39 S.E. 20 | N.C. | 1901
Lead Opinion
The General Assembly, on 22 March, 1875, enacted a law enabling the proper authorities of the town of Fayetteville to fund the then bonded indebtedness of the town contracted for subscription to stock of the Western Railroad Company, and to execute and deliver new bonds for like amounts in payment of and in exchange for the outstanding bonds, which had been issued under an Act of the General Assembly, in December, 1852, for the payment of the stock of the Western Railroad Company. The rate of interest named (530) in the bonds issued under the Act of 1852 was six per cent, and the rate provided for by the Act of 1875 was to be not more than eight per cent. The proper officers of the town of Fayetteville under the authority of the Act of 1875, issued to the plaintiff on the first day of January, 1876, the bonds which are the subject of this action, bearing 7 per cent interest, and the plaintiff surrendered to the mayor and commissioners a like number of bonds and for like amount of principal, which had been issued under the Act of 1852. No election was held in the town of Fayetteville upon the question of authorizing the issue of the bonds which were to be issued under the Act of 1875. *395
The question for decision, as we see it, is whether or not the loss of the entire interest follows the action of the mayor and commissioners under the Act of 1875 on account of a failure to submit the question of the increase in the rate of interest to the qualified voters of the town, under Art. VII, sec. 7, of the Constitution. The contention of the plaintiff is that the debt has not been changed; that the principal amounts of the bonds are of like sums (the words of the Act) as the principal in the bonds issued in 1852; that interest is a mere incident of a debt, and that a change in the rate of interest is, therefore, no change in the debt, and as a consequence that it was not necessary to have submitted that increase to a popular vote.
The defendant insists that interest is an integral part of a debt; that an increase in the rate of interest is an increase in the debt itself, and, therefore, that the increase in the debt not having been submitted to a vote of the people, under Art. VII, sec. 7, of the Constitution, the whole issue of the bonds, principal and interest, is void.
There is no doubt that in cases where interest is contracted for, the interest is an integral part of the debt. In cases where it is recoverable as damages for breach of contract to pay money, or where it is allowed in recoveries in tort, it is a mere incident of debt, the meaning of which is, that (531) if, on a contract for payment of money in which interest is provided for, the debtor should make a payment of the principal sum, the interest would yet be afterwards collectible as a part of the debt; while the other rule would prevail if the contract made no provision for the payment of interest. Kingv. Phillips,
In the case before us the interest was provided for in the face of the bonds; it was a part of the debt, but to be distinguished still from the principal of the debt. That part of Ch. 248, Laws 1874-'5, as to the principal amount of the bonds, was not contrary to the requirement of Art. VII, sec. 7, of the Constitution. The General Assembly, however, undertook to give the town authorities of Fayetteville the power to increase the rate of interest from 6 per cent to as much as 8 per cent in their discretion. That much of the Act, the power to increase the rate of interest, was repugnant to the feature of the Constitution which we have cited. A part of an Act of the General *396
Assembly can be constitutional and a part unconstitutional. McCless v.Meekins,
That part of the judgment below is erroneous in so (532) far as 6 per cent interest is allowed on the bonds, as only the principal sum of the bonds can be collected, with interest from the time of the maturity of the bonds. The judgment below is modified as in this opinion set out, and affirmed except as to the modification.
Modified and affirmed.
PLAINTIFF'S APPEAL.
Addendum
There was no error against the plaintiff in the ruling and judgment of the Court below.
No error.
Cited: Jones v. Comrs.,