4 Rand. 406 | Va. Ct. App. | 1826
This is an action of debt on a penal bill. The defendant pleaded payment and a special plea of usury, setting out at length, the several sums on which the usury is alleged to have been taken for forbearance, and the amount of the sums so charged to have been taken. Issue was joined on both pleas, and a jury sworn. At the trial, the defendant tendered a demurrer to the evidence, which was joined by the plaintiff. The jury found a verdict, subject to the judgment of the Court on the demurrer. The Court decided, that the evidence was sufficient in law to maintain the issues joined on the part of the plaintiff, and rendered judgment accordingly. The defendant appealed.
The first objection taken for the appellant, is, that the tender and joining in demurrer, were erroneous, the evidence being all on the side of the demurrant. But, this does not consist with the record; for the demurrer commences by stating, that the plaintiff introduced, to support his action, a bond in these words and figures; and goes on to set out at large the penal bill, which is the foundation of" the action. ■ •.
It is next contended, that the evidence supports the plea of usury, upon two grounds: 1st, Because, in the annual settlements, interest is added to the principal, and this balance is made an interest-bearing fund from that time forward, thus taking compound interest. 2d, Because, in the calculations of interest, a larger sum, in some instances, is taken, than the interest at 6 per cent, would amount to.
With respect to compound interest,- there has been considerable difference of opinion and of practice in the English Chancery. Some of the early cases allowed it; but the general rule, as settled by the latter cases, is, that it shall not be allowed. There are still some special circumstances, under which compound interest is allowed; as where a settlement of accounts takes place, after interest has become due, and an agreement is then made that the interest due shall thereafter carry interest; or the principal and interest are computed in a master’s report, and the same confirmed; for, after confirmation, it is considered as a judgment. But, an agreement made at the time of the loan, that at the end of the year interest shall become principal, will not be allowed; not that it is usury and will
The next objection taken is, that too much interest is ■taken; as the accounts A. B. & C. will shew. I have examined the calculations. Some of them are correct; some incorrect; some take too much, some too little interest. Upon the whole, I am inclined to think there is less interest included, than upon the strictest principles the party was entitled to. To constitute usury, there must be an intention to take more than legal interest. Wherever
I am clear that there is no usury proved, and that the judgment must be affirmed.
There are many cases in which the taking of compound interest is lawful, as in the cases mentioned by Judge Carr. But I should incline to think, that the taking it might, under circumstances, be usurious; as, if upon a debt of long standing, for the sake of getting further forbearance, the debtor, instead of giving a new security for the principal and simple interest, incurred upon the debt, were to agree to make annual rests, and to compound the interest for the time already past, and give a new security for the principal and interest so compounded, the whole to carry interest. Such an accumulation of the debt, arising from the compounding of the interest, might be considered as a premium for the further forbearance. The case at bar has no such features. The balance upon the accounts up to May 1, 1816, due to the plaintiffs, was $ 102 08 cts. Before striking this balance, no interest was charged.