246 Mass. 100 | Mass. | 1923
The beneficiaries for life under the will of Thomas Dana having died and his grandson, the plaintiff Julian Dana de Cordova, having ¡survived and attained the age of twenty-one years, the defendants Weeks and Wellington, the trustees, were required by its provisions to “ pay over and distribute ” to him the “ remainder of the principal estate ” which amounts “ to upwards of $500,000.”
The material facts are not in dispute. The plaintiff, by profession a lawyer but not then engaged in practice, borrowed of the lenders $40,000 for which he gave his promissory note of the following tenor:
“ $40,000.00 Boston, September 10, 1913. For value received, I, Julian Dana de Cordova, Promise to pay to Bissell- & Blunt and Howard F. Butler or order, the sum of forty thousand dollars ($40,000) in three (3) years from this date, with interest quarterly at the rate of eighteen (18) per centum per annum during said term, and for such further time as said principal sum, or any part thereof, shall remain unpaid, all interest unpaid at maturity to be added to and become a part of the principal and bear interest as herein provided for.” The bill was filed December 26, 1922, and on February 5, 1923, by agreement of parties the trustees paid to the lenders $170,000 on account, which is the first and only payment made on the note. But it is contended by them that notwithstanding this payment there is still due an approximate balance of more than $500,000 which the plaintiff obligated himself to pay by the terms of the note; and of the assignment to which we shall later refer.
The ascertainment and adjustment of the indebtedness under the contentions of the parties, as shown by the record, depends upon the rate of interest which is to be charged on the note, and under the stipulations in the assignment. The first question is whether interest on the note should be compounded quarterly on all sums then due, or whether it should be compounded only at the date fixed for payment of the principal. It must be decided on the terms of the note; and evidence of the application and negotia
It is settled by our own decision^ that the interest should not be computed by making quarterly rests. Shaw v. Norfolk County Railroad, 16 Gray, 407, 416. Hodgkins v. Price, 141 Mass. 162, 164. Tisbury v. Vineyard Haven Water Co. 193 Mass. 196, 198. While payable quarterly “ during said term,” the interest is also payable “ for such further time as said principal sum, or any part thereof, shall remain unpaid, all interest unpaid at maturity to be added to and become a part of the principal and bear interest as herein provided for.” The words, “ at maturity,” fix the determinable future time when the principal which is to include all accrued interest is thereafter to bear interest at the rate specified. It follows, that the single justice correctly ruled that on the face of the note, interest was to be compounded only at - maturity. The plaintiff also in compliance with the provisions of the assignment transferred three policies of insurance on his fife “ in the aggregate of one hundred thousand dollars ” as “ additional security for the payment of any and all sums which may be due on said . . . note.” It was further stipulated that he should pay the premiums as they became due, and if he defaulted the lenders were directed to make the payments for which they were to be reimbursed “ together with interest thereon computed in the same manner and at the same rate of interest as is provided for in said . . . note.” If at the end of four years from the date of the note the plaintiff’s debt had not been liquidated, he agreed to obtain additional insurance in companies satisfactory to the lenders to whom the policies were to be assigned and delivered, for a sum which added to the amount of insurance then in force would be sufficient “ to equal a sum equivalent to ten . . . per cent in excess of what may become due ... at the expiration of six . . . years from the date of said . . . note, including in said sum . . . any and all premiums on any and all of said policies . . . due during the said six . . . years period, together with interest upon said premiums computed
But even if the lenders should be allowed interest only at the rate of eighteen per cent the second question is whether they are entitled to interest at the rate of thirty-six per cent on the amount of the note at maturity as well as on the sums due for premiums, computed after September 10, 1917, the date when the plaintiff inexcusably failed to comply with the demand for additional insurance. The clause in the assignment, under which the right to double the interest is asserted, is in these words, “ Any failure on my part to furnish such additional policies of life insurance shall give the right to the Lenders to charge interest upon all sums owing from me to the Lenders at the date of such default at double the rate of interest which the said indebtedness then bears.” The parties undoubtedly had the right to make their own contracts. The increased amount, however, to be paid on default being obviously greater than the damages for nonpayment of the note or moneys advanced for premiums, with interest at the rate of eighteen per cent which could be separately and readily calculated and exactly ascertained, the stipulation should not be held to have been intended as compensation or liquidated damages, or an agreement to pay a larger percentage for a continuance of the loan, and extension of time for repayment of advancements. See Chase v. Allen, 13 Gray, 42, 45; Lynde v. Thompson, 2 Allen, 456, 459, 460;
Ordered accordingly.