Dunlap v. of Wiseman

2 Disney (Ohio) 398 | Oh. Super. Ct., Cinci. | 1858

Spencer, J.

It has been decided in the case of Watkinson v. Root, 4 Ohio, 373, that on a note drawn in this way, the interest would be allowed on the interest, as it matured from time to time; that was an action brought for the recovery of the interest alone, the principal not having yet become due, and it was held that where a note was drawn in that way, the interest, when it should be paid, becomes principal, and draws interest.

The present case falls within this ruling. The plaintiffs are entitled to interest on these installments of interest, as they matured, at the end of every six months. But where interest is thus made principal, the question is what rate of interest does it draw ? The statute provides that on all sums of money, after the same shall become due, the interest shall be allowed at the rate of six per cent, and no more. • By virtue of that provision, then, this installment of interest would only draw six per cent.; but it provides that parties may agree, in writing, to pay interest at a rate not exceeding ten per cent. ¥e are disposed to give that statute a strict construction. If the parties had agreed, by the terms of the contract, to pay interest at the rate of ten per cent, on the interest as it matured, it would be a contract for that sum; but they agreed to pay ten per cent, only on the principal sum, so that the contract, if the law were embodied into it, entitles the party to interest on the installments of interest, as they matured, at the rate of six per cent.

Decree accordingly.