34 F.2d 157 | N.D.N.Y. | 1928
This is an application for an order directing the receiver of the Carthage Sulphite Pulp & Paper Company to pay the United States Mortgage & Trust Company a certain amount as interest.
Under a general creditor’s bill Charles E. Norris was appointed receiver for the affairs of the Carthage Company. Later the mortgage company by authorized action foreclosed a mortgage given by the Carthage Company. Subsequent to the appointment of the receiver, and prior to the sale in foreclosure, the mortgage company paid taxes amounting to $27,536.27. The decree in foreclosure directed these taxes to be paid from the proceeds of the sale. The Circuit
The request for interest is not based upon contract or order of the court. It is based upon the equitable principle that the amount in the hands of the receiver from the date of the decree to the date of payment presumably earned as interest the sum demanded, and that the receiver should not be enriched by the withholding of payment. This equitable demand, if recognizable by the court, must be based upon some legal principle. The claim of the mortgage company does not rest in a contract, express or implied, calling for interest; neither does it rest upon the order of the court, for the order directing payment, dated long after the date interest is claimed, makes no provision for its payment. If allowed at all, it must be allowed under the legal principle of damages for withholding.
The facts do not warrant the conclusion that the receiver acted other than any prudent business man would have acted under the circumstances. He could not safely comply with the decree until he. knew there were no prior liens on the funds. The court nowhere ordered the payment of interest, and the acts of the receiver do not warrant its imposition as penalty. Moreover the mortgage company, when it accepted the principal, even though at the time of acceptance it protested against nonpayment of interest and demanded its payment, lost its right to recover interest even in a court of equity. Interest, except in cases where there is a contract to pay it, does not constitute a debt capable of a distinct claim. It is incidental to the principal and can only be recovered with it. In such eases, the acceptance of the principal, even under protest, without a separate agreement for the payment of interest, extinguishes the claim and bars a claim for its payment. Cutter v. N. Y., 92 N. Y. 166; Stewart v. Barnes, 153 U. S. 456, 14 S. Ct. 849, 38 L. Ed. 781.
The motion is therefore denied.