Thorndike v. United States

| U.S. Circuit Court for the District of Massachusetts | May 15, 1819

STOItY, Circuit Justice.

The replication of the United States is clearly bad for several reasons. In the first place it relies upon an act of congress (Act March 3, 1815. c. 76S; 4 Bior. & D. Laws. Ed. 1810, S31 [3 Stat. 227, c. 87]) as justifying a stoppage of interest upon the treasury notes tendered in payment of this bond, which is wholly inapplicable. That act is confined to treasury notes, which had already become due and remained unpaid; and the replication itself avers, that the treasury notes now in question were not due until after the first day of the succeeding August. In the next place, if we could surmount this difficulty, the replication would still be bad, because it neither traverses, nor avoids the matter alleged in the plea. If funds were assigned for the payment of these treasury notes, and yet the proper officers of the government refused to pay them out of these funds, there is no pretence to say, that such an assignment, with a refusal of payment, was within the purview of the act, .or .that it is a legal answer to the matter of the plea. We are therefore driven to eon-sider the sufficiency of the plea itself, which in truth covers the whole controversy between the parties, and involves matter of law .of no inconsiderable importance. By the statutes of the United States (Act March 4, 1814, c. 77 [12 Weightman’s Laws 276]; 4 Bior & D. Laws, p. 649, § 8 [3 Stat. 101, c. •18]; Act Dec. 26, 1814, c. 699; 4 Bior. & D. Laws, p. 737, § 3 [3 Stat. 162, c. 17]), under which treasury notes have from time to time been issued, it is enacted, that all such notes shall be receivable in payments to the United States for duties, taxes and sales of public lands, to the full amount of the principal and interest, accruing due on such notes. It follows of course, that they are a legal tender in payment of debts of this nature due to the United States, and by the very tenor of the acts, public officers are bound to receive them.

The single question, therefore, presented ■for the consideration of the court is, up to what time interest is to be calculated upon the treasury notes stated in the plea. If up to the time of the tender, then the plea is a good bar; if otherwise, then judgment must pass for the United States. The district attorney contends, that no interest is allowable beyond the times at which the notes respectively became due; on the other hand, the original defendants contend, that interest is to be allowed up to the time of the tender, the United States having refused to pay them at the time, when they became due, and at all subsequent times. All these treasury notes contain on their face a promise by the United States to pay the principal in one year from their date, with interest from that time, at the rate of 5Vb Per cent. per an-num, until that day; and the argument is, that as no interest is stipulated for beyond that day, none can grow due upon the contract. But the consequence does not follow from the premises; for the law upon every such contract between private citizens implies, that if the money is not paid at the day, the party shall pay interest for the delay of payment. Robinson v. Bland, 2 Burrows, 1077, 1086. Lord Mansfield has laid down this doctrine in very emphatic terms. He says, “where money is made payable by an agreement between parties, and a time given for the payment of it, this is a contract to pay the money at the given time, and to pay interest from the given day, in case of failure of payment at that day.” Robinson v. Bland, 2 Burrows, 1077, 1086. And we all know, that it is a uniform rule of courts of law, upon all contracts for payment of money at a stipulated time, to allow interest upon non-payment at the day, as a right, which is attached to all such contracts, when they are silent as to interest. Farquhar v. Morris, 7 Term R. 124; Marshall v. Poole, 13 East, 98; Clark v. Barlow, 4 Johns. 1S3. And the rule has been enforced by the supreme court in a case where the United States were a party to the contract, and sought the benefit of the rule. U. S. v. Gurney, 4 Cranch [8 U. S.] 345. Nor can it make any difference, that the contract contains an express stipulation for interest until the day fixed for payment; for that is not inconsistent with the implication, that if not paid at the day, interest is to be paid afterwards, since without such express stipulation no interest would grow due until a default of payment. The maxim then, expressum facit cessare taciturn, does not apply; for the contract does not speak to the particular case.

If the present then were a contract between private citizens, there can be no doubt, that the court would be bound to give interest upon the contract up to the time of payment. And if by law the amount due on the contract could be pleaded as a tender or a set off to a private debt, it would be a good bar to the full extent of the principal and interest due at the time of such tender or set off. Nay more, if the note or promise were given by a citizen to the government, the latter might enforce its claim to the like extent. Can it make any difference in the construction of the contract, that the government is the debtor instead of the creditor? In reason, in justice, in equity, it ought to make none; and there is not a scintilla of law to justify any. And if a suit could be maintained against the government, I- do not perceive, why it would not be as much the duty of the court to render judgment on such suit for the principal and interest, in the same manner and to the same extent as it would in the case of private citizens. The United States have no prerogative, to claim one law upon their own contracts, as creditors, and another as debtors. If, as creditors, they are entitled to interest, as debtors, they are bound also to pay it. Nor is there the slightest pretence to assert that the acts, under whicn these treasury notes were issued, prohibit the payment of interest after a year from their respective dates. They authorize the issuing of treasury notes in the exact terms, in which the present are couched. The most that can be urged is, that the acts are silent as to the payment of interest after the year; but in such cases the law steps in and by implication supplies, as matter-of necessary inference, what is not expressly declared.

• But it is not necessary to rest this construction upon the general principles of law, strong and unexceptionable as that ground appears to the court. There are clauses in the statutes cited at the bar, which manifestly contemplate that interest is due after the year, whenever treasury notes are then outstanding and unpaid. The collectors of the revenue, who are bound to receive the notes in payment of public debts as well after as before the expiration of the year, are in all cases chargeable with interest from the receipt until payment of the notes into the treasury. Act 4th March, 1814, c. 77, § 7 [12 Weightman’s Laws, 277; 3 Stat 101, c. 18]. Let why should this be done on payments after the expiration of the year, if interest by the terms of the contract had then ceased? The very clause in the statute of 1815 (Act 3d March, 1815, c. 768, § 7 [4 Bior. & D. Laws, 833 ; 3 Stat. 228, c. 87]) which has been relied upon by the government, does seem to me to justify the same construction. It authorizes the secretary of the treasury to pay the interest upon treasury notes then due and unpaid, as well with respect to the time elapsed before as after they became due, until funds shall be assigned for their payment. Why should interest, eo nomine be paid upon such notes, after they .became due, if the legislature did not clearly comprehend, that the faith of the government was pledged to that extent? The statute does not purport to make a new allowance, but simply to authorize a payment of an existing debt or duty

It has been asked, whether upon all contracts of the government, which are not strictly performed according to their terms, interest is to be allowed in the same manner as upon private contracts? In point of justice or law no reason is perceived by the court, why the government, if it were suable, ought not to pay, what as a creditor it could compel its own debtor to pay. But we may leave this case to be decided, when it shall arise. Here the government have expressly stipulated for interest at a specific rate; the •contract is received by the citizens upon the public faith; and that rate of interest becomes as between the government and the citizens the law of the contract, until it is paid. If a different measure of compensation could be dealt out by judicial tribunals, m my judgment it would seem as little to comport with the dignity of the government, as it does with sound policy and the eternal dictates of justice.

■ The judgment of the district court is reversed, and a judgment must be entered, that the plea in bar is good, and that the United States take nothing by their writ.