Richardson v. Diss

GRAY, C.

The record in this case presents the single question: What rate of interest should an allowed claim, based on ia promissory note, against a

solvent

estate of a deceased person, bear? On the part of appellant it is contended that the claim after allowance should bear the legal rate of seven per cent, and on the part of respondent it is claimed that the agreement as to interest, contained in the contract upon which the claim is based, is the measure of the rate of interest as well after the

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claim is allowed as before. The learned judge of the trial court adopted the latter theory, and decided that the claim after allowance should draw the contract rate of interest, which in this case was fifteen per cent per annum, compounded quarterly. We think this decision correct.

Section 1920 of the Civil Code provides that: “Interest is payable on judgments recovered in the courts of this state at the rate of seven per cent per annum, and no greater rate, but such interest must not be compounded in any manner or form.” Section 1494 of the Code of Civil Procedure provides as to estates of deceased persons: “If the estate be insolvent, no greater rate of interest shall be allowed upon any claim after the first publication of notice to creditors than is allowed on judgments obtained in the superior court.”

There is no statutory or code provision cited in the briefs herein fixing any rate of interest on claims against a

solvent

estate, and we infer that no such provision exists. Appellant claims that the headnote to section 1494 of the Code of Civil Procedure, quoted as follows: “Claims to be sworn to, and, when allowed, to bear same interest as judgments,” constitutes such provision; but the headnote of a section of the code should not be treated as an enactment of law standing by itself, but should be read and construed in its contextual relation to the whole section of which it is a part. Thus read and construed, it is obvious that the legislature intended by the said section to provide for a rate of interest only as to claims against insolvent estates. Before the enactment of any law reducing the interest on judgments from the contract rate to the legal rate all judgments, based on contracts which provided for interest in excess of the legal rate, continued to draw' interest at the rate agreed upon in such contracts.