Adams v. Hastings

The opinion of the Court was delivered by Mr. Justice Terry. Mr. Chief Justice Murray concurred.

The defendant, by an instrument in writing, acknowledged that he was indebted to plaintiffs in the sum of twenty-five thousand dollars for moneys advanced at different times before the date of the instrument, and also a further indebtedness of three per cent, per month on said sum, to be computed from the dates of the several advances.

The Court below rendered judgment in favor of plaintiffs for principal and interest, in accordance with the terms of the instrument.

It is contended by the defendant, that the judgment is erroneous; because,

1. The promise to pay interest at three per cent, for the time prior to the acknowledgment was without consideration, and therefore void.

2. The acknowledgment, by its terms, refers only to past and present indebtedness, and cannot operate as a promise to pay interest for the future.

Our statute provides that parties may stipulate in writing for any rate of interest for the use of money, but where there is no written contract, fixes the rate at ten per cent, per annum.

In this case, the advances were made without any written contract as to the rate of interest; and at the date of the acknowledgment, defendant was legally indebted to plaintiffs in the sum advanced, with ten per cent, per annum interest, from the date of the advances.

The indebtedness was the sole consideration for the acknowledgment, and in our opinion, was not sufficient to support a contract for the payment of a greater amount than was then due. This view is supported by numerous authorities from the Courts of the different States. In [130]Crampton v. the Administrator of Ballard, 10 Vt. R., 251, held, "That money received under a legal liability to repay it with interest, does not form any legal consideration for a promise beyond that.” See also Logan v. Mathews, 6 Barr, 417. The case of Shirley v. Harris, 3 McLean, 330, is almost identical with the one under consideration. The party agreed in writing to pay ten per cent, per annum on a note given before that time, if the note was not promptly met at maturity. The Court held that, “ As regards the ten per cent., we think it cannot be recovered ; there was no consideration to support the obligation. Six per cent, is the legal rate of interest in Indiana, though a higher rate, not exceeding ten per cent., will be valid if agreed to in writing. The note on which this interest was to be paid, was given before the date of the one on which this action was brought; there is no consideration, then, for the payment of the ten per cent, interest; it was a voluntary undertaking, and cannot be enforced.”