Opinion
Rehearing Granted 3 Cal. 231 at 233.
Appeal from the Fourth Judicial District.
The facts in this case, as they appear upon the record, show, that in September, 1850, respondent made and delivered to the appellants, three promissory notes, two of them dated September 11th, 1850, for $ 5000 each, and the other dated September 12th, 1850, for $ 5913 40, and all bearing interest at the rate of six per cent. per month. Sundry sums were paid on the notes, at different times, after their maturity; the last payment, November 15th 1851. In December 1851, appellants brought suit for the recovery of the balance, alleged by them to be due by respondent, on the notes, and the question was referred to referees, for determination, who decided there was nothing due thereon at the time of suit brought.
This finding was based upon the method of calculating interest upon the claims, which was by computing interest on both debt and payments up to the date of the last payment, November 15th, 1851, at the above rate, six per cent. per month.
The notes were secured by a mortgage of personal property, placed by the respondent in the hands of the appellants, to be sold by them, and the proceeds to be applied in payment of the notes. The appellants, on several occasions before the date of the last payment, had rendered accounts current to the respondent, in which the interest was computed on both debt and payments; the method pursued by the referees, who were of opinion that appellants were bound by this method, having themselves adopted it, and were estopped from insisting upon any other.
Judgment was entered on the report, and a motion for a new trial being overruled, this appeal was taken; the only question in which is, whether there was error in the mode adopted in computing the interest, as above explained.
COUNSEL
Insisted that the only true mode of calculating interest, is by computing it on the debt due to the day of the first payment, then appropriating such payment to the extinguishment of the interest, and the balance, if any, towards the principal, and so on. (3 Cow. 86; 1 Johns. Ch. Rep. 17; Ib. 209.)
If the interest be computed in this way, there was due to appellants, November 15th, 1851, about $ 1861 50. Whereas, by the mode adopted by the referees, there was nothing due on that day; and the result is produced by the difference in the modes of computation.
If the appellant, in rendering his accounts, computed the interest under a false impression of his rights, he is not therefore estopped from asserting them when the error is discovered. If this doctrine would apply in a case where an innocent third party might be affected by it, such is not the case in the present question. The transaction has been confined entirely to the parties to the notes. Besides this, the accounts were rendered with the customary reservation that all errors were excepted. Neither does it appear that six per cen. per month interest was allowed.
McAllister, Edwards, and Rose ,
Hambly, for Respondent.
The calculation was made by the referees, according to the custom of merchants, that is, by charging interest all the time upon the principal, and allowing like interest on the payments. A different rule works injustice to the debtor; and the counsel referred to the various modes adopted in different States. (Tracy and Wickoff, 1 Dallas, Wash. C. C. 169; 1 Johns. Ch. 13; 2 Johns. Ch. 209.)
The accounts of appellants were rendered in this form, and this was held to be binding on the parties. (See 2 Wash. C. C. 167; also, 4 Scam. 4; 7 Greenl. 48.) The counsel also submitted a paper exhibiting the results of the different modes of calculation.
The statute does not require an express agreement, but says what shall be allowed, where there is no express agreement. The respect paid by Courts to common usage, may be seen in Koons v. Millar, 3 Watts & S. 271, and 7 Wend. 315.
JUDGES: The opinion of the Court was delivered by Heydenfeldt, Justice. Wells, Justice, concurring.
OPINION
HEYDENFELDT, Judge
On motion of the appellants, the Court ordered a re-hearing of the above case, which was again argued. The following opinion was, at the close of the argument, delivered by Heydenfeldt, Justice--Wells, Justice, concurring.
The re-argument of this cause has not induced me to change my opinion. The dealings of the parties run through a period of more than two years. During this time, the appellants render to the defendant three or four stated accounts, showing balances. In all of these accounts, and throughout the whole of this time, they pursue the one mode of calculating interest: it has become their way of doing business. It is their system, and they pursue it and persist in it until the indebtness of the defendant is fully paid off, as found by the award of the referees.
It is true that an account after payment may be opened and surcharged on the ground of mistake, but the calculation of interest by the plaintiffs in this case can in no sense be called a mistake. It was a deliberate, methodical plan of doing business, according to a well-comprehended rule, and there is no authority or reason, at law or in equity, by which they are entitled to any relief.
Judgment affirmed.