Lakeman v. Mountstephen.

Cook v. Fowler.

1874

[Law Reports, 7 House of Lords, 27.]

March 24; May 15,.1874.

*ROBERT COOK, Appellant; and JOHN FOWLER, J. G. [27 WOOD, and J. ROBERTS, Respondents.

Warrant of Attorney-Defeasance-Interest on Money secured.

Where a written security is given for the payment of money at a certain day, with interest up to that day, and the sum secured and the interest thereon are not paid at the day, the principal and interest become from that time a debt which, when recovered by legal process, may, in the discretion of a jury or of the court, be made the subject of an additional liability, which, however, is not properly a liability to interest according to the contract, but to damages for the breach of it.

Per LORD CHELMSFORD: The defeasance of a warrant of attorney is not a contract, but merely a description of the object of the security, and of the means of enforcing payment.

Per LORD SELBORNE: There is no rule of law that, upon a contract for the payment of money on a day certain, with interest at a fixed rate, down to that day, a farther contract for the continuance of the same rate of interest is to be implied.

A warrant of attorney was given to secure payment of a sum of money. Its date was the 2d day of May, 1864, and the defeasance was in these terms: "The within written warrant of attorney is given for securing the payment of the sum of £1,330, with interest thereon, at and after the rate of £5 per cent. per month, on the 2d day of June next. Judgment to be entered up forthwith," &c.:

Held, that this was nothing more than an authority to enter up a judgment for these various sums, to be ascertained on the 2d of June, 1864, after which time the holder would merely stand as a creditor for the sums so ascertained, and the statutable rate of interest thereon that might be allowed him by a jury or by the court.

THIS was an appeal against a decision of Vice-Chancellor Stuart. William Bevan, late of Stapleton, in the county of Gloucester, was indebted to Cook (among other persons), and on the 2d of May, 1864, gave him a warrant of attorney, the defeasance of which was in the following terms:

"The within warrant of attorney is given to secure the payment of the sum of £1,330, with interest thereon at and after the rate of £5 per cent. per month, on the 2d of June next, judgment to be entered up forthwith; and in case of default in payment of the said sum of £1,330, and interest thereon, on the day aforesaid, *execution or executions, [28 and other processes may then issue for the said sum of £1,330 and interest, together with costs of entering up judg ment, &c., &c., and all other incidental expenses whatever." No judgment was entered up. Bevan made his will on the 3d of May, 1864, and made Wood and Roberts his executors and trustees; he died on the 25th of the same month, and Wood and Roberts duly proved his will. A creditor's suit for the administration of the estate of Bevan (Robinson v. Wood) was afterwards instituted, and the appellant came in 9 ENG. REP.

3

as a creditor under that suit, but did not give any particulars of his demands against Bevan's estate. On the 11th of March, 1867, Wood and Roberts therefore filed their bill against Cook, praying for accounts, for liberty to redeem any premises comprised in securities given to him, appellant, by their testator, and then alleged to be held by him, and for costs. The appellant put in an answer on the 14th of May, 1867, in which he referred to mortgages made to him by Bevan of certain lands in Ballin, in the county of Westmeath, and in Shire Newton, in the county of Monmouth ('). He also declared his readiness to account, stated the warrant of attorney, and claimed the principal sum due under it, with interest thereon at the rate of 5 per cent. per month. Both the suits came on for hearing before Vice-Chancellor Stuart, and an order was made for taking the accounts. The chief clerk made his certificate on the 8th of March, 1869, allowing the rate of interest claimed by the appellant. On the 12th of March, Fowler, as a creditor of Bevan, took out a summons to vary the chief clerk's certificate, and on the 7th of July, 1869, the Vice-Chancellor made an order varying it by allowing interest at 5 per cent. for the month, from the 2d of May, 1864, to the 2d of June, 1864, after which he fixed the rate of interest at only 4 per cent. per

annum.

This was the order now appealed against.

Mr. E. K. Karslake, Q.C. (Mr. F. H. Daly was with him), for the appellant: Whenever a security is given for the pay29] ment of money with *interest at a certain time, and payment is not then made, the rate of interest continues afterwards to be that which was fixed by the instrument securing it. Here is a valid instrument of security, and the particular rate of interest is settled by agreement between the parties. The appellant here had had other transactions with Bevan, and was, in fact, mortgagee of two properties, one in Ireland and one in Monmouthshire, and he had also a charge on a house in Bristol. He entered into an arrangement to give up his securities on having payment made to him. That payment must be calculated on the footing of those securities. The amount of interest given in ordinary cases by the court can only apply where there has not been any stipulated amount of interest settled by agreement between the parties. Here the amount has been expressly settled between them. The defeasance of this warrant of attorney gave to the appellant

(1) All these circumstances are so fully referred to by the Lord Chancellor, one portion of his judgment being expressly

founded on them, that it has been deemed unnecessary to set them out here at length.

in direct and express terms the interest now claimed, and there is no rule of construction applicable to such an instrument which, either at law or in equity, requires that the appellant should accept a less rate of interest than what had so been agreed upon. Here is an express contract. There is no ground on which a court can be called on to vary it. By the law as it now stands, any person is entitled to contract to pay any rate of interest, and such a contract is perfectly valid. If the time at which the principal of any money bearing interest ought, by the terms of a written contract, to be paid, is allowed to expire without payment, the party entitled to the payment may, in an action for the principal, recover the same interest from the date of the last payment of it: Price v. Great Western Railway Company (). That case shows that where nothing is said of future interest, it will continue as of course; and Mr. Baron Parke gave in that case the reason for the rule, saying: "Because the deed shows the intention of the parties that it should be a debt bearing interest." That rule had previously been adopted in Atkinson v. Jones ("), which was the case of a warrant of attorney, given by a third person to secure the due payment of interest on a debenture; the court would not interfere to enter satisfaction upon the roll, it not being sufficiently clear from the defeasance that the warrant of attorney was intended to cover only the interest up to the day named. *So that the court must have considered [30 that the warrant of attorney would cover the same interest accruing after the day named.

[The LORD CHANCELLOR: Suppose a promissory note, payable twelve months after date, but not paid at the time, what interest would be given on it by the jury?]

That which had been stipulated for between the parties. If they had fixed the interest at 3 per cent., of course it would not be increased; if they had fixed the interest at 6 per cent. or more, that would be given-it would not be diminished; "the intention of the parties,' as Mr. Baron Parke said, would afford the guide. Here the rate of interest had been expressly agreed upon.

Mr. Dickinson, Q.C., and Mr. Hemming, for the respondents: Interest may now of course be stipulated for to any amount the contracting parties think fit; but if stipulated for up to a certain time, the liability to pay that interest does not go on continuously. The interest, as interest, ceases at the time mentioned. If the contract is not performed at the time, the amount recoverable, in addition to (1) 16 M. & W., 244. (2) 2 Ad. & El., 439.

that stipulated for, is recoverable not as continuing interest, but as damages for breach of the contract to pay. Now, those damages are not necessarily to be measured by the quantum of the interest agreed upon by the parties themselves. The statute 3 & 4 Will. 4, c. 42, s. 28, which gives to a jury the power to assess damages for non-payment of money, expressly says that the jury may give such damages "if they shall think fit;" so that, so far from being obliged to give them, and to measure them by the amount of interest secured by the instrument, they may refuse the damages altogether. This case does not come within those referred to on the other side. The debenture in Price v. The Great Western Railway Company was declared to be a mortgage. A warrant of attorney is not a mortgage, it is a personal contract to secure payment of a debt, and in this instance that debt was to be paid, with stipulated interest upon it, at a time certain. If not paid then, the contract was broken, and all that could afterwards be recovered would be damages for the breach of it. In a note to Mounson v. Redshaw ('), it is shown that interest even upon a mortgage deed, accru31] ing after the day fixed in the deed, does not *become part of the debt, but is to be treated as damages for the detention of the debt. An excessive amount of interest submitted to for a time upon particular pressure, is certainly not a thing which, contrary to all legal analogies, the courts would continue upon mere implication. The money claimed after the day stipulated, not being interest as stipulated, must be in the discretion of the court, and must be that which the statute, or the rules of practice, would prescribe. Mr. Karslake, in reply: The warrant of attorney here, though it may not be a mortgage, is equivalent to a charge by a debtor on his land, and may be treated as an equitable mortgage. It cannot be argued that, because the judgment was not entered up at the end of the month, the instrument ceased to be a security at all. Yet, if not so argued, it is a valid and still subsisting security for the money mentioned in it according to the mode there mentioned, both as to principal and interest. If this instrument had only given interest at 6 per cent., no court would have reduced that amount to 5 per cent. Then, on what principle can it be reduced now?

The LORD CHANCELLOR (Lord Cairns), after stating the facts of the case, said: So far as the literal construction of that warrant of attorney and defeasance goes, your lordships will observe that there is no notice of any contract of (1) 1 Wm, Saund., 201, n; see also In re Kerr's Policy, Law Rep., 8 Eq., 331.