Richardson v. Campbell , 34 Neb. 181 ( 1892 )

Maxwell, Ch. J.

This case was before this court in 1889, and is reported in 27 Neb., 644. A rehearing was granted upon the question of the rate of interest to which the plaintiff was entitled and the case is. again submitted to the’ court. It appears from the record that the original loan was for $600 due in five years. This loan was made February 29,1876, and at a rate of ten per cent per annum, with a provision that if not paid at maturity the note should draw interest at twelve per cent. This rate was lawful when the note in question was given. There were also five interest notes of sixty dollars each, payable five years from date, which were attached to the principal note and were, in fact, coupons.

Two questions are presented, viz., Can the plaintiff recover more than ten per cent from the maturity of the $600 note; and, second, is he entitled to interest on the coupons?

In Weyrich v. Hobelman, 14 Neb., 432, the note was to draw ten per cent to time of maturity and if not paid at that time to draw twenty-four per cent thereafter. The court held that the increased interest was in the nature of penalty and that the plaintiff could recover interest only at the contract rate, viz, ten per cent. (Conrad v. Gibbon, 29 Ia., 120.) The plaintiff is»entitled, therefore, to but ten per cent interest upon the $600 note after it became due.

Second — In Mathews v. Toogood, 25 Neb., 99, it was held, in substance, that where the highest rate allowed by law is charged upon the principal note, interest cannot be allowed upon the coupon interest notes, the reason being that the several notes represent but one transaction and one indebtedness; therefore, if, considering the whole transaction; the interest agreed upon would exceed the legal rate, the contract will thereby be in conflict with the statute. If the rate agreed upon is within the statutory limits this objection will not apply. In the case at bar the interest notes did not draw interest until the principal note became due and the contract was within the provisions of the statute; that is, it was not usurious when made, and may be enforced. The plaintiff is entitled to interest on the coupon notes. The former opinion in this respect will be modified to conform to this opinion.

Judgment accordingly.

The other judges concur.