THIS was an action of account render, brought by Crawford and
Co. of Rotterdam against Willing and Morris of Philadelphia. There
was a judgment quod computent, under which the auditors reported,
'that the sum of 1658l. 11s. 8d. Pennsylvania currency is due from
the defendants to the plaintiffs; but not being agreed, with
respect to an allowance of interest, they submit that point to the
Court.' The plaintiffs thereupon filed a suggestion, 'that the
defendants ought to be charged 3770l. 15s. for interest, on the
several sums of money by them accounted for, in their account,
mentioned in the report of the auditors; and that the plaintiffs
are entitled to have and recover from the defendants the said sum
of 3770l. 15s. as well as the principal.' To this suggestion the
defendants pleaded, 1st. 'That they ought not to be charged with
the said sum of 3770l. 15s. for interest, &c. and that the
plaintiffs are not justly entitled to have and recover the same,
&c. because, they say, that the same, or any part thereof, is
not justly due from the defendants to the plaintiffs: and this they
pray may be inquired, &c.' 2d. Payment of the principal sum.
3d. The bankruptcy and certificate of Morris, one of the
defendants. Issue was joined on the first plea; and the second and
third were confessed.
On the evidence, it appeared, that the transactions on which the
debt to the plaintiffs was founded, occurred before the year 1775;
that during the years 1775 and 1776, and during several years after
the war, the debt was repeatedly acknowledged, and a remittance of
the amount promised, in a correspondence between the plaintiffs and
Morris, as the acting partner of the defendants;
Page 4 U.S.
286, 287
that the partnership commenced by articles dated the 1st of
January 1773, and continued for five years; that the partnership
was renewed, taking Swanwick in as a partner in the year 1783; that
partial remittances were made by Morris in the year 1786, which
reduced the balance of the principal sum to the amount reported by
the auditors; and that Willing never knew of the plaintiff's
demand, until the present suit was amicably instituted by agreement
with Morris alone, dated the 4th of August 1798. E. Tilghman and
Ingersoll, for the plaintiffs, proposed to inquire, 1st. Whether
considered as a commercial case, generally, it is not a case in
which interest ought to be allowed? 2d. Whether the special
circumstances of the case, exclude the claim of interest, with
reference to the law of partnership? 3d. Whether the case is
affected by the existence and operation of the revolutionary war?
1st. It is true, that, in the old books, the claim of interest upon
simple contract debts, is treated with great rigour, and allowed
only in the case of a note; but the law, gradually accommodating
itself to common sense and common honesty, is at length settled,
that for money lent; for liquidated balances: nay for goods sold
and delivered, where the usual credit is expired; for money
detained, which ought to be paid over, and during the continuance,
as well as before the commencement of a suit; the creditor shall be
entitled to interest. 1 Dall. Rep. 349. 1 Fr. Vezey, 63. Rep. temp.
Hard. (Ridgway) 286. 1 Vez. 310. 3 Br. Ch. 436. Doug. 361. And,
under circumstances of vexatious delay, interest may be recovered,
even beyond the amount of the principal. Atk. 80. 2 Vez. j. 300.
2d. The debt was contracted, the correspondence was carried on,
during the existence of the partnership, between Willing and
Morris. Each partner was, therefor, liable, not as a surety, but as
a principal, for the lawful contracts and transactions of the
other, in relation to their joint business. 1 Wils. 682. 3 F. Vez.
277. Bankrupt Act of Congress, s. 34. Doug. 629. 3d. The Courts of
Pennsylvania (differing in their view of the subject from the
federal Courts) have made an abatement of interest during the
continuance of the revolutionary war (a period computed at seven
years and a half) in suits brought by British creditors, against
American citizens, the immediate parties to the war: but there is
neither law, justice, nor precedent in any Court, for applying the
rule to suits brought by the citizens of a neutral, or friendly,
nation: And as to the practicability, as well as the lawfulness, of
a remittance, it is notorious, that the intercourse between the
United States and Holland was never suspended, at any period of the
contest. Lewis, for the defendants, stated his general position to
be, that interest is not due of course, upon an account current; or
an unliquidated
Page 4 U.S.
286, 288
debt. 1 Wils. 376. 3 Wils. 205. 1 Dall. 349. Doug. 361. 1 Dall.
265. 3 Dall. 313. 1 P. Wms. 376. 3 P. Wms. 205. Doug. 361. Durden
v. Gaskill; and that the peculiar circumstances of the present
case, will not warrant a departure from the general rule. The cases
cited for the plaintiffs are, indeed, inapplicable to the real
point at issue. Thus, 1 Dall. Rep. 349, was the case of a single
sum of money, received at one time, by the defendant from the
plaintiff's agent; not the case of an open, running, account. The
cases in 1 F. Vez. 63, and Ridgw. 286. go no farther than to show,
that when a sum is ascertained to be due, by settlement, or
liquidation, of accounts, interest begins to run. The case in 1
Vez. 310, contains, indeed, the strong expression, that interest
follows the principal, as a shadow does the substance; but the
expression must be applied to the subject before the Court: which
was a legacy, for the education of a child, bearing interest from
the very nature of the bequest. And the case in 1 Wils. 682. arose
upon a joint and several bond.
To the general position, however, that interest is not payable,
in cases of account current, and other simple contract debts, Lewis
admitted there were various exceptions: 1st. Where there is an
express contract to pay interest. 2d. Where the accounts have been
settled, and a liquidated balance ascertained. 3d. Where a debt
consists of a single sum of money, and no account current has been
raised between the creditor and debtor. 4th. Where there has been
an unreasonable detention of money, after a demand of payment, or a
refusal to come to a settlement. But, he insisted, that there was
no authority, in any case, to justify a verdict for interest,
beyond the amount of the principal; not even upon a bond, if the
creditor has neglected to demand payment for several years. 14 Vin.
Abr. 460.
But, adverting to the peculiar circumstances of the case, Lewis
contended, 1st. That there was a wide distinction between the
responsibility of Morris, and that of Willing: the correspondence
being exclusively with the former, and no demand of payment, no
notice of the claim, to the latter, till 1798, long after the
dissolution of the partnership. The act, or assumption, of one
partner, to bind the company, must take place during the
continuance of the partnership; and here the only promise made by
Morris, during the partnership, was in the year 1775; before the
money was received, and merely importing, that the defendants would
remit it, when it was collected; which, surely, is no foundation
for the charge of interest. 3 Bac. Abr. 517. 2 Ventr 151. So far,
therefore, as respects Willing, it is a stale demand, against which
every presumption will be made. Cowp. 215. 1 Wils. 742. 1 Atk. 493.
Gilb. Eq. 224. 2d. That the operations of the war, and the high
state of exchange, afford a justification for not remitting till
the peace of 1783; and after that epoch, no demand was made upon
Willing, till the suit was brought.
Page 4 U.S.
286, 289
By the COURT:1
The auditors have ascertained the principal sum, that is due
from the defendants to the plaintiffs; leaving to the Court the
question of interest. The only point now to be decided, therefore,
is whether any, and what, interest, ought to be paid upon the debt
so ascertained?
The inquiry has been naturally, and fairly, pursued, under the
considerations suggested at the bar: 1st. Whether, on general
principles, it is a case, in which interest can be allowed? 2d.
Whether any circumstances, peculiar to the case, in relation to the
parties, should prevent the allowance of interest here, in
opposition to a general rule? 3d. Whether the effect of the
revolutionary war was such, as to suspend the right to interest,
for any, and for what, period?
1st. Whatever may have been the doctrine in former times, we
have traced, with pleasure, the progress of improvement, upon the
subject of interest, to the honest and rational rule, that,
wherever one man retains the money of another, against his declared
will, the legal compensation, for the use of money, shall be
charged and allowed. From the single case of a promissory note, the
instances, in which interest is allowed, have been so multiplied,
year after year, that few remain to be added to the legal
catalogue. In Pennsylvania the policy is older, and still, perhaps,
more extensive, than it is in England. There, even at this day, an
action must be brought upon a judgment, in order to recover
interest upon it; but here, our act of assembly, so early as the
year 1715, made the interest an inseparable incident of the
judgment. For my own part, I am prepared to say, with the book
cited, that interest ought to follow a debt, as the shadow does its
substance. Even, in the case of goods sold and delivered, I would
think it right to allow interest, as soon as the express, or the
implied, term of credit had elapsed, and a demand of payment was
made. [
Footnote 2]
In the present action, there can be no doubt, that the balance
had long been ascertained and acknowledged. In England, it is the
practice of merchants to balance their accounts annually; and, by
that means, the interest of each year becomes principal, in the new
account of the succeeding year. Without adopting that practice, it
is clearly our opinion, that the defendants are liable for the
interest actually claimed, unless some special reason exempts them
from the general obligation of merchants.
Page 4 U.S.
286, 290
2d. The circumstances suggested, to distinguish the
responsibility of Mr. Willing, from that of his partner, are not a
sufficient legal, or equitable, answer, to the demand of the
plaintiffs. In Watson's treatise, on the law of partnership, the
cases on this point are collected and arranged. The result of the
whole is, that, during the partnership, all the partners are
answerable for the acts of each. It is no ground of discrimination
in this respect, which partner actually received the funds; which
was intrusted to transact the business, or which was ignorant of
the state of the debit and credit, of the company books. If,
indeed, a public notice is given by one partner, of the dissolution
of a partnership; and creditors, unreasonably neglecting it, will
place funds in the hands of the other partner, they must take the
consequence of their own imprudence. But the present case is free
from every embarrassment of this kind. The debt was contracted
during the partnership; and all that was written about it, both
before, and after, the termination of the partnership, was written
by Mr. Morris alone, without any objection, on the part of Mr.
Willing; whose conduct, on the contrary, gave reason to presume
consent and approbation.
3d. Nor will the effect of the revolutionary war, furnish the
defendants with a justification, or excuse, against the claim of
interest. We all know the eminent services of Mr. Morris to his
country; and the pre- eminent credit of the house of Willing and
Morris, throughout the war. But these very advantages show, that
the defendants, of all men, had it in their power to remit the
funds, for the payment of their debts, due in neutral
countries.
This, then, is our general position: the defendants are liable,
for the payment of interest, from the time the money was in their
hands, demanded and neglected to be paid, until the war; during the
war, if remittances could safely be made; and (if they could not be
safely made during the war) then from the peace of 1783, until the
actual recovery of the principal.
Unless, upon the whole, the jury can discover some ground of
excuse, which we have not been able to trace, the interest ought to
be allowed, in justice to the plaintiffs: and, we will add, in
justice to the commercial character of our country.
The jury found a verdict for the plaintiff, for 4422 dollars and
89 cents. [
Footnote 3]
Footnotes
Footnote 1 This cause was
tried before SMITH, and BRACKENRIDGE, Justices; the CHIEF JUSTICE
declining to sit, on account of his relationship to Mr. Willing;
and YEATES, Justice, being absent, on account of indisposition. The
charge was delivered by Judge SMITH.
Footnote 2 In the course of
the trial, SMITH, Justice, declared, that the authority of 1 Dall.
265. (laying down the rule, that interest was not payable for goods
sold and delivered) had been often overruled.
Footnote 3 This sum, it is
plain, was not equal to one half of the interes t claimed (and the
calculation of interest was in a mode favourable to the defendants)
but it was exactly equal to the principal sum reported by the
auditors. It is presumed, therefore, that the jury thought the
interest ought not to be allowed beyond the principal.
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