His Honor, Judge Daniel, instructed the jury that where partial payments were made upon bonds, bills, notes, or signed accounts, such payments are to be applied first to the interest, and, after its discharge, then to the extinguishment of the principal; because in these cases, the interest being given by law, the creditor has the same right to demand it as to demand the principal; and, therefore, when payments are made without any *Page 221 direction from the debtor as to their application, the (342) creditor may apply them as he pleases; and that hence such payments are always applied to that debt which does not bear interest. But that the present claim not being one on which the law allowed interest as a debt, the plaintiff had no right to demand it, although juries might and usually did give it. But that the payments made were to be applied to the principal, because that was the only debt existing at the time they were made; and that this application being made in the present case, by the law, they were not at liberty to apply them otherwise, and that if they found the whole principal to be paid, their verdict ought to be for the defendant.
A verdict being returned according to the charge of the judge, the plaintiff appealed. The judge, in his directions to the jury, distinguishes between cases where the law reserves interest upon the contract and those in which the jury, in their discretion, may allow it. He decides that in the first case the law applies the payment primarily to the discharge of the interest, the balance of it, if any, to the extinguishment of the principal. In the second, that the law applies the payment to the principal alone; that the jury cannot make a different application, and that if the payments amount to the principal, the interest, being only incident and no part of the debt, is entirely lost.
I am not apprised of any such positive rule. If by law a debt bears interest, and a payment is made, the law applies the payment first to the discharge of the interest. If it is left by law to the discretion of the jury to give interest or not, according to the circumstances of the case, and a payment is made, the payment is to be applied to the interest, if the jury should (343) allow it, in the same manner as if the law reserved interest upon the contract. Determine the fact that interest is to be paid, whether it arises from the imperative injunctions of the law or the discretion of the jury in the particular case, and the result is the same — the law applies the payment to the interest. It is unlike the case where a person is indebted in two debts, or two ways; there the debtor may apply the payment at the time of making it, as he pleases — cujus est dare, ejus est disponere. If he fails to direct its application, the right of doing so devolves upon the creditor. Not so in cases of the kind before us; the *Page 222 application is made by law, and depends upon the facts of the case. If there is interest due, it shall be first extinguished; and it is immaterial whether this fact is settled by law a priori, or allowed afterwards upon the adjustment of the account.
If the judge is correct, it would be in the power of a debtor, in such cases, to avoid payment of the interest by making a tender and bringing the money into court, for that amounts to a payment, and the creditor is bound to receive his debt, although he protests the whole time that interest is due, and refuses the sum tendered. Even after action brought, the net sum may be brought into court under the common rule and the same result obtained. I cannot believe that such is the law.
Much is conceded in support of the judge's opinion, to allow that there are in England any cases where it is imperative upon the jury to allow interest; and even here, although our act of 1786 declares that debts of a certain kind shall bear interest, yet neither that nor any other act declares at what rate interest shall be given. The act of 1741 prohibits the taking more than 6 per cent. Within that sum the amount to be allowed is left to the agreement of the parties or the discretion of the jury. The law of England is the same as to the latter point and (344) silent on the former. It is true, both with us and in England, that it follows as a matter of course to allow interest in certain cases; but there and even here, in extreme cases, juries, under the directions of the court, have departed from this common custom. Child v. Devereux, 5 N.C. 398. It is, in our courts, a well-settled rule that interest shall be paid whenever the debt is ascertained, the amount known to the debtor and the time of payment fixed. In this case nothing was wanting but the signature of the defendant to bring it completely within the act of 1786. The account was stated, the balance struck, the paper indorsed as a settlement between the parties, and this all in the handwriting of the defendant. When our rule, before mentioned, shall have received the sanction of time, and a distinction shall be attempted between debts imperatively bearing interest and those which do or do not, according to the discretion of the jury, there will be no difficulty in classing such a debt as this. In England those cases in which interest follows of course had precisely the same beginning, and now its allowance is so well established that within a few years a jury is dispensed with, and it is referred to the clerk, upon a default, to ascertain the amount.
PER CURIAM. Judgment reversed. *Page 223
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