On Motion for Rehearing.
Mr. Justice Mooredelivered the opinion.
10. The defendants’ counsel having filed a petition for a rehearing, call particular attention to that part of instruction No. *60314 pursuant to which a verdict was returned, and judgment rendered for interest on the sum specified in the undertaking, from March 12, 1903, when the summons was served, to June 19, 1906, when the recovery was had. The counsel for the respective parties stipulated, March 31, 1903, that during the term for which the defendants were sureties on the bond of the sheriff as tax collector, that officer received, failed to account for and converted to his own use the sum of $10,770.64. This agreement was in the nature of an acknowledgment of the extent of the sheriffs defalcation, but it was not an admission of their liability for any part thereof. The statute regulating the compensation to be paid for the use of money is, so far as applicable, as follows:
“The rate of interest in this state shall be 6 per centum per annum, and no more,' on all moneys after the same become due:” B. & C. Comp. § 4595.
"When the right to recover in an action is in good faith denied, interest will not be allowed on the demand prior to its liquidation by judgment: 22 Cyc. 1515; Sorenson v. Oregon Power Co. 47 Or. 24 (82 Pac. 10). That the defendants in good faith controverted their liability is evidenced by the several appeals which they have prosectued, and this being so, the sum due was not liquidated as to them until June 19, 1906, when the last judgment was rendered. There is no dispute as to the time for Which interest was awarded; and if within 10 days the plaintiff rfemits all.interest prior’to'{the rendition of the judgment, the cause will be remanded to the court below, with directions to enter a judgment for the sum of $10,000, with interest from June 19, 1906, at the rate of 6 per cent per annum; but if this reduction is not made within the time specified, the judgment will be reversed, and a new trial ordered: Graham v. Merchant, 43 Or. 294 (72 Pac. 1088).
11. The defendants will be allowed their costs and disbursements in this court upon the appeal.
Affirmed : Rehearing Denied.