O'Brien v. . Young , 95 N.Y. 428 ( 1884 )


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  • Judgment upon contract was entered in favor of the plaintiff, on the 10th of February, 1877, for the sum of $2,994.64. On the 19th of November, 1883, execution was issued for its enforcement with directions to collect the whole amount, with interest at seven per cent. The defendants applied by motion to the Special Term of the Supreme Court for an order restraining the sheriff from collecting interest at a greater rate than six per cent per annum after January 1, 1880. It was refused and the decision then made was affirmed by the General Term of that court.

    It is not denied by the appellant that the order appealed from was properly made, if the act of 1879, relating to "the interest of money" (Laws of 1879, chap. 538), is to regulate the computation of interest upon the judgment, and whether it does so or not is the only question before us.

    The statute (supra) was passed on the 20th day of June, 1879, to take effect on the 1st of January, 1880, except as to contracts or obligations made before its passage. These are declared to be exempt from its operation, and must consequently be governed by 1 R.S. 771, § 1, which continued the rate of interest at seven per cent. It is well settled that a judgment merges or extinguishes the right of action which before existed, and itself becomes a debt or contract of record for the *Page 437 payment of a sum of money adjudged to be due from the debtor to his adversary, or the person to whom it is awarded. (1 Black. Com. by Chitty, 455; In re European Central R. Co., L.R., 4 Ch. Div. 33; Dash v. Van Kleeck, 7 Johns. 477; Pease v.Howard, 14 id. 479; Andrews v. Montgomery, 19 id. 162;Sayre v. Austin, 3 Wend. 496; Taylor v. Root, 4 Abb. Ct. App. Dec. 382.) It is so styled in the statutes (1 R.S., vol. 2, p. 87, § 27), where the representative of a deceased person is required to pay "the debts" of the deceased, and among other debts, "judgments," according to their priority (id. 359, § 7); or if recovered after the death of the debtor, while it does not bind the real estate which he had at that time is still to be considered as "a debt" of a superior nature and to be paid in the usual course of administration. So it is styled a "demand" which may be set off (id. 354, § 18); and in the statute of limitations is classed among "contracts, obligations or liabilities" (id. 295, §§ 90, 91). We speak of a judgment debt, a judgment debtor and a judgment creditor. Its entry of record not only determines the relations of one party to the other, but fixes the rights and obligations of both. At common law it bore no interest (Creuze v. Hunter, 2 Ves. Jr. 162), but interest might be recovered in an action of debt brought upon the judgment (id, 167). These cases are cited by KENT, Ch. J., in Watson v. Fuller (6 Johns. 283), in setting aside an execution by which the plaintiff undertook to collect interest upon a judgment, saying, "The execution must follow the judgment, and can only be commensurate with it." This was in 1810.

    In 1813 it was provided (1 R.L. 506, 556), that in all executions on judgments thereafter to be recovered upon contract, it should be lawful to direct the collection of interest from the time of recovery, until paid, and it was held in Sayre v.Austin (supra, Jan., 1830), that a judgment was a debt due "in every possible sense of the term." "A debt," say the court, "due with interest from the time of its rendition, which since the statute, may be collected upon the execution, and before the statute could have been recovered by action *Page 438 of debt upon the judgment," treating it as a demand in the nature of specialty. By the Revised Statutes (vol. 2, p. 364, § 9), the law above referred to was extended so as to apply not only to judgments upon contract, but to judgments upon "any prior judgment," and it was made lawful to direct, upon such execution, "the collection of interest on the amount recovered from the time of recovering the same until such amount be paid." It is plain that it was not by virtue of these statutes that a judgment carried interest, but because it was debt, and COWEN, J., says inKlock v. Robinson (22 Wend. 160), that the legislature included a judgment for the reason that a judgment "is, for the purpose of interest, equivalent to a contract." Afterward, however, an absolute right thereto was given by statute, and a new suit for its recovery rendered unnecessary. (Laws of 1844, chap. 324, § 1.) "Every judgment," it says, "shall bear interest from the time of perfecting the same," and this was substantially re-enacted in 1877. (Code, § 1211.) No rate is specified, and therefore the general statute regulating interest in force at the time of its recovery, does, by operation of law, enter into and form part of the obligation, and has the same force as if directly referred to. In Rensselaer Glass Factory v. Reid (5 Cowen, 587), the right to recover interest when an account has been liquidated by both parties, and when a demand is liquidated by a judgment, is said to be founded upon the same principle, viz.: that there is an implied contract to pay.

    The course of English legislation and decision is not unlike our own. By 1 and 2 Vict., chap. 100, § 17, it is enacted that every judgment shall carry interest at the rate of four pounds per centum per annum until satisfied. In European Central R.Co. (supra), judgment had been obtained upon a railway debenture bearing six per cent interest, and the plaintiff claimed a right to that rate after judgment, but the court held otherwise, upon the ground that, after the recovery of judgment, it became the sole debt between the parties, saying, "the original debt is gone transit in rem judicatum, and a fresh debt is created with different consequences," and there is no other debt *Page 439 or obligation affecting them. It seems plain then, upon principle and authority, that the obligation of the judgment includes the payment of interest as well as principal, and as it was in being before, and at the time the act of 1879 took effect, it is by its very terms excluded from the operation of that act.

    A note, by its terms declared to bear interest until paid, but naming no day of payment, although made before the statute referred to, would, if paid after its passage, entitle the holder to the rate of interest prescribed by the statute in force when the note was made. Such would be the effect of the contract. If day of payment was named, and it fell due on and after the passage of the act, it would bear interest until that time according to the statute in force when made. Up to that time it was part of the debt (Keene v. Keene, 3 C.B. [N.S.] 144), and after maturity it is given as damages, and according to the statute then in force; for at that time, the law interferes not only to allow, but to regulate the rate of interest, on account of a detention beyond the term of the contract. In the last case, therefore, interest would run by operation of law, after maturity, and by contract up to that time. Now a judgment is like the note first supposed. It bears interest until paid, by force of the contract which the law implied into it at the time it was recovered. It then became a contract with no time of payment specified, but beginning to bear interest, and by the implied agreement to continue to bear it until paid.

    In Miller v. Burroughs (4 Johns. Ch. 436) the bond expressed six per cent per annum as the rate of interest, but the plaintiff claimed seven per cent, the statute rate, after pay-day had passed. The court decreed interest at six per cent, saying: "The contract must control until it ceases to operate by being merged in the decree." The condition of the bond is not set out, and it may be inferred from the remark of the court that the agreement extended until the money should be paid. If so, it would resemble the bond considered by us recently in Taylor v.Wing (84 N.Y. 471), where it was stipulated in plaintiff's mortgage (made prior to 1879) that the principal sum should bear interest at seven per cent until paid. It was *Page 440 admitted that there was no error — notwithstanding the statute of 1879 (supra) subsequently passed — in allowing the plaintiff interest at seven per cent until the date of the decision of the case. But after entry of the judgment, then by virtue of the judgment in which the mortgages were merged.

    In Paine v. Caswell (68 Me. 80; 28 Am. Rep. 21), a note, similar to one I have above supposed, came before the court; it read: "For value received, we promise to pay John S. Paine, or order, $500 and interest at ten per cent." The question was for how long a period was that rate of interest to be paid. It was held first, that a note payable at a time certain, with interest exceeding six per cent (the legal rate), would draw the stipulated rate till the time specified for payment, and no longer, for the bargain for interest extended only to that time, and after that the statutory rate, allowed by way of damages;second, that it would be otherwise where the note stipulated for the extra rate, after as well as when it became due, or until paid; third, that upon the contract in question, interest should be reckoned up to the date of judgment to be recovered upon the note. It was held that the substance of the contract was that the maker would pay the stipulated rate of interest so long as the note might run. So it is with a judgment and the statute which takes the place of the contract.

    In Klock v. Robinson (supra), Judge COWEN examined the question with his accustomed care and fullness of research, and quotes with approval the saying of the court in Prince v.Lamb (Breese, 299) that "the judgment is a debt, and may be assimilated to a contract to pay a sum certain with interest. Such interest is recoverable as a part of the contract, in the present case, by way of damages for the detention of the debt, the interest being a part of the judgment."

    It would seem to follow that the judgment in the case before us was a contract of debt — an obligation bearing interest until paid, and by necessary implication at the rate fixed by law at the time it was entered, and by the very terms of the statute (Laws of 1879, supra) to be unaffected by its provisions. Suppose the statutes permitting interest to be collected *Page 441 upon the execution had not been passed, and the plaintiff had after 1879 sued over the judgment in this case; can there be any doubt that he would have recovered interest at the rate prescribed when the cause of action — that is, the judgment or debt of record — accrued? It would then be like the case ofTaylor v. Wing, bearing interest until paid, and so entitled to bear the rate legal when the contract was made until it passed into a new judgment. The measure of interest cannot be affected by the mode of securing it. If this were otherwise, the provisions of the act of 1879 would be of no force in this case; they would come within the prohibition of the Constitution, as "a law impairing the obligation of contracts" (Const. U.S., § 10, art. 1; Roberts' Adm'r v. Cocke, etc., 28 Gratt. 207; Story on Const., § 138), for "an obligation is impaired when it is made worse for either party thereto." (Randall v. Sackett, 77 N.Y. 482. ) The judgment, like any other contract or obligation, is thus protected.

    The precise question presented by this appeal has been repeatedly considered by the courts of New Jersey, and it is there held that whether the debt is evidenced by judgment or agreement can make no difference, and that the judgment continues to draw interest according to the law existing at the time of the recovery, although in the mean time the rate of interest is changed by statute. (Cox v. Marlatt, 36 N.J., L.R., 389; 13 Am. Rep 454.) And somewhat analogous to this are the decisions of the late Supreme Court in this State, under section 3 of the act of 1844, supra. It was there declared lawful for any party who shall have obtained a verdict in his favor to tax interest upon such verdict from the time of obtaining the same to the time of perfecting judgment thereon, and it was held to have no application to a verdict rendered before the passage of the act, although judgment was not entered until after. (Bailey v.Mayor, etc., 7 Hill, 146; Bull v. Ketchum, 2 Denio, 188.)Salter v. Utica Black R.R.R. Co. (86 N.Y. 401) is not opposed to these views. In that case interest accrued, not under a contract, but as compensation for an injury, the statute *Page 442 fixing the period of computation, but leaving its estimate to be made at a rate lawful when the principal sum was ascertained.

    It has been argued by the appellant that the saving clause of the statute of 1879 (supra) relates only to contracts whereby one man binds himself to another, and not such as originate by the act and operation of law independently of their agreement. A distinction of this kind may sometimes be taken as in People, exrel. Dusenbury, v. Speir (77 N.Y. 144), where in favor of personal liberty, and in view of all the provisions of the act (Laws of 1831, chap. 300) to "abolish imprisonment for debt and to punish fraudulent debtors," then under examination, it was held that the contract referred to meant one to which the assent of both parties had been in fact given, and not one where such assent was a mere fiction of law; that the first might be the basis of proceedings then in question, and the other not. But however formed, such a contract leads to an obligation, and under a statute which speaks generally of "contracts or obligations made before" a certain time, we are not to ask how any particular obligation was created. There is nothing in the act which calls for such an inquiry. If an obligation exists, it is because it has been made, and whether it was because two persons were of the same mind, or because the law acting upon both bound each to the other, is immaterial. The obligation, whether by contract orquasi contract, is the same, and in either case, in applying the statute now before us, we have only to ascertain the time when the obligation was produced. In the cases cited by the appellant to show that a judgment is not a contract, it is conceded to be a quasi contract, because, as is said in some of them, and implied in all, "it establishes a legal obligation to pay the amount recovered." Therefore these cases, as well as the ones above referred to as showing that a judgment is to all intents and purposes a contract, agree in this, that a judgment is an obligation. Nothing more is necessary to sustain the respondent's position.

    It must be conceded by all that the judgment was an obligation upon which, when entered up, the defendants at once became liable to pay and the plaintiff to demand interest at the *Page 443 rate of seven per cent. By the laws then in force (1 R.S. 771, § 1; Laws of 1844, chap. 324), this rate was to continue while the principal remained unpaid, and I can find no authority which permits us to so abridge or limit the effect of the saving clause in the act of 1879, as to exclude such an obligation from the operation of those laws. It seems to me better to give that clause of the act of 1879 its full and natural meaning, and so carry out the apparent intention of the legislature by applying it to all contracts and obligations of whatever kind, if created or made before the day of its passage, rather than to those only which were made or formed in a particular way. By the last mode we obtain a construction not only against the letter of the statute, but against its intent so far as the intent can be collected out of the words of the act. It is there declared that nothing therein contained "shall be so construed as to in any way affect any contract or obligation made before" its passage. (Laws of 1879, supra.) I can find in these words no ambiguity, therefore no occasion to speculate as to the intention of the legislature in using them, nor can I see how, without adding a new term to the saving clause, we can subject the judgment before us to the operation of the general provisions of the body of the statute. This we are not at liberty to do.

    I am in favor, therefore, of affirming the order appealed from.

    RUGER, Ch. J., and FINCH, J., concur with EARL and ANDREWS, JJ.; MILLER and DANFORTH, JJ., dissent.

    Orders reversed and motion granted.

Document Info

Citation Numbers: 95 N.Y. 428

Judges: EARL, J.

Filed Date: 4/15/1884

Precedential Status: Precedential

Modified Date: 1/12/2023