Majority
p. 26Leopold Zimmermann, as Sole Surviving Executor, etc., of David Klauber, Deceased, Appellant, v. Albina Klauber and Bertha Abeles, Individually and as Executrix, etc., of Albert Klauber, Deceased, Respondents, Impleaded with Others. First Department, June 10, 1910.
Headnote
Mortgage — interest clause construed.Where, a mortgage provides for interest at four percent per annum “ until the aforesaid principal sum shall he paid” that rate prevails up to the date'of the entry of judgment. ’
'• Appeal by the plaintiff, Leopold Zimmermann, as sole surviving executor, etc., from so much of an order of the Supreme Court, made at the. New York Special Term and entered in the office óf ■ the clerk of the county of New York on the'15th.day of April, 1910, as directs that the'interest be computed upon the mortgage herein at the rate of four per centum per annum from January 2, , 1909, an'd n'o.t at the legal or statutory rate. . -
Order affirmed, with ten dollars.costs and disbursements, on opinion of the court below. '
Alfred Epstein, for the appellant.
Arthur J. Mg Olure, for the respondents.
Present — Ingbaham, P. J., McLaughlin, Laughlin, Scótt and Dowling, JJ.
The following is the opinion delivered at'Special'Term:
Motion for judgment upon the pleadings.[1] The action.is for foreclosure of a mortgage in which the rate of interest, was stipulated at four per centum per annum “ until the aforesaid principal sum shalhbe paid.” . By the terms of. the mortgage the principal became due on January 2, 1905. The complaint alleges the payment, of interestat the. rate of four.per centum down to the 2d day of January, 1909, and demands judgment for ,$20,000, the principal sum, with
* See Code Civ. Proc. § 547.— [Rep.
p. 27
interest; thereon from January 2, 1905, to January 2, 1909, at' the rate of-two per centum,per annum, and interest at the rate of six per centum from Jahuáry 2,1909, The answer presents no issuable question of fact, and the only question that arises upon the plead: ings is whether plaintiff is entitled to interest at the rate, of six per centum from January 2, 1905, the due date of the mortgage. The authorities in this State touching the point under discussion might upon a superficial reading indicate that the plaintiff’s contention is correct, but an analysis of the cases establishes to my mind a contrary conclusion. The general rule is summed up in the' recent case of Pryor v. City of Buffalo ( 197 N. Y. 123 , 143) as follows: “ That the rate of interest is fixed by the contract to pay money up to the time of default, but after breach the fate of interest is determined, not by the contract, but by statute.” The court" cites the leading cases -bearing upon this subject, among others Ferris v. Hard ( 135 N. Y. 354 ), which was the case of a foreclosure of a mortgage which provided for the payment of the principal in form of annual installments, “and the sums remaining from time to time unpaid were to bear interest at 7 per cent.” The court held that if an installment were not paid when due , the contract was violated, and interest after that upon such installment ciould only be • recovered" as damages and at the rate of interest authorized by law, citing Bennett v. Bates ( 94 N. Y. 354 ) and O'Brien v. Young (95 id. 428 ). In O'Brien v. Young (supra, at p. 430) it is stated: “ But when the contract provides that the interest shall be at a specified rate until the principal shall he paid, then the contract rate governs until payment of the principal, ox until the contract is merged in a judgment.” The opinion in Ferris v. Hard. (supra at p. 365 ) expressly distinguishes the case then before the court from one where the' agreement is “to pay interest-on a principal -s.um at 7 per cent, until the principal sum is paid, such as the case vof Taylor v. Wing ( 84 N. Y. 471 , 477).” The rule deducible from these authorities seems to be that where the parties have stipulated for the payment of interest at a fixed rate “ until the principal -sum is paid,” that rate will , prevail up to the date of entry of judgment, but where a rate of interest is'' provided for the payment of moneys without any such limitation as above quoted-the. rate is determined as fixed by the contract up to the time of
p. 28
default and thereafter at the legal rate fixed by statute. It follows, therefore, .that plaintiff is entitled to a decree of foreclosure for non-payment of the principal sum of $20,000, with interest thereon at the rate of four per cent. .Judgment will accordingly be directed.
Cases cited
- Pryor v. City of Buffalo 197 N. Y. 123 at 143 p. 27
- Ferris v. Hard 135 N. Y. 354 p. 27
- Bennett v. Bates 94 N. Y. 354 p. 27
- Taylor v. Wing 84 N. Y. 471 at 477 p. 27