United States National Bank v. Waddingham

Action on promissory note. Judgment for plaintiff and defendant appeals.

Defendant on August 1, 1905, executed to plaintiff’s assignor a promissory note for $2,000, using for that purpose a blank form as. follows:

“$- Los Angeles, Cal., -, 190—. “On-, 190—, at three o’clock P. M. of that day (no grace) for value received, I promise to pay to the order of-, - dollars, at the Los Angeles National Bank, with interest payable monthly at the rate of-

per cent, per -until paid. [If said interest be not paid when due, it shall be added to the principal, and bear interest at the same rate as the principal, and the whole amount of principal and interest shall thereafter be due and payable at the option of the payee.] Principal and interest payable in Gold Coin of the United States; and should this note not be paid at maturity it shall thereafter bear interest at the rate of two per cent, per month.” (The italics and brackets are inserted for purpose of reference.)

The amount ($2,000), date (August 1, 1905), day when due (November 1, 1905), and the name of the payee (Capíes Bros., Portland, Oregon), were inserted in the proper blanks in the form; the words italicized were erased by running a pen through them, and there was written immediately above them the words, “without interest.”

It is conceded that the portion of the note included in the brackets has no bearing upon the question to be considered upon this appeal, which is: Was it the intention of the parties to said note that the principal should bear interest as provided in the last clause of the note ?

The agreement that the principal shall bear interest at the rate of two per cent per month after maturity is irreconcilable with the promise “without interest until paid.” The words “until paid” are a part of the original form, and the words “without interest” are the only written part of the instrument to be considered in applying the rule of section 1651 (Civ. Code) that the written parts control the printed parts. In seeking to ascertain the intention of the parties from the writing, it will be observed, first, that the maker of the note selected from the various current blank forms of promissory notes one containing a penal clause. If instead of erasing the reference to per cent and interest the maker had inserted some rate of interest, say six per cent, the note would then have read, “with interest payable monthly, at the rate of six per cent, per annum until paid.” It would not, we think, or at least could not legally be said, that the maker intended by the use of the word “paid” to render ineffective the penal clause in the note increasing the interest to two per cent after maturity. If the expression “with interest until paid” should be construed so as to render the penal clause effective, the same rule would render such a construction proper where the expression used was “without interest until paid.” Giv

This construction is also supported by the rule of section 1654 of the Civil Code, that an uncertainty in the language of a contract is to be interpreted most strongly against the party who caused the uncertainty to exist, the promisor being presumed to be such party.

The conclusion of the court that plaintiff was entitled to recover judgment for $2,000, with interest thereon at the rate of two per cent per month from November 1, 1905, was correct, but would have been better expressed had the computation of interest been made and the whole amount of the principle and interest due at the date of the finding stated therein. The judgment as framed apparently entitles the plaintiff to continue to enjoy the benefit of the two per cent per month interest clause until execution on the judgment. This is improper.

The statute provides (Code Civ. Proc., sec. 1035), “the clerk must include in the judgment entered up by him any interest on the Verdict or decision of the court from the time it was rendered or made.” The interest after verdict or decision must be computed at the legal rate upon the aggregate amount of the principle and interest due at the contract rate at the time of the decision or verdict was rendered. (Murdock v. Clark, 88 Cal. 394 , [ 26 Pac. 601 ].) The theory of the law is not that the party recover the particular note or chose in action, but that he recover a fixed and definite sum as damages for the nonperformance of the contract, and in cases of failure to pay money due, the true measure of damage is the amount of money owing and the interest that was agreed upon. The amount of the judgment being ascertained, the statute steps in and regulates the rate at which it shall bear interest. (Guy v. Franklin, 5 Cal. 417 .) The rule is not affected by the judgment being formulated by the court instead of the clerk. (Barnhart v. Edwards, 128 Cal. 575 , [ 61 Pac. 176 ].)

That there may be no uncertainty in this respect the judgment should be modified so as to state the total sum of principal and interest due at the date of the rendition of the decision (findings) in accordance with the foregoing opinion,

It is therefore ordered that the superior court modify said judgment by striking out the words and figures “two thousand (2,000) dollars, together with interest thereon from November 1,1905, at the rate of two (2) per cent a month,” and inserting in lieu thereof the words and figures “two thousand three hundred and forty-five and 33/100 ($2,345.33) dollars”; and, when said judgment is so modified, it is affirmed.

Allen, P. J., and Shaw, J., concurred.