Family Interest

In the Past

Important Note: this is an extension/continuation on the entry on INTEREST FOR MONEY in this legal reference. A general legacy, when the time of payment is not named by the testator, is not payable till the end of one year after testator’s death, at which time the interest commences to run. 1 Ves. jr. 366; 1 Sch. & Lef. 10; 5 Binn. 475; 13 Ves. 333; 1 Ves. 308 3 Ves. & Bea. 183. But where only the interest is given, no payment will be due till the end of the second year, when the interest will begin to run. 7 Ves. 89.

Developments

Where a general legacy is given and the time of payment is named by the testator, interest is not allowed before the arrival of the appointed period of payment and that despite the legacies are vested. Prec. in Chan. 837. But when that period arrives, the legatee will be entitled, although the legacy be charged upon a dry reversion. 2 Atk. 108. See also Daniel’s Rep. in Exch. 84; 3 Atk. 101; 3 Ves. 10; 4 Ves. 1; 4 Bro. C. C. 149, n.; S. C. 1 Cox, l33. Where a legacy is given payable at a future day with interest and the legatee dies before it becomes payable, the arrears of the interest up to the time of his death must be paid to his personal representatives. McClel. Exch. Rep. 141. And a bequest of a sum to be paid annually for life bears interest from the death of testator. 5 Binn. 475.

Details

Where the legatee is a child of the testator or one towards whom he has placed himself in loco parentis, the legacy bears interest from the testator’s death, whether it be particular or residuary; vested, but payable It a future time or contingent, if the child have no maintenance. In that case the court will do what, in common presumption, the father would have done, give necessaries for the child. 2 P. Wms. 31; 3 Ves. 287; Id. 13; Bac. Abr. Legacies, K 3; Fonb. Eq. 431, n. j.; 1 Eq. Cas. Ab. 301, pl. 3; 3 Atk. 432; 1 Dick. Rep. 310; 2 Bro. C. C. 59; 2 Rand. Rep. 409. if a child in ventre sa mire, at the time of the father’s decease, interest is allowed only from its birth. 2 Cox, 425. Where maintenance or interest is given by the will and the rate specified, the legatee will not, in general, be entitled to claim more than the maintenance or rate specifled. 3 Atk. 697, 716 3 Ves. 286, n. and see further, as to interest in cases of legacies to children, 15 Ves. 363; 1 Bro. C. C, 267: 4 Madd. R. 275; 1 Swanst. 553; 1 P. Wms. 783; 1 Vern. 251; 3 Vesey & Beames, 183.

Other Aspects

Interest is not allowed by way of maintenance to any other person than the legitimate children of the testator; 3 Ves. 10; 4 Ves. 1; unless the testator has put himself in loco parentis. 1. Sch. & Lef. 5, 6. A wife; 15 Ves. 301; a niece; 3 Ves. 10; a grandchild; 15 Ves. 301; 6 Ves. 546; 12 Ves. 3; 1 Cox, 133; are therefore, not entitled to interest by way of maintenance. Nor is a legitimate child entitled to such interest if he have a maintenance; although it may be less than the amount of the interest of the legacy. 1 Scho. & Lef. 5: 3 Ves. 17. Sed vide 4 John. Ch. Rep. 103; 2 Rop. Leg. 202.

More Information

Where an intention though not expressed is fairly inferable from the will, interest will be allowed. 1 Swanst. 561, note; Coop. 143.

Other Issues

Interest is not allowed for maintenance, although given by immediate bequest for maintenance, if the parent of the legatee, who is under moral obligation to give for him, be of enough ability, so that the interest will accumulate for the child’s benefit, until the main becomes payable. 3 Atk. 399; 3 Bro. C. C. 416; 1 Bro. C. C. 386; 3 Bro. C. C. 60. But to this rule there are some exceptions. 3 Ves. 730; 4 Bro. C. C. 223; 4 Madd. 275, 289; 4 Ves. 498.

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Where a fund, particular or residuary, is given upon a contingency, the intermediate interest undisposed of, that is to say, the intermediate interest between the testator’s death, if there be no earlier legatee for life, or, if there be, between the death of the earlier taker and the happening of the contingency, will sink into the residue for the benefit of the next of kin or executor of the testator, if not bequeathed by him; but if not disposed of, for the benefit of his residuary legatee. 1 Bro. C. C. 57; 4 Bro. C. C. 114; Meriv. 384; 2 Atk. 329; Forr. 145; 2 Rop. Leg. 224.

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Where a legacy is given by immediate bequest whether such legacy be particular or residuary and there is a condition to divest it upon the death of the legatee under twenty-one or upon the happening of some other event, with a limitation over and the legatee dies before twenty-one or before such other event happens, which however does take place, yet as the legacy was payable at the end, of a year after the testator’s death, the legatee’s representatives and not the legatee over, will be entitled to the interest which accrued during the legatee’s life, until the happening of the event which was to divest the legacy. 1 P. Wms. 500; 2 P. Wms. 504; Ambl. 448; 5 Ves. 335; Id. 522.

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Where a residue is given, so as to be vested but not payable at the end of the year from the testator’s death, but upon the legatee’s attaining twenty-one or upon any other contingency and with a bequest over divesting the legacy, upon the legatee’s dying under age or upon the happening of the contingency, then the legatee’s representatives in the former case and the legatee himself in the latter, must be entitled to the interest that became due, during the legatee’s life or until the happening of the contingency; 2 P. Wms. 419; 1 Bro. C. C. 81; Id. 335; 3 Meriv. 335.

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Where a residue of personal estate is given, generally, to one for life with stayder over and no mention is made by the testator respecting the interest, nor any intention to the contrary to be collected from the will, the rule appears to be now settled that the person taking for life is entitled to interest from the death of the testator, on such part of the residue, bearing interest, as is not necessary for, the payment of debts. And it is immaterial whether the residue is only given generally or directely to be laid out, with all convenient speed, in funds or securities or to be laid out in lands. See 6 Ves. 520; 9 Ves. 549, 553; 2 Rop. Leg. 234; 9 Ves. 89.

But where a residue is directed to be laid out in land, to be settled on one for life, with stayder over and the testator directs the interest to accumulate in the meantime, until the money is laid out in lands or or invested on security, the accumulation must cease at the end of one year from the testator’s death and from that period. the tenant (see more about this popular legal topic in the U.S. encyclopedia) for life must be to the interest. 6 Ves. 520; 7 Ves. 95; 6 Ves. 528; Id. 529; 2 Sim. & Stu. 396.

Where no time of payment is mentioned by the testator, annuities are considered as commencing from the death of the testator; and consequently, the first payment will be due at the end of the year from that event if, therefore, it be not made then, interest, in those cases where it is allowed at all, must be computed from that period. 2 Rop. Leg. 249; 5 Binn. 475. See 6 Mass. 37; 1 Hare & Wall. Sel. Dec. 356.

As to the quantum or amount of interest allowed. 1. During what time. 2. Simple interest. 3. Compound interest. 4. In what cases given beyond the penalty of a bond. 5. When foreign interest is allowed. First. During what time. 1. In actions for money had and received, interest is allowed, in Massachusetts (see more about this State laws here) , from the time of serving the writ. 1 Mass. 436. On debts payable on demand, interest is payable only from the demand. Addis. 137. See 12 Mass. 4. The words “with interest for the same,” bear interest from date. Addis. 323-4; 1 Stark. N. P. C. 452; Id. 507.

The mere circumstance of war existing between two nations, is not a enough reason for abating interest on debts due by the subjects of one belligerent to another. 1 Peters’ C. C. R. 524. But a prohibition of all intercourse with an enemy, during war, givees a sound reason for the abatement of interest until the return of peace. Id. See,, on this subject, 2 Dall. 132; 2 Dall. 102; 4 Dall. 286; 1 Wash. 172; 1 Call 194; 3 Wash. C. C. R. 396; 8 Sergeant & Rawle’s Pennsylvania Reports (Reports of Cases adjudged in the Supreme Court of Pennsylvania, by Thomas Sergeant and William Rawle), 103; Post. 7. Secondly. Simple interest. 1. Interest upon interest is not allowed except in special cases 1 Eq. Cas. Ab. 287; Fonbl. Eq. b. 1, c. 4, note a; U. S. Dig. tit. Accounts, IV.; and the uniform current of decisions is against it, as being a hard, oppressive exaction and tending to usury. 1 Johns. Ch. R. 14; Cam. & Norw. Rep. 361. By the civil law, interest could not be demanded beyond the main sum and payments exceeding that amount, were applied to the extinguishment of the main. Ridley’s View of the Civil, &c. Law, 84; Authentics, 9th Coll.

Thirdly. Compound interest. 1. Where a partner has overdrawn the part nership funds and refuses, when called upon to account, to show the profits, recourse would be had to compound interest as a substitute for the profits he might reasonably be supposed to have made. 2 Johns. Ch. R. 213.

When executors, administrators or trustees, convert the trust money to their own use or employ it in business or trade (see more about this popular legal topic in the U.S. encyclopedia), they are chargeable with compound interest. 1 Johns. Ch. R. 620.

In an action to recover the annual interest due on a promissory note, interest will be allowed on each year’s interest until paid. 2 Mass. 568; 8 Mass. 455. See, as to charging compound interest, the following cases: 1 Johns. Ch. Rep. 550; Cam. & Norw. 361; 1 Binn. 165; 4 Yeates’s Reports, Pennsylvania’ 220; 1 Hen. & Munf. 4; 1 Vin. Abr. 457, tit. Interest, C; Comyn’s Digest (A digest of the laws of England, 1822) Chancery, 3 S 3; 3 Hen. & Munf. 89; 1 Hare & Wall. Sel. Dec. 371. An infant’s contract to pay interest on interest, after it has accrued, will be binding upon him, when it is for his benefit. 1 Eq. Cas. Ab. 286; 1 Atk. 489; 3 Atk. 613. Newl. Contr. 2.

Fourthly. When given beyond the Penalty of a bond. 1. It is a general rule that the penalty of a bond limits the amount of the recovery. 2 T. R. 388. But, in some cases, the interest is recoverable beyond the amount of the penalty. The recovery depends on principles of law and not on the arbitrary discretion of a jury. 3 Caines’ Rep. 49.

The exceptions are, where the bond is to account for moneys to be received 2 T. R. 388; where the plaintiff is kept out of his money by writs of error; 2 Burr. 1094; 2 Evans’ Poth. 101-2 or delayed by injunction; 1 Vern. 349; 16 Vin. Abr. 303; if the recovery of the debt be delayed by the obligor; 6 Ves. 92; 1 Vern. 349; Show. P. C. 15; if extraordinary emoluments are derived from holding the money; 2 Bro. P. C. 251; or the bond is taken only as a collateral security; 2 Bro. P. C. 333; or the action be on a judgment recovered on a bond. 1 East, R. 486. See, also, 4 Day’s Cas. 30; 3 Caines’ R. 49; 1 Taunt. 218; 1 Mass. 308; Comyn’s Digest (A digest of the laws of England, 1822) Chancery, 3 S 2; Vin. Abr. Interest, E.

But these exceptions do not get in the administration of the debtor’s assets, where his other creditors might be injured by allowing the bond to be rated beyond the penalty. 5 Ves. 329; See Vin. Abr. Interest, C, pl. 5.

Fifthly. When foreign interest is allowed. 1. The rate of interest allowed by law where the contract is made, may, in general, be recovered; hence, where a note was given in China, payable eighteen months after date, without any stipulation respecting interest, the court allowed the Chinese interest of one per cent. per mouth from the expiration of the eighteen months. 1 Wash. C. C. R. 253.

If a citizen of another state advance money there, for the benefit of a citizen of the state of Massachusetts (see more about this State laws here) , which the latter is liable to repay, the former must recover interest, at the rate established by the laws of the place where he lives. 12 Mass. 4. See, further, 1 Eq. Cas. Ab. 289; 1 P. Wms. 395; 2 Bro. C. C. 3; 14 Vin. Abr. 460, tit. Interest, F.

How computed. 1. In casting interest on notes, bonds, &c., upon which partial payments have been made, every payment is to be first applied to keep down the interest, but the interest is: never allowed to form a part of the main so as to carry interest. 17 Mass. R. 417; 1 Dall. 378. When a partial payment exceeds the amount of interest due when it is made, it is correct to compute the interest to the time of the first, payment, add it to the main, subtract the payment, cast interest on the stayder to the time of the second payment, add it to the stayder and subtract the second payment and in like way from one payment to another, until the time of judgment. 1 Pick. 194; 4 Hen. & Munf. 431; 8 Sergeant & Rawle’s Pennsylvania Reports (Reports of Cases adjudged in the Supreme Court of Pennsylvania, by Thomas Sergeant and William Rawle)’ 458; 2 Wash. C. C. R. 167. See 3 Wash. C. C. R. 350; Id. 396.

Where a partial payment is made before the debt is due, it cannot be apportioned, part to the debt and part to the interest. As, if there be a bond for one hundred dollars, payable in one year, and, at the expiration of six months fifty dollars be paid in. This payment must not be apportioned part to the main and part to the interest, but at the end of the year, interest must be charged on the whole sum and the obligor must receive credit for the interest of fifty dollars for six mouths. 1 Dall. 124.

When interest will be barred. 1. When the money due is tendered to the person entitled to it and he refuses to receive it, the interest ceases. 3 Campb. 296. Vide 8 East, 168; 3 Binn. 295. Where the plaintiff was absent in foreign parts, beyond seas, evidence of that fact may be given in evidence to the jury on the plea of payment, in order to extinguish the interest during such absence. 1 Call, 133. But see 9 Sergeant & Rawle’s Pennsylvania Reports (Reports of Cases adjudged in the Supreme Court of Pennsylvania, by Thomas Sergeant and William Rawle), 263.

Whenever the law prohibits the payment of the main, interest, during the prohibition, is not demandable. 2 Dall. 102; 1 Peters’ C. C. R. 524. See, also, 2 Dall. 132; 4 Dall. 286.

If the plaintiff has accepted the main, he cannot recover the interest in a separate action. 1 Esp. N. P. C. 110; 3 Johns. 229. See 14 Wend. 116. Rate of interest allowed by law in the different states. Alabama (see more about this State laws here). Eight per centum per annum is allowed. Notes not exceeding one dollar bear interest at the rate of one hundred per centum per annum. Some of the bank charters prohibit certain banks from charging more than six per cent. upon bills of exchange and notes negotiable at the bank, not having more than six months to run; and, over six and under nine, not more than seven per cent. and over nine months, to charge not more than eight per cent. Aikin’s Dig. 236. ArKansas (see more about this State laws here). Six per centum per annum is the legal rate of interest; but the parties may agree in writing for the payment of interest not exceeding ten per centum per annum, on money due and to become due on any contract, whether under seal or not. Rev. St. c. 80, s. 1, 2. Contracts where a greater amount is reserved are declared to be void. Id. s. 7. But this provision will not affect an innocent endorsee for a valuable consideration. Id. s. 8.

Connecticut (see more about this State laws here). Six per centum is the amount allowed by law.

Delaware (see more about this State laws here). The legal amount of interest allowed in this state is at the rate of six per centum per annum. Laws of Del. 314.

Georgia (see more about this State laws here). Eight per centum per annum interest is allowed on all liquidated demands. 1 Laws of Geo. 270; 4 Id. 488; Prince’s Dig. 294, 295.

Illinois (see more about this State laws here). Six per centum per annum is the legal interest allowed when there is no contract, but by agreenment the parties may fix a greater rate. 3 Griff. L. Reg. 423.

Indiana (see more about this State laws here). Six per centum per annum is the rate fixed by law, except in Union county. On the following funds loaned out by the state, namely, Sinking, Surplus, Revenue, Saline and College funds, seven per cent.; on the Common School Fund, eight per cent. Act of January 31, 1842.

Kentucky (see more about this State laws here). Six per centum per annum is allowed by law. There is no provision in favor of any kind of loan. See Sessions Acts, 1818, p. 707. Louisiana (see more about this State laws here). The Civil Code gives, art. 2895, as follows: Interest is either legal or conventional. Legal interest is fixed at the following, rates, to wit: at five per cent. on all sums which are the object of a judicial demand, whence this is called judicial interest; and Rums discounted by banks, at the rate established by their charters. The amount of conventional interest cannot exceed ten per cent. The same must be fixed in writing and the testimonial proof of it is not admitted. See, also, art. 1930 to 1939.

Maine (see more about this State laws here). Six per centum per annum is the legal interest and any contract for more is voidable as to the excess, except if letting cattle and other usages of a like nature, in practice among farmers or maritime contracts among merchants, as bottomry, insurance (see more about this popular legal topic in the U.S. encyclopedia) or course of exchange, as has been until now practiced. Rev. St. 4, c. 69, 1, 4.

Maryland (see more about this State laws here). Six per centum per annum, is the amount limited by law, in all cases.

Massachusetts (see more about this State laws here). The interest of money must continue to be at the rate of dollars and no more, upon one hundred dollars for a year; and at the same rate for a greater or less sum and for a longer or shorter time. Rev. Stat. c. 35, s. 1. Michigan (see more about this State laws here). Seven per centum is the legal rate of interest; but on stipulation in writing, interest is allowed to any amount not exceeding ten per cent. on loans of money, but only on such loans. Rev. St. 160, 161. Mississippi. The legal interest is six per centum; but on all bonds, notes or contracts in writing, signed by the debtor for the bona fide loan of money, expressing there the rate of interest fairly agreed on between the parties for the use of money so loaned, eight per cent. interest is allowed. Laws of 1842. Missouri (see more about this State laws here). When no contract is made as to interest, six per centum per annum is allowed. But the parties may agree to pay any higher rate, not exceeding ten per cent. Rev. Code, 1, p. 383.

New Hampshire (see more about this State laws here). No person must take interest for the loan of money, wares or goods or any other personal estate any, above the value of six pounds for the use or forbearance of one hundred pounds for a year and after that rate for a greater or lesser sum or for a longer or shorter time. Act of February 12, 1791, s. 1. gived, that nothing in this act must extend to the letting of cattle or other usages of a like nature, in practice among farmers or to maritime contracts among merchants as bottomry, insurance (see more about this popular legal topic in the U.S. encyclopedia) or course of exchange, as hath been until now used. Id. s. 2.

New Jersey (see more about this State laws here). Six per centum per annum is the interest allowed by law for the loan of money, without any exception. Statute of December 5, 1823, Harr. Comp. 45.

New York (see more about this State laws here). The rate is fixed at seven per centum per annum. Rev. Stat. part 2, c. 4, t. 3, s. 1. Moneyed institutions, depending on the safety-fund act, are entitled to receive the legal interest established or which may tafter this be established by the laws of this state, on all loans made by them or notes or bills, by them severally discounted or received in the ordinary course of business; but on all notes or bills by them discounted or received in the ordinary course of business, which must be matured in sixty-three days from the time of such discount, the said moneyed corporations must not take or receive more than at the rate of six per centum per annum before. 2 Rev. Stat. p. 612. North Carolina (see more about this State laws here). Six per centum per annum is the interest allowed by law. The banks are allowed to take the interest off at the time of making a discount.

Ohio (see more about this State laws here). The legal rate of interest on all contracts, judgments or decrees in chancery, is six per centum. per annum and no more. 29 Ohio (see more about this State laws here) Stat. 451; Swan’s Coll. Laws, 465. A contract to pay a higher rate is good for main and interest and void for the excess. Banks are bound to pay twelve per cent. interest on all their notes during a suspension of specie payment. 37 Acts 30, Act of February 25, 183,9, Swan’s Coll. 129. Pennsylvania (see more about this State laws here). Interest is allowed at the rate of six per centum per annum for the loan or use of money or other commodities. Act of March 2, 1723. And lawful interest is allowed on judgments. Act of 1700, 1 Smith’s L. of Penn. 12. See 6 Watts, 53; 12 S. & R. 47; 13 S. & R. 221; 4 Whart. 221; 6 Binn. 435; 1 Dall. 378; 1 Dall. 407; 2 Dall. 92; 1 S. & R. 176; 1 Binn. 488; 2 Pet. 538; 8 Wheat. 355.

Rhode Island (see more about this State laws here). Six per centum is allowed for interest on loans of money. 3 Griff. Law Reg. 116.

South Carolina (see more about this State laws here). Seven per centum per annum or at that rate, is allowed for interest. 4 Cooper’s Stat. of S. C. 364. When more is reserved, the amount lent and interest may be recovered. 6 Id. 409.

Tennessee (see more about this State laws here). The interest allowed by law is six per centum per annum. When more is charged it is not recoverable, but the main and legal interest may be recovered. Act of 1835, c. 50, Car. & Nich. Comp. 406, 407.

Vermont (see more about this State laws here). Six per centum per annum is the legal interest. If more be charged and paid, it may be recovered back in an action of assumpsit. But these provisions do not extend “to the letting of cattle and other, usages of a like nature among farmers or maritime contracts, bottomry or course of exchange, as has been usual.” Rev. St. c. 72, ss. 3, 4, 5.

Virginia (see more about this State laws here). Interest is allowed at the rate of six per centum per annum. Act of Nov. 22 1796, 1 Rev. Code. ch. 209. Vide 1 Hare & Wall. Sel. Dec. 344, 373.

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Notes and References

1. Partialy, this information about interests is based on the Bouvier´s Law Dictionary, 1848 edition. There is a list of terms of the Bouvier´s Law Dictionary, including interests.

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