Opinion
(November Term, 1801.)
1. When notes are received by a creditor as a payment, the debtor should be credited for them from the receipt, to be applied in the first place to the interest, and then to the principal as other payments; otherwise when he makes them his own only by delay.
2. It is not a legal tender to say "Here I am, ready"; the tenderer must have the money ready also.
CASE for money due by two notes of hand payable January, 1784. Payments were made in part by two notes in 1783, also there were several other payments, and in 1785 a payment was made to the amount of the balance of the principal, and an offer was then made to pay any balance which might be then due, if the plaintiff would agree to credit to the amount of the notes, which he refused. It was stated by counsel that a calculation had been made by agreement, and that on 20 May, 1785, when Mallett offered to close the account, $320.60 were due as interest and not as principal, and to calculate interest on that sum would be giving interest on interest. To support this position he stated that the mode of calculating interest at the time this contract was entered into, and during the whole transaction, till May, 1785, was to find the interest on the principal sum till the time of settlement, and the interest on the several payments from the day on which they were made to the time of settlement also, and then to strike the balance. Pursuing this method in the present case, as the several payments made amounted to more than the principal, the balance due on 20 May, 1785, must (152) certainly be considered as interest merely. And although the rule for calculating interest has been since altered, and that what is here contended for was erroneous in principle, yet as it was the mode in use when the parties contracted and paid, it ought now to be adhered to.
The payment ought, in the first place, to be applied to the discharge of the interest accrued, and if a balance of payments remains, then to deduct it from the principal. If the plaintiff received the notes as payment, the defendant should be credited from the day of the receipt; otherwise it is if he only made them his by delay and keeping them in his possession. The defendant may stop interest when he pleases by tendering the principal and interest; but it is not a legal tender to say, "Here I am, ready"; he must have the money ready also.
NOTE. — Upon the question of interest, see Bunn v. Moore, 2 N.C. 279; Yancy v. Mutter, 1 N.C.; Peebles v. Gee, 12 N.C. 341. Upon the other point, see Mills v. Huggins, 14 N.C. 58.
Cited: Overby v. B. L. Assn., 81 N.C. 61, [ 81 N.C. 56].