
    Kissam and Hazard, Executors of Hazard, Deceased, v. Burrall.
    Error from tbe Court of Common Pleas. Tbe plaintiffs brought their action of debt, counting upon a bond for £1,950 current money of New York, given by tbe defendant to tbe deceased, bearing date tbe 10th day of June, A. D. 17 61.
    Issue was joined, on a plea of full payment; and tbe defendant, in support of tbe issue, exhibited evidence of sundry payments, to tbe amount of £2,605 11s. 8d. made between tbe 9th day of December, 1761, and December, 1783: Also, ten accounts, from some of tbe principal merchants in New York, and elsewhere, in which tbe interest was computed and settled in tbe following manner, viz.— First casting tbe interest on tbe bond or account to tbe time of settlement, add tbe principal and interest together — then computing tbe interest on tbe several payments, from tbe time they were made to tbe time of settlement, and deduct tbe aggregate of payments and interest from tbe sum of debt and interest.— Tbe merchants from whom these accounts came, testified that tbe interest was computed agreeably to tbe custom of merchants in New York.— Tbe defendant also produced tbe testimony of sundry reputable merchants in tbe country, to tbe same effect, whose trade bad been with tbe merchants in New York; and further, that they knew no difference in compnt-ing interest on bonds and accounts.— Tbe defendant produced an account settled in tbe year 1773, with one of tbe plaintiffs, in which interest was computed in tbe manner above mentioned:— Also- tbe testimony of Jonathan Burrall, that previous to tbe late war, be saw Hazard several times with tbe defendant; and in a conversation beard bim tell tbe defendant, tbat be bad made several computations on tbe bond now in suit, but none of tliem suited bim: Tbat be found little or nothing due, and tbat tbe defendant need not give bimself any trouble about it: Tbat tbe defendant tben proposed to settle tbe bond, according to tbe rule of computation practiced by tbe Superior Court; and tbat Hazard agreed to tbe proposal, acknowledging it to be fair:— Tbat tbe defendant afterwards applied to tbe clerk of tbe Superior Court for tbe rule by wbicb be made a computation, and found there was about £18 York money, due, and be after-wards paid it: — Tbat about eight years after this conversation and agreement, Mr. Hazard presented tbe defendant a statement of tbe bond, by wbicb a balance of about £1,200 appeared to be due. Tbe defendant objected; but Mr. Hazard replied, tbat tbe other heirs insisted tbat tbe interest should be computed in tbat manner.
    Tbe defendant further exhibited a certificate from Q-eorge Wyllys, Esq. clerk of tbe Court of Common Pleas, in tbe county of Hartford, tbat tbe general mode of casting interest on bonds or notes, whereon judgment has been rendered by tbe Court of Common Pleas, in tbe county of Hartford, for thirty years last past, bad been, to compute tbe interest of tbe principal sum to tbe first day of tbe sitting of tbe court at wbicb tbe action was commenced; and when payments bad been made at different periods of time, to cast tbe interest on tbe several payments, from tbe time they were made to tbe first day of tbe court; add tbe payments, with their interest, and subtract tbe whole from tbe principal sum and its interest. — Also, a certificate from George Pitkin, Esq. clerk of tbe Superior Court, that from, the year 1757, until about the year 1774 or 1775, the rule of computing interest was, to cast the interest from the date of the note or bond to the time of the first payment, place it in a side column, then subtract the payment from the principal, and cast the interest on the remaining principal to the next payment, and so on to the time of judgment; then add the interest in the side column to what remains.
    Example.
    Bond for £150, 'dated 1st June, 1780 .£150 1782, June 1st, payment 80 " £120 1784, June 1st, payment 30 0 0 0 0 0 I Side column. 0 I Two years’ interest.£18 -Y Ditto.. 14 0 16 *16 0 0 *0
    1785, June 1st, judgment rendered. £90 Interest from June, 1784, to June, 1785.... 5 Interest from side column... 82 0 0 8 0 16 0 £128 4 0
    That from the year 1774 or 1775, the court ordered the interest to be computed from the date of the note or bond, to the time of the judgment; and the interest upon the payments, from the time they were made, in like manner, and rendered judgment for the balance.— So was the practice till the session of court in New London county, March Term, 1784, when the court established a different rule, and ordered the same to 'be entered on record.- — ■ (See page 49.)
    The plaintiffs demurred to this evidence — and the Court of Common Pleas gave judgment for the defendant.— The only question made in the cause, respected the mode of computing interest; and tbe exception taken to the judgment of the Court of Common Pleas, was, that the decision directly contradicted the rule established by the Superior Court, in the year 1784, for computing interest on bonds where payments have been made.
    The cause was argued in this court, by Mr. Tracy and Mr. Reeve, for the plaintiffs in error; and by Mr. Strong and Mr. Adams, for the defendant.
    Mr. Tracy.— The ground of controversy in this case, is — whether the rule for computing interest, adopted by the Superior Court in 1784, or those in use before that time, shall be the basis of this adjudication; for if the existing rule of the Superior Court be adopted, a large sum is due to the plaintiffs; but computing by the previous rules, a considerable sum more than the debt has been paid by the defendant.
    This being the matter in dispute, it occurs to the mind, with force, that the rule or mode of computing interest, which will give the plaintiffs the lawful interest, ought to be adopted.' — 'Upon the strictest attention to the rule adopted in 17 84, it will be found, that all calculations made upon that rule will produce the lawful interest simply, and never exceed that, by accumulated or compound interest•. But by a computation on any one of the principles urged by the defendant, the bond in suit will not be productive of lawful interest, and many years of its existence, not three per cent.— These different modes of computing interest, then, ought to be considered as so many attempts to come at a just mode of giving a holder of a bond on interest his due; and if at one period or another, the attempt failed of the wished for success, it could form no rule, until a just mode was hit upon, and then an adoption of tbat rule could not be called, with propriety, a new rule; because, it was always tbe rule meant to be practiced, and those modes of tbe Superior Court, now called tbe ancient rules of casting interest, bad no more force ever, and certainly cannot now be supposed to bave bad any more force, than any mistaken idea whatever; and as well might tbe idea, tbat it is contrary to tbe word of God to allow any interest to be taken on tbe loan of money, be offered as a rule, wholly to supersede tbe statute, which expressly allows interest to be taken, as any other mode or rule of computing interest; which does not, in fact, give tbe plaintiff his legal'ratio of interest.— Tbe statute allowing a certain rate of interest to be received by a creditor from a debtor, bad all its binding force in operation upon tbe defendant, and no evasion can prevent tbe benefits of tbat statute applying to tbe plaintiffs in this case. — Why were tbe adjudications of this honorable court uniformly against substantiating tenders of continental money for tbe payment of bard money contracts? — Did not all men generally believe, when those tenders were made, tbat continental money would be made good, as it was then termed? — The manifest reason was, tbat tbe idea of paying debts by those tenders was unjust, and a mistake; because, in fact, it did not make payment, and did not fulfill tbe contract; yet tbe party tendering it might be honest, and might verily believe tbe money would be made good, which would bave really, bad it happened, discharged tbe promise and contract be bad made.— In this case, tbe defendant might suppose be bad fulfilled bis contract; but be calculated upon mistaken ground; and when a rule of calculation is discovered, which will clearly fulfill bis contract, and bis mistake is detected, it is immoral to pretend be ought not to fulfill bis promise, because bis creditor was mistaken too — and so was tbe Superior Court for a number of years.
    Tbe demurrer to tbe evidence in tbis case, admits no more tban tbis- — Many persons bave mistook tbe right way of computing interest; but can a mistaken payment, or receipt of money, cancel an obligation? If not, can a mistake in casting interest cancel a written engagement in sucb manner as that an express statute shall lose its operation?
    Mr. Strong, for tbe defendant.—
    Tbe only question is, whether, upon tbe face of tbe record there appears to bave been full payment made.— The determination of tbis question will depend upon tbe application of tbe payments, whether to tbe principal or interest of tbe bond. No express application was made by tbe parties at tbe time of payment; but it remains now to be done, agreeably to tbe rules and usages by which similar transactions were then governed. There is no presumption that tbe parties contemplated any other rule or usage tban sucb as at that time existed*— Tbe contract was made, and every transaction consequent upon it, took place antecedent to tbe rule established by tbis court in tbe year 1784; that rule, therefore, cannot affect tbe case. So are tbe principles laid down by tbis court, in tbe case of ILinsdale v. Llinsdale, appeal from probate. It was there adjudged, that tbe estate should descend according as tbe law stood when tbe descent was cast.
    Tbe lawful rate of interest in tbis state, is six per cent. Why then do the courts allow seven per cent, upon contracts made in tbe state of New York? ■ — ■ It is because that is tbe lawful rate of interest there, and tbe fate of interest which tbe contracting parties are presumed to bave bad in contemplation, at tbe time of tbe contract, and tbeir intention is to be pursued.— Tbe same presumption arises, respecting tbe mode of computing tbe interest; and tbe court will regard tbe one as well as tbe other.— It is clear, from tbe evidence stated, tbat at tbe time tbe bond was given, and tbe payments made, tbe practice, both in tbe state of New York and in tbis state, was, to compute interest in tbe mode contended for by tbe defendant: — In tbe case of Phenix v. Prindle, ante 207, it was adjudged, tbat tbe contract should be governed by tbe custom of tbe merchants where it was made;— so interest was recovered contrary to the laws of tbis state, in an action of book debt, contracted .in New York, and on tbe ground, tbat tbe presumption was, tbe parties intended it should be paid.
    Mr. Adams, on tbe same side.
    It will be agreed, tbat by either of tbe rules for computing interest, in practice by tbis court, antecedent to tbe year 1784, tbe bond is fully» paid. Whether much or little be overpaid, is out of tbe case. -Tbat contracts are to be governed by tbe laws in existence at tbe time' and place where they are made, will not be denied:- — -The question then is — whether a rule of tbe Superior Court be a law; for when a law is repealed, or altered, it supposes tbe old law not to be so good as tbe new law.— Here are two rules:— Tbe first has existed time immemorial, and is supported by a long course of adjudications; — -the latter is an express and positive rule, adopted upon full deliberation. — They are of equal authority, and are both to be regarded as law. Tbe common law is settled and known by tbe adjudications of tbe high courts of tbe state.— Tbis principle being established, it will follow, tbat tbe contract, in tbis case, and tbe transactions consequent upon it, must be governed by the rules and practices of the Superior Court, antecedent to the year 1784; which rules are the same as was practiced by the merchants where the contract was made. The parties could have no other law or rule in contemplation; and to subject them to a subsequent rule, of a different nature, would malee their contract different from the original intention of the contracting parties. By the law, as it then stood, the contract was fully performed; but by an ex post facto law, it is again opened, and left unfulfilled.- — Whether it be true, that the last rule of the court ought to have been sooner adopted or not, is immaterial to this case; for the parties were to govern themselves by the law as it then stood. Could they have known, that they should be subject to this rule, their conduct would, undoubtedly, have been different.— The case of Phenix v. Prindle, will apply with force: ■— There the court said, the contract must be subject to the control of the laws under which it was made, although they were different from the law of this state; because, the intention and understanding of the parties is supposed to have reference to that, and no other.
    It has been urged, on the other side — that the practice of the merchants and court, stated in the evidence, is absurd; for that payment of a sum, beyond the sum of the principal, will, by a greater increase of interest, operate to destroy the whole debt, and finally bring the creditor in debt: But this reasoning is not just; for the accumulation of interest upon the payments can go no further, than till the payment is made, which cancels the bond.
    Mr. Reeve, for the plaintiffs in error.—
    The whole will ultimately resolve itself to this — What is the right rule of computing interest? Tbe plaintiffs bave adopted tbe rule made bj tbe court in tbe year 1784; not because tbe court are to be considered in a legislative capacity, or as having any right to alter tbe law, but that tbe rule last adopted by tbe court is only declarative of what tbe law is and was.— There is a positive law existing, which determines tbe rate of interest in this case to be seven per cent. What will be tbe amount of seven per cent, depends merely upon calculation;— bow that calculation shall be made, depends on tbe rules adopted by tbe Superior C'ourt;— for there can be but one true rule; and if tbe court bave ever gone on a false ground, it cannot acquire tbe force of law by long usage.— Therefore, tbe true rule is the only rule which can govern this contract, notwithstanding any practicés which may by mistake bave taken place. Examine tbe two rules contended for: —A bond is given for £100 on interest, at six per cent, at tbe end of two years, when £112.is due, £105 is paid. Ey tbe rule contended for, on tbe part of tbe defendant, at tbe end of twenty years tbe bond would be satisfied, without tbe payment of another farthing.— This cannot be tbe true rule. — -By tbe rule contended for on tbe part of tbe plaintiffs, tbe creditor will receive bis interest annually, if payments to that amount are made, which is agreeable to tbe spirit of tbe statute regulating tbe rate of interest; and upon that ground tbe payment is supposed to be applied to tbe discharge of interest due, and tbe residue to tbe principal; for tbe law expressly refers to annual interest.— By tbe other rule, let seven per cent, be annually paid, and at tbe end of fourteen years tbe principal will be discharged;— tbe creditor, therefore, does not get seven per cent, interest.
    
      Tbe rule I contend for, does not admit interest to accumulate upon interest.— Tbe concluding clause of tbe rule is — “ Tbat if any payments be made, of a less sum tban tbe interest arisen at tbe time of sucb payment, no interest is to be computed but only on tbe principal sum, for any period.”-— So tbat whenever tbe payment is insufficient to absorb tbe interest tben due, tbe next calculation of interest is to be upon tbe principal sum only; —• therefore, tbe rule is settled upon tbe most consistent and permanent principles.
    And tbe court agreed, tbat the rule was to be thus understood.
    This being a cause of considerable importance, tbe court directed it to lie for further argument; and afterwards, in the same term, it was again argued by tbe same counsel as before.
    Mr. Tracy. — When payments are made upon a contract carrying interest, without an express application to tbe principal, tbe presumption is, tbat they were intended to be applied to tbe interest. This idea is strongly corroborated by tbe conduct of tbe parties in tbe present case: For if tbe payments are not to be thus applied, tbe defendant, at tbe time of tbe last payment, bad exceeded tbe sum recoverable by the bond, to tbe amount of £366 Is. Id. This is a practical contradiction of tbe principles now contended for by tbe defendant, and destroys tbe presumption (arising from tbe custom of tbe merchants in New York) tbat tbe parties impliedly agreed to apply tbe payments and compute tbe interest in tbat manner.— Tbe rule contended for by tbe plaintiffs, allows no interest to accumulate upon interest, but pursues up the original contract, and gives tbe creditor bis seven per cent, interest, and no more. It cannot, therefore, be intended that tbe parties bad a mode of calculation in view, which would essentially vary the express tenor of the contract.
    Mi*. Strong, on the other side,
    again enforced the substance of his first argument.
    Mr. Adams, on the same side.—
    A bond is given for £100 payable at the end of one year, with interest. In that case, the principal is as much promised at the end of the year as the interest, and there is no preference given by the terms of the contract; therefore, no presumption can arise-, that interest is to be first paid. In regard to the mode of computing interest; which of the two rules contended for is most righteous, is wholly out of the case. It may be a political question, that will be forever litigated, and remain forever uncertain.- — Here is a bond, which, according to the usage of the place where it was given, and the practice of the courts where it was put in suit, at the time of the transaction, was fully paid and satisfied; but by a rule afterwards adopted, it is unpaid.— By which of those rules shall the case be governed? Shall the subsequent rule affect contracts carried into execution? Clearly, it cannot.
    Mr. Eeeve, for the plaintiffs:
    If the question came up, stripped of the circumstances attending this case, it would depend merely upon a calculation of figures: It would be, what will give the creditor his seven per cent, interest. The latter rule will do it perfectly, and the former does not.— Notwithstanding the circumstances of this case, can the court assume the office of legislators, and say, that seven per cent. aba'll produce no more than three and an half? Or shall they perform the proper duties of their office, and adjudge, that tbe plaintiffs recover tbe product of seven per cent, agreeably to tbe contract? — It is clear, tbat tbe creditor intended to bave taken seven per cent, and there is no ground to suppose an understanding or agreement to take less; for tbe law gave him tbat, and tbe contract was for tbat. — If tbe creditor, or any other person, bave adopted a mode of computation which gives less than tbe contract, it is a mistake, and not evidence of an agreement to receive less. When be applied to a court of justice, to compel performance of tbe contract, will tbe court admit a palpable mistake to be introduced, which alters tbe nature of the contract? — Tbe court will, undoubtedly, adjudge, tbat tbe contract shall be pursued up, and what tbe law allows be given.' — As to the application of payments; tbe law will clearly apply them to tbe interest first, where no application is made by the parties; ■ — ■ otherwise, seven per cent, for one year is usurious, and tbe law is not consistent with itself.— If seven per cent, is tbe lawful rate of interest, tbe law will so apply the> payment as to give tbat sum to tbe creditor.
    Judgment of tbe Court of Common Pleas affirmed.
    
      
      See the rule at large, ante, 49.
    
   By the Court.

(Dyer, J., absent.) The only question in law, made by tbe counsel, respects tbe mode of computing interest, there having been a number of payments at different times:— But tbe declaration counts upon a bond given for tbe payment of £1,950 New York money; and it does not appear by tbe declaration, or pleadings, tbat tbe bond bad any condition annexed, or tbat tbe obligation was on interest; and it appears tbat the payments exceed the sum of tbe obligation; — therefore, on tbat principle alone, tbe evidence, as stated, was sufficient to prove tbe issue.

But there was, in fact, a condition annexed to the bond, for the payment of half the sum mentioned in the obligation, with lawful interest, by a day certain. This brings up the question in dispute between the parties; and the determination depends upon the application of the payments. If the payments bad been applied to the interest due at the time they were made, and only the sinplus to the principal, there would have remained a considerable sum due to the plaintiffs; but if all the payments had been applied to the principal, until that was fully discharged, and the residue to the interest, the debt would have been overpaid. It is a settled rule of law, that he who pays money has a right to direct the application, if there are several duties to which it may be applied; but if he neglects to do it, the receiver may make his election. In this case, there does not appear to have been any particular application made by either party, but the sums paid were simply indorsed on the bond.— Therefore, the intention of the parties must be inferred from the common custom of the place where the contract and payments were made, and their own conduct respecting the matter:— 'This.being transacted in the city of New York, must be .•governed by the laws and customs of that state; and according to what appears from the evidence to have been the •custom of computing interest in New York, the bond is overpaid. But as the parties might have agreed to apply some of the payments to the interest due at the time they were made, Before the principal was fully paid, it is presumed to be the ■case; for it was both equitable and legal.- — • On these principles, and from the length of time since the money became •due, arises a strong presumption, that there hath been a settlement of tbe matter in demand agreeably to tbe minds of tbe parties.

Judgment was, therefore, affirmed.  