Drury v. Wolfe

Citations

• 134 Ill. 294
• 25 N.E. 626

Syllabus

<p>1. Usury—interest upon interest. On a loan of $8000, at the time interest might be reserved at the rate of ten per cent per annum, the borrower gave his four notes to the lender,-—one for $2000, payable in one year; one for $2500, payable in two years; one for $2500, payable in three years; and one for $3275.80, payable four years after date, all calling for ten per cent interest after maturity: Held, that the notes, including more than ten per cent simple interest, were usurious.</p> <p>2. The general rule is, parties can not be bound by any contract made before interest is due, for the payment of compound interest.</p> <p>3. But after interest is due, it may, by agreement then made, be added to the principal, and made to thereafter bear interest.</p> <p>4. There is, perhaps, an exception to the general rule mentioned, in the case of interest coupons annexed to commercial paper. Such coupons bear interest. But in such case interest is not compounded indefinitely.</p> <p>5. There is, therefore, no authority found in this exception for holding that interest may be compounded indefinitely, or at all, in cases where the payment of interest is not secured by some negotiable instrument independent of the instrument whereby the origina.l indebtedness is promised to be paid.</p>