INTEREST (Lat. it concerns; it is of ad vantage).
In Contracts. The right of property which a man has in a thing. See INSURABLE INTER EST.
On Debts. The compensation which is paid by the borrower of money to the lender for its use, and, generally, by a debtor to his creditor in recompense for his detention of the debt.
The compensation allowed by law or fixed by the parties to a contract for the use or forbearance or detention of money. Fisher v. Hoover, 3 Tex. Civ. App. 81, 21 S. W. 930.
A consideration paid for the use of money or for forbearance in demanding it when due. Maryland Casualty Co. v. Power Co., 157 Fed. 514, 85 C. C. A. 106.
Legal interest is the rate of interest estab lished by the law of the country, which will prevail in the absence of express stipulation; conventional interest is a certain rate agreed upon by the parties. Fowler v. Smith, 2 Cal. 568.
Interest is a matter of local regulation and the decisions of state courts are binding on the courts of the United States; Bond v. John V. Farwell Co., 172 Fed. 58, 96 C. C. A. 546; where a judgment is rendered prior to the passage of an act reducing the rate of interest, it draws interest only at the re duced rate after the act takes effect ; O'Brien v. Young, 95 N. Y. 428, 47 Am. Rep. 64.
It has been said that at common law in terest was not allowed; it can be secured only by statute; Pacific Coast S. S. Co. v.
U. B., 33 Ct. Cl. 36 ; Sanderson v. Read, 75 UL App. 190. On the other hand, a party liable for a principal sum is liable for inter est; it is an incident of the debt; Tidball v. Bank, 100 Va. 741, 42 S. E. 867.
Who is bound to pay interest. The Party to a contract who has expressly or impliedly undertaken to pay interest is, of course, bound to do so.
Executors; Adams v. Spalding, 12 Conn. 350; Findlay v. Smith, 7 S. & R. (Pa.) 264; administrators; Gwynn v. Dorsey, 4 Gill & J. (Md.) 453; Crowder v. Shackelford, 35 Miss. 321; assignees of bankrupts or insolvents; In re Dyott's Estate, 2 W. & S. (Pa.) 557; but see Thomas v. Car Co., 149 U. S. 95,
Sup. Ct. 824, 37 L. Ed. 663 ; guardians; Roy ston v. Royston, 29 Ga. 82; and trustees; Fay v. Howe, 1 Pick. (Mass.) 528 ; Dennis v. Dennis, 15 Md. 75; Royston v. Royston, 29 Ga. 82 ; Dickinson v. Owen, 11 Cal. 71; who have kept money an unreasonable length of time ; Boynton v. Dyer, 18 Pick. (Mass.) 1; Royston v. Royston, 29 Ga. 82 ; and have made or might have made it productive; Gwynn v. Dorsey, 4 Gill & J. (Md.) 453; Stearns v. Brown, 1 Pick. (Mass.) 530; Lock hart v. Horn, 3 Woods, 542, Fed. Cas. No. 8,446; Bourne v. Maybin, 3 Woods, 724, Fed. Cas. No. 1,700; are chargeable with interest. Where a litigant• claiming money as his own, was permitted to collect and retain it, sub ject only to the order of the court should it afterwards be decided he was not entitled to it, he is chargeable with interest ; Kenton Ins. Co. v. Bank, 93 Ky. 129, 19 S. W. 185. When a loan is negotiated, the retention of a portion of it for an unreasonable time en titles the borrower to a rebate of interest; Dodge v. Tulleys, 144 U. S. 451, 12 Sup. Ct. 728, 36 L. Ed. 501.
Who are entitled to receive interest. The lender upon an express or implied contract for interest. Executors, administrators, etc., are in some cases allowed interest for ad vances made by them on account of the es tates under their charge; Jennison v. 'Hap good, 10 Pick. (Mass.) 77. The rule has been extended to trustees; Dilworth's Lessee v. Sinderling, 1 Binn. (Pa:) 488, 2 Am. Dec. 469 ; and compound interest, even, allowed; Barrell v. Joy, 16 Mass. 228.
On what claims allowed. When the debtor expressly undertakes to pay interest, he or his perSonal representatives having assets are bound to pay it. But if a party has ac cepted the principal, it has been determined that he cannot recover interest in a separate action; Tillotson v. Preston, 3 Johns. (N. Y.) 229. See Williams v. Craig, 1 Dall. (U. S.) 315, 1 L. Ed. 153; Blodgett v. Gardiner, 45 Me. 542 ; Candee v. Webster, 9 Ohio St. 452.