auditor in his report has allowed interest, the plaintiff in the entry of judgment is entitled to have interest allowed from the date of the right to such entry.18 Interest is generally held to be recoverable upon rent from the time when the rent becomes due by the lease, 19 except in case of an offset, in which case it can be recovered only from the time that the balance due can be made certain.20 So it has been held that where one has rendered himself liable for the hire of slaves for a number of years, it will be charged as payable annually, and interest will be allowed on it as it came due.1 An unpaid license fee will bear interest from the date upon which it ought by law to have been paid. Under modern practice interest when it once begins to run does not stop at the commencement of the action but may be computed to the time of the verdict, and as a general rule, until the principal debt is merged in a judgment or decree. An indorser who pays a note can recover from the maker interest from the time of his payment up to the time judgment is entered against the maker.1

25. Computation from Demand or Institution of Suit.-In many cases before interest can be allowed as damages for a default in the payment of money, a demand is essential to fix the default. Thus where a note or bond is payable on demand, or on request, although it is suable at once yet the debtor is not considered in default until demand is made and therefore interest runs only from the time of demand in pais, or of suit brought, which is a judicial demand. In cases of contingent liability such as that of a surety the party is not considered in default until notice or demand, when interest will begin

18. Jackson v. Brockton, 182 Mass. 26, 64 N. E. 418, 94 A. S. R. 635.

19. Van Rensselaer v. Jewett, 2 N. Y. 135, 51 Am. Dec. 275 and note; Pengra v. Wheeler, 24 Ore. 532, 34 Pac. 354, 21 L.R.A. 726; Obermyer v. Nichols, 6 Bin. (Pa.) 159, 6 Am. Dec. 439; Boone v. Knox, 80 Tex. 642, 16 S. W. 448, 26 A. S. R. 767; Vermont, etc., R. Co. v. Vermont Cent. R. Co., 63 Vt. 1, 21 Atl. 262, 731, 10 L.R.A. 562. And see generally, LANDLORD AND ΤΕΝΑΝΤ.

20. Pengra v. Wheeler, 24 Ore. 532, 34 Pac. 354, 21 L.R.A. 726.

1. Hoyle v. Jones, 35 Ga. 40, 89 Am. Dec. 273.

2. Travelers' Ins. Co. v. Fricke, 99 Wis. 367, 74 N. W. 372, 78 N. W. 407, 41 L.R.A. 557.

3. Brewster v. Wakefield, 1 Minn. 352, 69 Am. Dec. 343, reversed on an

other point by Brewster v. Wakefield, 22 How. 118, 16 U. S. (L. ed.) 301. Note: 92 Am. Dec. 630.

And see DAMAGES, vol. 8, p. 539; VERDICT.

4. Stanley v. McElrath, 86 Colo. 449, 25 Pac. 16, 26 Pac. 800, 10 L.R.A. 545.

5. State v. Milwaukee, 158 Wis. 564, 149 N. W. 579, Ann. Cas. 1916A 110. Notes: 6 Am. Dec. 194 et seq.; 4 L.R.A. 566.

And see DAMAGES, vol. 8, p. 539. Generally as to the necessity and sufficiency of demand, see CONTRACTS, vol. 6, p. 946 et seq.

6. Horn v. Hansen, 56 Minn. 43, 57 N. W. 315, 22 L.R.A. 617; Scudder v. Morris, 3 N. J. L. 419, 4 Am. Dec. 382; Freeland v. Edwards, 3 N. C. 49, 2 Am. Dec. 620; Cannon v. Beggs, 1 McCord L. (S. C.) 370, 10 Am. Dec. 677. Note: 6 Am. Dec. 194.

to run. So, too, according to some authorities interest is recoverable on money due for labor after a demand of payment made at the expiration of a reasonable time.8 Where a person wrongfully detains money no demand is necessary to charge him with interest, but where there is no wrong in acquiring or detaining the money, a demand is necessary to charge the party with interest, and its computation will begin from such demand.10 Where money has been paid and received by common or mutual mistake of fact, and no fraud or misconduct can be imputed to the party receiving the same, interest will not be allowed except from the time when the mistake was discovered and demand was made.11 And where money paid under mistake of law may be recovered, interest thereon may also be recovered from the time of demand for repayment.12 Interest is properly allowed upon a check, payment of which has been wrongfully refused by a bank, from the date of its presentation for payment; 13 and it has been held that checks for the payment of which there is no money on deposit bear interest from the time when presentation should have been made.14 It is well settled that in cases of general deposits in a bank, unless there be some agreement or usage to the contrary, the undertaking of the bank is only to repay upon demand, and the deposit does not bear interest until after the bank

7. Frink v. Southern Exp. Co., 82 Ga. 33, 8 S. E. 862, 3 L.R.A. 482.

Note: 6 Am. Dec. 194.

8. Ford v. Tirrell, 9 Gray (Mass.) 401, 69 Am. Dec. 297.

Note: 6 Am. Dec. 194, 195.

And see FACTORS, vol. 11, p. 773; GARNISHMENT, vol. 12, p. 851 et seq.

11. Northrop v. Graves, 19 Conn. 548, 50 Am. Dec. 264; American Mut. Life Ins. Co. v. Bertram, 163 Ind. 51, 70 N. E. 258, 64 L.R.A. 935; State v. Mutual Life Ins. Co., 175 Ind. 59, 93 N. E. 213, 42 L.R.A. (N.S.) 256; Gould v. Emerson, 160 Mass. 438, 35 N. E. 1065, 39 A. S. R. 501; Lee v. Laprade, 106 Va. 594, 56 S. E. 719, 117 A. S. R. 1021, 10 Ann. Cas. 303; Hall v. Graham, 112 Va. 560, 72 S. E. 105, Ann. Cas. 1913B 1257 and note.

9. Note: 6 Am. Dec. 194. 10. United States v. Denvir, 106 U. S. 536, 1 S. Ct. 481, 27 U. S. (L. ed.) 264; United States v. Knowles, 106 U. S. 537, 1 S. Ct. 482, 27 U. S. (L. ed.) 264; Gunn v. Howell, 35 Ala. 144, 73 Am. Dec. 484; Northrop v. Graves, 19 Conn. 548, 50 Am. Dec. 264; Lowndes v. City Nat. Bank of South Norwalk, 82 Conn. 8, 72 Atl. 150, 22 L.R.A. (N.S.) 408; American Trust, etc., Co. v. Boone, 102 Ga. 202, 29 S. E. 182, 66 A. S. R. 167, 40 L.R.A. 250; American Mut. Life Ins. Co. v. Bertram, 163 Ind. 51, 70 N. E. 258, 64 L.R.A. 935; Hunt v. Nevers, 15 Pick. (Mass.) 500, 26 Am. Dec. 616; Gay v. Rooke, 151 Mass. 115, 23 N. E. 835, 21 A. S. R. 434, 7 L.R.A. 14. Culver v. Marks, 122 Ind. 554, 392 (action on I. O. U.); Wright v. 23 N. E. 1086, 17 A. S. R. 377, 7 Hamilton, 2 Bailey L. (S. C.) 51, 21 L.R.A. 489. Generally as to the neAm. Dec. 513; State v. Milwaukee, cessity for presentment of checks, see 158 Wis. 564, 149 N. W. 599, Ann. CHECKS, vol. 5, p. 500 et seq. Cas. 1916A 110.

12. Northrop v. Graves, 19 Conn. 548, 50 Am. Dec. 264; American Mut. Life Ins. Co. v. Bertram, 163 Ind. 51, 70 N. E. 258, 64 L.R.A. 935.

Note: 10 Ann. Cas. 307.

13. Niblack v. Park Nat. Bank, 169 Ill. 517, 48 N. E. 438, 61 A. S. R. 203, 39 L.R.A. 159.

is in default.15 Where a municipality may be liable for interest, even though the demand may be liquidated and due at a definite date, a demand has been held necessary to start interest.16 As a general rule in cases where a demand is necessary and none is made, interest will run from the service of the writ.17

26. Where Allowed as Damages for Injuries to or Taking of Property. A statement of the general rule as to the period from and to which interest is computed when allowed as a part of the damages. for injury to, or the destruction, loss or conversion of property, is found elsewhere in this work.18 In the case of property wrongfully seized under execution, when the plaintiff recovers judgment for the value at the time of the taking, it has been held that interest runs from the date of the taking to the date of trial.19 If payment of compensation for property taken for public use does not accompany the taking but is to be postponed to a later time, it must be upon the payment of interest for the deferred period.20

27. On Judgments and Decrees.-Interest on a judgment according to the rule of the supreme court of the United States will run from the date the judgment is entered and signed, and the same rule has also been generally applied by the courts of the various states not only to judgments at law, but also to decrees in equity for specific sums. Where a verdict was rendered for the plaintiff for a sum of money when the statute in force provided that interest in such case should run from the date the judgment was rendered, but judgment on this verdict was not entered until the statute had been superseded by one allowing interest to run from time of verdict, the first statute should apply and interest be cast not from date of verdict but from

15. Patten v. American Nat. Bank of Denver, 15 Colo. App. 479, 63 Pac. 424, 53 L.R.A. 693. And see BANKS, vol. 3, pp. 528, 687.

16. Smith v. Board of Education, 208 N. Y. 84, 101 N. E. 791, Ann. Cas. 1914D 406.

17. Goddard v. Foster, 17 Wall. 123, 21 U. S. (L. ed.) 589; Haven v. Foster, 9 Pick. (Mass.) 112, 19 Am. Dec. 353; Hunt v. Nevers, 15 Pick. (Mass.) 500, 26 Am. Dec. 616; Gay v. Rooke, 151 Mass. 115, 23 N. E. 835, 21 A. S. R. 434, 7 L.R.A. 392; Edison General Electric Co. v. Canadian Pac. Nav. Co., 8 Wash. 370, 40 A. S. R. 910, 24 L.R.A.

315.

Notes: 92 Am. Dec. 630; 10 Ann.
Cas. 307.

And see DAMAGES, vol. 8, p. 539.
18. See DAMAGES, vol. 8, p. 538 et

seq.

19. Woodworth v. Gorsline, 30 Colo. 186, 69 Pac. 705, 58 L.R.A. 417.

20. Appleton Water Works Co. v. Railroad Commission, 154 Wis. 121, 142 N. W. 476, Ann. Cas. 1915B 1160, 47 L.R.A. (N.S.) 770. And see EMINENT DOMAIN, vol. 10, p. 163 et seq.

1. Mitchell v. Harmony, 13 How. 115, 14 U. S. (L. ed.) 75; United States v. Veridier, 164 U. S. 213, 17 S. Ct. 42, 41 U. S. (L. ed.) 407.

2. Cobb v. Stratton's Estate, 56 Colo. 278, 138 Pac. 35, Ann. Cas. 1915C 1166; Patten v. American Nat. Bank, 15 Colo. App. 479, 63 Pac. 424, 53 L.R.A. 693; Guernsey v. Phinizy, 113 Ga. 898, 39 S. E. 402, 84 A. S. R. 270; Latta v. New Orleans, etc., R. Co., 131 La. 272, 59 So. 250, Ann. Cas. 1914A 988; Raleigh, etc., R. Co. v. Mecklenburg Mfg. Co., 166 N. C. 168, 82 S. E. 5, L.R.A. 1916A 1079; Gooch

the time the judgment was entered. Interest on a judgment is usually held to run from its entry until satisfaction thereof be made.*

Application of Payments

28. Computation of Interest on Partial Payments.-As to the computation of interest where partial payments have been made upon a debt bearing interest the rule sanctioned by the decisions or statutes of most of the states, and commonly known as the United States rule, is to apply the payment, in the first place, to the discharge of the interest then due. If the payment exceeds the interest, the surplus goes towards discharging the principal, and the subsequent interest is to be computed on the balance of principal remaining due. If the payment be less than the interest, the surplus of the interest must not be taken to augment the principal; but interest continues on the former principal until the period when the payments, taken together, exceed the interest due, and then the surplus is to be applied towards discharging the principal, and interest is to be computed on the balance as aforesaid. A few cases, however, follow what has been termed the "mercantile rule" by which interest is charged on each item of principal on the debit side and credited on each item on the credit side of the account, and a balance of such interest is struck and added to the balance of the principal. Another way of stating the same rule is to compute the interest on the principal debt until maturity or any given time, and the interest on payments made, for the time when made, until such time, and then deduct the one sum from the other. According to some authorities where a mistake has been made in the proper rule to apply in the calculation of interest where payments are made in instalments, such will be regarded as a mistake of law, whereas a mistake in the calculation of the amount

v. Gooch, 70 W. Va. 38, 73 S. E. 56, 37 L.R.A.(N.S.) 930.

3. Murdock v. Franklin Ins. Co., 33 W. Va. 407, 10 S. E. 777, 7 L.R.A. 572; Campbell v. Elkins, 58 W. Va. 308, 52 S. E. 220, 2 L.R.A. (N.S.) 159. 4. Cobb v. Stratton's Estate, 56 Colo. 278, 138 Pac. 35, Ann. Cas. 1915C 1166; Patten v. American Nat. Bank, 15 Colo. App. 479, 63 Pac. 424, 53 L.R.A. 693. Generally as to what constitutes satisfaction of a judgment, see JUDGMENTS, post, par. 298 et seq. 5. Story v. Livingston, 13 Pet. 359, 10 U. S. (L. ed.) 200; Woodward v. Jewell, 140 U. S. 247, 11 S. Ct. 784, 35 U. S. (L. ed.) 478; Hart v. Dorman, 2 Fla. 445, 50 Am.

Dec. 285 and note; Huner v. Dolittle, 3 G. Greene (Ia.) 76, 54 Am. Dec. 489; Wallace v. Glaser, 82 Mich. 190, 46 N. W. 227, 21 A. S. R. 556; Betcher v. Hodgman, 63 Minn. 30, 65 N. W. 96, 56 A. S. R. 447; Riney v. Hill, 14 Mo. 500, 55 Am. Dec. 119; Dickson v. Stewart, 71 Neb. 424, 98 N. W. 1085, 115 A. S. R. 596; Baker v. Baker, 28 N. J. L. 13, 75 Am. Dec. 243; Jones-Downes Co. v. Chandler, 13 N. M. 501, 85 Pac. 392, 13 Ann. Cas. 710 and note; Connecticut v. Jackson, 1 Johns. Ch. (N. Y.) 13, 7 Am. Dec. 471.

Note: 96 A. S. R. 70.

6. Note: 50 Am. Dec. 289.
7. Note: 13 Am. Dec. 710.

due will be regarded as a mistake of fact.8 Interest will be allowed on overdue instalments of interest up to the time of the maturity of the obligation, such not coming within the inhibitions upon interest on interest.9

29. Application, as between Principal and Interest, of Partial Payments before Maturity.-A partial payment made before the maturity of an obligation, when the terms of the obligation allow payment at any time, will be applied first to the interest accrued to date and then to the principal, for the reason that interest accrues daily even though its payment may have been reserved for yearly, semiannually, quarterly or monthly periods.10 Where it is agreed that no interest shall be charged, a payment should be applied to the principal, and where no interest is due at the time of payment, it should be applied to the principal; and not to future or unearned interests. Where neither principal nor interest is due when the payment is made, it should be applied to the extinguishment of principal and interest ratably.11 There are, however, decisions to the effect that a part payment before maturity which the holder was not bound to receive on a demand drawing interest will be applied to the principal and not to the interest.12 The reason underlying the rule that general payments cannot be appropriated to the extinguishment of the principal in advance of the discharge of the interest is that otherwise the legal effect of the contract would be changed, by which the unpaid balance not including interest bears interest until the entire debt is discharged. There would seem, however, to be no reason why this may not be done by the mutual assent of the parties.13 The rule that payments made generally will be applied first to the interest has been held not to apply to payments made generally on a promissory note which note embraces illegal interest, but that such payments will be applied in satisfaction of the principal,14 and that the maker of a note carrying illegal interest will not be held to have intended a general payment to be applied on interest merely because the payment was so applied on the books of the bank without his knowledge, 15

8. Baker v. Baker, 28 N. J. L. 13, 75 Am. Dec. 243.

9. Scott v. Fisher, 110 N. C. 311, 14 S. E. 799, 28 A. S. R. 688; Anketel v. Converse, 17 Ohio St. 11, 91 Am. Dec. 115; Cook v. Courtright, 40 Ohio St. 248, 48 Am. Rep..681; Wheaton v. Pike, 9 R. I. 132, 11 Am. Rep. 227, 98 Am. Dec. 377. And see infra, par. 35.

10. Jacobs v. Ballenger, 130 Ind. 231, 29 N. E. 782, 15 L.R.A. 169 and note.

11. Note: 96 A. S. R. 69 et seq.

12. Starr v. Richmond, 30 Ill. 276, 83 Am. Dec. 189.

Note: 15 L.R.A. 169.

13. Note: 96 A. S. R. 69, 70 and collected cases.

14. Knox v. Williams, 24 Neb. 630, 39 N. W. 786, 8 A. S. R. 220 and note; Bank of Cadiz v. Slemmons, 34 Ohio St. 142, 32 Am. Rep. 364.

15. Welch v. Wadsworth, 30 Conn. 149, 79 Am. Dec. 236; Richmond Second Nat. Bank v. Fitzpatrick, 111 Ky. 228, 63 S. W. 459, 62 L.R.A. 599.