Young v. Hill. Bledsoe v. Nixon, 69 N. C. 89; 12 Am. Rep. 642; Hollingsworth v. Detroit, 3 McL. 472-478; 17 Conn. 245; Bainbridge v. Wilcocks, 1 Bald. 536; Watkinson v. Root, 4 Ohio, 374; Peirce v. Rowe, 1 N. H. 179; Toll v. Hiller, 11 Paige, 228, 231, 232; Niles v. Bd. of Comrs., 8 Blackf. 158, 160; Raphael v. Boehm, 11 Ves. Jr. 92; Walker v. Walker, 9 Wall. 744, 756; Johnson v. Hedrick, 33 Ind. 129; Barrell v. Joy, 16 Mass. 227; Ossulston v. Yarmouth, 2 Salk. 449; Conn v. Jackson, 1 Johns. Ch. 13; 3 Pars. on Cont. (5th ed.) 150, 151; Story on Cont., § 1033; Barclay v. Kennedy, 3 Wash. 350; Rufford v. Bishop, 5 Russ. Ch. 346, 353; Eaton v. Bell, 5 B. & Ald. 34; Watkinson v. Root, 4 Ohio, 374; Kennon v. Dickens, C. & N. 357; Holmes v. D'Camp, 1 Johns. 34, 46; 2 Greenl. Ev., § 127; Smith v. Allen, 5 Day, 337; Russell v. Whipple, 2 Cow. 536; Kimball v. Huntington, 10 Wend. 675; Sackett v. Spencer, 29 Barb. 180; Morgan v. Mather, 2 Ves. Jr. 15, 20; Pawling v. Pawling, 4 Yeates, 220; Clancarty v. Latouche, 1 B. & B. 418, 429; Eaton v. Bell, 7 E. C. L. 13; Newell v. Jones, 19 id. 304; Ex parte Bevan, 9 Ves. Jr. 223; Denniston v. Imbrie, 3 Wash. 396; Barclay v. Kennedy, id. 350; Howard v. Farley, 3 Robt. 308. ALLEN, J. Had the action been directly upon the bond, the amount legally recoverable upon which is the only item in controversy, the recovery in respect to it would have been limited to what, if any thing, should be ascertained to be due thereon upon a computation after the rule prescribed in State of Connecticut v. Jackson, 1 Johns. Ch. 13, for the computation of interest where partial payments have been made from time to time. The question is presented whether by a change in the form of action the legal rights of the parties can be varied. Compound interest can only be recovered upon some new and independent agreement, made upon a good consideration. Hence, the plaintiff brings his action as upon a stated or settled account in which the bond is included as one of the items, with a statement of the amount due thereon in gross, but which amount is the result of compounding the interest with annual rests. The exacting or reserving of compound interest has not met with favor in the courts, but the right to retain it when voluntarily paid is not disputed, and a recovery of it upon express contract, made after the interest has accrued and upon a sufficient consideration, is allowed. When, by the terms. of an obligation, interest is payable at stated periods, interest upon. interest from the time it becomes due, only gives the creditor the Young v. Hill. usual and legal equivalent for the non-payment of money payable at a day certain, and in some States recovery may be had of interest upon interest under such circumstances without a special contract to that effect. With us it is not allowed. Two propositions are definitely settled by adjudication: first, that an agreement to pay interest upon interest must, in order to its validity, be made after the interest which is to bear interest has become due, and second, that it must be supported by a sufficient consideration. A mere voluntary promise, without a consideration, is a nudum pactum and cannot be enforced. It will be seen, I think, that in this case there was at no time a promise or agreement by the debtor to pay compound interest, and that there was no consideration to support a promise if one had been made. There are several dicta to be found in the reports to the effect that the agreement must be in writing. These dicta have their origin in Brown v. Barkham, 1 P. Wms. 652, which had respect to interest upon arrears of interest upon a mortgage, and Lord PARKER expressed the opinion that "to make interest on a mortgage principal, it is requisite that there should be a writing signed by the parties, forasmuch as the estate in the land is to be charged therewith." These dicta must be understood as applying to mortgages upon lands or other real securities, and as recognizing a difference between such securities. and personal contracts. Kelly on Usury, 47, 49; Morgan v. Mather, 2 Vesey, 15. It may be questioned whether the courts can extend the statute of frauds to cases not within its terms, and in their discretion require promises to be in writing which the legislature has not seen fit to subject to that formality. The rule has not been applied in practice. In the large class of cases in which interest upon interest has been allowed, it has been upon an agreement implied from the course of dealing and the usage of the parties, as in the case of mutual accounts between merchants. The courts will not give effect to a stipulation for compounding future interest, not because such agreements are condemned by the usury laws, but because they may serve as a temptation to negligence on the part of the creditor and a snare to the debtor, and prove in the end oppressive, and even ruinous. Quackenbush v. Leonard, 9 Paige, 334. It was decided in chancery, as early as 1707, that a proviso in a mortgage that future interest, if not paid, should be taken as prin Young v. Hill. cipal and bear interest is void, and that to make interest principal it is requisite that it be first grown due, and then an agreement concerning it may make it principal. Lord Ossulston v. Lord Yarmouth, 2 Salk. 449. This rule has been followed by the courts of England and of this State with unvarying uniformity to the present time. Ex parte Bevan, 9 Vesey, 223; Mowry v. Bishop, 5 Paige, 98; Comyn on Usury, 146; Van Benschooten v. Lawson, 6 Johns. Ch. 313; Connecticut v. Jackson, supra; Eaton v. Bell, 5 B. & Ald. 34; Toll v. Hiller, 11 Paige, 228; Forman v. Forman, 17 How. 255. It is held in Van Benschooten v. Lawson, supra, that the security which was for interest upon interest computed from a time past, and thus retrospective in its operation, was void, and that a valid agreement could only be made which should be prospective in its operation. The security for the compound interest which had already accrued was by mortgage upon real property, and upon bill filed to foreclose it the mortgage was held not to be usurious, but the amount included for interest upon interest was disallowed, as not recoverable in equity. Lord ELDON, in Er parte Bevan, supra, seemed to be of the opinion that although agreements for interest upon interest were legal between merchants, the rule could not be applied to a real security. Chancellor KENT did not rest his decision of the Van Benschooten case upon any distinction between real and personal securities, but upon the fact that the obligation was retrospective in its operation and that such an agreement could not be recognized or enforced in a court of equity. No reference is made to any consideration or to the want of a consideration for the obligation. The case is clearly an authority to the extent that an agreement not made upon some new and sufficient consideration for the payment of interest upon interest for a time already past, will not be sustained or enforced in equity. The decision goes further than this, but this is as far as it is necessary to rely upon it as an authority here. This case was commented upon by Chancellor WALWORTH in Mowry v. Bishop, supra, but the criticism was obiter, as the question was not involved in the case then under consideration. In Stewart v. Petree, 55 N. Y. 621, the only defense interposed was that of usury, and the decision might have been placed upon the authority of Kellogg v. Hickok, 1 Wend. 521, and Le Grange v. Hamilton, 4 T. R. 613, and other cases in which the precise point had been adjudged. Young v. Hill, The decision actually made by the court was upon the defense of usury, and the authority of the Van Benschooten case is not impaired by it. An obligation to pay compound interest already accrued would be without consideration, as the mere moral obligation to compensate the creditor for the loss of his interest would not be sufficient to support the undertaking. Ehle v. Judson, 24 Wend. 97. Whether in Stewart v. Petree, the extension of the time for the payment of the principal, as well as the accrued interest, was a sufficient consideration for the note was not considered, as the question was not made by the defendant. It was claimed to be illegal, and that, therefore, the note was usurious. At the time of the rendition of the account by the debtor in this case the creditor had no legal or equitable claim to the compound interest or to interest upon interest, and had its payment been coerced and an unfair advantage taken of his necessities to compel the payment of it, or security for its payment, the transaction would have been avoided by a court of equity as unjust and oppressive, and restitution ordered. Thornhill v. Evans, 2 Atk. 330. While all the cases agree that when the interest has once accrued the parties may lawfully agree to turn such interest into principal, so ss to carry interest in futuro, and the forbearance will constitute a consideration, there is no case that has come under my observation that holds that a like promise to operate retrospectively is valid, unsupported by any consideration other than the moral consideration (if one exists) resulting from the fact that the interest is in arrear and unpaid. Had the debtor at the time of the statement of the account, upon which reliance is placed, expressly promised to pay the interest in arrear with interest upon it from the time it was due and to compound it, the promise would have been a nude pact without consideration. The plaintiff is in no better situation seeking to recover upon a bare acknowledgment of an indebtedness from which an implied promise is claimed than he would have been upon an express promise. Engagements to pay interest in future upon interest already accrued have a consideration in forbearing and giving day of payment for moneys presently due. It is the agreement to forbear for a time in the future that gives vitality to the promise. Eaton v. Bell, supra. There can be no valid contract without a consideration to support it, and the right to compound interest depends entirely upon contract expressed, or, in mercantile transactions, VOL. XXIII. — 14 Young v. Hill. implied from the mode of dealing with former accounts or from custom. Fergusson v. Fyffe, 8 Cl. & Fin. 121; Ex parte Bevan, supra. Lord HARDWICK, in Thornhill v. Evans, which was an extreme case, intimated that an agreement to turn interest into principal could only be upon the advance of fresh money, and that even then it was reckoned a hardship. But it is not apparent why any other consideration, sufficient in the law to support a contract, would not serve as a consideration for this particular agreement as well as the actual advance of other money. Compound interest is recoverable upon merchants' accounts of mutual dealings, upon an express agreement, or when an agreement may be implied from custom or usage, for the reason that an extension of time for payment is implied, and the transaction is fair, as the balance may change and the benefit of the usage be mutual. Kelly on Usury, 49. The promise relied upon by the plaintiff is merely implied from the acknowledgment in the statement of account in December, 1871. It has no foundation in any usage or prior dealing between the parties. For this promise (if one can be implied) there is no consideration. Delay in payment was neither asked nor granted, and if this action can be maintained, a like action might have been brought immediately. Neither was any money advanced or other right relinquished by the creditor or benefit conferred upon the debtor. It was at best a gratuitous promise to pay a very large sum of money, to which the promisee had no claim, either at law or in equity, and an action will not lie upon it. But the rendition and statement of the account was not a promise or the equivalent of a promise to pay the compound interest upon which an action will lie. It was merely an acknowledgment that, upon the basis of the computation made, the sum named was due for principal and interest. Upon a like statement of account, and of a balance due between merchants, the law implies a promise, for the reason that the several items, when established, constitute legal demands of the respective parties against. each other, upon which an action would lie, and the acknowledgment is an admission of the correctness of the items of debit and credit, resulting in the stated balance. The right of action as upon a promise to pay necessarily follows. In such case there is no estoppel. The account may be impeached for errors or mistakes. It merely establishes, prima facie, the accuracy of the items without further proof. Lockwood v. Thorne, 18 N. Y. 285. If it ap |