The general rule is that compound interest is not allowed as damages. Logically it would seem that if a note or other pecuniary obligation is payable with interest annually or at other stated periods, and there is default extending over several interest periods the promisee should recover interest not only on the principal sum but on the various broken obligations to pay interest. Such, however is not the general rule of law. Simple interest only will be allowed for the whole period,81 except in a few States.82 This has been carried so far in some jurisdictions that even though the obligation in terms provides that if the defendant fails to pay Interest when due the interest shall be compounded, enforcement of the agreement is denied, sometimes on the construction of local statutes, sometimes as matter of common law.83 There seems no reasonable ground for holding that such an agreement of the parties is penal in character, at least unless the agreed rate of interest is excessive; and the contract is by many courts held enforceable.84

Miss, 41, 3 So. 137; Taylor r. Wing, M N. T. 471; Miller p. Hall, 18 8. a 141

76 See infra,Sec. 1696.

77 Herbert v. Salisbury, etc, R. Co., L R. 2 Eq. 221; Vermont L. & T. Co. v Dygreat, 80 Fed. 123; Miller p. Kempaer, 32 Ark. 573; Thompson o. Gamer, 104 CaL 168, 37 Pac. 900, 43 Am.St Rep. 81; Hubbard v. Callahan, 42 Conn. 524, 19 Am. Rep. 564; Ffrimpnecy v. Walsh, 142 HL App. 237; Holmes v. Dewey, 66 Kan. 441,71 Pac 836; Denton v. Reading 22 La. Ann. 607; Capen p. dwell, 66 Me. 282; Flanders v. Chamberlain, 24 Mich. 305; Sufoid p. Iitchenberger, 62 Neb. 501, 87N. W. 305; Bitterv. Phillips, 53 N. Y. 586; Pass v. Shine, 113 N. C. 284,

18 S E. 251; Haywood p. Miller, 14 Wash. 660, 45 Pac. 307.

78 Taloott v. Maraton, 3 Minn. 330; White v. litis, 24 Minn. 43; National life Ins. Co. p. Hall, 34 Okla. 305, 125 Pac. 1108.

79 Herbert v. Salisbury, etc., R. Co., L. R. 2 Eq. 221; Holmes p. Dewey, 66 Kans. 441, 442, 71 Pac. 836; Daggett p, Pratt, 15 Mass. 177; Hallam p. Telleren, 55 Neb. 255, 75 N. W. 560. But see contra Scottish-American Mortg. Co. v. Wilson, 24 Fed. 310; Finger p. McCaughey, 114 CaL 64, 45 Pac. 1004; Bailey v. McClure, 73 Ind. 275; Lalande p. Breaux, 5 La. Ann. 505.

80 Herbert p. Salisbury, etc., R. Co., L. R. 2 Eq. 221; Ely p. Witherspoon, 2 Ala. 131. As to the propriety of this distinction, see infra, Sec. 782.

Where a separate obligation for interest is entered into, interest is more readily allowed for breach of the subsidiary separate obligation, than where there is no such separate contract.85 This principle is especially applicable to overdue coupons;86 but it has also been extended in many jurisdictions to cover a case where by the agreement of the parties a fixed sum is payable on a stated day as interest. Often, interest on this amount is recoverable.87 For breach of a fiduciary obligation compound interest is often allowed in the discretion of the court if the breach was fraudulent or wilful as distinguished from negligent, or if the fiduciary has had the use of trust money or property in such a way that he has or may be supposed to have received compounded profits upon it.88 In

8l Doe v. Warren, 7 Me. 48; Lewin v. Folsom, 171 Mass. 188, 60 N. E. 523; Ward v. Brandon, 1 Heisk. 490; Fultz v. Davis, 26 Gratt. 903; Genin v. Inger-soll, 11 W. Va. 549, and see cases in this section passim.

82 Yndart v. Den, 116 Cal. 533, 48 Pac. 618, 58 Am. St. 200 (statutory); Preston v. Walker, 26 la. 205, 96 Am. Dec. 140; Newell v. Somerset Nat. Bank, 12 Bush, 57; Hall v. Scott, 90 Ky. 340, 344, 13 S. W. 249; Foley v. Hook (Ky.), 113 S. W. 105; Bledsoe v. Nixon, 69 N. C. 89, 12 Am. Rep. 642; O'Neall v. Bookman, 9 Rich. L. 80 (cf. Carolina Sav. Bank v. Parrott, 30 S. C. 61, 8 S. E. 199; Plyler v. McGee, 76 S. C. 450, 57 S. E. 180, 121 Am. St. 950); Roane v. Ross, 84 Tex. 46, 19 S. W. 339; Geisberg v. Mutual Bg. Ac. Assoc. (Tex. Civ. App.), 60 S. W. 478.

83 Eslava v. Lepretre, 21 Ala. 504, 56 Am. Dec. 266; Hochmark v. Ruchler, 16 Colo. 263, 26 Pac. 818; Bowman v. Neely, 151 111. 37, 37 N. E. 840; Gay v. Berkley, 137 Mich. 658, 100 N. W. 920; Lee v. Melby, 93 Minn. 4, 100 N. W. 379; Sanford v. Lundquist, 80 Neb. 408, 414, 118 N. W. 129; Young v.

Hill, 67 N. Y. 162, 23 Am. Rep. 99; Reusens v. Arkenburgh, 135 N. Y. App. Div. 75, 119 N. Y. S. 821; Levens v. Briggs, 21 Ore. 333, 28 Pac. 15, 14 L. R. A. 188; Brown v. Crow (Tex. Civ. App.), 29 S. W. 653; Jarrett v. Nickell, 9 W. Va. 345; Tallman v. Trueadell, 3 Wis. 443; Ogden v. Bradshaw, 161 Wis. 49,150 N. W. 399,152 N. W. 654. See also Kimbrough v. Idikins, 70 Ind. 373; Whiteworth p. Davey (Mo. App.), 185 S. W. 241; Mathews 9. Toogood, 23 Neb. 536,37 N. W. 265,8 Am. St. 131, 25 Neb. 99,41 N. W. 130. 84 Vaughan v. Kennan, 38 Ark. 114; Hovey v. Edmison, 3 Dak. 449, 22 N. W. 594; Merck v. American, etc., Mtge. Co., 79 Ga. 213, 7 S. E. 265; Ellard v. Scottish-American Mtge. Co., 97 Ga. 329, 22 S. E. 803; Bradley v. Merrill, 91 Me. 340, 40 Ail. 132. Sometimes a distinction is taken between compounding interest maturing prior to the maturity of the principal and interest due after the principal obligation has matured. Aspinwall v. Blake, 25 Iowa, 319; Whitcomb v. Harris, 90 Me. 206,38 Atl. 138, but the distinction seems untenable.

85 Stickney v. Moore, 108 Ala. 500, 19 So. 76; Lee v. Melby, 03 Minn. 4, 100 N. W. 370; Graeme v. Cullum, 23 Gratt. 286. See also Covington v. Fisher, 22 Okla. 207, 07 Pac. 615; Goodale v. Wallace, 10 S. Dak. 405, 103 N. W. 651,117 Am. St. 062.

86 United States Mortgage Co. v. Sperry, 13S U. S. 313, 343,11 Sup. Ct. 321, 330, 34 L. Ed. 060; Skinner v. franklin Co., 170 Fed. 862; Drexel State Bank v. La Moure, 207 Fed. 702; Stickney v. Moore, 108 Ala. 500,10 So. 76; Lake County v. Linn, 20 Colo. 446, 68 Pac. 830; Fox v. Hartford, etc., Co., 70 Conn. 1, 38 Atl. 871; Humphreys v. Morton, 100 HI. 502; Kentucky Title Co. v. English, 20 Ky. L. Rep. 2024, 50 8. W. 068; Lexington v. Union Nat. Bank, 75 Miss. 1, 22 So. 201; Philadelphia & Reading R. v. Knight, 124 Pa. 58, 16 Atl. 402; Rice v. Shealy, 71 8. C. 161, 50 S. E. 868. But see conZro Shaw 9. Norfolk County R., 16 Gray, 407; Force ». Elisabeth, 27 N. J. Eq. 408, and in New York interest is not given on overdue coupons if still held by the owner of the bonds. Bailey v. Buchanan County, 115 N. Y. 207, 22 N. E. 155,6 L. R. A. 562; Williamsburg Savings Bank v. Solon, 136 N. Y. 465, 32N.E.1058.

87 Vaughan v. Kennan, 38 Ark. 114; Wofford v. Wyly, 72 Ga. 863; Hall v. Scott, 90 Ky. 340, 13 S. W. 240, 11 Ky. L Rep. 810; Greenleaf v. Kellogg, 2 Mass. 568; Hayward ». Cain, 110

Mass. 273; Rix v. Straute, 50 Mich. 364, 26 N. W. 638; Townsend v. Riley, 46 N. H. 300; Cook v. Courtright, 40 Oh. St. 248, 48 Am. Rep. 681; Stokely v. Thompson, 34 Pa. 210; Angel v. Miller, 00 Tex. 505, 30 S. W. 016; Cullen v. Whitham, 33 Wash. 366, 74 Pac. 581; Genin *. Ingersoll, 11 W. Va. 540. But see contra Broughton v. Mitchell, 64 Ala. 210; Doe v. Vallejo, 20 Cal. 385; Denver B. & M. Co. r. McAllister, 6 Colo. 261; Rose v. Bridgeport, 17 Conn. 243; Grimes v. Blake, 16 Ind. 160; Stone v. Locke, 46 Me. 445; Lee v. Melby, 03 Minn, 4, 100 N. W. 370; Stoner v. Evans, 38 Mo. 461. See also Hodgkins v. Price, 141 Mass. 162, 5 N. E. 502.

88 See Barney v. Saunders, 16 How. 535, 14 L. Ed. 1047;McIntire v. Mo-Intire, 102 U. S. 116, 48 L. Ed. 360; Primeau v. Granfield, 184 Fed. 480; Silver King Consol. Min. Co. r. Silver King Coalition Min. Co., 204 Fed. 166, 122 C. C. A. 402; Price v. Peterson, 38 Ark. 404; Miller v. Lux, 100 Cal. 600, 35 Pac. 345, 630; Arnold v. Maxwell, 230 Mass. 441, 110 N. E. 776; Dissenger's Case, 30 N. J. Eq. 227; Watts v. Watts Ex'x, 104 Va. 260, 51 S. E. 350; Speiser v. Merchants' Exch. Bank, 110 Wis. 507, 86 N. W. 243. In England compound interest is not thus allowed unless the fiduciary has used the money in his private affairs, and has presumably made a mercantile profit.

Vermont compound interest is allowed upon an ordinary running account.90

Burdick v. Garrick, L. R. 5 Ch. App. 233; cf. Davis v. Davis [1902] 2 Ch. 314, where the defendants having acted in good faith, the plaintiffs were said to have the alternative of reclaiming the actual profits or of charging the defendants with simple interest

90 Tudor 9. Tudor's Est., (Vt. 1919), 107 AtL 132, and cases cited.