HAMMOND v. HAMMOND.—2 BLAND. 293

mond, and Charles Hammond, against Eezin Hammond, Elizabeth
Hammond, Matilda Hammond, Harriet Hammond, and Philip H.

account in Grinn v. Whitaker, 1 H. & J. 754. See also Williar v. Loan Ass'n,
45 Md. 548: Story v. Livingston, 13 Peters, 359; Conn v. Jackson, 1 John. Ch.
13; Penrose v. Hart, 1 Dall. 378; Bradford Academy v. Grover, 55 Vt. 463;
Case v. Fish, 58 Wise. 56, to the same effect. In a note appended to the case
of Hart v. Dorman, 50 Am. Dec. 289, it is said: "The custom is Tery common
among merchants in settling their accounts, to state an interest account, in
which interest ia 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 account is struck and added to the balance of the principal.
This is known as the mercantile rule. This method has been allowed by the
Courts in a few instances where it had been used by the parties or adopted
by the plaintiff. Stoughton v. Lynch, 2 Johns. Ch. 210; Smith v. Shaw, 2
Wash. 167: Hart v. Dewey, 3 Paige, 207; Backus v. Minor, 3 Cal. 231."

In Stoughton v. Lynch, 2 John. Ch. 214, the Chancellor says: "This excep-
tion goes to the whole mercantile usage of computing interest on merchants'
accounts. The correct mode of crediting payments, as between debtor and
creditor, is to carry them, in the first place to the extinguishment of the
interest due, according to the principle of this third exception; and it is
susceptible of mathematical demonstration that if credits be not eo applied,
but the principal of the debt be left to continue upon interest, and interest
is computed upon the payments as they are successively made, a debt will,
in the course of a few years, (and the time will he longer or shorter accord-
ing to the rate of interest.) be wholly extinguished by payments of interest,
without paying a cent of principal. I have, however, always understood
and observed that the usage amongst merchants in stating their accounts is
different and conformable to the master's report. It is the debtor who
gains and the creditor who loses by this mode. But this usage is not very
material when there are long mutual credits, because the rule operates
equally upon the credits of each party, and if the balances are nearly the
same, the result is equal. * * In the present account, I have no doubt the
parties, throughout their accounts, have foliowed the mercantile usage, and
as far as any partial calculation or settlements, in respect to each other have
been made, they would of course follow that custom. Shall I then break in
upon that usage in the settlement of these copartnership accounts ? As the
plaintiff claims to be, and is found to be, the creditor, he has an interest that
I should do so; but I do not think, upon a consideration of this case, that I
ought to disturb the complicated calculations attending the report upon this
point."

In the case of a partial payment before either principal or interest is due,
the usual mode is to credit the payment when made on the aggregate of the
principal debt and of the interest computed to the time of payment. Wil-
liams v. Houghtaling, 3 Cowen, 86. If a debtor pays the debt or a part
thereof before maturity, no interest can be claimed on such prepayment.
Handley vs. Dobson, 7 Ala. 359; Parker v. Moody, 58 Me. 70.

Credits growing out of the contract itself do not fall within the rule re-
quiring credits to be applied to the antecedent unsecured indebtedness, or to
the first items of debit in an account between the parties, like payments of
money on account, but may properly be applied to the payment of indebt-
edness arising out of the contract from which they spring. Suter v. Ivis, 47
Md. 520.

Interest as damages. If it does not arise from contract, express or implied,
or by the law merchant, interest can only be awarded as damages for the