the rate of eight per cent. per annum, thereby imposing a useless burden upon the taxpayers, this act shall become a law upon receiving the signature of the Governor." Section 3587, Hill's Ann. Laws, of which this act is amendatory, is an amendment of section 1 of "An act to regulate the rate of interest on money and to prevent and punish usury," approved October 16, 1862 (Laws, 1862, p. 115). The original act contained a provision (section 6) which has been continued in force until the present day (Section 3592, Hill's Ann. Laws) to the effect that it shall not be construed so as to affect or change the rate of interest to be received by virtue of any contract entered into prior to its becoming a law. Section 2465, Hill's Ann. Laws, as amended (Laws 1893, p. 59), relating to the duties of the county treasurer, provides, among other things, that "He shall pay all orders of the county clerk when presented, if there be money in the treasury for that purpose, and write on the face of such order the date of redemption and his signature. If there be no funds to pay such order when presented, he shall endorse thereon Not paid for want of funds,' and the date of such presentment, over his signature, which shall entitle such order thenceforth to draw legal interest; provided, that such interest shall cease from the date of notice by publication," etc. By section 2467 county orders are redeemable by the county treasurer according to the time of presentment, but it is further provided that such orders as are payable out of the county revenue shall be received in payment of county taxes without regard to priority of presentment, but that the treasurer shall not pay any balance thereon over and above such tax, when there are outstanding orders unpaid for want of funds. These are the only provisions of the statute which have any bearing upon the case in hand.

1. Defendant's theory touching the controversy embodies three principal contentions: First, that the county is but an arm or agent of the state, and that the sovereign is not required to pay interest, except when selfimposed; second, that a county order is not a contract between the county and the holder; and, third, that interest, when demandable under the statute, except when due upon an express contract for its payment, is in the nature of a penalty or damages for the detention of money due and unpaid, and, therefore, that it constitutes a part of the remedy in the enforcement of the demand, which may be modified, or even repealed altogether, by subsequent legislation, without impairment of any contractual relations. In our view of the case, we do not conceive the second proposition to be important or essential to the determination of the cause. As to the first, we are in accord with the contention of counsel, but as to the last we cannot give it our approval. There is some conflict in the authorities upon the question whether a sovereign state is required to pay interest unless self-imposed, but the weight thereof seems to support the contention that it is not. The Supreme Court of the United States has adopted the rule that interest is not allowable on claims against the government, whether they originate in contract or tort, or arise in the ordinary business of administration, or under private acts for relief, passed by congress on special application. But it recognizes the existence of two well established exceptions-one wherein the government has stipulated to pay interest, and the other where interest is given by act of congress either expressly as such, or under the name of damages United States v. Bayard, 127 U. S. 251 (8 Sup. Ct. 1156). In a subsequent case of United States v. North Carolina, 136 U. S. 211 (10 Sup. Ct. 920), Mr. Justice GRAY says: "Interest, when not stipulated for by con

tract, or authorized by statute, is allowed by the courts as damages for the detention of money, or of property, or of compensation, to which the plaintiff is entitled; and, as has been settled upon grounds of public convenience, is not to be awarded against a sovereign government, unless its consent to pay interest has been manifested by an act of the legislature, or by a lawful contract of the executive officers." The rule applies as well to a sovereign state as to the national government. Nor is the state within the purview of a general law regulating the rate of interest upon money due or to become due, and this goes upon the ground that a sovereign is not bound by the words of a statute unless it is expressly named: State ex rel. v. Board of Public Works, 36 Ohio St. 409; Carr v. State, 127 Ind. 204 (11 L. R. A. 370, 26 N. E. 778); Attorney-General v. Cape Fear Nav. Co., 37 N. C. (2 Ired. Eq.) 444; Bledsoe v. State, 64 N. C. 392; Town of Mt. Morris v. Williams, 38 Ill. App. 401; Madison County v. Bartlett, 2 Ill. (1 Scam.) 67. That the county is but the agent or instrumentality of the state, constituted and employed essentially for the promotion of its general government, and, therefore, subject to like rules and restrictions governing its liabilities as the state, there can be no controversy: 1 Dillon, Mun. Corp., § 23. We take it, therefore, that a county is not liable for the payment of interest under the general provisions of the statute regulating the rate upon the demands enumerated in said section 3587 as an individual would be where there is no contract to pay interest.

As a general rule, it may be conceded that where the demand falls within the purview of the statute, and by reason thereof is subject to an interest charge at the legal rate, the rate upon the demand will vary as the law fixing it may be changed or varied by the legisla

34 OR.-18.

ture during the life of the demand. The reason of the rule is that the person from whom the money is retained or withheld is entitled to an indemnity for the loss which he sustains on account of being deprived of its use, and it is assumed that the legal rate of interest for the time of the withholding is a fair measure of damages by which to determine such loss, in the absence of any other method of arriving at the exact or precise loss actually incurred: State v. Guenther, 87 Wis. 673 (58 N. W. 1105); Wilson v. Cobb, 31 N. J. Eq. 91; White v. Lyons, 42 Cal. 279; Mayor, etc. v. O'Callaghan, 41 N. J. Law, 349.

Where there is an agreement to pay interest upon an obligation at a stipulated rate to a day certain—as, for instance, at maturity-and there is no engagement touching the rate the obligation shall subsequently bear, the authorities are in hopeless conflict as regards the rate of interest recoverable upon the deferred payment. They divide accordingly as it has become the settled policy of the courts touching the nature of the indemnity recoverable for the detention of the money beyond the day upon which it has fallen due and payable. Upon the one hand, it is held that such indemnity is purely a matter of damages, not in the least referable to the contract, although for breach thereof; and that the proper and appropriate measure of such damages is the rate of interest which the law has prescribed. Upon the other, it is considered that, while the indemnity is recoverable as damages, yet the rate of interest which should be allowed is rather to be implied from the terms of the contract touching it prior to the maturity of the obligation. The idea is clearly expressed by Lord SELBORNE in Cook v. Fowler, L. R. 7 H. L. 27. He says: "Although, in cases of this class, interest for the delay of payment post diem ought to be given, it is on the principle, not of implied contract, but of damages

for breach of contract. The rate of interest to which the parties have agreed during the term of their contract may well be adopted, in an ordinary case of this kind, by a court or jury, as a proper measure of damages for the subsequent delay; but that is because, ordinarily, a reasonable and usual rate of interest, which it may be presumed would have been the same whatever might be the duration of the loan, has been agreed to:" Price v.. Railway Co., 16 Mees. & W. 244; Morgan v. Jones, 8 Welsb. H. & G. 620; Keene v. Keene, 3 C. B. (N. S.) 144-support this principle. Mr. Justice GRAY, while Chief Justice of the Supreme Court of Massachusetts, by a most exhaustive and learned opinion, in which he has collated and reviewed all the authorities pro and con, came to the conclusion expressed by the following language: "When a written engagement is made, as authorized by the statute, to pay a greater rate of interest yearly than six per cent., the intention of the contract and the effect of the statute appear to us to be that the creditor shall receive the stipulated rate of interest so long as the debtor has the use of the principal; and that, in an action upon the contract, the creditor shall recover interest at that rate, not merely until the time when the principal is agreed to be paid to him, but until it is actually paid, or his claim for principal and interest judicially established." Later he denotes the principal He says:

upon which it rests.

"The interest after the

breach of the contract, though not strictly recoverable as part of the debt, but rather as damages, is ordinarily to be measured, according to the intention manifested by the contract, by the standard thereby established :" Union Inst. for Savings v. City of Boston, 129 Mass. 82 (37 Am. Rep. 305). See, also, Brannon v. Hursell, 112 Mass. 63.

2. Although the Supreme Court of the United States is