No. 87-51
IN THE SUPREME COURT OF THE STATE OF MONTANA
1987
MAXINE H. BYRNE, and J. MICHAEL
BYRNE, co-personal Representatives
of the Estate of JAMES BYRNE,
Plaintiffs and Appellants,
-VS-
TERESA M. TERRY,
Defendant and Respondent.
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Missoula,
The Honorable Jack L. Green, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Milodragovich, Dale & Dye; Kim L. Ritter, Missoula,
Montana
For Respondent :
Garnaas, Hall & Pinsoneault; H.L. Garnaas, Missoula,
Montana
Submitted on Briefs: July 30, 1987
Decided: September 16, 1987
Filed: SEP 16 1987
Mr. Justice John Conway Harrison delivered the Opinion of the
Court.
Maxine Byrne and J. Michael Byrne, acting as co-personal
representatives of the estate of James Byrne, appeal a
judgment of the Fourth Judicial District in and for the
County of Missoula that awarded the estate $42,000 in
commission fees as detailed in a note signed by Teresa Terry
but that specifically refused to award interest. The
judgment was issued September 8, 1986; the memorandum
refusing to reconsider the question of an award of interest
was issued December 8, 1986.
We affirm in part and reverse in part. We remand the
matter to the District Court for proceedings to award
interest.
James Byrne served as a realtor for Terry when she
entered into a contract for deed on November 6, 1978 to buy
some 400 acres of property in Ravalli County. In that
contract she agreed to pay James Byrne's commission. She
signed a handwritten note on May 28, 1979 in which she agreed
to pay James Byrne $42,000 in commission from the resale of
parcels of the acreage. One clause of the note said James
Byrne would not charge Terry interest. The relevant portion
of the note reads:
[wlhereas J. Byrne has requested at this
time a note be signed for a total of
Forty-two Thousand and no/100 dollars
($42,000.00), eemgrised-e* sevefi-$3&+-ef
the-+eta&-sa&es-p~&ee-e$-six-hu~d~ed
tkeasa~d-de&&a~s-$$688~888+~-a~d-whereas
3s-Byr~e-has-skated-khe~e-w&&&-be-fie
ifite~esk-ehargedt and whereas J. Byrne
has stated that payments of this
commission will be made from the
assigning of portions of the funds
received from the sales of parcels of the
purchased property; I therefore promise
to pay Forty-two Thousand and no/100
dollars ($42,000.00) as set forth above.
s/Teresa M. Terry
(Lineouts appear on the original.)
On September 24, 1979, Terry sold 352 acres of the
property. Terms were $50,000 payable on that date, $100,000
due on January 31, 1980 and the remaining $450,000, subject
to 8+% interest, due January 1, 1990. Terry transferred her
remaining interest on May 16, 1980 pursuant to an agreement
that required the transferees to assume all of Terry's
obligations, including the resolution of a claim for $42,000
in commission fees by the James Byrne estate. (James Byrne
had died October 30, 1979.) Terry retained 19 acres as
security that the transferees would settle the claim. The
co-personal representatives, ignorant of the attempted
transfer of the obligation, presented the note to Terry.
When she refused to honor it, this litigation arose.
The District Court, sitting without a jury, heard the
evidence on February 24, 1986. The court found that the
writing signed by Terry was a promissory note demonstrating
an obligation to pay $42,000 as commission fees when the
acreage was resold. It found that substantially all of the
property was resold on September 24, 1979 and that Terry
received $50,000 in partial consideration of that sale on
that date. The court concluded that the note became payable
on September 24, 1979 because of the resale of the property,
and entered judgment accordingly.
The co-personal representatives moved for
reconsideration of the matter in order to obtain interest on
the debt. They claimed they were due 8% interest per year as
spelled out in a preprinted, typewritten note that had not
been presented into evidence and did not contain Terry's
signature. Otherwise, they claimed they still would be
entitled to the statutory rate of interest.
Terry also asked the court to reconsider its findings of
fact and conclusions of law. She argued to the District
Court that plaintiff had failed to prove that she had
received any payments on the November 1979 contract or that
the proceeds of that contract were intended to pay the
$42,000 commission. She now adds the argument that the
commission fee is not due since the final payments on the
November 1979 contract are not due until January 1990.
The District Court denied the motions to reconsider. In
its memorandum of December 8, 1986, the court discounted the
provisions of the note referred to by the co-personal
representatives. The court wrote:
There was no copy of the note attached to
the Motion. However, referring to the
copy of the note which is an exhibit,
there is no mention whatsoever of
interest except a provision " ... and
whereas J. Byrne has stated there will be
no interest charged," . .. The note is
payable upon the happening of a
contingency and therefore is not payable
at a date certain.
The question of whether interest is appropriate may be
resolved through the examination of several statutes,
S $ 27-1-211, 27-1-312, and 31-1-106, MCA. These statutes
indicate that interest was owed and should have been awarded.
Co-personal representatives of the estate base their claim on
S 27-1-211, MCA, which reads:
Every person who is entitled to recover
damages certain or capable of being made
certain by calculation and the right to
recover which is vested in him upon a
particular day is entitled also to
recover interest thereon from that day
except during such time as the debtor is
prevented by law or by the act of the
creditor from paying the debt.
A party must satisfy three criteria to be eligible for
prejudgment interest under S 27-1-211, MCA. Those criteria
are (1) an underlying monetary obligation; (2) the amount
of recovery is certain or capable of being made certain by
calculation; and (3) the right to recover the obligation
vests on a particular day. Agrilease Inc. v. Gray (1977),
173 Mont. 151, 160, 566 P.2d 1114, 1118-19. The three
criteria were satisfied in Aqrilease even though the
obligation was not due on a specific date, but rather when an
irrigation system was completed. Thus, the three criteria
are satisfied in the case before this Court: the underlying
monetary obligation of $42,000 was due and payable on the day
that Terry entered into a contract to sell the acreage.
That Terry disputes she was responsible for the
obligation when the Byrne estate presented the note does not
save Terry. The fact that a claim is disputed does not make
it uncertain and thus unable to support an award of
prejudgment interest. Safeco Insurance Co. v. Lovely Agency
(Mont. 1985), 697 P.2d 1354, 1357, 42 St.Rep. 509, 513.
Terry's assertion that the right to recover did not vest in
the Byrne estate because there was no date specified is
untenable. The date for payment of the debt was specified as
the date on which parcels of property were sold, and that
date arose September 24, 1979, when the bulk of the property
was sold. Thus, it constitutes a date certain. Agrilease,
566 P.2d at 1118; Safeco, 697 P.2d at 1357.
When the debtor knows of his debt and also knows when it
is due, "no demand is necessary to start the running of
interest from the date the payment should have been made."
W.J. Lake & Co. v. Montana Horse Products Co. (1939), 109
Mont. 434, 443, 97 P.2d 590, 594, citing 33 C.J. 237 note 61
(now 47 C.J.S. Interest 5 46 c). Therefore when Terry sold
the bulk of the property on September 24, 1979, she triggered
5 27-1-211, MCA. On that date she owed the Byrne estate
$42,000 and she did not pay it. No demand was required by
the Byrne estate to enforce her obligation on that day.
Thus, it makes no difference whether Terry delegated her duty
to pay the commission in May 1980 since she was required by
her actions of September 24, 1979 to pay the commission.
The rationale behind 27-1-211, MCA, is well summarized
in Price Building Services, Inc. v. Holms (Mont. 1985), 693
P.2d 553, 559-60, 42 St.Rep. 85, 92, which states that
prejudgment interest is to be awarded unless either the law
or the creditor prevents the payment of principal. Neither
the force of law nor the acts of the Byrne estate prevented
Terry from paying the $42,000 commission fee; she simply
refused to honor her obligation.
[Section] 27-1-211, MCA, is not a
discretionary statute. Rather, it
mandates interest as long as the legal
situation fits within the broad
guidelines of the statute. Determining
whether a cause of action fits within the
framework of the statute, particularly
the question of whether the claim is
determined or can be determined by
calculation, is not always an easy one.
However, the overriding purpose of the
statute can be best preserved if it is
remembered that its purpose is to fully
compensate the injured party for the loss
of use of his money during the period in
which a valid claim was not paid. We
believe ... that the objective of fully
compensating the injured party, and that
is the primary objective of the
prejudgment interest statute, should
predominate over other equitable
considerations. If the legislature has
chosen to provide a right to prejudgment
interest (5 27-1-211) , the primary
objective of the courts, where possible,
should be to award prejudgment interest.
Price Building Service, Inc., 693 P.2d at 559-560.
We reaffirm the notion that the "primary objective" of
5 27-1-211, MCA, is to fully compensate the party who has
been deprived of funds that are rightfully his. This is
corroborated by statute. Section 27-1-312, MCA, provides
that the remedy for a breach of an obligation to pay money is
"the terms of the obligation with interest thereon." The
appropriate interest to be charged of Terry on her obligation
is ascertainable from 5 3 1 - 1 - 1 0 6 , MCA. That section
prescribes interest of 6 % from the date of breach thereafter
to October 1, 1 9 8 5 , when 5 3 1 - 1 - 1 0 6 , MCA, was amended to
provide for interest at the rate of 1 0 % .
We affirm the District Court's September 8, 1 9 8 6
judgment awarding $ 4 2 , 0 0 0 to the Byrne estate. However, we
reverse that court's order of December 8, 1 9 8 6 refusing
interest. We remand the Byrne estate's request for interest
to the District Court for proceedings consistent with this
opinion.
h
We concur: \ I