Title: McBride v. SUPERIOR CT., COUNTY OF MARICOPA COUNTY

State: arizona

Issuer: Arizona Supreme Court

Document:

130 Ariz. 193 (1981) 635 P.2d 178 Glenn McBRIDE and Cheryl McBride, husband and wife, Petitioners, v. SUPERIOR COURT of the State of Arizona, In and For the COUNTY OF MARICOPA COUNTY; Paul W. LaPrade, Judge Thereof; and Milne Truck Lines, Inc., a corporation, Respondents. No. 15472. Supreme Court of Arizona, In Banc. October 13, 1981. Charles M. Brewer, Phoenix, for petitioners. O'Connor, Cavanagh, Anderson, Westover, Killingsworth & Beshears by Thomas A. McGuire, Larry L. Smith, Phoenix, for respondents. CAMERON, Justice. We accepted this petition for special action in order to consider the effect of a statutory change in the legal amount of interest between the entry of judgment and the satisfaction of judgment. We took jurisdiction because there was no fast, speedy, adequate remedy by appeal and because it is a matter of statewide importance. A.R.S. § 12-120.24. The facts necessary for a determination of this matter are not in dispute. On 24 January 1979, the petitioners, Glenn and Cheryl McBride, obtained a judgment for personal injury in the amount of $1,717,748.31 against the defendant, Milne Truck Lines, Inc. At the time of the judgment, the Arizona statute provided as follows. The judgment provided for interest "at the rate of six per cent per annum from date of entry until paid." Defendant Milne appealed the judgment and filed a supersedeas bond. A.R.S. § 44-1201 was amended, effective 14 December 1979, to provide: The McBrides contend that absent an agreement to the contrary, the rate of interest on the judgment was automatically increased from 6% to 10% per annum as of the effective date of the change in the statute. Milne Truck Lines disagrees contending that to do this would amount to a retroactive application of the statute and would be contrary to the judgment as a contractual obligation. This appears to be a question of first impression in Arizona. Other courts have ruled both ways on this subject. See Annot., 4 A.L.R.2d 932 (1949) and cases cited therein. The split of authority appears to *194 be based upon whether the treatment of the amount of interest on the judgment is viewed as a contractual or statutory obligation. If the judgment or at least the interest thereon is considered a contractual obligation, then the rate of interest does not change as a result of the statutory change of the rate of interest. Sunray DX Oil Co. v. Great Lakes Carbon Corp., 476 P.2d 329 (Okla. 1970); McKee v. Harris Seybold Co., 118 N.J. Super. 480, 288 A.2d 585 (1972). This rule applies even if the cause of action sounds in tort rather than contract. Moore v. Travelers Indemnity Co., 352 So. 2d 270 (La. App. 1977), cert. denied 354 So. 2d 1049 (La. 1978). If, on the other hand, the judgment or at least the interest thereon is considered a statutory obligation, a change in the statutory rate of interest will result in a change in the rate of interest upon the judgment. Noe v. City of Chicago, 56 Ill. 2d 346, 307 N.E.2d 376 (1974); Idaho Gold Dredging Corporation v. Boise Payette Lumber, 54 Idaho 765, 37 P.2d 407 (1934). Although we admit to responsible authority to the contrary, we do not believe that a judgment is a contractual obligation. Judgments are the result of the operation of the law. They are seldom based upon mutuality of the parties. In the instant case, when the judgment was signed, there being no "different rate * * * contracted for in writing" (A.R.S. § 44-1201(A)), 6% interest was the only rate that could be included in the judgment. We believe that interest upon a judgment is a statutory and not a contractual obligation, and when the interest rate was changed by statute, the rate of interest on the judgment was also changed. We agree with the Illinois and Idaho courts: And: Respondents contend, however, that changing the rate of interest after judgment is a retroactive application of the new interest rate. We do not agree. The statute at the time of judgment provided for 6% interest; the 10% rate did not take effect until 14 December 1979 and was effective only after that date. It was not retroactive but prospective after the effective date of the statute: The defendant is entitled to 6% interest from the date of the judgment until 14 December 1979 and 10% interest thereafter. We hold that when the statute was changed, the legal rate of interest also changed, and that the interest rate stated in the judgment by statute is, absent specific agreement to the contrary, subject to later modification by statute. Relief granted, and the matter is remanded for further proceedings consistent with this opinion. STRUCKMEYER, C.J., HOLOHAN, V.C.J., and HAYS and GORDON, JJ., concur.