Title: Ruby Drilling Co., Inc. v. Ratcliff

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Ruby Drilling Co., Inc. v. Ratcliff1999 WY 186994 P.2d 931Case Number: 97-267Decided: 12/30/1999Supreme Court of Wyoming
 
RUBY 
DRILLING CO., INC., Appellant (Plaintiff),

v.

SAM R. RATCLIFF, a/k/a 
SAM RATCLIFF, Appellee (Defendant).

Appeal from the District 
Court of Campbell County, Honorable Dan R. Price, II, 
Judge.

Nicholas H. 
Carter, Gillette, Wyoming, representing appellant.

Haultain E. 
Corbett and James L. Salmon of Lonabaugh and Riggs, Sheridan, Wyoming, 
representing appellee.

Before 
LEHMAN, C.J., and THOMAS, MACY, GOLDEN and TAYLOR,* 
JJ.

* Chief Justice at time of 
expedited conference; retired November 2, 1998

Golden, 
Justice.

[¶1]      Ruby Drilling 
Co., Inc. (Ruby Drilling) brought suit against Sam R. Ratcliff (Ratcliff) for 
payment of drilling services. Following a bench trial, the trial court 
determined Ruby Drilling had failed to credit Ratcliff's account in the proper 
amount and awarded the statutory interest rate rather than a higher rate claimed 
by Ruby Drilling.

[¶2]      We 
affirm.

ISSUES

[¶3]      Ruby Drilling 
presents the following issues:

1. Is the 
evidence sufficient to support the trial court's finding that there was no 
agreement as to a 12% interest rate between the Appellant and 
Appellee?

2. Did the trial 
court err in not recognizing a $9,000.00 credit that Appellant had given 
Appellee off the original invoice?

Ratcliff 
contends the following:

1. Did the 
District Court correctly rule that the open account Plaintiff sued to collect 
was liquidated and that interest must be calculated on that account at the 
statutory rate of 7% as mandated by Wyo. Stat. § 
40-14-106(e)?

2. Did the 
District Court correctly conclude that Plaintiff never gave the Defendant a 
$9,000 credit on his account?

FACTS

[¶4]      Between 1984 and 
1988, Ruby Drilling performed well drilling and related services for Ratcliff. 
Ratcliff made some payments on his account, and in March, 1988, Ruby Drilling 
began charging Ratcliff's account 12% interest. Ruby Drilling later indicated 
interest was being added to the total bill for the previous five months. In a 
note accompanying a $539.18 payment, Ratcliff indicated he was paying the 
interest charged and would try to start making payments on the principal along 
with the interest the following month. The note made no mention of a specific 
interest rate. On some later statements, no finance charge was added, while at 
other times interest of 12% or 18% was included. Statements to Ratcliff in 
March, May and July, 1991, included finance charges of 18% per annum, while 
statements for August and two in November, 1991, reflected no finance charge. 
Ratcliff's payments were sometimes credited by Ruby Drilling to the principal of 
the bill. Besides the note sent with his April, 1988, payment, Ratcliff made no 
agreement, oral or written, to pay interest at either 12% or 18% on his 
account.

[¶5]      Ratcliff began 
brokering leases for Ruby Drilling, and in March, 1991, invoiced Ruby Drilling 
$9,000 for these services. Ruby Drilling did not pay the $9,000 invoice sent by 
Ratcliff but stated that amount was deducted from the bill for services Ratcliff 
owed to Ruby Drilling. Ruby Drilling received an additional invoice for 
approximately $15,000 from Ratcliff that was not paid or credited against 
Ratcliff's debt to Ruby Drilling. Ratcliff's account with Ruby Drilling at the 
end of 1991 was approximately $31,000, and Ruby Drilling's accountant advised 
the company to write the account off as bad debt and no longer carry it on the 
company's financial books. In May and July, 1992, Ruby Drilling sent Ratcliff 
statements showing payment of $31,438.71 on Ratcliff's account, although 
Ratcliff had not made such a payment. On November 22, 1995, counsel for Ruby 
Drilling sent a letter to Ratcliff requesting payment of $49,756.58. Between the 
July, 1992, statement showing the account had been paid and the demand for 
payment in November, 1995, no one from Ruby Drilling ever contacted Ratcliff to 
inform him the money was still owed. Ruby Drilling followed the demand letter 
with a complaint on September 10, 1996, to collect the debt owed, and Ratcliff 
counterclaimed for payment of lease brokerage services.

[¶6]      A bench trial was 
held on April 18, 1997. Ruby Drilling claimed Ratcliff's $9,000 bill for 
services was credited against his account at the end of 1991, although Ruby 
Drilling could not show where in the company's books the credit had been made or 
how the principal and interest on Ratcliff's account came to total $49,000 by 
November, 1995. Ratcliff never received documentation from Ruby Drilling 
indicating he had been credited for his services against his account with Ruby 
Drilling. Ratcliff testified a fair billing for the work he performed was 
$6,500, not the $9,000 he had invoiced Ruby Drilling.

[¶7]      The trial court 
issued a decision letter on May 23, 1997, and ruled there was no specific 
agreement for the payment of interest and Ruby Drilling's action in charging 
interest for the period of January 1 through March 31, 1988, waived any interest 
prior to January 1, 1988; that because there was no specific agreement about 
interest other than this one time payment, interest after March 1, 1988, should 
accrue at the statutory rate of 7% per annum; that Ruby Drilling had never 
credited Ratcliff for the $9,000 in work he performed for Ruby Drilling, but 
because Ratcliff testified that was actually too much and the proper amount 
should have been $6,500, Ratcliff should be credited with that amount; that the 
May 12, 1992, statement showing a zero balance was a mistake and there was never 
any intent by Ruby Drilling to make an offer; however, because Ruby Drilling had 
sent that zero balance statement, Ruby Drilling was estopped from collecting 
interest from the date of that statement until the demand letter was sent in 
1995. The trial court also ruled that Ruby Drilling owed Ratcliff $15,586.03 for 
work done in 1995 and that after all of these credits were made, Ratcliff owed 
Ruby Drilling $12,647.59 plus interest at 7% from and after December 12, 1995, 
plus court costs. A final judgment of $14,084.80 was entered against 
Ratcliff.

DISCUSSION

[¶8]      Ruby Drilling 
challenges the sufficiency of the evidence supporting the trial court's decision 
not to recognize a $9,000 credit given Ratcliff on his account and awarding 
interest at the statutory rate of 7% instead of the 12% rate agreed upon by the 
parties. The standard of review for sufficiency of the evidence requires this 
Court to assume evidence in favor of the prevailing party is true, giving every 
favorable inference that may be reasonably drawn from it and ignoring 
conflicting evidence presented by the unsuccessful party. McCarthy v. James E. 
Simon Co., 923 P.2d 747, 749 (Wyo. 1996). We will not substitute our judgment 
for the trial court's findings and judgment of the facts unless they are clearly 
erroneous or contrary to the great weight of the evidence. Frost Construction 
Co. v. Lobo, Inc., 951 P.2d 390, 394 (Wyo. 1998).

[¶9]      Ruby Drilling 
contends Ratcliff's payment of 12% interest on the March, 1988, statement 
constitutes an agreement to pay interest. Relying on Jerry L. Phillips, Inc. v. 
Ratley, 627 P.2d 339 (Kan. App. 1981), Ruby Drilling argues that a seller's 
notice to a buyer that interest will be charged on an unpaid account, coupled 
with acquiescence by the buyer through payment, a course of dealing or 
otherwise, constitutes an agreement to pay the charges imposed. Absent these 
factors, however, there is no obligation to pay interest at the seller's terms. 
Id. at 343. 

[¶10]   We have previously addressed the 
issue of applicable interest rates on accounts in Miles v. CEC Homes, Inc., 753 P.2d 1021 (Wyo. 1988). In Miles, we acknowledged "an agreement to pay interest 
can be express or implied." Id. at 1028. Ruby Drilling began rendering services 
in 1984 but charged no interest to Ratcliff's account until March, 1988. 
Although Ratcliff's note accompanying payment in March, 1988, indicated he would 
pay the interest charged and begin making principal and interest payments, no 
specific amount of interest was delineated. No other evidence, either oral or 
written, supports an agreement to pay interest at either 12% or 18%. Further 
evidence that the parties had no mutuality of assent concerning the interest 
rate is seen in Ruby Drilling's sporadic levying of varied interest rates. 
March, May, and July, 1991, statements included interest charges at 18%, while 
statements for August and two in November, 1991, reflected no interest charges. 
Ruby Drilling testified some payments were applied to the principal on the 
account. Such inconsistency can hardly be said to have established a course of 
dealing, thereby creating an implied agreement to pay interest. Id. We have held 
the "mere appearance of a provision imposing interest on an invoice or billing 
statement is insufficient to establish an implied agreement for the payment of 
interest." Id. We do not find Ratcliff's one-time payment of interest to be an 
agreement to pay interest at 12%.

[¶11]   Wyoming statutes address 
computation of interest under the Uniform Consumer Credit Code by providing the 
following:

(e) If there is 
no agreement or provision of law for a different rate, the interest of money 
shall be at the rate of seven percent (7%) per annum.

Wyo. Stat. Ann. 
§ 40-14-106(e) (LEXIS 1999). We find the trial court's determination of interest 
at the statutory rate to be supported by the evidence.

[¶12]   In July, 1992, Ruby Drilling's 
statement to Ratcliff indicated a zero balance, and not until November, 1995, 
did Ruby Drilling notify Ratcliff that money was still due and owing on the 
account. The trial court found interest, at the statutory rate, should begin to 
accrue after November, 1995, and we agree.

[¶13]   Ratcliff did not receive payment 
for services rendered to Ruby Drilling or any notice his account was credited on 
a particular date for these services. Ruby Drilling was unable to demonstrate in 
the company's financial books where or when the credit was given. Failing any 
documentation to support a set-off, the trial court correctly determined the 
credit had not been given. Ratcliff admits $6,500, not the $9,000 he billed Ruby 
Drilling, is fair value for his services. We affirm the trial court's 
determination and hold credit must be given Ratcliff's account for $6,500 worth 
of services rendered to Ruby Drilling.

CONCLUSION

[¶14]   Substantial evidence supports the 
trial court's determination of interest on Ratcliff's account at the statutory 
rate, absent any agreement between the parties, express or implied, to establish 
a specific rate. Likewise, the trial court's determination that Ratcliff's 
account had not been credited for services rendered to Ruby Drilling is 
supported by substantial evidence in the record and is 
affirmed.