Supreme Court of Texas

══════════

No. 22-0215

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Samson Exploration, LLC, f/k/a/ Samson Lone Star, L.P.,

Petitioner,

v. 

Joe A. Bordages Jr., et al.,

Respondents

═══════════════════════════════════════

On Petition for Review from the

Court of Appeals for the Ninth District of Texas

═══════════════════════════════════════

Argued October 26, 2023

CHIEF JUSTICE HECHT delivered the opinion of the Court.

The central issue in this case is whether a mineral-lease provision 

calls for simple or compound interest on unpaid royalties. Because the 

lessee has previously litigated the identical lease language with a 

different lessor and lost, we must also consider whether it is collaterally 

estopped to relitigate the same issue here. We hold that because Texas 

law disfavors compound interest, an agreement for interest on unpaid 

amounts is an agreement for simple interest absent an express, clear, 

and specific provision for compound interest. We also hold that the 
2

lessee’s prior litigation of the issue does not collaterally estop it from 

asserting its claims here. Accordingly, we reverse the judgment of the 

court of appeals1 and remand the case to the trial court for further 

proceedings.

I

Petitioner Samson Exploration, LLC holds oil-and-gas leases on 

properties in Jefferson and Hardin Counties from several families,

including the Klorers, the Hookses, and the Bordages.2 The three 

families sued Samson for unpaid royalties owed under those leases. 

Their claims were severed into three different suits, and only the 

Bordages’ case remains unresolved.3 Samson has paid the Bordages all 

royalties due plus late charges as per its calculations. The remaining 

issue, now before us, is whether the Bordages are entitled to late charges

on the late charges.

The leases between Samson and the Bordages provide that 

1 662 S.W.3d 501 (Tex. App.—Beaumont 2023).

2 Respondents are Joe A. Bordages, Katherine Bordages Brownlee, 

Stephanie Bordages Knobel, Joseph A. Bordages III, Joanna M. Pastore, Scott 

Alan Bordages, and Allison Bordages Koskella.

3 After Samson failed to remit the Bordages’ and Hookses’ royalty 

payments, they joined in the Klorers’ existing suit against Samson (the T.S. 

Reed case). Samson moved to sever the three families’ claims. That request was

granted. Thus, the Bordages, Hookses, and Klorers proceeded against Samson

in three distinct lawsuits. The T.S. Reed and Hooks cases have since been fully

litigated and resolved, leaving only the Bordages case active. See Samson Lone 

Star, L.P. v. Hooks, 389 S.W.3d 409 (Tex. App.—Houston [1st Dist.] 2012), rev’d

in part, 457 S.W.3d 52 (Tex. 2015), on remand, 497 S.W.3d 1 (Tex. App.—

Houston [1st Dist.] 2016, pet. denied); Samson Expl., LLC v. T.S. Reed Props., 

Inc., 521 S.W.3d 26 (Tex. App.—Beaumont 2015), aff’d, 521 S.W.3d 766 (Tex. 

2017).
3

royalty payments are due by the first day of the calendar month 

following some sixty days after production.4 If not timely paid, a late 

charge is imposed the next day “based on the amount due” and “at the 

maximum rate allowed by law”. That charge is payable on the last day 

of the month.5

If no payment is made by that date, the Bordages argue that 

another late-charge calculation is triggered, which includes not only 

past-due royalties as of the first day of the month, but also accrued late 

charges as of the last day of the preceding month. Put differently, the 

Bordages believe that the leases’ Late Charge Provision imposes late 

charges on late charges, compounding them each month. The parties 

agree that the late charges constitute a form of interest and that the 

rate is 18%. Samson disagrees that the late charges are compounded.

II

The Bordages argue that Samson is collaterally estopped from 

litigating the meaning of the Late Charge Provision. The Hookses had 

leases with Samson that were separate from, but identical to, those 

4 Art. XVII(B): “The royalty for the calendar month in which production

is first marketed shall be paid on or before the first day of the calendar month 

next following the expiration of sixty (60) days [from execution of a completion 

report or potential test for the well], and the respective royalty payments for 

each subsequent calendar month of production shall be made [o]n or before the 

first day of each successive calendar month . . . .”

5 Art. XVII(C): “All past due royalties . . . shall be subject to a Late 

Charge based on the amount due and calculated at the maximum rate allowed 

by law commencing on the day after the last day on which such monthly royalty 

payment could have been timely made and for every calendar month and/or 

fraction thereof from the due date until paid . . . . Any Late Charge that may 

become applicable shall be due and payable on the last day of each month when 

this provision becomes applicable.”
4

between Samson and the Bordages. In the Hooks case, a jury found 

Samson liable for fraud and awarded the Hookses over $20 million in

fraud damages—including about $13 million in late charges, calculated 

at a rate of 18% per annum, compounded monthly.6 That award equaled

an estimate by the Hookses’ damages expert based on his reading of a 

provision identical to the Late Charge Provision. In the present case, the 

trial court found Samson liable for breach of contract and awarded the 

Bordages $12,955,919 in contract damages. That award is based on the 

same interpretation of the Late Charge Provision in Hooks and

comprises mostly compound interest.

The Bordages argue that collateral estoppel prevents this Court 

from reaching the issue of whether the Late Charge Provision calls for 

simple or compound interest because that very issue was previously

resolved in Hooks. Samson disagrees because the construction of the 

lease’s text is an issue of law, and “[c]ourts disfavor applying collateral 

estoppel in the context of a pure question of law.”7

An oil-and-gas lease is a contract, and its terms are interpreted 

as such.8 The construction of an unambiguous contractual provision—

meaning that the provision has only one reasonable construction—is an 

issue of law we review de novo using well-settled contract-construction 

principles.9 A contract is not ambiguous merely because the parties 

6 389 S.W.3d at 426.

7 Tankersley v. Durish, 855 S.W.2d 241, 245 (Tex. App.—Austin 1993, 

writ denied).

8 Tittizer v. Union Gas Corp., 171 S.W.3d 857, 860 (Tex. 2005).

9 URI, Inc. v. Kleberg County, 543 S.W.3d 755, 763 (Tex. 2018).
5

disagree about its meaning.10

As discussed below, the Late Charge Provision’s meaning is 

unambiguous because the only reasonable construction requires the late 

charge to be calculated using simple rather than compound interest. The 

provision’s construction is therefore an issue of law.

This Court has spoken sparingly on the overlap between 

collateral estoppel and issues of law. But in Getty Oil Co. v. Insurance

Co. of North America, we noted that collateral estoppel could apply to 

“essential issues of law that were litigated and determined in a prior 

action.”11 However, Getty’s application of collateral estoppel to issues of 

law is not limitless. The Restatement (Second) of Judgments, on which 

Getty relied to justify its statement, provides some exceptions—

including some in the nonmutual context as is relevant here.12

Nonmutual collateral estoppel is implicated in two situations. 

First, when a nonparty to an earlier action seeks to prevent an opposing 

party from relitigating an issue that the opposing party litigated in the 

prior action.13 Second, when a party to a prior action seeks to prevent a 

party in a later action who was a nonparty to the prior action from 

contesting an issue that was litigated in the prior action.14

10 Id.

11 845 S.W.2d 794, 802 (Tex. 1992). However, collateral estoppel 

ultimately did not preclude our review in Getty because the precise issue of law

had not been decided in the previous action. Id.

12 RESTATEMENT (SECOND) OF JUDGMENTS § 28 (AM. L. INST. 1982).

13 See id. § 29 cmt. b (citing id. § 28, illustrations 3, 4, 5, 7, 9, 10, & 11).

14 See id.
6

Section 29 of the Restatement includes an exception that applies 

when treating an issue of law “as conclusively determined would 

inappropriately foreclose opportunity for obtaining reconsideration of 

the legal rule upon which it was based”.15 Comment i to Section 29 

elaborates, noting that nonmutual collateral estoppel cannot foreclose a 

reviewing court from performing its function of developing the law.16

That consideration is especially pertinent “when the issue is of general 

interest and has not been resolved by the highest appellate court that 

can resolve it.”17

This Court, and Texas courts more broadly, have looked to the 

Restatement when interpreting the law of collateral estoppel.18

Application of the Restatement’s highest-court exception makes 

particular sense for pure issues of law pending before this Court, whose 

mandate is to review issues of law important to the jurisprudence of this

State.19 We hold that nonmutual collateral estoppel will not prevent a 

party from relitigating an issue of law in this Court when we have not 

15 Id. § 29.

16 Id. § 29 cmt. i.

17 Id.

18 See Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 

S.W.2d 507, 521-522 (Tex. 1998) (relying on Section 27 of the Restatement for 

the general rule prohibiting estoppel by alternative holdings); Sysco Food

Servs., Inc. v. Trapnell, 890 S.W.2d 796, 802 (Tex. 1994) (applying Section 29 

of the Restatement to determine whether an issue was fully and fairly litigated 

in the prior action); Tankersley, 855 S.W.2d at 245 (“Texas state courts have 

cited various provisions under [S]ection 29 with approval when determining 

whether to apply collateral estoppel.”).

19 TEX. GOV’T CODE § 22.001(a).
7

previously decided the issue and we deem the issue important to the 

jurisprudence of the State.20

So, how does this rule apply here? First, we consider whether the

interpretation of the Late Charge Provision is an issue previously 

decided by this Court. Our opinion in Hooks remanded to the court of 

appeals without construing the identical provision.21 The appellate 

court issued a new opinion and judgment,22 and we denied Samson’s 

subsequent petition for review. While attempts to read into the tea 

leaves are perhaps unavoidable, we reiterate that our denial of a petition 

for review does not indicate our views on the merits of any particular

issue.23 Further, as the Bordages’ counsel conceded at oral argument,

this Court did not previously decide how to interpret the Late Charge 

20 We note that the analysis may differ in the context of defensive 

nonmutual collateral estoppel. One of the purposes underlying collateral 

estoppel—protecting parties from multiple lawsuits—does not apply with the 

same force in the present offensive context because the party subject to 

multiple suits wants to relitigate an issue. See Sysco, 890 S.W.2d at 801 (“The 

doctrine of collateral estoppel or issue preclusion is designed to promote 

judicial efficiency, protect parties from multiple lawsuits, and prevent 

inconsistent judgments by precluding the relitigation of issues.”). By contrast, 

in the defensive context, a party subject to a judgment on an issue in a prior 

action wants to avoid relitigating that issue, and depending on the 

circumstances, collateral estoppel may be appropriate.

21 457 S.W.3d at 52.

22 Samson Lone Star L.P., 497 S.W.3d at 1.

23 This Court denies petitions for review for a host of reasons, many of 

which have nothing to do with whether a lower court reached the right 

conclusions or reasoned correctly. See TEX. R. APP. P. 56.1(a). As a result, the 

denial of a petition for review provides no basis to conclude that this Court has 

previously decided an issue for collateral-estoppel purposes. See id.

R. 56.1(b)(1).
8

Provision.

Second, we consider the importance of the underlying issues. At 

face value, this appeal is about the interpretation of a single provision 

in an oil-and-gas lease. But as described below, this case also involves 

two previously undecided issues important to the State’s jurisprudence.

Therefore, nonmutual24 collateral estoppel does not apply.

III

We turn to two questions about the interpretation of the Late 

Charge Provision. First, whether Texas favors simple or compound 

interest in the absence of a written agreement on the applicable rate of 

interest. Second, whether the Late Charge Provision contains an 

express stipulation to a compound rate of interest.

We hold that the default rule in Texas is that simple interest 

applies in the absence of an express stipulation—with clear and specific 

language—to a compound rate of interest. We further hold that because

the Late Charge Provision lacks clear and specific indicia of such an 

express stipulation, only simple interest is available.

A

In antiquity, the prohibition against usury went deeper than a 

surface-level distinction between simple and compound interest. The 

assessment of interest was outlawed altogether. From early 

24 The Bordages contend that they should be deemed parties to the 

Hooks case. First, because it was Samson, not they, who sought severance. 

Second, because the Hooks and Bordages cases have overlapping evidence, 

pleadings, and court orders. However, they cite no authorities in support of 

their position. Because the Bordages were severed from—and not subject to—

the judgment in Hooks, we conclude that they are nonparties.
9

civilization’s agrarian roots sprouted a principle that money, because of 

its sterility, “cannot beget money”.25 For thousands of years, with a few 

exceptions,26 this principle unwaveringly held true.

During the medieval period, scholastics and natural-law 

philosophers laid the theoretical groundwork for legitimizing simple 

interest.27 And between the late medieval period and renaissance, 

25 Jim Wishloff, Usury and the Common Good, 3 J. VINCENTIAN SOC.

ACTION 13, 15 (2018) (“[M]oney was intended to be used in exchange, but not 

increase at interest . . . . [O]f all modes of getting wealth [usury] is the most 

unnatural.” (quoting ARISTOTLE, POLITICS, Book I, Part 10 (4th cent. B.C.)

(Barnes trans., 1984))); Robert P. Maloney, The Teaching of the Fathers on 

Usury, 27 VIGILAE CHRISTIANAE 241, 249 (1973) (“But you, copper and gold, 

things that cannot usually bring forth fruit, do not seek to have offspring.” 

(quoting GREGORY OF NYSSA, CONTRA USURARIOS, PG 46,442 (4th cent. A.D.))).

Some mistakenly believe that these principles are exclusively rooted in Jewish 

and Christian traditions. But similar prohibitions exist in Buddhist, Hindu, 

and Islamic legal traditions. Wishloff, supra, at 25.

26 Solon, an archon of Athens, did not entirely eliminate interest. 

However, his debt-reform laws, known as seisachtheia, canceled public and 

private debts retroactively and eliminated debt slavery. Josine Blok & Julia 

Krul, Debt and Its Aftermath: The Near Eastern Background to Solon’s 

Seisachtheia, 86 HESPERIA 607, 607-619 (2017). The Code of Hammurabi 

contemplated an interest rate set by the King, but Mesopotamia also 

attempted to control spiraling debt with “Clean Slate” proclamations. Michael 

Hudson, How Interest Rates Were Set, 2500 BC–1000 AD: Máš, tokos, and 

fœnus as Metaphors for Interest Accruals, 43 J. ECON. & SOC. HIST. OF THE 

ORIENT 132, 133 (2000). Caesar Augustus regulated lending for interest almost 

to extinction on the Italian peninsula, setting rates as low as 4%, which drove 

the lending market to other parts of the Roman Empire. Charles Bartlett, The 

Financial Crisis, Then and Now: Ancient Rome and 2008 CE, EPICENTER:

HARV. UNIV. (Dec. 10, 2018), https://bit.ly/43OuWsI.

27 Thomas Aquinas allowed for simple interest, provided it was not 

made in direct payment for a loan. This required interest to be assessed 

through legal fictions, like “extrinsic titles”. André Lapidus, Hugo Grotius on 

Usury: Acknowledging an End of the Scholastic Argument, EUR. J. HIST. ECON.

THOUGHT, hal-03989450, at 11 (Apr. 2023) (quoting THOMAS AQUINAS, SUMMA 
10

mathematical advances led to a clearer conceptual separation between 

simple and compound interest.28 With growing recognition of that 

distinction came the realization that different regulatory treatment may 

be appropriate. Thus, in time, Britain came to permit simple interest, 

but it imposed stringent penalties for usurious rates.29

B

Those principles eventually migrated to our shores. In the 

nineteenth century, the states were almost unanimous in permitting 

only simple interest. There was one exception: California. In seeking to 

advance a regime of absolute freedom of commerce, California had “no 

penalty for usury.”30

THEOLOGIAE, IIa-IIae, Q. 78, art. 2, ad. 1 (1274)), https://bit.ly/3u0pZPM. 

Needless to say, there seems to be vanishingly little daylight between paying 

a lender interest directly and doing so indirectly to compensate him for risk 

and forgone opportunity. Thus, Hugo Grotius cast aside this apparent fig leaf, 

greatly simplifying the structure of personal and commercial loans. Id. at 18 

(quoting HUGO GROTIUS, DE JURE BELLI AC PACIS, II, 12.21 (1625)).

28 C.G. Lewin, The Emergence of Compound Interest, 24 BRIT.

ACTUARIAL J. 1, 6 (2019) (“One of the earliest and most important sources for 

the study of simple and compound interest is the arithmetical manuscript 

written in 1202 by Leonardo Fibonacci of Pisa, known as Liber Abaci.”); id. at 

24 (“The earliest compound interest tables known to us are those included in 

Pegolotti’s manuscript [on mercantile practice, La Pratica della Mercatura]; 

they may have originated around 1340.”); id. (“With the notable exception of 

Fibonacci, it is not until the early 16[th] century that there is much evidence 

of serious thought being given to [compound interest].”).

29 In the eighteenth century, fifty years before the American Revolution, 

the Usury Act lowered rates to 5%. 12 Ann. c. 17, 13 Ann. c. 15. It imposed 

harsh penalties, including treble damages on principal, for excessive rates. 

J.F.B., Usury, XIII AM. L. REG. 321, 321-322 (1865).

30 JFB, supra note 29, at 333. Michigan and Illinois provided for

“greater rate[s]” “if specified in writing”. Id. But even under written 
11

That experiment, however, lasted less than a century. It ended in 

1918 with the adoption of the California Usury Law by ballot 

initiative.31 Thereafter, California harmonized its laws with those of the 

other states, acquiescing to the general rule that compound interest is 

prohibited absent a clear and specific expression to the contrary in 

writing.32

Around that time, the Supreme Court also had an opportunity to 

reconsider when compound interest is permitted. It chose to reinforce 

the general rule. In Cherokee Nation v. United States, the Court rejected 

a demand by the Cherokees for compound interest on four debts owed 

by the United States since 1819, the largest of which was a sum of

$1.114 million.33 The Solicitor General suggested that the Cherokees’ 

demand for compound interest on that sum “for near a century” would 

result in an amount “equal to the national debt.”34

While not mathematically precise,35 the Solicitor’s point about the 

agreements to exceed Michigan’s 7% ceiling, lenders could “only recover the

principal and simple interest.” Id. at 324 n.1 (emphasis added). Further, 

although Illinois’ statutes were silent about whether interest was simple or 

compound, id. at 323-324 n.1, given the virtual unanimity on this issue, it is 

highly likely that Illinois permitted only simple interest.

31 Wishnev v. Nw. Mut. Life Ins. Co., 451 P.3d 777, 780-782 (Cal. 2019).

32 Id. at 781.

33 270 U.S. 476, 477, 494 (1926).

34 Id. at 492.

35 The national debt in 1926 was $19.643 billion. Historical Debt 

Outstanding, FISCALDATA.TREASURY.GOV, https://bit.ly/4aUkyTa (last visited

May 13, 2024). A compound rate of 5% with annual rests on $1.114 million for 

one century would have yielded a total of $146.492 million—132 times larger 
12

inherent dangers of compound interest came through. Thus, the 

Supreme Court deemed that the language “shall bear interest at the rate 

of five per centum per annum, payable semiannually” is insufficient to 

authorize compounding.36

Cherokee Nation’s influence was felt beyond just contracts 

involving the United States. This was due to the Court’s reliance on the 

“general rule” that “even as between private persons . . . in the absence 

of a contract therefor or some statute, compound interest is not allowed 

to be computed upon a debt.”37 Cherokee Nation cemented the disfavored 

status of compound interest and affirmed the propriety of longstanding 

than the principal, but several multiples less than the national debt. 

Compound Interest Calculator, INVESTOR.GOV: U.S. SEC. & EXCH. COMM’N, 

https://bit.ly/3TUP49m (last visited May 13, 2024) (To reproduce, enter 

“1,114,000” in Initial Investment field; then enter “100” in Length of Time in 

Years field; then enter “5” in Estimated Interest Rate field; leave all other 

fields alone; then hit calculate). Even with semiannual rests, the total would 

have been $155.474 million. Id. (To reproduce, follow the above steps but select 

“semiannually” instead of “annually” in the Compounded Frequency field 

dropdown menu).

The Solicitor General’s estimate of an amount equivalent to the 

national debt could have resulted only from a compound rate of 5% with annual 

rests for two centuries: $19.264 billion. These numerical inaccuracies do not 

undermine Cherokee Nation. They instead reinforce the notion that human 

beings are not naturally equipped to predict the behavior of large, complex 

systems. See generally NASSIM NICHOLAS TALEB, THE BLACK SWAN (Random 

House 2007). This underscores the wisdom of the ancient prohibition of, and 

today’s presumption against, compound interest. Were the same dispute before 

the Supreme Court today, for instance, after three centuries of compounding, 

the $1.114 million principal would have ballooned to $2.533 trillion—an 

amount 2.3 million times greater than the original sum.

36 Cherokee Nation, 270 U.S. at 481, 491-492.

37 Id. at 490.
13

state law presumptions against its assessment.38

Today, compound interest remains disfavored. And where it is 

permitted, state laws echo Cherokee Nation in requiring clear and 

specific contractual or statutory authorization.39 Even Delaware and 

38 See, e.g., HKB, Inc. v. Imperial Crane Servs., No. 1 CA-CV 20-0402, 

2021 WL 2324931, at *3 (Ariz. Ct. App. June 8, 2021) (unpublished); Landals 

v. George A. Rolfes Co., 454 N.W.2d 891, 896-897 (Iowa 1990); Abbott v. Abbott, 

195 N.W.2d 204, 209 (Neb. 1972); In re Schuster’s Will, 3 N.Y.S.2d 702, 704 

(Sur. Ct. 1938); Hensley v. W. Va. Dep’t Health & Hum. Res., 508 S.E.2d 616, 

624-625 (W. Va. 1998); Bookworm, Inc. v. Tirado, 44 V.I. 300, 307 n.5 (Terr. Ct. 

2002).

39 Alabama: Burlington N.R.R. Co. v. Whitt, 611 So. 2d 219, 223-224 

(Ala. 1992); Alaska: Brandal v. Shangin, 36 P.3d 1188, 1193 & n.12 (Alaska 

2001); Arizona: Com. Realty Advisors, Ltd. v. Zink Invs. L.P., No. 1 CA-CV 

16-0153, 2017 WL 2982109, at *3-4 (Ariz. Ct. App. July 13, 2017)

(unpublished); HKB, 2021 WL 2324931, at *3; Arkansas: Hartford Sch. Dist. 

No. 94 v. Com. Nat’l Bank, 188 S.W.2d 638, 640-641 (Ark. 1945); California: 

McConnell v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 662 P.2d 916, 

920-921 (Cal. 1983); Colorado: Tarabino Real Est. Co. v. Tarabino, 126 P.2d 

859, 862 (Colo. 1942); Connecticut: Onthank v. Onthank, No. 

FSTCV176034047S, 2020 WL 1488583, at *3 (Conn. Super. Ct. Jan. 30, 2020)

(unpublished); Perry v. Cohen, 11 A.2d 804, 805-806 (Conn. 1940); District of 

Columbia: D.C. Pub. Schs. v. D.C. Dep’t Empl. Servs., 262 A.3d 213, 222-224 

(D.C. 2021); Florida: Cohen v. Jain, 219 So. 3d 100, 100 (Fla. Dist. Ct. App. 

2021) (per curiam); Morgan v. Mortg. Disc. Co., 129 So. 589 (Fla. 1930); 

Georgia: Caradigm USA LLC v. PruittHealth, Inc., 964 F.3d 1259, 1279-1280 

(11th Cir. 2020) (citing Noons v. Holiday Hosp. Franchising, Inc., 705 S.E.2d 

166, 170 (Ga. Ct. App. 2010)); Hawaii: Nawahi v. First Tr. Co. of Hilo, Ltd., 30 

Haw. 359, 378-380 (1928); Idaho: N. Idaho Bldg. Contractors Ass’n v. City of 

Hayden, 432 P.3d 976, 990 (Idaho 2018); Illinois: Weigel Broad. Co. v. Smith, 

682 N.E.2d 745, 752 (Ill. App. Ct. 1996); Indiana: Wilson v. N. Salem Bank, 171 

N.E.3d 1066 (Table), 2021 WL 2521338, at *5 (Ind. Ct. App. June 21, 2021)

(unpublished); N. Ind. Pub. Serv. Co. v. Citizens Action Coal. of Ind., Inc., 548 

N.E.2d 153, 161 (Ind. 1989); Iowa: Iowa Sup. Ct. Bd. Prof’l Ethics & Conduct 

v. McKittrick, 683 N.W.2d 554, 560-561 (Iowa 2004); Kansas: Iola State Bank 

v. Bolan, 679 P.2d 720, 735 (Kan. 1984); Louisiana: Chittenden v. State Farm 

Mut. Auto Ins. Co., 788 So. 2d 1140, 1151 (La. 2001); Maine: Premier Cap., Inc. 

v. Doucette, 797 A.2d 32, 37 (Me. 2022); Maryland: Travel Comm., Inc. v. Pan 
14

Am. World Airways, Inc., 603 A.2d 1301, 1333-1334 (Md. Ct. Spec. App. 1992); 

Michigan: Nation v. W.D.E. Elec. Co., 563 N.W.2d 233, 235-237 (Mich. 1997); 

Minnesota: KPG Telecomms., LLC v. Ervin Cable Constr., LLC, 

No. 20-CV-0114 (PJS/ECW), 2021 WL 4291105, at *7 (D. Minn. Sept. 21, 2021)

(citing Am. Druggists Ins. v. Thompson Lumber Co., 349 N.W.2d 569, 573 

(Minn. Ct. App. 1984)); Mississippi: Pursue Energy Corp. v. Abernathy, 

77 So. 3d 1094, 1102-1104 (Miss. 2011); Missouri: Brockman v. Soltysiak, 

49 S.W.3d 740, 746 (Mo. Ct. App. 2001); Penzel Constr. Co. v. Jackson R-2 Sch. 

Dist., 655 S.W.3d 434, 440-441 (Mo. Ct. App. 2022); Montana: McCormick v. 

Brevig, 169 P.3d 352, 360 (Mont. 2007); Nebraska: Ashland State Bank v. 

Elkhorn Racquetball, Inc., 520 N.W.2d 189, 194-195 (Neb. 1994); Nevada: 

Westgate Planet Hollywood Las Vegas, LLC v. Tutor-Saliba Corp., 449 P.3d 476 

(Table), 2019 WL 4786884, at *4 (Nev. Sept. 27, 2019) (unpublished); New 

Hampshire: Metro. Prop. & Liab. Ins. Co. v. Ralph, 640 A.2d 763, 767 (N.H. 

1994); New Jersey: Henderson v. Camden Cnty. Mun. Util. Auth., 826 A.2d 615, 

619-620 (N.J. 2003); New Mexico: State ex rel. King v. B & B Inv. Grp., Inc., 

329 P.3d 658, 675-676 (N.M. 2014); New York: R.F. Schiffman Assocs. v. Baker 

& Daniels LLP, 147 A.D.3d 482, 483 (N.Y. App. Div. 2017); North Carolina: 

Ferguson v. Coffey, 637 S.E.2d 241, 243 (N.C. Ct. App. 2006); North Dakota: 

Van Sickle v. Hallmark & Assocs., 840 N.W.2d 92, 108 (N.D. 2013); Ohio: 

Mayer v. Medancic, 919 N.E.2d 721, 724-725 (Ohio 2009); Oklahoma: Phillips 

v. Hedges, 124 P.3d 227, 231 (Okla. 2005); Oregon: In re Marriage of Mannix, 

932 P.2d 70, 73-74 (Or. Ct. App. 1997) (en banc) (discussing OR. REV. STAT.

§ 82.010(2)(c)); Pennsylvania: Penn. State Educ. Ass’n v. Appalachia 

Intermediate Unit 08, 476 A.2d 360, 363 (Pa. 1984); In re Est. of Dembosky, 301

A.3d 906 (Table), 2023 WL 4013364, at *2 (Pa. Super. Ct. June 15, 2023)

(unpublished); Rhode Island: Imperial Cas. & Indem. Co. v. Bellini, 947 A.2d 

886, 894-895 (R.I. 2008); South Carolina: Edwards v. Campbell, 633 S.E.2d 

514, 516-517 (S.C. 2006); South Dakota: S.D. CODIFIED LAWS §§ 51A-12-15, 

54-3-1.1, 54-3-4, 54-3-16; Tennessee: In re Est. of Hawkins, 

No. W2003-02279-COA-R3-CV, 2004 WL 2951993, at *10-11 (Tenn. Ct. App. 

Dec. 16, 2004, appeal denied); Utah: City of Hildale v. Cooke, 28 P.3d 697, 708 

(Utah 2001); Vermont: Greenmoss Builders, Inc. v. Dun & Bradstreet, Inc., 543

A.2d 1320, 1323-1324 (Vt. 1988); Virginia: Helena Agri-Enters., LLC v. VA7, 

LLC, No. 5:22-cv-00015, 2022 WL 2287417, at *4 (W.D. Va. June 23, 2022) 

(citing VA. CODE ANN. § 6.2-302); Washington: Sintra, Inc. v. City of Seattle, 

935 P.2d 555, 565-566 (Wash. 1997); id. at 586 n.17 (concurrence); West 

Virginia: Warrior Oil & Gas, LLC v. Blue Land Servs., LLC, 886 S.E.2d 336, 

345 (W. Va. 2023); Wisconsin: McFadden v. Gray, 508 N.W.2d 75 (Table), 1993 

WL 348678, at *1 (Wis. Ct. App. Sept. 8, 1993) (unpublished); Guam: Guam 

United Warehouse Corp. v. DeWitt Transp. Servs. of Guam, 2003 Guam 20
15

Massachusetts law, upon which the Bordages rely so heavily, are 

consistent with the general rule.40 And the few exceptions to the general 

rule—some of which are unique to other jurisdictions—are inapplicable 

here.41 Thus, the Bordages’ arguments in favor of compound interest 

find little support.42

¶¶ 36-39 (2003); Virgin Islands: Castor v. Andrews, No. ST-94-CV-408, 2009 

WL 10742644, at *1 (V.I. Super. Ct. July 2, 2009); Smith v. Companion 

Assurance Co., 70 V.I. 233, 239-240 (Super. Ct. 2019).

40 The Delaware Court of Chancery retains the discretion to award 

compound interest in “specific circumstances”, but compounding remains a 

disfavored “exception”, and Delaware courts have rejected as false claims of 

“recent trend[s]” in its favor. LCT Cap., LLC v. NGL Energy Partners LP, 

No. N15-C-08-109 JJC CCLD, 2023 WL 4102666, at *7-8 (Del. Super. Ct. June 

20, 2023) (collecting cases); see also Gotham Partners, L.P. v. Hallwood Realty 

Partners, L.P., 817 A.2d 160, 173 (Del. 2002). Massachusetts likewise permits 

compounding “in certain cases” but reaffirms its “ancient unwillingness to 

allow compound interest”. Sec’y of Admin. & Fin. v. Lab. Rels. Comm’n, 749 

N.E.2d 137, 143 (Mass. 2001). Thus, while compound interest is permitted in 

“equitable proceeding[s]”, it remains “generally disfavored”. Lombardi Corp. v. 

Urb. Improvement Fund Ltd. 1973, Nos. 143922BLS1, 150643BLS1, 2016 WL 

3919624, at *11 (Mass. Super. Ct. May 20, 2016).

41 One such exception arises in takings cases, where compound interest 

may be assessed under the Fifth Amendment’s “just compensation” 

requirement. Innovair Aviation, Ltd. v. United States, 83 Fed. Cl. 498, 506-507 

(2008). Another exception, already discussed, supra note 40, permits courts of 

equity to assess compound interest in some circumstances. A third, also 

equitable in origin, permits compounding in certain cases involving breaches 

of fiduciary duty and mismanagement of trust assets. Jo Ann Howard & 

Assocs. v. Cassity, 395 F. Supp. 3d 1022, 1193 (E.D. Mo. 2019), aff’d sub nom. 

Jo Ann Howard & Assocs. v. Nat’l City Bank, 11 F.4th 876 (8th Cir. 2021). One 

more exception, accepted in Texas, applies to the assessment of postjudgment 

interest. TEX. FIN. CODE § 304.006.

42 Few cases support the Bordages’ position, and those that do rest on

questionable reasoning. See, e.g., Halling v. Yovanovich, 391 P.3d 611, 620-621

(Wyo. 2017) (holding that the trial court did not clearly err by concluding that 

“accrue @ 6% monthly” means “6 percent annual interest compounded 
16

C

The same principles hold true in Texas. From our earliest 

jurisprudence, the default rule has been that simple interest applies 

unless parties “expressly stipulate” to compound interest.43 While early 

Texas cases properly invoked the general rule, our decision in Lewis v. 

Paschal’s Administrator sowed confusion by suggesting that the use of 

any temporal language—such as “per annum” or “annually”—could 

suffice for such an express stipulation.44 The problem is that similar and 

identical temporal language appears in interest clauses for a wide 

variety of reasons. To provide but one example, simple interest is often 

monthly”); Dec. Farm Int’l, LLC v. Dec. Est., LLC, Nos. 2019-CA-0983-MR, 

2019-CA-1057-MR, 2021 WL 1823278, at *13 (Ky. Ct. App. May 7, 2021, review

denied) (holding that the trial court did not abuse its discretion by concluding

that “accrue interest at the rate of twelve percent (12%) per annum” “plainly 

refer[s] to compounding interest”); but see Nucor Corp. v. Gen. Elec. Co., 812 

S.W.2d 136, 140 n.1 (Ky. 1991) (noting that “compound interest [is] 

inappropriate [in actions at law] even if interest [is] otherwise proper”).

43 Lewis v. Paschal’s Adm’r, 37 Tex. 315, 320 (1872); Andrews v. Hoxie, 

5 Tex. 171, 194 (1849) (stating that “an agreement to pay interest on interest 

[i.e., compound interest] is not usurious”) (emphasis added).

44 See 37 Tex. at 318, 320 (concluding that “ten per cent. per annum, 

payable annually” is a stipulation to compound interest); see also Roane v. 

Ross, 19 S.W. 339, 340 (Tex. 1892) (affirming that “interest at the rate of 10 

per cent. per annum from date . . . [payable] annually” is a stipulation to 

compound interest); Texon Energy Corp. v. Dow Chem. Co., 733 S.W.2d 328, 

331 (Tex. App.—Houston [14th Dist.] 1987, writ ref’d n.r.e.) (concluding that 

“interest monthly at the rate of twelve percent (12%) per annum” is a 

stipulation to compound interest). The court below appeared to follow this line 

of cases. See 662 S.W.3d at 509-510 (concluding that an agreement to pay 

interest on “past due royalties . . . based on the amount due and calculated at 

the maximum rate allowed by law” where interest was “due and payable on the 

last day of each month” is a stipulation to compound interest).
17

described using “per annum” or “per month” language.45

Paschal’s Administrator was built on sand.46 It is thus 

unsurprising that its legacy has toppled. Even if pre-Cherokee Nation

cases in Texas permitted compounding under such an illusory standard, 

we have long since reversed course.47 Paschal’s Administrator and its 

45 See, e.g., KPG Telecomms., 2021 WL 4291105, at *7 (explaining the 

sensibility of a “specificity” requirement: if “contractual language as simple as 

‘per month’ were sufficient to trigger compound interest, then [the law] would 

be turned on its head . . . [c]ompound interest would be the rule, rather than 

the exception . . . as almost every interest clause imposes interest on a ‘per 

year,’ ‘per month,’ ‘per week,’ or ‘per day’ basis”).

46 Paschal’s Administrator rests on obiter dicta—so defined by the very 

author of the opinion—in De Cordova v. City of Galveston, 4 Tex. 470 (1849). 

One of the questions presented in De Cordova was: “Where interest is payable 

annually[,] . . . whether the creditor is entitled to interest upon interest”? Id.

at 470. At the start of his opinion, Chief Justice Hemphill expressly declined 

to address that issue, explaining that the “only question deemed material to 

discuss” was the “statute of limitations”. Id. at 473. But Paschal’s 

Administrator unduly focused on one of Chief Justice Hemphill’s passing 

hypotheticals, where he simply observed that “[t]he interest might have, 

perhaps, been recovered in a separate suit; or, if the action had been brought 

before the bar of the statute, the plaintiffs would have been entitled to annual 

rests, and to interest upon the interest in computing the amount to be 

recovered.” Id. at 482. Paschal’s Administrator declined to treat that statement 

as dicta—despite Chief Justice Hemphill’s cautionary words—and insisted 

that “it can hardly be questioned that [Chief Justice Hemphill] intended to 

decide that interest upon interest might be recovered”. 37 Tex. at 319 

(emphasis added).

47 Bothwell v. Farmers’ & Merchants’ State Bank & Trust Co. of Rusk

was decided four years after Cherokee Nation but did not consider that opinion, 

even though it ultimately concluded that the notes at issue were usurious. 30 

S.W.2d 289, 292 (Tex. 1930). We expressed doubt about “the toleration of 

taking interest in advance at the highest rate allowed by law,” an “artificial 

rule . . . unsupported by any sound reasoning”. Id. (quoting First Nat’l Bank v. 

Davis, 108 Ill. 633, 638 (1884)); see id. at 291 (explaining that the note in Davis 

could not “be differentiated from that one before us”). In this way, Texas had 
18

progeny have not been cited or followed for almost a century. Instead, 

more recently, the majority of Texas courts that have squarely 

considered this issue have reoriented to the general rule.48

As Cherokee Nation illustrates, the choice between simple and 

compound interest can have drastic consequences.49 Accordingly, a

court’s application of compound interest to a contract where compound 

interest was never intended can easily transform a venture that was 

beneficial to both sides into an oppressive relationship. In defiance of an 

extensive legal tradition, Paschal’s Administrator allowed choices of 

such gravity to be made with little more than a judicial coin flip, 

reaffirming the wisdom of the principle that one should not remove a 

already begun arcing back towards the general rule even before Cherokee 

Nation’s effects were felt. And to be clear, Bothwell’s suggestion that compound 

interest may not require “any express stipulation” does not survive Cherokee 

Nation or the present case.

48 See In re Phillips, 496 S.W.3d 769, 776 & n.36 (Tex. 2016); City of 

Austin v. Foster, 623 S.W.2d 672, 675-676 (Tex. App.—Austin 1981, writ ref’d 

n.r.e.); Spiller v. Spiller, 901 S.W.2d 553, 558-559 (Tex. App.—San Antonio 

1995, writ denied); William C. Dear & Assocs. v. Plastronics, Inc., 913 S.W.2d 

251, 254 (Tex. App.—Amarillo 1996, writ denied). See also Ex parte Glover, 701 

S.W.2d 639, 640 (Tex. 1985) (holding that a directive for “interest at the rate 

of 10% per annum” provides insufficiently “clear and definite” guidance on 

whether simple or compound interest is contemplated). Glover did suggest in 

passing that “per annum” could mean “compound interest as easily as simple 

interest.” Id. But that dictum contradicts Cherokee Nation, a pre-Erie case that 

invokes “general” principles of law. 270 U.S. at 490; see Swift v. Tyson, 41 U.S. 

1, 12-15 (1842). And regardless, Glover is a clear departure from Paschal’s 

Administrator’s pronouncement that “there can be no reasonable doubt” that 

“per annum” or “annually” requires the assessment of compound interest. 37 

Tex. at 318-320.

49 See supra note 35.
19

fence until one understands why it was put there.50

Today, we disapprove Paschal’s Administrator and its progeny to 

the extent that they are inconsistent with the following statement. The 

default rule in Texas accords with the general rule: absent clear and 

specific contractual or statutory authorization, compound interest51 is 

prohibited, and only simple interest52 is available.

D

The final question we must consider is what degree of clarity and 

specificity is required to expressly stipulate to a compound rate of 

interest. While we do not prescribe any particular formulas or magic 

words, we can certainly say what language falls short. In light of the 

harsh, commercially oppressive nature of compound interest, clauses

50 City of League City v. Jimmy Changas, Inc., 670 S.W.3d 494, 512 (Tex. 

2023) (Young, J., concurring) (invoking the principle commonly known as 

“Chesterton’s fence”); G.K. CHESTERTON, THE THING 29 (Sheed & Ward 1946).

51 In plainer but less precise language, “compound interest” is “[i]nterest 

paid on both the principal and the previously accumulated interest”. In re TCI 

Courtyard, Inc., 591 F. App’x 256, 257 (5th Cir. 2015) (quoting Compound 

interest, BLACK’S LAW DICTIONARY (10th ed. 2014)). “[A]t the end of each 

interest period, the accrued interest is added to the principal for purposes of 

future calculations of interest.” Themis Cap., LLC v. Dem. Rep. Congo, 626 F. 

App’x 346, 349 (2d Cir. 2015) (citation omitted). To use more precise terms, 

compound interest is expressed formulaically as CI = P(1 + r/n)nT - P; where CI 

is compound interest, P is the principal, r is the annual interest rate, n is the 

number of compounding periods, and T is the time or term. For example, a 

borrower who borrows $100 at an interest rate of 6% per annum (0.06) for 100 

years, compounded monthly (12), will owe $39,644.23 in compound interest; CI 

= $100(1 + 0.06/12)(12)(100) - $100.

52 Simple interest (SI) is calculated by multiplying the principal (P), by 

the annual interest rate (r), and the time or term (T); SI =PrT. For example, a 

borrower who borrows $100 at an interest rate of 6% per annum (0.06) for 100

years will owe $600 in simple interest.
20

imposing interest must be strictly construed in favor of simple interest.53

The court of appeals relied heavily on the Late Charge Provision’s 

statement that interest becomes “due and payable on the last day of each 

month” (or stated differently, “due and payable [monthly]”). The 

Supreme Court deemed similar language insufficient in Cherokee 

Nation.54 It should have been clear that such language falls short.

As a general matter, mere temporal references (e.g., “per annum,”

or “annually”) standing alone are insufficient to sustain the assessment 

of compound interest.55 Almost every interest clause imposes interest on 

a “per annum” or “per month” basis.56 And the most standard reading of 

a clause that demands payment “monthly” or “annually” is that it merely 

specifies the time for payment.57 Further, while periodic rests are indeed 

53 See Cherokee Nation, 270 U.S. at 490 (“In view of the care with which 

[legal tradition] ha[s] limited the collection of simple interest . . . a fortiori must 

compound interest be denied[,] unless [express] provision therefor is made”.); 

Spiller, 901 S.W.2d at 558-559 (holding that a statute “silent as to whether the 

interest was simple or compounded” requires simple interest “as a matter of 

law”).

54 270 U.S. at 491-492 (concluding that the phrase “payable 

semiannually” is insufficient to trigger compound interest with semiannual 

rests).

55 Phillips, 496 S.W.3d at 776 (expressing doubt about an “argu[ment] 

that . . . interest compounds” when a statute uses only the term “per annum”); 

Foster, 623 S.W.2d at 675 (explaining that merely “prescrib[ing] legal interest 

in terms of an annual rate” does not “direct” the compounding of interest); id.

at 676 (citing Cherokee Nation, 270 U.S. at 476).

56 See, e.g., KPG Telecomms., 2021 WL 4291105, at *7-8.

57 Cherokee Nation, 270 U.S. at 491-492 (concluding that “shall be paid 

semiannually” is insufficient to authorize compound interest).
21

a feature of agreements to compound rates of interest,58 courts will not

impose the harsh penalty of a compound rate by gleaning such periodic 

rests from ordinary or ambiguous temporal language that could also 

refer to a simple rate of interest.59

The court of appeals also reasoned that because the last sentence 

of the Late Charge Provision states that interest is “due and 

payable . . . each month”, any unpaid interest must be blended “every 

month” with the “amount” of past due monthly royalties subject to late 

charges in the first sentence of the provision. It thus concluded that the 

contract contemplated late charges on late charges, or interest on 

interest. But courts are called to interpret a contract’s plain language.

Here, a plain reading of the Late Charge Provision shows that it 

calls only for simple interest. It provides for a late charge “based on the 

amount due” of “past due royalties . . . including any compensatory 

royalties”. The late charge begins to accrue interest at the “maximum 

rate allowed by law”—a simple interest rate, absent an express 

stipulation, with clear and specific language, to the contrary—on the day 

after “such monthly royalty payment” was due. The late charge must be 

paid, i.e., becomes “due and payable”, on the last day of the month in 

58 Periodic rests denote the frequency with which compounding will 

occur. See Yaws v. Jones, 19 S.W. 443, 446 (Tex. 1892) (“The note sued upon 

expressly provides that ‘in case of failure to pay the note at maturity the 

interest is to be added to the principal, and total to draw interest, with annual 

rests.’”).

59 To be clear, however, an agreement that expressly provides a time 

period for compounding, together with the word “compounded” (e.g.,

“compounded annually” or “compounded semiannually”), at a given rate of x%, 

is sufficiently clear to denote compound interest.
22

which it is assessed. If the due date is missed, simple interest continues 

to accrue on the unpaid royalty “for every calendar month and/or 

fraction thereof from the due date until paid”.

The court of appeals rejected this straightforward approach 

because it thought such a reading would render the Late Charge 

Provision’s final sentence meaningless. Not so. The parties’ agreement 

that any late charges become “due and payable” on a certain day

achieves at least two things. First, it provides predictability about when 

the Bordages could expect late charges to be paid. Second, it creates a 

fixed point from which the Bordages could assess the maturation of their 

legal rights to collect any unpaid late charges and to seek other 

contractual remedies.

We hold that the language of the Late Charge Provision is 

insufficiently clear and specific to constitute an express stipulation to 

compound interest. Thus, only simple interest is available, and the trial 

court’s assessment of compound interest against Samson was in error.

* * * * *

We reverse the court of appeals’ judgment and remand the case 

to the trial court for further proceedings consistent with this opinion.

Nathan L. Hecht

Chief Justice

OPINION DELIVERED: June 7, 2024