Opinion ID: 1144435
Heading Depth: 1
Heading Rank: 2

Heading: standard of review

Text: `We review this case de novo, applying the oft-stated principles governing appellate review of a trial court's grant or denial of a summary judgment motion: `We apply the same standard of review the trial court used in determining whether the evidence presented to the trial court created a genuine issue of material fact. Once a party moving for a summary judgment establishes that no genuine issue of material facts exists, the burden shifts to the nonmovant to present substantial evidence creating a genuine issue of material fact. `Substantial evidence' is `evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved.' In reviewing a summary judgment, we view the evidence in the light most favorable to the nonmovant and entertain such reasonable inferences as the jury would have been free to draw.'  American Liberty Ins. Co. v. AmSouth Bank, 825 So.2d 786, 790 (Ala.2002) (quoting Nationwide Prop. & Cas. Ins. Co. v. DPF Architects, P.C., 792 So.2d 369, 372 (Ala.2000) (citations omitted)). General Motors Corp. v. Kilgore, 853 So.2d 171, 173 (Ala.2002).
Bockman and WCH agree that under § 6-5-253(a), Ala.Code 1975, the debt owed under the note and secured by the first mortgage on the property was a lawful charge to be applied to the redemption cost. However, Bockman argues that the trial court erred in entering a summary judgment for WCH on the issue whether the amount due under the note included interest upon unpaid interest. A promissory note is a form of contract; therefore, it must be construed under general contract principles. See 11 Am. Jur. 2d Bills and Notes § 2 (1997) (Bills and notes . . . are contracts; accordingly, the fundamental rules governing contract law are applicable to the determination of the legal questions which arise over such instruments. (footnotes omitted)); William D. Hawkland and Lary Lawrence, UCC Series § 3-119, Official Comment (1994) (As between the immediate parties a negotiable instrument is merely a contract. . . .). `General contract law requires a court to enforce an unambiguous, lawful contract, as it is written. P & S Business, Inc. v. South Central Bell Telephone Co., 466 So.2d 928, 931 (Ala.1985). See also McDonald v. U.S. Die Casting and Development Co., 541 So.2d 1064 (Ala.1989).' Dawkins v. Walker, 794 So.2d 333, 339 (Ala.2001) (quoting Ex parte Dan Tucker Auto Sales, Inc., 718 So.2d 33, 35-36 (Ala.1998)). In support of its motion for a summary judgment, WCH argued that the note in this case expressly provided for charging interest upon unpaid interest. The note stated: Each payment shall be applied first to the payment of acrued [sic] interest and the balance as a credit on the principal. Said principal and interest . . . shall bear interest from maturity at said rate until paid.  (Emphasis added.) The express terms of the note provide that accrued interest and matured principal would bear interest at 10 percent until paid. Because the note expressly provided for the payment of interest upon unpaid interest, WCH met its burden of presenting substantial evidence indicating that the amount due under the note included interest upon unpaid interest. Bockman, however, argues that the trial court's judgment was not supported by the evidence. Bockman contends that the mortgagees could not have intended that interest upon unpaid interest be applied to the debt owed on the note because, he says, Hartley and the mortgagees agreed in the 1997 agreement that the amount actually due under the note and first mortgage was $750,000. Bockman further argues that, if the mortgagees had been charging interest upon unpaid interest, the amount due on the note at the time the 1997 agreement was executed would have been $1,033,000. Lastly, Bockman argues that the affidavits of the mortgagees make it clear that the original parties to the 1989 note and mortgage did not charge interest on unpaid interest. Contrary to Bockman's assertions, the affidavits of the mortgagees do not make it clear that the note did not provide for interest upon unpaid interest. Rather, the mortgagees testified that in 1997 they entered into an agreement with Hartley to amend the terms of the note and the first mortgage by establishing and fixing the outstanding balance due under the Note at $750,000. The 1997 agreement was the result of a compromise between Hartley and the mortgagees in anticipation of full payment. The evidence indicates that the 1997 agreement was an amendment and that the $750,000 figure did not reflect the actual amount owed under the original terms of the note. Bockman insisted to the trial court, and both parties conceded, that the 1997 agreement was not to be considered in determining the redemption amount. Further, the express terms of the note stipulated that the debtor, Hartley, promised to pay interest upon unpaid interest. Bockman failed to present sufficient evidence to overcome WCH's motion for a summary judgment on the issue whether the note provided for charging interest upon unpaid interest. Bockman also argues that there is no common law or statutory authority for charging interest upon unpaid interest on the debt owed on the note. Bockman argues that under this Court's holding in Burgess Mining & Construction Corp. v. Lees, 440 So.2d 321, 338 (Ala.1983), the interest applied should have been simple interest and nothing more. However, the facts of Burgess are distinguishable from the facts of this case. In Burgess, there was no written contract between the parties setting out the controlling interest rate. Burgess, 440 So.2d at 338 (Consequently, the Court holds that where, as in this case, no written contract controls the interest rate, thereby precluding the 8% rate of [§] 8-8-1, the legal rate of prejudgment interest is 6% per annum.). In contrast, in this case, the language of the note expressly states that interest upon unpaid interest would be charged to the debt owed under the note. Further, our common law provides authority for charging interest upon unpaid interest. In Smith v. Penn Mutual Life Insurance Co., 244 Ala. 610, 614, 14 So.2d 690, 694 (1943), this Court addressed whether it was permissible for parties to a loan to expressly agree to compute the amount due by charging interest upon unpaid interest. This Court held: While there is considerable diversity of opinion on the subject, the rule of our decisions is that an express agreement to pay interest on interest, especially when such agreement is made after the maturity of the original principal, is not unlawful unless the interest so computed exceeds the legal rate for the time, and impinges the statute against usury. 244 Ala. at 614, 14 So.2d at 694. Bockman even concedes that [t]he only way that [WCH's] calculations could possibly be correct is if there is express language in the agreement between Hartley Silica and the Mortgagees to allow for interest on unpaid interest. Further, Bockman has not cited any authority stating that a mortgagee cannot charge interest upon unpaid interest. We hold that the trial court did not err in entering a summary judgment for WCH on the issue whether interest upon unpaid interest was to be applied to the debt owed on the note.
WCH argues that, under the plain meaning of § 6-5-253(a)(4), the trial court erred in excluding the unpaid balance, plus accrued interest, of the fifth mortgage from the costs of redemption. We disagree. `In determining the meaning of a statute, this Court looks to the plain meaning of the words as written by the legislature.' Ex parte Shelby County Health Care Auth., 850 So.2d 332, 337 (Ala.2002) (quoting DeKalb County LP Gas Co. v. Suburban Gas, Inc., 729 So.2d 270, 275-76 (Ala.1998)). The plain language of § 6-5-253(a)(4) states: (a) Anyone entitled and desiring to redeem real estate under the provisions of this article must also pay or tender to the purchaser or his or her transferee the purchase price paid at the sale, with interest at the rate allowed to be charged on money judgments . . . and all other lawful charges, also with interest as aforesaid; lawful charges are the following: . . . . (4) Any other valid lien or encumbrance paid or owned by such purchaser or his or her transferee or if the redeeming party is a judgment creditor or junior mortgagee or any transferee thereof, then all recorded judgments, recorded mortgages and recorded liens having a higher priority in existence at the time of the sale . . . .  Ala.Code 1975, § 6-5-253 (emphasis added). WCH contends that the § 6-5-253(a)(4) unambiguously states that the redemption costs include [a]ny other valid lien or encumbrance paid or owned by such purchaser; therefore, WCH argues, the unpaid balance of the fifth mortgage should be included in the redemption costs under § 6-5-253(a)(4). However, because Bockman is a junior mortgagee, the second portion of subsection (a)(4) applies. The statute clearly provides that the lawful charges of a junior mortgagee include recorded mortgages having a higher priority. Because the fifth mortgage is lower in priority than Bockman's second mortgage, it should not be included in the costs of redemption under § 6-5-253(a)(4). Therefore, the trial court did not err in entering a summary judgment for Bockman on the issue whether the unpaid debt on the fifth mortgage should be excluded from the redemption amount.