Court Opinion

ID: 5850399
Source: CourtListenerOpinion
Date Created: 2022-01-12 23:59:05.979687+00
Date Added: 2024-06-11T08:44:04.306449
License: Public Domain

Silverman, J., dissents in a memorandum as follows:
I would reverse the order appealed from and grant defendant’s motion for summary judgment. There is no issue of fact. It is simply a question of the interpretation of a written instrument, which in my view scarcely requires interpretation. Plaintiff is suing for interest on a 1959 promissory note. That note provides on its face for an amount of principal with interest at prime rate. It goes on to state on the face that “[t]his is a conditional non-negotiable promissory note, subject to the conditions on the reverse side hereof.” On the reverse side the note provides, among other things, “the maker shall repay only such sums as shall actually have been advanced or paid by the payee to the maker, together with interest from the date of any such advance or payment, pursuant to a series of thirteen demand promissory notes from the payee to the maker herein dated December 7, 1959 at the prime rate from the date of any such advance or payment by the payee herein.” (Italics mine.) It is undisputed that no sums were ever advanced under the note sued on or the 13 notes referred to. Plaintiff does not claim that defendant had any unconditional obligation, or, as it turned out, any obligation to “repay” principal. But plaintiff claims interest. In essence plaintiff says that this “interest” was in the nature of a commitment or stand-by fee. If so, the word interest is an extraordinarily inappropriate term. The usual meaning of interest is as compensation for the use or loan of a principal sum of money. An obligation to pay “interest” when no one has an obligation to pay principal is a legal anomaly. Further, the note provides for interest at the “prime rate.” The prime rate is the rate that banks charge for money actually advanced. It cannot be that that is also the rate to be paid when money was not advanced, and surely it cannot be that plaintiff was entitled to two “interests” at the prime rate, one interest at the prime rate for 20 or so years without advancing any money, and again true interest at the prime rate on money actually advanced, if any be advanced. But the decisive consideration, in the end as in the beginning, is the word — the language we are interpreting. That language plainly says that interest shall be payable only from the date of any advance or payment. There was no advance or payment. Therefore, there is no interest.