Court Opinion

ID: 7879493
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:19:39.750587+00
Date Added: 2024-06-11T16:31:31.173133
License: Public Domain

HENDERSON, Justice
(specially concurring).
Reference is made. to our very recent decision in Honomichl v. Modlin, 477 N.W.2d 599 (S.D.1991) (#17329 handed down 11-20-91).
In footnote one thereof, we quoted SDCL 21-1-13.1 and I shall extract therefrom a sentence within said statute: “Prejudgment interest on damages arising from a contract shall be at the contract rate, if so provided in the contract; otherwise, if prejudgment interest is awarded, it shall be at the Category B Rate specified in § 54-3-16.”
In Honomichl, concurring in part; dissenting in part, this Justice expressed, inter alia: “Clearly, appellants are claiming that the trial court was clearly erroneous in failing to award prejudgment interest. But, just as clearly, appellants testified that there was no interest charge agreed to between the parties, and that past practices between the parties demonstrated that interest was not charged.” (Citations omitted). Emphasizing in Honomichl, that we must hone in on the facts before us, I wrote: “... we must consider the (1) intent of the contracting parties regarding interest and (2) the dealings between the parties — not precedent in this Court where interest was imposed on a totally different set of facts.” (Emphasis supplied mine). My point was then, and it is now, that you absolutely must examine the contract of the parties concerning interest and rivet in on their dealings with one another concerning the interest. As authority, 47 C.J.S. Interest & Usury, Consumer Credit § 9 (1982) was cited for the proposition that the general rule is that liability for interest is *913purely a matter of contract, requiring a promise to pay it. In Honomichl, there was no promise; the dealings reflected that the parties had no agreement whatsoever on interest; quite to the contrary, all dealings between the parties demonstrated that interest was not being charged between the parties. Here, however, “interest” was billed with each billing.
With that background, let us examine the dealings of the parties before us in this appeal:
1. Empire’s grain sales agreements with Barzen provided for a two percent, per month, finance charge, on any sales for which payment was not made within thirty days of delivery of grain. It would appear that this “finance charge” is, in reality, “interest.”
2. Interest was billed, but was not paid.
3. Empire received payments on the principal but received no interest. These payments were chronically late.
4. Empire continued to sell grain to Barzen.
5. Empire did demand interest but Bar-zen refused to pay same.
6. Empire did not commence its claims for interest until the end of a long business relationship when Barzen became insolvent. By this time, four years had gone by, Empire accepting payments without interest and likewise making sales to Barzen during this four year period.
Empire attempts to circumvent the clear effect of SDCL 21-1-12 by advocating that it (a) did bill interest and (b) did demand interest by correspondence and telephone calls. But, unfortunate to its position, it continued to make sales to Barzen, continued to do business with Barzen, and did not put its foot down, during a four year period, and say, in effect, “you either pay the interest or we are not going to do any more business with you.” SDCL 21-1-12 rings out against its position. It is a harsh statute. It contains only 13 words but they are powerful.