“Whether a charge imposed because of late payment of a debt is compensation for the continued use of the money owed depends upon whether the late charge is made as consideration for an extension of the time for payment or as compensation for the damage done to the creditor by the debtor’s failure to pay his debt when due.”
How later courts described this case
- “Whether a charge imposed because of late payment of a debt is compensation for the continued use of the money owed depends upon whether the late charge is made as consideration for an extension of the time for payment or as compensation for the damage done to the creditor by the debtor’s failure to pay his debt when due.”
Written by the judges who cited it.
The opinion
Opinion on Petition to Rehear
The basic contention of the petition to rehear is that interest at the legal rate should be the sole element of damages for the breach of a contract to pay a sum certain of money. Our original opinion determined that interest was only one, though normally the most important, element of damages for the failure to pay a designated sum of money as required by a contract. Due consideration of the three sources of authority cited by the petitioner leaves this Court still persuaded that its original opinion is correct. The portion of the case of Morrison v. Searight, 63 Tenn. 476 , cited by the petitioner, is obiter dicta. Because of the extensive factual differences between the present case and Morrison, supra, to allow the dicta of the latter to control the outcome of the former would be a misapplication of principle.
Although some jurisdictions limit the recovery of damages for the breach of a contract to pay a sum cer *203 tain of money to legal interest alone we believe the better rule, as stated in onr original opinion, is to allow recovery of all damages wbicb are the normal and foreseeable result of the breach of such a contract. A rule limiting damages in siich a situation to interest alone provides compensation for only one part of the actual foreseeable damages. Such a rule would violate the basic principle of contract law that enables a person to recover all damages that are the reasonably foreseeable consequence of a breach of the contract.
The petition to rehear is therefore denied.