Sunray DX Oil Co. v. Great Lakes Carbon Corp.

SUPPLEMENTAL OPINION ON REHEARING

BERRY, Vice Chief Justice:

When the judgment involved was rendered our statute, 15 O.S.1961, § 274, provided all judgments of courts of record should bear 6% interest per annum. The instant judgment was entered July 29, 1966, including 6% interest until paid. By legislative enactment, effective March 25, 1968, the former statute was repealed and a new statute (15 O.S.Supp.1968 § 274) provided all judgments would bear interest at rate of 10% per annum from date of rendition.

On rehearing, directed against the opinion promulgated July 21, 1970, plaintiff in error prays modification of the opinion in respect to computation of interest upon the judgment. Basis for this claim is, in view of statutory change of rate of interest, the legal rate charged on this judgment should be computed under varying rates prescribed by changing laws. The precise inquiry is whether, when a judgment has been obtained bearing fixed interest rate under existing law, a change of that law by subsequent statute, either diminishing or increasing interest rate, will affect computation of the amount collectible under such judgment. It may be noted plaintiff in error’s position is supported by some authority from other courts.

In 45 Am.Jur.2d, Interest and Usury § 74, the text states:

“In a number of jurisdictions, it is the rule, sometimes statutory, that if a contract has specified a lawful, conventional rate of interest, the same rate will prevail on a judgment rendered on the contract. Other authorities take the view that the obligation is merged in the judgment, and that the latter bears interest at the legal rate. * * * ”

The varied results are observable in Linz v. Eastland County (Tex.Com.App.) 39 S.W.2d 599 , 77 A.L.R. 1466 , and Lawrence v. Am. Surety Co., 263 Mich. 586 , 249 N.W. 3 , 88 A.L.R. 535 . The Texas court held the specified contract rate chargeable until date of judgment and the legal rate thereafter. The latter case points out the rule in Michigan is settled by statute that the contract rate is chargeable before and after judgment. The question does not appear to have been considered directly by this Court, although plaintiff in error’s position is supportable under decisions of other courts.

Plaintiff in error cites Idaho Gold Dredging Co. v. Boise Payette Lumber Co., 54 Idaho 765 , 37 P.2d 407 ; Swanson et al. v. Flynn, 75 N.D. 597 , 31 N.W.2d 320 ; Peo *345 ple ex rel. Atlantic, Gulf and Pacific Co. v. Miller, 173 Misc. 397 , 17 N.Y.S.2d 202 ; Glades County, Florida et al. v. Kurtz (C.A. 5) 101 F.2d 759 . Each cited case presented a situation in which the statutory interest rate on judgments had been reduced by subsequent legislative enactment. To support the conclusion in Boise Payette Lumber Co., supra, the Idaho court declared interest upon a' judgment was not a matter of contract, but wholly statutory, and could bear interest only at the rate provided by law. Thus a court lacked power to provide for a rate of interest other than prescribed by statute.

The issue presented has been considered by a number of courts. In Wyoming National Bank v. Brown, 7 Wyo. 494 , 53 P. 291 , it was contended a judgment was a contract, and a rate of interest fixed by statute at time of rendition, could not be changed or modified by statute. That court held a judgment and statutory interest allowed did not constitute a contract in legal sense, and were subject to subsequent legislative enactment which reduced the prior rate of interest.

In Brauer v. City of Portland, 35 Or. 471 , 60 P. 378 , that court recognized irreconcilable conflict in decided cases as to whether a judgment is a contract within meaning of constitutional prohibition against legislative acts impairing obligation of contracts. The court held an amendatory act, which reduced rate of interest on money judgments from 8% to 6%, did not attempt to modify interest rate of judgments rendered prior to amendment, hence a trial court properly fixed interest at the original rate.

In Union Sav. Bank & Trust Co. v. Gelbach, 8 Wash. 497 , 36 P. 467 , that court held a county warrant unpaid upon presentation constituted a contract. And, the amendatory act reducing legal rate of interest from 10% to 8% did not apply to a warrant endorsed prior to amendment, since the rate of interest which a judgment bore was not reduced by the act, particularly since legislative act evidenced no such intention.

In Stanford v. Coram, 28 Mont. 288 , 72 P. 655 , that court held a statute changing interest rate which a judgment should bear after entry was not unconstitutional. Thus a judgment entered prior to legislative amendment bore 10% interest until effective date of the act and 8% thereafter. Basis for this holding was the decision in Morley v. Lake Shore, etc. Ry. Co., 146 U.S. 162 , 13 S.Ct. 54 , 36 L.Ed. 925 .

In Morley, supra, the Supreme Court held a cause of action based either upon tort or contract not prescribing a rate of interest was not a contract in the ordinary sense when merged into a judgment. And, whether interest shall accrue upon a judgment is not a matter of contract but of legislative discretion. Interest is a penalty prescribed as liquidated damages for nonpayment of a judgment. When prescribed by statute, the owner of a judgment is entitled to, and has a vested right in, these damages up' to time of legislative change. After legislative change the right is to receive such damages as the state chooses to prescribed. Dissent by Harlan, J. expressed the view that rights once acquired by legislative enactment cannot be destroyed by subsequent enactment because the judgment is a right or property, and legislature cannot violate this right without due process of law.

Within less than a year the Supreme Court decided Texas & Pac. Ry. Co. v. Anderson et al., 149 U.S. 237 , 13 S.Ct. 843 , 37 L.Ed. 717 , involving interpretation of Texas law. The judgment involved had been entered at a time when the statute provided judgments should bear 8% interest. Subsequently (April 13, 1891) the statute was amended to provide judgments thereafter obtained should bear 6% interest. Without noticing ' Morley, supra, the court said, 13 S.Ct. p. 845, 37 L.Ed. p. 719:

“ * * * and interest was properly included at the rate which obtained under the law of Texas at the time the judgment was rendered, the change in the *346 law in that respect operating only prospectively.”

Section 274, supra, as originally existing was amended (Chap. 1, S.L.1968 p. 98) by S.B. 566, entitled:

“AN ACT RELATING TO JUDGMENTS; AMENDING 15 O.S.1961, § 274; PROVIDING THAT JUDGMENTS BEAR INTEREST AT THE RATE OF TEN PERCENT FROM DATE OF JUDGMENT: PROVIDING FOR SEVERABILITY: REPEALING CONFLICTING LAWS: AND DECLARING AN EMERGENCY.”

Comparison of the former statute with § 274 as enacted 1968 discloses the new statute deleted “ * * * and justices of the peace” from the body of the statute, and only changed “at the rate of six per cent per annum” to “at the rate of ten percent (10%) per annum.”

A settled principal of statutory construction requires statutes be given prospective operation only, unless contrary legislative, intent is expressed clearly, or necessarily implied from the language used. Consistent application of this rule, in respect to fact situations involving fixed rights accrued under statutes prior to amendment, may be observed in Board Trustees, etc. v. Kern, Okl., 366 P.2d 415 , and Stagg v. Board Trustees, etc., 147 Okl. 172 , 296 P. 417 .

Nothing in the language used either plainly states an intention the new statute shall operate retrospectively, or by necessary implication requires such construction. Petition for rehearing, and Motion To Modify Judgment in respect to interest upon the judgment denied.

IRWIN, C. J., and DAVISON, WILLIAMS, BLACKBIRD, JACKSON, LAVENDER and McINERNEY, JJ., concur.

HODGES, J., dissents.