Summary
The Court of Appeals of Utah reversed and remanded a trial court's judgment awarding compound interest on a promissory note, finding that the note only provided for simple interest. The court also declined to address the issues of failure of consideration and attorney fees due to the appellants' failure to comply with appellate rules. The case involves a dispute over a promissory note for the purchase of a trailer, with the appellants arguing that the note was not supported by consideration due to the lack of a certificate of title.
Topics
Practice areas
Questions Presented
- Whether the trial court erred as a matter of law in awarding compound interest on the promissory note
- Whether the trial court erred as a matter of law in denying the appellants' defense of failure of consideration because the certificate of title was not delivered
- Whether the evidence was insufficient to support the award of attorney fees to the appellee
Holdings
- The trial court erred; the note did not expressly provide for compound interest, therefore only simple interest should be applied.
Key quotations
“The trial court failed to distinguish between interest on an overdue installment of interest and compound interest. As one compiler has noted, courts in past cases have been confused by failing to recognize this distinction.” (at 71)
“Accordingly, the trial court erred as a matter of law in ordering the award of compound interest rather than simple interest.” (at 72)
Factual background
Appellants executed a promissory note dated March 26, 1981 for $8,200 principal with interest at "prime + 3" per annum, payable at maturity on October 15, 1981. The note was accompanied by a typed trailer description; the trailer was delivered but the certificate of title was not. Appellants made partial payments totaling $3,000 in 1981 and additional payments in 1983‑84. The appellee sued for the unpaid balance, interest, and attorney fees.
Procedural history
The trial court entered judgment for the appellee on principal, interest, and attorney fees. The appellants appealed. The Court of Appeals reversed and remanded on the interest issue and declined to reach the issues of failure of consideration and attorney fees.
Remand instructions
Recalculate the balance owing on the note using simple interest, crediting all payments made before and after maturity, and enter judgment accordingly.