315 Conn. 433
Conn.2015Background
- Butts bought a car financed by Sikorsky Financial under a retail installment contract that set a 9.14% interest rate and granted the lender a security interest.
- Butts defaulted; lender repossessed and sold the car, then sought a deficiency for the shortfall. Butts defaulted in the suit; a default judgment was entered against him.
- Trial court awarded principal, fees, attorney’s fees, prejudgment interest under § 37-1 at 9.14%, and postjudgment interest under § 37-3a at 2% (discretionary).
- Plaintiff moved to alter postjudgment interest, arguing § 37-1(b) requires postmaturity interest to continue after judgment at the contract rate (or at least the statutory 8% if no contractual rate specified), citing Little v. United National Investors Corp.
- Appellate Court affirmed the trial court, holding postmaturity interest terminates at judgment unless the parties expressly agreed to postjudgment interest; plaintiff sought certification to appeal.
- Supreme Court reversed: held § 37-1(b) mandates postmaturity interest continues after judgment; because the contract did not fix a postmaturity rate, the statutory legal rate (8%) applies; § 36a-785 (repossession/deficiency statute) does not bar recovery of interest eo nomine.
Issues
| Issue | Plaintiff's Argument | Defendant/Amicus Argument | Held |
|---|---|---|---|
| Does postmaturity interest on a loan continue to accrue after entry of judgment? | Sikorsky: Yes — § 37-1(b) and Little require postmaturity interest to accrue from maturity until paid, including after judgment. | Appellate Court/amicus: No — entry of judgment terminates contractual postmaturity interest; any postjudgment interest is discretionary under § 37-3a. | Held: Postmaturity interest continues after judgment under § 37-1(b). |
| If postmaturity interest continues, which rate applies when the contract does not specify one? | Sikorsky: Contract rate (9.14%) or, alternatively, statutory 8% if contract unclear. | Amicus: Contract language is indefinite; discretionary § 37-3a should control. | Held: Contract did not fix a postmaturity rate; default legal rate of 8% under § 37-1(a) applies. |
| Does the retail repossession/deficiency statute (§ 36a-785) preclude recovery of interest eo nomine on a deficiency? | Sikorsky: § 36a-785 allows recovery of the “balance due under the contract,” which includes accrued interest. | Amicus: Because common law allegedly did not allow deficiency after repossession, and § 36a-785(g) does not expressly authorize interest eo nomine, interest should be discretionary under § 37-3a. | Held: § 36a-785 contemplates the contract balance (including interest); repossession does not terminate contract rights to interest eo nomine. |
| When contract had an open clause (“may charge … highest lawful rate”) for postmaturity interest, is that an agreement fixing a rate? | Sikorsky: Clause allows charging interest; plaintiff sought contractual rate application. | Amicus: Clause is indefinite and fails to adopt a specific postmaturity rate. | Held: Clause did not adopt a specific postmaturity rate; therefore the statutory legal rate applies. |
Key Cases Cited
- Little v. United Nat’l Investors Corp., 160 Conn. 534 (court held agreed postmaturity interest continues to accrue even after judgment)
- Ballou v. Law Offices Howard Lee Schiff, P.C., 304 Conn. 348 (discusses distinction between interest eo nomine and interest as damages and statutory framework)
- Selleck v. French, 1 Conn. 32 (early recognition of distinction between contractual interest and interest as damages)
- Sosin v. Sosin, 300 Conn. 205 (describes § 37-3a discretionary award of interest as damages)