*1 JORGENSEN, Plaintiff Neil Appellee,
v. & SURETY COM-
AETNA CASUALTY
PANY, corporation, and John Appellants.
Company, Defendants
No. 20196.
Supreme of Utah. Court
Dec. 1988. Hansen, Axland,
LeRoy J. Michael S. defen- Young, City, P. Salt Lake Scott appellants. dants and Nielsen, Nielsen, Clark R. Arthur H. Salt City, plaintiff and appellee. Lake ZIMMERMAN, Justice: Surety Casualty Defendant Aetna (“Aetna”) Company appeals a final order holding Jor- Aetna liable Neil gensen principal sum for the April, and interest accrued affirm. *2 Clay John Company supersedeas
Defendant bond was not increased to cov- (“Clay”)1 Clay augmented is a livestock dealer. er the judgment. agreed purchase Jorgensen’s some of appeal, upheld On this Court the trial and, sheep required by as the federal Pack- damage awards, court’s and interest but Act, Stockyards purchased ers and had punitive reversed the awards damages broker’s bond from Aetna. 7See U.S.C. attorney and Jorgensen fees. v. John Under the bond’s Co., Clay (Utah 1983). 660 P.2d
terms, agreed surety Aetna to act as for When the case was remanded to the trial Clay dealings in its as a broker with third court, Jorgensen judgment moved for parties up $75,000. to the bond’s limit of against Aetna, surety Clay’s superse- as Later, Jorgensen Aetna, Clay sued and bond, $191,463.40, deas for plus the costs alleging Clay wilfully had and mali- prejudgment and reflected ciously purchase breached the contract to judgment, total postjudgment as well as sheep seeking and recover interest, $267,849.07. all totalling Clay Jorgensen bond. obtained in was not involved in proceeding, having $191,463.40. Aetna, the amount of as sure- bankruptcy petition. filed a By stipulation bond, ty on the jointly broker’s was found of counsel Jorgensen Aetna, for both and severally $75,000 and Clay liable with for denied, Aetna, motion was and as sure- amount, Clay and sepa- was found ty, $191,463.40 tendered Jorgensen rately liable for the remainder. The trial supersedeas Jorgen- bond liability reserved the for court accepted payment sen and released Aetna interest, prejudgment attorney and fees for further surety as un- later determination. der that acknowledging bond. In ment, the trial court found that it had been Clay and appealed Aetna pursuant supersedeas to the bond sought and grounds. reversal on several Jorgensen’s and that against claims taken, appeal When the Clay was filed a as a original debtor on the judgment were supersedeas $191,463.40, bond for adjudication. reserved for future damages amount of awarded the trial bond, bond, court. This like the broker’s Jorgensen then claimed that Aetna still purchased by Clay from Aetna. The $75,000 him original supersedeas part: bond stated plus interest. Aetna asserted that Clay That we John Company and $191,463.40 payment discharged had Casualty and The Aetna $75,000 obligation for under the Surety Company as surety firmly are original judgment only and that its remain- bound penal unto Neil in the ing liability postjudgment for sum of ninety One hundred one thousand $75,000. on that posi- Consistent with this four sixty hundred three and 40/100 dol- tion, paid Jorgensen $25,097.30, Aetna then ($191,463.40) lars for the the amount it calculated post- was due for firmly we bind jointly ourselves $75,000judgment. interest on the severally. Aetna claimed that as of the date of this fully it had satisfied the (Emphasis added.) Although party to the against it. appeal, Aetna did separate super- not file a sedeas bond on its own behalf to cover the agreed The trial Jorgensen. court $75,000 portion damage award for $191,463.40 It found that the had not dis- which it liable. charged and several obli- appeal After the and the $75,000 gation for principal, but rather filed, were augmented the trial court that the had to be judgment by awarding prejudgment inter- pay Clay’s separate obligation under the $14,822.37,punitive $1, est of damages of judgment, including interest, then attorney fees, accruing daily could the applied Clay remainder be judgment. after the The amount of the Aetna’s and several bankruptcy petition filed a party present appeal. in federal court and is not a $75,000 principal, obligation for the amount. $75,000 on that plus the interest calculations,2 leaving only its According to the trial discharged by payment of entirely which had $25,097.30. obligation, Clay’s separate both satisfied interest, and left a remainder important begin analysis, our it is To portion which the was, clarify that the *3 Clay for which the effect, Clay, by Aetna. in not along Aetna. severally liable with very play to had two different roles Aetna First, it was payment. the time of that at to applied court this remainder The trial origi- the joint and several a be- interest on accrued Second, Clay’s surety judgment. it was nal Using that applying principal. it to fore $191,463.40 supersedeas bond filed found that the approach, the court paid Jorgensen un- by Clay.3 When Aetna $1,632.24 and that the reduced to due was bond, purposes it that for our here was der $75,000, addi- at principal remained payment, not Aetna. Clay if made the as accruing on the tional interest distinct, keep we In order to those roles $191,463.40payment. from the date of the payment Clay’s pay- as refer to that will severally jointly and liable Aetna was ment. Aet- The court then considered all of this. $25,097.30and found that payment na’s challenge court’s or- to the trial first to First, should be it questions of der raises two law. to The joint obligation and then proper allocation to be made of what is the satisfy payment to partial payment on a debt when the a it calcu- obligation, or, obligations to Clay, accrued in this case has two date, payee, separate obligation on that for the to be one a lated payee and the other outstanding principal entire amount due the then to reduce the portion for a joint and several $60,337.68. Accordingly, it ordered Aetna Second, par- $60,337.68, entire amount? when of that Jorgensen an additional pay interest-bearing payment is made on an enforcement, tial plus interest plus costs of debt, first credited payment should the $60,337.68 principal from accruing on the principal or to interest? payment until the date of satisfied. the entire controlling stat In the absence order, arguing ute, question by adopt the first appeals we answer generally accepted in which common law ing court erred in the manner the trial Specifically, when a debtor who payment rules. it allocated the allocated, individually for a debt and that, payment solely and liable properly liable, jointly concurrently joint and discharged Aetna’s should have principal; made no mention basis terms the bond unclear as to the 2. The record is somewhat obligated pay Jorgensen simply calcu- court’s mathematical Aetna to for some of the trial it $191,463.40—on Although appear Clay’s be several there behalf. lations. discrepancies fixed amount — respect in the record with the time the bond Nor is there evidence that at payments and dates of the various amounts and resulting obligations, paid Clay as when owed interest amount was ap- party to this neither money paid Clay principal, as wanted well question peal raise a has seen fit to benefit, Clay’s. opposed Associ- as to Aetna’s accuracy calculations. of the trial court’s only relies Howe’s conclusion ate Chief Justice to the correctness confine our review therefore self-serving itWhen be- statements. application of relevant law of the trial Clay’s amount of came clear that the accuracy of its arith- do not consider the discharge enough going both to be metic. obligations and inter- and Aetna’s est, pur- asked Aetna could have either suggests that this Chief Justice Howe 3. Associate purchased larger supersedeas bond or chase a to cover the amount bond was neither, apparent- It did on its own behalf. one of it should be and that none the applied dis- ly hoping result reached for the Aet- This works to to accrued interest. capacity its as a free ride in sent—a discharging portion advantage by its na’s purchased it from as of the bond debtor because despite inadequacy bond to Clay. co-obligor, company by bonding its pay It is notable accrued co-obligors, portion with one or more for a and several debt rath- debt, of that makes a insufficient er than to the individual debt. debt, satisfy gener- the entire under the raised Aetna is one of rule, applied, al will be as impression in Utah. Section 15-4-3 is debts, (i) between the two as follows: if part Act, Obligations of the Joint codified controlling agreement there is a between in sections 15-4-1 to -7 of the Code. The creditor, passed Act was first see 1929 Utah provided agree- shall 1-11, Laws ch. taken verba- §§ ment; (ii) agree- if controlling there is no respects tim in all relevant from the Model ment, debtor, but the at or before the time Obligations Act,4promulgated Joint in 1925 indicates an intent as to how by the National Conference of Commission- applied, that intent ers on Uniform State Laws. See Model followed; (iii) shall be if there is no control- Obligations Joint adoption Act 1-11 & ling agreement and the debtor has not ade- *4 notes, tables, 407-13, 422, 13 U.L.A. 430- quately designated payment how the 31, 434, (1925). Hawaii, Maine, 436 Neva- should be but the creditor made a da, York, New and Wisconsin also have election, definite within a reasonable time adopted the Act. We have found no case receipt after payment, of the how any of those states in which a court apply payment, the creditor’s election adopted has the construction of the lan- govern; (iv) will if there is no control- guage corresponding to section 15-4-3 that ling agreement and neither the nor debtor urged is by on us Aetna. clear, timely desig- creditor has made a nation, presumption is that Moreover, language of section 15-4-3 ment should sepa- be credited first to the expressly applicability limits the section’s debt, rate any remainder allo- payments made in “satisfaction of their joint cated to the obligation. and several obligations.” added.) (Emphasis findWe Am.Jur.2d, generally See 60 Payment usage this of the word “their” indicative 94-113, (1987); Payment 119 70 C.J.S. §§ the fact that the only drafters had in mind (1987). 36-54 obligations such by as are shared the obli- argues generally these ac- gors and did not provision intend that the cepted preempted by rules are section 15- govern the allocation of a made Code, provides 4-3 of the perti- by separate one who has obligations, two part: nent happens one of which to be a shared obli
The amount or value of considera- gation and the second of which is an entire obligee tion received from one or ly obligation.5 Further, individual joint more obligors, ... and several in interpretation disregard, would force us to partial whole or in satisfaction of their in all cases and exception, any without obligations shall be credited to the extent agreements made between the debtor and of the amount received on the regarding the creditor pay allocation of co-obligors_ of all ignore ments and to the clear intent of the (1986). Thus, Utah Code Ann. 15-4-3 debtor or the Under creditor. that con statute, interpretation struction effectively op would preclude when a is generally made one who eration of the accepted owes both rules we an joint individual debt and a certainly several outlined above. We pre cannot debt, always apply the creditor must sixty-year-old sume that a uniform act that 4. The Act was initially designated promulgated injustices the Uniform to address in "the Obligations redesignated Joint Act but was regard joint obligations." common law in Obligations Model Joint Act in 1943. Model Note, Obligations Prefatory Model Joint Act 13 Act, Note, Obligations Joint Historical 13 U.L.A. (1925) added). (emphasis U.L.A. 407 The entire 407 tone of the note indicates that the drafters of the Act did not intend that the Act as Aetna 5. The comments of the Uniform Law Commis- contends when a is made one who point. sioners are also instructive on this separate has both a and a debt. prefatory explains note to the Act that the Act
813 528, 529-31, by any 626, (1949); 206 been so construed P.2d 627-28 has never accomplish Farmer, 347, purpose. 350, v. 86 intended to this Whittlesea Nev. 57, Livant, P.2d 59 469 Livant v. therefore that section conclude 383, 384, 608, 18 A.D.2d 239 N.Y.S.2d 610 operate in Aet- the manner 15-4-3 does this, urges such na in a situation where We next address the made debtor who a has been a proper allocating payments rule as be has individual and a both an principal and tween interest. This is not an separate obligation. joint and several impression issue of first in Utah. We fol Rather, applies pay only the section general low “United States” rule. purpose one interest-bearing When the debtor on an wholly partially satisfying a shared partial payment, debt makes a absent a In a situation such as the contrary agreement between the creditor one, present play 15-4-3 into comes controlling and the debtor or a statutory application of law the common provision, first to Thus, rules which we have outlined. when accrued interest then to Pet debts, is liable to a creditor on two debtor Clark, 205, 223, ty v. Utah P.2d separate, one a unshared and the oth debt 589, (1948); see v. School City Claudio debt, er or a (Ind.Ct. Gary, 448 N.E.2d makes a de we will App.1983); Security Ins. Co. of Hartford the‘payment termine how Houser, 193-94, v. 191 Colo. 552 P.2d general by resorting first to the rules. We *5 311 45 generally See Am.Jur. begin by looking agreement will to any Usury 2d Interest and 99 § creditor, between the and the then 74(a) (1982); and Usury C.J.S. Interest § debtor, the to intent of the next to a choice Payment jur 70 C.J.S. Some creditor, and, finally, made the to the See, e.g., isdictions have codified the rule. judicial presumption payment the (West 1982). 1479(3) Cal.Civ.Code § applied should first to the individual debt, going the shared any apply remainder to We now the above-stated rules, If, regarding payment debt. in accordance with these rules the allocation payment the separate we determine that should be between and and debts inter separate, entirely principal to the individual to credited est and determine the correct debt, ruling. 15-4-3 into trial does not come ness of the first hand, if, $191,- play. any point payment the other is whether of On at process, pay properly entirely this the rules dictate that a 463.40 was allocated to Jorgensen. Clay’s explained As the shared obli debt earlier, gation, payment payment then that falls within on this operation of of section 15-4-3. The effect bond must be viewed as if it were made purchaser, Clay, section 15-4-3 is mandate that the bond bond obligation ing entity, Clay amount shared Aetna. had two obli equally obligation gations, shall credited one a benefit and several $75,000 obligation, sharing portion all of the debtors for a of the entire debt— more, allowing plus separate rather one than but few interest —the other a debt for all, remaining plus er than of the debtors to receive See, Clay payment, made there e.g., credit.6 Western Co. v. When Steel Jorgensen Corp., Clay Travel Batcher 663 P.2d no between and (Utah 1983); Co., governing payment 115 Utah allocation of the Lang Green v. be- obligation any way interpretation 6. Our hinder creditor to whom he does not in no other payment, operation of section circum- she makes a the above-described 15-4-3 in those apply. payment it was Outside common law rules of allocation are stances where intended to governs, range the here, described not relevant. Section 15-4-3 and it narrow circumstances requires will full effect. that the be credited reduce the statute continue to have equally has an which is shared and thus to reduce When a debtor obligors has each debtor. shared with other and that debtor the amount debts, tween no indication of the two to interest and then The trial accompanied correctly intended allocation court therefore acted ap- when it proved payment.7 of action. Pursuant to Moreover, course Jorgensen chose to calculations, the trial court’s Clay’s individual debt ment covered all interest —including accrued to the inter- both date and left an con- Clay est that owed. Under the rules set $60,337.68 sisting principal, as well as all above, quite out the trial court properly accruing interest on that amount after the found that should first be payment. date of Aetna’s That is the Clay’s debt, separate amount the court then ordered Aetna to principal, Clay’s joint before then to pay. debt, princi- and several second, resulting pal with the reduction Having considered each argu- of Aetna’s and several debt credited finding merit, ments and all to be without equally co-obligors, between the as section we affirm the order of the trial court. requires. 15-4-3 of the Code HALL, C.J., STEWART, J., properly applying After concur. Clay the trial court found that
and Aetna remained HOWE, Associate Chief Justice $75,000 liable to (dissenting): ¡plus together accrued I dissent. I would reverse the accruing with interest from the date of entered below. Meanwhile, payment. Aetna had Judgment was entered jury on a verdict $25,097.30. made a The next against defendant Company John question is whether correctly ap- the court 8, 1980, July in the sum of plied payment. general damages punitive damages. $1 Aetna had one Seventy-five thousand dollars of that Therefore, the first set of rules we have against ment was also entered Aetna Casu- today describing clarified how to alty Surety Company. —those prejudgment No payments treat one who is both and, course, postjudgment no *6 individually liable on one debt and interest were included in the above liable on another—is not at issue. Only the amounts. The two defendants took ap- an regarding rule payments allocation of be peal judgment, August 11, and on tween and interest comes into 1980, supersedeas a appeal on bond was play. rule, Under the United States an filed for to secure payor between the and the July judgment the 8th specifical- which was payee that indicates how the is to ly referred in to the bond. In judg- the governs. be allocated In the absence of a ment, the district court reserved for future controlling agreement, the is that the plaintiff rule determination whether was enti- payment applies to first accrued interest prejudgment tled to attorney interest and principal. and then to Jorgen- Aetna and Subsequently, 23, 1981, fees. on February agreement; sen had no simply made the district court entered an sup- amended payment, its applied plemental it judgment plaintiff wherein was sug- 7. Associate Chief Justice Howe's dissent Chief pay- Justice Howe to the effect that the was, fact, gests that there clear indication of ment was meant be payment’s intended allocation and that the Jorgensen by due on the entire amount owed to trial court jointly, therefore erred. He relies on nothing state- and Aetna with to be allo- ments Clay’s made Aetna at the separate time of the cated to debt for Second, adequately supports earlier, ment. We think the explained record as we behalf, point the trial court’s Clay’s decision on this for two was made on not Aet- First, Therefore, language reasons. of Aetna's inquiry state- na’s. the relevant ambiguous, indicating only ments is application that the intended of the not Aet- judgment Nothing made “for na's. in the record shows that verdict.” We do not find in these words the statements made Aetna in fact reflected message gleaned clear Clay's from them Associate wishes. Hruze, Monidah Trust v. pre- A.2d 759 against Clay Company awarded 444, 449, 232, $14,822.37; post- 205 P. 233-34 62 Mont. judgment 8, July case, In the Montana interest of the last-cited judgment 1981, 25, together with January explained: day; and per $45.21 further for the rule which confers reason $21,400. amendment No attorney fees right primarily upon the debtor the made to or addition was application volun- direct the to cover these had filed which been bond tarily apparent. him is Until 73(d), rule awards. Under Utah additional over, money actually paid it be- Procedure, in effect at that of Civil Rules longs him, may do it as he and he with required time, that the plaintiff could have direction, specific If he makes a sees fit. adequate in amount to cover bond creditor must observe it or refuse to plus pre- principal amount of accept payment. accepts If he interest, postjudgment money, retains the the law will treat the appeal, pending the would accrue which having di- payment as been fees, costs. attorney and court rected. appeal affirmed This Court rule referred to in the The United States ment, except disallowed the award $1 we majority opinion partial payment must damages the award attor- punitive satisfy first be accrued interest 25,1983, April Aetna sent ney fees. On satisfy principal and then to does $191,- plaintiff for attorney draft to designation by the debtor when there is a 463.40, in which Aet- together a letter payment. 47 application of his payment represented na stated Usury Interest and C.J.S. on the verdict “the amount case, supersedeas bond In the instant 8,1980.” July On entered this matter in the exact amount written Aetna was Aetna’s check was the notation the face of judgment. The principal of the judgment on the verdict.” About “for insufficient amount of the bond was later, attorney year Aetna tendered interest, post- any prejudgment cover $25,- additional a check for an Indeed, at the or costs. 097.30, representing postjudgment interest written, only amount time the 8, 1980, July had accrued between which owing by defendants was the April 8th, July all of judgment of rule, general settled that as a It is well The trial court still had money his creditor paying debtor when any prejudgment in- advisement whether paramount right primary has The amount of would awarded. terest money to such application of his direct increased to cover the bond was never demands as he chooses. Utah items or *7 Following appeal its to this interest. Am. Indem. Bldg. v. Great State Comm’n Court, the bond Aetna made on Co., Salt 11, (1943); P.2d 763 105 Utah 140 by by letter and and its transmittal O’Connor, 233, 249 City v. 68 Utah Lake itself, designated that it specifically draft Payment (1926); 38 70 C.J.S. P. 810 § on judgment entered was in of the (1987). applies when a This same rule 8, of the draft was July 1980. The amount payment to surety for the debtor makes principal amount of the identical to the Wellington, Sears & Co. v. the creditor. $191,463.40. namely, This iden- judgment, King, 157 Va. 767, 889 161 S.E. payment itself is tity of amount of debt and Payments as Annotation, Application of direction. 60 Am.Jur. of Aetna’s evidence or Surety Between Debts Which for here, (1987). However, Payment 2d 100 is and Those Which § Bound Guarantor Aetna’s additionally have transmittal (1958). we Not, 855, 872 He is 57 A.L.R.2d recited that neither in which it was letter held to right direction has been This of was plaintiff nor Aetna apply the right the debtor to include the of on costs of the and the balance principal instead of to payment to be heard R.R., 203, and that this issue would appeal 42 v. Erie 23 N.J.Misc. State governs court on and determined district This statute the allocation of the appears May clearly remaining supersedeas It thus amount from right outstanding after paid. me that Aetna exercised its have bond interest was money applied principal Clay, amount on its whose behalf made, judgment plaintiff, by gave and of the ac- consideration which, endorsing check, statute, cepting according “shall be obligated obligation accordingly. the funds ... on the of credited all co-obli- Thus, Payment gors.” remaining C.J.S. 15-4-3. § $140,175.03should first be credited to Aet- consequence It is of no that Aetna was Clay’s joint $75,000. na and jointly severally plaintiff liable with joint debtor, $75,000 thereby judgment of the bene- a surety, not as under the trial court’s by designating fitted its judgment is therefore satisfied. on be majority opinion argues that the re- judgment. amount of the A or his maining amount can credited to Clay’s be surety may application pay- his direct separate obligation before credited may advantageous ment as most to him. be Clay’s joint obligation. This re- Payment 60 Am.Jur.2d fully does not sult account for the lan- Clay Company & liable for First, guage found in section 15-4-3. the full amount when any operates statute when consideration is paid surety Aetna as amount Second, received debtor. designated of the and so its clearly contemplates the statute ment, debts it satisfied the entire several, only joint, and not obli- Later, judgment. amount of the Aetna rec- gors when it includes consideration re- ognized that it also several- obligee ceived “from one or more ly $75,- postjudgment liable for Finally, obligors.” several the majority’s judgment. thereupon paid 000 of the It construction renders the statute useless. plaintiff $25,097.30, thereby an additional specify If an is able alloca- fully discharging aas his tion of section 15-4-3 serves surety debtor and as for John purpose. no Company. satisfying joint All funds left after
If unable to recover bal- debt allocated several owing ance bankruptcy him because of the Hence, subtracting Clay Company, John must blame ($75,000) remaining from the debt funds assigned him for his failure to de- paid ($140,175.03) adequate supersedeas mand an bond. $65,175.03. This may leaves amount to Clay’s credited obligations (con- DURHAM, (dissenting): Justice $191,- sisting amount of plain I language dissent. The $75,000, 463.40 minus the or debt governs 15-4-3 the result in this case. $116,463.40). Thus, applying (1986) Utah Code 15-4-3 states: Ann. § bond first to then to obli- gations, obligations, The amount value of considera- and then to several obligee tion one or original judgment received from re- obligors, amount, more of several one or mains to be This satisfied. how- *8 ever, part purely more of of of several obli- obligors, partial gation Jorgensen. or in satisfac- whole Aet- obligations tion of their shall be credited na’s duties as a debtor were fulfilled obligations extent of amount received on and its satisfied when the obligation of co-obligors by Jorgensen all to whom amount received on the su- obligors giving was, persedeas the consid- after allocation to ac- according eration did not stand in the of a relation crued divided to section surety. 15-4-3. therefore reverse trial
I would holding order Aetna liable to Jor- $60,337.68 plus interest owed
gensen for April 1984. Uresk,
Roland Fitzgerald, Machelle Roosevelt, appellant. for defendant and Dam, Homak, Kimberly R. Paul K. Van City, appellee. Salt Lake Utah, Appellee, Plaintiff and STATE OF MEMORANDUM DECISION
v. ZIMMERMAN, Justice: MITCHELL, Montey Lee Defendant Appellant. trial, Following a bench defendant Mon- tey aggrava- Lee Mitchell was convicted of No. 870146. child ted sexual abuse of a and sentenced mandatory prison of six to minimum term Supreme of Utah. Court years. Code Ann. 76-5-404.1 Utah March (Supp.1988). appeals He claims that aggravating “bodily circumstance of injury” required for conviction was proven the trial erred be- and that proper it miti- cause failed to consider the imposed gating a minimum factors years mandatory term of six rather than mandatory lesser term of three minimum years. affirm. We treat Mitchell’s claim that “bodily injury” insufficient evidence of aggravated to convict him of sexual abuse (1) 76-5- child. Subsection of a 404.1 the crime of sexual abuse defines complete if actor child. That crime is genitalia “touches of a child who is the ... age the intent to ... with gratify arouse or the sexual desire of (3) section 76- person_” Subsection aggravated crime 5-404.1 defines the child, the of which sexual abuse of a crime provides: convicted. It defendant was (3) sex- person aggravated A commits conjunction ual when in abuse child in Subsection with the offense described (1) any following circumstances found charged and admitted or have been true action the offense: (b) bodily injury caused The accused vie- injury to the psychological or severe