Coastal Indus. Water Authority v. Trinity Portland Cement Division General Portland Cement Co.

• Decision Date: 15 March 1978
• Docket Number: No. B-6839,B-6839
• Citation: 563 S.W.2d 916
• Parties: COASTAL INDUSTRIAL WATER AUTHORITY, Plaintiff, v. TRINITY PORTLAND CEMENT DIVISION, GENERAL PORTLAND CEMENT COMPANY, Defendant.
• Court: Texas Supreme Court

Page 916

563 S.W.2d 916

COASTAL INDUSTRIAL WATER AUTHORITY, Plaintiff, v. TRINITY PORTLAND CEMENT DIVISION, GENERAL PORTLAND CEMENT COMPANY, Defendant.

No. B-6839.

Supreme Court of Texas.

March 15, 1978.

Rehearing Denied May 3, 1978.

Fred Spence, Houston, for plaintiff.

William H. White, Houston, for defendant.

BARROW, Justice.

The question on this appeal is whether a statutory change in the rate of interest on judgments applies to a judgment rendered before the effective date of the change so as to make the judgment bear interest at the new rate from the date of the change.

Tex.Rev.Civ.Stat.Ann. Art. 5069-1.05 provides the rate of interest that judgments of the courts of this State shall bear. This statute was amended by the legislature in 1975 to increase the rate of interest from six percent to nine percent effective September 1, 1975. The amended statute provides:

All judgments of the courts of this State shall bear interest at the rate of nine percent per annum from and after the date of the judgment, except where the contract upon which the judgment is founded bears a specified interest greater than nine percent per annum, in which case the judgment shall bear the same rate of interest specified in such contract, but shall not exceed ten percent per annum from and after the date of such judgment. (Emphasis added)

On June 17, 1974, Trinity Portland Cement Division (Trinity) recovered judgment against Coastal Industrial Water Authority (CIWA) for the sum of $2,537,473.74 with interest thereon at the rate of six percent per annum from date of judgment. The mandate was issued on January 26, 1976, after the appeal had been exhausted. On February 12, 1976, CIWA deposited into the registry of the trial court the sum of $2,789,830.72, which was the principal sum recovered by Trinity with interest thereon at the rate of six percent from date of judgment until that date. This amount was withdrawn by Trinity on February 17, 1976. On June 4, 1976, Trinity filed this suit seeking to recover from CIWA the sum of $34,412.32 being an amount equal to the three percent difference between the six percent interest rate specified in the judgment and nine percent computed from September 1, 1975, until date of payment. The trial court granted CIWA's motion for summary judgment and rendered a take-nothing judgment. The court of civil appeals reversed the judgment of the trial court and rendered judgment on Trinity's motion for summary judgment that it recover the sum of $34,412.32. 551 S.W.2d 76. We reverse the judgment of the court of civil appeals and affirm the judgment of the trial court.

Under two early decisions, one by a court of civil appeals and the other by the United States Supreme Court involving an interpretation of Texas law, the parties' rights and liabilities were deemed fixed at the time judgment was entered and subsequent changes in the statutory rate were held to have no effect on the interest rate as specified in the judgment. Missouri Pacific Railroad Co. v. Patton, 35 S.W. 477 (Tex.Civ.App.-1896, writ ref'd); Texas & Pacific R.R. Co. v. Anderson, 149 U.S. 237, 13 S.Ct. 843, 37 L.Ed. 717 (1893). In Herron v. Lackey, 556 S.W.2d 246 (Tex.1977) this Court, without discussion of the point, gave prospective application only to the amended statute by reforming the judgment of the court of civil appeals, which provided for nine percent interest, so as to permit recovery of interest from date of the trial court's judgment at six percent, "being the effective rate before the recent amendment."

The Texas cases to the contrary are distinguishable. In Watkins v. Junker, 90 Tex. 584, 40 S.W. 11 (1897), this Court held that where the statutory rate of prejudgment interest was changed during the pendency of suit, interest was properly computed on the amount of recovery at the rate in effect to the date of the change in the law and at the new rate thereafter. However, there the change in the law was made before the judgment was rendered by the trial court so that the case did not involve the question now before us. In Southwestern Bell Telephone Co. v. Hertz Equipment Rental Co., 533 S.W.2d 853 (Tex.Civ.App.-Fort Worth 1976, writ ref'd n. r. e.), and in Donahue v. Rattikin Title Co., 534 S.W.2d 156 (Tex.Civ.App.-Fort Worth 1976, no writ hist.), the trial courts denied all recovery in judgments rendered before September 1, 1975. The court of civil appeals reversed and rendered judgments for plaintiffs after September 1, 1975. The judgment in each of these cases as rendered by the court of civil appeals authorized interest at the rate of six percent before September 1, 1975, and at nine percent thereafter. There was no discussion in either case of the proper rate of interest, but the judgments as rendered by the court of civil appeals were correct in providing for interest at the rate of nine percent in that both judgments were rendered after the effective date of the change in the statutory rate.

There is a division of authority in other states as to the effect of a change in the statutory interest rate upon outstanding judgments. 4 A.L.R.2d 932 (1949); 45 Am.Jur.2d, Interest and Usury § 11 (1969). Some hold, as did Patton and Anderson, that the rights and liabilities of the parties were fixed by the judgment under the law as it then existed; when the judgment was rendered it became a certain and fixed demand that would not fluctuate with changes that might thereafter be made in the law, unless it clearly appeared that such laws were intended to have such a retroactive effect. See Sunray DX Oil Co. v. Great Lakes Carbon Corp., 476 P.2d 329 (Okl.1970); Bartlett v. Heersche, 209 Kan. 369, 496 P.2d 1314 (1972); State v. Ronaldson, 316 So.2d...