Gage v. Ford Motor Co.

• Citation: 423 Mich. 250,377 N.W.2d 709
• Decision Date: 13 November 1985
• Docket Number: INC,CUTLER-HAMME,74040 and 73749,Docket Nos. 74039
• Parties: William C. GAGE, administrator of the estate of Frederick W.L. Denlar, deceased, Plaintiff-Appellee, and Great American Insurance Company, Plaintiff-Appellee, v. FORD MOTOR COMPANY, a foreign corporation, Defendant-Appellant. Mary BURNETT, Plaintiff-Appellant, v., and Verson Allsteel Press Company, Defendants-Appellees. 423 Mich. 250, 377 N.W.2d 709
• Court: Supreme Court of Michigan

Page 709

377 N.W.2d 709

William C. GAGE, administrator of the estate of Frederick

W.L. Denlar, deceased, Plaintiff-Appellee, and Great American Insurance Company, Plaintiff-Appellee, v. FORD MOTOR COMPANY, a foreign corporation,

Defendant-Appellant.

Mary BURNETT, Plaintiff-Appellant, v. CUTLER-HAMMER, INC., and Verson Allsteel Press Company,

Defendants-Appellees.

Docket Nos. 74039, 74040 and 73749.

423 Mich. 250, 377 N.W.2d 709

Supreme Court of Michigan.

Submitted June 25, 1985.

Decided Nov. 13, 1985.

Sommers, Schwartz, Silver & Schwartz, P.C. by Richard D. Toth, Southfield, for plaintiff-appellee William C. Gage.

Reginald S. Johnson, Detroit, for Great American Ins. Co.

Harvey, Kruse, Westen & Milan, P.C. by Michael F. Schmidt, Detroit, for defendant-cross-appellee, Ford Motor Co.

Goodman, Eden, Millender & Bedrosian by Paul A. Rosen, Robert A. Koory, Detroit, for plaintiff-appellant.

Plunkett, Cooney, Rutt, Watters, Stanczyk & Pedersen, P.C. by John P. Jacobs, Ernest R. Bazzana, Detroit, for defendants-appellees.

BRICKLEY, Justice.

In these cases, we are asked to determine the proper method of computing interest under the 1980 amendment to M.C.L. Sec. 600.6013; M.S.A. Sec. 27A.6013. ¹ The lower courts have reached conflicting results as to whether, and how, prejudgment interest accrued before June 1, 1980, should be compounded. We hold that there should be no compounding of that interest.

I

Before 1980 P.A. 134, M.C.L. Sec. 600.6013; M.S.A. Sec. 27A.6013 provided:

"Interest shall be allowed on any money judgment recovered in a civil action, such interest to be calculated from the date of filing the complaint at the rate of 6% per year unless the judgment is rendered on a written instrument having a higher rate of interest in which case interest shall be computed at the rate specified in the instrument if such rate was legal at the time the instrument was executed. In no case shall the rate exceed 7% per year after the date judgment is entered. In the discretion of the judge, if a bona fide written offer of settlement in a civil action based on tort is made by the party against whom the judgment is subsequently rendered and the offer of settlement is substantially identical or substantially more favorable to the prevailing party than the judgment, then no interest shall be allowed beyond the date the written offer of settlement is made."

That language had been held to provide for simple, rather than compound, interest. See Schwartz v. Piper Aircraft Corp., 90 Mich.App. 324, 282 N.W.2d 306 (1979).

The statute was extensively revised by the 1980 amendment. The paragraphs dealing with actions filed before June 1, 1980, provide the following with regard to computation of interest:

"(2) For complaints filed before June 1, 1980, in an action involving other than a written instrument having a rate of interest exceeding 6% per year, the interest on the judgment shall be calculated from the date of filing the complaint to June 1, 1980 at the rate of 6% per year and on and after June 1, 1980 to the date of satisfaction of the judgment at the rate of 12% per year compounded annually.

"(3) For complaints filed before June 1, 1980, in an action involving a written instrument having a rate of interest exceeding 6% per year, the interest on the judgment shall be calculated from the date of filing the complaint to the date of satisfaction of the judgment at the rate specified in the instrument if the rate was legal at the time and instrument was executed. However, the rate after the date judgment is entered shall not exceed the following:

"(a) Seven percent per year compounded annually for any period of time between the date judgment is entered and the date of satisfaction of the judgment which elapses before June 1, 1980.

"(b) Thirteen percent per year compounded annually for any period of time between the date judgment is entered and the date of satisfaction of the judgment which elapses after May 31, 1980."

II

In Gage, plaintiff was awarded by a jury, in March 1979, $1,500,000 in his wrongful death action, filed on August 8, 1974. After exhausting its appeals, defendant paid the judgment and the undisputed portion of the interest, i.e., simple interest of six percent until June 1, 1980, and interest of twelve percent, compounded annually, using the $1,500,000 judgment amount as the base to compute the interest. However, plaintiff refused to execute a satisfaction of judgment, claiming that the interest was improperly calculated. According to plaintiff, the 1980 amendment required that the six percent pre-1980 interest be compounded and that the amount accrued by that date should have been included in the base from which the twelve percent compounded interest was calculated. Defendant moved to compel plaintiff to execute the satisfaction of judgment; following arguments, the trial judge issued such an order on April 14, 1982.

Plaintiff appealed to the Court of Appeals, which affirmed in part and reversed in part, holding that the pre-1980 six percent interest was simple, not compound, interest, but that the amount so accrued as of June 1, 1980, should be added to the judgment amount for purposes of computing the twelve percent compounded interest after June 1, 1980.

The defendant has applied for leave to appeal to this Court, challenging the inclusion of the pre-June 1, 1980, interest in the post-June 1, 1980, computation, and the plaintiff has applied for leave to appeal as cross-appellant, arguing that the statute requires compounding of interest at the six-percent rate before June 1, 1980.

In Burnett, plaintiff likewise recovered $1,500,000 (later reduced to $1,435,000 pursuant to a prior settlement with one of the defendants) in January 1979, following trial on her personal injury claim filed in August 1975. The defendants placed the disputed portion of the interest in escrow and filed a motion for determination of the interest question. The trial court entered an order on December 12, 1983, concluding that there should be no compounding of the interest accrued before June 1, 1980, either in its initial computation or by including it in the base on which the twelve percent compound interest would be computed thereafter. Thus, the court awarded the escrowed portion of the interest to the defendants.

The plaintiff attempted to file a claim of appeal, but the appeal was dismissed by the Court of Appeals on its own motion on the ground that the order was not appealable of right. The plaintiff has filed an application for leave to appeal to this Court, challenging both the rejection of its claim of appeal ² and the trial court's decision on the interest issue.

We granted leave to appeal in both cases on April 22, 1985, to resolve the computation of interest question. 422 Mich. 873 (1985).

III

In Gage, 133 Mich.App. 366, 350 N.W.2d 257 (1984), Judge Gribbs, in addressing the question whether there should be compounding of interest before June 1, 1980, looked to the legislative analyses of the bill that became 1980 P.A. 134 in attempting to determine the legislative intent:

"Under the heading 'Content of the Bill' in each analysis, the writer interpreted the bill as referring to 6% simple interest in the pertinent subsection:

" 'The interest rate on the money judgment on such a complaint would be calculated from the date that the complaint was filed until May 1, 1980 [later amended to June 1, 1980], at the current rate of six percent per year....' (April 22, 1980, report.) (Emphasis added.)

" 'Interest on such judgments would accrue at the present rate of six percent from the date a complaint was filed until June 1, 1980....' (May 27, 1980, report.) (Emphasis added.)" 133 Mich.App. 372, 350 N.W.2d 257.

Then, the court looked to the actual wording of the amendment, concluding that it supported the refusal to compound interest before June 1, 1980:

"With regard to the rules of grammar, the 'rule of the last antecedent' is more applicable than the exception to that rule since a 'dominant purpose' to provide for compounding before the effective date has not been shown. This Court reads the insertion of the effective date as having the effect of 'separating' not only the application of 6% versus 12%, but simple versus compound interest as well. As for public policy, the application of 12% interest compounded annually, after the effective date of the statute, would certainly satisfy the problem the statute sought to address.

"Viewing the statute syntactically the phrase 'compounded annually' is not separated from the remainder of subparagraph 2 by a comma or other form of punctuation. The adverbial phrase therefore applies only to its nearest antecedent, the 12% interest, and not to the remote antecedent of 6% interest. Had the Legislature intended to alter the simple interest construction of the 6% language, which is essentially carried forth from the prior version of the statute, it would have written subparagraph 2 to read:

" '... At the rate of 6% per year compounded annually and on and after June 1, 1980 to the date of satisfaction of the judgment at the rate of 12% per year compounded annually.'

"Alternatively, by separating the phrase 'compounded annually' by a comma, the Legislature could have...