Helland v. Helland

• Decision Date: 05 June 1991
• Docket Number: No. 2-90-0606,2-90-0606
• Citation: 573 N.E.2d 357,157 Ill.Dec. 939,214 Ill.App.3d 275
• Court: United States Appellate Court of Illinois
• Parties: , 157 Ill.Dec. 939 Ruby M. HELLAND, Plaintiff-Appellee and Cross-Appellant, v. David W. HELLAND, Defendant-Appellant and Cross-Appellee. Second District

Page 357

573 N.E.2d 357

214 Ill.App.3d 275, 157 Ill.Dec. 939

Ruby M. HELLAND, Plaintiff-Appellee and Cross-Appellant, v. David W. HELLAND, Defendant-Appellant and Cross-Appellee.

No. 2-90-0606.

Appellate Court of Illinois,

Second District.

June 5, 1991.

Vern L. Davitt (argued), Rockford, Ill., for David M. helland.

David L. Martenson, Martenson & Associates, Rockford, Ill., for Ruby M. Helland.

Justice NICKELS delivered the opinion of the court:

The circuit court of Winnebago County denied plaintiff's, Ruby M. Helland's, claim for compound interest on the obligation contained in defendant's, David W. Helland's, past-due promissory note. The trial court, however, granted plaintiff attorney fees incurred as a result of her unsuccessful claim. Defendant appeals asserting that: (1) the trial court incorrectly awarded plaintiff attorney fees because such fees were incurred after his payment in full of the promissory note containing the attorney fee provision; and (2) based on plaintiff's failure to prevail in her claim for compound interest, he is entitled to his attorney fees in defense of plaintiff's spurious claim as provided in Supreme Court Rule 137 (134 Ill.2d R. 137). Plaintiff cross-appeals asserting that the court erred in finding that plaintiff was not entitled to compound interest. We affirm in part and reverse in part.

On January 30, 1984, defendant executed a promissory note payable to plaintiff as part of the parties' judgment of dissolution of marriage. Defendant obliged himself to pay the sum of $12,000 plus interest at a rate of "8% per annum" to plaintiff on or before September 1, 1989. The note further provided that "in the event suit is filed upon the obligation herein stated in any court of competent jurisdiction, upon or after default, costs and reasonable attorney fees" would be paid by defendant in addition to the principal and interest.

Defendant failed to pay the sum due to plaintiff, and, on December 6, 1989, plaintiff filed a complaint to enforce defendant's obligation. Plaintiff specifically alleged that defendant owed "$12,000 principal, $5,600.00 interest through 11/29/89, interest of $2.63 per day beginning November 30, 1989, and reasonable attorney fees and costs." On December 27, 1989, defendant, after notifying counsel for plaintiff, remitted the sum of $18,263.50 representing the above-claimed principal and interest in addition to court costs of $83.50 and estimated attorney fees of $500.

However, plaintiff notified defendant that the sum remitted was insufficient and proceeded to petition the court to allow her use of the funds pending resolution of her claim for compound interest. On March 22, 1990, the court denied plaintiff's claim for compound interest but granted her petition for $1,280.50 in attorney fees. Plaintiff's attorney testified that prior to receipt of defendant's payment, he expended 3.6 hours at a rate of $110, or $396, and that the balance of his fees were incurred in continuing to pursue plaintiff's unsuccessful claim for compound interest. The court denied defendant's motion for reconsideration and this appeal and cross-appeal followed.

Defendant asserts that the court improperly awarded plaintiff attorney fees generated after defendant paid in full his obligation to plaintiff. Plaintiff cross-appeals asserting that, contrary to the court's ruling, defendant's promissory note entitled her to compound rather than simple interest.

We first address plaintiff's claim that the court erred in not granting her compound interest on the principal contained in defendant's promissory note. The law does not favor compound interest. (Harrington v. Kay (1985), 136 Ill.App.3d 561, 570, 91 Ill.Dec. 214, 483 N.E.2d 560.) Only when no statutory bar is present and the parties specifically agree to compound interest may such interest be applied. (Harrington, 136 Ill.App.3d at 570, 91 Ill.Dec. 214, 483 N.E.2d 560.) Plaintiff asserts that the language "8% per annum" contained in the promissory note indicated that compound interest was intended. In light of Illinois' disfavor of compound interest, we decline to read that language so expansively.

Several statutory provisions provide for interest "per annum." (See, e.g., Ill.Rev.Stat.1989, ch. 17, par. 6402 ("[c]reditors shall be allowed to receive at the rate of five (5) per centum per annum for all monies after they become due").) However, such language has been interpreted as providing for only simple rather than compound interest. (Braden v. Weinert (1981), 97 Ill.App.3d 929, 937-38, 53 Ill.Dec. 522, 423 N.E.2d 1326.) "Per annum" merely denotes the frequency at which the applicable rate of interest is to be applied and does not permit a compounded annual method of computation. See Lewis v. Stran-Steel Corp. (1978), 58 Ill.App.3d 280, 282-83, 15 Ill.Dec. 368, 373 N.E.2d 714.

So, too, plaintiff's own interpretation of the promissory note was that only simple interest was applicable, as evidenced by the allegations of her complaint. Plaintiff claimed interest owing of $5,600 for the 5 years and 11 months duration of the promissory note. This clearly is 8% simple interest per year. Thus, the trial court's ruling that defendant's promissory note required defendant to pay only simple interest is affirmed.

We now turn to defendant's claim, which is that plaintiff was not entitled to attorney fees for pursuit of her erroneous claim for compound interest. Once again, as with compound interest, the law does not favor the award of attorney fees. (Saltiel v. Olsen (1981), 85 Ill.2d 484, 488, 55 Ill.Dec. 830, 426 N.E.2d 1204.) Only when explicitly provided by statute or by agreement is a prevailing party entitled to his opponent's payment of his attorney fees. (Wheeling Trust & Savings Bank v. Citizens National Bank (1986), 142 Ill.App.3d 333, 338-39, 96 Ill.Dec. 587, 491 N.E.2d 866.) Contractual provisions for attorney fees must be strictly construed, and the court must determine the intention of the parties with respect to the payment of attorney fees. ( Wheeling Trust & Savings Bank, 142 Ill.App.3d at 339, 96 Ill.Dec. 587, 491 N.E.2d 866.) A provision for attorney fees in a note does not generally entitle a party to fees generated in interpreting the note, but rather only those incurred in...