Mayor and City Council of Baltimore v. Kelso Corp.

Decision Date03 September 1982
Docket NumberNo. 158,158
Citation449 A.2d 406,294 Md. 267
PartiesMAYOR AND CITY COUNCIL OF BALTIMORE v. KELSO CORPORATION et al.
CourtMaryland Court of Appeals

Richard K. Jacobsen, Chief City Sol., Baltimore (Benjamin L. Brown, City Sol., and Ambrose T. Hartman, Deputy City Sol., Baltimore, on the brief), for appellant.

Jonathan A. Azrael, Baltimore (Edward Azrael and Azrael & Gann, Baltimore, on the brief), for appellees.

Argued before MURPHY, C. J., and SMITH, ELDRIDGE, COLE, DAVIDSON, RODOWSKY and COUCH, JJ.

COUCH, Judge.

Once again we are called upon to resolve questions regarding the computation of interest in a quick-take condemnation proceeding. See Md.Const., art. III, §§ 40A-C. Specifically we are asked to decide (1) whether the principal upon which the condemning authority is required to pay postjudgment interest, see Md. Rule 642, is the unpaid balance of the quick-take judgment plus prejudgment interest under Md.Code (1974, 1981 Repl.Vol.), Real Property Article, § 12-106(c), 1 or merely upon the unpaid balance of the quick-take judgment, and (2) whether postjudgment interest under Rule 642 should be paid after July 1, 1980 at a rate of six percent or 10 percent per annum. 2 The Court of Common Pleas of Baltimore (Sklar, J.) ordered that postjudgment interest be paid on the balance of the quick-take judgment plus § 12-106(c) prejudgment interest and that this postjudgment interest be paid at a rate of 10 percent per annum after July 1, 1980. We shall affirm.

In 1972 and 1973 the City of Baltimore filed quick-take condemnation proceedings against various properties owned by the appellee and paid $80,499, the appraised value of the properties, into court. The cases were consolidated and tried as one case. On September 17, 1979 a judgment nisi was granted in the amount of $261,275. It became a final judgment on September 20. Over a year later, in January, 1981, the City paid appellee the difference between the quick-take deposit and the final judgment ($180,776) and interest on that difference at six percent per annum, from the date of the quick-take deposit until the date of payment ($82,825.31) resulting in a total payment of $263,601.31. The appellee accepted this payment "without prejudice and reserving its right to claim additional interest."

Subsequently, the appellee filed a motion in the condemnation proceeding claiming that he was entitled, not only to (1) the difference between the quick-take deposit and the final judgment, and interest, at six percent per annum, on that difference from the date of the quick-take deposit until the date of judgment, pursuant to § 12-106(c), but also to (2) interest, at six percent per annum, on the above sum from the date of the judgment to July 1, 1980, and (3) to interest, at 10 percent per annum, on the sum in (1) above from July 1, 1980 until paid. The trial court granted appellee's motion and the City appealed to the Court of Special Appeals. The appellee petitioned for a writ of certiorari, and we granted it to consider these two issues of public importance.

(1)

The first issue is the determination of the principal upon which the appellee is entitled to postjudgment interest under Md. Rule 642. It is clear that the City owed appellee $180,776 (the difference between the quick-take deposit and the final judgment), and it is clear that the City owed appellee prejudgment interest at six percent per annum on that difference from the date the deposit was made until the date of the judgment, see Real Property Article, § 12-106(c) resulting in a total of approximately $250,000. It is also clear that the City is obligated to pay appellee interest, at the legal rate, from the date of the judgment nisi until it is paid. See Md. Rule 642. The issue for our consideration is whether this interest is to be paid on the balance of the quick-take judgment ($180,776), or on that amount plus § 12-106(c) prejudgment interest (approximately $250,000). We agree with the trial court and conclude it is to be paid on the latter.

The appellant contends that the trial court erred in requiring the City to pay Rule 642 postjudgment interest on the unpaid balance of the quick-take judgment plus § 12-106(c) interest, because it was, in effect, ordering the City to pay compound interest, which we have said is not allowed by law, see Walker v. Acting Director, 284 Md. 357, 367, 396 A.2d 262, 267 (1979). In its decision, the trial court relied on Hammond v. State Roads Commission, 241 Md. 514, 217 A.2d 258 (1966), and appellant argues that it was in error to do so. Referring to Hammond, the appellant states that

"the Court of Appeals held that the property owner was entitled to interest on the unpaid balance of a condemnation judgment from the date of taking to the time of payment and not merely to the time of judgment nisi as required by Section 7(c) Article 33A ..., the former 'interest on award' statute, relied upon by the State."

The appellant is incorrect in his assessment of Hammond. In Hammond, a quick-take case, the condemnation award included "any and all interest that had accrued from the time that possession had been taken of the property." Id. at 516, 217 A.2d at 259. The condemnees in that case argued that they were entitled to postjudgment interest on the unpaid balance of the judgment, which included any and all prejudgment interest. We held that they were entitled to interest on the unpaid judgment from the time of the judgment nisi to the date on which the wrongfully held interest was finally paid. Id. at 521, 217 A.2d at 262. Similarly, the appellee in this case should be paid interest on the unpaid balance of the judgment plus § 12-106(c) prejudgment interest. Although the judgment in the instant case did not include "any and all prejudgment interest" as it did in Hammond, such interest accrued here as a matter of law by operation of § 12-106(c) and became a part of the judgment because the legislature has determined that § 12-106(c) prejudgment interest is part of the compensation required to be paid for the taking. Cf. Lore v. State Board of Public Works, 277 Md. 356, 360-61, 354 A.2d 812, 815 (1976) (legislature has determined that Md. Rule 642 postjudgment interest is part of the compensation that is to be paid for the taking in a condemnation proceeding). It is irrelevant whether the prejudgment interest was explicitly included in the judgment or accrued as a matter of law.

We made it clear in I. W. Berman Properties v. Porter Brothers, Inc., 276 Md. 1, 344 A.2d 65 (1975), that an award of postjudgment interest, under Rule 642, on a judgment that included prejudgment interest, did not constitute compound interest. Id. at 24, 344 A.2d at 79. The purpose of Rule 642 is to compensate the judgment creditor for the loss of the monies due and owing to him by the judgment debtor from the time the judgment is entered until it is paid. Id. Although the court in the instant case did not explicitly include § 12-106(c) prejudgment interest in its judgment as the lower court in Berman explicitly included prejudgment interest in its judgment, 3 such interest accrued as a matter of law by operation of § 12-106(c) and became part of the judgment as noted above. Cf. Lore v. State Board of Public Works, supra. It is irrelevant whether the prejudgment interest is judicially imposed, as in Berman, or statutorily imposed, as here. The balance of the quick-take judgment plus § 12-106(c) interest is the amount that is due and owing to the condemnee at the time the judgment is entered. Any delay in paying the judgment after it is entered results in a loss of the use of those monies during the delay in payment, for which the condemnee must be compensated pursuant to Rule 642. Although the appellant disputes the lower court's characterization of § 12-106(c) interest as "prejudgment interest," it is a distinction without a difference. "The purpose of the allowance of prejudgment interest is to compensate the aggrieved party for the loss of the use of the principal liquidated sum found due it and the loss of income from such funds." 276 Md. at 24, 344 A.2d at 79. The purpose of § 12-106(c) interest is exactly the same as that of prejudgment interest because the value of the condemned property is determined as of the time of the taking, which, in a quick-take case, occurs before trial and the resulting judgment. See Real Property Article, §§ 12-102 and 12-103. 4 This section compensates the condemnee for the loss of the use of the value of the land from the time of the taking until a judgment, which conclusively determines its value at the time it was taken, is entered. Thus, postjudgment interest, under Rule 642, in a quick-take case should be calculated upon the unpaid balance of the final judgment plus § 12-106(c) prejudgment interest.

(2)

The second issue involves what rate of interest is to be paid on the judgment after July 1, 1980. The appellee is entitled to interest on the amount of the judgment from the date of the judgment nisi until it is paid. Md.Rule 642. The rate of interest to be paid under Rule 642 is the legal rate. Northwestern National Insurance Co. v. William G. Wetherall, Inc., 272 Md. 642, 658, 325 A.2d 869, 878 (1974). The legislature, effective July 1, 1980, changed "the legal rate of interest on a judgment" from six percent per annum, see Md.Const., art. III, § 57, to 10 percent per annum (with certain exceptions not relevant here). 1980 Md.Laws, ch. 798; see Code (1974, 1980 Repl.Vol., 1981 Cum.Supp.) Courts & Judicial Proceedings Article, § 11-107(a). Appellant contends that, because the statute does not state that it applies to all outstanding judgments, it should be construed to apply only to judgments entered after July 1, 1980. Appellee argues that the legislature intended that it apply after that date to all outstanding judgments whenever entered. The appellant replies that the appellee's construction would result in a retroactive...

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