Platsis v. Diafokeris

• Decision Date: 01 September 1985
• Docket Number: No. 1436,1436
• Citation: 511 A.2d 535,68 Md.App. 257
• Parties: John PLATSIS et al. v. George DIAFOKERIS. ,
• Court: Court of Special Appeals of Maryland

Page 257

68 Md.App. 257

511 A.2d 535

John PLATSIS et al. v. George DIAFOKERIS.

No. 1436, Sept. Term, 1985.

Court of Special Appeals of Maryland.

July 9, 1986.

Peter A. Prevas and Peter A. Prevas (Prevas & Prevas, on brief), Baltimore, for appellant.

Renee L. Menasche (Barry M. Cohen, Cohen, Dwin & Garfield, P.A., on brief), Baltimore, for appellee.

Argued before ALPERT and ROBERT M. BELL, JJ., and JAMES C. MORTON, Associate Judge of the Court of Special Appeals (retired), Specially Assigned.

ROBERT M. BELL, Judge.

John and Mary Platsis, appellants, and George Diafokeris, appellee, executed a Bill of Sale and Agreement as well as a Promissory Note in connection with appellee's sale of his interest in Marie's Carry-Out in Towson, a pizza/submarine business. The agreement and the note provided that the sale price of $29,000.00 was to be paid to appellee as follows:

(a) Four Thousand Dollars ($4,000.00) shall be paid by December 1, 1982.

(b) The Twenty-five Thousand Dollars remaining shall be paid at sixteen percent (16%) interest from July 15, 1981. Said payments to be paid in twenty-four (24) equal installments commencing with the first payment due December 1, 1982 and for twenty-four (24) consecutive months thereafter in equal installments of One Thousand Four Hundred Seventeen Dollars Forty-one Cents ($1,417.41).

(c) That the parties acknowledge that the interest at sixteen percent (16%) is based upon thirty-six (36) months but payable in twenty-four (24) installments. That the said percent of the previous year has been proportionally added to the following twenty-four months.

In addition, they set forth "events or conditions" constituting default under the agreement and note and, in the event of default, appellants promised to "pay reasonable attorney's fees not to exceed 20 percent, legal expense and other expenses incurred by Seller in pursuing his rights and remedies under the law ...". The note, which provided for prepayment in full or in part, without penalty, at any time, detailed appellee's remedy in the event of a default. Appellants paid the $4,000.00 required under the agreement and note on the day that they were executed.

After making 14 monthly payments, appellants, desiring to prepay the note, consulted with an attorney who computed the amount due. They then delivered to appellee's wife a check in the amount of $8,333.36, marked "Dept [sic] paid off" as full payment of the unpaid balance due on the note, including interest.

Appellee, upon receipt of the check, consulted with his accountant, who advised him that the check was for an insufficient amount to cover the balance due and owing on the note. Having determined that the check was for an insufficient amount, appellee caused a letter to that effect to be forwarded to appellants:

Mr. Diafokeris received from you a check in the amount of $8,333.36. Please be advised, that as a payoff figure on the mortgage, it is incorrect, and there is a substantial balance due.

The balance on your mortgage, after the March 1984 payment, was $10,751.70. To verify this balance, please find enclosed a mortgage amortization on the original $29,000.00 at 16% yearly interest, payable in 24 months starting in December 1982, in monthly payments of $1,417.41.

I have advised Mr. Diafokeris not to cash this check, because it is incorrect. You are hereby requested, to immediately issue Mr. Diafokeris a check in the amount of $11,038.03, which consists of the balance of the mortgage in the amount of $10,751.70, interest on the mortgage for April in the amount of $143.36, payment shortgages in the amount of $1.23, and two months of late charges in the amount of $141.74.

Failure to remit this check within ten days of this date, or the monthly payment due (which is also considered late) will result in your defaulting the loan.

Upon receipt of the letter, appellants consulted a second attorney who advised them that interest should be payable only on $25,000.00 of principal, not $29,000.00, a position which appellants maintained throughout the proceedings below. Despite communication between appellants' counsel and appellee's accountant, the matter was not resolved.

Appellee filed a Nar and Confession of Judgment on the note. The issue at trial was summarized by the trial court thusly:

The note in question is for $29,000.00, with interest at 16% per annum, and provides for payment in 24 months at $1,417.41 per month. It also provided for a payment of $4,000.00 on the very day of the note. Evidence presented at the hearing established that the cost of the business transfer was $29,000.00, but that Platsis agreed also to pay Diafokeris one year's interest on $25,000.00 at 16%, which Diafokeris has incurred. This extra amount was $4,000.00, and there was conflict in testimony as to whether interest was payable on this sum.

In short, the issue resolved itself into one of whether it was the intention of the parties that interest be paid on $29,000.00 or $25,000.00. Noting an ambiguity in the agreement and the note and having heard the testimony as to the parties' intention, the trial judge, construing "any ambiguity ... against [appellee], whose agents prepared the documents", concluded that interest was only to be paid upon the reduced principal amount of $25,000.00. He therefore accepted the calculations offered by appellants "in preference to those offered by [appellee]". ¹

Another issue at trial was whether the tender of an amount, which was less than the amount due, ² but which appellants, in good faith, thought was the correct amount, coupled with an excessive demand by appellee, excused appellants from liability for interest from the date of tender, costs and attorney's fees. The trial court, noting that the parties did not agree on the balance due, but that the tendered amount was less than actually due, ruled:

This is not a case where a creditor, having sole possession of information as to the balance due, neglects or refuses to disclose that information to the debtor. The situation here is that each party is starting from a different base, and, therefore, no agreement will be reached as to the balance due until the conflict as to the base debt subject to interest is resolved.

Based on these findings of fact, the tender did not stop interest on the debt.

The court thereupon assessed against appellants interest accounting from the date of tender, counsel fees of 15%, ³ computed on the $10,207.26 found to be due as of the date of tender, and costs.

Appellants appeal from the judgment thus entered, raising only one question Did the trial court err in awarding creditor (plaintiff appellee) interest on the unpaid balance of the promissory note from the date of tender and in awarding creditor court costs and attorney's fees where creditor had made an excessive demand for the amount due on the note at the time of tender by debtor?

For reasons that will appear hereinafter, we will affirm.

We quite recently defined "tender" as "an offer to perform a condition or obligation, coupled with the present ability of immediate performance, so that if it were not for the refusal of cooperation by the party to whom tender is made, the condition or obligation would be immediately satisfied." Chesapeake Bay Distributing Company v. Buck Distributing Company, Inc., 60 Md.App. 210, 214, 481 A.2d 1156 (1984), quoting 15 Williston, A Treatise on the Law of Contracts, § 1808 (3d ed. 1972). To be valid and effective, i.e., to relieve the debtor of the obligation to pay costs, interest and attorney's fees after the date of tender, a tender "must be either in the exact amount due, or a larger amount without requiring the making of change", 5 A. Corbin, Treatise on Contracts, § 1235 (1964). See James v. Hogan, 154 Neb. 306, 47 N.W.2d 847, 853 (1951); Delashmutt v. Keller, 43 Or.App. 83, 602 P.2d 312, 314 (1979), and unconditional. 15 Williston, supra, at § 814; Mayor and City Council of Baltimore v. Hook, 62 Md. 371, 379 (1884); Heighe v. Sale of Real Estate, 164 Md. 259, 265, 164 A. 671 (1933); First National Bank of Davis v. Britton, 94 P.2d 896, 898 (Okla.1939); Ford Motor Credit Company v. Goings, 527 P.2d 603, 607 (1974). Thus, a tender which contains a condition "which would prejudice the creditor's right [, i.e., one] that a payment shall be taken in full discharge", is conditional. 15 Williston, supra.

The necessity of making tender may be excused. Chesapeake Bay Distributing Company v. Buck Distributing Company, Inc., supra, 60 Md.App. at 214, 481 A.2d 1156. This occurs when "claimant dispense[s] with its production, by express declaration or equivalent act, as if a party declare before hand that a tender will not be accepted ...", Shannon v. Howard Mutual Building Association of Baltimore, 36 Md. 383, 392 (1872), see Buel v. Pumphrey, 2 Md. 261, 268 (1852); Johnson v. Wheeler, 174 Md. 531, 539, 199 A. 502 (1938), or the creditor makes clear to the debtor that tender would be a futile gesture. 15 Williston, supra at § 1819; Chesapeake Bay Distributing Company v. Buck Distributing Company, Inc., supra, 60 Md.App. at 214, 481 A.2d 1156.

Appellants, first of all, concede that their tender was insufficient both as to amount and because it was conditional. Nevertheless, they assert:

... [W]here debtor first makes a tender ... and creditor rejects, clearly stating that nothing less than an excessive amount would be accepted as a re-tender, debtor ... is excused from re-tendering the actual balance, since this would have again been refused by creditor, and the law does not require a debtor to perform a futile gesture.

It is thus clear that the thrust of appellants' argument is that where a creditor makes an excessive demand upon his debtor,

[i]t is irrelevant that appellant, in the position of a debtor here, did not tender to appellee the proper amount due, for the rule is that tender is excused where the creditor has clearly indicated that he is unwilling to accept...