Ralston Purina Co. v. Parsons Feed & Farm Supply, Inc.

• Decision Date: 27 August 1969
• Docket Number: No. 19336,19428.,19336
• Citation: 416 F.2d 207
• Court: U.S. Court of Appeals — Eighth Circuit
• Parties: RALSTON PURINA COMPANY, Appellant, v. PARSONS FEED & FARM SUPPLY, INC., Thurman Parsons, Inez Parsons, Glenn Parsons, and Alma Parsons, Appellees (two cases).

416 F.2d 207 (1969)

RALSTON PURINA COMPANY, Appellant, v. PARSONS FEED & FARM SUPPLY, INC., Thurman Parsons, Inez Parsons, Glenn Parsons, and Alma Parsons, Appellees (two cases).

Nos. 19336, 19428.

United States Court of Appeals Eighth Circuit.

August 27, 1969.

F. W. Schwarz, St. Louis, Mo., for appellant, J. A. Fraser, St. Louis, Mo., and James R. Hale, Fayetteville, Ark., on the brief.

W. B. Putman, Fayetteville, Ark., for appellees.

Before BLACKMUN, MEHAFFY and HEANEY, Circuit Judges.

BLACKMUN, Circuit Judge.

We are concerned here with the elusive question of the proper interest to be allowed on an unliquidated counterclaim reduced to judgment, then reversed, and then reduced to an identical judgment at a date subsequent to the entry of judgment on the plaintiff's liquidated claim. The parties are agreed that, to the extent state law is pertinent, Arkansas law applies.

The facts are not in dispute:

1. In February 1964 Ralston Purina Company instituted a diversity action against Parsons Feed & Farm Supply, Inc., and four individual guarantors to recover $116,471.60, part of which ($16,027.46) was an open account for goods sold and delivered in 1963, and the remainder of which ($100,444.14) was for turkeys sold under a 1963 contract. Parsons and the individual defendants counterclaimed for $80,725.14 made up of damages ($64,429.47) for breach of a 1960 contract to purchase chicks and hatching eggs, and a discount ($16,295.67) under a 1962 agreement for the purchase of bulk feed from Ralston.

2. On October 16, 1964, at pretrial, it was determined that Ralston's accounting against Parsons was correct. The district court entered an order reciting that it finds that Parsons was indebted to Ralston for the claimed amount of $116,471.60. The issues raised by the counterclaim were not then resolved and were set for trial to a jury. No formal judgment was entered on that date.

3. At the ensuing trial the jury returned a verdict in favor of Parsons on the issue involving chicks and eggs but in favor of Ralston on the bulk sales discount issue. It fixed Parsons' damages at the $64,429.47 amount claimed.

4. Accordingly, on November 19, 1964, the district court entered judgment for Ralston for $116,471.60 on its claim and for the defendants for $64,429.47 on the counterclaim, set off the latter against the former, and entered a net judgment for Ralston for $52,042.13 against Parsons and the guarantors. The judgment made no reference to interest.

5. Ralston appealed from that part of the judgment which granted the setoff. This court reversed on evidentiary and instructional grounds, with costs to Ralston, and remanded the case for a new trial. Ralston Purina Co. v. Parsons Feed & Farm Supply, Inc., 364 F.2d 57 (8 Cir. 1966).

6. The case was retried. The jury again returned a verdict for Parsons for $64,427.47.¹ Judgment was entered accordingly on February 7, 1967, and, as amended three days later, set off the $64,427.47 against Ralston's judgment of November 19, 1964, for $116,471.60, making a net judgment for Ralston for $52,044.13 plus the costs allowed on the appeal. Here, too, there was no mention of interest.

7. Ralston again appealed. In November 1967 this court, on its own motion, dismissed that appeal for Ralston's failure to prosecute. Ralston thereby accepted the result as to the principal amount of the counterclaim.

8. On December 19, 1967, Ralston caused an execution to issue in its favor for $116,471.60 with interest thereon at 6 per cent per annum from October 16, 1964, plus the appellate costs, but less the amount of $64,427.47 and interest thereon at 6 per cent per annum from February 7, 1967. The effect of this would have been to allow Ralston interest on the full amount of its claim from the date of the pretrial determination to the date of the second judgment, and on the amount of the net judgment from and after the date of the second judgment.

9. The defendants moved to stay the execution. They admitted the net principal indebtedness to Ralston but, as grounds for the stay, they alleged a valid tender, Ralston's refusal of that tender, and delays on the part of Ralston which made it unconscionable for interest to be allowed during the period of those delays. Ralston, in its turn, moved for summary judgment.

10. Judge Miller on April 8, 1968, sustained the defendants' motion to stay the execution and denied Ralston's motion for summary judgment. In this memorandum order he stated:

"From the date of the filing of the complaint the plaintiff has obstinately contended that the defendants owed it the sum of $116,471.60, and has refused to recognize its own obligation to the defendants. The defendants have consistently admitted that they owed the plaintiff the sum of $116,471.60, but that the plaintiff owed them at least the sum of $64,427.47. The plaintiff would not recognize the claim of defendants for any sum, with the result that there were two jury trials and in both cases the jury returned a verdict for the defendants on their counterclaim * * *.

* * * * * *

"The defendants alleged in their motion attacking the execution that they had tendered to plaintiff the amount of $52,040.13 with interest at 6 percent. The record does not establish that a legal tender was made but if such a tender had been made in settlement of the claim of plaintiff, the court is of the opinion that it would not have been accepted. Everyone connected with the lawsuit recognized that whatever amount of judgment the plaintiff recovered, the defendants were fully able financially to pay it. The entire attitude of plaintiff was that the counterclaim was without substance. This attitude arose because of the belief on the part of plaintiff that no contracts were entered into by its duly authorized agent which required the payment to the defendants of any sum. The testimony in both trials showed that such contention on the part of the plaintiff was arbitrary. The mere fact that the judgment rendered in the first trial was reversed by the Court of Appeals did not in anywise weaken or alter the counterclaim of defendants. This is substantiated by the result of the second trial. * * *

"After reviewing the entire record, the court is of the opinion that it would be unjust to allow plaintiff the interest as claimed by it. This is a case that requires the court to exercise its judicial discretion in reaching a decision."

The court then granted Ralston an alias execution to recover interest at 6 per cent per annum on $116,471.60 from October 16, 1964, to November 19, 1964, and the sum of $52,040.13² with interest thereon at 6 per cent per annum from November 19, 1964. The effect of this was to disallow Ralston interest on its full claim during the period between the first and second judgments or, to put it oppositely, to allow Parsons counterbalancing interest on the amount of its counterclaim from the date of the first rather than the second judgment.

11. Ralston has again appealed. This is our No. 19,336.

12. On August 7, 1968, in response to this court's limited interim remand, Judge Miller entered an order permitting Parsons to deposit in the district court's registry a sum sufficient to cover the Ralston judgment principal and interest to the extent allowed by the order of April 8, 1968, as amended. From this order Ralston has taken a protective appeal. This is our No. 19,428.

The contested interest, therefore, is on the amount of the defendants' eventually allowed counterclaim for the period between the date of the first judgment and the date of the second judgment. This is 6 per cent per annum on $64,427.47 for something over 26 months.

Ralston's position is that counterbalancing interest on Parsons' counterclaim cannot begin to run until the entry of the second judgment on February 7, 1967. It argues that, by the reversal on the first appeal, the judgment of November 19, 1964, was rendered null and void and no longer existed; that the reversal left the parties in the positions they occupied be-before the judgment was entered; that the counterclaim was established only on February 7, 1967; and that it, Ralston, is entitled not to lose interest on its claim for the period between October 16, 1964, and February 7, 1967.

The defendants argue that Ralston is urging the "interest on the entire claim" approach which is "the extreme minority view"; that this was properly rejected by the district court; that an award of interest is to compensate a party for his being deprived of the rightful use of his money; that it would be inequitable to allow Ralston interest on its claim when it was not entitled to receive that entire amount; that, after four years and two trials, the validity of the setoff has been finally established; that Ralston was denied the use of only the net amount; that there is no authoritative Arkansas decision; and that this is a clear case for the exercise of the trial court's discretion.

As Judge Miller pointed out in his memorandum, a judgment creditor, under Arkansas law, with stated exceptions not applicable here, is entitled to receive interest at 6 per cent per annum (unless a contract is involved which specifies a greater rate) "from the day of signing judgment" and until "satisfaction". Ark.Stat.Ann. §§ 29-124 and 125 (Repl. 1962). Title 28 U.S.C. § 1961 provides that interest shall be allowed on any money judgment recovered in a United States district court in a civil case and "shall be calculated from the date of the entry of the judgment, at the rate allowed by State law."

These statutory provisions are not particularly helpful to us here, especially in the absence of authoritative construction of the Arkansas statutes by the Supreme Court of that State. Clearly, however, the Arkansas and federal statutes together generally authorize postjudgment interest at 6 per cent per annum.

At this point it is perhaps well precisely to pinpoint the nature of the interest which is at issue. On...