Safeco Ins. Co. v. City of Watertown, SD, 77-1012.

• Decision Date: 26 January 1982
• Docket Number: No. 77-1012.,77-1012.
• Citation: 538 F. Supp. 49
• Parties: SAFECO INSURANCE CO. OF AMERICA, Plaintiff, v. CITY OF WATERTOWN, SOUTH DAKOTA, A Municipal Corporation, Defendant.
• Court: U.S. District Court — District of South Dakota

538 F. Supp. 49

SAFECO INSURANCE CO. OF AMERICA, Plaintiff, v. CITY OF WATERTOWN, SOUTH DAKOTA, A Municipal Corporation, Defendant.

No. 77-1012.

United States District Court, D. South Dakota, N. D.

January 26, 1982.

Russell B. Holloway, Holloway, Dobson, Hudson & Bachman, Oklahoma City, Okl., and Glen H. Johnson, Banks & Johnson, Rapid City, S. D., for plaintiff.

Kathlynn G. Fadely, Trial Atty., Torts Branch, Civil Division, U. S. Dept. of Justice, Washington, D. C., for defendant United States of America.

William A. Hackett, Austin, Hinderaker & Hackett, Watertown, S. D., for defendant City of Watertown, S. D.

MEMORANDUM OPINION

DONALD J. PORTER, District Judge.

BACKGROUND

The crash which destroyed the Saberliner aircraft which was the subject of this lawsuit occurred on June 14, 1975. On December 31, 1981 this Court entered judgment for plaintiff for the full stipulated value of the aircraft, $1,787,872. 529 F.Supp. 1220. Plaintiff has now moved for an award of prejudgment interest, running from June 18, 1975, the date on which plaintiff claims the aircraft was determined to have been a total loss and payment to plaintiff's insured made, to the date of judgment, a total award of interest of $918,966.94. The Court finds, however, that there are certain periods of this time for which an interest award may not be made, and also that plaintiff's rate for a portion of the time is incorrect, and reduces the award to $512,226.18.

DISCUSSION

The parties having stipulated to the amount of damages sustained by plaintiff, and no evidence having ever come before this Court suggesting that these damages were not "certain, or capable of being made certain by calculation", SDCL 21-1-11, it is clear that plaintiff is entitled to an award of prejudgment interest. It then becomes necessary to determine under which statute this interest is to be determined: SDCL 54-3-4, as claimed by defendant, or SDCL 54-3-5, as claimed by plaintiff. The language of these statutes as they are currently written is as follows:

SDCL 54-3-4. Under an obligation to pay interest, no rate being specified, interest is payable from date of incurrence of debt, unless the parties have otherwise agreed, at the rate of twelve percent per annum, and in the like proportion for a longer or shorter term; but in the computation of interest for less than a year, three hundred sixty days are deemed to constitute a year.

SDCL 54-3-5. Unless there is an express contract in writing fixing a different rate, interest is payable on all moneys at a rate of eighteen percent per annum, after they become due on any instrument of writing, and on moneys lent, or due on any settlement of accounts, from the day on which the balance is ascertained, and on moneys received to the use of another and detained from him.

The interest rate under SDCL 54-3-4 was six percent until July 1, 1980, when it became its present twelve percent. The interest rate under SDCL 54-3-5 claimed by plaintiff to be applicable here, is six percent until June 30, 1980; from July 1, 1980 through June 30, 1981 it was twelve percent; after July 1, 1981 the rate became eighteen percent. There seems to be some confusion as to which of these statutes is the correct one to use in computing pre-judgment interest, compare Simpson v. Norwesco, Inc., 583 F.2d 1007, 1013 (8th Cir. 1978) (SDCL 54-3-4) with Northern Improvement Co., Inc. v. South Dakota State Highway Commission, 314 N.W.2d 857 (S.D. 1982); Hulstein v. Meilman Food Industries, 293 N.W.2d 889, 891 (S.D.1980) (SDCL 54-3-5). None of these cases discuss the question of which statute is to be applied in any particular case, giving this Court no clear precedent to follow. From a reading of the two statutes, however, it would appear that the language of SDCL 54-3-5, declaring the rate of interest on moneys "after they become due on any instrument of writing, and on moneys lent, or due on any settlement of accounts ... and on moneys received to the use of another and detained from him", seems to limit its applicability to cases in which those fact situations are present. Such is not the fact situation here. Rather, this negligence action for property damage clearly appears to fall under the general language of SDCL 54-3-4 that simply states the rate "under an obligation to pay interest." Plaintiff's demand for prejudgment interest will therefore be determined at the rate set forth in SDCL 54-3-4.

Next, the question is presented of the date from which interest is to be declared to run. SDCL 21-1-11 does, of course, say that when a right to recover is vested in a plaintiff on "a particular day, the plaintiff is entitled also to recover interest thereon from that day." Plaintiff does not contend that the amount of damages were certain on the date of the accident, June 14, 1975. Plaintiff does argue, however, that the damages were certain and vested on June 18, 1975, when plaintiff alleges in its brief that it "ascertained the totality" of the loss and paid its insured for the wrecked aircraft. Plaintiff relies on White Motor Corp. v. Northland Insurance Co., 315 F.Supp. 689 (D.S.D.1970), as authority for this argument. See also Bauer v. Uniroyal Tire Co., 630 F.2d 1287 (8th Cir. 1980). In White Motor, the interest was determined to run from the date of the completion of the repair of a truck. It must be observed, however, that this date had clearly been in the evidence presented to the Court in the trial.¹ Here, however, plaintiff points to none of the evidence presented at trial as a basis for the date of June 18, 1975, and the Court was able to find none. Apart from the bare assertions in its brief in support of its motion for pre-judgment interest, the first date in the record at which it appears that the damages had been made certain is the date of the filing of the complaint, June 13, 1977. The Court will therefore calculate the interest from that date.

Finally, the Court must consider the effect of the repeated requests for continuances made by plaintiff. This case was originally set for trial on June 16, 1980. By letter dated May 13, 1980 and attached to this opinion as...