Wyandotte Chemicals Corp. v. Royal Elec. Mfg. Co., Inc.

• Decision Date: 04 February 1975
• Docket Number: No. 277,277
• Citation: 66 Wis.2d 577,225 N.W.2d 648
• Parties: WYANDOTTE CHEMICALS CORP. et al., Appellants, v. ROYAL ELECTRIC MFG. CO., INC., et al., Respondents.
• Court: Wisconsin Supreme Court

Page 648

225 N.W.2d 648

66 Wis.2d 577

WYANDOTTE CHEMICALS CORP. et al., Appellants, v. ROYAL ELECTRIC MFG. CO., INC., et al., Respondents.

No. 277.

Supreme Court of Wisconsin.

Feb. 4, 1975.

Kenneth M. Kenney, Wolfe, O'Leary, Kenney & Wolfe, Milwaukee, for appellants.

Simarski, Goodrich, Brennan & Stack, James P. Brennan, Milwaukee, for Royal Elec. Mfg. Co., Inc.

Crowns, Merklein, Midthun & Metcalf, Wisconsin Rapids, for Thomas Elec. Service, Inc.

Whyte, Hirschboeck, Minahan, Harding, & Harland, S.C., Milwaukee, for Charles E. Schuler Engineering Co.; Richard C. Ninneman and Michael T. Hart, Milwaukee, of counsel.

CONNOR T. HANSEN, Justice.

The principal issue on this appeal relates to that portion of the judgment which denied the plaintiffs' demand for pre-verdict interest. There is no dispute as to the amount of the actual damages. The damage question in the special verdict was answered by the trial court pursuant to stipulation of the parties. Also, no issue is raised as to the rights of any insurer.

The damage to the property occurred on May 17, 1967. After a five-day jury trial, the jury returned their special verdict on December 8, 1972. Royal and Thomas were subcontractors engaged in the installation of some equipment fabricated by Schuler. The damage to plaintiffs' property arose during the installation of this equipment.

The action was originally commenced against Royal and Thomas. Schuler was subsequently impleaded as a third-party defendant by royal. Approximately one month before the trial, on motion of the plaintiffs, the court ordered that Schuler be made a principal defendant. The plaintiffs alleged the three respondents were jointly and severally liable. Royal, Thomas and schuler denied liability.

The jury found each of the three respondents causally negligent, and attributed 25 percent of the causal negligence to Royal, 25 percent to Thomas, and 50 percent to Schuler.

Following entry of the judgment on April 9, 1973, the defendants paid the amount due to the clerk of courts. Pursuant to an Order Correcting Clerical Omission In Judgment, the judgment was amended on May 7, 1973, to specifically reflect the denial of pre-verdict interest. The clerk then applied the defendants' payments to the judgment, satisfying the same on May 30, 1973.

The plaintiffs claim that the actual amount of the damages became liquidable, certain, and capable of determination on November 16, 1967, and that appropriate demand for payment was made on that date. There does not appear to be a material dispute as to these facts, especially as to Royal and Thomas. In this case, however, the dispute goes to the question of the respective liability of the three respondents and the apportionment of causal negligence, if any, among them.

The recent decision of Dahl v. Housing Authority of the City of Madison (1972), 54 Wis.2d 22, 194 N.W.2d 618, considered the question of pre-verdict interest and cited Laycock v. Parker (1899), 103 Wis. 161, 79 N.W. 327.

In Laycock v. Parker, supra, this court, after review of prior case authority, set forth the basic rules governing the recovery of pre-verdict interest. In Laycock it was noted that originally interest was recoverable only as a penalty or punishment for the wrongdoer's refusal to pay liquidated damages which were legally due. Laycock, supra, page 179. It was recognized, however, that more recent legal authorities had come to regard interest not just as a penalty but as an element of compensation necessary to make the injured party whole. This trend in the law paralleled the growing acceptance in the commercial world of interest as a measure of the time value of money. Laycock, supra, pages 179--181, 79 N.W. 327. Thus, it was determined by this court that the awarding of interest should not be strictly limited to the instance of liquidated damages, but should also extend to those cases where the amount of damages is determinable, i.e., where 'there be a reasonably certain standard of measurement by the correct application of which one can ascertain the amount he owes . . ..' Laycock, supra, page 186, 79 N.W. page 335. Applying that rule to the facts in Laycock, this court awarded pre-judgment interest where the items of damage claimed involved the costs of materials and labor necessary to complete a building.

While this standard was an extension of the rule as theretofore applied, the rule was a compromise between the two conflicting theories of interest recovery. The idea that interest was recoverable only in the instance where the money was wrongfully withheld from the injured party was not totally abandoned. Rather, in accommodating the view that interest was recoverable as an element of compensation, this court expanded the motion of what conduct was wrongful by placing on the withholding party the duty of ascertaining the value of the damages where an adequate standard of measurement was available reasonably permitting him to do so. The fact that this court still considered the rights of the withholding party as being important was specifically noted when it was stated in Laycock, supra, pages 186, 187, 79 N.W. page 335:

'. . . If one having a commodity to purchase or certain services to hire can by inquiry among those familiar with the subject learn approximately the current prices which he would have to pay therefor, a market value can well be said to exist, so that no serious inequity will result from the application of the foregoing rule to those who desire to act justly; especially in view of the other rule of law that a debtor can always stop interest by making and keeping good an unconditional tender, thus giving him a substantial advantage over a creditor, who has no such option.'

Cases decided subsquent to Laycock, while expressly relying on the theory that interest can be recovered as an item of compensatory damages, have followed a middle ground between the two conflicting policies.

In Necedah Mfg. Corp. v. Juneau County (1932), 206 Wis. 316, 237 N.W. 277, 240 N.W. 405, this court permitted recovery of preverdict interest in a negligence case where the damages claimed involved items of property destroyed by fire for which there was a reasonably certain standard for valuation available to the defendant before trial. The items had been assigned tax values which were essentially the same as the values ultimately found by the jury. So, too, in Maslow Cooperage Corp. v. Weeks Pickle Co. (1955), 270 Wis. 179, 70 N.W.2d 577, and Giffen v. Tigerton Lumber Co. (1965), 26 Wis.2d 327, 132 N.W.2d 572, this court permitted the recovery of pre-judgment interest where in each case it was shown that there was some available means by which the withholding party could determine the amount owed so that that amount could be tendered and interest halted. Moreover, in De Toro v. DI-LA-CH, Inc. (1966), 31 Wis.2d 29, 142 N.W.2d 192, it was recognized that interest was recoverable on an otherwise liquidable claim despite the existence of an unliquidated set-off, counterclaim or cross-claim. Essential to De Toro is the notion that an independent claim in the form of a set-off, counterclaim or cross-claim does not in itself affect the value of the damages being withheld from the injured party but merely results in the mathematical crediting of one independent claim against a competing independent claim after each has been fully established to the satisfaction of the court.

On the other hand, a claim of pre-judgment or pre-verdict interest has been denied in cases where the value of the amount withheld was 'determinable' under the standard Laycock test but where some other factor prevented the withholding party from determining the amount which should be tendered in order to avoid pre-verdict interest.

Thus, in Luber v. Milwaukee County (1970), 47 Wis.2d 271, 177 N.W.2d 380, this court held that pre-judgment interest could not be recovered on a claim for lost rental where the parties disputed the constitutionality of the statute under which the plaintiff's claim was computed. More recently, in State ex rel. Schilling & Klingler v. Baird (1974), 65 Wis.2d 394, 222 N.W.2d 666, this court determined that pre-judgment interest could not be recovered where, among other reasons, the parties disputed whether the law required that the county be credited with the earnings of the discharged employees during the period of discharge in computing the amount of back pay owed under a court ordered reinstatement. The credit in that case, which legally defined the amount of damages recoverable in the action, was distinguished from a set-off, counterclaim or cross-claim, such as that with which the De Toro Case was concerned. An additional case which fits this category is City of Franklin v. Badger Ford Truck Sales (1973), 58 Wis.2d 641, 657, 207 N.W.2d 866. In that case the damages were stipulated prior to trial. There was no claim that the damages, in the traditional Laycock sense, were not liquidated or liquidable. Pre-judgment interest was denied, however, because the suit was instituted against three parties alleging joint liability and thus it would have been impossible, prior to the judgment, for any individual party to determine the portion of the claimed damages for which it would be liable so that the amount could be tendered and interest stopped. The issue presented in City of Franklin was more than a denial of liability by a withholding party; a factor which has never been recognized as sufficient to defeat a claim for pre-judgment interest, Laycock, supra. Also involved was the question of how the liability for the damages was to be apportioned among the three joint tort-feasors.

The above cases demonstrate that the process of balancing the right of the injured party to receive full compensation for his injury against the right of the withholding party to be free of a claim for interest where his refusal to pay the claim is legally justifiable, has not stopped with...