SIKORSKY FINANCIAL CREDIT UNION, INC. v. WILLIAM D. BUTTS,

SC 19216

Judicial District of Danbury

 Contracts; Interest; Whether Contractual Postmaturity Interest was Properly Terminated Upon the Entry of Judgment.  The plaintiff brought this action against the defendant seeking to recover damages for breach of a retail installment contract for the purchase of an automobile.  When the defendant defaulted on the contract, the plaintiff took possession of the automobile and sold it at auction.  The sale proceeds did not cover the amount owed, and the plaintiff sought to collect the deficiency balance.  The trial court rendered a default judgment in favor of the plaintiff, awarding it the deficiency balance, attorney's fees and prejudgment interest at the contractual rate of 9.14 percent.  The court also awarded postjudgment interest at a rate of 2 percent pursuant to General Statutes § 37-3a.  While the contract provided for postmaturity interest on any deficiency balance at the rate of 9.14 percent, the court interpreted that provision as applying only to prejudgment interest and not to postjudgment interest.  The plaintiff appealed, arguing that the court improperly determined that postjudgment interest was governed by § 37-3a rather than by the parties' contact or by General Statutes § 37-1, which has been interpreted as allowing parties to agree to nonusurious rates of postmaturity interest and, in the absence of such an agreement, fixes the rate of interest that may be awarded on a debt at 8 percent.  The Appellate Court (144 Conn. App. 755) affirmed the judgment, concluding that the trial court properly awarded postjudgment interest pursuant to § 37-3a.  It found that because the contract did not explicitly address postjudgment interest, it was reasonable for the trial court to conclude that the 9.14 percent interest rate applied only to prejudgment interest.  The Appellate Court rejected the plaintiff’s alternative argument that, even if the 9.14 percent rate applied only to prejudgment interest, it was still entitled to postjudgment interest at the legal rate of 8 percent pursuant to § 37-1.  The court acknowledged that § 37-1 (b) provides that interest will continue to accrue on a debt at 8 percent from the date of maturity, but ruled that the trial court properly determined that the “postmajority” interest to be accrued under the contract should be characterized as prejudgment interest.  Finally, the Appellate Court noted that it would not find fault with the trial court’s handling of the interest issue where the plaintiff failed to raise its claim that it was owed postjudgment interest at the contractual rate until it filed a motion to reargue the trial court’s decision.  In this appeal, the Supreme Court will decide whether the Appellate Court correctly concluded that postmaturity interest under the contract was properly terminated upon the entry of the judgment.