Honomichl v. Modlin , 1991 S.D. LEXIS 179 ( 1991 )

MILLER, Chief Justice.

Ben and Susan Honomichl, d/b/a Custom Sales (Custom Sales), brought action seeking to recover $8,881.48 for repairs performed on vehicles owned by Roger Mod-lin. Custom Sales appeals from the trial court’s judgment awarding it only $4,685.48, asserting that from the evidence presented at trial, it should have received a larger award based on an hourly rate and that it should have also been awarded storage costs and prejudgment interest. We affirm in part, reverse in part, and remand.

FACTS

Custom Sales is an automobile body repair business located in Jefferson, South Dakota. Sometime in late 1988 or early 1989, Modlin brought two vehicles, a 1986 Blazer and a 1987 Ford pickup, to Custom Sales to be repaired. Modlin also delivered a 1987 Ford Dually to Custom Sales a few months later for repairs.

A dispute arose over the price of the repairs. Custom Sales alleged that it was to be paid $25 per hour plus parts. Modlin claimed they orally agreed on a fixed price for the repairs. Ultimately, Custom Sales initiated this action to recover $8,881.48 (reflecting a credit of $2,950 already paid). Modlin answered and counterclaimed, alleging Custom Sales owed him $1,080 for trees he planted at the Honomichl residence.

The trial court found there was an oral contract between the parties, and that Mod-lin owed Custom Sales $9,175.48 for work and materials provided. The court allowed Modlin credit of $3,500 for sums already paid, plus a credit of $990.00 for the trees. The trial court refused to award costs of storage or prejudgment interest. Custom Sales appeals.

ISSUE I

WHETHER THE AMOUNT OF THE JUDGMENT WAS APPROPRIATE.

Custom Sales’ first argument is that the trial court was clearly erroneous in setting the amount of the judgment, asserting that by a clear preponderance of the evidence it was entitled to a judgment of $8,260.42. However, the record does not contain proposed findings of fact and conclusions of law, or objections to Modlin’s proposed findings by Custom Sales. See SDCL 15--6-52(a).

Under the settled law of this state, “[t]he failure of an appellant to object to findings of fact and conclusions of law and to propose his or her own findings, limits review to the question of whether the findings support the conclusions of law and judgment.” Huth v. Hoffman, 464 N.W.2d 637, 638 (S.D.1991) (emphasis added); GMS, Inc. v. Deadwood Social Club, Inc., 333 N.W.2d 442, 443 (S.D.1983); Application of Veith, 261 N.W.2d 424, 425 (S.D.1978). Accordingly, on review, this court may only determine whether the trial court’s conclusions of law and its order and judgment are supported by the findings of fact.

We have reviewed the salient findings and determine that they support the conclusions of law.

ISSUE II

WHETHER THE TRIAL COURT’S CONCLUSION DENYING PREJUDGMENT INTEREST IS SUPPORTED BY THE FINDINGS.

The trial court found that Custom Sales was not entitled to prejudgment interest because “there was no sum certain which could be reasonably calculated based upon the facts and the contradictory testimony of both parties.”

SDCL 21-1-13.1, cited by Custom Sales as its sole authority for the availability of prejudgment interest, does not apply in this case. That statute applies only to those actions commenced on or after July 1,1990. SDCL 21-1-13.2. This action was commenced May 18, 1989, therefore, the controlling statute is SDCL 21-1-11, which reads as follows:

Every person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day, except during such time as the debtor is prevented by law, or by the act of the creditor, from paying the debt. (Emphasis added.)

We recently addressed the issue of prejudgment interest in Clements v. Gabriel, 472 N.W.2d 480 (S.D.1991), by stating: “The prevailing party is entitled to prejudgment interest only if damages are certain or capable of being made certain by calculation; prejudgment interest is not to be awarded if the damages are uncertain until determined by the trier of fact.” Id. at 484 (citing First Nat. Bank of Minneapolis v. Kehn Ranch, Inc., 394 N.W.2d 709 (S.D.1986); Twin City Testing & Engineering Lab. v. Smith, 393 N.W.2d 456 (S.D.1986)).

The problem which presents itself is, when are damages “certain or capable of being made certain by calculation?”

If this Court has been caught up with confusion, it is not alone in the jurisdictions of this Union. It should not bear the brunt of deep censure. Courts throughout the land are struggling with prejudgment interest. Court declarations on this subject have been an academic pilgrimage. Each particular set of facts seems to create a new hazard.

S.D. Bldg. Auth. v. Geiger-Berger Assoc., 414 N.W.2d 15, 26 (S.D.1987) (Henderson, J., concurring specially). In Arcon Const. Co. v. S.D. Cement Plant, 405 N.W.2d 45, 47 (S.D.1987), Justice Wuest, writing for this court, stated: “Often this statutory language has been difficult for the courts to apply to the variety of cases. It has also undoubtedly been difficult for attorneys to advise their clients on whether they are entitled to prejudgment interest on their contract claims.”

As noted earlier, the state legislature recently enacted SDCL 21-1-13.1, which applies to actions commenced after July 1, 1990.¹ The new statute addresses more specifically some of the difficult issues which often arise with prejudgment interest. Perhaps the new statute will eliminate some of the uncertainty courts and attorneys have had in applying the rule.

Prejudgment interest may be denied on the theory that when a person who is liable does not know what sum he owes, he cannot be in default for not paying. Clements, 472 N.W.2d at 485-86 (citing Beka v. Lithium Corporation of America, 77 S.D. 370, 92 N.W.2d 156 (1958)); Heer v. State, 432 N.W.2d 559, 562 (S.D.1988). In contrast, we have often said the purpose of awarding prejudgment interest is “to do justice to one who has suffered a loss at the hands of another person.” Jensen Ranch, Inc. v. Marsden, 440 N.W.2d 762, 767 (S.D.1989); S.D. Bldg. Auth., 414 N.W.2d at 19; Amert v. Ziebarth Const. Co., 400 N.W.2d 888, 890 (S.D.1987). “The true principle, which is based on the sense of justice in the business community and our statute, is that he who retains money which he ought to pay another should be charged interest upon it.” Arcon at 47; S.D. Bldg. Auth., 414 N.W.2d at 19; Gearhart v. Hyde, 39 S.D. 273, 275, 164 N.W. 58, 59 (1917).

Custom Sales’ complaint requested $8,881.48 plus prejudgment interest, costs, and attorney fees based on services completed at an hourly rate.² Modlin claimed he had an oral agreement with Custom Sales for an amount not exceeding $4,270.94³

A bona fide dispute as to the amount of damages should not bar the accrual of interest in all circumstances or a plaintiffs right to interest would depend merely upon the reasonableness of the defendant_ Mere difference of opinion as to the exact amount of damages was not sufficient to excuse [defendant] from compensating [plaintiff] for loss of the use of its money from July 1970 until judgment in 1975.

Heer, 432 N.W.2d at 570 (Sabers, J., concurring in part, dissenting in part); Arcon, 405 N.W.2d at 47; Gearhart, 39 S.D. at 275, 164 N.W. at 59.

As Justice Sabers stated in Heer, “[o]bvi-ously a debtor has the right to resist the debt, but in the meantime, he has had the use of the money and should pay interest on the obligation in accordance with SDCL 21-1-11.” Id. (citing S.D. Bldg. Auth., 414 N.W.2d at 28 (Sabers, J., concurring in part and dissenting in part)). Modlin admitted he owed Custom Sales money, the only dispute was the amount. The trial court found there was an oral contract and that Custom Sales was entitled to $4,685.48.⁴ It is apparent that Modlin was on notice that he would have to pay at least the contract price, less credits.

When someone is entitled to recover damages often they are also statutorily entitled to the time value of money which has been withheld from them. In essence, prejudgment interest discounts future damages to present value, and prejudgment interest under SDCL 21-1-11 compensates the plaintiff for the detention of his money when interest has not been provided for by contract.

Areon at 47.

Accordingly, we find there was a sum certain from which prejudgment interest could be calculated with reasonable certainty. Courts should not hesitate to award prejudgment interest when the facts and circumstances make the amount of damages readily determinable. Arcon, 405 N.W.2d at 47. Furthermore, “[i]t seems clear from these cases that the instances in which interest will be denied have been progressively restricted by a liberal application of the rule.” Clements, 472 N.W.2d at 484 (citing Beka, 77 S.D. at 376, 92 N.W.2d at 160)). Thus, the trial court’s conclusion that Custom Sales was not entitled to prejudgment interest is an error of law and the judgment must be reversed and remanded.

Affirmed in part, reversed in part, and remanded⁵ for further proceedings consistent with this decision.

WUEST, SABERS and AMUNDSON, JJ., concur. HENDERSON, J., concurs in part and dissents in part.

1 . SDCL 21-1-13.1 provides:

Any person who is entitled to recover damages, whether in the principal action or by counterclaim, cross claim or third-party claim, is entitled to recover interest thereon from the day that the loss or damage occurred, except during such time as the debtor is prevented by law, or by act of the creditor, from paying the debt. Prejudgment interest is not recoverable on future damages, punitive damages or intangible damages such as pain and suffering, emotional distress, loss of consortium, injury to credit, reputation or financial standing, loss of enjoyment of life or loss of society and companionship. If there is a question of fact as to when the loss or damage occurred, prejudgment interest shall commence on the date specified in the verdict or decision and shall run to, and include, the date of the verdict or, if there is no verdict, the date the judgment is entered. If necessary, special interrogatories shall be submitted to the jury. Prejudgment interest on damages arising from a contract shall be at the contract rate, if so provided in the contract; otherwise, if prejudgment interest is awarded, it shall be at the Category B rate specified in § 54-3-16. The court shall compute and award the interest provided in this section and shall include such interest in the judgment in the same manner as it taxes costs.

2 . The $8,881.48 reflects a credit of $2,950.00 for payments made.

3 . The $4,270.94 reflects a credit of $4,580 for payments made and trees provided.

4 . According to the briefs, subsequent to this appeal the parties entered a stipulation whereby the frame, which was the subject of Count IV, would not be delivered and the judgment could be reduced by $1,134.35.

5 . The dissent claims the foregoing authorities are inapplicable to the facts of this case. It is respectfully suggested that the dissenter fails to recognize the distinction between "contracted interest” and "prejudgment interest." See Hepper v. Triple U Enterprises, Inc., 388 N.W.2d 525 (S.D.1986) (plaintiffs had to pay interest provided under contract; however, claim for prejudgment interest denied because damages were uncertain until jury rendered verdict); Barton Masonry, Inc. v. Varilek, 375 N.W.2d 200 (S.D.1985) (contractor entitled to prejudgment interest in action seeking recovery on breach of contract and quantum meruit theories); Cert. of Question From U.S. Dist. Court, 369 N.W.2d 658 (S.D.1985) (trial court should mathematically compute prejudgment interest using SDCL 54-3-4 and SDCL 54-3-16, which establish rate of interest where no rate of interest has been specified under obligation); Subsurfco, Inc. v. B-Y Water Dist., 369 N.W.2d 129 (S.D.1985) (interest by way of damages in a breach of contract action allowed for the unlawful detention of money found to be due); City of Mission v. Abourezk, 318 N.W.2d 124 (S.D.1982) (trial court erred in awarding prejudgment interest at rate specified in contract for deed (which related to interest on balance of purchase price owed) because prior to December 4, 1980, there was no judgment and trial court should have awarded prejudgment interest based upon the statute).