Appeal from the Circuit Court of Champaign County; the Hon.
Harry E. Clem, Judge, presiding.
JUSTICE TRAPP DELIVERED THE OPINION OF THE COURT:
Plaintiff sued defendant for an arrearage on an open account and recovered a money judgment in the amount of $4,244.05 on January 18, 1983. On February 4, 1983, defendant entered into a stipulation approved by the trial court in which he consented to the entry of judgment against him in that amount together with costs and interest. Defendant further obligated himself to make monthly installment payments in agreed amounts to the plaintiff until the judgment was paid in full.
On October 30, 1984, a hearing was held at which defendant tendered to plaintiff a final installment of $300, which defendant contended was a sum sufficient to satisfy the judgment costs and interest. Plaintiff objected arguing that a sum in the amount of $490.36 remained due and owing.
The controversy arose over the method of calculating interest on the judgment. Defendant maintained that interest accrued on the declining balance of the judgment as payments were made while plaintiff contended that interest should be calculated on the entire amount of the judgment until paid in full. After taking the cause under advisement, the trial court ruled in defendant's favor, concluding that interest should only accrue upon the judgment principal which remained unpaid after each of defendant's periodic installment payments. Plaintiff appeals.
The parties agree that this decision is controlled by the interpretation of section 2-1303 of the Code of Civil Procedure (Ill. Rev. Stat. 1983, ch. 110, par. 2-1303), which governs the award of interest on judgments. The parties have further stipulated in the trial court that if the declining balance method is the proper formulation, defendant has satisfied the judgment previously awarded.
Section 2-1303 provided in pertinent part:
"Judgments recovered in any court shall draw interest at the rate of 9% per annum from the date of the judgment until satisfied * * *. When judgment is entered upon any award, report or verdict, interest shall be computed at the above rate, from the time when made or rendered to the time of entering judgment upon the same, and included in the judgment. The judgment debtor may by tender of payment of judgment, costs and interest accrued to the date of tender, stop the further accrual of interest on such judgment notwithstanding the prosecution of an appeal, or other steps to reverse, vacate or modify the judgment." (Ill. Rev. Stat. 1983, ch. 110, par. 2-1303.)
Plaintiff argues that under the statute interest continues to accrue on the entire amount of the judgment until defendant tenders a sum sufficient to cover the full amount of the judgment, costs and accrued interest to the date of tender. Installment payments simply do not affect the calculation of interest. Plaintiff reasons that had the legislature intended the judgment to draw interest on the declining balance from the date of judgment until satisfied it would have so provided in the statute.
Defendant counters that the situation in which the judgment debtor makes installment payments which the judgment creditor accepts and applies toward the indebtedness must be distinguished from the case in which a judgment debtor makes an insufficient tender by which he intends to satisfy the judgment which the judgment creditor refuses to accept in full payment of the debt.
The parties candidly agree that there does not appear to be an Illinois case on point, and our research has not revealed any cases which precisely address this question. Nevertheless upon careful examination of the authority presented, we believe on the facts of this case that defendant's argument must be sustained.
There is scant authority in Illinois on the question of whether a partial payment toward satisfaction of a judgment which is accepted by the judgment creditor stops the further accrual of interest on all but that portion of the unpaid principal remaining after the partial payment is applied toward the judgment debt. To the extent that several cases appear to conclude that partial payment may not suspend the accrual of interest on the entire balance of the judgment we find them factually distinguishable, inapposite or statements contained therein dicta in light of the judgment actually rendered by the court. It is therefore necessary to examine each case in some detail.
In Pinkstaff v. Pennsylvania R.R. Co. (1964), 31 Ill.2d 518, 202 N.E.2d 512, the issue was whether under the Interest Act (Ill. Rev. Stat. 1963, ch. 74, par. 3) an appealing judgment creditor was entitled to interest on the judgment which he appealed during the period of his appeal. Pinkstaff won a judgment on a jury verdict against the railroad but, dissatisfied with the amount, took a sequence of unsuccessful appeals terminating in the denial of certiorari by the United States Supreme Court. After the United States Supreme Court denied certiorari, defendant placed with the clerk of the circuit court a sum which included interest only from the date of the Supreme Court's denial of certiorari rather than from the date of the trial court's judgment. In addition, at the time defendant made the deposit in the clerk's office his accompanying petition stated that payment was made "in full satisfaction of the judgment, interest and costs," and requested the court to "spread the satisfaction of record."
The supreme court held that the effect of the 1955 proviso added to the Interest Act permitting a judgment debtor to stop the further accrual of interest by tender of payment of the judgment, costs and interest accruing to the date of tender reflected a legislative intent that a judgment creditor should be entitled to interest upon his judgment from the date of judgment even though by appeal he sought to correct errors therein. The final question was: Since the payment made by the defendant was obviously insufficient to satisfy the judgment because of the interest calculation discrepancy, what effect was it to be given?
Defendant there argued that the payment should be construed as a partial payment of the judgment and that subsequent interest should accrue only upon the balance of the principal thereafter remaining unpaid. The supreme court, however, rejected this argument, stating that because of the conditions attached by the defendant to the payment, the court could not treat a deposit ...