Legal Research

Ohio Supreme Court Ruling

Creditor Entitled to Simple Interest on Defaulted Note Unless Parties Agreed to or Statute Allows Compounding

From the website: "2008-2363 and 2009-0170.  Mayer v. Medancic, Slip Opinion No. 2009-Ohio-6190...

Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2009/2009-Ohio-6190.pdf

View oral argument video of this case...

...The Supreme Court of Ohio ruled 7-0 today that pursuant to R.C. 1343.02, when a debtor defaults on a written instrument that specifies an interest rate payable on the unpaid balance, and there is no agreement of the parties or another statutory provision expressly authorizing the compounding of interest, the creditor is entitled to simple interest on the unpaid amount until payment is made.

The Court also held that after a debtor defaults on a written instrument, simple interest accrues on the entire amount owed, which includes both the unpaid principal and the interest that was due and payable to the creditor at the time of the default. The Court's decision, which reversed a ruling by the 11^th District Court of Appeals, was authored by Justice Maureen O'Connor."

Full text and active links are available at the source site listed below.

Source: The Supreme Court of Ohio, 3 December 2009

Full post as published by Stark County Law Library Blawg on December 04, 2009 (boomark / email).