CITY COAL COMPANY OF SPRINGFIELD, INC., & another [Note 1] vs. EDWARD J. NOONAN

IRELAND, J. After nearly fifteen years of litigation and numerous hearings in both the trial and appellate courts, we consider, again, how to interpret the terms of a Superior Court judgment governing payments due to the respective parties. See City Coal Co. of Springfield v. Noonan, 36 Mass. App. Ct. 1102 (1994) (City Coal I) (affirming nine-paragraph Superior Court judgment). In City Coal Co. of Springfield v. Noonan, 424 Mass. 693, 696-697 (1997) (City Coal II), we answered questions regarding the calculation of postjudgment interest arising from certain components of that judgment [Note 2]. In regard to the first two paragraphs of the judgment, in City Coal H we also considered how to allocate two payments made by Edward J. Noonan to City Coal. Given the limited record at that time, we reluctantly "remand[ed] the case to the Superior Court to determine how the payment of $300,000 should be treated in light of this opinion." Id. at 697.

On March 23, 1999, a Superior Court judge (remand judge) issued an order governing the $300,000 payment pursuant to paragraphs one and two of the original judgment, as well as other disputed details arising under paragraphs five, six, and seven of that judgment. Both parties appealed from the remand judge's order, and we transferred the case to this court on our own motion. We review the remand judge's consideration and resolution of the following questions: (a) whether Noonan's $188,742,98 payment satisfied paragraph one of the Superior Court judgment; (b) whether Noonan's $111,257.02 check should be allocated first to postjudgment interest and then to principal; and (c) whether prejudgment interest should be awarded on the $150,000 owed by City Coal pursuant to paragraph six. Because we conclude that the remand judge exceeded her authority by reaching a result contrary to our explicit instructions regarding paragraph one, we vacate that

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aspect of her order. Additionally, "in the interest of finality of decision," Boston Edison Co. v. Boston Redevelopment Auth., 376 Mass. 151, 155 (1978), we consider and affirm the remaining sections of the remand judge's order, subject to certain modifications set forth below.

1. The $188,742.98 Check and Paragraph One of the Judgment.

We first consider whether Noonan's check to City Coal in the amount of $188,742.98 discharged his obligations under paragraph one of the Superior Court judgment [Note 3]. When issued on February 24, 1992, the check bore a restrictive indorsement stating: "Re: Civil Action # 86-1238 Endorsement and payment constitutes satisfaction in full of amount due under para (1), Judgment of 1/10/91." The indorsement was subsequently crossed out and the check cashed by City Coal [Note 4]. In the final paragraph of City Coal H, supra at 696-697, we concluded: "We cannot discern what happened in this case. . . . If this [i.e., the crossing out of the restrictive indorsement] was a unilateral action, it was ineffective. Absent an express agreement to the contrary, the payment purportedly in satisfaction of the amount owed on the first paragraph of the judgment should have been recognized as satisfying that obligation. We have no alternative on the state of the record but to remand the case to the Superior Court to determine how the payment of the $300,000 [i.e., this check and the second check for $111,257.02] should be treated in light of this opinion."

After a January 30, 1998, hearing, the remand judge "determined that the striking of the statement on the first check was a unilateral action." By our explicit instructions, we intended such a finding to be outcome-determinative, but the remand judge went on to refer to Rothenberg v. Boston Hous. Auth., 335 Mass. 597, 600 (1957): "An acknowledgment of satisfaction of a judgment indorsed upon an execution has been

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held to be invalid where made in consideration of the payment of a smaller sum than the amount due." She then found that, because "$188,742.98 'is a smaller sum than due upon the judgment, it is apparent from the face of the execution that the judgment was not satisfied.' Smith v. Johnson, 224 Mass. 50, 52 (1916)." To make up the difference, the judge ordered Noonan to pay City Coal "$8,058.03, plus postjudgment interest at the rate of twelve percent (12%) per year from February 24, 1992 through August 17, 1998."

Having considered this indorsement in City Coal II, we set forth a precise analytical formula to be applied on remand. Consistent with that formula, once it became clear to the remand judge that the underlying conditions were fulfilled, namely (1) the payment was not governed by an express agreement; and (2) that the crossing out was undertaken unilaterally by City Coal; then the payment "should have been recognized as satisfying [the paragraph one] obligation." Id. In other words, if those factors were present, the judge was not authorized to reach a different conclusion with regard to paragraph one. See Thomas O'Connor & Co. v. Medford, 20 Mass. App. Ct. 761, 762-763 (1985) (remand not intended to authorize judge to take evidence regarding increase of previous award).

In the circumstances of this case, the remand judge's reference to Rothenberg v. Boston Hous. Auth., supra., while well intended, was improper. Where neither party cited to Rothenberg v. Boston Hous. Auth., supra, in their original briefs to this court or in a petition for rehearing, our remand instructions became the governing "law of the case" and should not have been reconsidered by the remand judge. See Lunn & Sweet Co. v. Woltman, 268 Mass. 345, 349 (1929) (law of case binding upon other tribunals dealing with case). Accordingly, it was error for her to rely on the arguably contrary language from Rothenberg v. Boston Hous. Auth., supra. For these reasons, the remand judge's order awarding $8,058.03 and postjudgment interest thereon, is vacated. The matter is remanded for entry of an order that Noonan's $188,742.88 payment satisfied paragraph one of the original judgment.

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2. The $111,257.02 Check and Paragraph Two of the Judgment [Note 5].

a. Allocation of payment. On February 24, 1992, Noonan sent a check in the amount of $111,257.02 to City Coal. This check bore a restrictive indorsement stating, "Re: Case #86-1238 Partial payment of $451,821.47 under para (2), Judgment dated 1/10/91." The parties disputed how the funds should be allocated among principal, prejudgment interest, and postjudgment interest. In light of the indorsement, Noonan asserted that the second check "should be applied to the principal portion of the amount due under paragraph 2 of the [original] judgment. City Coal [countered] that it should first be applied to the interest accrued on the principal." Declining to read the indorsement as "an express agreement that the payment is to be applied to the principal before the interest," the remand judge ordered that the check "be applied to the outstanding interest obligation first, then to the principal." We agree and conclude that the payment was properly allocated to postjudgment interest first and then to the remainder of the sum of the principal and prejudgment interest.

It is "well established that, when a debtor pays money to a creditor, absent any express agreement to the contrary, the payment is first applied to the outstanding interest obligation and then to principal," City Coal II, supra at 696, citing Plasko v. Orser, 373 Mass. 40, 42-43 (1977), and cases cited, and therefore we do not find fault with the judge's conclusion. The indorsement's explicit reference to the amount of the principal, $451,821.47, does not rise to an "express agreement" between the parties designed to govern the allocation of funds among various sections of the judgment [Note 6]. City Coal II, supra (when money is owed under separate sections of judgment, "[t]he

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general rule is that a debtor may select which debt the payment should be applied toward and, if the debtor makes no explicit allocation, the creditor can make the choice"). Where neither the indorsement nor any other documentation restricted the check to the principal component of paragraph two, City Coal, as creditor, was free to select the method of allocation. The judge's order with regard to the payment allocation under paragraph two is affirmed.

b. Date of tender. City Coal delayed cashing the paragraph two check until several months after it was tendered. The parties disagree as to the date of its payment [Note 7]. Although City Coal II, supra at 696, stated that this check was "delivered . . . on February 24, 1992, payable to [City Coal]," the remand judge fixed April 3, 1992, as the date of payment. In reaching that conclusion, she focused on the fact that "it was necessary for City Coal to obtain the confirmation from Noonan (to avoid the implication of an express agreement between the parties to apply the payment to the principal) [Note 8]." On appeal, Noonan counters that "City Coal cannot control the date of delivery of payment . . . by simply not timely depositing Noonan's check." We disagree with the remand judge's conclusion and fix February 24, 1992, as the appropriate date of payment.

The text of the indorsement does not amount to a conditional promise capable of compromising the negotiability of the instrument. See G. L. c. 106, s.s. 3-104 and 3-106 (a) (i) (express condition to payment). See also Goes v. Feldman, 8 Mass. App. Ct. 84, 86, 92 (1979) (indorsement read "by cashing of this check, we release [parties] for all claims . . . in either equity or law"; not tender of payment but settlement offer). If City Coal feared the legal ramifications of cashing the check as written, they could have refused the instrument. See

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Community Bldrs., Inc. v. Indian Motorcycle Assocs., Inc., 44 Mass. App. Ct. 537, 545, 550 (1998) (check containing indorsement requiring surrender of all remaining claims returned uncashed). To hold otherwise would empower payees to manipulate the time of payment by refusing to negotiate the instrument in a timely fashion. Absent any other conditions or promises, Noonan's paragraph two obligations were discharged by the amount of the payment as of the date of delivery. See G. L. c. 106, s. 3-310 (b) (1) (uncertified check taken for obligation, suspends obligation). In this regard, the remand judge's order regarding the payment date on the $111,257.02 check is vacated.

3. Paragraph Six and Interest on Treble Damages [Note 9].

After finding a financial loss in the amount of $50,000, the trial judge ruled, "The sale [of an employment contract] was therefore in violation of [G. L. c. 231, s. 85J]. It follows that Noonan is entitled to treble damages by virtue of that statute, plus attorney's fees by reason of the 93A violation." Accordingly, as set forth in paragraph six of the Superior Court judgment, the judgment required City Coal to pay Noonan "on Count II(b) of the counterclaim the sum of $150,000.00, plus attorney's fees in the amount of $17,000.00, plus interest according to law" (emphasis supplied). On remand, from our decision in City Coal II, supra, the parties debated whether the treble damages segment of the paragraph six award arose from G. L. c. s. 93A (consumer protection) or G. L. c. 231, s. 85J (fraud), and how, if at all, that determination affects the accrual of prejudgment interest. The remand judge concluded "that the actual damages were . . . $50,000, and that $100,000 represented punitive damages [under G. L. c. 93A]." In reaching that result, the remand judge acknowledged that paragraph six of the

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award was made on "the 93A part [and] the judgment allowed $17,000 in attorney's fees which are not allowable under G. L. c. 231, s. 85J." We concur with her conclusion that prejudgment interest accrues solely on the $50,000 nonpunitive portion of paragraph six.

Even if, as Noonan asserts, the trial judge awarded the entire paragraph six amount under G. L. c. 231, s. 85J [Note 10], he would not be entitled to prejudgment interest on the multiple damages portion. See McEvoy Travel Bur., Inc. v. Norton Co., 408 Mass. 704, 716-719 & n.12 (1990); Briggs v. Carol Cars, Inc., 407 Mass. 391, 396 n.2 (1990) (interest on multiple damages portion of s. 85 awards accrue only from date of judgment); Makino, U.S.A., Inc. v. Metlife Capital Credit Corp., 25 Mass. App. Ct. 302, 320-321 (1987); J.L. Shapiro, M.G. Perlin & J.M. Connors, Collection Law s. 7.26 & n. 1, at 287 (3d ed. 2000). "Prejudgment interest, as is well understood, compensates the prevailing party for loss of the use of money that party, as determined by the judgment, should have had in the first place and not been obliged to chase. In that way compensatory damages are truly compensatory and, in monetary terms, the winner is no less well off for the chase.... No similar purpose would be served by imposing interest on punitive damages which, as we have seen, have a purpose beyond restoring to a plaintiff what should have been his. Indeed, to add interest on punitive damages in a c. 93A case would have the flavor of unseemly piling on." (Citation omitted.) Makino, U.S.A., Inc. v. Metlife Capital Credit Corp., supra. See McEvoy Travel Bur, Inc. v. Norton Co., supra at 716 ("We are satisfied that the rule in Makino is the correct one"). We see no reason why treble damages awarded under G. L. c. 231, s. 85J, ought to be exempted from this principle. See id. at 718 (comparing G. L. c. 231, s. 85J, with G. L. c. 93A) [Note 11]. Thus, whether the trial judge relied on one statute over the other is of no import. We therefore af-

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firm the remand judge's conclusion and order prejudgment interest to accrue solely on the $50,000 compensatory component of the paragraph six award.

4. Tolling of Postjudgment Interest.

With respect to paragraphs one and five of the judgment, the remand judge ordered postjudgment interest to be computed "through August 17, 1998." The judge did not explain her rationale for selecting that date. Pursuant to G. L. c. 235, s. 8, postjudgment interest accrues until the judgment is fully satisfied. See J.L. Shapiro, supra at s. 10.22 n.1, at 412-413. Regarding paragraph one, the question is moot because that judgment was satisfied in full by Noonan's payment. As to paragraph five, it was error for the remand judge to toll the computation of postjudgment interest on the underlying amount. While the amount is minuscule (one dollar), the imposed August 17, 1998, bar is vacated.

5. Conclusion.

With the intent of concluding this protracted litigation, we remand the matter to the Superior Court with the following instructions:

a. With regard to paragraph one, the remand judge's order is vacated. Noonan discharged its obligations by the payment of the $188,742.98 check.

b. With regard to paragraph two, we affirm the remand judge's order, but fix February 24, 1992, as the payment date for the purposes of computing postjudgment interest.

c. With regard to paragraph five, we affirm the remand judge's order, but vacate the order tolling postjudgment interest.

d. With regard to paragraph six, we affirm the remand judge's allocation of compensatory and punitive damages.

So ordered.