Opinion
July 7, 1988
Appeal from the Supreme Court, Onondaga County, Reagan, J.
Present — Doerr, J.P., Denman, Boomer, Green and Balio, JJ.
Order insofar as appealed from unanimously modified on the law and as modified affirmed without costs, and matter remitted to Supreme Court, Onondaga County, for further proceedings in accordance with the following memorandum: Defendant, 281 Groton Corporation, appeals and plaintiff, Marine Midland Bank, N.A., cross-appeals from those parts of an order that denied each party's motion for summary judgment in this dispute over entitlement to a sum of money presently being held in an escrow account pursuant to an agreement by the parties. Plaintiff claims that it is entitled to the entire sum as past-due accrued interest on two promissory notes. Defendant argues that it is entitled to the entire sum because plaintiff agreed in subsequent transactions to limit defendant's liability to a sum already paid by defendant and, in the alternative, that plaintiff was entitled to postmaturity interest at the statutory judgment rate only. If interest on the notes was calculated at the statutory judgment rate, defendant claims entitlement to 98.3% of the moneys held in escrow.
In our view, defendant is entitled to summary judgment on its alternative theory. "It is the settled law in this State that, in the absence of other agreement by the parties, 'where one contracts to pay a principal sum at a certain future time with interest, the interest prior to the maturity of the contract is payable by virtue of the contract, and, thereafter as damages for breach of the contract.' * * * After maturity, in the absence of other agreement, the interest is computed as damages according to the rate then prescribed by law, whether that is more or less than the contract rate" (Metropolitan Sav. Bank v. Tuttle, 290 N.Y. 497, 500 [emphasis in original]; see also, Barrick v Barrick, 83 A.D.2d 290, 292, appeal dismissed 56 N.Y.2d 802; Stull v. Feld, 34 A.D.2d 655, 656; 32 N.Y. Jur, Interest and Usury, § 13, at 30-33). In the instant case, because the promissory notes do not provide for a postmaturity rate of interest, plaintiff is entitled to interest at the statutory judgment rate unless plaintiff proved an agreement of the parties to a higher rate. That plaintiff failed to do. None of the documents evidencing the 1979 transactions between the parties provides for a rate of interest. Therefore, we remit the matter to Special Term to calculate interest due plaintiff at the statutory rate (CPLR 5004 [6% before June 25, 1981 and 9% thereafter]) and to distribute the proceeds of the escrow account.