Sands v. E.I.C., Inc.

Opinion

EARLY, J.

*

Plaintiff filed an action for declaratory relief requesting the court to determine his rights and obligations under a contract with defendant. He appeals from the summary judgment granted to defendant E.I.C., Inc. Plaintiff does not argue that the judgment in favor of defendant Sam Stein, president of defendant E.I.C., Inc., was improperly granted.

Plaintiff borrowed $364,000 from defendant E.I.C., Inc. The note executed by the parties required plaintiff to prepay one year’s interest ($20,815) at the time of execution and make monthly interest payments thereafter. Thus, interest was always to be paid one year in advance. The note contained a prepayment clause providing that plaintiff could pay “the principal” by tendering $272,000 “as payment in full of this note.” There was no provision for a prepayment penalty.

The issue is whether plaintiff, when he prepaid the $272,000, was entitled to offset the amount of the interest he had prepaid. This is a question of first impression in California.

In support of its motion, defendant filed plaintiff’s admissions that the documents attached to the complaint were intended to serve as the exclusive and final understanding of the parties and were not modified by any other agreements. Plaintiff filed a declaration stating that “at all times it was the intention of the parties to reimburse the prepaid interest,” but this conclusionary statement was not admissible in evidence and could not be considered by a court on a motion for summary judgment even in the absence of objection.

(Larsen

v.

Johannes

(1970) 7 Cal.App.3d 491, 500 [86 Cal.Rptr. 744].) The statute changing this rule (Stats. 1980, ch. 57) was expressly made inapplicable “to any appeal if the notice of appeal is filed prior to January 1, 1981.” Such notice herein was filed March 10, 1980. Interpretation of the note herein is a question of law.

[234]

Where a contract has been interpreted as a matter of law without the aid of extrinsic evidence, a reviewing court is not bound by the trial court’s interpretation. It must make its own independent interpretation.