Interstate Iron Works Corp. v. Poskanzer-Tulp Company

A-1353-97T2 (N.J. Super. App. Div. 1999) (Unpublished)
  • Opinion Date: January 12, 1999

CONTRACTS; INTEREST RATE—A court can apply equitable principles in awarding late payment interest on a basis other than the contract rate.

A steel fabricator and erector entered into an agreement with a prime contractor for steel work on a parking garage. Pursuant to a “rider” or supplemental section of the contract, it agreed to do additional work upon oral and apparent written authorization of the project supervisor who was acting on behalf of the property owner. The steel fabricator satisfactorily completed the “extras,” but when it submitted its final bill, no payment was made. The lower court found the prime contractor, the owner, and the “alleged owners” liable. It also awarded interest based upon a provision of the supplemental agreement reading: “on all unpaid balances due [to fabricator] under this Agreement at the rate of one and one-half [1 and 1/2%] percent per month.” The contractor and the owners objected to paying interest for the period between the start of the law suit and its conclusion. The supplemental conditions were probably signed on behalf of the prime contractor by the project supervisor, but neither the owner nor any of the alleged owners actually signed the supplemental conditions. In addition, an intervening bankruptcy of the prime contractor and one of its major partners introduced equitable considerations into the delay between initiation of the lower court suit and its final judgment. Consequently, the Appellate Division concluded that the legal rate of prejudgment interest was more compatible with “equitable principles” than the contract interest rate where liability for interest was being imposed on the ultimate responsible parties for quasi-contractual grounds.