Opinion
No. CV-94-0705208 S
September 7, 1994 CT Page 8917
MEMORANDUM OF DECISION
This case rises or falls on the interpretation given to the method of calculating interest pursuant to General Statutes § 12-157. This action was brought by the plaintiff, Victorian Associates Limited Partnership, seeking to enjoin the City of Hartford from recording a tax collector's deed to real property owned by it, located at 1-3 Charter Oak Place, Hartford, Connecticut.
On June 17, 1993, the tax collector for the City of Hartford conducted a tax sale of real estate at 1-3 Charter Oak Place, Hartford, Connecticut. Andrew Larew was the high bidder for the property at this sale at $37,544.26 which included unpaid taxes, interest and charges to the date of sale.
Pursuant to General Statutes Section 12-157, the tax collector executed a deed to Larew and lodged the deed in the office of the Town Clerk for the City of Hartford where it presently remains, unrecorded.
General Statutes Sec. 12-157. Method of selling real estate for taxes. When a collector levies one or more tax warrants on real estate, he shall prepare duplicate notices thereof, containing the name of the taxpayer, the amount of the tax or taxes, a description of the property levied upon and the time and place of sale, one of which he shall post on a signpost in the town where such real estate is situated, if any, or at some other exterior place near the office of the town clerk, which is nearest thereto and the other he shall file in the town clerk's office of such town, and such town clerk shall record and index the same as a part of the land records of such town . . . . At the time and place mentioned in such notices, or, if such sale is adjourned, at the time and place specified at the time of adjournment as aforesaid, such collector (a) may sell at public auction to a bidder enough of such estate to pay the taxes with the interest, fees and other charges allowed by law or (b) may sell such estate to his municipality if there has been no bidder or the amount bid is insufficient to pay the amount due. Within one week after such sale, the collector shall execute a deed thereof to the purchaser or to the municipality conducting the sale and shall lodge the same in the office of the town clerk of such town, where it shall remain unrecorded one year from the date of such sale, and, if the delinquent taxpayer or any person interested in the estate, within such time, pays or tenders to the purchaser or to such municipality, as the case may be, the amount paid by him, with interest at the rate of (1) twelve per cent per annum from the date of such sale, if such sale occurred prior to July 1, 1981, (2) fifteen per cent per annum from the date of such sale if such sale occurs on July 1, 1981, or thereafter but not later than June 30, 1982, or (3) eighteen per cent per annum from the date of such sale if such sale occurs on or after July 1, 1982, such deed shall be delivered to the person paying or tendering the money who, if not the person whose primary duty it was to pay the tax, shall have a claim against the person whose primary duty it was to pay such tax for the amount so paid, and may add the same to any claim for which he has security upon the premises sold. If the purchase money and interest are not paid within such year, the deed shall be recorded and have full effect. Any municipality holding a lien for unpaid taxes on real estate, other than the municipality conducting the sale, may purchase such estate at a tax sale.
On June 17, 1994, the plaintiff, in an attempt to void the tax sale, tendered a certified check payable to Larew in the amount of $44,302.23.
Larew refused to accept the tender of payment claiming that the computation of interest due him per § 12-157 was incorrect. Larew computed the interest due on $37,544.26 (the original high bid) to be $7,402.39 not $6,757.97 as computed by the plaintiff. Larew computed interest compounded on a daily rate of .04932% (18.00% ÷ 365). Larew claims that this formula was commercially reasonable since, as he claims, all banks contacted by him use this method. Larew's formula mathematically compounds 18% interest rather than computing simple interest at 18%.
General Statutes § 12-157 states in pertinent part: "[I]f the delinquent taxpayer or any person interested in the estate, within [one year after the sale at public auction by the tax collector], pays or tenders to the purchaser or to such municipality, as the case may be, the amount paid by him, with interest at the rate of . . . (3) eighteen percent per annum from the date of such sale if such sale occurs on or after July 1, 1982, such deed shall be delivered to the person paying or tendering the money . . . ."
The issue then in this case is whether interest, as provided for in § 12-157, means interest calculated at the simple rate of 18% or at the compound rate of 18%.
"Compound interest means interest on interest, in that accrued interest is added periodically to the principal and interest is computed upon the new principal thus formed (citations omitted). The difference between simple and compound interest is that simple interest does not merge with the principal and thus does not become part of the base on which future interest is calculated." (Citations omitted.) Niggeling v. Michigan Dept. of Transp., 488 N.W.2d 791, 792 (Mich.App. 1992).
Section 12-157 makes no provision for compounding the interest but rather adds to the principal the interest due from date of sale to date of payment or tender of payment. This is in line with General Statutes § 37-1(b) which provides that unless an agreement provides otherwise, "interest at the legal rate from the date of maturity of the debt shall accrue as an addition to the debt." This is simple interest. See Loomis Loomis, Inc. v. Stecker Colavecchio Architects, Inc., 6 Conn. App. 88, 94, 503 A.2d 181 (1986).
Larew seeks to interpret § 12-157 to define interest as what is commercially recognized by banks in the local area. Of course, that is not the law in Connecticut. Connecticut statutes are not open to interpretation unless there is ambiguity in the language of the statute. White v. Burns, 213 Conn. 307, 311, 567 A.2d 1195 (1990). We see nothing ambiguous in the language of § 12-157 which provides for the payment of 18% interest per annum computed on the sale price from date of sale to date of payment or tender. "Where the statute presents no ambiguity, we need look no further than the words themselves which we assume express the intention of the legislature." Id.
We conclude that plaintiff's tender, of payment of $44,302.23, representing principal of $37,544.26 plus simple interest of $6,757.97, was in compliance with the conditions set forth in § 12-157.
Accordingly, since the plaintiff is entitled to void the tax sale to Larew upon tendering the proper amount required by § 12-157, the prayer for relief by the plaintiff seeking a permanent injunction prohibiting the City of Hartford from recording the tax deed is granted with costs, and the City of Hartford is ordered to deliver the tax deed to the plaintiff.
Arnold W. Aronson, J. Judge of the Superior Court