MOORE v. MILITARY AFFAIRS DEP'T

R.B. BURNS, P.J.

When plaintiffs retired from the Michigan National Guard, a dispute arose over the computation of their retirement benefits. The Supreme Court eventually determined that plaintiffs had been underpaid, and remanded to the Court of Claims for entry of summary judgments in favor of plaintiffs. Moore v Dep't of Military Affairs, 398 Mich. 324; 247 N.W.2d 801 (1976), Larkey v Dep't of Military Affairs, 399 Mich. 1036; 249 N.W.2d 302 (1977). On remand, the Court of Claims entered judgments on the principal amounts owing and determined that interest should run from the date it entered the judgments. Plaintiffs appeal, arguing they are entitled to interest from the time retirement benefits came due, but were wrongfully withheld.

The issue presented on appeal is whether the Court of Claims judgment interest statute, MCL 600.6455; MSA 27A.6455, bars recovery in the Court of Claims of prejudgment interest on damages. We hold that it does.

MCL 600.6455; MSA 27A.6455 provides:

"No interest shall be allowed upon any claim up to the date of the rendition of judgment by the court, unless upon a contract expressly stipulating for the payment of interest. All judgments from the date of rendition thereof shall carry interest at the rate of 5% per annum, except that judgment upon a contract expressly providing for interest shall carry interest at the rate provided by said contract in which case provision to that effect shall be incorporated in the judgment entered."

In construing the statute, our function is to discover and give effect to the intent of the Legislature. See, e.g., Moore v Dep't of Military Affairs, supra, at 327; 247 N.W.2d at 803.

Although this Court has several times stated in particular cases that plaintiffs could not recover prejudgment interest in the Court of Claims, citing MCL 600.6455; MSA 27A.6455, Williams v Dep't of State Highways, 44 Mich. App. 51; 205 N.W.2d 200 (1972), Reich v State Highway Comm, 43 Mich. App. 284; 204 N.W.2d 226 (1972), but see Buckeye Union Fire Ins Co v Michigan, 38 Mich. App. 155; 195 N.W.2d 915 (1972), the Court has not addressed the precise question presented in the instant case. Williams involved the applicability of the more specific Court of Claims judgment interest statute over the general judgment interest statute, MCL 600.6013; MSA 27A.6013, and Reich appears to have involved a request for unliquidated, not easily ascertainable damages for trespass, in which prejudgment damages interest would not be allowable in any event. See Banish v Hamtramck, 9 Mich. App. 381; 157 N.W.2d 445 (1968).

This Court has recognized a distinction between interest on a judgment and prejudgment interest included as an element of damages. The former is purely statutory, while the latter has evolved judicially. See Militzer v Kal-Die Casting Corp, 41 Mich. App. 492, 496-497; 200 N.W.2d 323, 326 (1972), Vannoy v City of Warren (On Rehearing), 26 Mich. App. 283, 288; 182 N.W.2d 65, 68 (1970), aff'd, 386 Mich. 686; 194 N.W.2d 304 (1972), Banish v Hamtramck, supra, Swift v Dodson, 6 Mich. App. 480, 483; 149 N.W.2d 476, 478 (1967). Both have the purpose of compensating the plaintiff for the loss of use of funds. Vannoy v City of Warren, supra. Although there exists some confusion as to when prejudgment damages interest is recoverable, Banish v Hamtramck, supra, it is clear that, but for MCL 600.6455; MSA 27A.6455, it would be recoverable in the instant case. As in Banish, the disputed amount of pension benefits is certain, and an award of interest is necessary to insure adequate compensation.

Notwithstanding the applicability of the rationale for an award of prejudgment interest on damages in the instant case, the statute bars such recovery. The first sentence unambiguously excludes recovery of any prejudgment interest, except that expressly stipulated to by contract. The second sentence adequately establishes that the time at which judgment interest is recoverable is the date of judgment, without the necessity of further indicating in the first sentence that judgment interest is not recoverable prior to the date of judgment. Unless the first sentence refers to prejudgment interest on damages, it is meaningless. The Court must give effect to every sentence of a statute, if possible. Grand Rapids v Crocker, 219 Mich. 178, 182; 189 N.W. 221, 222 (1922). Moreover, the exception of expressly stipulated contract interest is a form of prejudgment interest on damages; in order to be an exception to the general rule, the general rule must prohibit recovery of prejudgment interest on damages generally. We therefore hold that the statute bars recovery of prejudgment interest on damages in the Court of Claims.

Banish v Hamtramck, supra, is not inconsistent. The language barring recovery of prejudgment interest on damages in MCL 600.6455; MSA 27A.6455 does not appear in the general judgment interest statute, MCL 600.6013; MSA 27A.6013.

Affirmed. No costs, a public question.

V.J. BRENNAN, J., concurred.

J.H. GILLIS, J. (dissenting).

I disagree with the majority's position that plaintiffs are not entitled to prejudgment interest. This case does not involve a tort claim with unliquidated damages as was the situation in Williams v Dep't of State Highways, 44 Mich. App. 51; 205 N.W.2d 200 (1972), and Reich v State Highway Comm, 43 Mich. App. 284; 204 N.W.2d 226 (1972).

Where the damages are liquidated it is a denial of full compensation to preclude interest. Therefore, I would allow plaintiffs to recover prejudgment interest as an element of damages. Banish v Hamtramck, 9 Mich. App. 381; 157 N.W.2d 445 (1968).