2020 Georgia Code
Title 7 - Banking and Finance
Chapter 4 - Interest and Usury
Article 1 - In General
§ 7-4-14. Interest Runs From Default Unless Otherwise Agreed; When Demand Necessary
In the absence of an agreement to the contrary, interest shall not run until default; hence, where money can be recovered because of mistake or other like reasons, no interest shall run until after demand and refusal to refund.
(Civil Code 1895, § 2881; Civil Code 1910, § 3431; Code 1933, § 57-107.)
Law reviews.- For survey article on trial practice and procedure, see 60 Mercer L. Rev. 397 (2008).
JUDICIAL DECISIONSANALYSIS
- General Consideration
- Mistake
- Obligations Payable On Demand
General Consideration
Interest accrues after default on interest-free contract.
- Stipulation in contract for sale of goods, to be delivered within a reasonable time in the future and to be paid for on delivery, to effect that obligation of purchaser is to bear no interest, does not mean that the purchaser would not be required to pay interest in case of and after the purchaser's default, but was merely a provision against payment of interest prior to maturity of purchase-money. Morgan v. Colt Co., 34 Ga. App. 630, 130 S.E. 600 (1925).
Interest note is liquidated demand which bears interest at maturity.
- When obligation to pay interest is put in form of interest note, that note becomes a liquidated demand; and when the note is not paid at maturity the note bears interest as such, certainly if parties have contracted that it should. Walton v. Johnson, 213 Ga. 108, 97 S.E.2d 310 (1957).
Good faith diversion of funds insufficient to bring case within section.
- That diversion of funds was made in good faith and with honest intentions is not sufficient to bring a case within former Civil Code 1895, § 2881. Davidson v. Story, 106 Ga. 799, 32 S.E. 867 (1899).
Trustee is chargeable with legal rate of interest from date of breach of trust. Allen v. Allen, 198 Ga. 269, 31 S.E.2d 483 (1944).
Interest charged from time of appropriation for improper retention of fees.
- When executor improperly retained attorney's fees for services rendered by the executor it is proper to charge the executor with interest from time such fees were appropriated. Davidson v. Story, 106 Ga. 799, 32 S.E. 867 (1899).
Interest recoverable from time of discharge upon payment of spouse's debt.
- When wife did not demand repayment of money with which she discharged her husband's debt until sometime subsequent to its payment, she could recover interest thereon from the time of its payment. Bank of Waynesboro v. Walters, 135 Ga. 643, 70 S.E. 244 (1911).
Interest recoverable from date of contract made by incompetent party.
- When one not having capacity to contract is induced by undue influence to pay over money under contract, interest may be recovered from date of the contract if recovery allowed at all. Newman v. Thompson, 134 Ga. 137, 67 S.E. 662 (1910).
Cited in Cochran v. City of Thomasville, 167 Ga. 579, 146 S.E. 462 (1928); Mendenhall v. Nalley, 81 Ga. App. 517, 59 S.E.2d 283 (1950); Carroll v. Taylor, 87 Ga. App. 815, 75 S.E.2d 346 (1953); Jenkins v. Tastee-Freez of Ga., Inc., 114 Ga. App. 849, 152 S.E.2d 909 (1966); Northside Envtl. Servs., Inc. v. National Bank, 191 Ga. App. 348, 381 S.E.2d 536 (1989); SunTrust Bank v. Hightower, 291 Ga. App. 62, 660 S.E.2d 745 (2008).
Mistake
When payment is by mistake, interest does not run until after demand.
- When money is paid by mistake, and there is no fraud or misconduct by the party receiving the money, interest does not run until after demand, since prior to demand, by suit or otherwise, the receiver is in no default. Trustees of Jesse Parker Williams Hosp. v. Nisbet, 191 Ga. 821, 14 S.E.2d 64 (1941).
General rule is that on money paid by mistake, when there is no fraud or misconduct by the party receiving the money, interest does not run until after demand. Dell v. Kugel, 99 Ga. App. 551, 109 S.E.2d 532 (1959).
In an action for money had and received brought to recover money paid and received by reason of mutual mistake of law, interest accrues not from the time the money is received, but from date on which demand for the money's return is made. Dell v. Kugel, 99 Ga. App. 551, 109 S.E.2d 532 (1959).
Former Code 1933, § 57-107 is not limited to a mistake of fact; there can be a mistake as to the law in good faith. Keen v. Lewis, 215 Ga. 166, 109 S.E.2d 764 (1959).
Section applicable only when money recoverable.
- Former Code 1933, § 57-107 applicable only when money, paid by mistake or other like reason, can be recovered, and has no reference to situations when a trustee has converted property of another to the trustee's own use. Allen v. Allen, 198 Ga. 269, 31 S.E.2d 483 (1944).
Obligations Payable On Demand
When salary is demanded and refused, judgment may bear interest.
- There is a definite contractual relation between every employee and employer, whether the employee is a public officer or not, which entitles the employee to payment of the employee's salary, and when a demand is made therefor and refused, the court may award interest on the salary. Undercofler v. Scott, 220 Ga. 406, 139 S.E.2d 299 (1964).
Interest on claim due on notice and demand runs from demand.
- When claim is due only on notice and demand upon donee, interest on such claim runs only from demand. Trustees of Jesse Parker Williams Hosp. v. Nisbet, 191 Ga. 821, 14 S.E.2d 64 (1941).
Legacy payable at discretion does not bear interest until after demand.
- When legacy is placed in the hands of a person with discretion as to payment, it does not bear interest until after the date of demand for payment. Harrison v. Watkins, 127 Ga. 314, 56 S.E. 437 (1907).
Deposit for certiorari does not bear interest until after demand.
- When it is necessary for allowance of certiorari that the deposit of fine and costs for violation of a city ordinance be made, deposit does not bear interest until after the demand. Mayor of Savannah v. Kassell, 115 Ga. 310, 41 S.E. 572 (1902).
When guarantor agreed to pay certain sum, interest does not run until demand has been made upon the guarantor. Manry v. Waxelbaum Co., 108 Ga. 14, 33 S.E. 701 (1899).
No prejudgment interest absent demand for return of purchase money.
- In determining that a tax sale was void, the superior court properly held that a buyer of real property was entitled to a refund of the purchase price the buyer paid for the property, but the buyer could not recover prejudgment interest, as the buyer failed to make an unequivocal demand for the return of the buyer's purchase money. Harpagon Co. v. Freeman, 281 Ga. 531, 640 S.E.2d 268 (2007).
Prejudgment interest claim not valid.
- Trial court properly concluded that the plaintiff did not have a valid claim for prejudgment interest under O.C.G.A. § 7-4-15 because the plaintiff's claims were not liquidated as, if successful at trial, the plaintiff stood to receive either a specific verdict amount or nothing at all because there were different potential sales involved. Miller v. Lynch, 351 Ga. App. 361, 830 S.E.2d 749 (2019), cert. denied, No. S19C1614, 2020 Ga. LEXIS 152 (Ga. 2020), cert. denied, No. S19C1615, 2020 Ga. LEXIS 148 (Ga. 2020).
RESEARCH REFERENCES
Am. Jur. 2d.
- 44B Am. Jur. 2d, Interest and Usury, §§ 48, 49.
C.J.S.- 47 C.J.S., Interest and Usury; Consumer Credit, § 103.
ALR.
- Time at which interest is payable under will or contract providing for payment of interest, 10 A.L.R. 997.
When contract construed to require interest to be paid in advance, 39 A.L.R. 951.
Who other than borrower may avail himself to latter's right to recover back usurious payments or penalties therefor, 82 A.L.R. 1008; 134 A.L.R. 1335.
Liability of Federal Deposit Insurance Corporation for interest in respect of insured deposit, 153 A.L.R. 532.
