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01/24/90 PAULINE SACKS v. HERBERT ROTHBERG

January 24, 1990

PAULINE SACKS, ET AL., APPELLANTS
v.
HERBERT ROTHBERG, APPELLEE



Appeal from the Superior Court of the District of Columbia; Hon. William S. Thompson, Trial Judge.

Before Rogers, Chief Judge and Schwelb and Farrell, Associate Judges.

The opinion of the court was delivered by: Rogers

ROGERS, Chief Judge: Appellant Pauline Sacks and Marvin Sacks appeal from the involuntary dismissal pursuant to Super. Ct. Civ. R. 41 (b) of their lawsuit against appellee Herbert Rothberg based on a Settlement Agreement and Promissory Note. The principal issues before the trial court concerned the anniversary date of the Note and the terms for prepayment of the Note, specifically whether appellee defaulted on the Note when he paid $4,250 on April 5, 1984, instead of $6,750, and whether the $178,800 tendered by appellee in April 1987 was sufficient to prepay the remainder of the $1,560,000 Note. Appellants contend on appeal that the trial Judge erred in finding that appellee had not defaulted on April 5, 1984, since the parties intended April 15 and not April 5 to be the anniversary date of the Note. They also contend that the Judge erred in finding that the parties intended the phrase "with credit given" in the prepayment provisions to entitle appellee in prepaying the Note to deduct the amount of the Note payments previously made first from the amount outstanding on the Note and, again, from the resulting figure. We affirm on the anniversary date finding and reverse the prepayment credit finding and remand the case.

Appellants and appellee entered into a Settlement Agreement (Agreement) in satisfaction of claims appellants had against appellee. The terms of the Agreement required, inter alia, that appellee give appellants a Promissory Note (Note) calling for payment of $1,560,000 over a twenty-year period in substantially equal monthly payments. The Note provided for prepayment at substantial reductions of the face amount of the Note. One of appellant's attorneys testified at trial that at the time of the Agreement the value of the debt was $450,000.

The Agreement and Note were both signed on April 15, 1982. However, the first page of the Agreement stated that it was entered into as of April 5, 1982, and the Note bore the typed date of April 5, 1982, on the first page before the text of the Note. Several other documents in the package of documents agreed to by the parties bore different dates. *fn1

The Note included a schedule of payment as follows:

Upon the Closing Date and until the second anniversary date of the Note, there shall be monthly payments of $4,250 due on the fifth day of each month aggregating $51,000 per year . . . .

From the second until the twentieth anniversary date of the Note, there shall be payments of $6,750 due on the 5th day of each month aggregating $81,000 per year . . . .

The Note further provided for acceleration of the debt

if any payment under this Note is not paid when due and remains unpaid for seven business days, or if Borrower is in default under the terms and provisions of [the Agreement], the entire amount outstanding shall at once become due and payable at the option of the Note holder.

On the 5th day of every month after April 5, 1982, through March 5, 1984, appellee paid appellants $4,250. *fn2 On or about April 5, 1984, appellant Pauline Sacks received a check from appellee for $4,250. The day after she received the check she spoke with Anthony Nuland, one of the attorneys who had represented appellee during negotiation of the Agreement and Note, and although she thought the check was for the incorrect amount, she did not so advise Mr. Nuland; nor did she advise appellee by any other means until nearly two months later. On June 2, 1984, she sent a letter notifying appellee that she was accelerating payment on the Note because of his default in failing to pay $6,750 on April 5, 1984, and demanding $850,000 plus 15% interest pursuant to the terms of the Note. *fn3

Pending trial, appellee gave appellants, on April 3, 1987, a check for $178,800 as prepayment in satisfaction of the Note, pursuant to paragraph 5.3 (e) of the Agreement which provided:

If paid in full at any time after the fourth anniversary date of the Promissory Note, and provided that all other obligations under this Settlement Agreement have been or are contemporaneously satisfied in full, the amount payable on the date of prepayment shall be 40% of the amounts outstanding under the Promissory Note, with credit given for all amounts paid by Rothberg to the date of prepayment . . . .

[Emphasis added]. Appellants refused to accept the check, contending, in view of appellee's default, that the amount was insufficient to satisfy the full prepayment amount, which they maintained was $496,800. *fn4 Appellee thereafter placed the $178,800 into a court-sanctioned escrow fund and continued ...


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