On note defaults, compounded interest requires support
The Ohio Supreme Court this week addressed a relevant issue given our current economic climate: when a debtor defaults on a written instrument, and neither the instrument or Ohio law authorizes the compounding of interest, can the creditor obtain compound interest for the amount due? The court's answer is no--unless there is an agreement between the parties that allows compounding of interest, or unless an Ohio statute specifically authorizes it. With neither supporting authority in the agreement or an authorizing statute, the creditor may only receive simple interest on the debt, said the court. The court's opinion in Mayer v. Medancic, Slip Opinion No. 2009-Ohio-6190 (Dec. 3, 2009) is available at http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2009/2009-Ohio-6190.pdf.