Creditor Only Entitled to Simple Interest on Defaulted Note

In its December 3, 2009 opinion in Mayer v. Medancic, Slip Opinion No. 2009-Ohio-6190, the Ohio Supreme Court ruled 7-0 that when a debtor defaults on a written instrument which specified an interest rate payable on the unpaid balance, and there was no agreement or another statutory provision expressly authorizing the compounding of interest, the creditor is entitled to simple interest on the unpaid amount until payment is made.

The Court also held that after a debtor defaults on a written instrument, simple interest accrues on the entire amount owed, which includes both the unpaid principal and the interest that was due and payable to the creditor at the time of the default. Justice Maureen O'Connor wrote the Court's opinion.

See the Court's summary and see the streaming video of the oral argument:

http://www.sconet.state.oh.us/PIO/summaries/2009/1203/082363_090170.asp