any agreement or arrangement or instruction on the part of the original depositor of the funds (Omar).
All entities known to have actual or potential claims to the interest accruing on the $ 295,800 have been given an opportunity to assert a claim to it. Omar served its papers in this motion on the Syrian defendants, which have not responded or objected to Omar's application. Additionally, Omar and the Syrian defendants have reached a settlement which both sides agree did not require any further payment to or by the Syrian defendants. The Syrian defendants were served with Omar's motions papers accompanied by a letter from Omar's attorney dated November 9, 1992 notifying them of the opportunity to intervene and indicating that failure to do so would result in loss of any claim to sums sought in this case. See SCAS Transport v. Steamship Danos, 578 F. Supp. 327 (S.D.N.Y. 1984); judgment rev'd on other grounds, 845 F.2d 1157 (2d Cir. 1988); Note, 79 Colum. L. Rev. 1551 (1979); Note, 19 J. Maritime L. & Com. 605 (1988).
By receiving service as parties, or through a vouching-in procedure relevant to non-parties, the Syrian defendants were given actual notice of the present motion and appear to have waived any claim to the interest at issue here.
In opposing Omar's present application, UBAF has presented no new facts, and I adhere to my prior finding of March 27, 1991 that UBAF is liable to Omar for the interest accruing from October 30, 1985 to June 1, 1990 on the $ 295,800 posted to secure the letter of credit.
UBAF has submitted a schedule of accrued interest on Omar's funds in the Syrian bank's call account which, although not persuasive as a business record under Fed.R.Evid. 802(6), can be used against the bank as an admission of a party under Fed.R.Evid. 801 (b)(4). Omar also concedes that the accounting provided in this schedule is the amount that UBAF would have paid or that the bank treated as owed to the Syrian bank, even though erroneously, and that this is the amount of interest it is owed. Therefore, I treat the interest applicable as being fixed by the parties at $ 110,565.46. See pp. 6-7, supra.
Omar's application for interest on the withheld interest seeks an extraordinary remedy not ordinarily provided, unless a contract, statutory provision or special circumstances justify it. Thus, for example, 28 U.S.C. § 1961 provides for interest to be allowed on any money judgment in a civil case, but only provides for simple interest - even though the full equivalent of the use of money can only be provided by compound interest (which recognizes the ability to earn interest on funds paid as interest).
Interest on interest, i.e., compounding of interest, "'as a general rule, is not allowed to be computed on a debt.'" Devex Corp. v. General Motors Corp., 749 F.2d 1020, 1025 (3d Cir. 1984), (quoting Cherokee Nation v. United States, 270 U.S. 476, 490, 70 L. Ed. 694, 46 S. Ct. 428 (1926)), cert. denied sub nom., Technograph, Inc. v. General Motors Corporation, 474 U.S. 819, 88 L. Ed. 2d 55, 106 S. Ct. 68 (1985). Limited interest on interest which would not continue to compound, as sought here, might, of course, be awarded where a judgment granted interest on an amount resulting from an unsatisfied former judgment but this is not such a case.
No precedent for judicial imposition of extracontractual compound interest has been cited by Omar. I deny Omar's request for interest on the amount owed for the period October 30, 1985 through June 1, 1990.
By order dated March 27, 1991, I directed UBAF to provide Omar with an accounting by April 27, 1991 on the "margin account", which UBAF now concedes were "swept" into the Syrian bank's interest-bearing account on October 30, 1985. UBAF having failed to reply, in direct violation of my order, I nonetheless granted UBAF additional time to comply by June 24, 1991. UBAF continued to disregard my order until February 24, 1993.
In addition, UBAF has admitted that the oral accounting on September 3, 1991 by the attorney who was then counsel to UBAF "mistakenly asserted" that the account holding the funds was non-interest-bearing. I had no reason to believe prior to February 1993, nor is there any evidence that Omar had reason to believe, that the September 3, 1991 "accounting," based on knowledge solely within the control of defendant UBAF, was inaccurate or misleading. UBAF now comes forward with what it asserts is the accurate description, requests that I expunge this civil contempt fine, and seeks cancellation of my May 8, 1991 order requiring UBAF to pay two thousand seven hundred fifty-six dollars ($ 2,756) in attorney's fees and costs, on the grounds that its attorney was ill.
UBAF does not provide any indication that it was unaware of its attorney's problems. It did not then select substitute counsel nor has UBAF cited any authority for not treating UBAF's former counsel as its agent in failing to disclose the requested information or for making representations on behalf of UBAF.
UBAF shall show cause within thirty (30) days of the date of this order:
(1) why UBAF should not be fined for contempt for violating my order of June 3, 1991, and required to pay to Omar the amount set forth in that order of two hundred and fifty dollars ($ 250) per day for each day from June 24, 1991 until February 24, 1993 that UBAF failed to provide Omar with an accounting of the interest accruing on the $ 295,800 principal;
(2) why UBAF should not be assessed the sum I directed it to pay in my May 8, 1991 order for attorney's fees and costs; and
(3) why I should not assess UBAF for Omar's attorney's fees for any litigation necessitated by UBAF's failure to comply with my order of June 3, 1991 to make such disclosure.
Omar's motion is granted to the extent that UBAF is ordered to pay to Omar one hundred and ten thousand five hundred sixty-five dollars and forty-six cents ($ 110,565.46) within thirty (30) days of the date of this order.
UBAF also is ordered to show cause within thirty (30) days of the date of this order as to why I should not impose contempt fines and assess attorney's fees as set forth in part VII; and why it should not pay the attorney's fees previously assessed.
Applications for attorney's fees and costs, with the exceptions discussed above, will be deferred until my determination of the order to show cause with respect to UBAF. Omar may submit within thirty-five (35) days of the date of this order an application for any further attorney's fees to which it believes it may be entitled.
As required by my individual rules, originals of all papers shall be filed with the clerk of the court and courtesy copies delivered to my chambers at the time of filing.
VINCENT L. BRODERICK, U.S.D.J.
Dated: White Plains, New York
March 31, 1993