Did the 1981 amendment to North Carolina's interest-on-judgments statute, G.S. 24-5, allow clerks to assess interest on costs?

Plain-English summary

The 1981 General Assembly rewrote part of G.S. 24-5, North Carolina's interest-on-judgments statute. The old version had said that the amount of any judgment or decree in a non-contract action "except the costs" would bear interest until paid. The 1981 amendment replaced that sentence entirely with new language about when interest accrued on compensatory damages, with different rules for claims covered by liability insurance and claims not covered.

The Clerk of Superior Court in Montgomery County noticed that the phrase "except the costs" had disappeared. He asked the AG whether the deletion meant clerks should now compute interest on the costs portion of a judgment as well as the principal.

The AG said no. The deletion was a side effect of restructuring the sentence, not a legislative intent to start charging interest on costs. The purpose of Session Laws 1981, c. 327 (read in light of its title and its simultaneous amendment of G.S. 24-7) was to change when interest accrued in tort cases covered by liability insurance — moving accrual from the date of verdict to the date the action was filed. The General Assembly was speaking to accrual timing on compensatory damages, not to whether costs themselves could draw interest.

Two other interpretive moves locked in the answer:

• The new statutory language was specific. It directed interest to be calculated on the portion of the judgment "designated by the fact-finder as compensatory damages." Costs are not designated by the fact-finder; they are taxed by the clerk after judgment. So costs simply did not fit the new formula.
• Interest on costs requires express statutory authority. City of Charlotte v. McNeely, 281 N.C. 684 (1972), and earlier cases held interest on costs cannot be allowed without express statutory permission. With "except the costs" gone but nothing affirmatively authorizing interest on costs in its place, the default no-interest-on-costs rule controlled.

The clerk's correct practice was therefore to compute interest only on principal (in contract cases) or compensatory damages (in non-contract cases), and not on the cost component.

Currency note

This opinion was issued in 1982. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

G.S. 24-5 and G.S. 24-7 have both been amended multiple times since 1982. The contract-versus-tort split, the liability-insurance treatment, and the legal rate of interest have all evolved. Anyone calculating post-judgment interest today should use the current version of Chapter 24 and confirm the result against recent case law.

Common questions

Q: Why did the legislature remove "except the costs" at all if it didn't intend to change the rule?
A: The AG read the deletion as a drafting consequence. The new sentence was rebuilt to specify what did bear interest (the fact-finder-designated principal or compensatory damages), which made the old exclusion redundant. Repealing redundant phrasing does not by itself signal an intent to flip the underlying rule.

Q: Was the 1981 amendment about all tort judgments or only those with liability insurance?
A: Both, but with different accrual dates. For claims covered by liability insurance, interest on compensatory damages ran from the date the action was filed. For claims not covered by liability insurance, interest still ran from the date of the verdict. The opinion read this two-track structure as evidence the legislature was thinking about insurance-bar dynamics, not about costs.

Q: What is the practical effect for a clerk taxing a judgment?
A: At the time, the clerk computed interest only on the principal or compensatory-damage portion. The cost line items (filing fees, service fees, jury fees, statutory witness fees, etc.) were not included in the interest base. Today, this should be confirmed against the current statute.

Q: Could a party still try to collect interest on costs?
A: Not based on G.S. 24-5 alone, under the AG's reading. There would need to be a separate, express statute or a court order with specific authority. City of Charlotte v. McNeely was the controlling background rule the AG relied on.

Background and statutory framework

The statutory text mattered, so the AG quoted both versions:

• G.S. 24-5 (pre-1981). "All sums of money due by contract of any kind, excepting money due on penal bonds, shall bear interest, and when a jury shall render a verdict therefor they shall distinguish the principal from the sum allowed as interest; and the principal sum due on all such contracts shall bear interest from the time of rendering judgment thereon until it is paid and satisfied. In like manner, the amount of any judgment or decree, except the costs, rendered or adjudged in any kind of action, though not on contract, shall bear interest till paid, and the judgment and decree of the court shall be rendered according to this section." (Emphasis in opinion.)
• G.S. 24-5 (post-1981, replacing the second sentence). Interest on the fact-finder-designated compensatory damages portion of any money judgment in non-contract actions accrues either from the time the action is instituted (claims covered by liability insurance) or from the time of the verdict (claims not so covered).

The simultaneous amendment of G.S. 24-7 added the phrase "Except with respect to compensatory damages in actions other than contract as provided in G.S. 24-5, when ...," tying the two statutes together so that the clerk's computation under G.S. 24-7 did not overlap with the new G.S. 24-5 rule.

The session-law title was the AG's clinching textual evidence: "An act to mandate the accrual of interest on money judgments awarded in actions other than contract from the filing of the claim." Nothing in the title suggested costs were part of the package. The AG also cited the established Strong's North Carolina Index principle that the spirit and intent of an act control its construction.

The case law backstop, City of Charlotte v. McNeely, set the default rule. Interest on costs requires express statutory authority. Without that authority surfacing in the 1981 amendment, the AG saw no basis to extend interest to the costs portion of a judgment.

Citations

• N.C.G.S. § 24-5 (interest on judgments; both pre- and post-1981 versions)
• N.C.G.S. § 24-7 (interest from verdict to judgment; 1981 coordinating amendment)
• N.C. Sess. Laws 1981, c. 327 (the act and its title)
• City of Charlotte v. McNeely, 281 N.C. 684, 190 S.E.2d 179 (1972) (interest on costs requires express statutory authority)
• Smith v. Old Dominion Building and Loan Association, 119 N.C. 249, 26 S.E. 41 (1896) (same general principle)
• 50 N.C. Atty. Gen. Rep. 18 (1980) (earlier AG opinion on interest)

Source

• Landing page: https://ncdoj.gov/opinions/judgments-interest-on-costs/

Original opinion text

Requested By: Honorable Charles M. Johnson
Clerk of Superior Court
Montgomery County

Question:
May interest be assessed on costs in light of the 1981 amendments to G.S. 24-5?

Conclusion:
No.

Prior to its amendment in 1981, G.S. § 24-5 read:

"All sums of money due by contract of any kind, excepting money due on penal bonds, shall bear interest, and when a jury shall render a verdict therefor they shall distinguish the principal from the sum allowed as interest; and the principal sum due on all such contracts shall bear interest from the time of rendering judgment thereon until it is paid and satisfied. In like manner, the amount of any judgment or decree, except the costs, rendered or adjudged in any kind of action, though not on contract, shall bear interest till paid, and the judgment and decree of the court shall be rendered according to this section." (Emphasis added)

In 1981 the General Assembly substituted the following language in place of the second sentence of G.S. § 24-5 quoted above:

"The portion of all money judgments designated by the fact-finder as compensatory damages in actions other than contract shall bear interest from the time the action is instituted until the judgment is paid and satisfied, and the judgment and decree of the court shall be rendered accordingly. The preceding sentence shall apply only to claims covered by liability insurance. The portion of all money judgments designated by the fact-finder as compensatory damages in actions other than contract which are not covered by liability insurance shall bear interest from the time of the verdict until the judgment is paid and satisfied, and the judgment and decree of the court shall be rendered accordingly." N.C. Sess. Laws 1981, c. 327 s. 1.

The phrase "except the costs" found in the original statute does not appear in the amended section. The issue thus raised is whether the legislature intended to allow interest to be computed on costs henceforth.

Of course, the intent and spirit of an act are controlling in its construction. In ascertaining this intent one must consider the language of the statute, the spirit of the Act and what it sought to accomplish, and the changes to be made and how these should be effected. 12 Strong's N.C. Index 3d, Statutes, § 5.1 (1978).

The intent of the legislature, clearly expressed in the amendment, was to change the method of computing interest in the case of claims covered by liability insurance so as to allow interest to accrue from the time action is instituted rather than from the time of verdict. The purpose of the amendment in this regard is also expressed by the simultaneous amendment of G.S. § 24-7 adding the phrase,

"Except with respect to compensatory damages in actions other than contract as provided in G.S. 24-5, when . . ." N.C. Sess. Laws 1981, c. 327 s. 3.

at the beginning of the statute which originally read,

"When the judgment is for the recovery of money, interest from the time of the verdict or report until judgment is finally entered shall be computed by the clerk and added to the costs of the party entitled thereto."

The title of the Bill itself gives evidence to the General Assembly's intent for it reads,

"An act to mandate the accrual of interest on money judgments awarded in actions other than contract from the filing of the claim." N.C. Sess. Laws 1981, c. 327.

There is nothing in any of the above to indicate that the legislature intended to allow interest on costs by virtue of the amendment. To the contrary, the plain language of the statute provides for interest only on that portion of a judgment designated by the fact finder as principal, in the case of contracts, or as compensatory damages, in actions other than contract. The amendment acted only to change the period of accrual used to calculate that interest. Further, since the amendment now specifies which portion of the judgment interest is to be computed on it would have been redundant to carry over the phrase "except the costs," from the original language.

It is the general rule that interest on costs may not be allowed without statutory authority. City of Charlotte v. McNeely, 281 N.C. 684, 190 S.E. 2d 179 (1972); and, see, Smith v. Old Dominion Building and Loan Association, 119 N.C. 249, 26 S.E. 41 (1896); 50 N.C. Atty. Gen. Rep. 18 (1980). Since there is nothing in G.S. § 24-5 expressly providing for interest on costs, nor, as we have discussed, is there anything in the amendment from which such an allowance can be implied, we are of the opinion that interest may not be assessed on costs.

Rufus L. Edmisten
Attorney General

Lucien Capone, III
Assistant Attorney General