Supreme Court of Texas
                            ══════════
                             No. 22-0215
                            ══════════

     Samson Exploration, LLC, f/k/a/ Samson Lone Star, L.P.,
                               Petitioner,

                                    v.

                      Joe A. Bordages Jr., et al.,
                              Respondents

   ═══════════════════════════════════════
               On Petition for Review from the
       Court of Appeals for the Ninth District of Texas
   ═══════════════════════════════════════

                       Argued October 26, 2023

      CHIEF JUSTICE HECHT delivered the opinion of the Court.

      The central issue in this case is whether a mineral-lease provision
calls for simple or compound interest on unpaid royalties. Because the
lessee has previously litigated the identical lease language with a
different lessor and lost, we must also consider whether it is collaterally
estopped to relitigate the same issue here. We hold that because Texas
law disfavors compound interest, an agreement for interest on unpaid
amounts is an agreement for simple interest absent an express, clear,
and specific provision for compound interest. We also hold that the
lessee’s prior litigation of the issue does not collaterally estop it from
asserting its claims here. Accordingly, we reverse the judgment of the
court of appeals 1 and remand the case to the trial court for further
proceedings.
                                      I
       Petitioner Samson Exploration, LLC holds oil-and-gas leases on
properties in Jefferson and Hardin Counties from several families,
including the Klorers, the Hookses, and the Bordages. 2 The three
families sued Samson for unpaid royalties owed under those leases.
Their claims were severed into three different suits, and only the
Bordages’ case remains unresolved. 3 Samson has paid the Bordages all
royalties due plus late charges as per its calculations. The remaining
issue, now before us, is whether the Bordages are entitled to late charges
on the late charges.
       The leases between Samson and the Bordages provide that


       1 

 (Tex. App.—Beaumont 2022).


       2Respondents are Joe A. Bordages, Katherine Bordages Brownlee,
Stephanie Bordages Knobel, Joseph A. Bordages III, Joanna M. Pastore, Scott
Alan Bordages, and Allison Bordages Koskella.
       3  After Samson failed to remit the Bordages’ and Hookses’ royalty
payments, they joined in the Klorers’ existing suit against Samson (the T.S.
Reed case). Samson moved to sever the three families’ claims. That request was
granted. Thus, the Bordages, Hookses, and Klorers proceeded against Samson
in three distinct lawsuits. The T.S. Reed and Hooks cases have since been fully
litigated and resolved, leaving only the Bordages case active. See Samson Lone
Star, L.P. v. Hooks, 

 (Tex. App.—Houston [1st Dist.] 2012), rev’d
in part, 

 (Tex. 2015), on remand, 

 (Tex. App.—
Houston [1st Dist.] 2016, pet. denied); Samson Expl., LLC v. T.S. Reed Props.,
Inc., 

 (Tex. App.—Beaumont 2015), aff’d, 

 (Tex.
2017).




                                      2
royalty payments are due by the first day of the calendar month
following some sixty days after production. 4 If not timely paid, a late
charge is imposed the next day “based on the amount due” and “at the
maximum rate allowed by law”. That charge is payable on the last day
of the month. 5
       If no payment is made by that date, the Bordages argue that
another late-charge calculation is triggered, which includes not only
past-due royalties as of the first day of the month, but also accrued late
charges as of the last day of the preceding month. Put differently, the
Bordages believe that the leases’ Late Charge Provision imposes late
charges on late charges, compounding them each month. The parties
agree that the late charges constitute a form of interest and that the
rate is 18%. Samson disagrees that the late charges are compounded.
                                      II
       The Bordages argue that Samson is collaterally estopped from
litigating the meaning of the Late Charge Provision. The Hookses had
leases with Samson that were separate from, but identical to, those


       4 Art. XVII(B): “The royalty for the calendar month in which production

is first marketed shall be paid on or before the first day of the calendar month
next following the expiration of sixty (60) days [from execution of a completion
report or potential test for the well], and the respective royalty payments for
each subsequent calendar month of production shall be made [o]n or before the
first day of each successive calendar month . . . .”
       5 Art. XVII(C): “All past due royalties . . . shall be subject to a Late

Charge based on the amount due and calculated at the maximum rate allowed
by law commencing on the day after the last day on which such monthly royalty
payment could have been timely made and for every calendar month and/or
fraction thereof from the due date until paid . . . . Any Late Charge that may
become applicable shall be due and payable on the last day of each month when
this provision becomes applicable.”




                                       3
between Samson and the Bordages. In the Hooks case, a jury found
Samson liable for fraud and awarded the Hookses over $20 million in
fraud damages—including about $13 million in late charges, calculated
at a rate of 18% per annum, compounded monthly. 6 That award equaled
an estimate by the Hookses’ damages expert based on his reading of a
provision identical to the Late Charge Provision. In the present case, the
trial court found Samson liable for breach of contract and awarded the
Bordages $12,955,919 in contract damages. That award is based on the
same interpretation of the Late Charge Provision in Hooks and
comprises mostly compound interest.
       The Bordages argue that collateral estoppel prevents this Court
from reaching the issue of whether the Late Charge Provision calls for
simple or compound interest because that very issue was previously
resolved in Hooks. Samson disagrees because the construction of the
lease’s text is an issue of law, and “[c]ourts disfavor applying collateral
estoppel in the context of a pure question of law.” 7
       An oil-and-gas lease is a contract, and its terms are interpreted
as such. 8 The construction of an unambiguous contractual provision—
meaning that the provision has only one reasonable construction—is an
issue of law we review de novo using well-settled contract-construction
principles. 9 A contract is not ambiguous merely because the parties


       6 

.


       7 Tankersley v. Durish, 

 (Tex. App.—Austin 1993,

writ denied).
       8 Tittizer v. Union Gas Corp., 

 (Tex. 2005).


       9 URI, Inc. v. Kleberg County, 

 (Tex. 2018).




                                      4
disagree about its meaning. 10
       As discussed below, the Late Charge Provision’s meaning is
unambiguous because the only reasonable construction requires the late
charge to be calculated using simple rather than compound interest. The
provision’s construction is therefore an issue of law.
       This Court has spoken sparingly on the overlap between
collateral estoppel and issues of law. But in Getty Oil Co. v. Insurance
Co. of North America, we noted that collateral estoppel could apply to
“essential issues of law that were litigated and determined in a prior
action.” 11 However, Getty’s application of collateral estoppel to issues of
law is not limitless. The Restatement (Second) of Judgments, on which
Getty relied to justify its statement, provides some exceptions—
including some in the nonmutual context as is relevant here. 12
       Nonmutual collateral estoppel is implicated in two situations.
First, when a nonparty to an earlier action seeks to prevent an opposing
party from relitigating an issue that the opposing party litigated in the
prior action. 13 Second, when a party to a prior action seeks to prevent a
party in a later action who was a nonparty to the prior action from
contesting an issue that was litigated in the prior action. 14



       10 

       11 

 (Tex. 1992). However, collateral estoppel
ultimately did not preclude our review in Getty because the precise issue of law
had not been decided in the previous action. 

       12 RESTATEMENT (SECOND) OF JUDGMENTS § 28 (AM. L. INST. 1982).


       13 See id. § 29 cmt. b (citing id. § 28, illustrations 3, 4, 5, 7, 9, 10, & 11).


       14 See id.




                                          5
       Section 29 of the Restatement includes an exception that applies
when treating an issue of law “as conclusively determined would
inappropriately foreclose opportunity for obtaining reconsideration of
the legal rule upon which it was based”. 15 Comment i to Section 29
elaborates, noting that nonmutual collateral estoppel cannot foreclose a
reviewing court from performing its function of developing the law. 16
That consideration is especially pertinent “when the issue is of general
interest and has not been resolved by the highest appellate court that
can resolve it.” 17
       This Court, and Texas courts more broadly, have looked to the
Restatement when interpreting the law of collateral estoppel. 18
Application of the Restatement’s highest-court exception makes
particular sense for pure issues of law pending before this Court, whose
mandate is to review issues of law important to the jurisprudence of this
State. 19 We hold that nonmutual collateral estoppel will not prevent a
party from relitigating an issue of law in this Court when we have not



       15 Id. § 29.


       16 Id. § 29 cmt. i.


       17 Id.


       18 See Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 

 (Tex. 1998) (relying on Section 27 of the Restatement for
the general rule prohibiting estoppel by alternative holdings); Sysco Food
Servs., Inc. v. Trapnell, 

 (Tex. 1994) (applying Section 29
of the Restatement to determine whether an issue was fully and fairly litigated
in the prior action); Tankersley, 

 (“Texas state courts have
cited various provisions under [S]ection 29 with approval when determining
whether to apply collateral estoppel.”).
       19 TEX. GOV’T CODE § 22.001(a).




                                      6
previously decided the issue and we deem the issue important to the
jurisprudence of the State. 20
       So, how does this rule apply here? First, we consider whether the
interpretation of the Late Charge Provision is an issue previously
decided by this Court. Our opinion in Hooks remanded to the court of
appeals without construing the identical provision. 21 The appellate
court issued a new opinion and judgment, 22 and we denied Samson’s
subsequent petition for review. While attempts to read into the tea
leaves are perhaps unavoidable, we reiterate that our denial of a petition
for review does not indicate our views on the merits of any particular
issue. 23 Further, as the Bordages’ counsel conceded at oral argument,
this Court did not previously decide how to interpret the Late Charge



       20 We note that the analysis may differ in the context of defensive
nonmutual collateral estoppel. One of the purposes underlying collateral
estoppel—protecting parties from multiple lawsuits—does not apply with the
same force in the present offensive context because the party subject to
multiple suits wants to relitigate an issue. See Sysco, 

 (“The
doctrine of collateral estoppel or issue preclusion is designed to promote
judicial efficiency, protect parties from multiple lawsuits, and prevent
inconsistent judgments by precluding the relitigation of issues.”). By contrast,
in the defensive context, a party subject to a judgment on an issue in a prior
action wants to avoid relitigating that issue, and depending on the
circumstances, collateral estoppel may be appropriate.
       21 

.


       22 Samson Lone Star L.P., 

.


       23 This Court denies petitions for review for a host of reasons, many of

which have nothing to do with whether a lower court reached the right
conclusions or reasoned correctly. See TEX. R. APP. P. 56.1(a). As a result, the
denial of a petition for review provides no basis to conclude that this Court has
previously decided an issue for collateral-estoppel purposes. See 

R. 56.1(b)(1).




                                       7
Provision.
      Second, we consider the importance of the underlying issues. At
face value, this appeal is about the interpretation of a single provision
in an oil-and-gas lease. But as described below, this case also involves
two previously undecided issues important to the State’s jurisprudence.
Therefore, nonmutual 24 collateral estoppel does not apply.
                                    III
      We turn to two questions about the interpretation of the Late
Charge Provision. First, whether Texas favors simple or compound
interest in the absence of a written agreement on the applicable rate of
interest. Second, whether the Late Charge Provision contains an
express stipulation to a compound rate of interest.
      We hold that the default rule in Texas is that simple interest
applies in the absence of an express stipulation—with clear and specific
language—to a compound rate of interest. We further hold that because
the Late Charge Provision lacks clear and specific indicia of such an
express stipulation, only simple interest is available.
                                     A
      In antiquity, the prohibition against usury went deeper than a
surface-level distinction between simple and compound interest. The
assessment    of   interest   was   outlawed    altogether.   From    early



      24  The Bordages contend that they should be deemed parties to the
Hooks case. First, because it was Samson, not they, who sought severance.
Second, because the Hooks and Bordages cases have overlapping evidence,
pleadings, and court orders. However, they cite no authorities in support of
their position. Because the Bordages were severed from—and not subject to—
the judgment in Hooks, we conclude that they are nonparties.




                                     8
civilization’s agrarian roots sprouted a principle that money, because of
its sterility, “cannot beget money”. 25 For thousands of years, with a few
exceptions, 26 this principle unwaveringly held true.
       During the medieval period, scholastics and natural-law
philosophers laid the theoretical groundwork for legitimizing simple
interest. 27 And between the late medieval period and renaissance,

       25 Jim Wishloff, Usury and the Common Good, 3 J. VINCENTIAN SOC.

ACTION 13, 15 (2018) (“[M]oney was intended to be used in exchange, but not
increase at interest . . . . [O]f all modes of getting wealth [usury] is the most
unnatural.” (quoting ARISTOTLE, POLITICS, Book I, Part 10 (4th cent. B.C.)
(Barnes trans., 1984))); Robert P. Maloney, The Teaching of the Fathers on
Usury, 27 VIGILAE CHRISTIANAE 241, 249 (1973) (“But you, copper and gold,
things that cannot usually bring forth fruit, do not seek to have offspring.”
(quoting GREGORY OF NYSSA, CONTRA USURARIOS, PG 46,442 (4th cent. A.D.))).
Some mistakenly believe that these principles are exclusively rooted in Jewish
and Christian traditions. But similar prohibitions exist in Buddhist, Hindu,
and Islamic legal traditions. Wishloff, supra, at 25.
       26  Solon, an archon of Athens, did not entirely eliminate interest.
However, his debt-reform laws, known as seisachtheia, canceled public and
private debts retroactively and eliminated debt slavery. Josine Blok & Julia
Krul, Debt and Its Aftermath: The Near Eastern Background to Solon’s
Seisachtheia, 86 HESPERIA 607, 607-619 (2017). The Code of Hammurabi
contemplated an interest rate set by the King, but Mesopotamia also
attempted to control spiraling debt with “Clean Slate” proclamations. Michael
Hudson, How Interest Rates Were Set, 2500 BC–1000 AD: Máš, tokos, and
fœnus as Metaphors for Interest Accruals, 43 J. ECON. & SOC. HIST. OF THE
ORIENT 132, 133 (2000). Caesar Augustus regulated lending for interest almost
to extinction on the Italian peninsula, setting rates as low as 4%, which drove
the lending market to other parts of the Roman Empire. Charles Bartlett, The
Financial Crisis, Then and Now: Ancient Rome and 2008 CE, EPICENTER:
HARV. UNIV. (Dec. 10, 2018), https://bit.ly/43OuWsI.
       27Thomas Aquinas allowed for simple interest, provided it was not
made in direct payment for a loan. This required interest to be assessed
through legal fictions, like “extrinsic titles”. André Lapidus, Hugo Grotius on
Usury: Acknowledging an End of the Scholastic Argument, EUR. J. HIST. ECON.
THOUGHT, hal-03989450, at 11 (Apr. 2023) (quoting THOMAS AQUINAS, SUMMA




                                       9
mathematical advances led to a clearer conceptual separation between
simple and compound interest. 28 With growing recognition of that
distinction came the realization that different regulatory treatment may
be appropriate. Thus, in time, Britain came to permit simple interest,
but it imposed stringent penalties for usurious rates. 29
                                      B
       Those principles eventually migrated to our shores. In the
nineteenth century, the states were almost unanimous in permitting
only simple interest. There was one exception: California. In seeking to
advance a regime of absolute freedom of commerce, California had “no
penalty for usury.” 30


THEOLOGIAE, IIa-IIae, Q. 78, art. 2, ad. 1 (1274)), https://bit.ly/3u0pZPM.
Needless to say, there seems to be vanishingly little daylight between paying
a lender interest directly and doing so indirectly to compensate him for risk
and forgone opportunity. Thus, Hugo Grotius cast aside this apparent fig leaf,
greatly simplifying the structure of personal and commercial loans. Id. at 18
(quoting HUGO GROTIUS, DE JURE BELLI AC PACIS, II, 12.21 (1625)).
       28  C.G. Lewin, The Emergence of Compound Interest, 24 BRIT.
ACTUARIAL J. 1, 6 (2019) (“One of the earliest and most important sources for
the study of simple and compound interest is the arithmetical manuscript
written in 1202 by Leonardo Fibonacci of Pisa, known as Liber Abaci.”); id. at
24 (“The earliest compound interest tables known to us are those included in
Pegolotti’s manuscript [on mercantile practice, La Pratica della Mercatura];
they may have originated around 1340.”); id. (“With the notable exception of
Fibonacci, it is not until the early 16[th] century that there is much evidence
of serious thought being given to [compound interest].”).
       29 In the eighteenth century, fifty years before the American Revolution,

the Usury Act lowered rates to 5%. 12 Ann. c. 17, 13 Ann. c. 15. It imposed
harsh penalties, including treble damages on principal, for excessive rates.
J.F.B., Usury, XIII AM. L. REG. 321, 321-322 (1865).
       30JFB, supra note 29, at 333. Michigan and Illinois provided for
“greater rate[s]” “if specified in writing”. Id. But even under written




                                      10
       That experiment, however, lasted less than a century. It ended in
1918 with the adoption of the California Usury Law by ballot
initiative. 31 Thereafter, California harmonized its laws with those of the
other states, acquiescing to the general rule that compound interest is
prohibited absent a clear and specific expression to the contrary in
writing. 32
       Around that time, the Supreme Court also had an opportunity to
reconsider when compound interest is permitted. It chose to reinforce
the general rule. In Cherokee Nation v. United States, the Court rejected
a demand by the Cherokees for compound interest on four debts owed
by the United States since 1819, the largest of which was a sum of
$1.114 million. 33 The Solicitor General suggested that the Cherokees’
demand for compound interest on that sum “for near a century” would
result in an amount “equal to the national debt.” 34
       While not mathematically precise, 35 the Solicitor’s point about the


agreements to exceed Michigan’s 7% ceiling, lenders could “only recover the
principal and simple interest.” Id. at 324 n.1 (emphasis added). Further,
although Illinois’ statutes were silent about whether interest was simple or
compound, id. at 323-324 n.1, given the virtual unanimity on this issue, it is
highly likely that Illinois permitted only simple interest.
       31 Wishnev v. Nw. Mut. Life Ins. Co., 

, 780-782 (Cal. 2019).


       32 Id. at 781.


       33 

 (1926).


       34 

.


       35The national debt in 1926 was $19.643 billion. Historical Debt
Outstanding, FISCALDATA.TREASURY.GOV, https://bit.ly/4aUkyTa (last visited
May 13, 2024). A compound rate of 5% with annual rests on $1.114 million for
one century would have yielded a total of $146.492 million—132 times larger




                                      11
inherent dangers of compound interest came through. Thus, the
Supreme Court deemed that the language “shall bear interest at the rate
of five per centum per annum, payable semiannually” is insufficient to
authorize compounding. 36
       Cherokee Nation’s influence was felt beyond just contracts
involving the United States. This was due to the Court’s reliance on the
“general rule” that “even as between private persons . . . in the absence
of a contract therefor or some statute, compound interest is not allowed
to be computed upon a debt.” 37 Cherokee Nation cemented the disfavored
status of compound interest and affirmed the propriety of longstanding



than the principal, but several multiples less than the national debt.
Compound Interest Calculator, INVESTOR.GOV: U.S. SEC. & EXCH. COMM’N,
https://bit.ly/3TUP49m (last visited May 13, 2024) (To reproduce, enter
“1,114,000” in Initial Investment field; then enter “100” in Length of Time in
Years field; then enter “5” in Estimated Interest Rate field; leave all other
fields alone; then hit calculate). Even with semiannual rests, the total would
have been $155.474 million. 

 (To reproduce, follow the above steps but select
“semiannually” instead of “annually” in the Compounded Frequency field
dropdown menu).
        The Solicitor General’s estimate of an amount equivalent to the
national debt could have resulted only from a compound rate of 5% with annual
rests for two centuries: $19.264 billion. These numerical inaccuracies do not
undermine Cherokee Nation. They instead reinforce the notion that human
beings are not naturally equipped to predict the behavior of large, complex
systems. See generally NASSIM NICHOLAS TALEB, THE BLACK SWAN (Random
House 2007). This underscores the wisdom of the ancient prohibition of, and
today’s presumption against, compound interest. Were the same dispute before
the Supreme Court today, for instance, after three centuries of compounding,
the $1.114 million principal would have ballooned to $2.533 trillion—an
amount 2.3 million times greater than the original sum.
       36 Cherokee Nation, 

.


       37 

.




                                      12
state law presumptions against its assessment. 38
       Today, compound interest remains disfavored. And where it is
permitted, state laws echo Cherokee Nation in requiring clear and
specific contractual or statutory authorization. 39 Even Delaware and

       38 See, e.g., HKB, Inc. v. Imperial Crane Servs., No. 1 CA-CV 20-0402,

, at *3 (Ariz. Ct. App. June 8, 2021) (unpublished); Landals
v. George A. Rolfes Co., 

 (Iowa 1990); Abbott v. Abbott,

 (Neb. 1972); In re Schuster’s Will, 

(Sur. Ct. 1938); Hensley v. W. Va. Dep’t Health & Hum. Res., 

 (W. Va. 1998); Bookworm, Inc. v. Tirado, 

, 307 n.5 (Terr. Ct.
2002).
       39 Alabama: Burlington N.R.R. Co. v. Whitt, 

(Ala. 1992); Alaska: Brandal v. Shangin, 

, 1193 & n.12 (Alaska
2001); Arizona: Com. Realty Advisors, Ltd. v. Zink Invs. L.P., No. 1 CA-CV
16-0153, 

, at *3-4 (Ariz. Ct. App. July 13, 2017)
(unpublished); HKB, 

, at *3; Arkansas: Hartford Sch. Dist.
No. 94 v. Com. Nat’l Bank, 

 (Ark. 1945); California:
McConnell v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 

 (Cal. 1983); Colorado: Tarabino Real Est. Co. v. Tarabino, 

 (Colo. 1942); Connecticut: Onthank v. Onthank, No.
FSTCV176034047S, 

, at *3 (Conn. Super. Ct. Jan. 30, 2020)
(unpublished); Perry v. Cohen, 

 (Conn. 1940); District of
Columbia: D.C. Pub. Schs. v. D.C. Dep’t Empl. Servs., 

, 222-224
(D.C. 2021); Florida: Cohen v. Jain, 

 (Fla. Dist. Ct. App.
2021) (per curiam); Morgan v. Mortg. Disc. Co., 

 (Fla. 1930);
Georgia: Caradigm USA LLC v. PruittHealth, Inc., 

(11th Cir. 2020) (citing Noons v. Holiday Hosp. Franchising, Inc., 

 (Ga. Ct. App. 2010)); Hawaii: Nawahi v. First Tr. Co. of Hilo, Ltd., 

 (1928); Idaho: N. Idaho Bldg. Contractors Ass’n v. City of
Hayden, 

 (Idaho 2018); Illinois: Weigel Broad. Co. v. Smith,

 (Ill. App. Ct. 1996); Indiana: Wilson v. N. Salem Bank, 

 (Table), 

, at *5 (Ind. Ct. App. June 21, 2021)
(unpublished); N. Ind. Pub. Serv. Co. v. Citizens Action Coal. of Ind., Inc., 

 (Ind. 1989); Iowa: Iowa Sup. Ct. Bd. Prof’l Ethics & Conduct
v. McKittrick, 

 (Iowa 2004); Kansas: Iola State Bank
v. Bolan, 

 (Kan. 1984); Louisiana: Chittenden v. State Farm
Mut. Auto Ins. Co., 

 (La. 2001); Maine: Premier Cap., Inc.
v. Doucette, 

 (Me. 2022); Maryland: Travel Comm., Inc. v. Pan




                                       13
Am. World Airways, Inc., 

 (Md. Ct. Spec. App. 1992);
Michigan: Nation v. W.D.E. Elec. Co., 

 (Mich. 1997);
Minnesota: KPG Telecomms., LLC v. Ervin Cable Constr., LLC,
No. 20-CV-0114 (PJS/ECW), 

, at *7 (D. Minn. Sept. 21, 2021)
(citing Am. Druggists Ins. v. Thompson Lumber Co., 

(Minn. Ct. App. 1984)); Mississippi: Pursue Energy Corp. v. Abernathy,

 (Miss. 2011); Missouri: Brockman v. Soltysiak,

 (Mo. Ct. App. 2001); Penzel Constr. Co. v. Jackson R-2 Sch.
Dist., 

, 440-441 (Mo. Ct. App. 2022); Montana: McCormick v.
Brevig, 

 (Mont. 2007); Nebraska: Ashland State Bank v.
Elkhorn Racquetball, Inc., 

 (Neb. 1994); Nevada:
Westgate Planet Hollywood Las Vegas, LLC v. Tutor-Saliba Corp., 

(Table), 

, at *4 (Nev. Sept. 27, 2019) (unpublished); New
Hampshire: Metro. Prop. & Liab. Ins. Co. v. Ralph, 

 (N.H.
1994); New Jersey: Henderson v. Camden Cnty. Mun. Util. Auth., 

 (N.J. 2003); New Mexico: State ex rel. King v. B & B Inv. Grp., Inc.,

, 675-676 (N.M. 2014); New York: R.F. Schiffman Assocs. v. Baker
& Daniels LLP, 

 (N.Y. App. Div. 2017); North Carolina:
Ferguson v. Coffey, 

 (N.C. Ct. App. 2006); North Dakota:
Van Sickle v. Hallmark & Assocs., 

 (N.D. 2013); Ohio:
Mayer v. Medancic, 

 (Ohio 2009); Oklahoma: Phillips
v. Hedges, 

 (Okla. 2005); Oregon: In re Marriage of Mannix,

 (Or. Ct. App. 1997) (en banc) (discussing OR. REV. STAT.
§ 82.010(2)(c)); Pennsylvania: Penn. State Educ. Ass’n v. Appalachia
Intermediate Unit 08, 

 (Pa. 1984); In re Est. of Dembosky, 

 (Table), 

, at *2 (Pa. Super. Ct. June 15, 2023)
(unpublished); Rhode Island: Imperial Cas. & Indem. Co. v. Bellini, 

 (R.I. 2008); South Carolina: Edwards v. Campbell, 

 (S.C. 2006); South Dakota: S.D. CODIFIED LAWS §§ 51A-12-15,
54-3-1.1, 54-3-4, 54-3-16; Tennessee: In re Est. of Hawkins,
No. W2003-02279-COA-R3-CV, 

, at *10-11 (Tenn. Ct. App.
Dec. 16, 2004, appeal denied); Utah: City of Hildale v. Cooke, 

(Utah 2001); Vermont: Greenmoss Builders, Inc. v. Dun & Bradstreet, Inc., 

 (Vt. 1988); Virginia: Helena Agri-Enters., LLC v. VA7,
LLC, No. 5:22-cv-00015, 

, at *4 (W.D. Va. June 23, 2022)
(citing VA. CODE ANN. § 6.2-302); Washington: Sintra, Inc. v. City of Seattle,

 (Wash. 1997); 

 at 586 n.17 (concurrence); West
Virginia: Warrior Oil & Gas, LLC v. Blue Land Servs., LLC, 

,
345 (W. Va. 2023); Wisconsin: McFadden v. Gray, 

 (Table), 

, at *1 (Wis. Ct. App. Sept. 8, 1993) (unpublished); Guam: Guam
United Warehouse Corp. v. DeWitt Transp. Servs. of Guam, 

                                      14
Massachusetts law, upon which the Bordages rely so heavily, are
consistent with the general rule. 40 And the few exceptions to the general
rule—some of which are unique to other jurisdictions—are inapplicable
here. 41 Thus, the Bordages’ arguments in favor of compound interest
find little support. 42


¶¶ 36-39 (2003); Virgin Islands: Castor v. Andrews, No. ST-94-CV-408, 

, at *1 (V.I. Super. Ct. July 2, 2009); Smith v. Companion
Assurance Co., 

, 239-240 (Super. Ct. 2019).
       40 The Delaware Court of Chancery retains the discretion to award
compound interest in “specific circumstances”, but compounding remains a
disfavored “exception”, and Delaware courts have rejected as false claims of
“recent trend[s]” in its favor. LCT Cap., LLC v. NGL Energy Partners LP,
No. N15-C-08-109 JJC CCLD, 

, at *7-8 (Del. Super. Ct. June
20, 2023) (collecting cases); see also Gotham Partners, L.P. v. Hallwood Realty
Partners, L.P., 

 (Del. 2002). Massachusetts likewise permits
compounding “in certain cases” but reaffirms its “ancient unwillingness to
allow compound interest”. Sec’y of Admin. & Fin. v. Lab. Rels. Comm’n, 

 (Mass. 2001). Thus, while compound interest is permitted in
“equitable proceeding[s]”, it remains “generally disfavored”. Lombardi Corp. v.
Urb. Improvement Fund Ltd. 1973, Nos. 143922BLS1, 150643BLS1, 

, at *11 (Mass. Super. Ct. May 20, 2016).
       41 One such exception arises in takings cases, where compound interest

may be assessed under the Fifth Amendment’s “just compensation”
requirement. Innovair Aviation, Ltd. v. United States, 

(2008). Another exception, already discussed, supra note 40, permits courts of
equity to assess compound interest in some circumstances. A third, also
equitable in origin, permits compounding in certain cases involving breaches
of fiduciary duty and mismanagement of trust assets. Jo Ann Howard &
Assocs. v. Cassity, 

, 1193 (E.D. Mo. 2019), aff’d sub nom.
Jo Ann Howard & Assocs. v. Nat’l City Bank, 

 (8th Cir. 2021). One
more exception, accepted in Texas, applies to the assessment of postjudgment
interest. TEX. FIN. CODE § 304.006.
       42 Few cases support the Bordages’ position, and those that do rest on

questionable reasoning. See, e.g., Halling v. Yovanovich, 

(Wyo. 2017) (holding that the trial court did not clearly err by concluding that
“accrue @ 6% monthly” means “6 percent annual interest compounded




                                      15
                                       C
       The same principles hold true in Texas. From our earliest
jurisprudence, the default rule has been that simple interest applies
unless parties “expressly stipulate” to compound interest. 43 While early
Texas cases properly invoked the general rule, our decision in Lewis v.
Paschal’s Administrator sowed confusion by suggesting that the use of
any temporal language—such as “per annum” or “annually”—could
suffice for such an express stipulation. 44 The problem is that similar and
identical temporal language appears in interest clauses for a wide
variety of reasons. To provide but one example, simple interest is often




monthly”); Dec. Farm Int’l, LLC v. Dec. Est., LLC, Nos. 2019-CA-0983-MR,
2019-CA-1057-MR, 

, at *13 (Ky. Ct. App. May 7, 2021, review
denied) (holding that the trial court did not abuse its discretion by concluding
that “accrue interest at the rate of twelve percent (12%) per annum” “plainly
refer[s] to compounding interest”); but see Nucor Corp. v. Gen. Elec. Co., 

, 140 n.1 (Ky. 1991) (noting that “compound interest [is]
inappropriate [in actions at law] even if interest [is] otherwise proper”).
       43 Lewis v. Paschal’s Adm’r, 

 (1872); Andrews v. Hoxie,

 (1849) (stating that “an agreement to pay interest on interest
[i.e., compound interest] is not usurious”) (emphasis added).
       44 See 

 (concluding that “ten per cent. per annum,

payable annually” is a stipulation to compound interest); see also Roane v.
Ross, 

 (Tex. 1892) (affirming that “interest at the rate of 10
per cent. per annum from date . . . [payable] annually” is a stipulation to
compound interest); Texon Energy Corp. v. Dow Chem. Co., 

 (Tex. App.—Houston [14th Dist.] 1987, writ ref’d n.r.e.) (concluding that
“interest monthly at the rate of twelve percent (12%) per annum” is a
stipulation to compound interest). The court below appeared to follow this line
of cases. See 662 S.W.3d at 509-510 (concluding that an agreement to pay
interest on “past due royalties . . . based on the amount due and calculated at
the maximum rate allowed by law” where interest was “due and payable on the
last day of each month” is a stipulation to compound interest).




                                      16
described using “per annum” or “per month” language. 45
       Paschal’s Administrator was built on sand. 46 It is thus
unsurprising that its legacy has toppled. Even if pre-Cherokee Nation
cases in Texas permitted compounding under such an illusory standard,
we have long since reversed course. 47 Paschal’s Administrator and its


       45 See, e.g., KPG Telecomms., 

, at *7 (explaining the

sensibility of a “specificity” requirement: if “contractual language as simple as
‘per month’ were sufficient to trigger compound interest, then [the law] would
be turned on its head . . . [c]ompound interest would be the rule, rather than
the exception . . . as almost every interest clause imposes interest on a ‘per
year,’ ‘per month,’ ‘per week,’ or ‘per day’ basis”).
       46 Paschal’s Administrator rests on obiter dicta—so defined by the very

author of the opinion—in De Cordova v. City of Galveston, 

 (1849).
One of the questions presented in De Cordova was: “Where interest is payable
annually[,] . . . whether the creditor is entitled to interest upon interest”? Id.
at 470. At the start of his opinion, Chief Justice Hemphill expressly declined
to address that issue, explaining that the “only question deemed material to
discuss” was the “statute of limitations”. Id. at 473. But Paschal’s
Administrator unduly focused on one of Chief Justice Hemphill’s passing
hypotheticals, where he simply observed that “[t]he interest might have,
perhaps, been recovered in a separate suit; or, if the action had been brought
before the bar of the statute, the plaintiffs would have been entitled to annual
rests, and to interest upon the interest in computing the amount to be
recovered.” Id. at 482. Paschal’s Administrator declined to treat that statement
as dicta—despite Chief Justice Hemphill’s cautionary words—and insisted
that “it can hardly be questioned that [Chief Justice Hemphill] intended to
decide that interest upon interest might be recovered”. 

(emphasis added).
       47 Bothwell v. Farmers’ & Merchants’ State Bank & Trust Co. of Rusk

was decided four years after Cherokee Nation but did not consider that opinion,
even though it ultimately concluded that the notes at issue were usurious. 

 (Tex. 1930). We expressed doubt about “the toleration of
taking interest in advance at the highest rate allowed by law,” an “artificial
rule . . . unsupported by any sound reasoning”. 

 (quoting First Nat’l Bank v.
Davis, 

 (1884)); see id. at 291 (explaining that the note in Davis
could not “be differentiated from that one before us”). In this way, Texas had




                                       17
progeny have not been cited or followed for almost a century. Instead,
more recently, the majority of Texas courts that have squarely
considered this issue have reoriented to the general rule. 48
       As Cherokee Nation illustrates, the choice between simple and
compound interest can have drastic consequences. 49 Accordingly, a
court’s application of compound interest to a contract where compound
interest was never intended can easily transform a venture that was
beneficial to both sides into an oppressive relationship. In defiance of an
extensive legal tradition, Paschal’s Administrator allowed choices of
such gravity to be made with little more than a judicial coin flip,
reaffirming the wisdom of the principle that one should not remove a




already begun arcing back towards the general rule even before Cherokee
Nation’s effects were felt. And to be clear, Bothwell’s suggestion that compound
interest may not require “any express stipulation” does not survive Cherokee
Nation or the present case.
       48 See In re Phillips, 

, 776 & n.36 (Tex. 2016); City of

Austin v. Foster, 

 (Tex. App.—Austin 1981, writ ref’d
n.r.e.); Spiller v. Spiller, 

 (Tex. App.—San Antonio
1995, writ denied); William C. Dear & Assocs. v. Plastronics, Inc., 

 (Tex. App.—Amarillo 1996, writ denied). See also Ex parte Glover, 

 (Tex. 1985) (holding that a directive for “interest at the rate
of 10% per annum” provides insufficiently “clear and definite” guidance on
whether simple or compound interest is contemplated). Glover did suggest in
passing that “per annum” could mean “compound interest as easily as simple
interest.” 

 But that dictum contradicts Cherokee Nation, a pre-Erie case that
invokes “general” principles of law. 

; see Swift v. Tyson, 

 (1842). And regardless, Glover is a clear departure from Paschal’s
Administrator’s pronouncement that “there can be no reasonable doubt” that
“per annum” or “annually” requires the assessment of compound interest. 

.
       49 See supra note 35.




                                       18
fence until one understands why it was put there. 50
       Today, we disapprove Paschal’s Administrator and its progeny to
the extent that they are inconsistent with the following statement. The
default rule in Texas accords with the general rule: absent clear and
specific contractual or statutory authorization, compound interest 51 is
prohibited, and only simple interest 52 is available.
                                       D
       The final question we must consider is what degree of clarity and
specificity is required to expressly stipulate to a compound rate of
interest. While we do not prescribe any particular formulas or magic
words, we can certainly say what language falls short. In light of the
harsh, commercially oppressive nature of compound interest, clauses


       50 City of League City v. Jimmy Changas, Inc., 

, 512 (Tex.

2023) (Young, J., concurring) (invoking the principle commonly known as
“Chesterton’s fence”); G.K. CHESTERTON, THE THING 29 (Sheed & Ward 1946).
       51 In plainer but less precise language, “compound interest” is “[i]nterest

paid on both the principal and the previously accumulated interest”. In re TCI
Courtyard, Inc., 

 (5th Cir. 2015) (quoting Compound
interest, BLACK’S LAW DICTIONARY (10th ed. 2014)). “[A]t the end of each
interest period, the accrued interest is added to the principal for purposes of
future calculations of interest.” Themis Cap., LLC v. Dem. Rep. Congo, 

 (2d Cir. 2015) (citation omitted). To use more precise terms,
compound interest is expressed formulaically as CI = P(1 + r/n)nT - P; where CI
is compound interest, P is the principal, r is the annual interest rate, n is the
number of compounding periods, and T is the time or term. For example, a
borrower who borrows $100 at an interest rate of 6% per annum (0.06) for 100
years, compounded monthly (12), will owe $39,644.23 in compound interest; CI
= $100(1 + 0.06/12)(12)(100) - $100.
       52 Simple interest (SI) is calculated by multiplying the principal (P), by

the annual interest rate (r), and the time or term (T); SI =PrT. For example, a
borrower who borrows $100 at an interest rate of 6% per annum (0.06) for 100
years will owe $600 in simple interest.




                                       19
imposing interest must be strictly construed in favor of simple interest. 53
       The court of appeals relied heavily on the Late Charge Provision’s
statement that interest becomes “due and payable on the last day of each
month” (or stated differently, “due and payable [monthly]”). The
Supreme Court deemed similar language insufficient in Cherokee
Nation. 54 It should have been clear that such language falls short.
       As a general matter, mere temporal references (e.g., “per annum,”
or “annually”) standing alone are insufficient to sustain the assessment
of compound interest. 55 Almost every interest clause imposes interest on
a “per annum” or “per month” basis. 56 And the most standard reading of
a clause that demands payment “monthly” or “annually” is that it merely
specifies the time for payment. 57 Further, while periodic rests are indeed




       53 See Cherokee Nation, 

 (“In view of the care with which

[legal tradition] ha[s] limited the collection of simple interest . . . a fortiori must
compound interest be denied[,] unless [express] provision therefor is made”.);
Spiller, 

 (holding that a statute “silent as to whether the
interest was simple or compounded” requires simple interest “as a matter of
law”).
       54270 U.S. at 491-492 (concluding that the phrase “payable
semiannually” is insufficient to trigger compound interest with semiannual
rests).
       

 S.W.3d at 776 (expressing doubt about an “argu[ment]

that . . . interest compounds” when a statute uses only the term “per annum”);
Foster, 

 (explaining that merely “prescrib[ing] legal interest
in terms of an annual rate” does not “direct” the compounding of interest); 

at 676 (citing Cherokee Nation, 

).
       56 See, e.g., KPG Telecomms., 

, at *7-8.


       57 Cherokee Nation, 

 (concluding that “shall be paid

semiannually” is insufficient to authorize compound interest).




                                         20
a feature of agreements to compound rates of interest, 58 courts will not
impose the harsh penalty of a compound rate by gleaning such periodic
rests from ordinary or ambiguous temporal language that could also
refer to a simple rate of interest. 59
       The court of appeals also reasoned that because the last sentence
of the Late Charge Provision states that interest is “due and
payable . . . each month”, any unpaid interest must be blended “every
month” with the “amount” of past due monthly royalties subject to late
charges in the first sentence of the provision. It thus concluded that the
contract contemplated late charges on late charges, or interest on
interest. But courts are called to interpret a contract’s plain language.
       Here, a plain reading of the Late Charge Provision shows that it
calls only for simple interest. It provides for a late charge “based on the
amount due” of “past due royalties . . . including any compensatory
royalties”. The late charge begins to accrue interest at the “maximum
rate allowed by law”—a simple interest rate, absent an express
stipulation, with clear and specific language, to the contrary—on the day
after “such monthly royalty payment” was due. The late charge must be
paid, i.e., becomes “due and payable”, on the last day of the month in


       58  Periodic rests denote the frequency with which compounding will
occur. See Yaws v. Jones, 

, 446 (Tex. 1892) (“The note sued upon
expressly provides that ‘in case of failure to pay the note at maturity the
interest is to be added to the principal, and total to draw interest, with annual
rests.’”).
       59 To be clear, however, an agreement that expressly provides a time

period for compounding, together with the word “compounded” (e.g.,
“compounded annually” or “compounded semiannually”), at a given rate of x%,
is sufficiently clear to denote compound interest.




                                         21
which it is assessed. If the due date is missed, simple interest continues
to accrue on the unpaid royalty “for every calendar month and/or
fraction thereof from the due date until paid”.
      The court of appeals rejected this straightforward approach
because it thought such a reading would render the Late Charge
Provision’s final sentence meaningless. Not so. The parties’ agreement
that any late charges become “due and payable” on a certain day
achieves at least two things. First, it provides predictability about when
the Bordages could expect late charges to be paid. Second, it creates a
fixed point from which the Bordages could assess the maturation of their
legal rights to collect any unpaid late charges and to seek other
contractual remedies.
      We hold that the language of the Late Charge Provision is
insufficiently clear and specific to constitute an express stipulation to
compound interest. Thus, only simple interest is available, and the trial
court’s assessment of compound interest against Samson was in error.
                        *       *        *        *    *
      We reverse the court of appeals’ judgment and remand the case
to the trial court for further proceedings consistent with this opinion.



                                         Nathan L. Hecht
                                         Chief Justice

OPINION DELIVERED: June 7, 2024




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