3-D Lumber Co. v. Belgrade State Bank, 12002

• Decision Date: 31 August 1971
• Docket Number: No. 12002,12002
• Parties: 3-D LUMBER COMPANY, Plaintiff and Respondent, v. BELGRADE STATE BANK, a Banking Corporation, Defendant and Appellant.
• Court: Montana Supreme Court

Page 1136

487 P.2d 1136

157 Mont. 481

3-D LUMBER COMPANY, Plaintiff and Respondent, v. BELGRADE STATE BANK, a Banking Corporation, Defendant and Appellant.

No. 12002.

Supreme Court of Montana.

Submitted June 17, 1971.

Decided July 20, 1971.

Rehearing Denied Aug. 31, 1971.

Towe, Neely & Ball, Billings, Thomas Towe, argued, Billings, for defendant-appellant.

Corette, Smith & Dean, Butte, Kendrick Smith, argued, Butte, for plaintiff-respondent.

DALY, Justice.

3-D Lumber Company brought this action against the Belgrade State Bank in the district court of Gallatin County to recover damages for malicous prosecution. Belgrade State Bank appeared by motion to dismiss and seeking, in the alternative, a motion for summary judgment. In response, 3-D Lumber Company filed a motion for summary judgment. Briefs were submitted by both parties and the matter was argued orally to the district court on October 13, 1970. On October 27, 1970, an order was issued by the district court denying the motion of the Belgrade State Bank for dismissal and summary judgment and granting the motion for summary judgment of the 3-D Lumber Company. Judgment was entered November 2, 1970. Belgrade State Bank appeals from that order and judgment.

Plaintiff, 3-D Lumber Company, based this action on an action brought by the defendant, Belgrade State Bank v. Elder, Mont., 482 P.2d 135. That case reveals the following facts:

'Belgrade State Bank * * * loaned money to George Elder. Elder was a logger. Elder signed several promissory notes in 1964 and 1965. The notes were secured by a security agreement entitled 'Security Agreement (Farm Products and Equipment)' covering timber and logs, and listing equipment as a crawler-type tractor, a bulldozer, a truck with a mounted crane and a yarder. In November 1967, the bank took possession of the bulldozer.

'The security agreement was filed of record in Gallatin County; but apparently not in the secretary of state's office.

'Subsequently, Elder traded the crane to defendant Western Construction Equipment Company for a heel boom loader. Also, Elder traded the yarder and the crawler-type tractor to defendant Skagit Equipment Company for a Skagit yarder.

'Elder encountered financial difficulties and failed to make payments on the heel boom loader and the Skagit yarder. They were repossessed and sold to 3-D Lumber Company.

'In December 1967, Elder filed a petition in bankruptcy. * * * Belgrade State Bank, filed in the bankruptcy matter 'Specification of Objections to Discharge' as follows:

"1) On or about March 6, 1967, the bankrupt, while engaged in business as a sole proprietor obtained from the Belgrade State Bank an extension of credit on six promissory notes all due on demand except one due on December 21, 1964, and payable to the said Belgrade State Bank by making a materially false statement in writing respecting his financial condition, which said materially false statement was that his total liabilities were $111,466.00, * * * whereas in truth and in fact the same were $248,361.95 * * *.

"2) On or about March 6, 1967, the bankrupt, while engaged in business as a sole proprietor obtained from the above Belgrade State Bank an extension of credit on six notes all due on demand except one due on December 21, 1964, and payable to the Belgrade State Bank by making a materially false statement in writing respecting his financial condition, which said materially false statement was that his total machinery, equipment and fixtures had a value of $113,300 * * * whereas in truth and in fact, the same were less than $60,000 * * *.

"3) On or about August 7, 1964, the bankrupt, while engaged in business as a sole proprietor obtained money, in the form of a loan from the Belgrade State Bank on credit by making a materially false statement in writing respecting his financial condition, which said materially false statement was that he had * * * ($7,000) worth of logs cut ready for hauling, whereas in truth and in fact, he had no such logs cut ready for hauling.

"4) Some time after March 7, 1967, and subsequent to the first day of the twelve months immediately preceding the filing of the Petition and bankruptcy herein, the bankrupt transferred certain of his property consisting of a Little Giant Heel Boom Loader and a Skagit Yarder to 3-D Lumber Company or to other persons with intent to defraud, hinder, or delay his creditors.'

'The referee in bankruptcy held a hearing and made findings as reflected hereinafter:

"I. That on or about March 6, 1967, the bankrupt, at the request of Jack W. Swainson, Executive Vice President of Belgrade State Bank, at Belgrade, Montana, said Swainson then and there acting as agent and for and on behalf of said Belgrade State Bank, answered questions posed him, the said bankrupt, by the said Swainson; Swainson, as the bankrupt answered the questions, placed his answers upon the form entitled 'Personal Statement', that all answers given by the bankrupt to the said Swainson were given to the best of the bankrupt's knowledge, and were not materially false in any respect. That the bankrupt, insofar as he knew, truthfully listed his total liabilities, total assets, and total value of machinery, equipment and fixtures; That at said time, March 6, 1967, the Belgrade State Bank was the holder of six promissory notes executed by the bankrupt, five of these notes being demand, and the sixth having been due on December 21, 1964. That Belgrade State Bank made no binding extension of credit, or any extension of credit, on any representation made by the bankrupt, and bankrupt received nothing of value as a result of any statement, written or oral, made on or about March, 1967, to the said Belgrade State Bank; That as a result of said conversation, bankrupt did assing * * * ($.75) per thousand board feet of all timber cut by him, to the said Belgrade State Bank, which said moneys so assigned were received by the said Belgrade State Bank.

"II. That the bankrupt never made any material false statement, or any false statement, either oral or written, respecting his financial condition to the said Belgrade State Bank, said Belgrade State Bank never made any extensions of credit, nor parted with anything of value, upon any representation, either oral or written, made by the bankrupt, in connection with the said 'Personal Statement'.

"III. That on or about August 7, 1964, the bankrupt, while engaged in business as a sole proprietor, obtained money, in the form of a loan to the Belgrade State Bank on credit by making a statement in writing respecting his financial condition, which said statement was that he had * * * ($7,000.00) worth of logs cut, and ready for hauling, and that at said time the said bankrupt had in excess of * * * ($10,000.00) worth of logs cut and ready for hauling, and that the said statement so made was in...