Aetna Cas. & Sur. Co. v. Nielsen

• Citation: 217 Neb. 297,348 N.W.2d 851
• Decision Date: 11 May 1984
• Docket Number: No. 83-220,83-220
• Parties: , 38 UCC Rep.Serv. 1297 AETNA CASUALTY & SURETY COMPANY, a corporation, Appellee and Cross-appellant, v. Don NIELSEN and Velma Nielsen, Appellants and Cross-appellees.
• Court: Supreme Court of Nebraska

Page 851

348 N.W.2d 851

217 Neb. 297, 38 UCC Rep.Serv. 1297

AETNA CASUALTY & SURETY COMPANY, a corporation, Appellee and Cross-appellant, v. Don NIELSEN and Velma Nielsen, Appellants and Cross-appellees.

No. 83-220.

Supreme Court of Nebraska.

May 11, 1984.

Syllabus by the Court

1. Guaranty: Presumptions. There is no presumption as to the genuineness of signatures upon a guaranty of a contract or promissory note. The presumption of genuineness of a signature under Neb.U.C.C. § 3-307 (Reissue 1980) has application only to negotiable instruments, and a guaranty is not such an instrument.

2. Pretrial Motions: Evidence. A failure to appropriately respond to properly served requests for admissions within the time prescribed constitutes an admission of the facts sought to be elicited.

3. Trial: Courts: Pleadings. Courts will take appropriate action to prevent unnecessary delays and dilatory proceedings, and such action may involve a refusal to permit amendment of pleadings where request therefor is both untimely and violates a prior order limiting such pleading by virtue of a failure to answer requests for admissions.

4. Court Rules: Judicial Notice. This court will judicially notice trial court rules filed with the clerk of this court.

5. Pleadings. Formal judicial admissions which waive any evidence by the adverse party on the admitted matter are conclusive on the pleader.

6. Prejudgment Interest: Claims. Prejudgment interest is allowable where the amount of the claim is liquidated. A claim is liquidated where no reasonable controversy exists as to the plaintiff's right to recover or as to the amount of such recovery. If either of the requirements of the rule is not met, the claim is unliquidated and prejudgment interest is not allowed.

James P. Fitzgerald of McGrath, North, O'Malley & Kratz, P.C., Omaha, for appellants and cross-appellees.

Knudsen, Berkheimer, Richardson & Endacott, Lincoln, for appellee and cross-appellant.

BOSLAUGH, HASTINGS, and GRANT, JJ., BRODKEY, J., Retired, and RIST, District Judge.

RIST, District Judge.

This is an action by appellee, Aetna Casualty & Surety Company (Aetna), against appellants, Don and Velma Nielsen (Nielsens), upon a guaranty allegedly given by appellants to guarantee a sale contract and promissory note from Lincoln Skyrise, Inc. (Skyrise), to International Hotel Supply Corporation (IHSC). Aetna's action is based upon an assignment from IHSC. Following trial, a jury returned verdicts against both appellants in the amount of $64,671.66. Judgment was entered thereon with prejudgment interest. Appellants appeal from the verdicts and judgment, and appellee cross-appeals.

Skyrise was a corporation which built a motel near Lincoln, Nebraska. It purchased furnishings and equipment for the motel from IHSC, for which it executed a purchase contract and promissory note. Appellant Don Nielsen was president and a stockholder of Skyrise. He and his wife, Velma, are alleged to have executed a guaranty of the contract and note.

Skyrise defaulted on the note and, after application of proceeds from the sale of property pledged to secure the note, IHSC assigned to Aetna its rights against all persons liable for the balance. Aetna had paid $64,671.66 to IHSC under its policy obligation with respect to the default, and sought to recover $143,840.04 plus interest, being the total amount claimed due on the note.

One assignment of error by appellants is dispositive of the case and requires reversal of the judgment below, although we will consider several other assignments, since this cause is subject to retrial.

One of the issues at trial was whether appellants had executed the guaranty. In instruction No. 2 the trial court properly instructed that appellee had the burden to prove such execution by appellants. The court, however, also gave instruction No. 6, which provided in part that "[w]hen the effectiveness of a signature is put in issue, the burden of establishing it is on the party claiming under the signature, but the signature is presumed to be genuine or authorized." (Emphasis supplied.) Appellants assign as error the giving of this instruction, having sufficiently objected to the same at the trial court's instruction conference.

Appellants are correct that the instruction was improper. The record is clear that the trial court considered Neb.U.C.C. § 3-307 (Reissue 1980) as applicable, the language emphasized above being a literal statement of a portion of that statute. The problem is that the statutory rule contained in this instruction is applicable only to negotiable instruments as such instruments are defined in Neb.U.C.C. § 3-104 (Reissue 1980).

The guaranty in issue is not a negotiable instrument. It does not meet the criteria of the statute last cited, in that it does not contain an unconditional promise to pay a sum certain and is not payable on demand or at a time certain. Two courts have specifically held guaranty agreements are not negotiable instruments. Associates Discount Corporation v. Elgin Organ Center, Inc., 375 F.2d 97 (7th Cir.1967); Crown Life Ins. Co. v. LaBonte, 111 Wis.2d 26, 330 N.W.2d 201 (1983).

A guaranty of a promissory note cannot be construed together with the note so that the guaranty partakes of the status of a negotiable instrument of the note. This court has held that a guaranty is an undertaking independent of the note, the responsibilities of which differ from those of the note to which the guaranty is collateral. National Bank of Commerce Trust & Sav. Assn. v. Katleman, 201 Neb. 165, 266 N.W.2d 736 (1978). See, also, Crown Life Ins. Co. v. LaBonte, supra.

We find no law providing any presumption of genuineness with respect to signatures on a guaranty.

Appellee argues that even though the instruction may be wrong, it is harmless error, asserting that the instructions as a whole fairly submitted the case and that the jury was not misled as to appellee's burden of proof. We cannot agree. Instruction No. 6 as framed has the effect of making the presumption of genuineness evidence of that fact, regardless of what evidence appellants offered. At best, this type of presumption is rebuttable and would have no effect once there was evidence which disputed the signatures. Nowhere in the instructions is there a statement to that effect, nor that if evidence had been offered by appellants denying the execution of the guaranty, the presumption no longer applies. Under instruction No. 6 the jury could well believe the presumption remained in full force and effect to appellee's benefit, no matter what evidence appellants produced, and was to be considered, in effect, as evidence to support appellee's burden of proof in all circumstances.

Even if § 3-307 were applicable, which it is not, the Comment following that section makes clear that if some evidence is produced by a defendant that the signature is not his, the statutory presumption disappears and the burden of proof is on the claimant without benefit of the presumption.

We find instruction No. 6 substantially misstates the law with respect to appellee's burden of proof and what may be considered in support of that burden. Such error is not harmless and is not cured by other instructions correctly setting forth the burden of proof. For this reason we must reverse the judgment of the trial court.

Since we remand this cause for retrial, several additional assignments of error require consideration.

One such assignment is that Nielsens were denied the right to amend their answer before trial. The record reflects that on October 15, 1979, Nielsens originally filed an answer by way of a general denial. Aetna, on February 27, 1980, filed requests for admissions from the Nielsens. On April 7, 1980, Aetna moved to have the requests deemed admitted, Nielsens having failed to answer them within the statutory time. The trial court heard this motion and, on September 18, 1980, entered its order that the parties having agreed that all admissions be deemed admitted except for the execution of the guaranty, the Nielsens were ordered to file an amended answer in accordance therewith.

On February 5, 1981, the Nielsens filed...