Bank of Idaho v. Colley

• Decision Date: 22 June 1982
• Docket Number: No. 13365,13365
• Parties: BANK OF IDAHO, Plaintiff, Respondent, and Cross-Appellant, v. James A. COLLEY, aka J. A. Colley, dba Eicom, Inc., Philip G. Jones, and Marvene Colley, Defendants, and Jack T. Christopherson, Defendant, Appellant, Cross-Respondent.
• Court: Idaho Court of Appeals

Page 776

647 P.2d 776

103 Idaho 320

BANK OF IDAHO, Plaintiff, Respondent, and Cross-Appellant, v. James A. COLLEY, aka J. A. Colley, dba Eicom, Inc., Philip G. Jones, and Marvene Colley, Defendants, and Jack T. Christopherson, Defendant, Appellant, Cross-Respondent.

No. 13365.

Court of Appeals of Idaho.

June 22, 1982.

John B. Kugler, Pocatello, for defendant, appellant, cross-respondent.

M. Jay Meyers, McDevitt, McDevitt, Meyers & White, Pocatello, for plaintiff, respondent, cross-appellant.

BURNETT, Judge.

When a loan made by Bank of Idaho went into default, the bank sued several guarantors, including Jack Christopherson. The district court entered judgment against Christopherson on his guaranty, but declined to award the bank attorney fees. Both sides have appealed.

Christopherson has raised a potpourri of questions, which we have consolidated into four principal issues: (1) Did the district court err in allowing the bank to proceed in a separate trial against Christopherson, without serving process upon the debtor or other guarantors? (2) Should the court have admitted loan documents into evidence, copies of which had not been furnished previously by the bank to Christopherson? (3) Did the court err by allowing the bank to reopen its case-in-chief, for the purpose of moving admission of an exhibit, while a motion for involuntary dismissal was pending? (4) Was the guaranty instrument correctly interpreted and applied by the court? The bank's cross-appeal raises an additional issue: (5) Was the bank entitled to attorney fees at trial?

We affirm the judgment of the district court on the guaranty. We reverse the court's order denying attorney fees at trial, and remand for determination of an appropriate award. We also award attorney fees to the bank on appeal.

I

The bank sued the debtor and all of the guarantors, but served process only upon Christopherson. The district court granted a motion by the bank to conduct a trial on the claim against Christopherson, separate from the others. The judgment against Christopherson was certified for appeal under Rule 54(b) of the Idaho Rules of Civil Procedure. Christopherson now argues that the debtor and the other guarantors were indispensable parties, and that the court had no authority to proceed without them. We cannot agree.

Rule 19(a)(1), I.R.C.P., provides in pertinent part, for compulsory joinder, if feasible, of persons in whose absence "complete relief cannot be accorded among those already parties." It appears from the pleadings that Christopherson cross-claimed for indemnity from the debtor and contribution from the other guarantors. Accordingly, for the purpose of this discussion, we presume that the debtor and other guarantors were within the scope of persons to be joined if feasible under Rule 19(a)(1). As noted, they were named as parties but not effectively joined by service of process. Had service been feasible, the district court would have been required to compel effective joinder. However, the record discloses no service on the cross-claims; and the record is silent as to whether service was feasible. We will not presume error from a silent record. E.g., Dawson v. Mead, 98 Idaho 1, 557 P.2d 595 (1976). Accordingly, we cannot presume that service was feasible.

Therefore, we turn to Rule 19(a)(2), which governs action to be taken by the court if joinder is not feasible. Rule 19(a)(2) prescribes factors to be considered by the court in determining "whether in equity and good conscience the action should proceed among the parties before it ...." Among these factors is whether the plaintiff would have an adequate remedy if the action was dismissed for nonjoinder. The court's determination is rooted in the exercise of sound discretion. See 7 C. Wright & A. Miller, Federal Practice and Procedure §§ 1607-08 (1972) (discussing a counterpart federal rule). The guaranty signed by Christopherson provided that "(t)he obligations (of the guarantors) are joint and several, and independent of the obligations of (the borrower), and a separate action ... may be brought against (them)." From this language, and from the bank's evident lack of a remedy had the action been dismissed, we conclude that the district court did not abuse its discretion in allowing the action to proceed. We uphold the court's implicit determination that the debtor and other guarantors were not indispensable parties under Rule 19(a)(2).

Christopherson has grafted the issue of indispensable parties upon the question of whether a separate trial was appropriate. Accordingly, we extend our analysis to note that the district court had discretionary authority, under Rule 42(b), to order a separate trial where such action would be "conducive to expedition and economy." Christopherson has made no showing of abuse of discretion, beyond his argument about indispensable parties; and we find no abuse. Therefore, the district court's order for a separate trial is sustained.

II

Christopherson next contends that the district court erred by admitting into evidence copies of the debtor's promissory note to the bank and of the cashier's check disbursed by the bank to the debtor. Christopherson bases this contention upon the fact that he had not been furnished copies of these items. The underlying components of Christopherson's argument appear to be that he signed his guaranty before the debt actually was created; that he should have been notified by the bank when the loan was made; and that, therefore, evidence of the debt should have been excluded in the absence of a foundational showing that he had been notified.

Christopherson has cited no authority for the proposition that a guarantor is freed from his obligation if the creditor fails to furnish him copies of documents evidencing the debt transaction. Our research discloses that such a result may flow from an express requirement in the guaranty agreement itself. See George E. Failing Co. v. Cardwell Investment Co., 190 Kan. 509, 376 P.2d 892 (1962). However, Christopherson's guaranty did not so provide. In the absence of such a contract provision, a transaction notice requirement will not be judicially imposed where the guaranty is unconditional by its terms and the circumstances indicate that guarantor was aware of the nature and extent of the debt guaranteed. E.g., Lee v. Dick, 35 U.S. (10 Pet.) 482, 9 L.Ed. 503 (1836); Pittsburgh Plate Glass Co. v. Cassidy, 194 Ky. 81, 238 S.W. 172 (1922).

In the present case, the purpose of the loan was to finance the debtor's purchase of a radio business. The evidence at trial showed that during February, 1972, the debtor-accompanied by Christopherson and another individual who later became a guarantor-visited the bank to discuss a loan. On February 28, 1972, Christopherson signed a "memorandum of intent" obligating him to join the debtor as a co-purchaser of the radio business. The memorandum referred to a $25,000 purchase price, of which $20,000 would be paid in five equal annual installments. In April, 1972, Christopherson signed the bank's guaranty agreement. He later signed another agreement, dated May 1, in which he acknowledged having signed the "memorandum" concerning purchase of the radio business, and in which he promised to secure a $20,000 loan from the bank. Five months later, in a "supplemental agreement," he, the debtor, and the other guarantor agreed that the sum of $20,000 from the bank would be applied to the purchase price of the business in lieu of the previously contemplated installment payments. On the same day as the "supplemental agreement" was signed, the debtor executed the promissory note in question, for $20,000, and the bank issued the cashier's check in that amount.

From this evidence, the district court found that Christopherson "was aware at all stages of the loan and purchase proceedings as to the amount of money loaned ... (to the debtor), the disbursement of said funds, and that he executed authorizations therefor." This finding is supported by substantial and competent evidence; it is not clearly erroneous, and it will not be set aside. I.R.C.P. 52(a). In view of Christopherson's awareness of the nature and extent of the debt guaranteed, we hold that the bank's failure to notify Christopherson did not discharge the guaranty obligation. Proof of such notification was not required as a foundation to evidence showing existence of the debt. The district court properly admitted the promissory note and cashier's check into evidence.

Taking a somewhat different tack, Christopherson further contends that his execution of the guaranty instrument merely represented an offer of a guaranty, and that he was not bound unless the bank notified him of its acceptance before, or at the time of, making the loan. Christopherson's argument superimposes the concept of notice of acceptance of an offer of guaranty upon the issue of duty to give notice of a loan transaction. These two types of notices are frequently confused. See discussion in 38 Am.Jur.2d, Guaranty § 97 (1968).

However, in this case, the guaranty instrument itself deals directly with notice of acceptance. The agreement expressly provides that the guarantor waives notice of acceptance by the bank. Such a waiver is enforceable. E.g., Linwood State Bank v. Lientz, 413 S.W.2d 248 (Mo.1967). Moreover, where-as here-the guaranty instrument is unconditional and recites an absolute promise to pay, the promisee need only act upon it. Notice of acceptance is unnecessary. New Idea Spreader Co. v. Satterfield, 45 Idaho 753, 265 P. 664 (1928). We conclude that no duty to give notice, either of acceptance or of the loan transaction, was breached by the bank.

III

At trial, when the bank rested its case, Christopherson moved for involuntary dismissal, arguing in general terms that the bank had failed to prove its claim. The court took the motion under advisement, and directed Christopherson to go forward with his evidence....