Boatmen's Nat. Bank of St. Louis v. Nangle
| Decision Date | 02 May 1995 |
| Docket Number | No. 66585,66585 |
| Citation | 899 S.W.2d 542 |
| Parties | The BOATMEN'S NATIONAL BANK OF ST. LOUIS, Plaintiff/Respondent, v. Donald V. NANGLE and Jeanne Nangle, Defendants/Appellants. |
| Court | Missouri Court of Appeals |
Arthur G. Muegler, Jr., St. Louis, for appellants.
Ronald A. Norwood, James V. O'Brien, Lewis, Rice & Fingersh, L.C., St. Louis, for respondent.
This is an appeal from an order of the circuit court granting Boatmen's National Bank of St. Louis (Boatmen's) a new trial after a jury verdict against Boatmen's on its claim against a guarantor and his wife 1 for the debts of a defaulting obligor. The circuit court granted a new trial on the basis that two of defendant's instructions should not have been given. Guarantor alleges that Boatmen's failed to make a submissible case and that guarantor should be considered discharged from his obligation. We affirm.
The essential facts are not in dispute. In 1983 Mr. White, a businessman, engaged in a project to repair, renovate, and operate a Quality Inn Motel. White's attorney, the guarantor and defendant in this action, formed a corporation for White and solicited Quality Inn for an operating agreement. Guarantor used $75,000 of his own funds as a down payment for the operating agreement, thereby becoming a creditor of White's corporation.
White needed still more financing and, therefore, approached his friend, Lichtenstein, who was Chairman of the Board of CharterBank of St. Louis, N.A. (CharterBank). On January 5, 1984, CharterBank approved a $200,000 loan at 13% interest to White's corporation as a favor to him, however, it required guarantor's signature so that the bank's portfolio would "look better." Because guarantor believed White to have substantial personal assets, and because he was friends with White and Lichtenstein, he thought he would never be held to his promise to guarantee the note.
In December of 1984, CharterBank increased the loan amount to $250,000 at 15%. When it did so, it marked the old note "Paid" and issued a new note.
On January 28, 1985, Boatmen's parent, a holding company called Boatmen's Bankshares, Inc. (BBI), merged with CharterBank's parent, a holding company called CharterBank Corp. (CC). BBI was the surviving institution, holding both Boatmen's and CharterBank after the merger.
On March 18, 1985, Boatmen's and CharterBank merged, and Boatmen's became the surviving institution.
On July 8, 1985, Boatmen's replaced the second CharterBank loan to the corporation with its own loan in the amount of $250,000, marking the CharterBank loan "Paid" and issuing a new note.
Beginning on October 7, 1985, Boatmen's repeatedly replaced its own loan to debtor with others for $250,000, each time marking them "Paid" and issuing a new note. It did so five times, on October 7, 1985, January 6, 1986, July 8, 1986, November 5, 1986, and February 3, 1987.
The corporation defaulted on the February 3, 1987, note, leaving a balance of $233,500. Boatmen's then sued guarantor for $233,500, plus interest. A jury found against Boatmen's and for guarantor. The trial court then granted Boatmen's motion for new trial on the basis that two of defendant's instructions should not have been given.
Guarantor now appeals, alleging four grounds of error: (I) that Boatmen's failed to show it had a legal interest in the guaranty agreement; (II) that Boatmen's could not make a submissible case on the default of the February 3, 1987, loan because the guaranty contract pertained only to CharterBank loans, and not Boatmen's loans; (III) that the marking of the CharterBank loans as "Paid" discharged guarantor from his obligations; and (IV) that the alteration of the terms of the original note increased guarantor's risk and should operate to release his obligations. We find no merit in any of these contentions.
Guarantor alleges that Boatmen's failed to establish that it had a legal interest in the guaranty agreement between guarantor and CharterBank. Boatmen's counters that this element was satisfied when it introduced evidence of the March 18, 1985, merger between CharterBank and Boatmen's. However, guarantor contends that the true owner of this guaranty agreement asset could be BBI, Boatmen's parent, or perhaps some other subsidiary of BBI. CharterBank's former parent, CC, merged with BBI before the later CharterBank/Boatmen's merger. Guarantor's theory is that the rights to the guaranty contract asset may have shifted out of CharterBank during the first merger. If so, when Boatmen's later merged with CharterBank, Boatmen's would not own the asset. Guarantor does not offer a shred of evidence for his asset shifting theory. We deem that the evidence of the merger between Boatmen's and CharterBank is sufficient for a prima facie showing that Boatmen's has rights in all of CharterBank's former assets, including the guaranty agreement. Point denied.
Guarantor next alleges that the guaranty agreement covered only loans made by CharterBank, and not the February 3, 1987, loan made by Boatmen's, which is the loan in default. The terms of the guaranty agreement read:
NOW, for value received, ... the undersigned jointly and severally for themselves, their heirs, executors and administrators, hereby guarantee to said Bank, its successors and assigns, the prompt payment as they may severally mature of any or all loans made, or which may be made, to said Borrower by said Bank, as well as any and all renewals thereof and all indebtedness that is now or at any time hereafter may be or become owing from said Borrower to said Bank not exceeding in the aggregate $200,000.00
This instrument is intended to be and shall be a continuing guaranty and agreement and shall apply to and cover all loans, discounts or renewals thereof made by said Bank and all indebtedness of any kind due to said Bank from said Borrower prior to notice in writing given to the Cashier of said Bank by the undersigned that they will not be liable upon any further loans or discounts accepted or indebtedness incurred after the receipt of such written notice.
Guarantor's position is that this contract, on its face, only covers loans made by CharterBank: "the undersigned ... hereby guarantee to said Bank ... the prompt payment ... of any or all loans made ... by said Bank." "[B]y said Bank" obviously refers to CharterBank in this agreement between guarantor and CharterBank.
However, Boatmen's contends that the February 3, 1987, loan made by Boatmen's also constitutes a loan by "said Bank," by operation of federal law. We agree with Boatmen's. We acknowledge that guarantors are favored in law, and that courts are loathe to stretch a guaranty agreement beyond the letters of its language. See Beauchamp v. North American Sav. Ass'n, 543 S.W.2d 536, 538 (Mo.App.1976). Yet, we are bound by federal statute to consider Boatmen's, the receiving institution of the Boatmen's/CharterBank merger, to be the same corporation as CharterBank:
The corporate existence of each of the merging banks or banking associations participating in such merger shall be merged into and continued in the receiving association and such receiving association shall be deemed to be the same corporation as each bank or banking association participating in the merger. All rights, franchises, and interests of the individual merging banks or banking associations in and to every type...
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