Bonded Elevator, Inc. v. First Nat. Bank of Louisville
| Decision Date | 22 December 1983 |
| Docket Number | No. 82-SC-729-DG,82-SC-729-DG |
| Parties | BONDED ELEVATOR, INC., Movant, v. FIRST NATIONAL BANK OF LOUISVILLE, Respondent. |
| Court | United States State Supreme Court — District of Kentucky |
Richard M. Trautwein, Robert W. Bishop, Barnett & Alagia, Louisville, for movant.
Winfrey T. Blackburn, Jr., W. Robinson Beard, James D. Boyer, Stites & Harbison, Louisville, for respondent.
The questions presented by this appeal are (1) whether summary judgment was properly entered against Bonded Elevator, Inc., in favor of First National Bank of Louisville, and (2) whether the Bank is precluded from seeking satisfaction of the judgment from Bonded to the extent that Bank has received payment thereon from a third party under an unusual loan-receipt transaction.
Bonded Elevator, Inc., a Kentucky corporation, engaged in a grain elevator business in Madisonville and Calvert City, Kentucky. It sought a line of credit from First National Bank of Louisville.
To secure the loan a field warehousing arrangement was entered into whereby Bonded designated S.L.T. Corporation as an independent warehouseman to receive grain from Bonded and to issue a warehouse receipt to the Bank certifying the receipt of the grain. The Bank would then lend Bonded a stipulated percentage of the value of the grain.
Bonded leased to S.L.T. the grain storage facility at Madisonville, and S.L.T. hired former employees of Bonded to certify the receipts of grain.
In some manner not fully explained by this record, the warehouse receipts issued by S.L.T. greatly exceeded the amount of grain actually held in storage by S.L.T. The Bank demanded payment of its note from Bonded and demanded delivery of the collateral from S.L.T. Neither was able to comply, and Bank therefore sued Bonded upon the note it had executed and sued S.L.T. for breach of its obligations in connection with the warehouse receipts.
Bonded and S.L.T. each filed cross-claims against the other seeking to recover any amount which either of them might be required to pay Bank. Bonded also asserted as a defense against Bank that the loss was caused by the negligence of Bank, its agents, and employees.
Separate summary judgments were entered in favor of Bank against S.L.T. and against Bonded in an identical amount of $3,079,086.92. The cross-claims of Bonded and S.L.T. against each other have not yet been disposed of. On June 30, 1980, Bonded appealed to the Court of Appeals.
Thereafter, on December 12, 1980, S.L.T., and its insurance carriers entered into a Loan Receipt Agreement whereby the insurance carrier loaned S.L.T. the sum of $2,800,000.00, interest free, to be repaid only in the event and to the extent of any recovery which S.L.T. might make from Bonded on its cross-claim or from any other person arising from the Promissory Notes pursuant to a Loan Receipt and Agreement entered into between S.L.T. and the Bank.
S.L.T. pledged to the insurance carriers all of its claims against all parties to the action.
S.L.T. then, on December 18, 1980, loaned to Bank the sum of $2,800,000.00, interest free, to be repaid only in the event and to the extent of any recovery which Bank might obtain from Bonded on the promissory notes or from other persons arising out of these transactions.
Bank agreed to, and did, dismiss with prejudice its claims against S.L.T. but reserved its claims against Bonded. Bank agreed to repay S.L.T. out of any recovery from Bonded or others, up to the amount of $2,800,000.00.
Bank further agreed not to settle its claim against Bonded without consent of S.L.T., to cooperate with S.L.T. in Bank's claim against Bonded and, if necessary, to commence and to prosecute diligently other legal proceedings in Bank's name against persons who may be liable on Bank's claim, all such proceedings to be prosecuted, settled or dismissed, at the risk and expense (including attorney fees) of S.L.T. and under S.L.T.'s exclusive direction, management, and control. Bank appointed S.L.T. its agent and attorney-in-fact with irrevocable power to collect on behalf of Bank upon any claim which Bank had against Bonded at the risk and expense of S.L.T.
Bonded was not a party to, nor aware of, these loan receipts and agreements at the time of their execution. Upon learning of them, Bonded moved to set aside and vacate the judgment of Bank against Bonded upon the ground that the payment by S.L.T. to Bank satisfied the judgment. This motion was denied and Bonded prosecuted a second appeal to the Court of Appeals. The Court of Appeals affirmed each of the judgments appealed from.
The entry of summary judgment against Bonded in favor of Bank was proper. It is true, as contended by Bonded, that it asserted as a defense to Bank's claim that the loss to Bank was caused by Bank's own negligence in permitting impairment of the collateral and also that S.L.T. was the agent of Bank and any negligence of S.L.T. which resulted in loss of the collateral was imputed to Bank.
It is likewise true that summary judgment is not to be used as a substitute for trial. Sheppard v. Immanuel Baptist Church, Ky., 353 S.W.2d 212 (1961). Summary judgment could not properly be used to foreclose the opportunity of Bonded to prove facts which would establish its defense as pleaded.
The record in this case consists of five volumes of the transcript of record and twenty-two volumes of depositions consisting of thousands of pages. In its brief Bonded asserts a number of factual matters it contends are in dispute but which it would have been able to prove on a trial on the merits. It cites the discovery depositions as evidence of its ability to prove these allegedly disputed issues of fact.
A majority of this court is of the opinion that Bank would be entitled to judgment on its note as a matter of law even if Bonded could establish as a fact each of the matters which it contends it can prove. In other words, the facts...
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