Bottrell v. American Bank
| Decision Date | 15 June 1989 |
| Docket Number | No. 87-209,87-209 |
| Citation | 237 Mont. 1,46 St.Rep. 561,773 P.2d 694 |
| Parties | , 9 UCC Rep.Serv.2d 583 Donald G. BOTTRELL, Edward T. Reeve, and Northern Line Layers, Inc., Plaintiffs and Respondents, v. AMERICAN BANK, f/k/a Western State Bank, a Montana banking corporation, Jim Beaton and Marty Derrig, Defendants and Appellants. |
| Court | Montana Supreme Court |
Anderson, Edwards & Molloy, Donald W. Molloy (argued), Jarussi & Bishop, L. Randall Bishop (argued), Billings, for American Bank.
Anderson, Brown, Gerbase, Cebull, Fulton, Harmon & Ross, Richard Cebull (argued), Billings, for Beaton & Derrig, as cross-appellants.
Herndon, Harper & Munro, Gregory S. Munro (argued), Billings, James Edmiston (argued), Billings, for Northern Line.
Northern Line Layers, Inc. was awarded a judgment of $500,000.00 compensatory damages and $100,000.00 punitive damages against American Bank, based on a jury verdict, in the District Court, Thirteenth Judicial District, Yellowstone County, on In the same cause, on the same day, the District Court granted a separate judgment in favor of American Bank against Donald G. Bottrell, in the sum of $22,126.31, and provided that American Bank (Bank) should recover attorneys fees and costs which "shall be determined at a hearing to be set by the court."
January 8, 1987, "together with costs incurred by plaintiffs to be determined."
In the same cause, on the same day, the District Court granted judgment in favor of American Bank, and against Northern Line Layers, Inc. (NLL), in the sum of $239,629.43, with attorneys fees and costs, which "shall be determined at a hearing to be set by the court."
On January 29, 1987, a further separate judgment was entered by the District Court, based upon its grant of a motion for directed verdict at the close of the plaintiffs' evidence, in favor of the defendants, Jim Beaton and Marty Derrig, and dismissing the "plaintiff's [sic] complaint against" those defendants with prejudice.
Further, during the course of the jury trial, the District Court granted a directed verdict which dismissed the claims of the individual plaintiffs, Don Bottrell and Ed Reeve, for damages against all of the defendants.
American Bank appeals to this Court from the judgment entered against it in favor of NLL. The latter, in turn, cross-appeals from the judgment entered against it in favor of American Bank. All of the plaintiffs cross-appeal from the judgment dismissing their claims against the individual bank officers, Jim Beaton and Marty Derrig. Donald G. Bottrell and Edward T. Reeve cross-appeal from the judgment dismissing their individual claims against American Bank.
In sorting out this welter of judgments, dismissals, appeals and cross-appeals, we have come to the following conclusions: The judgment for plaintiff of $500,000.00 in compensatory damages is modified to $312,000.00 under the conditions hereafter described. The award of punitive damages of $100,000.00 is affirmed. Such judgments, however, are subject to a setoff in the total amount of $239,629.43. Costs incurred by NLL in the District Court and on this appeal shall be recoverable. American Bank is not entitled to costs or attorneys fees. Judgment interest is recoverable only by NLL, and only on the net amount after application of the setoff as aforesaid. The judgment in favor of American Bank and against Donald G. Bottrell in the sum of $22,126.31 is affirmed. The judgment of dismissal of the claims of Donald G. Bottrell and Edward T. Reeve against American Bank is affirmed. The judgment dismissing the individuals Jim Beaton and Marty Derrig is affirmed.
We recite the facts from the viewpoint of the plaintiffs, since the jury determined in their favor.
In reviewing a jury verdict, our function is to determine whether the substantial credible evidence in the record supports the jury verdict. We must view the evidence in the light most favorable to the prevailing party below, and if the record presents conflicting evidence which has been resolved by the jury, this Court is precluded from disturbing the verdict. Anaconda Company v. Whittaker (1980), 188 Mont. 66, 610 P.2d 1177. When the evidence is in conflict, we can only review testimony for the purpose of determining whether there is any substantial evidence in the record to support the verdict of the jury, and we must accept evidence there found as true, unless the evidence is so inherently impossible or improbable as not to be entitled to belief. Strong v. Williams (1969), 154 Mont. 65, 460 P.2d 90.
Weinberg v. Farmers State Bank (Mont.1988), 752 P.2d 719, 45 St.Rep. 391.
Donald G. Bottrell and Edward T. Reeve are stockholders and managing operators of NLL, a corporation resident in Billings which specialized in burying telephone lines through contracts with Mountain Bell and other utilities.
The corporation began banking with American Bank on July 31, 1981. Bottrell and Reeve made operating loans from the Bank through its officers Jim Beaton and On April 18, 1983 new loan No. 14296 in the amount of $70,008.00 was made for operating capital. This loan was likewise to be repaid from the collection of accounts receivable. On June 6, 1983, however, new loan No. 14463 in the amount of $140,000.00 was taken out for the purpose of paying further operating expenses. At the time this loan was made, part of the proceeds paid off loan No. 14296 in the amount of $70,008.00.
Marty Derrig. The first loan was for $16,000.00, to be repaid in 30 days upon collection of existing accounts receivable. Small loans were made available throughout 1981 for the purpose of paying operating expenses. In each instance, the Bank was told that repayment was coming from the collection of accounts receivable. In January, 1982, a larger loan was made in the amount of $50,000.00. The Bank memoranda indicated that "this firm will now be doing all of its banking business with us." On February 8, 1982, a $10,000.00 loan was made again to be paid from accounts receivable. In May, a larger loan of $70,000.00 was made for operating capital to be repaid within 60 days. On July 16, 1982, this $70,000.00 loan was extended by an increase and renewal. Loan comments in the Bank records of August 20, 1982 and September 8, 1982 stated the Bank's understanding that NLL's short term loans were being paid from the collection of accounts receivable and noted that the company continued "to perform as agreed." In 1983, there were additional short-term operating loans. Note No. 14077 was signed on February 15, 1983 for the financing of certain heavy equipment. This note required that the corporation make monthly payments of $3,500.00. As of June 6, 1983, the balance due on note No. 14077 was $71,770.49
As of June 6, 1983, NLL had six outstanding loans in American Bank, identified as follows:
Loan Number Amount Origination Date
8355 $ 6,006.00 9/4/81
8455 4,000.00 11/9/81
8462 13,004.00 11/9/81
9470 3,000.00 1/31/83
14077 71,770.49 2/15/83
14463 $140,000.00 6/6/83
In the years subsequent to July 31, 1981, NLL had over 25 loans in American Bank which had never been delinquent nor was any payment missed. Generally, the loans were for purchase of equipment or operating capital. Don Bottrell and Edward T. Reeve procured each of the loans by simply walking in and asking. They waited while the loans were processed, generally for a period of 20 minutes or half an hour, and received the proceeds the same day as requested. They provided whatever information the bankers required with respect to the loans as they were made. There was no requirement that NLL had to borrow exclusively or solely at American Bank.
NLL had other sources of financing. They borrowed money for equipment purchases from Cen-Dak Leasing Company, GMAC Credit Corporation, Case Credit Corporation, and Norwest Bank. In addition, the company borrowed short-term or start-up money from one Lyle Tisor, an officer of Tri-State Equipment Company of Billings, Montana.
Tisor had loaned Don Bottrell money to purchase real estate lots in 1980 and subsequently had made four other loans to NLL for operating capital on a short-term 30 to 90 day basis. NLL borrowed from Tisor for short-term money either for start-up jobs in the spring or to carry NLL over while waiting for checks to come in. The company used Tisor's help to avoid borrowing short-term money under their established line of credit at the Bank. NLL borrowed from Tisor by executing a promissory note and receiving a check from Tisor drawn on his account at Norwest Bank which NLL would then deposit in their main checking account at American Bank. They paid back Tisor with checks drawn on their American Bank account.
NLL borrowed $45,000.00 from Tisor in 1982. The company paid back Tisor with checks drawn on its account at American Bank. One of the checks was for $30,000.00.
In the beginning of the construction season of 1983, NLL borrowed $75,000.00 in The Bank produced daily, for its own use, a "Large Item" report. Nevertheless, Beaton testified that the Bank officers would not be aware if a $55,000.00 check came through the Bank.
short-term funds from Tisor. The company repaid Tisor with two American Bank checks, one for $55,000.00 and the second for $20,718.06. This latter check had the notation "for short-term loan" in the memo section of the check.
On July 11, 1983, NLL borrowed $65,000.00 from Tisor and executed a promissory note therefor. Of those proceeds, $61,000.00 was deposited in NLL's main checking account at the Bank and the other $4,000.00 was put into its two smaller expense accounts at American Bank. Each of the deposit slips had written upon them "Tisor loan." The $61,000.00 deposit was made to the main checking account on July 11, 1983. Before the...
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