BWH, Inc. v. Metropolitan Nat. Bank

• Decision Date: 26 November 1979
• Docket Number: No. 79-100,79-100
• Citation: 590 S.W.2d 247,267 Ark. 182
• Parties: BWH, INC. d/b/a The Country Squire et al., Appellants, v. METROPOLITAN NATIONAL BANK, Appellee.
• Court: Arkansas Supreme Court

Page 247

590 S.W.2d 247

267 Ark. 182

BWH, INC. d/b/a The Country Squire et al., Appellants, v. METROPOLITAN NATIONAL BANK, Appellee.

No. 79-100.

Supreme Court of Arkansas.

Nov. 26, 1979.

Rehearing Denied Jan. 7, 1980.

James A. Neal, Little Rock, for appellants.

House, Holmes & Jewell, Little Rock, for appellee.

FOGLEMAN, Justice.

Appellee Metropolitan National Bank brought suit against appellants, BWH, Inc., James A. Neal and Charles A. Neal on a promissory note executed by BWH, Inc. and Charles A. Neal. The note was dated August 23, 1977, for $27,000, with interest at the rate of 10% Per annum. Appellee alleged that Charles A. Neal and James A. Neal had executed a guaranty of the indebtedness of BWH, Inc. on August 30, 1977. Appellants answered, admitting their status and residence, but otherwise generally denying appellee's allegations. Appellee then filed requests for admissions addressed to James A. Neal and Charles A. Neal separately. No responses were ever filed by either. On September 27, 1978, 19 days after the filing of the requests for admissions, appellee filed a motion for summary judgment, based upon the failure of appellants to answer the requests for admissions. On the same day, appellants addressed interrogatories to appellee, which were answered October 20, 1978. Appellants filed a response to the motion for summary judgment on October 9, 1978. In the response, appellants stated that there were genuine issues of material fact to be adjudicated, that they verily believed that defenses could be raised by further pleadings, that interrogatories to appellee had been propounded prior to the filing of the motion for summary judgment but that no response had been received, that appellants had been diligent in conducting discovery, and that responsive pleadings by them prior to receipt of responses to the interrogatories would be irresponsible and spurious.

On November 7, 1978, appellants filed an amended response to the motion for summary judgment. Appellants stated that their attorney had received, by regular mail, appellee's request for admissions on September 11, 1978, a notice of trial date of March 5, 1979, on September 19, 1978, and appellee's motion for summary judgment on September 29, 1978. Appellants asserted that the motion for summary judgment was filed prior to the time fixed by statute for answering the requests for admissions. Appellants also alleged that Steve Riggs, appellee's attorney, had, on or about October 3, 1978, indicated to the attorney for appellants that no further action would be taken on the motion for summary judgment until appellee responded to the interrogatories propounded to it, and that appellants' attorney had informed Riggs that there were justiciable issues and valid defenses to be raised and that he was attempting to conduct discovery as provided by law. Appellants excused their failure to file controverting affidavits by saying that appellee had filed no supporting affidavits and the motion was untimely filed. (No objection to the premature filing of the motion had been made in the response filed October 9.) Appellants also alleged that, after their attorney received appellee's response to their interrogatories on October 23 or 24, 1978, he attempted to contact Charles A. Neal, an active member of the United States Army, stationed at Ft. Sam Houston, for the purpose of discussing the responses to the interrogatories and further discovery by depositions, but was unsuccessful until Charles Neal came to Little Rock on October 30, 1978, when it was decided that further discovery was necessary. Appellants also alleged that, on November 2, 1978, their attorney received a copy of a letter to the circuit judge enclosing a precedent for summary judgment, and indicating that the judge had requested the precedent. Appellants further alleged that on November 3, 1978, appellee's attorney was informed by telephone that appellants had not completed discovery and that they proposed to take the deposition of Weldon McWhirter, an officer of appellee, but, several minutes later, appellant's attorney received a telephone call from the circuit court law clerk, who stated that the summary judgment would be entered, but the judge was out of town and would return on November 7, 1978. They alleged that the law clerk was informed that appellants would file additional pleadings and affidavits. Appellants asserted that they had been diligent in their attempts to complete discovery and file responsive pleadings but were unable to do so without completion of discovery. Appellants also asserted that appellee was not entitled to summary judgment because the motion was untimely filed, since no time for hearing on the motion had been fixed as required by Ark.Stat.Ann. § 29-211(c) (Supp.1977) and because appellant was not entitled to summary judgment "as a matter of law as required by Ark.Stat.Ann. §§ 29-201 and 29-211."

This amended response was supported by the affidavit of appellant James A. Neal, who is also attorney for appellants. In that affidavit, he asserted that: McWhirter, an officer of appellee, had stated on oath in response to appellants' interrogatory that the promissory note was not a renewal of a previous note or notes but that the note exhibited with the complaint stated on its face that it was a renewal; BWH, Inc. and Charles A. Neal had received no consideration for the promissory note; Charles A. Neal and James A. Neal received no consideration for the execution of the guaranty executed some seven days after the note was executed; and other guarantors may be liable to appellee or appellants, but entry of summary judgment might be res judicata against said liability or contribution as allowed by Ark.Stat.Ann. § 27-1134.1 (Supp.1977). This affidavit also contained the following allegations: that appellee's response to an interrogatory was that, as part of the sale of BWH, Inc., the proceeds of the note which was the subject of the suit were used to pay off the outstanding indebtedness of that corporation evidenced by certain notes, but that affiant had not received any proceeds or documents reflecting that the indebtedness was paid off as part of the sale of the corporation; and that this sale was the subject of an action by Charles A. Neal and James A. Neal to recover damages from Dewey L. Buffington for alleged fraud in the sale of stock in BWH, Inc. by him to the Neals. Appellants again asserted that they had not been granted sufficient time or opportunity for full discovery.

On November 17, 1978, appellants filed a motion to set aside the summary judgment which had been entered on November 7. The following grounds were alleged: the motion was a nullity because it was untimely filed; the judgment was entered without notice of the date and time fixed for the hearing; the judgment was entered without a hearing; there was no statutory authority specifically allowing for the summary judgment, or, in the alternative, the extent of relief granted exceeded the lawful purpose and intent of summary judgment statutes and the judgment was not well founded in law or fact; the record clearly reflects that there were material issues of fact and law that appellants were attempting to raise by discovery; and the entry of summary judgment within approximately 80 days of the institution of this suit while various pleadings were filed and discovery was being conducted was a denial of appellants' legal right to defend against the claim and unlawfully foreclosed appellants' remedies.

Appellants' motion was denied because the trial judge found that appellants had not, even to the date of the denial, November 22, 1978, injected any factual issues to be resolved in this case.

Appellants contend that summary judgment may be granted in Arkansas only in those specific situations authorized by Ark.Stat.Ann. § 29-201 (Repl.1979), and that no summary judgment may be rendered in an action on a promissory note. They quote from an article on the summary judgment procedure written by Dr. Robert A. Leflar more than a decade before the adoption of Ark.Stat.Ann. § 29-211 (Repl.1962). That article contained a statement that most states, like Arkansas, restrict the summary judgment procedure to a limited group of actions. Minimum Standards of Judicial Administration Arkansas, 5 Ark.L.Rev. 1, 7. In the same comments on summary judgment procedure, Dr. Leflar also pointed out that Rule 56 of the Federal Rules of Civil Procedure made summary judgments available in federal courts in all appropriate cases regardless of the type of action involved.

It is appellants' contention, however, that by the subsequent act (Act 123 of 1961, digested as Ark.Stat.Ann. § 29-211) adopting Rule 56 of the Federal Rules of Civil Procedure, the legislature merely prescribed procedures to be used in the limited group of actions enumerated in other specific statutes, none of which mention actions on promissory notes. They rely particularly on § 2 of the Summary Judgment Act providing that "This Act is cumulative and supplementary to existing provisions governing summary judgments, and does not in any manner amend, repeal, or supersede such provisions." The mere fact that the act did not amend, repeal or supersede existing statutory provisions does not limit the effect of the act to providing a procedure for obtaining summary judgment in cases authorized by other statutes, even if it actually does that. If the act were merely supplementary, appellants' argument would carry more weight. The word cumulative, as used in the act, is indicative, however, of an addition to existing provisions for summary judgments. Since the act is both cumulative and supplementary to existing provisions, we find no merit in this argument.

Appellants argue that, since the General Assembly passed Act 30 of 1961 adding another category to cases in which summary judgments are permissible under Ark.Stat.Ann. § 29-201 at the same session...