C.S.B. Co. v. Isham, S-94-186

• Citation: 541 N.W.2d 392,249 Neb. 66
• Decision Date: 05 January 1996
• Docket Number: No. S-94-186,S-94-186
• Parties: C.S.B. CO., a Nebraska corporation, Appellant, v. Eleanor Joy ISHAM and Robert W. Isham III, Copersonal Representatives of the Estate of Robert W. Isham, deceased, et al., Appellees.
• Court: Supreme Court of Nebraska

Page 392

541 N.W.2d 392

249 Neb. 66

C.S.B. CO., a Nebraska corporation, Appellant, v. Eleanor Joy ISHAM and Robert W. Isham III, Copersonal Representatives of the Estate of Robert W. Isham, deceased, et al., Appellees.

No. S-94-186.

Supreme Court of Nebraska.

Jan. 5, 1996.

Syllabus by the Court

1. Summary Judgment. Summary judgment is proper only when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law.

2. Summary Judgment: Appeal and Error. In reviewing a summary judgment, an appellate court views the evidence in a light most favorable to the party against whom the judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence.

3. Contracts: Appeal and Error. The construction of a contract is a matter of law, in connection with which an appellate court has an obligation to reach an independent, correct conclusion irrespective of the determinations made by the court below.

4. Contracts. In interpreting a contract, a court must first determine, as a matter of law, whether the contract is ambiguous.

5. Contracts. A contract written in clear and unambiguous language is not subject to interpretation or construction and must be enforced according to its terms.

6. Contract. A contract must be construed as a whole, and if possible, effect must be given to every part thereof.

7. Contract. Where one has voluntarily, with full knowledge of the facts, paid a disputed demand, which he claimed he did not owe, he cannot ordinarily recover it back on the ground of its invalidity.

Trev E. Peterson, of Knudsen, Berkheimer, Richardson & Endacott, Lincoln, for appellant.

Michael V. Smith, of Smith and King, P.C., Gordon, for appellees.

WHITE, C.J., and CAPORALE, FAHRNBRUCH, LANPHIER, WRIGHT, CONNOLLY, and GERRARD, JJ.

LANPHIER, Justice.

C.S.B. Co., the appellant, acquired ownership of the First National Bank of Chadron (Bank) by purchasing the stock of a holding

company which owned nearly 100 percent of the Bank's stock. Robert W. Isham, Robert W. Isham III, Robert E. Connealy, and Steven Erwin, the appellees, are the sellers of the stock. The essence of this dispute is whether the terms of the contract governing the stock purchase and sale require the appellees to indemnify C.S.B. Co. for the costs and expenses arising from defending the Bank in two separate lender liability actions. After the stock purchase and sale, the Bank continued to defend a lender liability action, referred to as the G.F. Track case, that had been disclosed in the contract for the sale of the stock. The other lender liability action, the Solar Motors case, was initiated after the contract's closing date. C.S.B. Co. brought an action at law for declaratory judgment in the district court for Sheridan County and sought to recover damages arising from the defense of the G.F. Track and the Solar Motors cases which accrued after the stock purchase. The appellees counterclaimed for attorney fees paid by them after they sold their stock in defense of the G.F. Track case. Both parties moved for summary judgment. The trial court sustained appellees' motion for summary judgment and entered judgment against C.S.B. Co. on its claims and in favor of the appellees on their counterclaim. This appeal timely ensued. We affirm the judgment of the district court as to that part of the summary judgment related to the G.F. Track case and the counterclaim, but hold summary judgment was not proper as to the Solar Motors case and remand for further proceedings.

BACKGROUND

C.S.B. Co. began negotiations for the purchase of the Bank's holding company's stock in early 1990. Clifford Young, the president of C.S.B. Co., and Robert W. Isham, the principal owner of the holding company's stock, were the primary negotiators.

During the course of the negotiations, C.S.B. Co. undertook its "due diligence" evaluation of the Bank with the assistance of the National Bank of Commerce in Lincoln and Peat Marwick, a national firm of certified public accountants. The National Bank of Commerce examined loan files, investments, and bank operations, while Peat Marwick examined income tax statements and the Bank's accounting system.

The negotiations culminated in the execution of a 16-page contract dated June 25, 1990. The sale of the Bank was subject to the approval of the Federal Reserve bank, and the transaction was not closed until November 1, 1990. A closing statement effecting the transfer was executed on November 1.

The June 25 contract contains purchase terms and provisions relating to the management of the Bank during the interim between the execution of the contract and the closing date. The contract also contains provisions by which the sellers and C.S.B. Co. agreed to indemnify the other as to certain claims or other liabilities.

C.S.B. Co. asserts that under the terms of the parties' contract, the appellees must indemnify it for costs that the Bank incurred in defending the lender liability actions. The G.F. Track case was resolved in favor of the Bank. The Solar Motors case resulted in a $204,357 jury verdict against the Bank. The Bank appealed the Solar Motors verdict, and the Nebraska Court of Appeals reversed the judgment of the trial court and remanded with directions to dismiss. Solar Motors v. First Nat. Bank of Chadron, 4 Neb.App. 1, 537 N.W.2d 527 (1995). A petition for further review of the Solar Motors opinion was sustained by this court on October 25, 1995, and is still pending at this time.

Following the district court's judgment in favor of Solar Motors, C.S.B. Co. filed this action to recoup the attorney fees paid in the G.F. Track case; the attorney fees and expenses incurred in the defense of the Solar Motors case; the judgment awarded against the Bank in the Solar Motors case; and a declaratory judgment that the appellees are obligated, under the terms of the contract, to pay accruing attorney fees and expenses involved in the appeal of the Solar Motors case. The appellees counterclaimed for attorney fees paid by them in defense of the G.F. Track case. Both parties moved for summary judgment. The trial court sustained appellees' motion for summary judgment and entered judgment against C.S.B C.S.B. Co. timely appealed to the Court of Appeals. We removed the case to our docket. Subsequent to the filing of the appeal, appellee Robert W. Isham died. The appeal has been revived in the name of Eleanor Joy Isham and Robert W. Isham III, copersonal representatives of the estate.

Co. on its indemnity claim and in favor of the appellees on their counterclaim. The trial court denied C.S.B. Co.'s motion for summary judgment.

ASSIGNMENTS OF ERROR

C.S.B. Co. asserts that the trial court erred in sustaining the appellees' motions for summary judgment and in denying its motions for summary judgment.

STANDARD OF REVIEW

Summary judgment is proper only when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law. Poppleton v. Village Realty Co., 248 Neb. 353, 535 N.W.2d 400 (1995); Krohn v. Gardner, 248 Neb. 210, 533 N.W.2d 95 (1995); Walpus v. Milwaukee Elec. Tool Corp., 248 Neb. 145, 532 N.W.2d 316 (1995).

In reviewing a summary judgment, an appellate court views the evidence in a light most favorable to the party against whom the judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence. SID No. 57 v. City of Elkhorn, 248 Neb. 486, 536 N.W.2d 56 (1995); Poppleton v. Village Realty Co., supra; Krohn v. Gardner, supra.

The construction of a contract is a matter of law, in connection with which an appellate court has an obligation to reach an independent, correct conclusion irrespective of the determinations made by the court below. Rains v. Becton, Dickinson & Co., 246 Neb. 746, 523 N.W.2d 506 (1994); Larsen v. First Bank, 245 Neb. 950, 515 N.W.2d 804 (1994).

ANALYSIS

G.F. TRACK

At the time the negotiations for the sale of the Bank began, the Bank was already in litigation regarding the G.F. Track case. G.F. Track had declared bankruptcy and the matter was pending in bankruptcy court. Paragraph 3.6 of the contract provides:

Litigation. Attached hereto as Exhibit 3.6 is a list of all pending or threatened litigation and, except as set forth on Exhibit 3.6, there is no litigation, proceeding, or investigation pending, or, to the knowledge of the Sellers, threatened against the Company or the Bank, which might result in any material adverse change in the business or prospects or condition (financial or otherwise) of the Company or the Bank....

On exhibit 3.6, the appellees disclosed that a court case titled "G & F Track Service" had been filed in the U.S. Bankruptcy Court, District of Nebraska. The name, address, and telephone number of the attorney handling the case for the Bank was listed.

During his deposition, Young testified that he had discussed the G.F. Track case with the elder Isham prior to the closing. Young stated that Isham had told him that there was a problem with G.F. Track, that the debtors were a "bunch of crooks," and that a frivolous lawsuit had been filed. However, Young also testified that he did not rely upon Isham's representations because "we had a specific paragraph put in the contract that said if it happened when you--if it happened--if you were responsible for the lawsuit, you pay for it."

The G.F. Track case was concluded in favor of the Bank, but the Bank incurred $47,853.88 in attorney fees and expenses in defending the matter. These fees and expenses were incurred...