Citizens State Bank v. Bossard, 86-484

Decision Date10 March 1987
Docket NumberNo. 86-484,86-484
Citation44 St.Rep. 468,226 Mont. 75,733 P.2d 1296
PartiesCITIZENS STATE BANK, a Montana banking corporation, Plaintiff, v. Richard C. BOSSARD, Floyd Bossard, James T. Maddux, Zane K. Sullivan, Kenneth A. High, Defendants. Zane K. SULLIVAN, Third-Party Plaintiff, v. AMERICAN LAND TITLE CO. OF RAVALLI COUNTY, Third-Party Defendant.
CourtMontana Supreme Court

Worden, Thane & Haines, Robert J. Phillips, Missoula, for American Land Title Co.

SHEEHY, Justice.

This is an appeal from a judgment of the District Court, Fourth Judicial District, County of Ravalli, ordering appellant to contribute his pro rata share as a guarantor on a promissory note. We affirm.

Appellant Sullivan was a shareholder in the Title Company, a Montana corporation in the business of issuing title insurance on real estate. Sullivan and four other shareholders, the respondents in this action, each held one share of stock in the company. In January, 1979, the five shareholders executed guaranties for promissory notes to Citizens State Bank on behalf of the Title Company. The continuing guaranties stated that the obligations incurred were joint and several, and that the guarantors waived any right to require the bank to exhaust any security before proceeding against the borrowers.

Sullivan left the Title Company in December, 1979, at which time he signed away his share of stock and resigned his office as president and general counsel of the company.

In November, 1981, the Title Company was sold to a California title company. Richard Bossard, one of the respondents, negotiated the sale. None of the sale proceeds were applied toward the Title Company's promissory notes to Citizens State Bank. The proceeds went instead to pay debts of the Title Company, including taxes, insurance, wages, underwriting fees, supplies, equipment, miscellaneous operational bills, and monies owed to Title Insurance of Montana, a management company.

The Title Company was not a profitable venture. The Company missed several payments on the notes, although several payments had been personally funded by respondents. In February, 1983, the bank accelerated the notes and demanded immediate payment.

Initially, the bank sued all five guarantors on the basis of their continuing guaranties, and respondents filed a cross-claim against Sullivan for contribution as a coguarantor. Subsequently, respondents agreed to pay off the notes, and the agreed payment schedule has since been completed. The bank was then dismissed from the action, leaving the cross-claim for contribution against Sullivan and Sullivan's third-party complaint against the Title Company for reimbursement of any sums he would be required to pay. In August, 1986, the District Court entered its judgment ordering Sullivan to contribute his one-fifth share of the monies owed the bank, and ordered the Title Company to reimburse Sullivan for the sums he actually paid.

The issue raised by Sullivan on appeal is whether the District Court erred in concluding as a matter of law in an action for contribution between coguarantors, that Sullivan could not raise the equitable defense concerning the security for the underlying promissory notes. In particular, Sullivan specifies as error the District Court's conclusion of law No. 5:

The continuing guaranties that were executed by the parties created a joint and several obligation. The said continuing guaranty also provides that the guarantors waived any right to require the bank to proceed against the principal obligor, American Land Title of Ravalli County or to proceed or exhaust any security held by borrowers. Thus, the claimed defense by Sullivan that the bank failed to execute against its security is insufficient as a matter of law.

Sullivan contends this conclusion indicates the court did not allow or consider his equitable defense, the defense being that respondents personally profited from the sale of the Title Company.

We find no merit in Sullivan's contention that the District Court failed to consider his equitable defense. Both parties filed briefs and supplemental briefs discussing the equitable nature of contribution and the equitable defense of unequal benefits. Sullivan argues that because respondents...

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4 cases
  • Hammons v. Ehney
    • United States
    • United States State Supreme Court of Missouri
    • June 25, 1996
    ...contractual and is enforceable where one party is required to pay more than his share of common liability ..."); Citizens State Bank v. Bossard, 733 P.2d 1296, 1298 (Mont.1987). For the proposition that contribution is now solely a legal claim, Mrs. Ehney relies on Equity Mut. Ins. Co. v. K......
  • Collection Ctr. Inc. v. Bydal
    • United States
    • United States State Supreme Court of North Dakota
    • March 22, 2011
    ...and severally liable for the contribution.’ ” Albrecht v. Walter, 1997 ND 238, ¶ 10, 572 N.W.2d 809 (quoting Citizens State Bank v. Bossard, 226 Mont. 75, 733 P.2d 1296, 1298 (1987)). “A guarantor may compel contribution by a coguarantor by an action at law or in equity.” Albrecht, at ¶ 10.......
  • Albrecht v. Walter, 970082
    • United States
    • United States State Supreme Court of North Dakota
    • December 10, 1997
    ...entitled to contribution from other guarantors who are jointly and severally liable for the contribution." Citizens State Bank v. Bossard, 226 Mont. 75, 733 P.2d 1296, 1298 (1987); see N.D.C.C. § 9-01-08. A guarantor may compel contribution by a coguarantor by an action at law or in equity.......
  • Felska v. Goulding, 88-548
    • United States
    • United States State Supreme Court of Montana
    • July 19, 1989
    ...is limited to whether the findings of the trial court are clearly erroneous. Rule 52, M.R.Civ.P.; and Citizens State Bank v. Bossard (Mont.1987), 733 P.2d 1296, 44 St.Rep. 468. With this standard in mind, we review the evidence, dividing our discussion into post- and pre-December, 1983 The ......

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