Craig v. Hastings State Bank

• Decision Date: 31 January 1986
• Docket Number: No. 84-622,84-622
• Citation: 221 Neb. 746,380 N.W.2d 618
• Parties: Jacqueline CRAIG, Appellee, v. HASTINGS STATE BANK, a Banking Corporation, Appellant.
• Court: Nebraska Supreme Court

Page 618

380 N.W.2d 618

221 Neb. 746

Jacqueline CRAIG, Appellee, v. HASTINGS STATE BANK, a Banking Corporation, Appellant.

No. 84-622.

Supreme Court of Nebraska.

Jan. 31, 1986.

Syllabus by the Court

1. Contracts. While a court is not free to speculate about terms absent from a written contract and will not rewrite a contract which expresses the intent of the parties, a court will construe uncertain, indefinite, or ambiguous terms in a written contract.

2. Contracts. Where a questioned clause in a written contract may be fairly interpreted in more than one way, there is ambiguity to be resolved by a court as a matter of law.

3. Contracts. When contractual language is ambiguous, a court will construe such language against the party preparing the contract, especially where the language is embodied in a preprinted form.

4. Contracts. Although a provision is not ambiguous merely because such provision is general enough to encompass more than one transaction or option, virtually unlimited breadth of a contractual provision cannot be ignored in assessing ambiguity in a provision.

5. Contracts. Where specific terms characterizing or enumerating a class are followed by general words capable of including more than the class specified, the general terms are construed to refer to the same nature or kind as that of the class specified.

6. Contracts: Banks and Banking: Joint Accounts. Under Neb.Rev.Stat. § 30-2703(a) (Reissue 1979), a joint account belongs, during the lifetime of all parties, to the parties in proportion to the net contributions by each to the sums on deposit, unless there is clear and convincing evidence of a different intent.

7. Contracts: Banks and Banking: Debtors and Creditors: Joint Accounts. Under Neb.Rev.Stat. § 30-2713 (Reissue 1979) and in the absence of an agreement otherwise providing, a bank can set off the debt of a depositor having an account with the bank, but only to the extent of the debtor's present beneficial interest in that account. When there is a joint account and proof of net contributions, the amount of the debtor's beneficial interest in such joint account is determined by the net contributions rule required by Neb.Rev.Stat. §§ 30-2703(a) and 30-2701(6) (Reissue 1979).

8. Contracts: Banks and Banking: Debtors and Creditors: Joint Accounts. Under the net contributions rule of Neb.Rev.Stat. § 30-2703(a) (Reissue 1979) and in the absence of an agreement otherwise providing, if it is established that a nondebtor party to the account has funded all or part of the beneficial interest in an account, a bank has no right of setoff against the beneficial interest contributed by the nondebtor depositor.

9. Contracts: Banks and Banking: Debtors and Creditors: Joint Accounts. In the absence of an agreement otherwise providing, if a person has a present right to withdraw funds from a joint account and is indebted to the financial institution where the account is maintained, the financial institution has a right to set off against such indebtedness the debtor's beneficial interest in the account as determined by the net contributions rule of ownership in accordance with Neb.Rev.Stat. §§ 30-2703 and 30-2701(6) (Reissue 1979).

Dale A. Norris of Whelan, Foote & Scherr, P.C., Hastings, for appellant.

Cunningham, Blackburn, VonSeggern, Livingston & Francis, Grand Island, for appellee.

KRIVOSHA, C.J., and BOSLAUGH, WHITE, HASTINGS, CAPORALE, and SHANAHAN, JJ.

SHANAHAN, Justice.

Hastings State Bank (HSB) appeals a judgment for damages awarded after a bench trial in the district court for Adams County regarding Jacqueline Craig's action for HSB's conversion of her joint bank account. We affirm.

With money inherited from her husband, Jacqueline Craig acquired a certificate of deposit for $15,000 from Home Federal Savings and Loan Association in Hastings. As the sole payee named on the Home Federal certificate, Jacqueline redeemed that certificate on June 30, 1981, and that same day used the redemption proceeds to purchase HSB's money market certificate No. 10829 in the amount of $15,000.

HSB's certificate, a preprinted instrument drafted by HSB and utilized as the standard form for the bank's money market certificates, contained the following clause:

On certificates made in joint survivorship, the bank may deem either or any of said payees, or the survivor or survivors as the absolute owner for purposes of payment, presentation and transfer of this certificate, payment of interest hereon, the giving or receiving of notice or any other action affecting this certificate.

HSB issued certificate No. 10829 payable to Jacqueline and her two sons, Russell Craig and Steven Craig, with rights of survivorship. Neither of Jacqueline's sons knew she had purchased the certificate, and neither made any contribution to purchase the certificate. In its letter on June 26, 1982, HSB notified Jacqueline and her sons that the bank "under the setoff provision of a promissory note from Steve Craig to the Hastings State Bank, certificate of deposit #10829 and the accumulated interest thereon has been applied to the balance of the note."

On May 9, 1983, Craig filed her petition alleging that HSB had "unlawfully converted the proceeds" of the money market certificate. In its answer HSB responded that the contract terms of the certificate permitted HSB "to pay or otherwise treat any of the named owners as absolute owners" of the certificate. The district court, after finding that "the entire beneficial interest in the Certificate of Deposit belongs to the Plaintiff, Jacqueline Craig," and that "the provision in the Certificate of Deposit providing 'or any other action affecting this certificate' is void and must be construed against Defendant Bank as draftor [sic] of the instrument," entered judgment in Jacqueline's favor for $15,000 and interest.

HSB contends the district court erred in (1) declaring the money market certificate's wording, "or any other action affecting this certificate," void, (2) construing the certificate's contractual clause adversely to HSB, and (3) failing to recognize HSB's contractual and statutory right to set off the certificate of deposit against the indebtedness of one of the certificate's named payees.

HSB's assignments of error require examination of a bank's right, whether by contract or statute, to set off against a joint account the debt owed the depository bank by a debtor who has not contributed to the account subjected to such setoff.

In Uttecht v. Norwest Bank of Norfolk, 221 Neb. 222, 225, 376 N.W.2d 11, 13 (1985), we construed the language of a contractual provision conferring a bank's right to "charge to or offset against any amount then on deposit in any account (including a savings certificate) ... any and all debts or liabilities ... then owed to [the] Bank by [the] depositor or, in the case of a multiple-party account, by any party to such multiple-party account." In Uttecht we held, under Neb.Rev.Stat. § 30-2713 (Reissue 1979), a bank can by contract obtain a right to set off the full amount of a debt owed the bank by one of the parties to a joint account, notwithstanding a possibly different result from strictly statutory provisions for a bank's setoff. Therefore, if the wording of the questioned clause in HSB's money market certificate confers on HSB the right to set off Steven's debt against the joint account with Jacqueline, Uttecht requires reversal of the district court's judgment.

HSB contends the phrase "any other action affecting this certificate" encompasses "all types of actions," including HSB's right to setoff against the joint account, because Steven is an absolute owner of the account. Jacqueline maintains that the phrase is not clear enough to create the contractual right to setoff.

Our initial inquiry is governed by basic rules for construing contracts. A court is not free to speculate about terms absent from a written contract. See Kansas-Nebraska Nat. Gas Co. v. Swanson Bros., 215 Neb. 398, 338 N.W.2d 774 (1983). Where the parties have clearly expressed an intent to accomplish a particular result, it is not the province of a court to rewrite a contract to reflect the court's view of a fair bargain. See, Gunset v. Mossman, 196 Neb. 529, 243 N.W.2d 783 (1976); Richardson v. Waterite Co., 169 Neb. 263, 99 N.W.2d 265 (1959). On the other hand, a court will construe uncertain, indefinite, or ambiguous terms in a written contract. See, Pawnee Plastics, Inc. v. American Savings Co., 210 Neb. 131, 313 N.W.2d 262 (1981); Metropolitan Utilities Dist. v. Fidelity & Deposit Co., 200 Neb. 635, 264 N.W.2d 854 (1978); Timmerman Bros., Inc. v. Quigley, 198 Neb. 129, 251 N.W.2d 877 (1977). In Denis v. Woodmen Acc. & Life Co., 214 Neb. 495, 498, 334 N.W.2d 463, 465 (1983), we stated that "absence of articulation accounts for ambiguity" and held that where a questioned clause in a written contract may be fairly interpreted in more than one way, there is ambiguity to be resolved by a court as a matter of law. When contractual language is ambiguous, a court will construe such language against the party preparing the contract, especially where the language is embodied in a preprinted form. See, DaLee Realty, Inc. v. Kuhl, 209 Neb. 6, 305 N.W.2d 891 (1981); Baltes v. Hodges, 207 Neb. 740, 301 N.W.2d 92 (1981). The policy and rationale for construction adverse to a drafter are expressed in comment a. to Restatement (Second) of Contracts § 206 at 105 (1981):

Where one party chooses the terms of the contract, he is likely to provide more carefully for the protection of his own interests than for those of the other party. He is also more likely than the other party to have reason to know of uncertainties of meaning. Indeed, he may leave meaning deliberately obscure, intending to decide at a later date what meaning to assert. In cases of doubt, therefore, so long as other factors are not decisive, there is substantial reason for preferring the meaning of...