First Nat. Bank in Mitchell v. Bolzer
| Decision Date | 06 December 1985 |
| Docket Number | No. 85-227,85-227 |
| Citation | 221 Neb. 415,377 N.W.2d 533 |
| Parties | FIRST NATIONAL BANK IN MITCHELL, Appellee, v. Paul BOLZER, Appellant. |
| Court | Nebraska Supreme Court |
Syllabus by the Court
1. Jury Instructions. The purpose of an instruction is to furnish guidance to the jury in its deliberations, and to aid it in arriving at a proper verdict; and, with this end in view, it should state clearly and concisely the issues of fact and the principles of law which are necessary to enable the jury to accomplish the purpose desired.
2. Jury Instructions: Appeal and Error. It is error to refuse a proffered instruction which is warranted by the evidence and correctly states the law of the case, unless the principles involved are covered by other instructions.
3. Prejudgment Interest. Prejudgment interest is interest due, pursuant to statute, prior to the rendition of a judgment. In the case of a written instrument, it is allowed on liquidated claims pursuant to the provisions of Neb.Rev.Stat. § 45-104 (Reissue 1984).
4. Interest: Contracts. While the rule is generally to the effect that unliquidated demands do not bear interest until the amounts have been liquidated, the rule is otherwise where the parties have contracted to do otherwise.
5. Interest: Contracts. Where the parties have contracted for the payment of a particular lawful rate of interest, to be paid after the maturity of the debt and on default in payment, such contract controls and the rate thus fixed is recoverable, provided the rate is not unconscionable. Thus, if the contract provides for a certain rate of interest until the principal sum is paid, such contract generally will control the recovery as to the rate after maturity.
6. Case Overruled. To the extent that Aetna Cas. & Surety Co. v. Nielsen, 217 Neb. 297, 348 N.W.2d 851 (1984), is in conflict with this opinion, it is overruled.
7. Guaranty: Contracts: Time. A guarantor is not discharged by an extension of time for payment or performance of the principal obligation if he consents thereto, as where the contract of guaranty expressly or impliedly provides for the extension.
8. Guaranty: Notice. Under an absolute guaranty of payment there is no condition as to demand and notice of default.
9. Contracts. The general rule has been said to be that in the absence of fraud one who signs a written agreement is bound by its terms whether or not he can read; a person unable to read is still bound by contracts which he signs and which are otherwise valid and enforceable. A party's mere ignorance, occasioned by his limited intelligence and understanding of the language Frederick B. Allan, Jr., of Allan, Brauer & Mullally, Seward, for appellant.
and of the contents of the contract which he voluntarily executes, is not, in the absence of fraud, a ground for avoiding it, although it is different from what he supposed; one who is unable to read is not permitted to make contracts without the usual precaution to ascertain what they mean.
John A. Selzer of Wright, Simmons & Selzer, Scottsbluff, for appellee.
Paul Bolzer appeals from a judgment entered by the district court for Scotts Bluff County, Nebraska, following a trial to a jury, finding Bolzer indebted to the appellee, First National Bank in Mitchell (First National), in the total sum of $143,838.69. The judgment was based upon a certain guaranty allegedly signed by Bolzer, in which he guaranteed to pay First National the indebtedness owed by his son, Orin Bolzer. Bolzer assigns several errors, including that the district court erred in granting First National "pre-judgment interest." He also claims that the district court erred in giving certain instructions and refusing to give certain instructions.
Though there are disputes regarding the facts, the record reasonably supports the conclusion that, sometime prior to December 1982 or January 1983, First National had made certain loans to Orin Bolzer. In December of 1982 or January 1983, First National determined that it could no longer continue to provide financing to the son without some further security. First National testified that it decided unless Paul Bolzer agreed to guarantee his son's loans, First National would not continue the son's line of credit. As a result of that request, First National maintains, Bolzer signed a guaranty on February 25, 1983. The guaranty, purportedly signed by Bolzer to First National, was offered in evidence and provided as follows:
We, the undersigned, being interested in the business success of Orin Bolzer (hereinafter referred to as the debtor), and desiring to assist said debtor in obtaining credit and money from you, hereby request and authorize you to extend or advance to the said debtor such credit accomodations [sic] and money as he may from time to time request or make application for, and in case you have heretofore purchased or discounted or may hereafter purchase or discount, for debtor any note or notes, or may hereafter advance to said debtor any money, or if said debtor be now or shall hereafter become indebted to you in any manner or upon any account; I do hereby promise and agree to pay the same and do hereby guarantee full payment to you at maturity of all such notes and of all sums of money now or hereafter due or owing by said debtor to you or any account or liability whatsoever, and I hereby consent to any extensions of time of payment or other accomodations [sic] you may make to said debtor.
We further agree that you may, without notice to us, pledge, sell, or assign any and all indebtedness covered by this guarantee.
The guaranty was allegedly signed by Paul Bolzer and witnessed by an officer of the bank on February 25, 1983.
Bolzer denied that he signed the guaranty of February 25, 1983, and denied that he guaranteed any amount already advanced to his son, or any subsequent advances. He did admit, however, that he had signed a guaranty for a family corporation on August 25, 1978. Upon default, Bolzer paid the family corporation's debt to First National.
Bolzer further introduced evidence that he could neither read nor write except for his signature and certain numbers and that he had only a third-grade education.
As to the debt itself, the evidence was without dispute that Bolzer's son had in fact signed the two notes allegedly guaranteed by Bolzer. First National testified that as of the date of trial, there was due and owing on one of the notes the principal sum of $115,500 plus interest of $20,990.01, for a total owing on the note as of that date of $136,490.01. It further testified that on the second note there was due and owing as of the date of trial the principal sum of $5,520.81 plus interest of $1,829.58, less a credit life insurance rebate of $48.43, for a total of $7,301.96. The jury returned a verdict for First National on the first note in the amount of $115,500 and on the second note in the amount of $7,287.46, apparently being the principal amount due as of that date. Thereafter, and within time, First National filed a document which it entitled "Motion to Include Prejudgment Interest." The district court granted its motion and amended the judgment on the first note to include interest in the sum of $21,034.31, and on the second note the additional amount of $16.92.
Bolzer contends that the district court erred in not instructing the jury, as requested by Bolzer, that "[i]n order for the Bank to recover, it must prove by a perponderance [sic] of the evidence that Paul Bolzer signed the guaranty marked Exhibit 3". The trial court refused to give the instruction as requested by Bolzer and, instead, instructed the jury that
the plaintiff claims that the defendant guaranteed the debts of Orin Bolzer....
The defendant denies any guaranty agreement was made.
....
Before the plaintiff can recover, it must prove, by a preponderance of the evidence, all the following elements:
1. Mutual assent or agreement to the guaranty contract.
2. Consideration.
3. Breach of the guaranty contract by defendant's refusal to pay; and,
4. Damages, amounting to the unpaid debt of Orin Bolzer guaranteed by the defendant.
If the plaintiff has failed to establish any of the above-numbered elements, your verdict will be for the defendant.
The court further instructed the jury:
A contract is an agreement between two or more persons consisting of a promise or mutual promises which the law will enforce.
In order that there be an agreement it is clear that at least two parties are necessary. The parties must agree with definiteness on the same thing, on the same terms, and at the same time....
While all of these instructions were correct and fairly reflected the law, and while it is true that "[i]nstructions must be taken as a whole and construed together, and when instructions cover the issues and fairly submit the case to the jury, the jury's verdict will not be disturbed unless it is clearly erroneous," Ellis v. Far-Mar-Co, 215 Neb. 736, 742, 340 N.W.2d 423, 427 (1983), nowhere was the jury advised here, in so many words, that the bank must prove that Bolzer in fact signed the warranty contract. It may be argued that in order for the jury to find that there was an "agreement to the guaranty contract," it must obviously find that the agreement was signed by Bolzer. That argument, however, is not sufficient when we recognize that the purpose of the instructions is to advise lay persons with regard to the law. While lawyers and judges might recognize that an agreement to pay the debt of another must be in writing in order to satisfy the statute of frauds, and, therefore, the jury must find that the agreement was signed in order for it to be a binding agreement, lay members of a jury are not likely to be aware of that distinction.
As we observed in Bodtke v. Bratten, ...
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