First State Bank of Wheatland v. American Nat. Bank

• Citation: 808 P.2d 804
• Decision Date: 11 April 1991
• Docket Number: No. 90-160,90-160
• Parties: FIRST STATE BANK OF WHEATLAND (formerly American Bank of Wheatland), and American National Bank of Laramie, Appellants (Plaintiffs), v. AMERICAN NATIONAL BANK (Cheyenne), and Does 1 to 5, inclusive, Appellees (Defendants).
• Court: United States State Supreme Court of Wyoming

Page 804

808 P.2d 804

FIRST STATE BANK OF WHEATLAND (formerly American Bank of Wheatland), and American National Bank of Laramie, Appellants (Plaintiffs), v. AMERICAN NATIONAL BANK (Cheyenne), and Does 1 to 5, inclusive, Appellees (Defendants).

No. 90-160.

Supreme Court of Wyoming.

April 11, 1991.

John E. Stanfield of Smith, Stanfield & Scott, Laramie, and John B. Speight, Hathaway, Speight, Kunz, Trautwein & Barrett, Cheyenne, for appellants.

David H. Carmichael, Burgess, Davis, Carmichael & Cannon, Cheyenne, and Anthony T. Wendtland, Burgess, Davis, Carmichael & Cannon, Sheridan, for appellees.

Before THOMAS, CARDINE and GOLDEN, JJ., and RAPER and BROWN, JJ., Retired.

RAPER, Justice, Retired.

Appellants sued appellee claiming dishonesty, misrepresentation, fraud, abuse of good faith and fair dealing in loan participation arrangements. The trial judge granted summary judgment to appellee.

The appellants have created what they consider the issues in what appears to be an attempt to obtain our attention in a melodramatic way:

1. Is dishonesty within the banking industry acceptable?

2. Do banks have a right to be dishonest--so long as they only cheat or defraud other banks?

3. In view of the Rule 56 evidence demonstrating its many misrepresentations as well as the facts which the Cheyenne Bank unquestionably concealed--was its summary judgment proper in this case?

4. Should the Cheyenne Bank be allowed to evade all responsibility for its actions through the ruse of comparing its own fraudulent conduct with conduct on the part of the Plaintiffs which, at most, was merely inadvertent or negligent?

5. Despite the unlimited powers it supposedly reserved under the participation contract--a document it alone created and filled out--was the Cheyenne Bank nevertheless obligated to exercise good faith and deal fairly with the participants when exercising those powers?

Appellee rephrases the issues claimed by appellants in a more conservative, judicious fashion:

1. Was Appellee entitled to Summary Judgment on Appellants' claims of fraud because no genuine issue of material fact existed concerning the element of justifiable reliance?

2. Was Appellee entitled to Summary Judgment on Appellants' claims of negligence because the element of "duty" was lacking?

3. Was Appellee entitled to Summary Judgment on Appellants' claims of breach of fiduciary duty because no fiduciary duty existed as a matter of law?

4. Was Appellee entitled to Summary Judgment on Appellants' claims that Appellee did not act in good faith or that Appellee committed the tort of "outrage"?

We will affirm the district court.

The facts are somewhat simple and lack the sinister view taken by appellants. Appellee loaned $800,000 to a Shirley L. Brown and then took from each of eight banks, including appellants, a certificate of participation in the sum of $100,000. Each participant, including appellants, signed and accepted a certificate of participation containing the following language:

Forwarding Bank [American National Bank, Cheyenne], by issuing this certificate, makes no representation of warranty as to the collectibility of the loan or the validity of any lien, collateral or instrument taken in connection therewith, nor with respect to any representations, warranties, or statements made by said borrower. (Bracketed material supplied.)

Appellee loaned an additional $600,000 to Shirley Brown several months later. Interest was paid currently on both promissory notes and both were renewed with a due date in November 1985. In November, the $800,000 loan and the $600,000 were combined into one loan totaling $1.4 million. Additional security was taken. Appellants participated and the same form of certificate of participation was executed by each of appellants and each contained the same language quoted above.

Appellants' officers, signatory to the certificates, admitted that bankers of reasonable and ordinary care would read loan documents, such as the certificates they executed, before signing them. Appellants' expert witnesses testified in their depositions that bankers, being sophisticated business persons, are charged with a duty to carefully read loan documents and that participant banks have an affirmative and independent duty to conduct credit analysis of any loan they consider participating in. Appellee furnished all financial information provided by Shirley Brown to appellants and it is acknowledged by appellants that they received such information prior to their execution of the $1.4 million loan certificate of participation.

Shirley L. Brown defaulted on the $1.4 million loan.

Appellee calls our attention to TZ Land & Cattle Co. v. Condict, 795 P.2d 1204, 1208 (Wyo.1990) (quoting Boehm v. Cody Country Chamber of Commerce, 748 P.2d 704, 710 (Wyo.1987)) wherein...