Hamada v. Valley Nat. Bank

• Decision Date: 23 September 1976
• Docket Number: CA-CIV,No. 1,1
• Citation: 27 Ariz.App. 433,555 P.2d 1121
• Parties: Hajime HAMADA and Toshiko Hamada, his wife, Appellants, v. The VALLEY NATIONAL BANK of Arizona, a National Banking Association, Appellee. 3145.
• Court: Arizona Court of Appeals

Page 1121

555 P.2d 1121

27 Ariz.App. 433

Hajime HAMADA and Toshiko Hamada, his wife, Appellants, v. The VALLEY NATIONAL BANK of Arizona, a National Banking Association, Appellee.

No. 1 CA-CIV 3145.

Court of Appeals of Arizona, Division 1.

Sept. 23, 1976.

Jennings, Strouss & Salmon by Thomas J. Trimble and Steven C. Lester, Phoenix, for appellants

Gust, Rosenfeld, Divelbess & Henderson by Richard A. Segal and John M. McVey, Phoenix, for appellee.

OPINION

HOWARD, Chief Judge.

This is an appeal from a summary judgment awarding appellee $50,000.

The facts show that two individuals, Mr. Peterson and Mr. Steven Carr, formed a Utah corporation called Planformation, Inc. On October 5, 1970, Norman E. Smith, a commercial loan officer at the Valley National Bank approved a $5,000 loan to Planformation secured by some corporate accounts receivable. Mr. and Mrs. Peterson pledged to the bank 253,000 shares of stock in a corporation called Pilot Titanium. He also furnished the bank with a financial statement which showed the value of the pledged stock as being 5cents per share. From October 5, 1970 on, Planformation borrowed various sums of money from the bank and on May 26, 1971, it owed $24,719. On June 11, 1971, Planformation wanted to borrow another $10,000. Mr. Peterson had previously contacted Mr. Hamada, an acquaintance, and had him write a letter addressed to Mr. Peterson agreeing to buy 250,000 shares of Pilot Titanium stock for 20cents per share. Peterson told Hamada the purpose of the letter was to show a market value for the stock. This letter was given to Mr. Smith at the bank. Mr. Smith decided he wanted to obligate Hamada directly to the bank, so he drafted the following letter which he gave to Peterson:

'. . .

Dear Mr. Smith:

It is my understanding that Ted Peterson has pledged 233,000 shares of his Pilot Titanium restricted stock as collateral for a loan made by the Valley Bank to Planformation, Inc. I am personally associated with Planformation and I hereby agree, upon demand by the Valley Bank, to purchase up to 250,000 shares of Pilot Titanium stock from Ted Peterson with proceeds payable to Valley National Bank at 20cents per share with the total dollar amount not to exceed $50,000.

This letter is in conformation (sic) of and replaces my undated letter addressed to Ted J. Peterson written in the fall of 1970, covering the same subject matter.'

Although the letter recites that the bank had made a loan to Planformation, the fact of the matter was that the bank had given Planformation a line of credit, not a loan. Sometime after June 11, 1971, Mr. Hamada typed the letter drafted by the bank on his own letterhead and mailed it to Mr. Peterson, who in turn forwarded it to the bank. Thereafter, various loans were made to Planformation. As of July 30, 1971, Planformation owed the bank $34,719. On that date, the bank's ledger card shows a payment of $34,719. On August 10, 1971, a new loan was made to Planformation in the amount of $34,719.

From August 10, 1971, to October 6, 1971, various loans were made leaving a balance of $44,719. From October 6, 1971, to January 3, 1972, Planformation borrowed $30,050.50 and paid the bank $74,759.50 leaving a zero balance as of January 3, 1972, when Planformation again borrowed $44,719 signing a promissory note in connection with the loan for the same amount. The note was due February 2, 1972, but was not paid, although interest through February 2, 1972 was paid. On March 10, 1972, the bank applied $6,000 from Planformation's bank account against the note, reducing it to $38,719. No further sums were paid.

In September 1971, the bank obtained a formal continuing guarantee in the amount of $50,000 from the Petersons and the Carrs. It did not secure such a document from the Hamadas.

On December 13, 1971, Mr. Hamada's attorney wrote a letter to Mr. Smith advising him that it had not been Mr. Hamada's intention to unconditionally guarantee the money Mr. Peterson was borrowing and that the '. . . situation is ambiguous and worrisome to all concerned.' The letter also asked Mr. Smith to put a hold upon 'this file' pending a more complete review.

On September 14, 1972, the bank demanded that the Hamadas buy the Pilot Titanium stock pursuant to the letter of June 11, 1971.

Needless to say, Planformation went bankrupt and this suit was filed. The Petersons and Carrs were defendants below on the basis of their continuing guarantee. As to the Hamadas, the complaint alleged the execution of the letter of June 11, 1971, and that its effect was to guarantee the repayment of the loan or, in the alternative, that the letter constituted a binding contract between the Hamadas and the bank obligating the Hamadas to pay the balance due on the promissory note executed January 3, 1972.

The bank filed its first motion for summary judgment which was denied by Judge C. Kimball Rose. After Judge Rose was transferred to the criminal calendar, the bank filed this motion for summary judgment which was granted.

Appellants contend that summary judgment was improper for two reasons: (1) The...