Havelock Bank of Lincoln v. Western Sur. Co.

• Court: Nebraska Supreme Court
• Writing for the Court: KRIVOSHA; WHITE
• Citation: Havelock Bank of Lincoln v. Western Sur. Co., 352 N.W.2d 855, 217 Neb. 560 (Neb. 1984)
• Decision Date: 08 June 1984
• Docket Number: No. 83-192,83-192
• Parties: HAVELOCK BANK OF LINCOLN, a corporation, Appellee, v. WESTERN SURETY COMPANY, a South Dakota corporation, Defendant and Third-Party Plaintiff, Appellant, Roger Sughroue, and United Auto Sales, Inc., a corporation, Appellees, Fred C. Eberhardt, Jr., et al., Third-Party Defendants, Appellees. UNITED AUTO SALES, INC., doing business as Classic Coach, Ltd., et al., Appellees, v. Roger SUGHROUE, Appellant.

Page 855

352 N.W.2d 855

217 Neb. 560

HAVELOCK BANK OF LINCOLN, a corporation, Appellee, v. WESTERN SURETY COMPANY, a South Dakota corporation, Defendant and Third-Party Plaintiff, Appellant, Roger Sughroue, and United Auto Sales, Inc., a corporation, Appellees, Fred C. Eberhardt, Jr., et al., Third-Party Defendants, Appellees.

UNITED AUTO SALES, INC., doing business as Classic Coach, Ltd., et al., Appellees, v. Roger SUGHROUE, Appellant.

No. 83-192.

Supreme Court of Nebraska.

June 8, 1984.

Syllabus by the Court

1. Declaratory Judgment: Appeal and Error. This court has treated the determination of factual issues in a declaratory judgment action which would otherwise be an action at law in the same manner as if a jury had been waived. The findings of the trial court therefore have the effect of the verdict of a jury and will not be set aside unless clearly wrong.

2. Banks and Banking: Bonds. A bank, if it can prove a loss occasioned by a statutory motor vehicle dealer's breach of one of the conditions outlined in Neb.Rev.Stat. § 60-1419 (Reissue 1978), is entitled to recover on the dealer's statutory bond.

3. Attorney Fees. It is the general practice in this state to allow the recovery of attorney fees and expenses only in those cases as are provided for by statute, or where the uniform course of procedure has been to allow such recovery.

4. Attorney Fees. Attorney fees can be allowed upon recovery on a statutory motor vehicle dealer's bond.

5. Contracts. A written contract that is clear and unambiguous is not subject to interpretation or construction by this court.

6. Uniform Commercial Code: Revocation. Under Neb.U.C.C. § 2-608 (Reissue 1980), a buyer may revoke acceptance of a lot or commercial goods only if there is some defect or nonconformity in the article that substantially impairs its value.

7. Parties: Causes of Action: Stipulations. A party who voluntarily agrees by stipulation to consolidate several causes of action cannot later be heard to complain of the ramifications of such an agreement.

William L. Walker and Earl Ludlam of Walker & Ludlam, Lincoln, for defendant and third-party plaintiff, appellant Western Sur. Co.

Ronald Rosenberg of Rosenberg & Taute, Lincoln, for appellant Roger Sughroue.

Edward F. Carter, Jr., and Dana Baker of Barney, Carter & Johnson, P.C., Lincoln, for appellee Havelock Bank.

Crosby, Guenzel, Davis, Kessner & Kuester, Lincoln, for appellees United Auto Sales and Carol Norquist.

KRIVOSHA, C.J., WHITE, and CAPORALE, JJ., and McCOWN and BRODKEY, JJ., Retired.

WHITE, Justice.

This appeal involves two cases which were consolidated for both trial in the district court for Lancaster County, Nebraska, and for the purpose of this appeal. The first case is a declaratory judgment action brought by appellee Havelock Bank of Lincoln (Bank), a corporation, against Western Surety Company (Surety), a South Dakota corporation, Roger Sughroue (Sughroue), and United Auto Sales, Inc. (UAS), a corporation. The purpose of the action was to enforce the provisions of the statutory bond of UAS, a licensed new and used car dealer, upon which Surety was the surety. The case also included a third-party complaint in which Surety was permitted to file against third-party defendants, Fred C. Eberhardt, Jr., Christa M. Eberhardt, and Carol Norquist, individually and as the personal representative of the estate of Clayton E. Norquist, deceased, for subrogation and indemnity under an indemnity agreement for the statutory bond. The second case, brought by UAS, doing business as Classic Coach Ltd., and Fred C. Eberhardt, Jr., against Sughroue, is an action to recover the sale price of an automobile.

The district court held: (1) That Surety was liable, under its bond to the Bank, for $14,500, plus interest and costs, under Neb.Rev.Stat. § 60-1419 (Reissue 1978). (2) That the third-party defendants were liable to Surety under their indemnity agreement in the same amount as Surety was liable to the Bank. (3) That Sughroue did not revoke his acceptance of the automobile and was consequently liable to UAS in the amount of $24,500, plus interest. Surety appeals the decision of the first case; Sughroue appeals the decision of the second case. We affirm.

At the outset it is best to note that while the two cases have some common parties, they are totally independent of each other and should not have been consolidated. For some inscrutable reason the parties agreed to do so, however. Clarity requires that we discuss the cases separately.

In the first case, Havelock Bank of Lincoln v. Western Surety Company, the record discloses that in January 1979 the Bank entered into a security agreement and floor-plan agreement with UAS through Fred C. Eberhardt, Jr., the president of UAS. Pursuant to the floor-plan agreement, the Bank provided funds to UAS through Eberhardt. The funds were evidenced by note and trust receipts transferring title and right of possession of certain automobiles to the Bank under the floor-plan agreement. The certificates of title for the floor-plan automobiles were also held by the Bank as security.

At the time of trial on August 2, 1982, the principal amount due the Bank from UAS was $14,500, with interest accrued from July 17, 1981, at the rate of 12 percent per annum. This indebtedness was upon a note No. 23506, and was secured by the security agreement and certificate of title to a 1979 Classic Coach automobile, VIN 1H57U7K584825 (Car I).

UAS was a licensed new and used car dealer in Lancaster County, Nebraska. Pursuant to the statutory requirements for obtaining a motor vehicle dealer's license, UAS had obtained the required statutory bond from Surety. See § 60-1419. On November 7, 1979, while in California for an auto show, Eberhardt met Sughroue in Glendale, California. Sughroue indicated that he was interested in purchasing Car I, and the sale was consummated on the same day by Sughroue's giving Eberhardt a $14,500 check. Eberhardt drafted all but the signature of Sughroue's check and made it payable to "Classic Coach." Eberhardt conceded that Classic Coach, Ltd. never became an operating entity. Sughroue took possession of the automobile. When asked about the title to Car I, Eberhardt told Sughroue that he would deliver the title to Sughroue when the check cleared the bank. Eberhardt admitted that he did not inform Sughroue that the automobile was subject to a security claim of the Bank, saying he told Sughroue the title was "in our Bank" without saying anything more, although Eberhardt was aware that the automobile was floor-planned with the Bank and that the Bank held title to the automobile. On November 9, 1979, Eberhardt deposited the check in a newly opened checking account in Glendale, California, in the name of Fred C. Eberhardt, Jr.

On November 26, 1979, Eberhardt received a receipt in the mail from the bank in Glendale advising him that the funds from Sughroue's account had been collected and deposited to his account. However, Eberhardt made no arrangements to deliver the title to Sughroue. The money was not paid to the Bank and the Bank continued to hold title to the automobile. In early 1980 Eberhardt telephoned the Bank and informed them of the sale of Car I. When asked about the proceeds from the sale, Eberhardt indicated that a second automobile was to be sold and the Bank would be paid after the sale of that car. The Bank never received payment for Car I, and it still holds the title. Sughroue has physical possession of Car I.

Surety's four assignments of error can be summarized as follows: (1) The trial court erred in entering judgment against Surety on the basis that the Bank suffered a loss due to fraud on the part of UAS. (2) The district court erred in not allowing Surety to recover attorney fees on the judgment taken against the indemnitors (third-party defendants) as provided in the indemnity agreement.

The applicable scope of review for the purpose of the first case was recently set forth in Quinn v. Godfather's Investments, 213 Neb. 665, 330 N.W.2d 921 (1983), citing Larutan Corp. v. Magnolia Homes Manuf. Co., 190 Neb. 425, 433, 209 N.W.2d 177, 182 (1973), wherein we stated that

this court has treated the determination of factual issues in a declaratory judgment action which would otherwise be an action at law in the same manner as if a jury had been waived. The findings of the trial court therefore have the effect of the verdict of a jury and will not be set aside unless clearly wrong.

The Bank contends, and the district court found, that Surety was liable to the Bank on its statutory bond because the Bank came within the provisions of § 60-1419, which provides in pertinent part:

Applicants for a motor vehicle dealer's license ... shall, at the time of making application, furnish a corporate surety bond ... in the penal sum of twenty thousand dollars ... on a form to be prescribed by the Attorney General of the State of Nebraska. The bond shall provide (1) that the applicant will faithfully perform all the terms and conditions of said license, (2) that the licensed dealer will fully indemnify any person or other dealer by reason of any loss suffered because of (a) the substitution of any motor vehicle or trailer other than the one selected by the purchaser, (b) the dealer's failure to deliver to the purchaser a clear and marketable title, (c) the dealer's misappropriation of any funds belonging to the purchaser, (d) any alteration on the part of the dealer so as to deceive the purchaser as to the year model of any motor vehicle or trailer, and (e) any false and fraudulent representations or deceitful practices whatever in representing any motor vehicle or trailer, and (3) that the motor vehicle, motorcycle, motor vehicle auction, or trailer dealer or wholesaler shall well, truly, and faithfully comply with all the provisions of his license and the acts of the Legislature relating thereto. The aggregate liability of the surety...