Jones Land and Livestock Co. v. Federal Land Bank of Omaha, 86-197

• Court: United States State Supreme Court of Wyoming
• Writing for the Court: Before BROWN; MACY
• Citation: 733 P.2d 258
• Parties: JONES LAND AND LIVESTOCK CO., a Wyoming corporation; and Hugh W. Jones, individually, Appellants (Defendants), Wyoming Production Credit Association, a Wyoming corporation; and American Quasar Petroleum Company of New Mexico, a Texas corporation, (Defendants), v. FEDERAL LAND BANK OF OMAHA, a corporation, Appellee (Plaintiff).
• Docket Number: No. 86-197,86-197
• Decision Date: 26 February 1987

Page 258

733 P.2d 258

JONES LAND AND LIVESTOCK CO., a Wyoming corporation; and Hugh W. Jones, individually, Appellants (Defendants), Wyoming Production Credit Association, a Wyoming corporation; and American Quasar Petroleum Company of New Mexico, a Texas corporation, (Defendants), v. FEDERAL LAND BANK OF OMAHA, a corporation, Appellee (Plaintiff).

No. 86-197.

Supreme Court of Wyoming.

Feb. 26, 1987.

Philip Nicholas of Corthell and King, Laramie, for appellants.

Richard D. Gist of Richard D. Gist, P.C., Lander, for appellee.

Before BROWN, C.J., and THOMAS, CARDINE, URBIGKIT and MACY, JJ.

MACY, Justice.

This is an appeal from a summary judgment for foreclosure of lands mortgaged by appellants Jones Land and Livestock Co., a Wyoming corporation, and Hugh W. Jones, individually, to secure the payment of promissory notes held by Federal Land Bank of Omaha (FLB) and Wyoming Production Credit Association (WPCA).

We affirm.

Appellants present the following issues for review:

"1. Are there material facts in controversy regarding the issues raised in the complaint, crossclaim or the affirmative defenses such that granting summary judgment was inappropriate?

"2. Is there a material issue of fact concerning any of the following:

"a. Did appellees agree to give appellants releases for pieces and parts of the appellants' Baldwin Place in order that they could make land sales which would generate income to make payments to appellees?

"b. Were appellants' circumstances such that the regulations promulgated pursuant to the Farm Credit Act and incorporated in the mortgage given by appellants to appellees required appellees to provide or at least consider providing partial releases?

"c. Did appellees breach the terms of the contract with appellants by not providing promised partial releases?

"d. Did appellees pursue a course of dealing with appellants which prevented appellants from repaying the notes payable to appellees "e. Are there facts which would justify treating appellees, the Wyoming Production Credit Association and the Federal Land Bank of Omaha, as the same entity for purposes of this action such that defenses against one are valid against the other?

"f. Did appellees act in concert or conspire in their acts against appellants such that defenses against one are valid against the other?

"3. Did appellees interfere with appellants' ability to perform, causing the default upon which appellees rely to bring this action to foreclose?

"4. Was there sufficient competent evidence on the issues of attorneys' fees and interest rates before the Trial Court to support the Court's Judgment?"

On April 4, 1975, appellants borrowed $506,000 from FLB to refinance and expand their existing ranching operations and to pay for Mr. Jones' ranch house. The loan was evidenced by appellants' promissory note made payable to FLB and was secured by a mortgage on appellants' lands--a ranch known as the Beaver Creek ranch and a ranch located near Lander, Wyoming, known as the Baldwin place. The loan documents provided that the loan was to be repaid in 29 equal annual installments but gave FLB the option to require prepayment in full on January 1, 1980, if FLB was not satisfied with appellants' financial progress.

During the time appellants were negotiating the FLB loan, they borrowed an additional amount of money from WPCA for the purchase of more cattle and machinery, which loan was evidenced by appellants' promissory notes made payable to WPCA and was secured by another mortgage on appellants' ranch lands. This mortgage is the subject of WPCA's cross-claim against appellants. None of the loan documents mention the sale of the mortgaged land by appellants for the purpose of making their annual payments or otherwise; however, paragraph ten of the FLB mortgage provides:

"That the Mortgagee may extend and defer the maturity of and renew and reamortize said indebtedness, release from liability any party liable thereon, and release from the lien hereof portions of the property covered hereby, without affecting the priority hereof or the liability of Mortgagors or any other party for the payment of said indebtedness, all such extensions, deferments, renewals, and reamortizations to be secured hereby." (Emphasis added.)

In 1979 appellants negotiated the sale of approximately 35 acres of their ranch lands and submitted a letter application to FLB for release of the acreage from the FLB mortgage. The letter also contained a proposal for making the FLB loan current and plans to sell additional parcels of the ranch lands in the future. FLB accepted appellants' request and reamortized appellants' loan, providing for a maturity date of January 1, 1983.

None of the planned sales materialized, and appellants advised FLB that, due to high interest rates, it might be difficult to sell development property. During the month of June 1981, appellants verbally informed FLB that they wanted to borrow enough money from the Yellowstone State Bank, Lander, Wyoming, to make the FLB and WPCA loans current and to finance anticipated subdivision development costs. They also informed FLB that they needed a release of 40 to 80 acres of their mortgaged lands so that Yellowstone State Bank would have a first mortgage to secure the loan. FLB refused to grant the requested release.

On July 20, 1982, FLB advised appellants that, because of the delinquent status of the loan, it would consider legal action if the loan was not paid at maturity on January 1, 1983, or if other suitable arrangements were not made. Appellants failed to pay the FLB loan at maturity. FLB commenced foreclosure proceedings on February 10, 1984, and added WPCA as one of the defendants by filing an amended complaint on March 2, 1984. WPCA answered the complaint, admitting that its mortgage was junior, and cross-claimed against appellants for foreclosure of its mortgage since the WPCA loan was not timely paid.

Appellants answered FLB's complaint and WPCA's cross-claim by admitting the existence of the notes and mortgages and alleging that the notes were not in default, that the notes and mortgages did not constitute the entire agreement, and that FLB and WPCA were barred from recovery by the statute of limitations and by the doctrines of waiver, laches, and estoppel. After FLB and WPCA filed their motions for summary judgment, appellants filed for Chapter 11 bankruptcy. The automatic stay entered in the bankruptcy proceeding was lifted, and the motions were heard after two continuances.

In support of their motions for summary judgment, FLB and WPCA submitted affidavits alleging the delivery of the notes and mortgages to them, appellants' subsequent defaults, and the amounts of principal, interest, attorney's fees, and costs owing by appellants.

The affidavit and deposition of Mr. Jones filed in opposition to the motions for summary judgment stated, inter alia, that Mr. Jones became a real estate agent for the purpose of buying and selling the land so he could earn enough money to purchase a ranch; that he bought the Baldwin place to subdivide and sell in small parcels; and that he planned to use the income from those sales to pay for the Baldwin place and to aid in paying for the Beaver Creek ranch. Mr. Jones further stated that the lending agents for FLB and WPCA agreed his plan was feasible, loaned appellants the money to refinance the purchase of the Baldwin place and the Beaver Creek ranch, and further agreed that if the land sales were going smoothly, the FLB loan would not be called due in five years.

In addition, Mr. Jones stated that WPCA forced the sale of appellants' cattle and that FLB did nothing to stop the sale, knowing that it would prevent appellants from raising money to make the mortgage payments. The affidavit also contained Mr. Jones' allegations that FLB, through its agents, broke express oral agreements to provide appellants with partial mortgage releases for subdivided lands, and, as a direct consequence, appellants were unable to make the FLB mortgage payments.

The trial court ruled that there were no genuine issues of material fact raised by appellants and that FLB and WPCA were entitled to judgment as a matter of law. Summary judgment was entered on June 13, 1986.

Appellants support their contention that there is a genuine issue of fact by arguing that the proposed testimony of Mr. Jones concerning FLB's agreement to provide releases is consistent with the language of the mortgage in that the mortgage does not prohibit releases. Apparently, it is appellants' position that FLB was required to provide them with partial releases because there was an oral agreement to do so. We do not agree.

When construing written contracts, we are guided by the black letter law reiterated in Shepard v. Top Hat Land & Cattle Co., Wyo., 560 P.2d 730, 732 (1977):

"If the language of the contract is plain and unequivocal that language is controlling and the interpretation of the contractual provisions is for the court to make as a matter of law. The meaning of the instrument is to be deduced only from its language if the terms are plain and unambiguous."

See also Williams v. Collins Communications, Inc., Wyo., 720 P.2d 880, 883 (1986).

The language of the mortgage is plain and unequivocal that FLB may, at its discretion, grant partial releases of the mortgage. We will, therefore, not consider whether extraneous evidence would alter this discretion.

Appellants...