Landmark Bank of St. Charles County v. Saettele

• Decision Date: 18 February 1992
• Docket Number: No. 91-0787C(5).,91-0787C(5).
• Citation: 784 F. Supp. 1434
• Parties: LANDMARK BANK OF ST. CHARLES COUNTY, Plaintiff, v. Gustave J. SAETTELE, et al., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

784 F. Supp. 1434

LANDMARK BANK OF ST. CHARLES COUNTY, Plaintiff, v. Gustave J. SAETTELE, et al., Defendants.

No. 91-0787C(5).

United States District Court, E.D. Missouri, E.D.

February 18, 1992.

COPYRIGHT MATERIAL OMITTED

Armstrong, Teasdale, Schlafly, Davis & Dicus, Paul N. Venker, St. Louis, Mo., for plaintiff.

The Stolar Partnership, Charles Alan Seigel, Michael A. Fisher, E. Michael Murphy, St. Louis, Mo., for defendants Gustave and Laura Saettele.

MEMORANDUM

LIMBAUGH, District Judge.

This suit involves the liability of the defendants as guarantors of certain loans made by the plaintiff Bank to Cimarron Development, Inc. Plaintiff seeks approximately $1.2 million from the defendant guarantors as the balance due and owing on three promissory notes signed on behalf of Cimarron Development, Inc. Plaintiff has filed for summary judgment averring that there are no issues of material facts regarding the defendants' execution of the continuing guaranties, the execution of the promissory notes or that Cimarron Development received the loan proceeds, the amounts due and owing on the notes, and that plaintiff has made a demand for payment. Also pending before the Court is a motion to intervene filed by Enterprise Bank. Enterprise Bank seeks intervention in order to assert a claim against certain real property that plaintiff Landmark Bank has previously attached.

Courts have repeatedly recognized that summary judgment is a harsh remedy that should be granted only when the moving party has established his right to judgment with such clarity as not to give rise to controversy. New England Mut. Life Ins. Co. v. Null, 554 F.2d 896, 901 (8th Cir. 1977). Summary judgment motions, however, "can be a tool of great utility in removing factually insubstantial cases from crowded dockets, freeing courts' trial time for those that really do raise genuine issues of material fact." Mt. Pleasant v. Associated Elec. Coop. Inc., 838 F.2d 268, 273 (8th Cir.1988).

Pursuant to Fed.R.Civ.P. 56(c), a district court may grant a motion for summary judgment if all of the information before the court demonstrates that "there is no genuine issue as to material fact and the moving party is entitled to judgment as a matter of law." Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 467, 82 S.Ct. 486, 488, 7 L.Ed.2d 458 (1962). The burden is on the moving party. Mt. Pleasant, 838 F.2d at 273. After the moving party discharges this burden, the nonmoving party must do more than show that there is some doubt as to the facts. Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1355, 89 L.Ed.2d 538 (1986). Instead, the nonmoving party bears the burden of setting forth specific facts showing that there is sufficient evidence in its favor to allow a jury to return a verdict for it. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986).

In passing on a motion for summary judgment, the court must review the facts in a light most favorable to the party opposing the motion and give that party the benefit of any inferences that logically can be drawn from those facts. Buller v. Buechler, 706 F.2d 844, 846 (8th Cir.1983). The court is required to resolve all conflicts of evidence in favor of the nonmoving party. Robert Johnson Grain Co. v. Chem. Interchange Co., 541 F.2d 207, 210 (8th Cir. 1976). With these principles in mind, the Court turns to an examination of the facts relevant to the present action.

On December 20, 1983 defendants Saettele executed a personal continuing guaranty covering all loans, discounts, and renewals made by the plaintiff Bank to Cimarron Development, Inc. Cimarron Development was a real estate development company primarily involved in the construction and sale of residential housing. It was a closely held corporation with two principal shareholders. Defendant Gustave Saettele was a 50% shareholder, an officer, and a director of Cimarron (the other 50% shareholder, officer, and director is Clifford Faddis who was a defendant in a default action brought by plaintiff Bank in state court).

The December 20, 1983 guaranty (hereinafter referred to as the 1983 guaranty) was executed by Faddis, defendant Gustave Saettele, and defendant Gustave Saettele on behalf of his wife, Laura Saettele. It was executed in connection with a construction loan sought by Cimarron for a condominium project known as Sunset Park. The 1983 guaranty is a personal continuing guaranty and is on a 1-½ page standard Landmark Bank form. It covers all loan amounts and no particular loan or loan amount is specified in the document. See, Exhibit A to plaintiff's summary judgment motion for complete terms of the guaranty.

On January 13, 1984 Cimarron, through its agent Faddis, executed a promissory note with a $1 million line of credit. Under the terms of the promissory note and the extensions and renewals thereto, Cimarron owed the full balance of principal borrowed and interest thereon on May 1, 1990. Cimarron failed to pay its obligation on May 1, 1990 and the defendants Saettele have refused to pay in full the balance due and owing on the January 13, 1984 promissory note.

On April 3, 1985 Cimarron, acting through its agent Faddis, executed a promissory note with a $300,000.00 line of credit. Under the terms of the promissory note and the extensions and renewals thereto, Cimarron owed the full balance of principal borrowed and interest thereon on May 1, 1990. Cimarron failed to pay its obligation on May 1, 1990 and the defendants Saettele have refused to pay in full the balance due and owing on the April 3, 1985 promissory note.

In the fall of 1985, Cimarron approached the plaintiff Bank for the purpose of securing a construction loan for a condominium project known as Cliffridge Estates. As with the previous construction loan regarding Sunset Park, plaintiff Bank requested defendants Saettele to sign a continuing personal guaranty. On November 19, 1985 Faddis, defendant Gustave Saettele, and Gustave Saettele on behalf of his wife, Laura Saettele signed as personal guarantors.

The November 19, 1985 guaranty (hereinafter referred to as the 1985 guaranty) is a continuing personal guaranty and is on a 4-½ page standard form. The Cliffridge Estates loan agreement is specifically referred to in the guaranty as the loan agreement to which the guaranty applies. The 1985 guaranty states that it is cumulative to and does not supercede any other guaranties. See, Exhibit D to plaintiff's summary judgment motion for complete terms of the document.

The 1985 guaranty secured a promissory note executed November 15, 1985 by Cimarron, through its agent Faddis, for a $1.5 million line of credit. Under the terms of the November 15, 1985 note and the extensions and renewals thereto, Cimarron was obligated to pay the full balance of principal borrowed and interest thereon on June 15, 1990. Cimarron failed to meet its obligation on June 15, 1990 and the defendants have refused to pay the balance due and owing on the November 15, 1985 note.

At all times pertinent to this litigation, defendant Gustave Saettele was Chairman of the Board of a branch facility of plaintiff Bank known as the Landmark North County Bank and Trust Company. He has been and is a director of Landmark Bancshares Corporation. He was a member of its loan committee which was responsible for reviewing loan packages and approving/disapproving them. These loan packages sometimes contained personal guaranties. These loan packages utilized Landmark's standard forms.

At all times pertinent to this litigation, defendant Gustave Saettele had the express approval of his wife, Laura Saettele, to sign her name to each of the personal guaranties. Finally, defendant Gustave Saettele signed each of the guaranties, for himself and his wife, without reading them beforehand.

Defendants claim that the guaranties are unenforcable because they do not comply with the terms expressed in the loan applications and loan commitment letters. They further contend that officers of the plaintiff Bank misrepresented to them the nature of the continuing personal guaranties. They also contend that the guaranties are voidable due to mutual mistake, i.e. the parties used the wrong forms and did not intend for the defendants to sign continuing personal guaranties. Finally, Mrs. Saettele contends that as to her, the guaranties are unconscionable because, unlike her husband, she had no interest in securing loans for Cimarron.

The defendants argue that the guaranties in question are not the complete integration of the parties' respective agreements. They aver that one must look at the terms and conditions of the loan applications and commitment letters to formulate the "clear, complete, and final expressions of the parties' agreements". The Court disagrees. These guaranties are independent agreements between the Bank and the defendants. They are not subject to the "terms and conditions" of the loan applications and/or commitment letters. A guarantor's liability is construed strictly according to the terms of the guaranty. Boatmen's Bank v. Community Interiors, Inc., 721 S.W.2d 72, 79 (Mo.App.1986); U.S. Suzuki Motor Corp. v. Johnson, 673 S.W.2d 105, 107 (Mo.App.1984). A guaranty is collateral to and independent of any underlying agreement, and is the source of the guarantor's liability. Boatmen's Bank v. Community Interiors, at 79; Standard Meat Co. v. Taco Kid, 554 S.W.2d 592, 595 (Mo.App.1977). Any ambiguity in a guaranty agreement should arise from the agreement itself. id. Both the 1983 and 1985 guaranties are clear, complete and final expressions of the defendants' obligations to pay all the loan balances for the promissory notes signed on behalf of Cimarron Development. The guaranties unequivocably state that they are personal continuing guaranties...