Lawrence v. Farm Credit System Capital Corp.

• Decision Date: 24 August 1988
• Docket Number: Nos. 87-167,87-168,s. 87-167
• Citation: 761 P.2d 640
• Parties: C.K. LAWRENCE, also known as Charles K. Lawrence; Dorothy D. Lawrence; James W. Lawrence and Pat E. Lawrence, husband and wife; Dan B. Lawrence, Appellants (Defendants), Clear Creek Ranch Co., Inc.; Charles K. Lawrence Order Buying Company, Inc.; Lawrence Land Company, Inc.; Linda Ann Love, formerly Linda Ann Lawrence, also known as Linda Lawrence Love; John D. Lawrence; Charles F. Lawrence, (Defendants), v. FARM CREDIT SYSTEM CAPITAL CORPORATION and Production Credit Association of the Midlands, formerly Wyoming Production Credit Association, Appellees (Plaintiffs). FARM CREDIT SYSTEM CAPITAL CORPORATION and Production Credit Association of the Midlands, formerly Wyoming Production Credit Association, Appellants (Plaintiffs), v. CLEAR CREEK RANCH CO., INC.; Charles K. Lawrence Order Buying Company, Inc.; Lawrence Land Company, Inc.; James W. Lawrence; Dan B. Lawrence; Linda Ann Love, formerly Linda Ann Lawrence, also known as Linda Lawrence Love, Appellees (Defendants), C.K. Lawrence, also known as Charles K. Lawrence; Dorothy D. Lawrence; Pat E. Lawrence, (Defendants).
• Court: Wyoming Supreme Court

Page 640

761 P.2d 640

C.K. LAWRENCE, also known as Charles K. Lawrence; Dorothy D. Lawrence; James W. Lawrence and Pat E. Lawrence, husband and wife; Dan B. Lawrence, Appellants (Defendants), Clear Creek Ranch Co., Inc.; Charles K. Lawrence Order Buying Company, Inc.; Lawrence Land Company, Inc.; Linda Ann Love, formerly Linda Ann Lawrence, also known as Linda Lawrence Love; John D. Lawrence; Charles F. Lawrence, (Defendants), v. FARM CREDIT SYSTEM CAPITAL CORPORATION and Production Credit Association of the Midlands, formerly Wyoming Production Credit Association, Appellees (Plaintiffs).

FARM CREDIT SYSTEM CAPITAL CORPORATION and Production Credit Association of the Midlands, formerly Wyoming Production Credit Association, Appellants (Plaintiffs), v. CLEAR CREEK RANCH CO., INC.; Charles K. Lawrence Order Buying Company, Inc.; Lawrence Land Company, Inc.; James W. Lawrence; Dan B. Lawrence; Linda Ann Love, formerly Linda Ann Lawrence, also known as Linda Lawrence Love, Appellees (Defendants),

C.K. Lawrence, also known as Charles K. Lawrence; Dorothy D. Lawrence; Pat E. Lawrence, (Defendants).

Nos. 87-167, 87-168.

Supreme Court of Wyoming.

Aug. 24, 1988. ^*

Appellants Petition for Rehearing Denied Sept. 20, 1988.

Appellee's Motion to Dismiss Denied Sept. 20, 1988.

Henry A. Burgess and Darlene L. Reiter of Burgess & Davis, Sheridan, for appellants in Case No. 87-167 and for appellees in Case No. 87-168.

Mark J. Murphy of Shoumaker and Murphy, Sheridan; and Howard P. Olsen, Jr. of Simmons, Raymond, Olsen, Ediger, Selzer & Ballew, P.C., Scottsbluff, Neb., for appellants in Case No. 87-168 and for appellees in Case No. 87-167.

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

MACY, Justice.

These consolidated cases involve appeals from the judgment entered on a directed verdict in favor of Production Credit Association of the Midlands (Production Credit) and Farm Credit System Capital Corporation (Farm Credit) and against James W. Lawrence, Pat E. Lawrence, Charles K. Lawrence, and Dorothy D. Lawrence on two separate promissory notes and allowing foreclosure and sale of personal and real property used as security for those promissory notes, including after-acquired property. In addition, the judgment found that Charles K. Lawrence Order Buying Company, Inc. (Order Buying Company), Lawrence Land Company, Inc. (Land Company), James W. Lawrence, and Linda Lawrence Love were not liable as makers, guarantors, or co-signers on one promissory note and that Clear Creek Ranch Co., Inc. (Clear Creek) was not liable as a maker, guarantor, or co-signer on either promissory note. The judgment also dismissed the counterclaims of Dan B. Lawrence, Charles F. Lawrence, John D. Lawrence, Linda Lawrence Love, James W. Lawrence, and Pat E. Lawrence.

We affirm in part, reverse in part, and remand.

The parties' issues on appeal are summarized as follows:

1. Whether the trial court erred when it entered its judgment on the directed verdict:

a. awarding Production Credit and Farm Credit judgment against James W. Lawrence, Pat E. Lawrence, Charles K. Lawrence, and Dorothy D. Lawrence on the two separate promissory notes and allowing foreclosure on personal and real property used as security for the payment of the promissory notes;

b. awarding Production Credit and Farm Credit all but $100 from the proceeds of the sale of the wool and sheep branded X7 and the accompanying incentive payments;

c. determining that Order Buying Company, Land Company, Clear Creek, James W. Lawrence, and Linda Lawrence Love were not liable as makers, guarantors, or co-signers on the January 19, 1984, promissory note; and

d. dismissing the counterclaims of Dan B. Lawrence, James W. Lawrence, and Pat E. Lawrence.

2. Whether the trial court erred in refusing to hear evidence relating to the financial collapse of the Wyoming Production Credit Association and Production Credit.

This action commenced with the filing of an original complaint on October 3, 1985, which was amended on two occasions. ¹ Production Credit and Farm Credit alleged in the last amended complaint filed on September 18, 1986, that Order Buying Company, Land Company, Charles K. Lawrence, Dorothy D. Lawrence, Linda Lawrence Love, and James W. Lawrence, in consideration of an extension or renewal loan, executed and delivered to Wyoming Production Credit Association, now Production Credit, a promissory note in the principal amount of $950,000, plus interest, payable on or before December 15, 1984. The complaint also alleged that, to secure payment of a $955,000 promissory note and as part of that same transaction, Land Company executed a mortgage on approximately 6,841 acres of agricultural land. ² It was further alleged that Charles K. Lawrence, Dorothy D. Lawrence, James W. Lawrence, and Linda Lawrence Love, doing business as Clear Creek, executed a security agreement pledging livestock, livestock proceeds or product, feed crops, equipment, and all after-acquired property as security for the payment of the $950,000 promissory note. The complaint then alleged that the conditions of the promissory note, mortgage, and security agreement were broken and that Charles K. Lawrence had converted secured properties. It also stated that there was a lien on the cash proceeds from the sale of sheep branded X7 and other after-acquired livestock or equipment and that Dan B. Lawrence claimed these proceeds. The complaint requested that the trial court find due and owing the amount of $686,918.25, which included interest through July 14, 1986, plus interest accruing thereafter at the rate of $215.1780 per day, and that the lien on the real and personal property in favor of Production Credit and Farm Credit be foreclosed with the property being sold to reduce the judgment. The complaint further asked that the proceeds from the sale be awarded to Production Credit and Farm Credit.

The complaint also alleged that James W. Lawrence and Pat E. Lawrence, in consideration for an extension or renewal loan, executed and delivered a promissory note for $49,000 payable on or before December 15, 1984, and executed a security agreement pledging to Wyoming Production Credit Association, now Production Credit, existing and future livestock as security for the loan. The complaint alleged that such promissory note was not paid when due and prayed for a judgment of $34,350.22 plus interest of $8.5240 per day from and after July 14, 1986, plus attorney's fees and costs. It also prayed for an order giving them authority to sell the security to reduce the judgment and giving them ownership of the proceeds from the sale of the sheep branded X7.

In response to Production Credit's and Farm Credit's last amended complaint, Clear Creek, Order Buying Company, Land Company, Charles K. Lawrence, Dorothy D. Lawrence, James W. Lawrence, Pat E. Lawrence, Linda Lawrence Love, John D. Lawrence, Charles F. Lawrence, and Dan B. Lawrence (defendants) filed an answer and counterclaim on October 3, 1986. In their answer, the defendants alleged that Dan B. Lawrence was the owner of the sheep branded X7 and that he was legally entitled to those proceeds. Their counterclaim alleged that Dan B. Lawrence, James W. Lawrence, Pat E. Lawrence, Robert S. Love, and Linda Lawrence Love had applied for loans from the Farmers Home Administration and the Small Business Administration but that Production Credit arbitrarily, capriciously, and maliciously refused to sign nondisturbance agreements with the intent to damage, humiliate, and embarrass them; that Production Credit and Farm Credit damaged defendants by objecting to their securing a loan with the State of Wyoming Farm Loan Board; and that Production Credit and Farm Credit had brought their action in bad faith. It also alleged that Production Credit and Farm Credit had intentionally harassed, embarrassed, and denied James W. Lawrence, Dan B. Lawrence, and Linda Lawrence Love an opportunity to avail themselves of federal assistance in a young and beginning ranchers program; and that each of the individual persons signing the promissory notes had done so as a guarantor and not as a maker. Finally, it alleged that Production Credit had breached an agreement to advance to defendants $100,000 from the State of Wyoming Farm Loan Board loan proceeds; and that Production Credit had breached its agreement with each defendant to extend between $955,000 and $2,000,000 as a revolving line of credit until December 15, 1990, by bringing the lawsuit.

When faced with a directed verdict question, this Court's applicable standards of review are as follows:

In reviewing the grant of a directed verdict by a trial court, consideration must be given to all evidence favorable to [the] party against whom the motion is directed, as well as to all reasonable and legitimate inferences which might be drawn therefrom. Whether or not the evidence so viewed is sufficient to create an issue for the jury is solely a question of law to be answered by the trial court. That court must determine whether or not the evidence is such that, without weighing the credibility of the witnesses[ ] or otherwise[ ] considering the weight of the evidence, there is but one conclusion as to [the] verdict which men of reason could reach.

Town of Jackson v. Shaw, 569 P.2d 1246, 1250 (Wyo.1977) (citations and footnote omitted).

"In determining whether a verdict should have been directed, the appellate court applies the same standard as does the trial court in passing on the motion originally. * * * Whether a verdict should be directed is a question of law and on those questions litigants are entitled to full review by the appellate court without special deference to the views of the trial court." 9 Wright and Miller, Federal Practice and Procedure, Civil, § 2536, p. 595, and § 2524, pp. 541-542.

Carey v. Jackson, 603 P.2d 868, 877 (Wyo.1979).

[S]ince a directed verdict deprives the parties of a determination of the facts...