Liberty Nat. Bank & Trust Co. v. Dvorak
| Decision Date | 31 May 1972 |
| Docket Number | No. 8802,8802 |
| Citation | 199 N.W.2d 414 |
| Parties | LIBERTY NATIONAL BANK AND TRUST CO., a corporation, Plaintiff and Respondent, v. Anton J. DVORAK, Defendant and Appellant. Civ. |
| Court | North Dakota Supreme Court |
Syllabus by the Court
1. A promissory note is 'renewed' when a new promissory note evidencing the same obligation is executed and delivered by the maker to the holder of the old promissory note.
2. A guaranter at a promissory note is exonerated by an act of the creditor without the consent of the guarantor which changes the original obligation of the principal by substantially increasing the principal debt and by providing for increased monthly payments extended over a longer period of time, even though the original note contained provisions whereby the guarantor consented to any extension and renewal without notice.
Greenwood, Moench & Heth, Dickinson, for defendant and appellant.
Mackoff, Kellogg, Kirby & Kloster, Dickinson, for plaintiff and respondent.
This is an appeal from a judgment of the District Court of Stark County. The facts were stipulated to the district court and the case was tried without a jury. The court awarded judgment in the amount of $3,643.62 plus interest to the plaintiff, Liberty National Bank & Trust Company.
The facts stipulated by the parties are as follows:
'. . ..
'(a) On and prior to July 7, 1969, Edwin Dvorak, son of the Defendant herein, was desirous of purchasing a 1960 kenworth Truck Tractor hereinafter referred to as 'Kenworth'; and in order to secure monies with which to purchase said Kenworth Edwin Dvorak conferred with officers of Plaintiff Bank; that Plaintiff Bank agreed to lend Edwin Dvorak the funds with which to purchase said Kenworth if said Kenworth was covered by collision and comprehensive insurance or if repayment of the obligation was guaranteed by Defendant, Anton J. Dvorak. No insurance was ever obtained covering said Kenworth.
'(b) That on or about the 7th day of July, 1969, Edwin Dvorak did make, execute and deliver unto Plaintiff his promissory note in the sum of $6,441.90, the original of which said promissory note is hereto attached and made a part hereof by reference as though the same were set forth herewith in full; that Defendant Anton J. Dvorak at the time of, or prior to, delivery of said note as aforesaid signed the guarantee on the reverse side of said note; that Edwin Dvorak executed and delivered unto Plaintiff a Security Agreement granting Plaintiff a security interest in said Kenworth as well as the title certificate to said Kenworth; and that the Plaintiff delivered unto Edwin Dvorak the sum of $5,500.00, which said monies were used to purchase said Kenworth truck.
'(c) That no payments were made upon said note dated July 7, 1969, except as shown and posed and on the reverse side thereof; that on the 26th day of June, 1970, there was due and owing upon said note the sum of $4,079.87, including interest and credit life insurance premiums upon the life of the maker, Edwin Dvorak, if said note were paid in the provided installments to maturity; and that at said time there was owing Plaintiff upon said promissory note the sum of $3,693.62, after reduction for unearned interest and unearned credit life insurance premiums.
'(d) That on or about the 26th day of June, 1970, the transmission in said Kenworth truck broke down in Montana and was in need of replacement; that Bonnie Dvorak, wife of Edwin Dvorak, requested officers of the Liberty National Bank & Trust Co. to obtain the sum of $2,267.23 to repair said transmission; that at said time, in addition to the promissory note of July 7, 1969, hereinabove referred to, Edwin Dvorak was indebted to Plaintiff on an additional note in the principal sum of $1,100.00; and that at said time Edwin Dvorak in addition to desiring to obtain monies for the replacement of the Kenworth transmission sought to refinance all obligations owing plaintiff from him to provide for a single monthly installment, which said obligations including the one for the Kenworth transmission would be as follows, all as of June 26, 1970:
Balance on July 7, 1969, note ...... $3,693.62
Other--Dvorak Note .................. 1,100.00
Kenworth Transmission Money ......... 2,267.23
Interest on Proposed New Loan ....... 1,068.96
Credit Life Insurance on Proposed
New Loan ............................ 127.09
---------
TOTAL ...... $8,256.90
'(e) That on or about the 26th day of June, 1970, Edwin Dvorak and Bonnie J. Dvorak did make, execute and deliver unto Plaintiff their promissory note in the amount of $8,256.90, the original of which said note is hereto attached and made a part hereof by reference as though the same were set forth herewith in full; that at said time Liberty National Bank & Trust Co. advanced unto Edwin Dvorak and Bonnie Dvorak the sum of $2,267.23 for replacement of the Kenworth transmission; that at said time Edwin Dvorak and Bonnie Dvorak pledged as collateral for said loan a security interest in the said Kenworth truck and a security interest in a 1959 Diamond T. Truck, a security interest in which had previously been pledged to Plaintiff to secure the $1100.00 note above referred to; that at said time officers of Plaintiff Bank wrote on the reverse side of the note of July 7, 1969, and the $1100.00 note above referred to 'Pd. by renewal' and retained both of said renewed notes in their files and vaults.
'(f) That during the month of July, 1970, said Kenworth truck was in a collision and burned near Jamestown, North Dakota, completely eliminating the value of said Kenworth, except for relatively minor salvage value; that no insurance coverage existed upon said Kenworth; and that no payments have been made upon the note dated June 25 (sic), 1970, hereto attached, except the following:
'(i) The sum of $1,098.00 received on September 18, 1970, for salvage of the transmission from the Kenworth.
'(ii) The sum of $950.00 on May 6, 1971, for sale of the 1959 Diamond T truck, following its repossession by Plaintiff.
'(iii) The sum of $50.00 on April 19, 1971, as salvage for the remainder of said Kenworth, all of which said sums have been posted to the reverse side of said note.
'(g) That Edwin Dvorak and Bonnie J. Dvorak have heretofore filed in the United States District Court for the District of North Dakota, Southwestern Division, their petition in bankruptcy and that all of their remaining obligation on the attached notes will in all probability be discharged on September 4, 1971.
. . .'
The first promissory note provided for monthly payments of $214.73 from August of 1969 to January of 1972. The note was signed by Edwin Dvorak. Anton J. Dvorak endorsed this...
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...his request to include language in a jury instruction regarding renewals of promissory notes. Relying on Liberty Nat'l Bank & Trust Co. v. Dvorak, 199 N.W.2d 414 (N.D.1972), Noorlun argues the court's instruction on "notes" was incomplete because it did not explain the difference between a ......
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