Lincoln Lumber Co. v. Fowler
| Decision Date | 16 June 1995 |
| Docket Number | No. S-93-785,S-93-785 |
| Citation | 248 Neb. 221,533 N.W.2d 898 |
| Parties | LINCOLN LUMBER COMPANY, a Nebraska Corporation, Appellant and Cross-Appellee, v. Kerwin FOWLER and Mavis Fowler, Appellees and Cross-Appellants. |
| Court | Nebraska Supreme Court |
Syllabus by the Court
1. Judgments: Appeal and Error. In a bench trial of a law action, the trial court's factual findings have the effect of a verdict and will not be set aside on appeal unless they are clearly wrong.
2. Appeal and Error. An appellate court has an obligation to reach conclusions on questions of law independent of the trial court's ruling.
3. Attorney Fees: Appeal and Error. On appeal, a trial court's decision allowing or disallowing an attorney fee under Neb.Rev.Stat. § 25-824 (Reissue 1989) will be upheld in the absence of the trial court's abuse of discretion.
4. Res Judicata: Judgments. The doctrine of res judicata bars the relitigation of a matter that has been directly addressed or necessarily included in a former adjudication if (1) the former judgment was rendered by a court of competent jurisdiction, (2) the former judgment was a final judgment, (3) the former judgment was on the merits, and (4) the same parties or their privies were involved in both actions.
5. Res Judicata: Proof: Judgments. When different proof is required to establish a cause, a judgment in one action does not preclude another action.
6. Res Judicata: Judgments. Any right, fact, or matter in issue and directly adjudicated upon, or necessarily involved in, the determination of an action before a competent court in which a judgment or decree is rendered upon the merits is conclusively settled by the judgment therein and cannot again be litigated between the parties and privies whether the claim or demand, purpose, or subject matter of the two suits is the same or not. The judgment in a former action between the same parties is final as to every issue which could have been decided in that action.
7. Res Judicata. The doctrine of res judicata bars relitigation not only of those matters actually litigated, but also of those matters which might have been litigated in an earlier proceeding.
8. Res Judicata. The doctrine of res judicata rests on the necessity to terminate litigation and on the belief that a person should not be vexed twice for the same cause.
9. Evidence: Records: Appeal and Error. In a law action, before an appellate court can consider evidence bearing upon an issue of fact, evidence must have been offered at the trial court and embodied in the bill of exceptions filed with the appellate court.
10. Debtors and Creditors: Interest. In the absence of a contract or statute, compensation in the form of compound interest is not allowed to be computed upon a debt.
11. Actions. An action is frivolous or in bad faith if a party attempts to relitigate the same issue previously resolved in an action involving the same party.
12. Actions. A proliferation of actions on issues already adjudicated engenders disrespect for the law, unnecessarily adds to an overburdened judicial caseload, and will not be tolerated.
Douglas D. DeLair, of DeLair & DeLair, Lincoln, for appellant.
John C. Hahn, of Jeffrey, Hahn & Hemmerling, P.C., Lincoln, for appellees.
Plaintiff, Lincoln Lumber Company, a Nebraska corporation, appeals a district court order dismissing its petition seeking $25,905.82 in alleged unpaid interest from the guarantors of Fowler Custom Homes, Inc., Mavis Fowler and Kerwin Fowler.
The district court for Lancaster County dismissed Lincoln Lumber's petition because the court previously held in a case against Mavis Fowler that Lincoln Lumber charged a usurious rate of interest on a promissory note. In the instant lawsuit, the trial court found that Lincoln Lumber had released the separate guaranties of Mavis Fowler and Kerwin Fowler.
In this court, the Fowlers cross-appeal, claiming they are entitled to attorney fees because Lincoln Lumber's lawsuit is "frivolous" and their counterclaim in the district court for attorney fees should have been granted.
We affirm the judgment of the trial court in part, reverse it in part, and remand the cause to the district court for further proceedings.
Lincoln Lumber claims that the trial court erred in (1) finding that the rate of interest was usurious, (2) applying the court's judgment in a prior action filed by Lincoln Lumber against Mavis Fowler in dismissing Lincoln Lumber's petition, and (3) finding that Lincoln Lumber released each of the Fowlers' guaranties.
In their cross-appeal, the Fowlers assign that the trial court erred in not awarding attorney fees on the ground of a frivolous lawsuit.
In a bench trial of a law action, the trial court's factual findings have the effect of a verdict and will not be set aside on appeal unless they are clearly wrong. First Westside Bank v. For-Med, Inc., 247 Neb. 641, 529 N.W.2d 66 (1995). An appellate court has an obligation to reach conclusions on questions of law independent of the trial court's ruling. Jindra v. Clayton, 247 Neb. 597, 529 N.W.2d 523 (1995).
On appeal, a trial court's decision allowing or disallowing an attorney fee under Neb.Rev.Stat. § 25-824 (Reissue 1989) will be upheld in the absence of the trial court's abuse of discretion. Sports Courts of Omaha v. Meginnis, 242 Neb. 768, 497 N.W.2d 38 (1993).
It is necessary to discuss the action against the two Fowlers separately because Mavis Fowler and Kerwin Fowler signed separate personal guaranties. In addition, Mavis Fowler alone signed a promissory note. Different rules of law are applicable to each of the Fowlers.
On July 26, 1990, Lincoln Lumber filed an amended petition against Mavis Fowler, individually, seeking judgment on a $60,318.24 promissory note she had personally issued to Lincoln Lumber, which equaled in amount the debt Fowler Custom Homes owed to Lincoln Lumber. Lincoln Lumber alleged that on December 12, 1989, Mavis Fowler executed a personal promissory note and failed to pay the principal of the debt owing to Lincoln Lumber. Mavis Fowler's note purportedly bore interest at the rate of 2 percent per month on the unpaid balance of the promissory note. The evidence reflects that Lincoln Lumber wanted a personal promissory note from Mavis Fowler in order to secure the Fowler Custom Homes and Kensington Park Partnership accounts. The record reflects that, at all times relevant, Kerwin Fowler held 50 percent of Fowler Custom Homes' stock and was the chief operating officer of the corporation and that Mavis Fowler was a corporate officer of Fowler Custom Homes.
After the trial in the promissory note case, the district court, on February 19, 1992, found that the principal amount owed Lincoln Lumber on Mavis Fowler's promissory note was $31,927.24. The court also held that the interest rate of 24 percent per annum contained in the promissory note exceeded the statutory rate allowed by Neb.Rev.Stat. § 45-101.03 (Reissue 1988). The court held that a 24-percent rate of interest was usurious and was not collectible from Mavis Fowler as an individual. The judgment of the court was not appealed by Lincoln Lumber and became final. The record reflects that Mavis Fowler paid the $31,927.24 judgment to Lincoln Lumber by April 6, 1992. That payment was applied by Lincoln Lumber in satisfaction of Fowler Custom Homes' indebtedness of principal to Lincoln Lumber.
On December 12, 1989, the same date that Mavis Fowler executed the previously litigated promissory note, she also signed a guaranty with Lincoln Lumber. In the guaranty, Mavis Fowler unconditionally promised to pay any sum or balance on the account of Fowler Custom Homes with Lincoln Lumber after the debt "becomes due and is not paid within 10 days after receiving the written demand" from Lincoln Lumber. Lincoln Lumber's petition and exhibit 10 in this lawsuit reflect that the only principal indebtedness upon which Lincoln Lumber filed its lawsuits was that of Fowler Custom Homes.
It is undisputed that Lincoln Lumber charged an interest rate of 24 percent per annum on the guaranty and the previously litigated promissory note.
On June 8, 1992, slightly less than 4 months following the entering of the judgment in the action against Mavis Fowler, Lincoln Lumber filed a petition against the Fowlers, seeking $25,905.82 plus prejudgment interest. It is undisputed that the $25,905.82 represented alleged unpaid interest on only the Fowler Custom Homes account. Lincoln Lumber alleged that the debt of Fowler Custom Homes to Lincoln Lumber was payable in full by the guarantors within 10 days after the guarantors received the written demand. Lincoln Lumber alleged that Mavis Fowler was liable as guarantor for the Fowler Custom Homes debt as a result of her personal guaranty executed on December 12, 1989.
The Fowlers affirmatively alleged that Lincoln Lumber's action was barred by res judicata due to the previous district court judgment dated February 19, 1992.
At a bench trial, Don Hamill, president of Lincoln Lumber, agreed under cross-examination that the debt alleged in the petition represented the interest that Lincoln Lumber sought in the prior action against Mavis Fowler. Beverly Hamill, the office manager in charge of books for Lincoln Lumber, testified that of the original $60,318.24 owed Lincoln Lumber by Fowler Custom Homes, the principal was paid in full and the remaining balance for which suit was instituted was for the unpaid service charge.
On August 2, 1993, the district court dismissed Lincoln Lumber's petition. The court found that Lincoln Lumber sought to collect a usurious rate of interest as determined in a prior action.
The doctrine of res judicata bars the relitigation of a matter that has been...
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