Lomas & Nettleton Co. v. Tiger Enterprises, Inc.

• Decision Date: 13 October 1978
• Docket Number: Nos. 12288,s. 12288
• Citation: 99 Idaho 539,585 P.2d 949
• Court: Idaho Supreme Court
• Parties: The LOMAS & NETTLETON COMPANY, a Connecticut Corporation, Plaintiff-Respondent, v. TIGER ENTERPRISES, INC., an Idaho Corporation, Lily E. Hedlund and Thomas K. Pope, Defendants-Appellants, and Jay Mount and Eva Mae Mount, husband and wife, Intervenors-Appellants. & 12298.

Page 949

585 P.2d 949

99 Idaho 539

The LOMAS & NETTLETON COMPANY, a Connecticut Corporation, Plaintiff-Respondent, v. TIGER ENTERPRISES, INC., an Idaho Corporation, Lily E. Hedlund and Thomas K. Pope, Defendants-Appellants and Jay Mount and Eva Mae Mount, husband and wife, Intervenors-Appellants.

Nos. 12288 & 12298.

Supreme Court of Idaho.

Oct. 13, 1978.

Everett D. Hofmeister, Coeur d'Alene, for defendants-appellants.

Charles Van Marter and Roger K. Anderson of Lukins, Annis, Bastine, McKay & Van Marter, Spokane, Wash., James E. Hunt of Greene & Hunt, Sandpoint, for plaintiff-respondent.

McFADDEN, Justice.

This is a consolidated appeal from two cases, numbers 12298 and 12288, involving the financial collapse of Whiskeyjack, a condominium development on Lake Pend Oreille in northern Idaho. Plaintiff-respondent Lomas & Nettleton Company originally filed this action against defendants-appellants Tiger Enterprises, Inc., and its organizers, defendants-appellants Thomas K. Pope and Lily E. Hedlund, to foreclose a mortgage on several lots in the development. Intervenors-appellants Jay and Eva Mae Mount intervened, alleging that they held a prior mortgage that had not been validly released. Defendants-appellants Tiger Enterprises, Inc., Pope and Hedlund then counterclaimed for damages, alleging fraud and misrepresentation by plaintiff-respondent in the transactions leading to the mortgage. The trial court granted summary judgment against intervenors-appellants, finding that their prior mortgage had been released. From that judgment intervenors-appellants appeal in case number 12298. The trial court also granted summary judgment against defendants-appellants on the mortgage foreclosure claim and dismissed defendants-appellants' counterclaim with prejudice under I.R.C.P. 41(b). ¹ Defendants-appellants appeal the dismissal of their counterclaim in case number 12288.

In case number 12298, intervenors-appellants Jay and Eva Mae Mount have neither filed a brief nor presented any oral argument. Although their case arises from the same factual circumstances as its companion case, the legal issues are altogether different and have not been addressed. Under the circumstances, this court deems the appeal to have been abandoned. Moscow Hotel Co. v. Employment Security Agency, 74 Idaho 162, 258 P.2d 1160 (1953).

Idaho Appellate Rule 21 provides in part:

Failure of a party to timely take any . . . step in the appellate process (other than filing a notice of appeal, or cross-appeal or a petition for rehearing) shall not be deemed jurisdictional, but may be grounds only for such action or sanction as the Supreme Court deems appropriate, which may include dismissal of the appeal.

Under I.A.R. 21 this court finds it appropriate and hereby orders that the appeal be dismissed. ²

In case number 12288, defendants-appellants appeal from the dismissal of their counterclaim against plaintiff-respondent Lomas & Nettleton Company pursuant to I.R.C.P. 41(b). The judgment is affirmed.

Defendant-appellant Tiger Enterprises, Inc., was organized principally by defendants-appellants Lily Hedlund and Thomas K. Pope for the purpose of developing a condominium community called "Whiskeyjack" on a ninety acre site along Lake Pend Oreille. Financing for the project was arranged through plaintiff-respondent Lomas & Nettleton Company, a loan broker. Appellants sought a "package" loan arrangement consisting of three kinds of financing: (1) acquisition and development loans to complete streets, sewers, lighting and other central improvements; (2) interim construction loans to finance construction of the individual condominiums; and (3) "take-out" loans to the individual purchasers of the condominiums. These take-out loans would then be used to repay the interim construction loan on the particular condominium and a portion of the acquisition and development loans. The first of a series of acquisition and development loans was made by a Washington state bank through respondent in early 1972. Other such loans and interim construction loans followed.

The record indicates that by late 1972, the Whiskeyjack development's financial condition was precarious, apparently due to appellants' inability to secure continuing interim and take-out loans for the project, which appellants claim respondent was obliged to obtain for them. By the end of 1972, construction had ceased, the sales staff had been laid off and some salesmen commissions were unpaid. Several earnest money payments made by prospective condominium purchasers had to be refunded because of the seller's inability to arrange financing for the prospective purchasers.

By January, 1973, appellants were seeking financing elsewhere and had secured a commitment from a Montana lender for additional loans. Appellants, being unable to pay the forward loan fees ³ to the Montana lender, sought a $36,900 loan from respondent in order to pay these fees and other expenses of closing the loan. On January 18, 1973, appellants Hedlund and Pope met with a representative of respondent and a Washington state bank in Seattle, Washington. Respondent agreed to provide the needed funds and presented appellants with a loan agreement containing the following:

In consideration of this commitment and the making of the loan provided for herein, you and each of you jointly and severally do hereby forever release and discharge the Company, its officers, agents and employees from any and all claims of any nature whatsoever which you or any of you may have or claim to have on account of past dealings with the Company, the existence of which are expressly denied by the Company. In further consideration of this commitment and the making of the loan provided for herein and as an express condition thereto, you and each of you jointly and severally release the Company from any and all obligations claimed to exist by you to making or providing any further loans or loan commitments of any nature whatsoever to you or to any purchaser from you on account of any property developed by you within the Whiskey Jack Development.

The foregoing loan commitment, including a general release of all claims against The Lomas & Nettleton Company has been read and understood and approved and we accept said loan commitment and make such general release on the terms and conditions to this loan commitment which have been expressly set forth therein and this agreement contains the entire agreement between the parties.

Although they objected to these provisions, both Pope and Hedlund executed the agreement for themselves individually and on behalf of Tiger Enterprises. Several months later appellants signed a promissory note on behalf of the corporation and, for themselves and Tiger Enterprises, gave respondent a mortgage on several lots in the Whiskeyjack development. With the borrowed funds appellants obtained the anticipated financing from the Montana lender. Nevertheless, the financing was insufficient to prevent the venture's eventual financial collapse.

On October 30, 1973, respondent commenced foreclosure of the note and mortgage given for the January 18, 1973 loan. Appellants counterclaimed for two and one-half million dollars in damages, alleging that respondent had fraudulently misrepresented that it would provide full financing for the project, that appellants had relied upon such representations, and that respondent had refused to provide the financing. Appellants alleged that as a direct result, the Whiskeyjack project had failed, placing in jeopardy the security appellant Hedlund had pledged for earlier loans.

On November 21, 1975, summary judgment was entered against appellants on the note and mortgage foreclosure claim. At the March 29, 1976, trial on appellants' counterclaim, the written loan agreement of January 18, 1973, was placed into evidence. Claiming that as a matter of law ⁴ appellants had relinquished any claim for relief by the release provision of the loan agreement, respondent moved to dismiss the action with prejudice under I.R.C.P. 41(b).

Following this motion to dismiss the court allowed appellants to reopen their case in order to present any further evidence showing the invalidity of the release. On reopening, only appellant Pope testified and no documentary evidence was offered. In his testimony Pope indicated that appellants had delayed seeking financing from other sources because they believed respondent's written permission was required before they could negotiate with other lenders. Pope testified that appellants were without funds when the release was executed and that, without the January 18, 1973 loan, appellants could not have paid the fees necessary to secure other loan commitments. Appellant Pope further stated that he read and understood the import of the release. According to Pope's testimony, when he objected to the release and called it "financial blackmail," he was told to "take it or leave it."

At the conclusion of this testimony the court granted respondent's motion to dismiss, later entering a memorandum opinion incorporating findings of fact and conclusions of law (pursuant to I.R.C.P. 52(a)) that stated that appellants "have the burden of proving reasons for setting aside the release by clear and convincing evidence, and they have failed in this regard." On appeal, the only issue is whether the trial court, after "accept(ing) as true the positive, uncontradicted testimony of . . . credible witness(es)," Russ v. Brown, 96 Idaho 369, 373, 529 P.2d 765, 769 (1974), was clearly erroneous in ruling that appellants had failed to carry their burden of proof. I.R.C.P. 52(a).

A release is a type of contract, Little Rock Packing Co. v. Massachusetts Bonding & Insurance Co., 262 F.2d 327 (8th Cir. 1959); Sears, Sucsy & Co. v. Insurance Co. of North America, 392 F.Supp. 398 (N.D.Ill. 1974); Westfall v. Motors Ins. Co., 140 Mont. 564, 374 P.2d 96 (1962); 15 S. Williston, the Law of Contracts § 1820...