Middleton v. First Nat'l Bank
| Decision Date | 10 May 2013 |
| Docket Number | No. SD 32178.,SD 32178. |
| Citation | 399 S.W.3d 463 |
| Parties | Brown MIDDLETON, Jr., and Doris L. Middleton, Plaintiffs–Appellants, v. FIRST NATIONAL BANK, Defendant–Respondent. |
| Court | Missouri Court of Appeals |
OPINION TEXT STARTS HERE
Tom K. O'Loughlin II, O'Loughlin, O'Loughlin & Koetting, L.C., Cape Girardeau, MO, for appellants.
David W. White and Mark M. Haddad, Foland, Wickens, Eisfelder, Roper & Hofer, P.C., Kansas City, MO, for respondent.
Brown Middleton, Jr. (“JR”), and Doris Middleton, his wife (collectively “the Middletons”), appeal the trial court's grant of summary judgment in favor of First National Bank (“Bank”) on their second amended petition. In it, they alleged that Bank wrongfully set off the proceeds of the Middletons' joint certificate of deposit (“CD”) to partially pay a debt owed to the Bank by a corporation owned by their sons, Mike and Tim Middleton, on which JR alone was a guarantor.1 Finding that the CD did not contractually grant Bank a right of set-off as claimed by the Bank and, therefore, Bank was not entitled to summary judgment as a matter of law, we reverse the trial court's judgment and remand for further proceedings.
Mike and Tim owned and operated Middleton Bros., Inc., which in 2001 obtained a $850,000 “floor plan” loan from Bank, the repayment of which was guaranteed by JR. Sometime after the loan was made, JR and Doris opened a $500,000 certificate of deposit at Bank.
Two hundred thousand dollars of the Middletons' original certificate of deposit eventually wound up in account number 302694, the CD in question here, which was created on September 20, 2007. The Deposit Agreement for the CD, signed by JR and Doris, provided, in pertinent part:
In consideration of Financial Institution's agreement to open this account, and other value received by each of the undersigned, the undersigned Depositor (whether one or more) agrees to the terms stated on this form and acknowledges receipt of this Deposit Agreement and (if checked) [x] Truth–In–Savings Disclosure [x] Schedule of Fees and Charges [x] TIN instructions [ ] Funds Availability Disclosure [ ] Substitute Check Policy Disclosure [ ] Electronic Funds Transfer Disclosure [ ] Financial Institution rules and regulations [x] Any separate account agreement [x] Addendum A [x] Addendum B. In the event of any conflict or inconsistency between the terms of any separately receipted document and this Deposit Agreement, the term [sic] of the separately receipted document shall govern and control.... The terms and conditions of all receipted documents are incorporated herein by this reference.
(Emphasis added).
Addendum A, which was not signed by JR or Doris, is a two-page document containing sixteen paragraphs covering various account topics. The first sentence of the “GENERAL PROVISIONS” paragraph provides, “The following printed terms and those on the Deposit Agreement and any separate agreements and disclosures, the terms and conditions of which have been incorporated herein (collectively the “Agreement”), will govern the operation of this account [.]” The “SET–OFF” paragraph provides:
By signing this form, for value received, you each grant to us a security interest in the account and in addition agree that we have the right (without prior notice and when permitted by law) to set-off the funds in this account against any due and payable indebtedness owed to us now or in the future by any of you, either individually or jointly. We may set-off any debt owed to us by any one or more of you without regard to the ownership or source of the funds in the account and without requirement that the debt be owed to us by all of you rather than only some of you. This right of set-off does not apply to this account to the extent restricted or prohibited by law or contract. You agree to hold us harmless from any claim arising from exercise of our right of setoff.
Near the end of 2007, Middleton Bros., Inc., suffered financial difficulties and became insolvent. Shortly thereafter, Bank set off the CD proceeds against the balance due on the note owed by Middleton Bros., Inc., in partial satisfaction of JR's guarantee.
JR and Doris filed this action seeking to recover the CD proceeds. Bank filed a motion for summary judgment on all counts, claiming that its right to set-off as provided in Addendum A to the Deposit Agreement defeated the Middletons' claims.2 The trial court sustained that motion and entered judgment for Bank on all counts in the Middletons' second amended petition. This appeal timely followed.
Our review is essentially de novo. The criteria on appeal for testing the propriety of summary judgment are no different from those which should be employed by the trial court to determine the propriety of sustaining the motion initially. The propriety of summary judgment is purely an issue of law. As the trial court's judgment is founded on the record submitted and the law, an appellate court need not defer to the trial court's order granting summary judgment.
ITT Commercial Fin. Corp. v. Mid–Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993).
In their first point, the Middletons claim that the trial court misapplied the law and that Bank was not entitled to summary judgment as a matter of law because the SET–OFF paragraph in Addendum A required, as a condition to its application, that the Middletons sign Addendum A during the formation of the contract, and it is an uncontroverted fact that they did not sign it. The Bank responds that because Addendum A was incorporated into the Deposit Agreement, which the Middletons signed, they were not required to sign Addendum A for the SET–OFF paragraph to apply. The resolution of this issue hinges upon the meaning of the phrase “this form” as used in the introductory phrase—“By signing this form”—in the SET–OFF paragraph of Addendum A.
The cardinal principle of contract interpretation is to ascertain the intention of the parties and to give effect to that intent. The terms of a contract are read as a whole to determine the intention of the parties...
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