Production Credit Ass'n v. Halverson, 11087

• Decision Date: 13 May 1986
• Docket Number: No. 11087,11087
• Citation: 386 N.W.2d 905
• Parties: PRODUCTION CREDIT ASSOCIATION, Plaintiff and Appellee, v. Donald G. HALVERSON and Lorna G. Halverson, Defendants and Appellants. Civ.
• Court: North Dakota Supreme Court

Page 905

386 N.W.2d 905

PRODUCTION CREDIT ASSOCIATION, Plaintiff and Appellee, v. Donald G. HALVERSON and Lorna G. Halverson, Defendants and Appellants.

Civ. No. 11087.

Supreme Court of North Dakota.

May 13, 1986.

Pearson & Christensen, Grand Forks, for plaintiff and appellee; argued by Douglas A. Christensen.

Kirschner & Baker Legal Clinic, Fargo, for defendants and appellants; argued by Michael J. Garrison.

LEVINE, Justice.

Donald G. and Lorna G. Halverson (hereinafter collectively referred to as Halverson) appeal from a district court summary judgment entered in an action brought by Production Credit Association of Grafton (PCA). We reverse and remand for trial.

Asserting that Halverson was in default under the terms of a 1980 "Basic Loan Agreement" and a 1984 "Supplementary Loan Agreement," PCA sued for a money judgment and an order allowing it to repossess and dispose of farm machinery and equipment in which it asserted a security interest, with an accounting to Halverson of any surplus or an order establishing a deficiency in favor of PCA.

PCA filed an "ex parte motion for an order to show cause re claim and delivery," a "replevin bond and written undertaking," and an affidavit of Harold Becker, a PCA officer. By order of March 20, 1985, the trial court ordered Halverson to show cause on April 9, 1985, "why the Defendants should not be required to assemble the secured collateral and make it available to Plaintiff/secured party, or permit Plaintiff/secured party to repossess said collateral wherever it may be found." The motion, replevin bond and undertaking, affidavit, and order to show cause were served on Halverson on April 3, 1985.

Halverson answered the complaint and filed documents opposing the motion for an order to show cause, Becker's affidavit, and the replevin bond and written undertaking. After the April 9 hearing, the trial court issued an order granting PCA's claim and delivery application and allowing it to repossess and sell the property in which it claimed a security interest.

PCA filed a motion for summary judgment supported by the previously filed Becker affidavit and later supplemented with an affidavit of Keith Rourke. Halverson filed an affidavit in opposition to the motion. After a hearing on June 5, at which Halverson appeared pro se, ¹ an order for summary judgment was entered on June 17, granting PCA a money judgment and authorizing it to sell the collateral in which it had a security interest, and further providing:

"IT IS FURTHER ORDERED in view of the Defndants [sic] having contacted an attorney ... the Court will allow the Defendants fifteen (15) days from June 15th, 1985 for Attorney Kischner [sic] to make written application for the vacation of this Order for Judgment. If said written application is made the Court will schedule another hearing to determine if there are reasons why the Production Credit Association is not entitled to a summary judgment...."

Within the time provided in the order for summary judgment, Michael Garrison, an attorney for Halverson, filed a motion (with a request for a hearing) to vacate the order for summary judgment, a motion to amend Halverson's answer and set up a counterclaim, Halverson's affidavit in support of the motion to vacate, and a demand for jury trial. Briefs on the motions were filed by both parties and considered by the trial court. By order of July 31, 1985, the trial court denied all of Halverson's motions.

Counsel for Halverson filed a motion for a hearing on PCA's motion for summary judgment, Halverson's motion to vacate the order for summary judgment, and Halverson's motion to amend. The trial court issued an order which affirmed the previous order for summary judgment and also ordered dismissal of PCA's action because PCA had repossessed and sold the Halverson collateral, the proceeds from which satisfied PCA's claim. A judgment of dismissal was entered and Halverson appealed.

Halverson contends that the trial court erred: (1) in granting PCA's motion for summary judgment; (2) in denying Halverson's motion to amend his answer and his demand for jury trial; and (3) in granting PCA possession of Halverson's machinery and equipment under the claim and delivery statute.

I.

Whether this action was properly disposed of by summary judgment depends upon a showing of "no genuine issue as to any material fact" and "that any party is entitled to a judgment as a matter of law." Rule 56(c), N.D.R.Civ.P.

"A motion for summary judgment may be granted only if, after considering the evidence and inferences in the light most favorable to the party against whom the judgment is demanded there is no genuine issue of any material fact and the moving party is entitled to judgment as a matter of law. St. Paul Fire & Marine Insurance Co. v. Amerada Hess Corporation, 275 N.W.2d 304 (N.D.1979); Albers v. NoDak Racing Club, Inc., 256 N.W.2d 355 (N.D.1977)." Latendresse v. Latendresse, 294 N.W.2d 742, 748 (N.D.1980).

Under the terms of the June 17 order for summary judgment, the trial court would, upon application, "determine if there are reasons why the Production Credit Association is not entitled to a summary judgment." The only burden upon Halverson to preclude summary judgment was to raise a genuine issue of material fact. We believe Halverson did that.

In his June 18, 1985 affidavit in support of his motion to vacate the order for summary judgment, Halverson stated: (1) that he had been doing business with PCA since approximately 1972; (2) that in March 1980 he borrowed funds from PCA pursuant to a basic loan agreement and a supplementary loan agreement which, like subsequent supplementary loan agreements executed in early 1981 and 1982, required yearly payment of all accrued interest and 15 percent of the principal balance existing at the effective date of the supplementary loan agreement; (3) that in November 1982 he informed Harold Becker, a PCA officer, that he had funds to pay on the loan but would need in excess of $50,000 of those funds in March 1983 for a payment due Federal Land Bank; (4) that Becker represented that if Halverson used that money to reduce the PCA loan balance, PCA would advance funds for the payment to Federal Land Bank under the terms of the prior agreements requiring repayment of only 15 percent of the principal per year; (5) that Becker advised him to reduce the PCA balance to five or ten dollars but not to repay the loan in full, so that the previous agreements relating to 15 percent principal payments would apply; (6) that, in reliance on Becker's representations, Halverson reduced his PCA loan balance to five dollars by prepaying in excess of $100,000; (7) that PCA did advance the funds for the payment to Federal Land Bank; (8) that thereafter PCA would not honor the previous agreements providing for 15 percent principal payment each year but required Halverson to execute supplementary loan agreements in 1983 and 1984 that required repayment of 100 percent of principal each year, which Halverson had no choice but to execute because he had paid Federal Land Bank with the funds advanced by PCA; (9) that he detrimentally relied on PCA's representations with no knowledge of the true facts relating to terms and conditions of future loans; (10) that PCA has not acted in good faith; and (11) that PCA's breach of the earlier agreement, its misrepresentations, Halverson's detrimental reliance thereon, PCA's changes in the terms of the 1983 and 1984 loans, and increasing the repayment of loan principal from 15 percent per year to 100 percent per year caused Halverson to have less funds to finance his farming operation and that the combination of less funds and a shorter time within which to repay principal caused his financial difficulties, including his inability to repay the 1984 PCA loan. The matters raised in Halverson's affidavit were also raised in his proposed amended answer and counterclaim.

Upon considering Halverson's affidavit in the light most favorable to him, we conclude that genuine issues of material fact do exist precluding disposition of the action by summary judgment. It appears to us that Halverson has raised genuine issues as to material facts with regard to fraud, estoppel, breach of PCA's contractual obligation of good faith, and possibly other matters as well. ² See, e.g., Yankton Production Credit Ass'n v. Larsen, 219 Neb. 610, 365 N.W.2d 430 (1985); First National Bank in Libby v. Twombly, 689 P.2d 1226 (Mont.1984); O'Connell v. Entertainment Enterprises, Inc., 317 N.W.2d 385 (N.D.1982); Verry v. Murphy, 163 N.W.2d 721 (N.D.1968). Because Halverson raised genuine issues as to material facts precluding summary judgment, we reverse the summary judgment.

II.

By its order of July 31, 1985, the trial court, in addition to denying Halverson's motion to vacate the previous order for summary judgment, denied Halverson's motion to amend his answer and set up a counterclaim, and his demand for trial by jury. No reasons for the denials were stated in that order. "Denial based only upon the determination that summary judgment was proper would have been erroneous." First State Bank of Buxton v....