Provence v. Hilltop Nat. Bank
| Citation | 780 P.2d 990 |
| Decision Date | 10 October 1989 |
| Docket Number | No. 89-82,89-82 |
| Parties | Forrest W. PROVENCE and Shirley J. Provence, Appellants (Plaintiffs), v. HILLTOP NATIONAL BANK, Appellee (Defendant). |
| Court | United States State Supreme Court of Wyoming |
Donald L. Painter, Casper, for appellants.
Richard E. Day and Richard L. Williams of Williams, Porter, Day & Neville, P.C. and Manuel A. Lojo, Casper, for appellee.
Before CARDINE, C.J., THOMAS, URBIGKIT and MACY, JJ., and ROONEY, J., Retired.
The Central Wyoming Livestock Exchange, Inc. of Glenrock, Wyoming (Livestock Exchange), a corporation in which Forrest W. and Shirley J. Provence (Provences) were major stockholders and personal secured guarantors by mortgage of their home, failed to repay the Hilltop National Bank (Hilltop Bank) loan. The Hilltop Bank assigned the collateral to the Small Business Administration (SBA) in utilization of the SBA 90% loan guarantee, following which the SBA called the loan and foreclosed including the individual Provence collateral which had been pledged for the business loan. Milton L. Keim (Keim) had, subsequent to the initial loan origination and closing, also executed a payment guarantee on the loan. After the foreclosure, the Provences sued the Hilltop Bank for monetary damages claiming negligence and breach of agreement for loss of We affirm.
their home when they were not given a mortgage release in exchange for the Keim guarantee which was provided. 1 The district court granted summary judgment to the Hilltop Bank from which the Provences appeal
The Provences frame the issue presented to this court by asking "[w]hether the District Court erred in granting summary judgment to Defendant on Plaintiffs' claim of estoppel." A question of law?
The Hilltop Bank frames the issue presented to this court by asking whether "the Trial Court [was] correct in its ruling that there was no agreement between Appellants Provence and Appellee Hilltop National Bank to release the Appellants' residence mortgage solely upon the receipt of the personal guaranty of Mr. Keim?" A question of fact?
The Hilltop Bank more inclusively claims the issue it presents must be answered first because the estoppel claim and supporting argument advanced by the Provences presupposes an agreement exists. The argument suggests that if there was no agreement between the Provences and the Hilltop Bank which called for the release of the Provence collateral upon the receipt of Keim's personal guarantee, then the Provences' theory of estoppel is without supportable foundation. The Hilltop Bank asserts it breached no agreement, had no duty (or right) to release the Provence collateral and is not subject to liability for violated estoppel since the right of decision rests with the guarantor, the United States agency--the SBA.
The transaction is a business loan for a livestock enterprise in Glenrock, Wyoming with a 90% guarantee by the SBA and cross-collateralized by guarantees and security which, at default date, included the following:
A. Collateral
1. First mortgage on commercial property (44 acres-Glenrock and improvements).
2. First mortgage on Provence residence (4955 Skyline Road-Casper).
3. Third mortgage on Steffensmeier residence (1400 Sunlight Drive-Casper).
4. First perfected Financing Statement/Security Agreement.
B. Co-borrowers or guarantors.
Forrest W. Provence and wife--co-borrowers
Marvin Steffensmeier and wife--co-borrowers
Milton Keim--personal guaranty.
Originally, the Provences and Marvin and Carolyn Steffensmeier (Steffensmeiers) owned equal amounts of stock in the Livestock Exchange in their negotiation in behalf of that business with the Hilltop Bank as originating lender to obtain an SBA guaranteed loan of $650,000. In order to complete the loan agreement (Proposal # 1), the Hilltop Bank, in conjunction with the co-borrowers, successfully approached the SBA to obtain the 90% guarantee which, within prudent lending criteria, made the loan possible for the Hilltop Bank. In return for the SBA guarantee, the Provences and the Steffensmeiers executed the negotiated loan promissory note of $550,000 and gave mortgages encumbering their homes. In accord with normal business practices for the SBA loan arrangement, the note and security were executed in favor of the Hilltop Bank. There was in addition the basic three-party agreement encompassing the SBA guarantee which is contained within the SBA loan authorization and sets the terms of borrowing and conditions for assignment to the SBA upon payment default and lender request for the agency to honor its 90% guaranteed amount.
Within a month following loan closing, Keim additionally became involved in the venture. He notified the Hilltop Bank in a letter acknowledged by the Provences and the Steffensmeiers that he had agreed to purchase the Provences' stock in the Livestock Exchange and asked the Hilltop Bank to release the collateral pledged by the Provences. In exchange, he would provide "a first mortgage on a commercial office building, a second mortgage on [his] personal residence, and [he] and [his] wife's personal guaranties of all indebtedness at the bank". One day later and as a gesture of "good faith" before leaving on a vacation, Keim signed a personal guaranty to the Hilltop Bank for the Livestock Exchange's indebtedness. Apparently, a down payment was made on his investment in the business which was to be $100,000.
Recognizing the SBA would have to approve any modification to the agreement if the modified loan was to continue to be guaranteed, the Hilltop Bank wrote to the SBA to review and approve the Keim-Provence-Steffensmeier proposal. On March 22, 1985, the SBA approved this proposal (Proposal # 2) which called for the release of the security provided by the Provences upon Keim assuming the Provences' obligations and giving mortgages on his residence and business property as collateral for the indebtedness. The exchange, substitution and transfer was scheduled to take place on March 27, 1985, but before that closing date, Keim advised that the terms of his involvement had to be changed since his wife would sign neither the guarantee nor the home mortgage. Consequently, he could not provide the collateral necessary to complete Proposal # 2. 2
On March 28th, Keim, Provence, and Steffensmeier advised the SBA and the Hilltop Bank that Proposal # 2 would be modified. In this new proposal (Proposal # 3), there would be a new mix of obligations, collateral and stock ownership. Under Proposal # 3, the three men would each own one-third of the stock. This proposal was not accepted by either the SBA or the Hilltop Bank. The only legally enforceable agreement at this point was the original loan agreement (Proposal # 1) found in the SBA loan authorization, which continued to include the additional security of Keim's personal guarantee. Only too soon thereafter, the loan went into default and all collateral was assigned by the Hilltop Bank to the SBA. The SBA withdrew approval of the noncompleted modification and foreclosed on the collateral used to secure the loan, including the Provences' home.
After their home had been foreclosed by the SBA, the Provences brought suit against the Hilltop Bank claiming it negligently failed to release or obtain the release of their collateral, breached an agreement to obtain the release of that collateral and breached a duty to obtain the release of that collateral. The Hilltop Bank's success by summary judgment dismissal of the complaint presents the case for appellate review. Springs Industries, Inc. v. Kris Knit, Inc., 880 F.2d 1129 (9th Cir.1989).
In consideration of the divergent phraseology of the issues by the litigants, this court must first determine whether the appeal presents an argument about the existence of an issue of fact, Davenport v. Epperly, 744 P.2d 1110 (Wyo.1987); Cordova v. Gosar, 719 P.2d 625 (Wyo.1986) (), or whether with a determined factual record, a legal issue which was presented was properly decided by the trial tribunal, Cordova, 719 P.2d 625 (stage five). For the issue of fact review, summary judgment is proper if the party awarded the judgment met the burden of proof to demonstrate there was no genuine issue of material fact. Summary judgment as a process is also proper when the parties agree as to the material facts, since without an issue of material fact, the decision would properly be submitted to the court for decision as a matter of law. Material facts establish or refute the elements needed in a cause of action brought by the plaintiff or in the defense raised by the defendant. Cordova, 719 P.2d at 634-40; Garner v. Hickman, 709 P.2d 407, 410 (Wyo.1985) (accord Dudley v. East Ridge Development Co., 694 P.2d 113 (Wyo.1985)). Material facts are the basis for and are therefore different from legal conclusions,...
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