Shimsky v. Valley Credit Union, 83-223

Decision Date22 March 1984
Docket NumberNo. 83-223,83-223
Citation676 P.2d 1308,208 Mont. 186,41 St.Rep. 258
PartiesPatrick F. SHIMSKY and Eileen F. Shimsky, husband and wife, Plaintiffs and Appellants, v. VALLEY CREDIT UNION, a credit union organized under the laws of the State of Montana, Defendant and Respondent.
CourtMontana Supreme Court

Howard F. Strause, Lawrence A. Anderson (argued), Great Falls, for plaintiffs and appellants.

Herndon, Harper & Munro; Donald R. Herndon (argued), Billings, for defendant and respondent.

HARRISON, Justice.

This case involves allegations of violations of the Truth in Lending Act and breach of contract in relation to an "open ended" financing arrangement. This appeal is taken from the District Court order dismissing appellants' complaint and granting respondent's motion for summary judgment.

On January 10, 1979, appellant Patrick F. Shimsky obtained a $5,500 loan from respondent (hereinafter Credit Union) by means of an open ended revolving credit plan. The annual percentage rate on the outstanding balance was 12%, and the agreement provided for minimum monthly payments. The language which gave rise to this dispute is found in paragraphs two and thirteen of the agreement, which provide:

"2. the credit union reserves the right to amend or terminate this agreement or refuse any request for an advance at any time for any reason not prohibited by law and such action shall not affect the obligations of the undersigned or any other obligor.


"13. Undersigned agrees that (a) the credit union may retain this agreement to comply with federal and/or state law and (b) in compliance with applicable law, regulation and this agreement the credit union may change the terms of the plan from time to time upon prior notice mailed to the undersigned's last known address as shown on the records of the credit union."

Pursuant to these provisio, the Credit Union mailed a "Notice of Amendment to Revolving Credit Plan" to appellant in June of 1979, to be effective July 15, 1979. The notice generally stated that the Credit Union was raising the annual percentage rate from 12% to 15%, and gave appellant a choice of adhering to the new provisions of the contract or making payment in full on July 15, 1979. Appellant made monthly payments of $165 from August 1979 through October 1981 reducing the outstanding balance to less than $300. This action was filed on October 20, 1981.

Two causes of action were asserted in the complaint; first, alleged violations of the Federal Truth in Lending Act, and second, a breach of contract for unilaterally raising the interest rate in contravention of the agreement. The Credit Union generally denied both claims, and affirmatively plead novation, estoppel, waiver, laches and statute of limitations.

The Credit Union then moved for summary judgment on the grounds that as a matter of law appellant's Truth in Lending claim was barred by the statute of limitations. Briefs were filed and oral arguments heard on the motion. The Court dismissed the complaint on the ground that the truth in lending claim was barred by the statute of limitations. An extensive memorandum in support of its order was filed by the court in which the Truth in Lending statute of limitations was discussed in depth. However, the breach of contract claim was not mentioned in the memorandum. In any event the complaint was dismissed in its entirety.

On appeal, appellant seeks review only of the District Court's dismissal of the breach of contract claim, conceding that the Truth in Lending claim is barred by the statute of limitations. The issues raised deal with the propriety of the summary judgment in two aspects. He first contends the District Court improperly applied the Truth in Lending statute of limitations to the breach of contract claim, and second, that there were genuine issues of material fact so as to preclude summary judgment.

We note that this case was disposed of below on motion for summary judgment. The trial judge sat without a jury and no testimony was taken, as the facts are relatively uncontested. The scope of review in such a case is much broader than in other appeals, as this Court is free to make its own examination of the entire case and to make a determination in accordance with its findings. Steadman v. Halland (Mont.1982), 641 P.2d 448, 39 St.Rep. 343; citing In re Estate of Jensen (1969), 152 Mont. 495, 452 P.2d 418; and Kostbade v. Metier (1967), 150 Mont. 139, 432 P.2d 382. We will also uphold the result reached below if correct, regardless of the reasons given for the conclusion. Steadman, supra, citing Spaeth v. Emmett (1963), 142 Mont. 231, 383 P.2d 812; and Johnstone v. Sanborn (1960), 138 Mont. 467, 358 P.2d 399.

We further note that this case sounds in equity. Traditionally, breach of contract claims, which is the only claim still pursued here, have been classified as actions at law. See McClintock, Equity section 60 (2d Ed.1948). Specifically actions for breach of contract to lend money have been classified as actions at law. See McClintock, supra, section 60 at p. 156-7. However appellant's argument below was that the contract was illusory and thus void. On appeal he contends that the contract was void and illusory for lack of mutuality, and that the Credit Union's interpretation of the contract renders the contract unconscionable requiring it to be voided or reformed. These claims are tied to the breach of contract theory by appellant arguing that these problems have placed the Credit Union in breach of the contract provisions which allow amendment, "[I]n compliance with applicable law..." In addition, the Credit Union raised the equitable defenses of estoppel, waiver and laches. These requests are of an equitable nature and invoke the Court's equity power.

When reviewing cases of an equitable nature,

"[T]he supreme court shall review all questions of fact arising upon the evidence presented in the record, whether the same be presented by specifications of particulars in which the evidence is alleged to be insufficient or not, and determine the same, as well as questions of law, unless for good cause a new trial or the taking of further evidence in the court below be ordered." Section 3-2-204(5), MCA.

The peculiar circumstances of this appeal show the need for such a broad standard; the legal theory primarily relied on below by appellant has been conceded on appeal, and the issues presented for review relate to a legal theory which was barely touched by the District Court. In the lower court appellant's main legal theory involved alleged violations of the Truth in Lending Act. Appellant pursued the Truth in Lending claim vigorously, filing numerous briefs, discovery motions and seeking certification of the lawsuit as a class action. When the Credit Union filed its motion for summary judgment, appellant filed additional briefs and argued orally against the motion. After the hearing, appellant filed a post hearing memorandum further arguing his position. However in his zeal pursuing the Truth in Lending claim, the breach of contract claim seems to have been put on the back burner.

Throughout the various briefs and motions filed by appellant, little mention is made of the breach of contract claim. Some argument was made that the contract was illusory and thus void, but any...

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