Sturman v. First Nat. Bank, 86-117

• Decision Date: 11 December 1986
• Docket Number: No. 86-117,86-117
• Citation: 729 P.2d 667
• Parties: Janice L. STURMAN, Appellant (Defendant), v. FIRST NATIONAL BANK, Torrington, Wyoming, Appellee (Plaintiff).
• Court: Wyoming Supreme Court

Page 667

729 P.2d 667

Janice L. STURMAN, Appellant (Defendant), v. FIRST NATIONAL BANK, Torrington, Wyoming, Appellee (Plaintiff).

No. 86-117.

Supreme Court of Wyoming.

Dec. 11, 1986.

Maren K. Felde and Roger C. Elletson of Elletson, Doby and Felde, Cheyenne, for appellant.

Michael E. Warren of Sawyer, Warren & Kautz, Torrington, for appellee.

Before THOMAS, C.J., and BROWN, CARDINE, URBIGKIT and MACY, JJ.

MACY, Justice.

First National Bank of Torrington, appellee, filed an action to recover certain secured property pursuant to the terms of six promissory notes, two security agreements, and a financing statement signed by Janice Sturman, appellant. Following several hearings on the matter, the district court granted summary judgment for the bank. From that judgment, appellant now appeals to this Court.

We affirm.

Since 1971, the bank has financed the operations of the Sturman ranch in Goshen County, Wyoming. Between April 30 and September 10, 1985, following her husband's death, appellant obtained credit from the bank on six separate occasions. As evidenced by six promissory notes, appellant agreed to repay the principal amount of the loans, $205,900, plus interest by November 30, 1985. The notes also provided that the loans were secured by all of appellant's livestock, feed, machinery, equipment, and crops. As evidence of the bank's secured interest in her property, appellant also signed two security agreements and a financing statement. The security agreements provided in part that:

"[I]f any attempt shall be made to sell the collateral or remove the same from [Goshen] [C]ounty without the written consent of the Secured Party or its assigns, or if at any time Secured Party or its assigns reasonably deem themselves insecure or unsafe, then Secured Party or its assigns, at its option, may declare the obligations immediately due and payable * * *."

On November 7, 1985, the bank filed a complaint for replevin and a motion for prejudgment seizure. In support thereof, the bank filed affidavits alleging that it had a secured interest in approximately 200 head of cattle belonging to appellant, that it believed the cattle were being weighed in preparation for sale to a Kansas buyer, and that pursuant to the security agreements and § 1-34-103, W.S.1977, it was entitled to possession of the cattle. The district court entered an order for delivery of the property, commanding the sheriff of Goshen County to stop the sale and take possession of the cattle. Pursuant to § 1-34-103 et seq., the matter was set for hearing.

At the hearing on November 13 and 15, 1985, the district court found that there was probable cause to believe that appellant was preparing to sell or remove the secured livestock with the intent to hinder or delay the bank in the collection of the amounts owed. The court also found that probable cause existed to believe that the remaining secured property might be sold and that the proceeds from such sale would not be applied to the promissory notes. In an order filed November 25, 1985, the court directed the sheriff to take possession of the secured property remaining in appellant's possession and authorized the bank to proceed in its replevin action. On the same day, the bank filed a request for issuance of a writ of attachment and a motion for an order to show cause why appellant should not be held in contempt of court. In support of its motion to show cause, the bank filed an affidavit alleging that appellant violated the court's order directing her to deliver the secured livestock remaining in her possession by filing a labor and feed lien on the livestock and demanding payment of the lien from the bank in the amount of $475,550. On November 25, 1985, the district court entered an order directing appellant to appear on December 5 to show cause why she should not be held in contempt. In support of its request for the issuance of a writ of attachment, the bank filed an affidavit alleging that appellant had deposited $42,000 in Rocky Mountain Federal Savings & Loan Association in Torrington, which sum was subject to attachment. The bank also requested that a writ of garnishment issue to Rocky Mountain Federal. Pursuant to §§ 1-15-102 and 1-15-110, W.S.1977, the district court issued an order of attachment against the property and estate of appellant and a writ of garnishment directing the sheriff to serve a garnishee notice and summons on Rocky Mountain Federal.

On November 27, 1985, appellant filed a petition for a temporary restraining order and preliminary injunction in which she requested that the bank be restrained from attaching or garnishing assets outside the scope of the court's prejudgment attachment order. Among the assets claimed to be outside the scope of the order were $10,000 in Veteran's benefits and $2,400 held in trust for the United Church of Christ. In addition, on December 4, 1985, appellant filed a motion to discharge the writs of attachment and garnishment. After a hearing on December 11, 1985, the district court found:

"1. [The bank's] Writs of Attachment and Garnishment filed herein are valid and [appellant's] petition for temporary restraining orders and motions to quash the Writs of Attachment and Garnishment are denied.

"2. The attachment and replevin bonds filed by the [bank] are sufficient pursuant to W.S. § 1-34-107.

"3. [Appellant's] claimed exemption of $10,000.00 for Veteran's benefits is denied on the basis that [she] failed to establish that funds on deposit in the Rocky Mountain Federal Savings & Loan were 'Veteran[']s benefits'.

"4. [Appellant's] claimed exemption of $2,400.00 for certain funds held in trust for the United Church of Christ is denied on the basis that no evidence that a trust was ever established was presented to the Court.

"5. The [labor and feed] lien filed by [appellant] pursuant to Wyo.Stat. § 29-7-102 is invalid."

The question of appellant's remaining liability to the bank was then set for trial. On December 16, 1985, appellant filed her answer and counterclaim in which she denied the allegations set forth in the bank's complaint. In addition, appellant raised two affirmative defenses: (1) failure of consideration in that the bank did not actually lend her money but simply made a credit entry in its books, and (2) fraud in that the bank had made false and misleading statements since 1971 in order to cause her and her husband to enter into loan arrangements detrimental to their interests. Appellant also counterclaimed against the bank for fraud, deceit and misrepresentation, failure of consideration, bad faith in contract, bad faith in tort, intentional interference with a contractual relationship, conversion, and intentional infliction of emotional distress. She later amended her answer to include the additional counterclaim of wrongful replevin and garnishment. In its reply, the bank generally denied appellant's claims and raised the affirmative defense that her counterclaim failed to state a claim and was frivolous as a matter of law. On January 21, 1986, the bank moved the district court to enter summary judgment on its complaint. Appellant filed a resistance to the bank's motion for summary judgment. In support thereof, she filed a memorandum of law, eight affidavits, three depositions, and a number of exhibits. A hearing on the motion was held February 17, 1986, and on March 24, 1986, the court entered summary judgment for the bank. With respect to the bank's complaint and appellant's counterclaim, the district court found as follows:

"1. [Appellant] executed and delivered to the First National Bank, Torrington, Wyoming, ('Bank') six (6) promissory notes dated April 30, 1985, May 15, 1985, June 24, 1985, July 11, 1985, August 7, 1985, and September 10, 1985, in the total amount of $205,900.00 and as of March 18, 1986, after crediting net proceeds from sale of assets secured to the Bank, there remained due and owing to the Bank on said promissory notes the sum of $65,223.55 in principal and interest, together with attorney fees and costs to January 21, 1986, in the amount of $13,813.34, for a total sum of $79,036.89, which is due and owing to [the Bank] from [appellant].

"2. [Appellant's] affirmative defenses and counterclaims interposed in this action are without merit, present no genuine issue as to any material fact to support [appellant's] contentions and such counterclaims should be dismissed with prejudice."

On the basis of these findings, the court ordered in relevant part:

"A. That [the bank] have and recover judgment against [appellant] in the sum of $79,036.89 as of this date;

"B. That [appellant's] counterclaims be and the same are hereby dismissed with prejudice; and

"C. That the Clerk of Court shall release [the bank's] replevin bond and return all money the [bank] has posted and the [bank] is hereby released from any and all liability resulting from its replevin action."

On appeal from that judgment, appellant raises the following issues:

"I. A CONFLICT OF INTEREST EXISTS BETWEEN THE APPELLEE'S ATTORNEY AND THE APPELLANT.

"II. THE PREJUDGMENT ATTACHMENT AND GARNISHMENT STATUTES WERE UNCONSTITUTIONALLY APPLIED TO JANICE STURMAN IN VIOLATION OF HER CONSTITUTIONAL RIGHTS OF DUE PROCESS AND EQUAL PROTECTION.

"III. APPELLEE WAS GRANTED SUMMARY JUDGMENT PURSUANT TO RULE 56 OF THE WYOMING RULES OF CIVIL PROCEDURE. THAT SAID SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED BASED ON THE EXISTENCE OF GENUINE ISSUES OF MATERIAL FACT AND APPELLEE WAS NOT ENTITLED TO JUDGMENT AS A MATTER OF LAW."

I

The attorney representing the bank in this action against appellant is also a member of the bank's loan committee and board of directors. At the November 13 and 15 hearing, appellant contended, as she does before this Court, that, as a member of the board of directors, counsel's primary duty is to protect the bank's depositors. According to appellant, counsel cannot satisfy his duty to the bank's depositors if he is...