Undem v. First Nat. Bank, Springdale, Ark.

• Decision Date: 15 June 1994
• Docket Number: No. CA,CA
• Citation: 879 S.W.2d 451,46 Ark.App. 158
• Parties: Obert M. UNDEM, Appellant, v. FIRST NATIONAL BANK, SPRINGDALE, ARKANSAS, Appellee. 93-423.
• Court: Arkansas Court of Appeals

Page 451

879 S.W.2d 451

46 Ark.App. 158

Obert M. UNDEM, Appellant, v. FIRST NATIONAL BANK, SPRINGDALE, ARKANSAS, Appellee.

No. CA 93-423.

Court of Appeals of Arkansas,

En Banc.

June 15, 1994.

David D. Stills, John C. Everett, Fayetteville, for appellant.

Charles L. Harwell, Springdale, for appellee.

ROGERS, Judge.

Obert M. Undem appeals from a summary judgment for appellee, First National Bank of Springdale, in an action on a promissory note. We agree with appellant that genuine issues of material fact remained to be tried, and reverse and remand.

On May 22, 1989, Joe B. Morris, Sr., C. Thomas Pearson, Jr., Floyd Harris, George Williams, Marjorie Niblock, Vincent Morris, and appellant signed a promissory note in the amount of $250,000.00 to appellee. This note stated that the loan's purpose was to benefit the holding company of Northwest National Bank and had a maturity date of August 22, 1990. On May 31, 1989, Madelyn Harris, Walter Niblock, Marjorie Niblock, Susan Morris, and Delores Williams signed guaranties for this debt.

On August 22, 1990, George Williams, Marjorie Niblock, C. Thomas Pearson, Jr., Floyd Harris, Vincent Morris, and Joe Morris signed extension agreements for the unpaid balance on the note. Appellant did not sign an extension agreement.

On February 28, 1992, appellee sued the parties to the note, guaranties, and extension agreements for the remaining balance due on the note. In his answer to the complaint, appellant admitted signing the note but stated that he had done so in reliance on the representations of Virginia T. Morris, whom he characterized as appellee's agent. He stated that he had signed the note on Virginia Morris' assurances and representations that appellant's liability on the note would be totally eliminated upon the termination of his membership on the board of directors of Northwest National Bank and its holding company, Northwest Bancorporation of Arkansas, Inc. He alleged that Virginia Morris had agreed to provide documentation of this agreement but did not do so. Appellant stated that he had not been re-elected as a director of Northwest National Bank or Northwest Bancorporation at their respective annual meetings in March 1990. Appellant argued that the renewal of the note on August 22, 1990, without his signature released him from liability on the note. Appellant also claimed fraud and argued that appellee should be estopped from asserting its claim against him.

Appellee moved for summary judgment and, in support, filed the affidavit of Jack Erisman, appellee's vice president, who had handled the transaction involved in this lawsuit. In his affidavit, Mr. Erisman stated that appellee had not given appellant any written or oral release of liability on the note. In response, appellant argued that genuine issues of material fact regarding release, waiver, estoppel, and agency remained for trial. Appellant also filed an affidavit in which he stated:

3. That on or about May 22, 1989, and specifically prior to my execution of the promissory note that is the subject of this cause of action, Virginia Morris stated to me that the plaintiff, First National Bank, had engaged her personally to obtain the signatures of each defendant on the promissory note, and that the various documents presented to me by Virginia Morris contained both the name and logo of the First National Bank, and appeared to have been prepared by the plaintiff.

4. That prior to my execution of the promissory note and after having stated to me that she had been engaged by the plaintiff, to obtain my signature on the promissory note, Virginia Morris, as an agent of the plaintiff, First National Bank, represented directly to me that my liability on the promissory note would be nominal only, that I would be relieved from any liability on the promissory note in the event my membership on the Board of Directors of Northwest National Bank and its holding company, Northwest Bancorporation of Arkansas, Inc., was terminated; and that the plaintiff, First National Bank would not hold me liable on the promissory note thereafter.

5. That in January of 1990, I was not nominated for re-election as a member of the Board of Directors of First National Bank, and its holding company, Northwest Bancorporation of Arkansas, Inc. at the request of Virginia T. Morris since I had not agreed to increase my small investment in stock of either of these corporations.

On February 3, 1993, appellee filed a satisfaction of judgment, stating that it had received $275,977.80. On February 11, 1993, the circuit court granted summary judgment to appellee in the amount of $275,977.80 against the defendants, jointly and severally. The court also found that the total amount of the judgment had been paid to appellee by fewer than all of the defendants and that those defendants who had contributed toward satisfaction of the judgment desired an order of contribution against those who had not contributed a pro rata share. The court held that, contribution being a matter cognizable in equity, the action would be transferred to the Washington County Chancery Court for the purpose of determining the rights of contribution among the defendants. It is from the entry of this summary judgment for appellee that appellant has appealed.

Summary judgment should be granted only when a review of the pleadings, depositions, and other filings reveals that there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. Watts v. Life Ins. Co. of Ark., 30 Ark.App. 39, 41, 782 S.W.2d 47 (1990). When the movant makes a prima facie showing of entitlement, the respondent must meet proof with proof by showing a genuine issue as to a material fact. Wyatt v. St. Paul Fire & Marine Ins. Co., 315 Ark. 547, 551, 868 S.W.2d 505 (1994). In appeals from the granting of summary judgment, we review facts in a light most favorable to the appellant and resolve any doubt against the moving party. Wilson v. Gen. Elec. Capital Auto Lease, Inc., 311 Ark. 84, 86-87, 841 S.W.2d 619 (1992); Thomas v. Sessions, 307 Ark. 203, 205, 818 S.W.2d 940 (1991).

Appellant argues that a genuine issue of material fact remained in regard to fraud, misrepresentation, agency, and estoppel. In short, appellant argues that the bank's purported agent, Virginia Morris, fraudulently induced appellant to sign the promissory note. Appellant also argues that appellee should be estopped because it had made it possible for Mrs. Morris to perpetrate fraud against appellant.

Appellant's fraudulent inducement argument regarding the execution of the note rests upon Mrs. Morris' status as an agent for appellee. The relation of agency is created as the result of conduct by two parties manifesting that one of them is willing for the other to act for him subject to his control, and that the other consents to so act. First Commercial Bank v. McGaughey Bros., Inc., 30 Ark.App. 174, 177, 785 S.W.2d 236 (1990). Ordinarily, agency is a question of fact to be determined by the jury; but where the facts are undisputed, and only one inference can be reasonably drawn from them, it becomes a question of law. Id.

Additionally, whether an agent is acting within the scope of his actual or apparent authority is a question of fact for the jury to determine. Henry v. Gaines-Derden Enters., Inc., 314 Ark. 542, 551, 863 S.W.2d 828 (1993). In Hawthorne v. Davis, 268 Ark. 131, 133, 594 S.W.2d 844 (1980), the supreme court stated that circumstantial evidence may be sufficient to establish agency, and the declarations of the purported agent may be used to corroborate other evidence of agency.

The dissent argues that appellant has produced insufficient facts of agency to withstand summary judgment and bases this argument on the rule of law that apparent agency cannot be founded solely on assertions made by the alleged agent; there must be some form of holding out or representation by the alleged principal. See Arkansas Poultry Fed'n Ins. Trust v. Lawrence, 34 Ark.App. 45, 805 S.W.2d 653 (1991). The...