Waddell v. Dewey County Bank, No. 17305

• Court: South Dakota Supreme Court
• Writing for the Court: AMUNDSON; MILLER
• Citation: 471 N.W.2d 591
• Docket Number: No. 17305
• Decision Date: 24 April 1991
• Parties: Dick WADDELL, Plaintiff and Appellant, v. DEWEY COUNTY BANK, a state banking corporation; Mabsco Agricultural Services Corp., a corporation; and Rabobank of the Netherlands, a foreign banking corporation, Defendants and Appellees. . Considered on Briefs

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471 N.W.2d 591 Dick WADDELL, Plaintiff and Appellant,
v.
DEWEY COUNTY BANK, a state banking corporation; Mabsco
Agricultural Services Corp., a corporation; and
Rabobank of the Netherlands, a foreign
banking corporation,
Defendants and
Appellees. No. 17305. Supreme Court of South Dakota. Considered on Briefs April 24, 1991.
Decided June 12, 1991.

Jeff Masten of Masten & Fox Canton, for plaintiff and appellant.

Brent A. Wilbur of May, Adam, Gerdes & Thompson, Pierre, for defendant and appellee, Dewey County Bank.

AMUNDSON, Justice.

Dick Waddell (Waddell) appeals from a decision of the trial court granting summary judgment to Dewey County Bank (Bank) on Waddell's claim for breach of fiduciary duty. We affirm.

FACTS

Waddell is a life-long rancher who has operated on a large scale basis near Isabel, South Dakota. For the majority of his ranching career, Waddell obtained financing through the First National Bank of Lemmon, South Dakota, where he maintained an operating line of credit which varied from approximately $1.0 million per year to $1.4 million per year. In anticipation of retirement, Waddell sold much of his land on contracts for deed in 1981, and sold his farm machinery in 1982. He then paid all his debts at the First National Bank in Lemmon and transferred his personal account to Dewey County Bank. Shortly thereafter, the purchasers on the contracts for deed defaulted, and Waddell reacquired the ranch land and began operating the ranch once again to satisfy outstanding mortgages on the property.

In 1984, Waddell sought and obtained a one-year operating loan from Bank for approximately $1.3 million to cover operating expenses and for debt retirement. At that time, Bank had a legal lending limit of approximately $250,000. Waddell testified that he was aware of this lending limit, and that Bank contacted him when a participating bank was located which would handle the portion of the operating loan which exceeded Bank's legal lending limit. Bank, working with an agricultural credit service called Mid-American Agricultural Services, Inc. (MASI), an arm of Mid-America Banking Services Company (MABSCO), secured Rabobank of the Netherlands (Rabobank), a foreign banking corporation, to fund Waddell's 1984 operating loan. ¹ In doing so, Rabobank became the participating bank, funding that portion of Waddell's 1984 operating loan in excess of Bank's legal lending limit.

Waddell claimed that Bank did not tell him any of the details surrounding the participation of the loan, including the alleged experimental nature of the participation agreement, and that the transaction was structured as a series of one-year notes. At his deposition, however, Waddell admitted that he knew, and Bank made him aware, that each year's operating loan was a separate transaction, that he would have to renegotiate an operating loan for each succeeding year, that the loan funding provided by Rabobank did not extend past the one-year period of the operating loan, and that he was never promised by either Bank, MASI, MABSCO, or Rabobank that he

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would receive another loan for the next year's operation.

In 1985 and 1986, Waddell continued to obtain over-line financing for the operation of his ranching business, and made his payments in a timely manner. In late 1986, Waddell again applied for an operating loan to fund the next year's operation. In December 1986, Bank informed Waddell that his loan application had been turned down by MABSCO and the secondary lender, Rabobank. Bank had been advised that the loan was turned down because Rabobank was no longer permitted to use real estate mortgages to partially collateralize loans, however, Bank had no prior notice that there had been a change in the credit criteria utilized by MABSCO and Rabobank. After learning that Rabobank would not participate in the over-line loan to Waddell, Bank sought another financial institution to participate in the loan to Waddell. However, Bank was unable to find a financial institution with sufficient lending authority that was willing to finance the over-line loan on such short notice. Bank has continued to finance Waddell's operation, by lending him the maximum amount allowed under the law.

Waddell commenced this suit in 1989, alleging, inter alia, that Bank had breached a fiduciary duty to him, breached an implied covenant of good faith and fair dealing, breached a contract with him, and was guilty of fraud. Bank brought a motion for summary judgment. At the time the motion for summary judgment was heard, Waddell abandoned all claims against Bank, with the exception of his claim for breach of fiduciary duty. The trial court ruled in favor of Bank, and granted their motion for summary judgment. This appeal followed.

ISSUE

Did the trial court err in ruling that Dewey County Bank owed no fiduciary duty to Waddell?

ANALYSIS

The standard of review of a grant or denial of summary judgment is well settled. The principal considerations were summarized in Garrett v. BankWest, Inc., 459 N.W.2d 833, 836-37 (S.D.1990):

'In reviewing a grant or a denial of summary judgment under SDCL 15-6-56(c), we must determine whether the moving party demonstrated the absence of any genuine issue of material fact and showed entitlement to judgment on the merits as a matter of law. The evidence must be viewed most favorably...