Western Nat. Bank of Lovell v. Moncur, 5336

• Decision Date: 26 February 1981
• Docket Number: No. 5336,5336
• Parties: WESTERN NATIONAL BANK OF LOVELL, Wyoming, Appellant (Plaintiff), v. J. Doyle MONCUR, R. Dee Cozzens, and Howard Butler, Appellees (Defendants).
• Court: Wyoming Supreme Court

Page 765

624 P.2d 765

WESTERN NATIONAL BANK OF LOVELL, Wyoming, Appellant (Plaintiff), v. J. Doyle MONCUR, R. Dee Cozzens, and Howard Butler, Appellees (Defendants).

No. 5336.

Supreme Court of Wyoming.

Feb. 26, 1981.

Rick Anderson, Powell, signed the brief and appeared in oral argument on behalf of appellant.

Mark L. Reynolds, Lovell, C. Edward Webster, II, Cody, and Robert A. Gish, of Zaring & Gish, Basin, signed the briefs of appellees.

Reynolds and Gish appeared in oral argument on behalf of appellees.

Before ROSE, C. J., and McCLINTOCK, RAPER, THOMAS and ROONEY, JJ.

ROONEY, Justice.

Appellant-plaintiff appeals from a judgment rendered on a jury verdict which denied recovery to it on three promissory demand notes (one by each of the appellees-defendants ¹) totaling $53,786.84, and which awarded damages to appellee Moncur in the amount of $31,000.00 on his counterclaim for breach of contract.

We affirm but modify the judgment to reduce the award of damages to appellee Moncur to $26,000.00.

The following recitation of facts is in conformance with the recognized standard for review of evidence on appeal, i. e., to assume evidence in favor of the successful party as true, to leave out of consideration entirely the evidence of the unsuccessful party in conflict therewith, and to give to the evidence of the successful party every favorable inference which may reasonably and fairly be drawn from it. Madrid v. Norton, Wyo., 596 P.2d 1108 (1979); Cline v. Sawyer, Wyo., 618 P.2d 144 (1980); Jelly v. Dabney, Wyo., 581 P.2d 622 (1978).

In 1972, appellees and Brent Moncur, appellee Moncur's son, formed a partnership Appellee Moncur's farm became the base of operations. He and Brent Moncur handled the day-to-day operations of the business. Appellees Cozzens and Butler did not contribute cash to the partnership, but strengthened the financial structure of it with the inclusion of their personal assets and credit ratings on financial statements. Appellee Cozzens contributed bookkeeping services and business expertise, and appellee Butler contributed some knowledge of livestock feeding.

Beef Unlimited, for the purpose of operating a cattle feeding business. They planned to avoid the cyclical nature of cattle prices by use of a new hay-cubing system for high feed efficiency and by turning over their cattle inventory two and one-half times a year.

Appellant extended a line of credit to Beef Unlimited in the amount of $150,000.00. ² Beef Unlimited wrote checks for cattle or feed and then executed six-month promissory notes with appellant to cover the purchases. By May 1973, appellant had extended $146,000.00 of the line of credit to Beef Unlimited, and Beef Unlimited had reached its highest inventory of about 400 head of cattle on feed.

About that time, ³ appellant requested Beef Unlimited to delay purchase of more cattle, and it forced Beef Unlimited to apply all funds from cattle sales to the outstanding notes. Thus, purchase of replacement cattle with a portion of the funds received from such sales was prevented. In 1974, controlling interest in appellant was purchased by Harold Meier. He advised Beef Unlimited that appellant would no longer provide funds for purchase of livestock, i. e., would not continue the line of credit. ⁴ Refinancing of the outstanding balance of $80,000.00 was discussed, and the outstanding notes were temporarily renewed. Beef Unlimited did not have sufficient collateral to cover the obligation. ⁵

Appellee Moncur requested appellant (through Meier) to investigate the possibility of obtaining federal loan guarantees through a federal aid to the beef industry program. Appellant told him that the partnership would not qualify for such. Appellee Moncur later discovered that the partnership could qualify if his real property were considered in the analysis.

Appellee Moncur had financed his personal farming business through appellant. He was advised by appellant that such financing could continue only if his obligation on the Beef Unlimited note were reduced and if his other obligations to the appellant were paid. He was told (by Meier) that appellant would supply operating funds for him if he would refinance his personal obligations to the extent possible, apply funds therefrom to the Beef Unlimited note, and arrange to divide the balance of the Beef Unlimited debt among appellees. This was done. Appellee Moncur obtained refinancing from the Farmers Home Administration. ⁶ The funds obtained therefrom were used to pay his personal loan from appellant and to pay $26,000.00 to the Beef Unlimited notes. The balance of the Beef Unlimited debt amounted to $54,000.00, and it was split into the three separate notes ⁷ upon Appellant words the issues on appeal as follows:

which this action was initiated. Brent Moncur was thus released from further obligations of Beef Unlimited to appellant.

"1. Is the verdict and judgment of the court inconsistent?

"2. Did the court err in allowing oral testimony regarding the events and agreement leading up to and contemporaneous with the execution of those notes dated July 8, 1976?

"3. Did the court err in receiving into evidence charts showing damages sustained by appellees?

"4. Was the verdict of the jury finding that appellant Western National Bank was in breach of contract supported by the evidence?

"5. Did the district court err in refusing to direct a verdict in favor of appellant Western National Bank?

"6. Was appellant Western National Bank entitled to a judgment notwithstanding the verdict?"

The arguments of the parties relative to these issues seem to indicate a misapplication by them of the law and facts of the case as the same pertain to appellant's claim and to appellees' counterclaims. With respect to appellant's claim, the pleadings and pretrial procedure reflect an effort to recover payment on three notes. In the separate answers and counterclaims, appellees Cozzens and Butler set forth affirmative defenses of misrepresentation, fraudulent inducement in the making of the notes and failure of consideration. Appellee Moncur did not set forth an affirmative defense except insofar as his counterclaim can be considered such.

" ' * * * (I)t is the content of the pleading and not the label which determines its nature and effect * * *.' " Joslyn v. Professional Realty, Wyo., 622 P.2d 1369 (1981).

" * * * When a party has mistakenly designated a defense as a counterclaim or a counterclaim as a defense, the court on terms, if justice so requires, shall treat the pleading as if there had been a proper designation." Rule 8(c), W.R.C.P.

With respect to the counterclaims, each appellee alleged a breach by appellant of the contract to provide the line of credit with resulting damages from loss of profits. Appellee Butler also alleged damages for appellant's failure "to provide 'Beef Unlimited' with federal assistance." ⁸ Appellee Cozzens also counterclaimed for damages resulting from slander by one of the appellant's officers, but this counterclaim was dismissed at trial. Appellee Moncur set forth in his pretrial memorandum:

" * * * J. Doyle Moncur sold his farm and applied the proceeds to the debt and all of the Defendants executed notes for their respective shares of the remaining balance, each co-signing the notes of the others. This arrangement was made in reliance by the Defendants on the promise of the Plaintiff, that if the Defendants executed and co-signed said notes, and if the note executed by Defendant J. Doyle Moncur would include Brent Moncur's share of the remaining balance, then Brent Moncur would be released from all obligations of Beef Unlimited to Plaintiff and Brent Moncur and Defendant J. Doyle Moncur would be loaned operating money for their farming enterprise. After the notes were executed according to Plaintiff's specifications, Plaintiff thereafter refused to make the promised operating loan to the Moncurs, forcing them to obtain funds from another lender."

An instruction on the issues was given without objection. It set forth appellant's contentions concerning the execution and delivery of the three notes and the demand for judgment on them for the amounts not paid plus interest. It then set forth appellees' contentions as follows:

"4. Defendants R. Dee Cozzens, J. Doyle Moncur and Howard Butler individually contend that the indebtedness to the bank "5. Further defendants contend that the plaintiff failed to provide the partnership with information concerning possible federal assistance which further damaged the partnership."

was incurred as a result of misrepresentation and breach of contract on behalf of plaintiff and further that no consideration was given for the obligation alleged in plaintiff's complaint. Further, the defendants jointly and individually contend that there was a commitment made for a period of five years by which the plaintiff agreed to provide credit up to a total of $150,000.00 to defendants for a cattle feeding operation and that plaintiff breached this agreement and caused the defendants to liquidate the cattle feeding operation for which defendant R. Dee Cozzens was damaged in the sum of $75,000.00 and that defendant Howard Butler was damaged to the extent of $25,000.00 and that defendant J. Doyle Moncur was also damaged by plaintiff's forcing defendants to liquidate the partnership.

The jury verdict reads:

"We the jury with the evidence submitted to us find the Western National Bank was in breech (sic) of contract. Thereby we feel the defendants R. Dee Cozzens, J. Doyle Moncur, and Howard Butler should be released from their obligations on combined notes totaling $53,789.84, plus interest as of July 8, 1976, to current date, at 1 01/2% per cent (sic) per annum. We find also in the favor of J. Doyle Moncur in the amount of $31,000.00 for personal and property losses."

The verdict reflects an acceptance of appellees' defense of breach of contract to appellant's claim on the notes. It did not...