Wurst v. Blue River Bank of McCool Junction

• Court: Nebraska Supreme Court
• Writing for the Court: BOSLAUGH, WHITE, CAPORALE, SHANAHAN, GRANT, and FAHRNBRUCH, JJ., and COLWELL; SHANAHAN
• Citation: Wurst v. Blue River Bank of McCool Junction, 454 N.W.2d 665, 235 Neb. 197 (Neb. 1990)
• Decision Date: 04 May 1990
• Docket Number: No. 88-313,88-313
• Parties: William F. WURST and Carla M. Wurst, Appellants, v. BLUE RIVER BANK OF McCOOL JUNCTION, Nebraska, Appellee.

Page 665

454 N.W.2d 665

235 Neb. 197

William F. WURST and Carla M. Wurst, Appellants, v. BLUE RIVER BANK OF McCOOL JUNCTION, Nebraska, Appellee.

No. 88-313.

Supreme Court of Nebraska.

May 4, 1990.

Syllabus by the Court

1. Contracts: Intent. A court is not free to speculate about terms absent from

a written contract. Where the parties have clearly expressed an intent to accomplish a particular result, it is not the province of a court to rewrite a contract to reflect the court's view of a fair bargain.

2. Contracts: Words and Phrases. Ambiguity exists in an instrument when a word, phrase, or provision in the instrument has, or is susceptible of, at least two reasonable but conflicting interpretations or meanings.

3. Contracts. Whether a document is ambiguous is a question of law initially determined by a trial court.

4. Judgments: Appeal and Error. Regarding a question of law, an appellate court has an obligation to reach a conclusion independent from a trial court's conclusion in a judgment under review.

5. Contracts. When a court has determined that ambiguity exists in a document, an interpretative meaning for the ambiguous word, phrase, or provision in the document is a question of fact for the fact finder.

6. Contracts: Intent. In attempting to ascertain the meaning of ambiguous terms of a contract, a court must determine the actual intent of the contracting parties, considering facts and circumstances which motivated each party to enter the contract, and the nature and subject matter of the contract.

7. Contracts: Intent. When construction of a contractual provision is necessary, a court may consider the conduct of the parties, performing their contract, to ascertain the parties' intent regarding their contract.

8. Contracts: Mental Competency: Proof. One asserting lack of requisite mental capacity in relation to an instrument has the burden to prove such lack of mental capacity.

9. Debtors and Creditors: Consideration: Time. Extension of time to pay a mature and valid debt is sufficient consideration to support a promise to pay the debt at the later date.

Stephen Speicher, Lincoln, for appellants.

Stephen H. Nelsen, of Cline, Williams, Wright, Johnson & Oldfather, Lincoln, for appellee.

BOSLAUGH, WHITE, CAPORALE, SHANAHAN, GRANT, and FAHRNBRUCH, JJ., and COLWELL, District Judge, Retired.

SHANAHAN, Justice.

In an action commenced in the district court for York County, William F. Wurst and Carla M. Wurst contended that the Blue River Bank of McCool Junction, Nebraska (Bank), now the First National Bank of York, had breached a loan agreement by not discharging all of Wursts' indebtedness to the Bank, which had received proceeds from the sale of Wursts' farmland. After a bench trial, the district court dismissed Wursts' action.

STANDARD OF REVIEW

In a bench trial of a law action, a trial court's factual findings have the effect of a verdict and will not be set aside unless clearly erroneous. Alliance Nat. Bank v. State Surety Co., 223 Neb. 403, 390 N.W.2d 487 (1986). In reviewing a judgment awarded in a bench trial of a law action, the Supreme Court does not reweigh evidence but considers the evidence in a light most favorable to the successful party and resolves evidentiary conflicts in favor of the successful party, who is entitled to every reasonable inference deducible from the evidence. Zeller v. County of Howard, 227 Neb. 667, 419 N.W.2d 654 (1988); Alliance Nat. Bank v. State Surety Co., supra; McKinstry v. County of Cass, 228 Neb. 733, 424 N.W.2d 322 (1988).

Oddo v. Speedway Scaffold Co., 233 Neb. 1, 2, 443 N.W.2d 596, 598-99 (1989). See, also, Buckingham v. Wray, 219 Neb. 807, 366 N.W.2d 753 (1985).

BACKGROUND FOR WURSTS' ACTION

Wursts owned a York County farm, which included 130 acres of irrigated farmland and a 6-acre site for Wursts' residence. Until 1978, William Wurst had farmed the land, but, on account of his severe back problem, was forced to give up farming. Wursts leased their farmland on a cash basis while William tried his hand at selling feed. However, chronic back problems compelled William to give up the feed business.

Over a span of approximately 11 years, Wursts and the Bank had engaged in a business relationship during which K.D. Patitz, manager of the Bank, became well acquainted with Wursts and handled their financial matters. In 1980, William Wurst approached Patitz about obtaining a business loan to conduct a trucking operation. Wurst wanted to buy one truck, an Aerodyne cab-over model with a V-8 Caterpillar engine, for the proposed trucking business. Since William had no experience in trucking, Patitz advised against a loan for the truck purchase. When Wurst persisted and offered the Wursts' farmland and residence as collateral for a truck loan, he told Patitz that if the Bank would not lend them the money, they would secure financing elsewhere. As the result of Wurst's persuasion, Patitz authorized a bank loan to Wursts, which was sufficient for purchase of a Kenworth truck and commencement of a trucking business. Before making the loan, the amount of which is undisclosed by the record, Patitz warned Wurst that if the trucking business failed, they could lose everything. Sometime in 1981, after Wursts had granted the Bank a mortgage on their farmland and residence, Wursts purchased a Kenworth truck for $76,000 and began their trucking operation.

Although their trucking business became unprofitable, Wursts continually borrowed money from the Bank to meet their business and personal living expenses. In June 1981, Wursts listed the farmland for sale through United Farm Agency, which listing excluded Wursts' residence. Throughout the fall of 1981, Wursts continued to borrow from the Bank to make up for operating deficits from the trucking business. Around November or December 1981, when it became apparent that the 130 acres of farmland were not selling through United Farm Agency, Patitz suggested to Wursts that they take some action to reduce their bank debt, which by February 1982 exceeded $163,000. Of the Wursts' bank debt, $140,000 was attributable to the unprofitable trucking business. On January 13, 1982, Wursts executed a new mortgage for $168,000 to the Bank, covering their farmland and residence as security for the new mortgage. In February 1982, the Bank and Wursts entered into a loan agreement in which the parties acknowledged Wursts' current debt of $163,796.95 to the Bank at the date of February 8, 1982. Also in the loan agreement, the Bank agreed "to the renewal and extension of the present indebtedness, plus the new advance [$4,203.05] as requested by the borrower." Pursuant to the loan agreement, Wursts signed two promissory notes, one for $150,000 and the other for $13,796.95, which were due on August 2, 1982. Wursts' indebtedness was secured by the January 1982 mortgage, a financing statement covering all agricultural products from Wursts' farm, a motor vehicle lien on the Kenworth truck, and the "[p]ersonal signatures of William F. Wurst and Carla M. Wurst." Additionally, the loan agreement provided:

5. Borrower hereby acknowledges that he has listed for sale his 130 acres of farm real estate located in the Southwest Quarter (SW 1/4) of Section Twenty-four (24), Township Ten (10) North, Range Three (3), West of the 6th P.M., in York County, Nebraska.

6. It is hereby understood and agreed that if this real estate is not sold by private treaty by June 1, 1982, it will be listed for sale at public auction, with said auction to be held prior to July 1, 1982 and final settlement on the sale of real estate, on or before August 2, 1982.

7. It is further agreed that the proceeds from the sale of the York County real estate will be applied to and will pay the total indebtedness to The Blue River Bank, McCool Junction, Nebraska at the time of final settlement.

When the loan agreement was entered, both the Bank and Wursts believed that the agreement was a means for eventual liquidation of Wursts' assets and reduction of their indebtedness to the Bank. William Wurst told Patitz to do "whatever would be necessary" to pay off the Wurst debts.

From March 1982 through July of that year, the Bank continued to advance funds to Wursts for operating expenses in the trucking business and for their personal expenses. Although the loan agreement provided for a total advance of $4,203.05, by July the Bank had advanced $24,380 to Wursts, which brought Wursts' bank indebtedness to a sum of almost $200,000.

Throughout most of 1982, Carla Wurst suffered "atypical depression," which, according to her psychiatrist, Dr. Robert Osborne, was a "persistent, ongoing, severe depressive disorder," severe enough to impair her ability to make decisions or solve problems. William Wurst displayed depression but was not treated by Dr. Osborne until December 1982. Dr. Osborne evaluated William Wurst in January 1983. Although Dr. Osborne had no information to indicate that William Wurst was incapable of understanding the nature and effect of his actions when the loan agreement was signed, Dr. Osborne believed that the depression suffered by William Wurst may have affected Wurst's ability to make decisions and rendered Wurst apathetic toward the consequences of the loan agreement.

In July 1982, Wursts' farmland was sold at public auction, which resulted in $170,000 applied to the Wurst indebtedness. Since the proceeds from the farmland sale were insufficient to satisfy Wursts' entire indebtedness reflected on the Bank's records, Patitz suggested that Wursts sell their home or their Kenworth truck. When the promissory notes which Wursts had given pursuant to the loan agreement with the Bank were overdue, Wursts, on September 3, 1982, signed two "extension notes" in the total of $33,796.95. Both notes were due on November 15, 1982. Wursts tried to sell the Kenworth on their own, but their efforts failed. In November 1982, Patitz arranged for the Kenworth to be sold to...