Title: Ames v. Sundance State Bank

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Ames v. Sundance State Bank1993 WY 54850 P.2d 607Case Number: 92-134Decided: 04/08/1993Supreme Court of Wyoming
Kenneth R. 
AMES,

 Appellant 
(Plaintiff),

v.

SUNDANCE STATE BANK, 

Appellee 
(Defendant).

Appeal from District 
Court, Cook County, Terence L. O'Brien, J.

Joseph E. 
Darrah, Powell, and Stephen R. Winship, Casper, for 
appellant.

Robert Berger 
and Dan R. Riggs, Sheridan, for appellee.

Before 
THOMAS, CARDINE, GOLDEN and TAYLOR, JJ; and ROONEY, Ret.J.

ROONEY, Justice 
(Retired).

[¶1]      This appeal by 
plaintiff below is from a Judgment Notwithstanding the Jury's Verdict in a 
matter in which defendant/appellee bank refused to renew appellant's note in 
1989 as had been done during several previous years. The annual loans were made 
to provide operating money to appellant for his ranching business. Appellant's 
ranching business evolved from a yearling operation into a bred heifer operation 
and a breeding cattle operation. Each year, appellant would discuss with the 
bank's officer his budget, expected costs, status of long term debts with 
required annual payments, e.g., Wyoming Farm Loan debt, previous bank loan carry 
over, and similar items pertaining to appellant's financial situation. For 
years, a new note would then be executed, payable in one year. In 1989, appellee 
refused the renewal, and the existing note was called for payment.

[¶2]      The complaint 
alleged five claims for relief: breach of loan commitment, promissory estoppel, 
bad faith, tortious interference with contract and business relationships, and 
severe emotional distress. The last claim was withdrawn prior to trial. Appellee 
was granted its motion for summary judgment on the bad faith and tortious 
interference claims prior to trial (the court finding that there were no issues 
of material fact relative thereto and appellee to be entitled to judgment as a 
matter of law). Subsequently, appellant moved to amend his complaint to again 
assert these two claims, but the record does not reflect any action taken 
thereon. The case went to trial on the other two claims, i.e., breach of loan 
commitment and promissory estoppel.

[¶3]      In its verdict, 
the jury found that the bank breached its loan agreement of December 5, 1988 
with appellant by failing to renew the note, and that it is liable to appellant 
by reason of promissory estoppel, fixing damages at $375,000.

[¶4]      Appellant words 
the issues on appeal:

"I. Whether the jury's 
verdict was overwhelmingly against the weight of the evidence.

"II. Whether the District 
Court erred in considering ordering a new trial on damages.

"III. Whether the 
District Court erred in granting the summary judgment and not allowing amendment 
of the complaint concerning Appellant's claims for intentional interference with 
contract and business relationships and bad faith."

[¶5]      Appellee words 
them:

"A. Whether the District 
Court erred in granting judgment notwithstanding the verdict.

"B. Whether the District 
Court erred in conditionally granting a new trial.

"C. Whether the District 
Court erred in granting summary judgment on claims where no material issue of 
fact existed or in not allowing the decided claims to be raised a second time by 
an amendment of the complaint shortly before trial."

JUDGMENT NOTWITHSTANDING 
THE VERDICT

(First issue of each 
party)1

[¶6]      As appellant 
recited, we recently repeated the standards for review of a judgment 
notwithstanding the verdict in Wilson v. McMahon, 831 P.2d 1152, 1154 (Wyo. 
1992) (quoting Inter-Mountain Threading v. Baker Hughes, 812 P.2d 555, 558-59 
(Wyo. 1991)):

     "`When this appellate 
court is faced with a JNOV question, we undertake a full review of the record 
without deference to the views of the trial court. Cody v. Atkins, 658 P.2d 59, 
61-62 (Wyo. 1983). In determining whether a JNOV motion should be granted, we 
consider "whether the evidence is such that without weighing the credibility of 
the witnesses, or otherwise considering the weight of the evidence there can be 
but one conclusion reasonable persons could have reached * * *." Erickson v. 
Magill, 713 P.2d 1182, 1186 (Wyo. 1986). In our review we consider the evidence 
favorable to the nonmoving party, giving it all reasonable inferences. Carey v. 
Jackson, 603 P.2d 868, 877 (Wyo. 1979). A court should cautiously and sparingly 
grant JNOV motions. Erickson, 713 P.2d  at 1186.'"

[¶7]      Appellant argues 
that "one of the principal issues determined by the jury was the intent of the 
parties." However, the intent of the parties cannot prevail for enforcement of 
all contracts. An agreement that by its terms is not to be performed within one 
(1) year from the making thereof is void unless the agreement is in writing and 
signed by the party to be charged with it. Wyo. Stat. § 1-23-105(a) (1988) (the 
statute of frauds). In his argument, appellant states that:

"It is the position of 
Appellant that the loan commitment or contract was at least an oral agreement 
upon which the specific terms and parameters are represented by all of the 
documents generated by the parties, and primarily the bank's records, including 
the important supplementation of those documents by the primarily unrefuted 
evidence of the course of dealing and practice standards which the Appellee 
bankers admitted to be bound." Such did not include any written obligation 
binding the appellee to finance appellant's business for more than one year in 
the future. Appellant himself so testified. The written agreements between the 
parties relating to the terms of the loans consisted only of promissory notes 
given to appellee by appellant. They were clear and unambiguous. Extrinsic 
evidence cannot be used to vary their terms or determine an intent of the 
parties not expressed therein (the parole evidence rule). Kerper v. Kerper, 780 P.2d 923 (Wyo. 1989); Lawrence v. Farm Credit System Capital Corp., 761 P.2d 640 
(Wyo. 1988).

[¶8]      The district 
court properly granted judgment notwithstanding the verdict and the jury verdict 
was against the weight of properly admissible evidence. If the verdict had been 
allowed to stand and appeal was taken for error properly reserved on the basis 
of admission of evidence in violation of the parole evidence rule and of the 
statute of frauds, we would have to reverse and remand on appeal. The district 
court corrected the situation as it should. In its opinion letter, it said in 
part:

"When Mr. Ames signed the 
notes and security agreements he may have had an expectation or, more likely, a 
hope that the bank would continue to finance his ranching operation indefinitely 
into the future. In spite of his private expectations, that was not the 
understanding of the bank officers; there was no meeting of the minds on that 
issue. Such a provision is conspicuously absent from the contract documents. It 
was error to entertain testimony contrary to the parties written agreement - I 
should not have admitted evidence which sought to vary the terms of the notes 
and affiliated security agreements. Construction of the contract is for the 
court, not the jury and only one construction is possible given the plain 
language of the contract documents. The[re] was no agreement to lend money 
beyond the term of the notes and by the clear language of the notes advances 
were subject to bank approval. There was no breach of the lending commitment nor 
was there a premature liquidation. Regardless of whether a demand to sell the 
herd was made (a matter hotly disputed by the bank) the fact is that no action 
was taken by the bank to force payment before the notes were due on December 5, 
1989. In fact only partial payment was made on December 4, 1989 and the balance 
not paid (with the forbearance of the bank) for a considerable time after the 
due date. Moreover, any agreement to fund Ames' ranching operation for more than 
one year, as contended by Ames, would necessarily be unenforceable as violative 
of the Statute of Frauds. Accordingly, defendant is entitled to a judgment 
N.O.V. on the contract issue."

[¶9]      Yet to be 
considered with reference to this issue is appellant's contention that the 
doctrine of promissory estoppel favors his position. Again, the district court 
adequately and properly addressed this contention. It said in its opinion 
letter:

"The Statute of Frauds 
problem is avoided under the plaintiff's theory of promissory estoppel. 
Reimilong [Remilong] v. Crolla, 576 P.2d 461 (Wyo. 1989 [1978]). In B & W 
Glass, Inc. v. Weather Shield Mfg., Inc., [829] P.2d [809], (Wyo. 1992), Case 
No. 91-123, decided April 10, 1992, the Wyoming Supreme Court extended the 
principle to the Uniform Commercial Code Statute of Frauds provision. In doing 
so it restated the doctrine [at ]:

"`Promissory estoppel is 
a doctrine incorporated in the law of contracts. Restatement (Second) Contracts 
§ 90 (1981). Judge Posner has provided a considered and succinct description of 
the doctrine: "If an unambiguous promise is made in circumstances calculated to 
induce reliance, and it does so, the promisee if hurt as a result can recover 
damages." Goldstick v. ICM Realty, 788 F.2d 456, 462 (7th Cir. 1986). Promissory 
estoppel is recognized as both a sword and a shield - a cause of action and a 
defense. Equitable estoppel is a close relative, but it is a tort doctrine that 
requires proof of misrepresentation. Goldstick. [emphasis supplied]'

"The underscored 
language, quoted with approval by our Supreme Court, qualifies and clarifies in 
important detail the more general language of the Restatements and is of 
significance in this case. See also, Hayes & Griffith, Inc., v. GE Capital 
Corporation, ___ F. Supp. ___, 1989 WL 135246 (N.D.Ill.), Memorandum Opinion 
& Order, Oct. 24, 1989.

     "In this case there is no 
evidence of an unambiguous promise. The years old statements attributed to a 
deceased bank officer that he would "stick with" Ames are too vague to form a 
basis upon which promissory estoppel could rest. Likewise (considered in a light 
most favorable to Ames), even if the loan officer made statements that the bank 
would "fund his operation" for the 1989 year such a statement does not meet the 
requirement of an unambiguous promise. In dealing with a similar 
situation the court in Hayes & Griffith said: "The statement is woefully 
vague. It was made in the context of ongoing negotiations, and it specified none 
of the essential terms of the transaction. It was thus not an unambiguous 
promise, as is necessary to stat[e] a claim for promissory estoppel.' Arguable a 
promise to `fund his operation' could bind the bank to continue to lend money to 
Ames indefinitely and regardless of the profitability of his ranch and 
regardless of the security he would be able to supply and regardless of his 
ability to repay the loan. It is not unambiguous, nor is it even reasonable. 
When contrasted with the clarity and precision of the written notes and 
affiliated documents which emerged as a result of the parties negotiations, it 
is clearly evident that the alleged statement is simply unenforceable and could 
not reasonably be relied upon by Ames in the manner he has asserted 
here."

[¶10]   From a common sense standpoint, 
banks would be reluctant to renew notes even once, (1) if the renewal 
itself legally obligated them to make further renewals, or (2) if 
examination of the borrower's finances, budgets, etc., itself so 
obligated them, or (3) if a combination of both of these actions so obligated 
them.

CONSIDERATION OF THE 
DAMAGE AWARD

(Second issue of each 
party)

[¶11]   In its opinion letter, the district 
court said in part:

"Finally, even though it 
is not necessary to the decision, I feel I must tell counsel that I would feel 
compelled to grant a new trial on the issue of damages in any event. The damages 
would have to be limited to one year at the most and could not reasonably have 
been in the amount awarded by the jury. Perhaps the award could be justified if 
this were a tort case (which would have required a showing of an intentional 
misrepresentation of fact - a matter clearly not appearing), but not upon a 
contract theory."

[¶12]   Inasmuch as this issue is not 
necessary to the decision of the district court or to our action on that 
decision, we need not address the issue.

INTENTIONAL INTERFERENCE 
AND BAD FAITH CLAIMS

(Third issue of each 
party)

[¶13]   As noted supra, appellee's motion 
for summary judgment was granted as to appellant's claims of bad faith and 
tortious interference. Subsequently, appellant filed a motion to amend the 
complaint to real-lege the two claims, and a hearing was held thereon. As 
appellee states, "the lower court never entered a formal order denying the 
motion to amend, but allowed the case to proceed only on the two contract 
theories, and made it known throughout the trial that tort concepts would not be 
allowed."

Intentional 
Interference

[¶14]   As pointed out by appellee, to 
establish a claim for intentional interference with a contract, the plaintiff 
has the burden of showing (1) the existence of a contract, (2) the defendant's 
knowledge of the contract, (3) the intentional and improper interference 
inducing or causing a breach, and (4) the resulting damage. First Wyoming Bank 
v. Mudge, 748 P.2d 713, 715 (Wyo. 1988).

[¶15]   The contract allegedly interfered 
with here is one between appellant and the Wyoming Farm Loan Board. It is 
contended that the failure to renew appellant's loan interfered with appellant's 
ability to make payment on a loan from the Board. Not only can the lack of legal 
nexus between the two loans negate the presence of an "improper" interference, 
but any interference is permitted if made in good faith to protect an economic 
interest. Four Nines Gold, Inc. v. 71 Construction, Inc., 809 P.2d 236, 238 
(Wyo. 1991).

Bad 
Faith

[¶16]   A tort claim of "bad faith" can be 
asserted only by a party to a contract or by a third party beneficiary to an 
enforceable contract. McCullough v. Golden Rule Ins. Co., 789 P.2d 855 (Wyo. 
1990); Darlow v. Farmers Insurance Exchange, 822 P.2d 820 (Wyo. 1991); Herrig v. 
Herrig, 844 P.2d 487 (Wyo. 1992). As reflected supra, appellant did not have an 
enforceable contract with the appellee bank requiring the renewal of his note. 
Nor was he a third party beneficiary to a contract between the appellee bank and 
another party.

[¶17]   Since there was no issue of fact, 
the district court did not err in its ruling on the legal questions which 
resulted in the grant of summary judgment on the tort claims and in its refusal 
to allow amendment of the complaint to include such claims.

[¶18]   Affirmed. 

CARDINE, Justice, 
dissenting.

[¶19]   I would reverse the judgment not 
withstanding the verdict (JNOV). I have no problem with the bank examining the 
borrower's finances, requiring financial statements and disclosures. But when 
the bank becomes involved in the ranch operation with advice and requirements 
concerning numbers and kinds of livestock to run, leasing pasture, obtaining a 
long-term loan from the Farm Loan Board, and the sale of livestock, the bank may 
then become a participant in the operation of the ranch and incur obligations 
and duties that would not otherwise exist. I acknowledge that the facts 
concerning what occurred between these parties was hotly disputed - but 
resolution of these disputed facts was for the jury.

[¶20]   Finally, the trial court stated 
that if the JNOV were not appropriate, it would have granted a new trial upon 
the question of damages. That, for me, is a preferable result in this case. 
Consequently, I dissent.

 

 FOOTNOTE

1 By use of the word 
"overwhelmingly" in his first issue, appellant misstates the requirement for 
reversal of a judgment notwithstanding the verdict. Excluding such word, the 
thrust of appellant's first issue is as stated in appellee's first 
issue.