Title: SHIPLET v FIRST SECURITY BANK OF L

State: montana

Issuer: Montana Supreme Court

Document:

blo. 8 8 - 1 4 1 IN THE SUPREME COURT OF THE STATE OF MONTANA 1 9 8 8 ROBERT S H I P L E T and JACQUELINE S H I P L E T , P l a i n t i f f s and A p p e l l a n t s , F I R S T SECURITY BANK OF LIVINGSTON, I N C . , a Montana corporation, D e f e n d a n t and R e s p o n d e n t . APPEAL FROM: D i s t r i c t C o u r t of t h e S i x t h J u d i c i a l D i s t r i c t , I n and f o r t h e C o u n t y of P a r k , T h e H o n o r a b l e T h o m a s H o n z e l , Judge presiding. COUNSEL OF RECORD: For A p p e l l a n t : T e r r y S c h a p l o w ; M o r r o w , Sedivy & B e n n e t t , B o z e m a n , M o n t a n a For R e s p o n d e n t : Joe S w i n d l e h u r s t ; H u p p e r t & S w i n d l e h u r s t , L i v i n g s t o n , M o n t a n a S i d T h o m a s ; M o u l t o n L a w F i r m , B i l l i n g s , M o n t a n a S u b m i t t e d on B r i e f s : A u g . 11, 1 9 8 8 D e c i d e d : S e p t e m b e r 2 7 , 1 9 8 8 C l e r k V r . J u s e i c e R. C . 5fcDonough d e l i v e r e d t h e Opinion o f che Courc. Roberc and J a c q u e l i n e Shiplec ( S h i p l e c s ) appeal from che o r d e r o f r h e D i s c r i c c Courc o f che Sixch J u d i c i a l D i s c r i c r , Park Councy, grancing summary judgmenc i n favor o f F i r s c Securicy Rank of Livinqscon (Bank). W e a f f i r m . The S h i p l e c s presenc one i s s u e f o r review: Did che Discricc Courc err i n grancing che Rank summary judgmenc on a l l counrs o f che complaint? A complece scacemenc o f che f a c e s would be very lengrhy. However, an o u c l i n e of r e l e v a n c evencs w i l l provide sufficient background and more d e c a i l w i l l be given where r e q u i r e d . The S h i p l e c s o p e r a r e a ranch souch of Livingscon. They have done b u s i n e s s wich che Bank f o r a number of y e a r s , e n r e r i n g i n c o v a r i o u s loan agreemencs i n che course o f c h e i r ranching operations. I n 1 9 7 8 , che S h i p l e r s soughc f u r c h e r f i n a n c i n g f o r c h e i r ranch from che Rank i n che form o f a $350,000 loan. The Bank indicaced chac i could n o r make che loan u n l e s s a guarancy could be arranged chrough che Farmers Home Adminiscracion (FmHA). The Bank chen submicced a Requesc f o r Guarancee [ s i c ] co FmHA, which l i s c e d a "Line o f Credic C e i l i n g " of $350,000, an i n c e r e s c r a c e o f l o % , and a c e r m of f i v e y e a r s . The Concracc o f Guarancee [ s i c ] i s s u e d by F m H A upon ics approval o f che application l i s c e d no c e r m s particular co che S h i p l e c s ' loan o r h e r t h a n r h e $350,000 c r e d i c c e i l i n g . Once che guarancy was obtained, che Bank and che S h i p l e c s executed a one-year promissory noce f o r 5350,000 a c an i n c e r e s c r a t e o f 10%. The S h i p l e c s w e r e nor a b l e co repay che coca1 p r i n c i p a l and i n c e r e s c due a f c e r one y e a r , and i n 1979 chey execuced a new one-year noce. This began a cycle of noces, mosc of which were issued for six-monch cerms. The principal and inceresc scill ouescanding as each noce came due were carried over co che new noce. When che 1978 nore came due and ic appeared chae anocher noce would be necessary, che Bank concacced FmHA and asked whecher che cerms of che guarancy would prohibic che Bank from raising che race of inceresr on che loan co reflecc che overall rise in inceresc races caking place ac chac eime. The FmHA replied chac according co ics accorneys, such a race increase was permissible. The 1979 noce carried an inceresc race of 11.75%. The inceresc race on subsequent noces fluccuaced as the prime lending race rose and fell, reaching a peak of 214% in 1981. The FmHA guarancy expired in 1.984, ac which eime pavmencs from che Shiplecs on cheir loan were in arrears. The FmHA decided chac the Rank would have co concinue che Shiplecs' loan wichouc a guarancy or presenc a plan of liquidacion. In February of char year, che Shiplecs and cheir accorney began meecing wich Rank officials to determine whac could be done co resolve che sicuacion. Negociacions resulred in execution of a $400,000 noce and a new, seven-year FmHA guarancy. The condieions accached co the new guarancy included complece repayment of inceresc and operacing credic ar che end of each year, and liquidacion of some Shiplec real escace holdings in order co repay $338,000 of che loan. When chis final nore reached macuricy on Sepcember 28, 1985, approximately $348,000 remained oucscanding. In Occober of 1985, che Shiplecs filed suic againsc che Bank based on che increased ineeresc charged on che pose-1978 noces. They alleged breach of concracc, breach of chird-parcy-beneficiary concracc, bad fairh, fraud, negligenc infliction of emocional dis~ress, breach of fiduciary ducy and economic duress. On January 21, 1988, che Discricc Courc issued an order grancing che Bank's mocion for summary judgmene as co all chirceen councs enurneraced in che Shiplecs' cornplainc. This appeal followed. In order for summary judgrnenc co issue, che moving parcy muse show chere is no genuine issue as co faces chac are macerial in lighc of che subscancive principles enticling chae parcy co judgmenc as a rnaccer of law. If che moving parey meecs chis burden, che non-moving parey chen has che burden of showing a genuine issue of macerial face. These scandards also apply co chis Courc when reviewing che granc or denial of summary judgrnenc. Frigon v. Morrison-Maierle, Inc. (Monc. 1988) - P.2d - , 45 Sc.Rep. 1344, and cases cited cherein. I. The firsc counc of che Shiplecs' complainc alleged breach of concracc. They argued che Bank represenced co chem char the applicacion form for che guarancy was a concracc becween che Bank and che Shiplees for a five-year loan ac an annual inceresc race of 10%. Shiplecs alleged che Bank breached chis concracc by raising che race of inreresc charged on che loan above 10%. The ~iscricc Courc held chis counr failed for a number of reasons, including che applicaeion was noc a concracc Seeween che Bank and che Shiplecs. The courc ruled che concracc becween che cwo parries was evidenced by che 1978 promissory noce for a cerm of one year ac lo%, and any oral represencacions made by che Bank prior co che signing of chac noce merged with che noce's cerms. On appeal, che Shiplecs direcc cwo arguments ac che Discricc Courc's holding. Firsc, chey argue Weinberg v. Farmers Scace Bank of Worden (Monc. 1988), 752 P.2d 719, 45 Sc.Rep. 391, is conerolling in chis case. According KO che Shiplecs, chis Courc held in Weinherg such a concracc exisced in a face sicuacion very similar co chis case. In Weinberg, che farm operacors alleged a seven-year loan agreemenc ac an inceresc race of 93%. Ilowever, in char case boch pareies had signed a promissory noce which on ics face lisced a seven-year rerm and a 94% inceresc race. The only wricing in chis case concaj-ning che cerms alleged by che Shiplecs is che applicacion for guarancy. Thac documenc was signed. only by che Bank's agent, and was direcced co he FmHA. The FmHA and che Bank later execuced a separace concracc of guaraney once che applicacion had been approved. The applicacion was noc a concracc becween che Bank and che Shiplers. As co any oral represencacions by che Bank chac che applicacion was in facr a concracc, che Discricc Courc quoced language from our decision in Firsc Nacional Moncana Bank of Missoula v. McGuiness (Monc. 1985), 705 P.2d 579, 42 Sc.Rep. 1288: [Elvidence of prior oral agreemencs is noc admissible for che purpose of alcering subsequenc wriccen agreemenes dealing wich che same subjecc, and chac ehe prior oral agreemencs and che wriccen agreemenc will merge inco che subsequenc wrircen agreemeniz unless i z h e y are discincc and can srand independencly of one anocher. 705 P.2d ac 584. Under che doccrine of merger as enunciaced in McGuiness, any oral represencacions made by che Bank merged wich che cerms of che nore, which chen represenced che concracc reached becween chese two parries. The Shiplecs second argumenc is char an exception co che doccrine of merger exiscs for evidence of an oral agreernenc introduced in order co establish fraud. As will be discussed more fully below, any such evidence would be barred by che cwo-year scacuce of 1-imicacions f o r fraud-relaced c o r c s found a c 5 27-2-203, MCA. The D i s r r i c r Courc was c o r r e c c i n grancing summary judgmenc on c h i s coune. The S h i p l e c s ' second coune a l l e g e d breach of a chird- parry-beneficiary concracc. They argued chey a r e chird-parcy b e n e f i c i a r i e s o f che guaraney concracr between che Bank and r h e FmHA. O n appeal, r h e S h i p l e c s argue Weinberg i s c o n e r o l l i n g on c h i s i s s u e a s w e l l . They a s s e r c c h i s Courc found a chird-parry-benef i c i a r y concracc i n Weinberg, rejecting r h e argumenc chac che guarancy concracc was s c r i c c l y becween che bank and che FmHA. Again, che d i s c i n g u i s h i n g f a c c o r o f che promissory noce i n Weinberg i s overlooked i n che S h i p l e c s ' argumenc. I n Weinberg, che guarancy concracc was nor h e l d co be a chird-parcy-beneficiary concracc a s such. The bank i n c h a r c a s e argued under t h e p a r o l evidence r u l e found a c 5 28-2-905, MCA, che noce was evidence o n l y o f che i n i c i a l advances made t o che Weinbergs, which had been r e p a i d . The Weinbergs a l l e g e d che noce was evidence o f an agreemenr f o r a l i n e o f c r e d i r l a s c i n g seven y e a r s . VJe held che p a r o l evidence r u l e d i d noc apply, because t h e Weinbergs were noc a ~ c e m p c i n g co vary che cerms o f che noce. They w e r e inscead basing c h e i r argumenc on c e r m s found on che n o c e ' s f a c e . W e n here fore a p p l i e d S 28-3-402, MCA, which allows evidence o f che circurnscances under which an agreemenc i s made i n o r d e r t o e x p l a i n , bur noc modify, ics cerms. The guaraney c o n r r a c c i n Weinberg was one p i e c e o f evidence showing ehe circurnscances surrounding che execurion of che noce. The documencs used i n procuring che guaraney and che bank's subsequenc accions i n r e l i a n c e on che guarancy concracc a l l percained co whac che bank and che Weinbergs had i n mind when chey execuced che noce. Unlike Weinberg, che S h i p l e e s a r e noc seeking co enforce che cerms o f c h e i r noce wich che Bank. Inscead, rhey seek KO e n f o r c e t h e guarancy concracc i c s e l f . The D i s e r i c c Courc's c i c a c i o n KO che Souch Dakoca Supreme Coure d e c i s i o n i n Swier v. Norwesc Bank (S.D. 1 9 8 7 ) , 409 N.W.2d 121, i s p e r s u a s i v e . The loan i n chac c a s e was an F m H A emergency l i v e s c o c k l o a n , che same kind o f loan involved i n c h i s c a s e . Such l o a n s a r e governed by regul-acions found a c 7 CFR 5 s 1980.201 - e c seq, which do nor p r o h i b i c a bank from r a i s i n g che i n c e r e s c r a c e charged on a loan d u r i n g che l i f e o f che guarancy. Before r a i s i n g che r a r e i c charged che S h i p l e c s , che Bank C O ~ K ~ C K ~ ~ che F m H A co f i n d our: i f c h i s would v i o l a c e che guarancy concracc, and was c o l d correctly chac i c would nor. The Discricc Coure was c o r r e c c i n grancing summary judgmenc on c h i s counc. 111. The c h i r d counc of che S h i p l e c s ' complainc a l l e g e d breach o f che scacucory obligacion of good f a i c h found i n he Uniform Commercial Code a s adopced i n Mon~ana. Secrion 30-1-203, MCA, s c a c e s , " [ e l v e r y concracc o r ducy w i t h i n c h i s code imposes an o b l i g a c i o n o f good f a i c h , " and 5 30-1-202 ( 1 9 ) , MCA, s c a c e s c h a r "good f a i c h " means honesey i n face. The S h i p l e c s ' argumenc on appeal s c a c e s b a s i c a l l y chac chere i s ample evidence of dishonesry i n a number of represencacions made KO chem by che Bank's agenc. While i c appears from our review o f che r e c o r d c h a r che S h i p l e c s experienced difficulties i n d e a l i n g wich che Rank, che evidence before u s does nor supporc a v i o l a c i o n of scacucory good f a i c h . Moncana c a s e law on c h i s s u b j e c c i s s c a r c e . However, because t h e scacucory p r o v i s i o n s c i c e d above a r e p a r e o f che Uniform Commercial Code, w e a r e a f f o r d e d che opporcunicy KO look KO decj-sions i n ocher scaces i n c e r p r e c i n g virtually identical p r o v i s i o n s . From our reading of c a s e s such a s Third Nacional Rank i n Nashville v. Hardi-Gardens Supply of I l l i n o i s , Inc. (M.D. Tenn. 1.974), 380 F.Supp. 930; and ~ i r s c Bank o f Savannah v. Kilpacrick-Smich Conscruccion Co., I n c . (Ga. 1.980), 264 S.E.2d 576, i c appears che gravamen o f che scacucory good f a i c h requirement i s whecher che cerms o f che agreernenc w e r e c a r r i e d ouc faithfully. Our review of che r e c o r d b e f o r e u s shows che v a r i o u s noces evidencing agreernenc becween che Bank and r h e S h i p l e c s w e r e i n f a c e c a r r i e d our by che Bank. The monies agreed upon w e r e advanced a c che r a c e s agreed upon i n w r i c i n g by boch p a r c i e s . Scacemencs made by che Bank's agenc, w h i l e nor always s c r i c c l y f o r c h r i g h ~ , d i d noc d e p r i v e S h i p l e c s of che b e n e f i c of che b a r g a i n s chey scruck wich che Bank. The D i s c r i c c Courc was c o r r e c c i n grancing summary judgmenc on r h i s counc. I V . The S h i p l e c s ' fourch counc a l l e g e d breach of che implied covenanc of good f a i c h and f a i r d e a l i n g . The D i s c r i c e Courc's r u l i n g c i c e d auchoricy from c h i s Courc r e q u i r i n g c h a r a breach of concracc muse be r h e r e s u l c o f some "impermissible a c c i v i c y " b e f o r e r h e breaching parcy can be held co have a l s o breached che implied covenanc of good f a i c h and f a i r d e a l i n g . See, Noonan v. F i r s c Bank Bucce (Mon~. 1 9 8 7 ) , 740 P.2d 631, 4 4 Sc.Rep. 1124; Nordlund v. School D i s c r i c c No. 1 4 (MoIIK. 1 9 8 7 ) , 738 P.2d 1299, 4 4 Sc.Rep. 1183; Nicholson v. Uniced P a c i f i c Insurance Co. (Mone. 1 9 8 5 ) , 710 P.2d 1342, 4 2 Sc.Rep. 1822. The S h i p l e c s seek co d i s c i n g u i s h c h i s auehoricy by nocing i n Nicholson we h e l d a breach o f concracc was nor a prerequisite co breach of che covenanc, because che implied covenanc o f good f a i c h is noc an obligation a r i s i n g from che concracc i c s e l f . Nicholson, 710 P.2d a c 1348. While c h i s i s c r u e , w e a l s o seaced che obligation imposed by che covenanc is c o a c e reasonably. Under c h i s scandard, we have h e l d che "minimal requiremenc" f o r breach o f che covenanc i s a c c i o n by che defendanc char i s " a r b i c r a r y , c a p r i c i o u s o r unreasonable, and exceeded plaintiffs' j u s c i f i a b l e expeccacion [ c h a r che defendanc a c e reasonably]." Noonan, 740 P.2d a c 635. I n c h i s c a s e , che S h i p l e c s had a j u s c i f i a b l e expeccacion chac che Bank would a c e reasonably by loaning rhem money on che cerms agreed upon i n che noces. A s w e found above, c h i s was done. The evidence adduced by che S h i p l e c s f a i l s co show a r b i c r a r y o r unreasonable conduce by che Bank. The Discricc Courc was c o r r e c c i n g r a n r i n g summary judgment. v. Councs f i v e ehrough nine o f che complainc a l l e g e d v a r i o u s forms of fraud and fraud-relaced c o r e s . The D i s c r i c c Courc r u l e d chese claims w e r e b a r r e d by Montana's cwo-year scacuce o f limicacions f o r accions based on fraud o r miscake found a c S 27-2-203, MCA. On a p p e a l , che S h i p l e c s concend ehey had developed a c o n f i d e n c i a l r e l a c i o n s h i p wich che Bank s i m i l a r t o chac found by c h i s Courc i n Weinberg, which roll-ed che scacuce o f limicaeions. The e x i s t e n c e o f a c o n f i d e n c i a l r e l a c i o n s h i p , however, is noc an i s s u e h e r e . The a u t h o r i c y c i c e d b 5 7 S h i p l e c s f o r che proposition c h a r che scacuce was c o l l e d i n c h i s c a s e i s 37 Am J u r 2d Fraud and Deceic S 409: Where a c o n f i d e n c i a l r e l a c i o n s h i p e x i s c s becween che p a r e i e s , f a i l u r e c o d i s c o v e r f a c e s conscicucing fraud may be excused. The b a s i s of che S h i p l e c s ' complainc i s char che Bank represenced KO chem it would loan chem money a c a r a c e o f 10% over a p e r i o d o f f i v e y e a r s , and chen d i d nor do so. I n January o f 1 9 7 8 , t h e S h i p l e c s signed a noce chac d i d noc c o n t a i n t h e a l l e g e d five-year c e r m . Tn January of 1979, chey signed a noce c h a t concained n e i t h e r t h e a l l e g e d c e r m , nor che a l l e g e d i n c e r e s c r a c e . They had a c c h a r poinc certainly discovered f a c e s s u f f i c i e n c t o conscicuce fraud. There was no f a i l u r e co d i s c o v e r f a c e s , and therefore no need f o r a c o n f i d e n c i a l r e l a c i o n s h i p argumenc. The Discrice Courc' s r u l i n g was c o r r e c c . V I . The S h i p l e c s ' cench counc a l l e g e d negligent i n f l i c c i o n of emocional d i s c r e s s . Negligent i n f l i c c i o n of emocional d i s c r e s s i s a narrowly-defined c o r c i n Montana. W e see o u r che cesc f o r c h i s c o r c i n Versland v. Caron Transporc (1983), 206 Monc. 313, 671 P.2d 583, by r e q u i r i n g an emocional impact r e s u l e i n g from d i r e c c observance of t h e deach o r s e r i o u s i n j u r y o f a c l o s e r e l a c i v e . Thac s i c u a c i o n c l e a r l y i s nor: presene h e r e , and che counc i s t h e r e f o r e a c l e a s e mislabeled. The body of c h i s counc, and che S h i p l e c s ' subsequenc argumencs c o che Districc Courc and c h i s Courc, use language adopced from our d e c i s i o n i n Johnson v . Supersave Markecs, Inc. (Monc. 1984), 686 P.2d 209, 4 1 Sc.Rep. 1495, concerning emocional d i s c r e s s a s an elemenc of damages r e s u l t i n g from a corc. W e a r e h e r e a f f i r m i n g che Discricc Courc' s granc o f summary judgmenc i n favor o f che Bank on a l l councs l i s c e d i n 7;he S h i p l e c s ' complainc. Therefore w e need noc reach che i s s u e of damages. VII. The eleveneh counc o f t h e complainc a l l e g e d promissory noLe breach o f concracc. The S h i p l e c s and t h e Bank a l l e g e d l y agreed i n c e r e s c would be due a c macuricy, wich a l l incerim paymencs a p p l i e d t o p r i n c i p a l . The S h i p l e c s a l l e g e che Bank p a r c i a l l y misapplied some incerim paymencs co i n c e r e s c . Boch p a r c i e s a g r e e che Discrice Courc correctly s c a r e d t h e g e n e r a l r u l e c h a r incerim paymencs on a debc a r e normally a p p l i e d f i r s c co accrued i n c e r e s c . S h i p l e c s argue, however, che cescimony of ehe Bank's experc wicness creaeed a genuine i s s u e o f macerial f a c e a s co a p o s s i b l e excepcion co che r u l e . The Bank's experc c e s c i f i e d che p r o v i s i o n c h a t i n c e r e s c would be due a c macuricy meanc, i n h i s opinion, incerim payrnencs would be a p p l i e d co p r i n c i p a l . The S h i p l e c s a l s o poinc ouc chae cwo o f che noces s c a r e e a r l y paymencs would be a p p l i e d co p r i n c i p a l . A recenc scacemenc o f che g e n e r a l r u l e on a p p l i c a c i o n of incerim payrnencs i s found. a c 45 Am J u r 2d I n c e r e s c and TJsury S 99. Known a s che "Uniced Scares Rule," i c provides incerim payrnencs a r e f i r s c a p p l i e d co accrued i n c e r e s c u n l e s s chere is a scacuce o r an agreernenc co che contrary. See, e . g . , Shuccs v . P h i l l i p s Pecroleum Co. (Kan. 1987), 732 p.2d 1286. Neicher excepeion i s presene i n c h i s case. Lack o f an agreernenc a s co a p p l i c a c i o n o f incerim payrnencs i s evidenced by che S h i p l e c s ' own b r i e f c o c h i s Courc. They concend chey have always asked c h a r payrnencs be a p p l i e d f i r s c co p r i n c i p a l , buc che Rank's r e p l y h a s been "chey'd do whacever chey wane co wich ic." There i s l i k e w i s e no scacuce i n Moncana d i c e a c i n g a p p l i c a c i o n o f incerim payrnencs co p r i n c i p a l . Furcherrnore, che noce language c i c e d by che S h i p l e c s s c a r i n g e a r l y payrnencs would be a p p l i e d co p r i n c i p a l was preceded. by he cavear c h a r such e a r l y payrnencs would noc r e l i e v e che dehcor of che duey c o concinue making payrnencs under che agreed paymenc schedule. This language therefore d e a l s wiizh paymenes made oucside ~ h e normal course of che l o a n , noc r e g u l a r incerim paymenes. The Discrice Courc was c o r r e c e i n grancing summary judgmenc on c h i s counc. VIII. Counc cwelve o f che complaint a l l e g e d breach o f f i d u c i a r y duey a r i s i n g from che c o n f i d e n c i a l r e l a c i o n s h i p becween che S h i p l e c s and che Bank. On a p p e a l , che S h i p l e c s again argue che situation here is analogous co chat in Weinberg, where a confidencial relacionship was found. Shiplecs also cice our decision in Deisc v. Wachholz (Monc. 1984), 678 P.2d 188, 41 Sc.Rep. 286, for che proposition char a confidencial relacionship can exisc becween a bank and ics customer in cercain sicuacions. In Deisc, we began wich che general rule chac a bank-cuscomer relacionship does not ordinarily give rise co fiduciary responsibilities. However, we found an excepcion co chis general rule when special circumscances are presenc. In D ~ ~ s K , che plaintiff and her deceased husband had banked wich che defendanc for over 20 years. After che husband's deach, che bank had caken an accive advisory role in che plaintiff's finances, and she had relied on char advice. Deisc, 678 P.2d ac 193-94. Likewise in Weinberg, we found a confidencial relacionship where che bank "parccipaced in and encouraged the changes co be made regarding che Weinbergs' farming operacion." Weinberg, 752 P.2d ac 731. One celling faccor distinguishes chis case from Deisc and Weinberg. The Shiplets did nor place such greac reliance on che Bank's advice. The Shiplecs felt chey knew more abouc ranching chan did che Bank's agenc. While che Bank advised che Shiplecs on the operacion of cheir ranch, char advice was noc always heeded. For example, chey refused co wichdraw from che FmHA guarancy program when advised co do so in 1979, and even refused to sell land when required to do so by che condicions of che seven-year FmHA guarancy issued in 1984. Furehermore, chey were represented by counsel during che 1984 negociacions. No special circumscances are presenc in chis case co create an excepcion co che general rule char a bank's relacionship wich ics cuseomer is noc a confideneial. one. The Discricc Courc was correcc in grancing summary judgmen~ on chis counc. IX. The Shiplecs final c0un.c alleged Economic Duress, in ~ h a c che Bank's agenc chreacened foreclosure when he had no legal righc co do so. Shiplees advance chis argumene again on appeal, scacing che Rank's unwarranced foreclosure chreacs descroyed cheir free agency and lefc chem wich no choice buc co sign che noces. The Shiplecs' argumene on chis counc fails for much rhe same reason as cheir argumene concerning breach of fiduciary duey. Economic duress, also known as "business compulsion," concerns che making of conrraccs under circumscances showing a lack of free will on che pare of one of che concraccing parries. However, [economic duress] is noc established merely by proof char consent was secured by che pressure of financial circumscances, or by che face char one parcy insisced upon a legal righc and che ocher parry yielded co such insistence. 25 Am Jur 2d Duress and Undue Influence § 7. The record before us shows che noces ac issue represenred an indebcedness incurred ac che requesc of che Shiplecs. They were unable co repay even che firsc note completely, and wich each new note, the indebcedness compounded. The Shiplecs' claims chac chey had no choice bur co sign chese noces seem nor from some unlawful chreac by rhe Bank, bur from che pressure of cheir mouncing debc. True, had chey nor signed che noces, the Bank could have "pue chem ouc of business," bur chis would have been chrough foreclosure, rhe Bank's lawful remedy for failure of repaymenc. The Discricc Courc was correcc in grancing summary judgment on chis counc. We a f f i r m t h e o r d e r o f the D i s t r i c t Court. Re& Justice We Concur: Justices 6 '