Title: Gose v. Hess

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Gose v. Hess1991 WY 163822 P.2d 846Case Number: 91-21Decided: 12/13/1991Supreme Court of Wyoming
RICHARD V. 
GOSE, APPELLANT (DEFENDANT),

v.

DOUGLAS 
M. HESS, APPELLEE (PLAINTIFF).

Appeal from the District Court, 
NatronaCounty, Harry E. Leimback, 
J.

 Richard V. 
Gose, pro se.

J. 
Scott Burnworth of Schwartz, Bon, McCrary & Walker, Casper, for appellee.

Before URBIGKIT, C.J., THOMAS, CARDINE and 
GOLDEN, JJ., and ROONEY, Ret. J.

ROONEY, 
Justice, Retired.

 [¶1.]     Appellant appeals from 
a summary judgment entered on an action brought against him by appellee on a 
$4,429.74 promissory note given by appellant to the American Bank of Casper and transferred to 
appellee by the Federal Deposit Insurance Corporation (FDIC) after the bank 
failed and was taken over by FDIC. Appellant had filed a counterclaim for a 
set-off of $3,000, the amount paid by him on another note of his to another 
failed bank also taken over by the FDIC. The parties stipulated and the court 
found that the $3,000 payment was "on a loan which is separate and distinct from 
that which is sued upon in the present action."

 [¶2.]     The judgment was for 
$4,429.74 (the principal amount of the note), accrued interest thereon, court 
costs, and reasonable attorney's fees of $1,841, with the total to bear interest 
at the rate of 21 percent per annum until paid.

 [¶3.]     Appellant words the 
issues on appeal:

"A. 
Counterclaim should be permitted in the suit on a Promissory Note by Hess 
against Gose.

"B. 
Attorney's fees were granted without any evidence and were to be submitted to a 
Jury for its verdict.

"C. The 
interest rate of 21 percent exceeded the legal amount 
authorized."

Appellee 
words them:

"1. 
Does the appellant's counterclaim set forth a cause of 
action?

"2. Is 
there a genuine issue as to attorney's fees which was preserved 
below?

"3. 
Does W.S. § 1-16-102(b) as amended in 1988 apply to judgments entered after the 
effective date of the statute but arising out of obligations incurred before its 
effective date?"

 [¶4.]     We 
affirm.

COUNTERCLAIM

 [¶5.]     Appellant contends the 
claimed $3,000 set-off is authorized by Wyo. Stat. § 1-1-106 (1988). It 
provides:

"When 
cross demands exist between persons under circumstances that if one brought an 
action against the other, a counterclaim or setoff could be set up, neither can 
be deprived of the benefit thereof by assignment by the other, or by his death, 
but the two (2) demands will be deemed compensated so far as they equal each 
other."

 [¶6.]     However, the premise 
for operation of the statute is not present in this case. Circumstances do not 
here exist which would allow appellant to offset or counterclaim for payment or attempted payment on one of 
the notes in an action on the other note. In other words, under the 
circumstances of this case, appellant could not have claimed the $3,000 set-off 
against the FDIC in an action brought by FDIC on the $4,429.74 note before it 
was assigned to appellee.

 [¶7.]     The $3,000 check was 
given to pay a separate $3,000 debt. It could not be said to also reduce the 
$4,429.74 debt. To do so would give a $6,000 credit for a $3,000 payment. 
However, in an affidavit made in support of his Motion to Dismiss, appellant 
states he "paid to the Federal Deposit Insurance Corporation $3,000 that should have been credited towards the 
payment of this promissory note, a 
copy of the canceled checked [sic] is attached hereto." (Emphasis added.) 
Application of the payment to this note by FDIC would have been contrary to the 
notation placed on the check by appellant. The notation read: "Payment on Note 
of Western National Bank." If an action were brought on the note of Western 
National Bank by FDIC or its assignee, appellant would have a defense of 
payment.1

 [¶8.]     Further, when FDIC 
takes over a failed bank, it is a receiver and acts in the capacity of that bank 
in winding up that bank's affairs. Here, it acts in the capacity of American 
Bank of Casper 
with reference to the $4,429.74 note and in the capacity of the Western National 
Bank with reference to the $3,000 note.

 [¶9.]     Even assuming that the 
FDIC desired to use the $3,000 payment for set-off against the $4,429.74 debt, 
the notation on the check reflecting it to be for payment of the $3,000 note 
would have prevented FDIC from doing so. To do so would have been similar to a 
set-off of one's debt against his general deposits in the bank. Speaking for the 
court, Justice Raper said in Spratt v. 
Security Bank of Buffalo, Wyoming, 654 P.2d 130, 135-36 (Wyo. 
1982):

"Before 
going further, we need to discuss a bank's right to set off against the general 
deposits in its possession. The bank's right of set-off to secure the payment of 
its depositor's indebtedness is a part of the law merchant and well established 
in commercial transactions. Atkinson v. 
Federal Deposit Ins. Corp., [635 F.2d 508 (5th Cir. 1981)]. For a bank to 
establish a right to set off, three conditions must be met: `the fund to be set 
off must be the property of the debtor, the fund must be deposited without 
restrictions, and the existing indebtedness must be due and owing.' Federal Deposit Ins. Corp. v. Pioneer State 
Bank, [155 N.J. Super. 381,] 382 A.2d [958,] 962 [1977]. The bank's right to 
set off does not arise until the time the depositor's indebtedness to the bank 
has matured. Bonhiver v. State Bank of 
Clearing, [29 Ill. App.3d 794, 331 N.E.2d 390 (1975)]. 
Addressing appellant's point, for set-off to be permissible, there must be 
mutuality of obligation between the debtor and his creditor, as well as between 
the debt and the fund on deposit. 5A Michie, Banks and Banking, § 115c. Debts to 
be used as set-offs must be due to and from the same persons in the same 
capacity. United States v. Clawson, 13 F. Supp. 178 (D.C.Wyo. 
1935)."

 [¶10.]  Wyo. Stat. § 1-1-106 does not authorize 
the set-off claimed by appellant since the premise in the statute is not present 
under the circumstances of this case, i.e., appellant could not have had an 
offset against FDIC in an action 
against him by FDIC, as receiver, on the $4,429.74 note given by him to the 
American Bank of Casper based on his payment, or attempted payment, of $3,000 on 
another note given by him to the Western National Bank, also in receivership to 
FDIC, especially in view of the payment restriction placed on the note by 
appellant.

ATTORNEY'S 
FEES

 [¶11.]  Attorney's fees are recoverable only when 
there is specific statutory or contractual authorization therefor. UNC Teton Exploration Drilling, Inc. v. 
Peyton, 774 P.2d 584, 594 (Wyo. 1989); Rocky Mountain Helicopters, Inc. v. Air 
Freight, Inc., 773 P.2d 911, 924 (Wyo. 1989). In this case, the note (contract) 
specifically authorized recovery of "all costs of collection, including but not 
limited to reasonable attorney's fees thereto paid or incurred by the Lender on 
account of such collection."

 [¶12.]  Appellant contends "the question of 
attorney's fees should be determined by a jury," citing Greenough v. Prairie Dog Ranch, Inc., 
531 P.2d 499 (Wyo. 1975) in support thereof. In Greenough, we recognized the 
determination of attorney's fees to be a factual question to be decided upon the 
evidence and facts of each individual case, but we held the determination to be 
one for the court. The case was remanded to the district court with instructions 
to make the determination. The allowance of attorney's fees and the amount 
thereof is within the discretion of the trial court. UNC Teton Exploration Drilling, Inc., 
774 P.2d 584; Lebsack v. Town of 
Torrington, 698 P.2d 1141, reh. 
denied and case remanded 703 P.2d 338, order amended 707 P.2d 1389 (Wyo. 1985); Combs 
v. Walters, 518 P.2d 1254 (Wyo. 1974); Bruegger v. National Old Line Ins. Co., 
529 F.2d 869 (10th Cir. 1976). Appellant is wrong in his contention that the 
question of attorney's fees should be determined by a 
jury.

 [¶13.]  The amount here allowed by the court for 
attorney's fees is that set forth in appellee's proposed order and summary 
judgment which was submitted to the trial court pursuant to Rule 404, Uniform 
Rules for the District Courts of the State of Wyoming. Evidence was not presented relative 
to the reasonableness of them. Appellee contends appellant did not properly 
object to the provision for attorney's fees in the proposed order and summary 
judgment, and that he is, therefore, precluded from raising the issue on appeal. 
In support thereof, appellee quotes as follows from Dennis v. Dennis, 675 P.2d 265, 266 
(Wyo. 1984) 
(citations omitted and emphasis added):

"[W]e 
will not ordinarily consider contentions of error unless the trial court has 
first been apprised thereof and given an opportunity to rule on the alleged 
error. The trial court is usually apprised of the error by means of objection together with reasons in support of the 
objection."

 [¶14.]  A purpose in Rule 404 of requiring a 
proposed order is to give the non-prevailing party an opportunity to object to 
alleged errors in the order, and to give the trial court an opportunity to make 
any necessary correction. In his objection to the proposed order and summary 
judgment, appellant recited: "Objection is further made on the basis that the 
matters going to Judgment should have been tried before a jury, including 
attorney's fees."

 [¶15.]  The objection is to a refusal to submit 
the question of attorney's fees to a jury, it is not to the failure to submit 
evidence of the reasonableness of the fees. Appellant failed to preserve any 
error concerning the reasonableness of the attorney's fees for consideration of 
this court. If the objection had been made to the failure to submit evidence 
concerning the reasonableness of the fees, our affirmance in this case would 
have excepted the issue of attorney's fees, and we would have remanded the case 
for a hearing as to their reasonableness. We make this comment to emphasize our 
preference for proper supporting evidence of the reasonableness of attorney's 
fees, rather than an agreement between the parties thereto. The failure to 
object in this instance amounts to such agreement, and the area is one in which 
there should be no suggestion of agreement between attorneys concerning fees. 
The relationship of the parties and attorneys in this case negates such 
suggestion, but the bar is cautioned in this respect.

INTEREST

 [¶16.]  Wyo. Stat. § 1-16-102(b) as amended 
effective June 9, 1988, provides:

"If the 
decree or judgment is founded on a contract and all parties to the contract 
agreed to interest at a certain rate, the rate of interest on the decree or 
judgment shall correspond to the terms of the contract."

 [¶17.]  The note sued upon provided for interest 
at the rate of 21 percent per annum after its maturity date of July 12, 1986. 
Pursuant to Wyo. Stat. § 1-16-102(b) as amended, the court awarded interest on 
the judgment at the rate of 21 percent per annum. Prior to the amendment, the 
statute set such interest rate at 10 percent per annum.

 [¶18.]  Appellant argues that inasmuch as the 
note was executed in January 1986, the rate of interest after judgment should be 
10 percent pursuant to the statute then in force. He contends that application 
of the statute as amended is an improper retroactive application of the amended 
statute.

 [¶19.]  The interest is on the judgment, not on 
the note. It was the judgment that triggered the application of the amended 
statute. It is not being applied retroactively to the note. "`A statute is not 
necessarily retroactive because it draws upon antecedent facts for its 
operation.'" Independent Producers 
Marketing Corp. v. Cobb, 721 P.2d 1106, 1109 (Wyo. 1986) (quoting Belco Petroleum Corp. v. State Board of 
Equalization, 587 P.2d 204 (Wyo. 1978)). Interest on the judgment was 
properly awarded at the rate of 21 percent per annum.

 [¶20.]  Affirmed.

 
 
FOOTNOTES

1 There is nothing in the record 
indicating a refusal to accept payment for the $3,000 note except appellant's 
statement that credit should have been given for it.

THOMAS, 
Justice, concurring specially, with whom URBIGKIT, Chief Justice, and GOLDEN, 
Justice, join.

 [¶21.]  I concur without reservation in the 
opinion of the court as to all issues other than the question of the attorney 
fee. I had a concern about the sufficiency of the record to establish the 
attorney fee that the court awarded in this case under our prior cases. See, e.g., UNC Teton Exploration Drilling, 
Inc. v. Peyton, 774 P.2d 584 (Wyo. 1989); 
Albrecht v. Zwaanshoek Holding En 
Financiering, B.V., 762 P.2d 1174 (Wyo. 
1988); Miles v. CEC Homes, Inc., 753 P.2d 1021 (Wyo. 1988); and Downing v. Stiles, 635 P.2d 808 
(Wyo. 1981). 
That concern has been resolved by subsequent pleadings, filed in this case, that 
establish that the attorney fee that was awarded has been paid to the appellee 
by the appellant. Under the circumstances, I am satisfied that there has been an 
admission of the correctness and propriety of the amount awarded as an attorney 
fee by the trial court.