- 30 -

Nebraska Court of Appeals Advance Sheets

25 Nebraska Appellate Reports

WALKER v. PROBANDT

Cite as 25 Neb. App. 30

Dennis Walker et al., appellants and

cross-appellees, v. John Probandt, 

appellee, and John Raynor, 

appellee and cross-appellant.

___ N.W.2d ___

Filed September 12, 2017. No. A-16-844.

1. Default Judgments: Pleadings: Appeal and Error. Whether default 

judgment should be entered because of a party’s failure to timely 

respond to a petition rests within the discretion of the trial court, and an 

abuse of discretion must affirmatively appear to justify reversal on such 

a ground.

2. Default Judgments. A trial court should defer entering a default judgment against one of multiple defendants where doing so could result 

in inconsistent and illogical judgments following determination on the 

merits as to the defendants not in default.

3. Default Judgments: Pleadings: Damages. In the case of an original 

action filed in the district court, the failure of a defendant to file a 

responsive pleading entitles the plaintiff to a default judgment, without 

evidence in support of the allegations of the petition, except as to allegations of value or damages.

4. Negotiable Instruments: Principal and Surety. If an instrument is 

issued for value given for the benefit of a party to the instrument 

(accommodated party) and another party to the instrument (accommodation party) signs the instrument for the purpose of incurring liability on 

the instrument without being a direct beneficiary of the value given for 

the instrument, the instrument is signed by the accommodation party 

for accommodation.

5. Negotiable Instruments: Principal and Surety: Words and Phrases.

An accommodation party is one who signs the instrument for the purpose of lending his credit to some other person or party.

6. Promissory Notes: Guaranty. The assignment of a promissory note and 

its guaranties to a guarantor does not enhance the guarantor’s right of 

Nebraska Supreme Court Online Library

www.nebraska.gov/apps-courts-epub/

09/19/2017 01:10 AM CDT
- 31 -

Nebraska Court of Appeals Advance Sheets

25 Nebraska Appellate Reports

WALKER v. PROBANDT

Cite as 25 Neb. App. 30

recovery against a coguarantor; rather, recovery against a coguarantor 

remains limited to the coguarantor’s proportionate share.

7. Negotiable Instruments: Intent. In determining the identity of the 

party accommodated, the intention of the parties is determinative.

8. Actions: Contribution: Time: Liability. Co-obligors to a debt are each 

liable for a proportionate share of the debt as a whole, and an action for 

contribution does not accrue until a co-obligor has paid more than his or 

her proportionate share of the debt as a whole.

9. Negotiable Instruments: Security Interests: Contribution: Liability.

If the obligation of a party is secured by an interest in collateral not 

provided by an accommodation party and a person entitled to enforce 

the instrument impairs the value of the interest in collateral, the obligation of any party who is jointly and severally liable with respect to the 

secured obligation is discharged to the extent the impairment causes the 

party asserting discharge to pay more than that party would have been 

obliged to pay, taking into account rights of contribution, if impairment 

had not occurred.

10. Security Interests. Impairing value of an interest in collateral includes 

failure to obtain or maintain perfection or recordation of the interest 

in collateral.

11. Principal and Surety: Words and Phrases. Rights of the surety to 

discharge are commonly referred to as “suretyship defenses.”

12. Contracts: Guaranty: Waiver. The defense that a guarantor is discharged by a creditor’s impairment of collateral can be waived by an 

express provision in the guaranty agreement.

13. Reformation: Words and Phrases. A mutual mistake is a belief shared 

by the parties, which is not in accord with the facts.

14. ____: ____. A mutual mistake is a mistake common to both parties in 

reference to the instrument to be reformed, each party laboring under the 

same misconception about its instrument.

15. Reformation: Intent. A mutual mistake exists where there has been a 

meeting of the minds of the parties and an agreement actually entered 

into, but the agreement in its written form does not express what was 

really intended by the parties.

16. Reformation: Presumptions: Intent: Evidence. To overcome the presumption that an agreement correctly expresses the parties’ intent and 

therefore should not be reformed, the party seeking reformation must 

offer clear, convincing, and satisfactory evidence.

17. Evidence: Words and Phrases. Clear and convincing evidence means 

that amount of evidence which produces in the trier of fact a firm belief 

or conviction about the existence of a fact to be proved.

18. Uniform Commercial Code: Negotiable Instruments: Words and 

Phrases. A holder in due course means the holder takes an instrument 
- 32 -

Nebraska Court of Appeals Advance Sheets

25 Nebraska Appellate Reports

WALKER v. PROBANDT

Cite as 25 Neb. App. 30

(1) for value, (2) in good faith, (3) without notice that the instrument is 

overdue or has been dishonored or that there is an uncured default with 

respect to payment of another instrument issued as part of the same 

series, (4) without notice that the instrument contains an unauthorized 

signature or has been altered, (5) without notice of any claim to the 

instrument described in Neb. U.C.C. § 3-306 (Reissue 2001), and (6) 

without notice that any party has a defense or claim in recoupment 

described in Neb. U.C.C. § 3-305(a) (Reissue 2001).

19. Contracts: Negotiable Instruments. Unless one has the rights of a 

holder in due course, he is subject to all the defenses of any party which 

would be available in an action on a simple contract.

20. Breach of Contract: Damages. In a breach of contract case, the ultimate objective of a damages award is to put the injured party in the 

same position he would have occupied if the contract had been performed, that is, to make the injured party whole.

21. Damages. As a general rule, a party may not have double recovery for 

a single injury, or be made “more than whole” by compensation which 

exceeds the actual damages sustained.

22. Actions: Accord and Satisfaction. Where several claims are asserted 

against several parties for redress of the same injury, only one satisfaction can be had.

23. Accord and Satisfaction: Damages. Where the plaintiff has received 

satisfaction from a settlement with one defendant for injury and damages alleged in the action, any damages for which a remaining defendant 

would be potentially liable must be reduced pro tanto.

24. Actions: Parties. Every action must be prosecuted in the name of the 

real party in interest.

25. Actions: Parties: Standing. To determine whether a party is a real party 

in interest, the focus of the inquiry is whether that party has standing to 

sue due to some real interest in the cause of action, or a legal or equitable right, title, or interest in the subject matter of the controversy.

26. Assignments: Words and Phrases. As a general rule, an assignment is 

a transfer vesting in the assignee all of the assignor’s rights in property 

which is the subject of the assignment.

27. Assignments. The assignee of a thing in action may maintain an action 

thereon in the assignee’s own name and behalf, without the name of 

the assignor.

28. Assignments: Consideration. An assignee may recover the full value 

of an assigned claim regardless of the consideration paid for the 

assignment.

29. Pleadings: Evidence. Admissions made in superseded pleadings are no 

longer judicial admissions, but, rather, simple admissions.
- 33 -

Nebraska Court of Appeals Advance Sheets

25 Nebraska Appellate Reports

WALKER v. PROBANDT

Cite as 25 Neb. App. 30

30. Contracts: Consideration. Generally, there is sufficient consideration 

for a promise if there is any benefit to the promisor or any detriment to 

the promisee. What that benefit and detriment must be or how valuable 

it must be varies from case to case. It is clear, however, that even “a 

peppercorn” may be sufficient.

31. ____: ____. A benefit need not necessarily accrue to the promisor if a 

detriment to the promisee is present, and there is a consideration if the 

promisee does anything legal which he is not bound to do or refrains 

from doing anything which he has a right to do, whether or not there is 

any actual loss or detriment to him or actual benefit to the promisor.

32. ____: ____. For the purpose of determining consideration for a promise, 

the benefit need not be to the party contracting, but may be to anyone 

else at the contracting party’s procurement or request.

Appeal from the District Court for Dawson County: James

E. Doyle IV, Judge. Affirmed in part, and in part reversed and 

remanded with directions.

Diana J. Vogt and James D. Sherrets, of Sherrets, Bruno & 

Vogt, L.L.C., for appellants.

Patrick M. Heng, of Waite, McWha & Heng, for appellee 

John Raynor.

Moore, Chief Judge, and Inbody and Riedmann, Judges.

Riedmann, Judge.

I. INTRODUCTION

This case calls into question the ability of a co-obligor to 

settle a claim on a promissory note for less than the amount 

due, and in return obtain the authority to direct assignment of 

the note to a third party of his choosing for full enforcement 

against another co-obligor. Under the facts of this case, we 

find recovery must be limited to the amount outstanding on 

the note.

II. BACKGROUND

A & G Precision Parts, LLC (Parts LLC), was a limited 

liability company whose members at the time of organization were Dennis Walker, John Raynor, John Probandt, John 
- 34 -

Nebraska Court of Appeals Advance Sheets

25 Nebraska Appellate Reports

WALKER v. PROBANDT

Cite as 25 Neb. App. 30

Brazier, and Walter Glass. The five members of Parts LLC 

formed a second limited liability company, A&G Precision 

Parts Finance, LLC (Finance LLC).

In 2002, Finance LLC, Walker, Raynor, and Brazier obtained 

a loan from Five Points Bank of Grand Island, Nebraska, for 

approximately $2.1 million and delivered the proceeds of the 

loan to Parts LLC. Parts LLC and Finance LLC (collectively 

the LLCs) did not make the loan payments as required, and 

the bank made demand for full payment. In September 2004, 

Raynor filed personal bankruptcy, and his personal liability 

on the Five Points Bank loan was discharged in bankruptcy 

in 2005.

In March 2008, the parties negotiated with First State Bank 

(FSB) to refinance the Five Points Bank loan. In conjunction with the loan, Parts LLC, Finance LLC, Walker, Raynor, 

Brazier, and Mark Herz signed a promissory note for $1.5 million. Under the promissory note, Walker, Raynor, Brazier, and 

Herz were cosigners on the loan and assumed joint and several 

liability for the repayment of the loan. The LLCs defaulted on 

the loan, and FSB commenced this action to recover on the 

note in February 2009.

In June 2011, Parts LLC, Finance LLC, Walker, Walker’s 

wife, FSB, and Five Points Bank entered into a settlement 

agreement and mutual release under which Walker agreed to 

pay FSB $1.05 million to settle the claims FSB asserted against 

him and the LLCs. In exchange, FSB assigned the FSB note 

and related agreements to an entity of Walker’s choosing; he 

selected Skyline Acquisition, LLC (Skyline). As a result of the 

settlement and assignment, Walker and the LLCs became plaintiffs in this action. On the first day of trial, the plaintiffs orally 

moved to amend the pleadings to name Skyline as a plaintiff, 

and the district court granted the motion.

Walker and the LLCs filed a motion for default judgment 

against Probandt on December 15, 2011. They asserted that 

Probandt never filed an answer and asked that judgment be 

entered against him in the amount of $2,134,832.99. The 
- 35 -

Nebraska Court of Appeals Advance Sheets

25 Nebraska Appellate Reports

WALKER v. PROBANDT

Cite as 25 Neb. App. 30

district court denied the motion, finding that entering a default 

judgment as to one defendant prior to trial could result in 

inconsistent and illogical judgments following determination 

on the merits as to the remaining defendants.

Due to various settlement agreements and dismissals, the 

parties remaining at trial were Walker, the LLCs, and Skyline 

as plaintiffs, and Raynor and Probandt as defendants. Probandt 

did not appear at trial. Trial was held on the fourth amended 

complaint, which included four operative causes of action—

two against Raynor and two against Probandt. Raynor’s operative answer asserted several affirmative defenses and two 

counterclaims.

After the conclusion of trial, the district court entered an 

order which found in favor of Skyline as to one claim against 

Raynor but denied the remaining causes of action and Raynor’s 

counterclaims. Specifically, the court found that the evidence 

established Raynor’s liability to Skyline for repayment of the 

FSB note, because the full amount of principal and interest 

is due and Raynor has made no payments on the note and is 

in default. The court noted that the president of FSB testified 

that the principal amount due on the note as of the first day 

of trial was $1,430,260. Adding in the accrued interest up to 

the time of the court’s order, judgment was entered in favor of 

Skyline and against Raynor for $2,306,244.76. In its order, the 

court stated that default judgment had previously been entered 

against Probandt on the FSB note. Walker, the LLCs, and 

Skyline (hereinafter collectively the appellants) appeal, and 

Raynor cross-appeals.

III. ASSIGNMENTS OF ERROR

On appeal, the appellants assign that the district court erred 

in failing to enter an award of damages against Probandt for 

the full amount of the note and for the amount of money 

Probandt misappropriated from Parts LLC. On cross-appeal, 

Raynor assigns, restated and renumbered, that the district court 

erred in (1) failing to apply Nebraska’s Uniform Commercial 
- 36 -

Nebraska Court of Appeals Advance Sheets

25 Nebraska Appellate Reports

WALKER v. PROBANDT

Cite as 25 Neb. App. 30

Code (U.C.C.); (2) failing to give effect to the order of the 

bankruptcy court; (3) failing to find that he was an accommodation party and Walker was an accommodated party; (4) 

failing to apply the rule based on Mandolfo v. Chudy, 253 Neb. 

927, 573 N.W.2d 135 (1998) (Mandolfo Rule); (5) denying 

judgment on his counterclaim for contribution; (6) failing to 

find that his obligation on the debt was discharged; (7) failing 

to find mutual mistakes of fact; (8) allowing judgment in favor 

of Skyline because of lack of consideration; (9) entering judgment in favor of Skyline because Skyline sustained no injury 

and received a windfall; (10) failing to treat Walker as the real 

party in interest; (11) allowing foreign corporations to prosecute the action without certificates of authority; (12) allowing Walker and the LLCs to take inconsistent positions with 

respect to the enforceability of the FSB note; and (13) ignoring 

the “sole basis” stipulation.

IV. STANDARD OF REVIEW

A suit for damages arising from breach of a contract, including breach of the terms of a promissory note, presents an action 

at law. Schuelke v. Wilson, 255 Neb. 726, 587 N.W.2d 369 

(1998). In a bench trial of a law action, a trial court’s factual 

findings have the effect of a jury verdict and will not be set 

aside unless clearly erroneous. Id.

V. ANALYSIS

1. Default Judgment Against Probandt

On appeal, the appellants assign that the district court erred 

in failing to enter an award of damages against Probandt. 

The appellants argue that because Probandt failed to appear 

and enter a responsive pleading, and the evidence was sufficient to establish his liability and damages, the court should 

have entered a default judgment. We find that the district 

court did not abuse its discretion in failing to grant a default 

judgment on the unjust enrichment claim, but that it should 

have granted a default judgment against Probandt on the 
- 37 -

Nebraska Court of Appeals Advance Sheets

25 Nebraska Appellate Reports

WALKER v. PROBANDT

Cite as 25 Neb. App. 30

fraud/misappropriation claim. We therefore reverse the court’s 

order denying the appellants’ cause of action for fraud/

misappropriation against Probandt.

[1,2] Whether default judgment should be entered because 

of a party’s failure to timely respond to a petition rests within 

the discretion of the trial court, and an abuse of discretion 

must affirmatively appear to justify reversal on such a ground. 

Mason State Bank v. Sekutera, 236 Neb. 361, 461 N.W.2d 517 

(1990). In denying the motion for default judgment before trial 

in the present case, the district court concluded that entry of 

a default judgment prior to trial could result in inconsistent 

and illogical judgments following determination on the merits as to the remaining defendants. In reaching its decision, 

the district court relied upon State of Florida v. Countrywide 

Truck Ins. Agency, 258 Neb. 113, 602 N.W.2d 432 (1999), 

in which the Nebraska Supreme Court held that under Frow 

v. De La Vega, 82 U.S. (15 Wall.) 552, 21 L. Ed. 60 (1872), 

a trial court should defer entering a default judgment against 

one of multiple defendants where doing so could result in 

inconsistent and illogical judgments following determination 

on the merits as to the defendants not in default.

Here, the operative complaint at the time the motion for 

default judgment was filed was the second amended complaint; 

however, between the date the motion was argued and the 

date on which the court entered its order, the appellants filed 

a revised third amended complaint. It is upon this complaint 

that the court denied the motion. In the revised third amended 

complaint, the appellants included two causes of action against 

Probandt. The first was a claim for unjust enrichment against 

Brazier, Herz, and Probandt. Therein, the complaint alleged 

that Brazier, Herz, and Probandt used a portion of the funds 

from the FSB loan to satisfy the loan which was owed to 

Five Points Bank by the LLCs and guaranteed by Probandt 

and Glass. The complaint alleged that because Probandt was 

a guarantor of the Five Points Bank loan, he benefited from 

the use of the FSB loan to pay off the Five Points Bank loan, 
- 38 -

Nebraska Court of Appeals Advance Sheets

25 Nebraska Appellate Reports

WALKER v. PROBANDT

Cite as 25 Neb. App. 30

relieving him of his obligation to Five Points Bank. It further alleged that despite demands to pay, Brazier, Herz, and 

Probandt failed to pay the amount due.

The second cause of action involving Probandt was for 

fraud. This claim alleged that Probandt misappropriated funds 

from the original financing of Parts LLC to finance other 

business ventures; Probandt took unauthorized payments from 

Parts LLC; Probandt took money from Parts LLC and signed a 

promissory note in the amount of $64,859 but never repaid the 

note; and Probandt used funds of Parts LLC to pay rent on an 

apartment and pay personal living expenses.

Although the appellants’ motion for default judgment was 

broad, at the hearing on the motion, the appellants’ counsel 

limited the scope of her motion. Responding to an objection 

to an offered exhibit, she stated, “[T]hese number[s] go to just 

amounts that . . . Probandt took for his personal uses. There’s a 

separate cause of action against . . . Probandt for misappropriation of funds; and this default judgment only goes to that cause 

of action.”

Our review of the revised third amended complaint reveals 

that the cause of action to which counsel referred was the fraud/

misappropriation claim. Under this cause of action, appellants 

sought recovery from only Probandt for actions he performed 

individually. It does not involve the other defendants and 

therefore a judgment against Probandt on this cause of action 

could not produce conflicting results. We determine that the 

court’s analysis under State of Florida v. Countrywide Truck 

Ins. Agency, supra, is therefore inapplicable.

[3] In the case of an original action filed in the district court, 

the failure of a defendant to file a responsive pleading entitles 

the plaintiff to a default judgment, without evidence in support 

of the allegations of the petition, except as to allegations of 

value or damages. Chapman v. Department of Motor Vehicles, 

8 Neb. App. 386, 594 N.W.2d 655 (1999). Because Probandt 

failed to file a responsive pleading, the appellants were entitled to a default judgment on their fraud/misappropriation 
- 39 -

Nebraska Court of Appeals Advance Sheets

25 Nebraska Appellate Reports

WALKER v. PROBANDT

Cite as 25 Neb. App. 30

cause of action. It was then incumbent upon the appellants to 

prove damages.

The appellants argue on appeal that they sufficiently proved 

damages at trial via deposition testimony of Rex Hansen, a 

certified public accountant, and Herz. We agree that Hansen’s 

testimony and the corresponding ledger offered at the close of 

appellant’s case in chief establishes damages in the amount 

of $2,184,530.

Hansen testified that he classified expenditures by Probandt 

into two categories: “Bad” and “Sketch.” According to Hansen, 

the “Bad” were expenditures “clearly used for something other 

than the daily operations of A&G” and the “Sketch” expenditures were composed of items that he “didn’t understand what 

they were. There were some loan guarantees, financing costs, 

et cetera.” The “Bad” totaled $2,184,530, and the “Sketch” 

totaled $477,661. We determine that the evidence sufficiently 

proved that Probandt misappropriated $2,184,530 from the 

LLCs; however, the evidence that the “Sketch” items represented additional misappropriations was insufficient due to 

Hansen’s own admission that he did not understand what they 

were. Accordingly, the court should have entered a default 

judgment against Probandt in the amount of $2,184,530.

Because counsel limited the scope of her pretrial motion for 

default judgment to the claim for misappropriation of funds, 

the court did not err in failing to grant a default judgment 

against Probandt on the unjust enrichment claim. We further 

observe that the appellants did not move for default either at 

trial or after trial. See, e.g., Forker Solar, Inc. v. Knoblauch, 

224 Neb. 143, 396 N.W.2d 273 (1986) (referencing plaintiff’s 

motion for default judgment made after trial).

We note that in its memorandum order entered after trial, 

the court stated, “During the early stages of the case, the 

court entered a default judgment against . . . Probandt on 

the plaintiffs’ claims under the First State Bank note.” The 

appellants argue that the court’s statement was in error, and 

Raynor takes no position on the assigned error. We agree that 
- 40 -

Nebraska Court of Appeals Advance Sheets

25 Nebraska Appellate Reports

WALKER v. PROBANDT

Cite as 25 Neb. App. 30

no order is contained in our record granting default judgment 

against Probandt. However, we interpret the court’s misstatement to relate to a claim other than the two claims contained in the operative complaint because the district court’s 

order specifically rejected these two claims, citing a lack of 

proof. Therefore, this misstatement does not constitute reversible error.

2. U.C.C.

On cross-appeal, Raynor posits several arguments with 

respect to the U.C.C. He argues that the district court failed 

to apply the U.C.C., failed to give effect to the order of the 

bankruptcy court, failed to find that he was an accommodation 

party and Walker was an accommodated party as defined by 

the U.C.C., failed to apply the Mandolfo Rule, erred in denying judgment on his contribution counterclaim against Walker, 

and failed to find that his obligation on the debt was discharged 

under the U.C.C.

(a) Failure to Apply U.C.C.

Raynor first claims that the district court erred in failing 

to apply the U.C.C. in entering judgment against him on the 

FSB note. He does not specify, however, in what way the court 

“ignor[ed]” the U.C.C. Brief for appellee on cross-appeal at 

30. The parties stipulated that the FSB note is a negotiable 

instrument within the meaning of the U.C.C. When the district 

court addressed Raynor’s arguments regarding accommodation 

and accommodated parties in its order, the court cited to the 

U.C.C. Although it disagreed with Raynor’s position, the court 

considered certain sections of the U.C.C. in reaching its decision. We therefore disagree with Raynor’s assertion that the 

district court did not address the U.C.C.

(b) Accommodation Party and 

Accommodated Party

Raynor next argues that the district court failed to give 

effect to the bankruptcy court order to find that he was an 
- 41 -

Nebraska Court of Appeals Advance Sheets

25 Nebraska Appellate Reports

WALKER v. PROBANDT

Cite as 25 Neb. App. 30

accommodation party and failed to find that Walker was an 

accommodated party. He asserts that because, at the time he 

signed the FSB note, he had no ownership in the LLCs and 

was not personally liable for the Five Points Bank loan, he 

qualifies as an accommodation party under the U.C.C. He 

further claims that Walker is an accommodated party and 

that under the U.C.C., an accommodated party is prohibited 

from seeking contribution from an accommodation party. 

Therefore, he argues that the judgment entered against him 

is erroneous.

[4] If an instrument is issued for value given for the benefit 

of a party to the instrument (accommodated party) and another 

party to the instrument (accommodation party) signs the instrument for the purpose of incurring liability on the instrument 

without being a direct beneficiary of the value given for 

the instrument, the instrument is signed by the accommodation party “‘for accommodation.’” Neb. U.C.C. § 3-419(a) 

(Reissue 2001).

[5] An accommodation party is one who signs the instrument for the purpose of lending his credit to some other person or party. See Bachman v. Junkin, 129 Neb. 165, 260 N.W. 

813 (1935). See, also, 10 C.J.S. Bills and Notes § 26 (2008) 

(party accommodated is one to whom name of accommodation 

party is loaned).

The claim upon which judgment was entered against Raynor 

was based on his liability to FSB for nonpayment of the loan. 

Specifically, the operative complaint alleges that Raynor was 

a maker and guarantor of the promissory note to FSB in the 

amount of $1.5 million and that Raynor failed to pay amounts 

due on the loan; therefore, FSB, later amended to Skyline as 

assignee, is entitled to judgment against Raynor for the outstanding balance plus interest. The district court agreed, finding that Raynor signed the note but failed to repay the loan 

and was therefore liable. In its order, the district court stated 

that for “the sake of resolving the claims, the court assumed 

Raynor was an accommodation maker.” The court observed 
- 42 -

Nebraska Court of Appeals Advance Sheets

25 Nebraska Appellate Reports

WALKER v. PROBANDT

Cite as 25 Neb. App. 30

that as an accommodation party, Raynor remained liable to 

FSB, and subsequently to Skyline. His status of an accommodation party would only be relevant in an action for contribution by the accommodated party. However, because this was 

not a cause of action for contribution raised by Walker individually, the issue of contribution between an accommodated 

party and an accommodation party was immaterial.

We find no error in the district court’s analysis. As stated 

above, the claim on the FSB note was prosecuted in the name 

of Skyline, the assignee of the note. The court’s judgment was 

in favor of Skyline, not Walker. As such, the status of Raynor 

and Walker under the U.C.C., and whether Walker is barred 

from seeking contribution from Raynor, have no effect on 

whether Skyline can recover on the note from Raynor. This 

argument therefore lacks merit.

(c) Mandolfo Rule

[6] Raynor next argues that the district court erred in failing to apply the Mandolfo Rule, which he claims prohibits 

enhancing recovery by reason of the assignment of a promissory note after default. See Mandolfo v. Chudy, 253 Neb. 927, 

573 N.W.2d 135 (1998). See, also, Rodehorst v. Gartner, 266 

Neb. 842, 669 N.W.2d 679 (2003). In the cases Raynor cites, 

the Supreme Court held that the assignment of a promissory 

note and its guaranties to a guarantor does not enhance the 

guarantor’s right of recovery against a coguarantor; rather, 

recovery against a coguarantor remains limited to the coguarantor’s proportionate share. See, Mandolfo v. Chudy, supra; 

Rodehorst v. Gartner, supra.

In the present case, however, the assignment of the note 

was not made to a coguarantor of the note, but, instead, to 

Skyline. Raynor argues that Skyline is a mere alter ego of 

Walker and that the assignment of the note to Skyline was a 

“[s]ham [t]ransaction” because it was done for the sole purpose 

of enhancing Walker’s recovery. Brief for appellee on crossappeal at 34. We find no evidence in the record to support 
- 43 -

Nebraska Court of Appeals Advance Sheets

25 Nebraska Appellate Reports

WALKER v. PROBANDT

Cite as 25 Neb. App. 30

this argument, however, and Raynor cites to none in his brief. 

To the contrary, the only evidence regarding Skyline is that it 

is owned by Walker and his wife. None of the factors necessary to evaluate the existence of an alter ego were presented. 

As such, we find the holdings of Mandolfo and Rodehorst are 

inapplicable to the present case and do not prohibit Skyline’s 

recovery on the FSB note from Raynor.

(d) Counterclaim for Contribution

Raynor argues that the district court erred in denying his 

counterclaim for contribution from Walker, asserting that under 

§ 3-419, Walker is the party primarily responsible for the debt 

because of his status as an accommodated party. As such, 

Raynor argues that his contribution claim should have been 

granted. We disagree.

The district court denied Raynor’s contribution claim because 

there was no evidence that Raynor had paid any portion of the 

FSB debt. Raynor claims this “result ignores the duty of the 

Trial Court to fully dispose of all contribution issues of parties 

to the controversy regarding the personal liability for unpaid 

negotiable instruments according to each party’s pecuniary 

obligation pursuant to Nebr. U.C.C., Article 3, Part 4.” Brief 

for appellee on cross-appeal at 39.

Assuming without deciding that Raynor was an accommodation party, the evidence does not establish that Raynor 

signed the note in order to accommodate or benefit Walker; he 

stipulated that he signed it to assist Herz who was managing 

the business of the LLCs. In essence, Raynor signed it to assist 

the LLCs in obtaining the loan. With respect to the instrument, 

Walker held the same position Raynor did—that of cosigner 

who lent his credit in order to benefit the LLCs.

[7] The fact that Walker was an owner of the LLCs and 

received some benefit from the FSB note does not conclusively 

establish his status as an accommodated party. See Empson 

v. Richter, 113 Neb. 706, 204 N.W. 518 (1925) (mere fact 

that party may have received some benefit out of transaction 
- 44 -

Nebraska Court of Appeals Advance Sheets

25 Nebraska Appellate Reports

WALKER v. PROBANDT

Cite as 25 Neb. App. 30

does not necessarily determine that he was an accommodated 

party). Rather, in determining the identity of the party accommodated, the intention of the parties is determinative. See 10 

C.J.S. Bills and Notes § 26 (2008). There is no evidence that 

Raynor intended to assist Walker in obtaining a loan. Walker 

needed no accommodation to secure financing, because the 

undisputed evidence establishes that FSB offered financing to 

the LLCs based exclusively on Walker’s financial strength and 

willingness to cosign. Thus, Raynor and Walker each cosigned 

the note in order to assist the LLCs, and therefore, Walker had 

no greater liability on the note than did Raynor.

[8] Co-obligors to a debt are each liable for a proportionate share of the debt as a whole, and an action for contribution does not accrue until a co-obligor has paid more than 

his or her proportionate share of the debt as a whole. See 

Cepel v. Smallcomb, 261 Neb. 934, 628 N.W.2d 654 (2001). 

Accordingly, until Raynor has paid more than his proportionate 

share of the debt as a whole, he has no basis for contribution 

from Walker or any other co-obligors. As a result, the district 

court did not err in denying Raynor’s counterclaim for contribution from Walker.

(e) Discharge of Raynor’s 

Obligation

Raynor asserts that because FSB failed to properly secure 

Walker’s collateral, his liability on the note is discharged under 

Neb. U.C.C. § 3-605 (Reissue 2001). We conclude that this 

defense has been waived.

[9-11] If the obligation of a party is secured by an interest 

in collateral not provided by an accommodation party and a 

person entitled to enforce the instrument impairs the value of 

the interest in collateral, the obligation of any party who is 

jointly and severally liable with respect to the secured obligation is discharged to the extent the impairment causes the party 

asserting discharge to pay more than that party would have 

been obliged to pay, taking into account rights of contribution, 
- 45 -

Nebraska Court of Appeals Advance Sheets

25 Nebraska Appellate Reports

WALKER v. PROBANDT

Cite as 25 Neb. App. 30

if impairment had not occurred. § 3-605(f). Impairing value 

of an interest in collateral includes failure to obtain or maintain perfection or recordation of the interest in collateral. See 

§ 3-605(g). Rights of the surety to discharge are commonly 

referred to as “suretyship defenses.” § 3-605, comment 1.

[12] Here, however, Raynor waived his right to assert this 

defense. According to the promissory note Raynor signed in 

conjunction with the FSB loan, Raynor agreed to “waive 

any defenses . . . based on suretyship or impairment of collateral.” The defense that a guarantor is discharged by a 

creditor’s impairment of collateral can be waived by an express 

provision in the guaranty agreement. See Builders Supply 

Co. v. Czerwinski, 275 Neb. 622, 748 N.W.2d 645 (2008). 

Accordingly, we find that Raynor has waived his right to assert 

this defense.

3. Mutual Mistakes of Fact

Raynor argues that he is not liable for the debt to FSB 

because of mutual mistakes of fact among the parties. He 

argues that the evidence was clear that, at the time the FSB 

note was executed, all of the parties to the note mistakenly 

believed he retained an ownership interest in the LLCs and 

remained personally liable for the Five Points Bank note. He 

claims that but for the mistakes of fact, he would not have 

executed the FSB note. We find that Raynor failed to meet his 

burden of proving that mutual mistakes of fact exist.

[13-15] A mutual mistake is a belief shared by the parties, 

which is not in accord with the facts. R & B Farms v. Cedar 

Valley Acres, 281 Neb. 706, 798 N.W.2d 121 (2011). It is a 

mistake common to both parties in reference to the instrument 

to be reformed, each party laboring under the same misconception about its instrument. Id. A mutual mistake exists where 

there has been a meeting of the minds of the parties and an 

agreement actually entered into, but the agreement in its written form does not express what was really intended by the 

parties. Id.
- 46 -

Nebraska Court of Appeals Advance Sheets

25 Nebraska Appellate Reports

WALKER v. PROBANDT

Cite as 25 Neb. App. 30

[16,17] To overcome the presumption that an agreement 

correctly expresses the parties’ intent and therefore should 

not be reformed, the party seeking reformation must offer 

clear, convincing, and satisfactory evidence. See id. Clear and 

convincing evidence means that amount of evidence which 

produces in the trier of fact a firm belief or conviction about 

the existence of a fact to be proved. Id.

Raynor cites to no evidence in the record to support a 

conclusion that the promissory note does not express what 

was really intended by the parties. To the contrary, the parties intended that FSB would extend the loan in exchange for 

the cosigners’ signatures. The promissory note reflects that 

intent. The fact that Raynor was no longer liable on the Five 

Points Bank debt nor a member of the LLCs is of no effect. 

As in R & B Farms v. Cedar Valley Acres, supra, there is 

no clear and convincing evidence that the parties mistakenly 

believed the contract to mean one thing when in reality it 

did not.

The burden was on Raynor to present clear and convincing 

evidence to overcome the presumption that the agreement correctly expresses the parties’ intent. Because he failed to do so, 

the district court correctly rejected his argument.

4. Skyline’s Status and

Real Party in Interest

Raynor asserts several arguments with respect to the ability of Skyline and the LLCs to prosecute a case against him. 

Specifically, he argues that the district court erred in allowing a judgment in favor of Skyline, entering a judgment in 

contravention of the Nebraska Constitution, failing to treat 

Walker as a substantive owner of the FSB note and instead 

treating Skyline as the real party in interest, allowing foreign 

limited liability companies to prosecute the action without 

certificates of authority, and allowing Walker and the LLCs 

to take inconsistent positions on the enforceability of the 

FSB note.
- 47 -

Nebraska Court of Appeals Advance Sheets

25 Nebraska Appellate Reports

WALKER v. PROBANDT

Cite as 25 Neb. App. 30

(a) Lack of Consideration 

From Skyline

Raynor argues that Skyline does not qualify as a holder 

in due course of the FSB note and that therefore, Skyline’s 

enforcement of the note against him is subject to the personal defenses that existed between the original parties to 

the instrument.

[18] Neb. U.C.C. § 3-302 (Reissue 2001) provides that a 

holder in due course means the holder takes an instrument 

(1) for value, (2) in good faith, (3) without notice that the 

instrument is overdue or has been dishonored or that there 

is an uncured default with respect to payment of another 

instrument issued as part of the same series, (4) without 

notice that the instrument contains an unauthorized signature or has been altered, (5) without notice of any claim to 

the instrument described in Neb. U.C.C. § 3-306 (Reissue 

2001), and (6) without notice that any party has a defense 

or claim in recoupment described in Neb. U.C.C. § 3-305(a) 

(Reissue 2001).

Here, Skyline does not meet all of the requirements to 

qualify as a holder in due course. Despite the language of 

the assignment, it does not appear that Skyline paid value for 

the note; rather, as evidenced by the language of the settlement agreement, the consideration was paid by Walker, and 

upon such payment, FSB agreed to assign the note to Skyline. 

In addition, in taking the note, Skyline had notice that the 

instrument was overdue, because Walker and his wife are the 

only members of Skyline and they both signed the release 

which recognized the default of the note. Therefore, although 

Skyline is the present holder of the note, it is not a holder in 

due course.

[19] Raynor argues that because Skyline does not qualify 

as a holder in due course, it is subject to any defenses he 

could have asserted against FSB, and we agree. Unless one 

has the rights of a holder in due course, he is subject to all the 

defenses of any party which would be available in an action 
- 48 -

Nebraska Court of Appeals Advance Sheets

25 Nebraska Appellate Reports

WALKER v. PROBANDT

Cite as 25 Neb. App. 30

on a simple contract. See S.I.D. No. 32 v. Continental Western 

Corp., 215 Neb. 843, 343 N.W.2d 314 (1983). See, also, 

§ 3-305. This would include the defense of set-off. See Davis 

v. Neligh, 7 Neb. 78 (1878) (stating that holder not in due 

course takes note subject to any right of set-off which maker 

had against any prior holder). See, also, Neb. U.C.C. § 3-601 

(Reissue 2001) (limiting effectiveness of discharge of obligation of party to holder in due course of instrument without 

notice of discharge); § 3-605, comment 3 (using hypothetical 

stating partial payment by one borrower reduces obligation 

of coborrower).

[20-23] Furthermore, in a breach of contract case, the ultimate objective of a damages award is to put the injured party 

in the same position he would have occupied if the contract 

had been performed, that is, to make the injured party whole. 

Vowers & Sons, Inc. v. Strasheim, 254 Neb. 506, 576 N.W.2d 

817 (1998). As a general rule, a party may not have double 

recovery for a single injury, or be made “‘more than whole’” 

by compensation which exceeds the actual damages sustained. 

Id. at 516, 576 N.W.2d at 825. Where several claims are 

asserted against several parties for redress of the same injury, 

only one satisfaction can be had. Id. Thus, where the plaintiff 

has received satisfaction from a settlement with one defendant 

for injury and damages alleged in the action, any damages for 

which a remaining defendant would be potentially liable must 

be reduced pro tanto. See id.

Accordingly, in the present case, because Skyline is not a 

holder in due course, it is subject to any defense Raynor could 

assert against FSB in a simple contract case. In such a case, 

Raynor would have a defense against FSB that any amount 

for which he is liable on the note must be reduced pro tanto 

by the amounts FSB already received in settling the claims 

for nonpayment of the note from Walker, Brazier, Herz, and/

or Hansen. FSB is not allowed double recovery from multiple 

defendants for the same claim as to the note, and therefore, 

Raynor is liable only for the amount remaining on the note 
- 49 -

Nebraska Court of Appeals Advance Sheets

25 Nebraska Appellate Reports

WALKER v. PROBANDT

Cite as 25 Neb. App. 30

after subtraction of the amounts FSB received from the settling defendants. Therefore, we reverse the award of damages entered in favor of Skyline against Raynor and remand 

the cause for recalculation of the remaining balance due on 

the note.

(b) Skyline Sustained No Injury

Raynor contends that the judgment entered against him was 

unconstitutional, because Skyline sustained no legally cognizable injury. In other words, he claims that Skyline was not the 

real party in interest. We do not agree.

[24,25] Subject to an exception not relevant here, every 

action must be prosecuted in the name of the real party in 

interest. Neb. Rev. Stat. § 25-301 (Reissue 2016). To determine whether a party is a real party in interest, the focus of the 

inquiry is whether that party has standing to sue due to some 

real interest in the cause of action, or a legal or equitable right, 

title, or interest in the subject matter of the controversy. Eli’s, 

Inc. v. Lemen, 256 Neb. 515, 591 N.W.2d 543 (1999).

[26-28] As a general rule, an assignment is a transfer vesting in the assignee all of the assignor’s rights in property 

which is the subject of the assignment. Id. The assignee 

of a thing in action may maintain an action thereon in the 

assignee’s own name and behalf, without the name of the 

assignor. Neb. Rev. Stat. § 25-302 (Reissue 2016). An assignee 

may recover the full value of an assigned claim regardless 

of the consideration paid for the assignment. Eli’s, Inc. v. 

Lemen, supra.

In the instant case, FSB assigned to Skyline all of its rights 

conferred by the terms of the promissory note and term loan 

agreement which are the subject of this action. The cause 

of action upon which judgment was entered against Raynor, 

FSB, or Skyline alleged that Raynor signed the FSB note, the 

note was in default, and Raynor failed to satisfy the debt. As 

the assignee of FSB’s right to collect on the loan, Skyline was 

permitted to maintain an action against Raynor and pursue 
- 50 -

Nebraska Court of Appeals Advance Sheets

25 Nebraska Appellate Reports

WALKER v. PROBANDT

Cite as 25 Neb. App. 30

any rights that FSB had to recover on the note. Although lack 

of consideration is a factor in Skyline’s becoming a holder in 

due course, it does not void the assignment. As a result, we 

find no merit to this argument.

(c) Unconstitutional Windfall 

in Favor of Skyline

Raynor also argues that the award in favor of Skyline was 

an unconstitutional windfall for Skyline because the district 

court refused to consider the settlements of Walker, Brazier, 

Hansen, and Herz. We agree. As set forth above, Skyline was 

not a holder in due course. It was therefore allowed to collect only the remaining balance on the note. The district court 

should have taken into consideration the settlement amounts 

paid by Walker, Brazier, Hansen, and Herz. As stated above, 

we remand the cause for recalculation of the unpaid balance.

(d) Certificates of Authority

Raynor argues that the LLCs were dissolved before this 

action was commenced and never had certificates of authority to do business in Nebraska. Thus, he claims, they have no 

standing as plaintiffs in Nebraska courts under Neb. Rev. Stat. 

§ 21-162(a) (Reissue 2012).

The cause of action upon which judgment was entered 

against Raynor was the claim of FSB, later assigned to Skyline. 

The LLCs are not the plaintiffs with respect to the claim at 

issue in Raynor’s argument. In ruling on this claim, the district court found that judgment should be entered on the FSB 

note in favor of Skyline. Therefore, whether the LLCs having 

standing as plaintiffs in a Nebraska court has no bearing on 

Raynor’s liability to Skyline.

(e) Inconsistent Positions on 

Enforceability of FSB Note

Raynor claims that initially Walker and the LLCs argued 

that the FSB note was unenforceable for various reasons, but 

once they settled and became plaintiffs, they took an opposite 
- 51 -

Nebraska Court of Appeals Advance Sheets

25 Nebraska Appellate Reports

WALKER v. PROBANDT

Cite as 25 Neb. App. 30

position. He argues that the assertions Walker and the LLCs 

made in their early pleadings constitute judicial admissions 

and that they should be estopped from asserting an inconsistent position now.

[29] As discussed above, neither Walker nor the LLCs are 

the plaintiffs in the relevant cause of action against Raynor. It 

is FSB by way of Skyline that is asserting the enforceability of 

the note. Thus, Walker’s and the LLCs’ positions with respect 

to the note are irrelevant to our analysis as to whether judgment was erroneously entered against Raynor. Furthermore, 

admissions made in superseded pleadings are no longer judicial 

admissions, but, rather, simple admissions. Cook v. Beermann, 

202 Neb. 447, 276 N.W.2d 84 (1979). We therefore reject 

this argument.

5. Sole Basis Stipulation

Raynor argues that the district court’s judgment was contrary to the parties’ stipulation that the sole basis for seeking 

recovery against him was his expressed intent to assist Herz. 

We understand this stipulation to be the parties’ recognition 

that Raynor was not an owner or member of the LLCs at the 

time the FSB note was signed nor was he personally liable on 

the Five Points Bank note. The dispute appears to arise out of 

whether Raynor’s intended assistance to Herz is sufficient consideration to support the FSB note.

[30-32] Generally, there is sufficient consideration for a 

promise if there is any benefit to the promisor or any detriment 

to the promisee. Kissinger v. Genetic Eval. Ctr., 260 Neb. 431, 

618 N.W.2d 429 (2000). What that benefit and detriment must 

be or how valuable it must be varies from case to case. It is 

clear, however, that even “‘a peppercorn’” may be sufficient. 

Id. at 439, 618 N.W.2d at 436. A benefit need not necessarily 

accrue to the promisor if a detriment to the promisee is present, and there is a consideration if the promisee does anything 

legal which he is not bound to do or refrains from doing 

anything which he has a right to do, whether or not there is 
- 52 -

Nebraska Court of Appeals Advance Sheets

25 Nebraska Appellate Reports

WALKER v. PROBANDT

Cite as 25 Neb. App. 30

any actual loss or detriment to him or actual benefit to the 

promisor. Id. For the purpose of determining consideration for 

a promise, the benefit need not be to the party contracting, but 

may be to anyone else at the contracting party’s procurement 

or request. Id.

In the present case, a detriment to the promisee is present: 

FSB issued a loan to the LLCs, a legal act which it was not 

bound to do. Raynor argues that he, as the promisor, did not 

receive a benefit from the loan because he was not an owner 

of the LLCs at the time of the loan and was not personally 

liable on the Five Points Bank loan. There is no requirement, 

for purposes of consideration, that Raynor personally received 

a benefit; his stated intention to assist Herz is sufficient consideration, because Herz received a personal benefit via the loan 

proceeds. Accordingly, this argument lacks merit.

VI. CONCLUSION

We conclude that the district court abused its discretion in 

declining to enter default judgment against Probandt on the 

fraud/misappropriation cause of action, and we remand the 

cause to the district court with directions to enter a default 

judgment against Probandt in the amount of $2,184,530.

We find no error in the decision to enter judgment in favor 

of Skyline against Raynor. However, the district court erred in 

failing to award a credit against the judgment for the amounts 

received in settlement, and we remand the cause for recalculation of this amount.

 Affirmed in part, and in part reversed

and remanded with directions.