No. 90-599 IN THE SUPREME COURT OF THE STATE OF MONTANA 1991

ELIZABETH EISELEIN, Plaintiff and Appellant,

v. MONTANA BANK OF ROUNDUP, SF?S -" 

### 1ggj MONTANA BANCSYSTEMS, 1NC.r Defendant and Respondent. cFSUPREME CO~JR-~ 5(AYE ?ti)&rAivA

APPEAL FROM: District Court of the Fourteenth Judicial District, In and for the County of Musselshell, The Honorable Roy C. Rodeghiero, Judgepresiding.

COUNSEL OF RECORD: For Appellant: Patrick F. Hooks; Hooks Law Firm, Townsend,Montana ThomasA. Budewitz,Attorney atLaw,Helena,Montana Robert D. Moore; Moore, McDonough & Norton, Salt Lake City, Utah For Respondent: James A. Ragain and Kyle A. Gray; Holland & Hart, Billings,Montana

Filed: Submitted on briefs: June 271 1991 Decided: September 9, 1991

a - ClerkChief Justice J. A. Turnage delivered the Opinion of the Court. Plaintiff Eiselein appeals from a summary judgment granted to defendants by the Montana Fourteenth Judicial District Court, Musselshell County. We affirm. The issues are: 1. Did the District Court err in denying Eiselein's motion for partial summary judgment? 2. Was summary judgment fordefendants improperbecause there are genuine issues of material fact or the defendants are not entitled to judgment as a matter of law? Plaintiff Eiselein is the assignee for several persons who operated theEiselein Ranch (Ranch) inMusselshell County,Montana. The Ranch borrowed operating funds from defendant Montana Bank of Roundup (Bank) for a number of years. Defendant Montana Bancsystem, Inc., is the Bank's holding company. Plaintiffcontends that inJanuary 1987,theBank's president, Richard Swanz, told the manager of the Ranch, Lou Grosskop, that the Bank would lend $30,000 to the Ranch in 1987 for "anythingwe wished to buy." Plaintiff also contends that inApril 1987, Swanz made averbal commitment toGrosskop to lend theRanch approximately $150,000 to buy 200 to 250 head of cattle. In June of 1987, the Bank made a $35,000 loan to the Ranch. That loanwas memorialized in a promissory note. The Ranch boughtswinewith the loan proceeds,granting theBank a security interest in sixty-four pigs. InSeptember of 1988, following financial difficulties, plaintiff filed this lawsuit on behalf of the Ranch, claiming damages for the Bank's failure to keep a commitment to loan the Ranch $150,000. Her complaint includes counts of breach of warranty, fraud,negligent misrepresentation,promissory estoppel, breach of the obligation of good faith imposed under the Uniform Commercial Code, and breach of an implied covenant of good faith and fair dealing. The District Court dismissed the claim for breach of warranty and Eiselein has conceded judgment on her claim for tortious breach of the covenant of good faith and fair dealing. In the order from which this appeal is taken, the District Court denied Eiseleinlsmotion for partial summary judgment that the Bank committed to loan the Ranch $150,000. The court granted defendants1motion for summary judgment, ruling, inter alia, that

even if the alleged April 1987 commitment was made, it was extinguished by the Junepromissory note pursuant to the doctrine of merger. I Did the District Court err in denying Eiseleinlsmotion for partial summary judgment? Summary judgment is proper only when the pleadings, depositions, answers to interrogatories, and admissions, together withany affidavits filed, show that there are no genuine issues of material fact and that themoving party is entitled to judgment as

a matter of law. Rule 56(c), M.R.Civ.P. In arguing for partial summary judgment,~iselein cites the testimony of Jon Eiselein and Ranch manager Grosskop that, on or about April 6, Bank president Swanz told Grosskop to go ahead and start buying cattle and told Jon Eiselein that the loan would go through. She also cites Swanzlsdeposition testimony that he did not recall the conversations in question and that they could have occurred. Eiselein argues thatSwanzls affidavitsubmitted in connection with the motions for summary judgment is too conclusory to serve

as a reason to deny her motion for summary judgment. In his affidavit, Swanz stated that Although Ms. Grosskop may conceivably have made such a request, I did not make a commitment to loan approximately $150,000.00 to the Eiselein Ranch in 1987. 

# . . . The only amount I committed to loan to the Eiselein Ranch in 1987 was $35,000.00. Attached to his affidavit was a copy of the $35,000 promissory note.We conclude that Swanzlsaffidavit is sufficient to demonstrate that there is a genuine dispute of fact as to whether an oral commitmentwasmade tomake the $150,000 loan. Thisprecludes Eiseleinlsrequest for summary judgment on this issue. SeeReaves

v. Reinbold (1980), 189 Mont. 284, 615 P.2d 896. We hold that theDistrict Courtdid not err indenying Eiselein8s motion for summary judgment

# . I1 Was summary judgment for defendants improper because thereare genuine issues of material fact or the defendants are not entitled to judgment as a matter of law? In granting defendants8 motion for summary judgment, the District Court relied on thedoctrine ofmerger: evidence of prior oral agreements is inadmissible where there is a subsequent written agreement as to the same subject, into which it is assumed all prior oral agreements are merged. First Nat. Mont. Bank of Missoula v. McGuiness (1985), 217 Mont. 409, 417, 705 P.2d 579, 584. The court ruled that any verbal obligation to loan $150,000 to the Ranch was merged into the subsequent written agreement to loan the Ranch $35,000. Under the doctrine of merger, the factual dispute about whether Swanz made a verbal commitment to loan $150,000 is irrelevant, because any evidence as to such a verbal commitment would be inadmissible in court. Eiselein argues that the doctrine of merger does not apply in this case. She cites this Court8sopinion in Blome v. First Nat. Bank of Miles City (1989), 238 Mont. 181, 776 P.2d 525. In one part of that opinion, this Court stated that Itnooral representationsby anybank officersmay be foundwhichwould bind the Bank to perform as the Blomes contend." Blome, 776 P.2d at 528. But,as defendants point out, that statement did not appear within and

was not relevant to this Court's discussion of the doctrine of merger. Eiselein also argues that the Bank's commitment to make a $150,000 loan to the Ranch was for cattle and was completely separateand distinct from its commitmenttomake the loan for hogs consummated in the June promissory note. She asserts that the doctrine of merger does not, therefore, apply. We disagree. InBlome, the Blomes brought suit against their bank for failure to comply with an agreement to provide them with financing for their farming operation as long as they needed it with repayment to be made when they were able. This Court ruled that the doctrine of merger applied and that it barred the Blomesl claims, even though the alleged oral promise was for the purchase of feeder cattle and the later loans into which that promise was merged were for such things as a grain hopper and a truck. Blome, 776 P.2d at 527, 528. In thepresent case, ranch manager Grosskop characterized all funds sought from the Bank as for I1ouryearls operation.I1 She also admitted that she was aware at least by May 11, 1987, that the $150,000 loanwould not be made. She nevertheless accepted and signed the promissory note for $35,000. We agree with the District Court that the alleged $150,000 commitment and the $35,000promissory note both dealt with financing for operation of the Eiselein Ranch. We also agree with theDistrict Court's statement that Iv[t]oargue that the existence of

an oral representation can preclude merger is contradictory and insupportable." We hold that the District Court did not err in granting summary judgment for defendants. Affinned.

We concur:Justice Terry N. Trieweiler specially concurring. I agree that the District Court was correct when it denied plaintiff's motion for partial summary judgment. I also concur with the majority that the ~istrictCourt's order granting the defendants motion for summary judgment should be affirmed. However, Idisagree with the reasons set forthby themajority for their decision. This is clearly not a case where the undisputed facts bar plaintiff's claim pursuant to the doctrine merger. It is correct that evidence of prior oral agreements is not admissible to alter a subsequent written agreement so long as the written agreement deals with the same subject matter. However, a written agreement will not preclude evidence of a prior oral agreement that dealswith a different subject matter and which was not merged in the written agreement. That rule is clear from the concluding language in FirstNationalBankofMissoulav.McGuiness (1985)

## , 217 Mont. 409, 705 P.2d 579,where we stated: Under case law inMontana, it is clear that evidence of prior oral agreements is not admissible for the purpose of altering subsequent written agreements dealina with the same subject,and that theprior oral agreements and the written agreement will merge into the subsequent written agreement unless they are distinct and can stand independentlv of one another. Reaves v. Reinbol[d] (Mont

# . 1980), 615 P.2d 896, 899, 37 St.Rep. 1500, 1504. McGuiness, 705 P.2d at 584 (emphasisadded). Inthis case there was clearevidence fromthe testimony of the plaintiff's ranch manager,Mrs. LouGrosskop, that thepromise thatplaintiff sought to enforcewas different and independent from the promise which became the subject of plaintifflswritten loan agreement with the defendant. Plaintiff sought to enforce a promise to loan her $150,000 for the purchase of cattle. The promise which became the subject of the written agreement relied upon by the majority was to loan the plaintiff approximately $30,000 for the purchase of pigs. The deposition testimony of Mrs. Grosskop which was offered in opposition to the defendants1motion for summary judgment is replete with testimony describing the difference between the two promises. She gave the following answers to the following questions regarding the loan for the hog operation: Q. My first question Iwould like to ask is, in 1987, did the Montana Bank of Roundup ever make any unconditional promise or commitment that it would continuetoprovidemoney fortheoperating expenses 

### of the Eiselein Ranch? A. Yes. Q. Who made that promise? A. Dick Swanz. 

### Q. And when did Mr. Swanz make that? A. January. Q. January of 1987? A. Yes.

Q. Tell me what Mr. Swanz said.A. We received a $30,000 line of loan at that time. I can't repeat the exact words. Q. To the best of your recollection. A. We received $30,000to startan operationtodowith some of the things weld talked about in the past. We had talked ofputting inahog operation,a sheep operation, and these were just talking about different typesofprojectionswewere goingtowork on. That's basically it. Mrs. Grosskop gave the following testimony regarding a second promise to loanmoney for a cattle operation: Q. At any other time in 1987 did anyone at theMontana Bank of Roundup make an unconditional promise or commitment to continue to provide money to the Ranch? A. Yes. Q. Okay. Who was that? A. Dick Swanz. Q. And when?

Q. April 1987? A. Yes.

Q. Tell me what Mr. Swanz said during this conversation. A. We had been working with a budget projection of buying cattle, and Ihad called and asked if he had reviewed it andwe were going togoaheadwith this, and he said yes, held okay it. Q. How much was that budget for? A. That particular budget, we was looking at buying about 200 to 250 head of cattle at that time.Q. Okay. In terms of a dollar amount, what were you asking for? A. Around the $150,000mark. We hadn't set an exact figure, depending on the price of cattle. (Emphasisadded.) Mrs. Grosskop testified that in order to obtain the loan for the pig operation, she submitted a budget proposal pertaining to that operation. However, when applying for the cattle operation, she had to submit an entirely different budget proposal. The following testimony is illustrative of how independent the two loan transactionswere: Q. Now in light of what you've told me, did the new budget that you prepared only relate to the cattle purchase, or did it also relate to these other aspects of your totalprogram thatyouwere talking about, the swine and the sheep, et cetera? A. The swine budget he already had because we already had the money for that. This proposal would have pertained basically to the 150 head run at that time. The fact that the loanpromised in January was intended solely for the operation further evidenced from the fact that the security agreement entered into as part of that loan secured "64 pigsw and made no mention of any other collateral. In Reaves 

### v. Reinbold (1980), 189 Mont. 284, 615 P.2d 896, we reaffirmed that, This Court has consistently held that the party moving for summary judgment has the burden of showing the completeabsence of anygenuine issueas to all the facts which are deemed material in light of those substantiveprinciples which entitle him to judgment as a matter of law. Reaves, 615p.2d at 898 (citationsomitted). We further stated that: It is clear that theparty opposing amotion for summary judgmentwill be afforded the benefit of all reasonable inferences which may be drawn from the offered proof. Mally v. Asanovich (1967), 149 Mont. 99, 423 P.2d 294; Harlandv.Anderson, supra. Reaves, 615 P.2d at 898. Based upon theseprinciples,we held that aplaintiff in that case relying on a written agreement was not entitled to summary judgment where the defendant asserted contrary rights based on an alleged oral agreement. We stated: PlaintiffIs argument isbased on the allegation that the written agreements entered into on November 21, 1975, which included the "Submitted Annualized Commission Agreement,I1 superseded any prior oral negotiations or agreement between the parties. In support of this argument,plaintiff citessections28-2-904 and 28-3-203, MCA

# . As stated in plaintifffsbrief, there is abundant case law inMontana which holds thatprior oral agreements or conditions are not admissible to alter orvary the terms of a laterwritten contract. Davihon

### v. Casebolt (1969), 154 Mont. 125, 461 P.2d 2;HeckmanandShellv.Wilson (1971), 158 Mont. 47,487P.2d 1141;Kingerskiv.Lame-(1979), [I85Mont. 1111

## , 604 P.2d 782. It should be noted, however, that such case lawhas only dealt with an application of the rule as toprior oral agreementsand subsequentcontracts between the same parties in regard to the same matter. It should also be noted that distinct collateral agreements even as between the same parties, will not merge so as to preclude a prior oral agreement. See Storyv. Monforton (1941), 112 Mont. 24, 113 P.2d 507; 17 C.J.S. Contracts 381 at 451.In reviewing the relationship of the two agreements in a light most favorable to defendant we note that the alleged oral agreement is collateral as opposed to ancillary. Both agreements were entered into at approximately the same time and deal with an arrangement whereby defendant is to receive monies for selling insurance. One agreement, however, is with Lincoln Benefit Life Company and provides for a repayment of advances made. The other separate agreement is with plaintiff and allegedly provides thathepersonally will guarantee a set salary no matter how much defendant is required to repay the insurance company. Each agreement isdistinct, separate, involves a differentparty and is able to stand independentof the other. With thisbeing the case, we cannot find as a matter of law that the written agreement would supersede the alleged oral agreement. 

### Reaves, 615 P.2d at 899. The testimony of one witness which is disputed by another is sufficient to raise an issue of fact which precludes summary judgment on that issue. In this case, the testimony of Mrs. Grosskopwas sufficient,ifbelieved,toestablishthatdefendants' January promise to loan money for pigs was separate and independent from its April promise to loan money for cattle. If that fact was established, then the written agreement which resulted from the January promise did not merge with theApril promise and did not preclude the evidence which plaintiff sought to offer. Ibelieve,however, that defendantswere entitled to summary judgment for different reasons. Assuming that the testimony of Mrs. Grosskop is true and that the defendant did promise to loan her $150,000to finance thepurchase of cattle,thatpromise aloneis not sufficient to form the basis for plaintiffls cause of action. We have previously stated that "there is no legal duty requiring a bank to loan money to a customer absent a clear contractual ~ommitment.~~ Mann Farms, Inc. v. TradersState Bank ofPoplar (Mont. 1990), 801 P.2d 73, 77, 47 St.Rep. 2094, 2099. Under 5 28-2-102, MCA, the essential elements of a contract are: (1) identifiable parties capable of contracting; (2) their consent; (3) a lawful object; and (4) sufficient cause or consideration. Inthis case,the specific elements of a contractwere neither alleged nor proven by the plaintiff. Specifically, there was no consideration extended from the plaintiff to the defendant which would establish a binding contract. Plaintiff in her complaint sought to enforce the defendants1 oral promise based on the principle of promissory estoppel. However, inKeilv.GlacierPark,Inc. (1980), 188Mont. 455, 462, 614 P.2d 502, 506, we defined the elements of promissory estoppel as: (1) a promise clear and unambiguous in its terms; (2) reliance on thepromise by theparty towhom the promise is made; (3) reasonableness and foreseeability of the reliance; (4) the party asserting the reliance must be injured by the reliance. (Citationsomitted.) In this case, there was no evidence that subsequent to April 1987 theplaintiff suffered detrimentby the reliance on the Bank's promise to loan her money. Plaintiff locatedno cattle,purchasedno cattle,and incurredno expense which couldbe attributed tothe defendants1promise to loan her money for a cattle operation. In fact, within two weeks from thetime that theBankpromised to loan her money, plaintiff was notified through Mrs. Grosskop that the promise was being reconsidered and that further financial information was necessary. At that point, all further plans to proceed with expansion of the cattle operation were put on hold. For these reasons, plaintiff suffered no detriment due to a justifiable reliance on defendants' promise and has not satisfied the elements of promissory estoppel. Because there was neither a binding contract nor sufficient detrimental reliance to establish promissory estoppel, I would affirm the District Court's order granting summary judgment to the defendants.