Opinion ID: 1925557
Heading Depth: 2
Heading Rank: 3

Heading: Waltke's Unpaid Obligations to the Bank

Text: ¶ 13. There is no dispute that Waltke never repaid the $50,000 loan taken out on September 4, 1986. In December of 1988, Waltke declared bankruptcy. About this time, under the instruction of the FDIC, the Bank wrote off this $50,000 debt and the rest of Waltke's outstanding obligations as legal bad debts. [7] Waltke's end-of-the-year account statement from the Bank for 1988 demonstrates that until December 2, 1988, he owed the Bank $50,000 in principal and a considerable amount in interest. The Bank's general ledger reflects that on December 2, 1988, it charged Waltke's $50,000 debt to its reserve account as a loss to the Bank. Around this time, the Bank also posted a letter to the FDIC describing all of the bad debts it was writing off, including the $50,000 Waltke debt. The Bank's general ledger, the letter to the FDIC, and the Bank's end-of-the-year account statements demonstrate that Waltke owed an additional $42,000 in outstanding obligations as of December 1988. ¶ 14. Twenty-five thousand dollars of that debt stems from Waltke's personal guaranty of a $25,000 loan the Bank made to Gary Butler in the summer of 1986. Over the course of 1986, that note was renewed three times and no payments were ever made against it. The most recent due date for that loan was February 2, 1987, about a month before Waltke's September 4, 1986, $50,000 note was due. ¶ 15. A smaller portion of Waltke's unpaid obligation to the Bank came from his personal guaranty of a May 29, 1986, $15,000 loan to Miracle Shield International, Inc., a Waltke business interest. The record demonstrates that Waltke and other individuals guaranteed this loan and that some payments were made against it during the summer and fall of 1986. Waltke's personal guaranty of this note was limited to $5,000 and therefore the Bank does not claim interest against this sum. [8] ¶ 16. The remaining $12,000 of Waltke's total unpaid obligations to the Bank as of December 1988 came from his personal guaranty of a $50,000 note to another business interest, Universal Graphics Services, Inc. The Universal Graphics loan originated on November 3, 1986, and established a master line of credit for the business, which was secured by Waltke's personal guaranty. ¶ 17. This note was renewed on February 3, 1987, in the sum of $45,271.98. Apparently, some payments had been made against this note. Also, upon renewal, Waltke secured the note with a real estate mortgage on his Grand Avenue property in Waukesha. The face of the mortgage recites that it was granted in consideration for a $145,271.98 note. Mr. Croke, the Bank's vice president and chief financial officer, testified that this entire sum was probably made available to Universal Graphics for incremental disbursements, although only $45,271.98 had been actually drawn out as of February 1987. ¶ 18. The subsequent disposition of the Grand Avenue mortgage is not clear from the record. [9] The record shows that the most recent amount owed on the Universal Graphics debt was $45,271.98, the entire sum of the February 3 renewal note. On December 2, 1988, the Bank wrote off the Universal Graphics debt in the amount of $12,000. The Bank stated in its letter to the FDIC that as of November 29, 1988, the only security the Bank had for all of Waltke's obligations was his personal guaranty and a lien on a printing press. [10] ¶ 19. The Bank recovered the written-off $12,000 Universal Graphics debt in July of 1989 upon the foreclosure and sale of one of Waltke's printing presses. [11] The press was originally appraised with a value of $133,000, but was sold for only $25,000. The Bank satisfied the remaining Universal Graphics debt from this $25,000 and the remaining $13,000 was applied to Waltke's September 4, 1986, personal $50,000 loan. Therefore, the Bank claims that Waltke owes nothing on the Universal Graphics loan and only owes $37,000 in principal (though some $75,041.43 in interest) on the September 4, 1986, $50,000 personal loan. In sum, the Bank claims that Waltke owes $67,000 in principal and over $125,000 in interest for his personal note and his guaranties of the Butler and Miracle Shield loans. [12]