Twite v. First Bank (n.A.) Western

No. 8 4 - 2 1 0
IN THE SUPREME COURT OF THE STATE OF MONTANA
1984
LLOYD A. TWITE and MARY C. TWITE,
Plaintiffs and Appellants,
FIRST BANK ( N . A. ) WESTERN MONTANA
MISSOULA,
Defendant and Respondent.
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Missoula,
The Honorable Douglas Harkin, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Green, MacDonald, Wagner & Kirscher; Joan Newman argued,
Plissoula , Montana
For Respondent :
Garlington, Lohn & Robinson; George Goodrich argued,
Missoula, Montana
Submitted: November 1, 1984
Decided: December 31, 1984
Filed:
C k ;1 i lY84
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14r.Justice John Conway Harrison delivered the Opinion of the
Court.
This is an appeal from a summary judgment granted to
respondent by the District Court of the Fourth Judicial
District, County of Missoula. We vacate the summary judgment
and remand for trial.
Issue
Appellants set forth five issues for review in their
opening brief but we will decide this case by addressing only
the following question: did the District Court err in
granting summary iudgrnent when material issues of fact
emerged at the hearing on motion for summary judgment?
Facts
On June 29, 1979, a promissory note was executed by
Thomas R. Napton payable to First Bank Western Montana
Missnula (Bank) for the sum of $480,000. On July 10, 1979,
Lloyd A. and Mary C. Twite executed a document in favor of
Bank entitled "Guaranty." The document is a standard form of
the Bank. The blanks in the form were filled out for the
amount and the following language was typed in at the bottom
of the page: "This guarantee is expressly limited to FIRST
Eighty Thousand Dollars ($80,000.00) of Debtor's Four Hundred
Eighty Thousand Dollar Note Dated June 29, 1973, or any
renewal or extension of any portion thereof." The meaning of
this language is the subject of this appeal.
The guaranty was part of a construction contract
between Twite and Napton. Twite was to build certain houses
for Napton and also provide a guaranty for a portion of the
loan Napton was obtaining from the Bank. $2,500 was paid by
Napton to Twite in consideration for the guaranty. When
Napton discussed with Twite the need for the guaranty, Twite
was left with the impression that the obligation of Twite
would be limited to the sum of $80,000 until such time as the
Napton-Bank note was reduced to $400,000, at which time
Twite's obligation would cease. Representatives of the Bank
were not present during these discussions. The Napton-Twite
agreement provides that "Twite shall act as a guarantor of
said notes to the extent of Eighty Thousand Dollars
($80,000.00)." This agreement did not specify that Twite's
obligation was limited to the first $80,000 of the note.
However, the Napton-Twite agreement granted to Twite the
right to assume the entire project and the underlying debt.
In the alternative, Twite could pay $80,000 to the Rank and
in that event Napton would execute a note to Twite in the sum
of $80,000 secured by a second mortgage covering certain
lots. If the houses in the project did not sell, Twite
planned to buy two of the houses at $56,000 each. This
arnount could then be paid on the note thereby reducing the
loan to less than $400,000. At that time, Twite thought his
obligation under the guaranty would be extinguished.
The District Court found that the $480,000 Napton-Bank
note had been renewed and that at the time of this a.ction,
more than $80,000 of the balance had been paid. The purpose
of the guaranty was to insure that the Bank would recover the
full amount of the note even if the underlying collateral
would be insufficient.
Before the meeting when the guaranty was executed by
Twite, officers of Bank had inserted the typed portion at the
bottom of the guaranty. Twite did not recall statements made
to him by the representatives of the Bank, nor did he ask the
officers what the language was intended to mean. The court
also found that Twite saw the typed portion of the guaranty
and thought it confirmed what was verbalized to him. Twite
did not ask for an explanation of the typed portion at
cl-osing. He testified the typed portion read the way it was
explained to him, and was cut and dry. Twite testified the
typed portion said exactly what he wanted it to say.
Twite thought he was guaranteeing the first $80,000 of
the loan. To him that meant once the loan balance went below
$400,000 he would no longer be held responsible. He was
pleased with this arrangement because he thought if he was
called upon to pay $80,000 he would simply buy two of the
nine houses that were being built. That would have the
effect of reducing the loan balance to an amount less than
$400,000 and he would be off the hook. He would then sell
the two homes and recover his money.
The Bank, on the other hand, had a different idea. The
Bank understood the guaranty to mean that Twite would be
responsible for $80,000 in case of Napton's default,
regardless of the balance of the loan. The Bank felt it
could get anyone to buy two houses and reduce the loan
balance below $400,000 so it certainly did not expect Twite
to do that. The Bank was relying on all nine houses -
and
Twite's guaranty as collateral for the loan.
SUMMARY JUDGMENT
Appellants and respondent are in marked disagreement
about the meaning of the language "limited to FIRST Eighty
Thousand Dollars ($80,000.00) of Debtor's Four Hundred Eighty
Thousand Dollar Note Dated June 29, 1979, or any renewal or
extension of any portion thereof." It was error for the
District Court to grant summary judgment when the parties
were in such sharp disagreement. The matter should have been
submitted to a jury.
"It is true that the purpose of the
summary judgment procedure is to
encourage judicial economy through the
elimination of an unnecessary trial.
However, it is also true that the
procedure is never to be a substitute for
trial if a factual controversy exists.
Engebretson v. Putnam ( 1 9 7 7 ) , 1 7 4 Mont.
409, 5 7 1 P.2d 3 6 8 ; Duncan v. Rockwell
Mfg. Co. ( 1 9 7 7 ) , 1 7 3 Mont. 3 8 2 , 5 6 7 P.2d
936; Ronawitz v. Bourke ( 1 9 7 7 ) , 1 7 3 Mont.
1 7 9 , 5 6 7 P.2d 3 2 . " Reaves v. Reinbold
(Mont. 1 9 8 0 ) , 6 1 5 P.2d 8 9 6 , 3 7 St.Rep.
1500.
"Summary judgment is usually inappropriate where the intent
of the contracting parties is an important consideration."
Fulton v. Clark ( 1 9 7 5 ) , 1 6 7 Mont. 399, 5 3 8 P.2d 1371. We
therefore vacate the summary judgment and remand for a trial
on the merits.
We concur: 'i
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%&d.%d?
Chief Justice
Justices