COURT OF
APPEALS DECISION DATED AND
RELEASED March
6, 1997 |
NOTICE |
A party may file with the Supreme Court a petition to review an
adverse decision by the Court of Appeals.
See § 808.10 and Rule
809.62, Stats. |
This opinion is subject to further editing. If published, the official version will appear in the bound
volume of the Official Reports. |
Nos. 95-2808
95-3618
STATE OF WISCONSIN IN
COURT OF APPEALS
DISTRICT IV
FIRST
BANK (N.A.),
Plaintiff-Appellant,
v.
RUSSELL
CLEARY, JOHN MOONEY,
SABINA
BOSSHARD, WILLIAM BOSSHARD,
as the
Personal Representatives of the Estate of
JOHN
BOSSHARD, ALEX SKOVER and
JOSEPH
WEBB,
Defendants-Respondents.
APPEALS
from judgments of the circuit court for La Crosse County: ROBERT W. WING, Judge. Reversed and causes remanded.
Before
Eich, C.J., Dykman, P.J., and Vergeront, J.
PER
CURIAM. First Bank (N.A.), appeals from summary judgments
dismissing its complaint against Russell Cleary, John Mooney, Alex Skover,
Joseph Webb and the personal representatives of the Estate of John Bosshard
(the respondents). We conclude that
disputes of material fact remain unresolved, and therefore reverse and remand
for further proceedings.
The
respondents sought loans from First Bank to finance the purchase of a business,
including a $3.6 million loan to buy real estate. At the time they applied, the respondents were undecided whether
to operate as a partnership or a corporation.
A letter stating First Bank’s commitment to loan the money to either a
corporation or partnership identified the following under the heading
“collateral”:
First real estate mortgage on the real estate to be
acquired by [the corporation] or the general partnership. The loan would require either an unlimited
guarantee or joint and several liability, in the case of a partnership, from
the following individuals: [the respondents].
The letter also stated that the loan commitment was
conditional on “an agreement of the bank and borrower on documentation,” and
provided that “the commitment on the part of First Bank, N.A. is not transferable
and is confidential between the bank, investors and guarantors of [the
corporation] or the partnership.”
The
respondents accepted the commitment letter, and subsequently decided to proceed
as a partnership known as JJAWC Partners.
At the October 3, 1988 loan closing, First Bank asked the respondents to
sign personal guarantees and each did so.
Each respondent also signed the loan agreement which made the guarantees
a condition precedent to the loan. Four
and one-half years later each guarantor signed an agreement that reaffirmed the
guarantees but without waiving “any defense which any of the Guarantors may
assert against the Guarantee issued by them on October 3, 1988.”
JJAWC
ultimately defaulted on the loan with $2.7 million still owing. First Bank then commenced this lawsuit
against the respondents on their guarantees.
For unexplained reasons, the bank did not sue JJAWC or the partners on
the note resulting from the loan agreement itself.
On
First Bank’s summary judgment motion, the trial court concluded that the plain
terms of the commitment letter did not require guarantees from the respondents
if they received the loan as a partnership.
Therefore, according to the court, First Bank failed to provide any
consideration for the subsequent guarantees it obtained at closing because the
loan was already promised without them.
The court granted summary judgment to the respondents on that basis and
dismissed the claim on the guarantee.
First
Bank subsequently filed a motion for summary judgment on the note, and all of
the respondents except the Bosshard estate moved to strike it on grounds that
First Bank never stated a cause of action on the note. The trial court and First Bank learned at
the hearing on the motion that the respondents, but not the estate, had
commenced a separate action alleging several claims against First Bank arising
out of the transaction. The court found
that First Bank’s complaint did not state a claim on the note and, after
considering whether to allow First Bank to amend the complaint and add a claim
on the note, concluded that it would not grant leave to amend. The court determined, as conceded by counsel
for the four respondents, that First Bank could present its claims on the note
by counterclaim in the respondents’ newly filed action. The result was an order granting the motion
to strike the summary judgment motion and a final judgment dismissing the
complaint. The other action remains
pending. First Bank has counterclaimed
on the note in that action and filed a third-party complaint on the note
against the estate.
Summary
judgment is appropriate only if material facts are undisputed, only one
reasonable inference is available from those facts, and that inference requires
dismissal as a matter of law. Wagner v. Dissing, 141 Wis.2d 931, 939-40,
416 N.W.2d 655, 658 (Ct. App. 1987). We
independently decide this issue without deference to the trial court. Schaller v. Marine Nat’l Bank,
131 Wis.2d 389, 394, 388 N.W.2d 645, 648 (Ct. App. 1986).
There
are two reasonable interpretations of the commitment letter clause on personal
guarantees. The letter states that “the
loan would require either an unlimited guarantee or joint and several
liability, in the case of a partnership,” from the respondents. They reasonably interpret that language to
require a personal guarantee only if the respondents formed a corporation. However, one could also reasonably interpret
it to mean that First Bank reserved the right to choose between joint and
several liability or an unlimited guarantee in the case of a partnership. Although the parties devote considerable
effort in their briefs to the issue whether joint and several liability
automatically attaches to the individual partners of a partnership, that is a
question of law and does not assist in determining the intended meaning of the
letter. Because that intent remains
ambiguous, it must be resolved by resort to extrinsic evidence and subsequent
determination by the fact-finder. See
Patti v. Western Machine Co., 72 Wis.2d 348, 351, 241 N.W.2d 158,
160 (1976).
If
it is found that the commitment letter did not contemplate personal guarantees
for the partners of JJAWC, a fact dispute then remains as to whether First Bank
unilaterally imposed the guarantees at closing, or whether the respondents
voluntarily agreed to amend the terms of the letter. First Bank introduced
evidence that Bosshard, acting as attorney for the respondents, acknowledged
and consented to the guarantees before closing. Respondents contested that interpretation of Bosshard’s written
statement, and presented disputed evidence that they signed guarantees under
duress and threat of cancellation.
These, too, are issues not capable of resolution on summary judgment.
First
Bank also contends that the respondents have no defense because they agreed to
unconditional liability at closing and waived any “circumstance whatsoever that
might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor.” We do not
construe that provision as a waiver on the issues of duress or lack of
consideration. See Midwest Corp.
v. Global Cable, Inc., 688 F. Supp. 872, 875 (S.D.N.Y 1988)
(unconditional waiver of defenses does not preclude lack of consideration
defense).
First
Bank has not waived its right to appeal.
The Bosshard estate contends that First Bank cannot pursue this appeal
against the estate because it filed a third-party complaint against the estate
in the second action, rather than pursuing efforts to amend the complaint in
this action.[1] We disagree. The estate cites the proposition that when a party commences a
second action in the trial court based upon the same cause of action, it waives
its appeal rights. Richie v.
Badger State Mut. Cas. Co., 22 Wis.2d 133, 137-38, 125 N.W.2d 381, 383
(1963). Here, as explained by the
parties, First Bank’s cause of action in the second action is different because
it is based on the note and not on the guarantees.
Additionally,
the estate cites the proposition that the right to appeal is waived by one who
causes or induces the judgment to be entered.
County of Racine v. Smith, 122 Wis.2d 431, 437, 362 N.W.2d
439, 442 (Ct. App. 1984). Here, First
Bank did not induce or cause the judgment dismissing its complaint. Although First Bank could have moved to
amend its complaint, it reasonably chose not to after the trial court held that
it could raise its alternative claims in the newly filed action. The trial court so held after counsel for
the other four respondents confirmed the availability of that alternative, and
counsel for the estate remained silent.
While the estate is not bound by the representations of counsel for the
other respondents, it is bound both by its failure to object to the trial
court’s ruling, and its failure to appeal, if aggrieved by it.
By
the Court.—Judgments reversed
and causes remanded.
This
opinion will not be published. See
rule 809.23(1)(b)5, stats.
[1] At
the time the trial court stated that it would not grant leave to amend the
complaint to add a cause of action based on the note, there was no motion to
amend before the court. Presumably the
estate means First Bank should have filed a motion to amend to preserve the
issue, and then appealed the denial of the motion.