Hastings State Bank v. Misle

282 Neb. 1Neb

Full text

cases determined
in the
sUPreme cOUrt OF nebraska
()
H astings state Bank , appellee , v. M iriaM M isle ,
in Her capacity as trustee of tHe Julius M isle
revocaBle trust, appellant.
804 n.W.2d 805
Filed august 5, 20. 	no. s-0-549.
. Statutes: Appeal and Error. statutory interpretation presents a question of law,
which an appellate court resolves independently of the trial court.
2. Summary Judgment: Appeal and Error. an appellate court will affirm a lower
court’s granting of summary judgment if the pleadings and admitted evidence
show that there is no genuine issue as to any material facts or as to the ultimate
inferences that may be drawn from those facts and that the moving party is
entitled to judgment as a matter of law.
3. ____: ____. in reviewing a summary judgment, an appellate court views the evi-
dence in a light most favorable to the party against whom the judgment is granted
and gives such party the benefit of all reasonable inferences deducible from the
evidence.
4. Judgments: Appeal and Error. in a bench trial of a law action, the trial court’s
factual findings have the effect of a jury verdict and will not be disturbed on
appeal unless clearly wrong. the appellate court does not reweigh the evidence
but considers the judgment in a light most favorable to the successful party and
resolves evidentiary conflicts in favor of the successful party, who is entitled to
every reasonable inference deducible from the evidence.
appeal from the district court for Lancaster county: steven
D. Burns, Judge. affirmed.
James 	b. 	cavanagh 	and 	adam 	e. 	astley, 	of 	Lieben,
Whitted, houghton, slowiaczek & cavanagh, P.c., L.L.O., for
appellant.
richard P. Jeffries and megan s. Wright, of cline, Williams,
Wright, Johnson & Oldfather, L.L.P., for appellee.
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:43 AM CST
H eavican, c.J., gerrarD, stepHan, and M iller-lerMan, JJ.,
inBoDy, chief Judge, and Moore , Judge.
gerrarD, J.
hastings state bank (the bank) sought to enforce a commer-
cial guaranty against miriam misle in her capacity as trustee
of the Julius misle revocable trust. the bank claimed that
Julius misle had signed a guaranty in favor of the bank, which
guaranteed debt owed by nOVi, LLc. the district court deter-
mined that Julius’ trust was liable for up to $500,000 in prin-
cipal on the commercial guaranty and granted partial summary
judgment in favor of the bank. after trial, the district court
found in favor of the bank and entered judgment in the amount
of $500,000. miriam appeals. For the following reasons, we
affirm the judgment of the district court.
backgrOUnd
Julius and miriam’s daughter and son-in-law are the sole
members of nOVi. On October 8, 2006, their son-in-law,
Jeffrey mellen, acting on behalf of nOVi, signed a promissory
note with the bank in the amount of $500,000 payable to the
bank on april 8, 2007. On the same day that Jeffrey signed
the note, Julius executed a commercial guaranty, guaranteeing
payment of the indebtedness of nOVi on the $500,000 note.
the face of the note reflects that it is payable on demand.
however, the guaranty treats the note as a line of credit. the
guaranty states that Julius authorized the bank to extend addi-
tional loans to the borrower and to change the time for pay-
ment without notice or demand and without lessening Julius’
liability under the guaranty.
after the execution of the guaranty, over a period of 2 years,
Jeffrey and the bank executed several change-in-terms agree-
ments, which increased Jeffrey’s maximum line of credit and
extended the maturity date of the loan. the undisputed evidence
established that $,900,000 was advanced on the note and sub-
sequent change-in-terms agreements and that the maturity date
was extended to april 8, 2008. the record reflects that some
of the moneys advanced after execution of the change-in-terms
agreements were deposited into an account owned by edm
2 	282 nebraska rePOrts
corporation (edm). edm manages nOVi, and Jeffrey is the
president of edm.
On October 0, 2007, Julius died. When the promissory
note became due, nOVi failed to pay on its obligation. On
October 8, 2008, the bank issued a written demand to miriam
in her capacity as the trustee for payment of the amount the
bank claimed was due on the note guaranteed by Julius:
$,999,579.38. On October 0, the bank filed a complaint in
the county court, later transferred to the district court, against
miriam, claiming that the trust was liable for the $500,000
initial loan as well as the amounts loaned pursuant to the sub-
sequent change-in-terms agreements, in the total amount of
$,999,579.38.
both parties moved for summary judgment. miriam asserted
that the bank failed to provide sufficient notice of its claim
pursuant to neb. rev. stat. § 30-3850 (reissue 2008), that the
bank failed to state a claim for relief, that the bank did not
give valuable consideration for Julius’ guaranty, that the bank
had a duty to disclose certain information about nOVi and
Jeffrey, that the extension of additional credit to nOVi released
Julius from the obligation of the guaranty, and that the bank
breached the implied covenant of good faith and fair dealing.
the district court found miriam’s defenses and counterclaims
were without merit and refused to grant summary judgment in
her favor.
in support of the bank’s motion for summary judgment,
it asserted that the trust was liable for the entire amount due
under the promissory note and its amendments and sought
partial summary judgment on the amount of the original note,
$500,000. the district court noted that the language of the
guaranty did not permit the bank to increase the maximum
principal amount of the indebtedness guaranteed by Julius,
so it determined that Julius was not bound by the subsequent
change-in-terms agreements. the court determined that the
maximum amount for which Julius could be liable under the
guaranty was $500,000, and it granted partial summary judg-
ment in the bank’s favor.
trial was then held to determine for what amount, up to
$500,000, the trust was liable under the guaranty. the bank
hastings state bank v. misLe 	3
cite as 282 neb. 
entered into evidence an affidavit of its former vice president,
who attached copies of the loan history and payoff statement
for the note at issue. Ultimately, the district court determined
that the amount due under the note underlying the guaranty
exceeded $500,000 and found that the trust was liable in the
amount of $500,000. miriam appeals.
assignments OF errOr
miriam assigns that the district court erred in () conclud-
ing that the bank’s notice to the trust was sufficient under
§ 30-3850; (2) finding that the bank’s material alteration of
the note did not void the purported guaranty; (3) finding that
the bank had no legal duty to make disclosures to Julius con-
cerning the terms of the transaction, the bank’s history with
the borrower, or the circumstances surrounding the note; (4)
granting partial summary judgment in favor of the bank; (5)
denying miriam’s motion for summary judgment; (6) finding
that the outstanding liability on the note subject to the pur-
ported guaranty was $500,000; and (7) entering judgment for
the bank in the amount of $500,000.
standard OF reVieW
[] statutory interpretation presents a question of law, which
an appellate court resolves independently of the trial court.
[2,3] an appellate court will affirm a lower court’s granting
of summary judgment if the pleadings and admitted evidence
show that there is no genuine issue as to any material facts or
as to the ultimate inferences that may be drawn from those
facts and that the moving party is entitled to judgment as a
matter of law.2 in reviewing a summary judgment, we view the
evidence in a light most favorable to the party against whom
the judgment is granted and give such party the benefit of all
reasonable inferences deducible from the evidence.3
 see State v. State Code Agencies Teachers Assn., 280 neb. 459, 788
n.W.2d 238 (200).
2 Wilson v. Fieldgrove, 280 neb. 548, 787 n.W.2d 707 (200).
3 Deviney v. Union Pacific RR. Co., 280 neb. 450, 786 n.W.2d 902 (200).
4 	282 nebraska rePOrts
[4] in a bench trial of a law action, the trial court’s factual
findings have the effect of a jury verdict and will not be dis-
turbed on appeal unless clearly wrong.4 the appellate court
does not reweigh the evidence but considers the judgment in
a light most favorable to the successful party and resolves
evidentiary conflicts in favor of the successful party, who
is entitled to every reasonable inference deducible from the
evidence.5
anaLYsis
notice unDer § 30-3850
miriam argues that the bank failed to provide sufficient
notice to the trust pursuant to § 30-3850. miriam argues that
because the bank issued a written demand requesting pay-
ment of $,999,579.38, rather than the $500,000 amount of the
guaranty, she, as the trustee, was not provided with sufficient
notice of the claim against the trust. We disagree. section
30-3850(a)(3) states, in relevant part:
a proceeding to assert the liability for claims against the
estate and statutory allowances may not be commenced
unless the personal representative has received a written
demand by the surviving spouse, a creditor, a child, or a
person acting for a child of the decedent. the proceeding
must be commenced within one year after the death of
the decedent.
the notice provision contained in § 30-3850 merely required
the bank to issue to miriam written notice of the claim against
the estate before commencing the proceeding. section 30-3850
does not require that the amount requested match the amount
ultimately recovered. it is undisputed that the bank sent notice
before commencing the proceeding and that such proceed-
ing was commenced within  year. the bank’s timely notice
to miriam of the amount claimed due under the guaranty,
$,999,579.38, put her on notice of the claim against the estate
and complied with the notice requirements of § 30-3850. the
4 Davenport Ltd. Partnership v. 75th & Dodge I, L.P., 279 neb. 65, 780
n.W.2d 46 (200).
5 Id.
hastings state bank v. misLe 	5
cite as 282 neb. 
district court therefore did not err when it denied miriam sum-
mary judgment after determining that notice was sufficient.
extension of aDDitional creDit to novi
miriam claims that when the bank extended additional
credit to nOVi, those extensions materially altered the note
and voided Julius’ obligation on the guaranty. miriam argues
that under nebraska law, “‘[a]ny material change in the terms
of [the] principal contract which is covered by the guaranty
agreement, made without the consent of the guarantors will
release them from the obligation of the guaranty.’”6 miriam
also cites authority that “‘[w]here the principal contract, which
is described and covered by the guaranty agreement is, without
the consent of the guarantors, materially changed or varied
from such contract as it is described in such agreement, the
guarantors will be released.’”7 miriam also cites other sources
which generally state that a guarantor is discharged when a
creditor has unilaterally increased the amount of the underly-
ing obligation.
however, unlike the authority cited by miriam, here, the
guaranty 	specifically 	stated 	that 	the 	guarantor 	authorized
the lender, without notice or demand and without lessening the
guarantor’s liability under the guaranty, to extend additional
loans to the borrower and change the time for payment without
notice to the guarantor. as the district court correctly noted,
when Julius signed the guaranty, he acknowledged that the
bank’s additional loans would not lessen his obligation under
the guaranty.
miriam notes that the guaranty authorized the bank “‘to
make one or more additional secured or unsecured loans to the
borrower.’”8 miriam argues that the bank’s subsequent advances
to nOVi were not “‘additional loans’” as contemplated by the
guaranty, but were in fact modifications of the existing note
6 brief for appellant at 23, quoting Bash v. Bash, 23 neb. 865, 244 n.W.
788 (932).
7 Id., quoting Hunter v. Huffman, 08 neb. 729, 89 n.W. 66 (922).
8 reply brief for appellant at 6.
6 	282 nebraska rePOrts
which discharged Julius’ liability under the guaranty.9 but
Julius specifically acknowledged that fluctuations in the aggre-
gate amount of the indebtedness would occur.
the guaranty states that it “covers a revolving line of credit
and it is specifically anticipated that fluctuations will occur in
the aggregate amount of the indebtedness. guarantor specifi-
cally acknowledges and agrees that fluctuations in the amount
of the indebtedness . . . shall not constitute a termination of
this guaranty.” thus, it does not matter whether the subsequent
amounts loaned to nOVi were viewed as additional loans
under the guaranty or were advanced under the revolving line
of credit guaranteed by Julius for the purpose of determining
whether the subsequent loans terminated Julius’ obligation
under the guaranty. Julius agreed that additional loans could
be made without reducing his obligation and agreed that fluc-
tuations in the aggregate amount of the indebtedness did not
terminate the guaranty. the fact that the bank subsequently
loaned additional moneys to nOVi does not discharge Julius’
obligation under the guaranty, and the district court did not err
when it so found.
D uty to D isclose
miriam argues that the bank had a duty to disclose to Julius
the terms of the transaction, the bank’s history with the bor-
rower, and the circumstances surrounding the note. We first
note that the terms of the guaranty do not impose a duty on the
bank to disclose to Julius information regarding either nOVi
or Jeffrey. rather, the guaranty specifically states that Julius
had asked to sign the guaranty, that the bank made no repre-
sentations as to the creditworthiness of nOVi or Jeffrey, and
that Julius had adequate means of knowing and keeping abreast
of nOVi’s financial condition.
though the guaranty itself did not impose a duty on the
bank to disclose information regarding nOVi or Jeffrey, we
have previously held:
a duty of disclosure may arise when the creditor knows
or has good grounds for believing () the surety is being
9 Id. at 7.
hastings state bank v. misLe 	7
cite as 282 neb. 
deceived or misled or (2) the surety has been induced to
enter the contract in ignorance of facts materially increas-
ing his risks, of which the creditor has knowledge and the
opportunity to disclose prior to the surety’s acceptance of
the undertaking.0
however, deception or ignorance of the facts is not presumed;
there must be some evidence that would put the lender on
notice that the surety was being deceived or was ignorant of the
facts. miriam had the burden of producing such evidence, and
no such evidence is contained in the record.
though miriam states that the bank had knowledge that
Jeffrey and his other corporation, edm, had “massive” out-
standing loans,2 that the bank’s directors were concerned
about Jeffrey and edm’s ability to repay, and that edm had
an overdrawn checking account at the time of the $500,000
loan, miriam did not present evidence that the bank knew or
had grounds to know that Julius was being deceived or misled,
or that Julius was induced to enter the guaranty in ignorance
of the facts. and again, Julius represented that he requested
the guaranty, that the bank made no representations to him
as to the creditworthiness of nOVi or Jeffrey, and that he had
adequate means of knowing and keeping abreast of nOVi’s
financial condition. accordingly, we conclude that the district
court did not err when it determined that the bank did not
owe Julius a duty to disclose the financial condition of nOVi
or Jeffrey.
consiDeration
miriam also argues that Julius did not receive valuable con-
sideration to support the guaranty, because the amounts loaned
to nOVi exceeded the legal lending limit of the bank. but
whether the amounts loaned exceeded the legal lending limit of
the bank is not relevant to the issue of valuable consideration.3
0 Bock v. Bank of Bellevue, 230 neb. 908, 97, 434 n.W.2d 30, 36
(989).
 see id.
2 brief for appellant at 28.
3 see Schuyler State Bank v. Cech, 228 neb. 588, 423 n.W.2d 464 (988).
8 	282 nebraska rePOrts
generally, sufficient consideration for an agreement will be
found if there is some benefit to one of the parties or a detri-
ment to the other.4 it is undisputed that the bank agreed to,
and in fact did, advance at least $500,000 on the note which
Julius guaranteed. that served as a detriment to the bank and
constituted consideration sufficient to support the agreement.
and though miriam argues that no valuable consideration
exists because the advances on the loan were not deposited in
accounts belonging to nOVi, the “‘benefit rendered need not
be to the party contracting but may be to anyone else at [the
contracting party’s] procurement or request.’”5
miriam also argues that the officer who made the loan did
not have the authority to do so. however, miriam does not
explain or cite authority for the proposition that a loan officer
who grants a loan without authority from the officer’s superior
somehow transforms valuable consideration into insufficient
consideration. the bank’s promise and subsequent advance of
$500,000 on the note underlying the guaranty served as a detri-
ment to the bank, and as such, Julius received consideration
for the detriment he incurred when he guaranteed the loan.
suMMary JuDgMent
miriam argues that the district court erred when it denied
summary judgment in miriam’s favor and instead granted par-
tial summary judgment in the bank’s favor. miriam argues that
the facts, viewed in a light most favorable to her, demonstrate
that a material issue of fact existed as to whether the bank
knew or had grounds to know that Julius was being deceived or
misled or that he had been induced to enter into the guaranty in
ignorance of the facts. however, as discussed, it was miriam’s
burden to produce evidence that the bank knew or had reason
to know that Julius was being deceived or was ignorant of the
facts. no such evidence is contained in the record. therefore
the evidence, even when viewed in a light most favorable to
4 Aon Consulting v. Midlands Fin. Benefits, 275 neb. 642, 748 n.W.2d 626
(2008).
5 Bock, supra note 0, 230 neb. at 94, 434 n.W.2d at 34, quoting Erftmier
v. Eickhoff, 20 neb. 726, 36 n.W.2d 754 (982).
hastings state bank v. misLe 	9
cite as 282 neb. 
miriam, reveals that there exists no genuine issue of mate-
rial fact as to whether the bank knew or should have known
that Julius was being deceived or misled or that he had been
induced to enter the guaranty in ignorance of the facts.
miriam also argues that the district court erred when it
granted partial summary judgment in the bank’s favor after
determining that the guaranty was supported by consideration.
as discussed, the bank provided consideration to support the
agreement, so the district court did not err when it granted par-
tial summary judgment in the bank’s favor after it determined
that the undisputed facts, taken in a light most favorable to
miriam, indicated that the parties’ agreement was supported
by consideration.
miriam also argues the district court erred when it refused
to grant summary judgment in her favor. however, miriam
fails to cite any evidence adduced at the hearing which would
tend to show that summary judgment in miriam’s favor was
appropriate. and, for the reasons previously discussed, the dis-
trict court did not err when it determined that miriam was not
entitled to summary judgment as a matter of law.
D istrict court’s D eterMination after trial
the sole issue at trial was what amount was due on the
$500,000 guaranty. at trial, an affidavit from the bank’s assist-
ant vice president noted that the principal amount due under the
note was $,598,594.37 and that the total amount of principal
and interest due on the note was $,933,280.56. an accounting
of the note was also entered into evidence, which indicated that
a principal payment of $490,000 had been made on June 30,
2009. miriam’s counsel specifically stated that the trust did not
claim to have made the $490,000 payment. the bank did not
identify the source of the payment, and miriam did not present
any evidence that the payment was made by Julius, his estate,
or the trust. the district court ultimately determined that the
evidence adduced at trial established that the underlying debt
exceeded $500,000 and that Julius’ trust was liable to the bank
in the full amount of the guaranty, $500,000.
miriam argues that even if Julius was liable for $500,000
under the guaranty, there exists a question whether the $490,000
0 	282 nebraska rePOrts
payment was applied to the guaranteed portion of the loan or
to the unguaranteed portion. again, miriam does not assert that
the payment was made by Julius, his estate, or the trust.
as discussed, the guaranty specifically states that it encom-
passes a line of credit and that the guarantor understands and
agrees that it shall be open and continuous until the indebted-
ness is paid in full. the guaranty also states that the lender
was authorized “to determine how, when and what application
of payments and credits shall be made on the indebtedness.”
miriam cites no authority in support of her argument that the
$490,000 payment should be credited against the $500,000
ceiling of the guaranty. in fact, there is authority to the con-
trary—that a guaranty that contains only a ceiling on the
guarantor’s aggregate liability requires the guarantor to answer
for deficiencies up to the specified ceiling without respect
to the amount of proceeds received by the creditor from
the debtor.6
On appeal, we do not disturb the trial court’s factual find-
ing unless clearly wrong.7 the only evidence adduced at trial
indicated that the total amount of principal and interest due
on the note underlying the guaranty was $,933,280.56, so the
district court was not clearly wrong when it determined that
the evidence established that the amount due under the note
underlying the guaranty exceeded $500,000. and because we
determine that Julius was liable under the guaranty to answer
for deficiencies up to the $500,000 specified ceiling without
respect to the $490,000 payment received by the bank, the dis-
trict court did not err when it determined that Julius was liable
for the full amount which he guaranteed. miriam’s claims to
the contrary are without merit.
cOncLUsiOn
the district court did not err when it granted partial summary
judgment in the bank’s favor and denied miriam’s motion for
summary judgment. the district court’s factual determination
6 see Woodruff v. Exchange Nat. Bank of Tampa, 392 so. 2d 285 (Fla. app.
980).
7 see Davenport Ltd. Partnership, supra note 4.
hastings state bank v. misLe 	
cite as 282 neb. 
that the trust was liable for the full amount of the guaranty,
$500,000, is supported by the evidence and not clearly wrong.
We therefore affirm the judgment of the district court.
affirMeD.
WrigHt, connolly, and MccorMack, JJ., not participating.
tHe cHicago luMBer coMpany of oMaHa , a neBraska
corporation, appellant, v. Joann selvera ,
an inDiviDual , et al ., appellees.
809 n.W.2d 469
Filed august 5, 20. 	no. s-0-74.
. Summary Judgment. summary judgment is proper when the pleadings and
evidence admitted at the hearing disclose no genuine issue as to any material fact
or as to the ultimate inferences that may be drawn from those facts and that the
moving party is entitled to judgment as a matter of law.
2. Summary Judgment: Appeal and Error. in reviewing a summary judgment, an
appellate court views the evidence in a light most favorable to the party against
whom the judgment is granted and gives such party the benefit of all reasonable
inferences deducible from the evidence.
3. Statutes: Appeal and Error. statutory construction is a question of law that an
appellate court decides independently of the trial court.
4. Summary Judgment: Jurisdiction: Appeal and Error. When reviewing cross-
motions for summary judgment, an appellate court acquires jurisdiction over both
motions and may determine the controversy that is the subject of those motions;
an appellate court may also specify the issues as to which questions of fact
remain and direct further proceedings as the court deems necessary.
5. Summary Judgment: Proof. a party moving for summary judgment must make
a prima facie case by producing enough evidence to demonstrate that the movant
is entitled to judgment if the evidence were uncontroverted at trial.
6. Mechanics’ Liens: Intent: Words and Phrases. Under neb. rev. stat.
§ 52-57(2) (reissue 200), one acts in “bad faith” if the claimant either knows
its lien is invalid or overstated or acts with reckless disregard as to such facts.
7. Mechanics’ Liens: Notice. sending a copy of a recorded lien to a contracting
owner under neb. rev. stat. § 52-35(3) (reissue 200) is a prerequisite for
foreclosing the lien.
8. Attorney Fees: Appeal and Error. On appeal, an appellate court will uphold a
lower court’s decision allowing or disallowing attorney fees for frivolous or bad
faith litigation in the absence of an abuse of discretion.
9. Actions: Attorney Fees. attorney fees can be awarded when a party brings an
action that is without rational argument based on law and evidence.
2 	282 nebraska rePOrts

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