Havelock Bank of Lincoln v. Bargen

321 N.W.2d 432, 212 Neb. 70, 1982 Neb. LEXIS 1164
CourtNebraska Supreme Court
DecidedJuly 2, 1982
Docket44196
StatusPublished
Cited by9 cases

This text of 321 N.W.2d 432 (Havelock Bank of Lincoln v. Bargen) is published on Counsel Stack Legal Research, covering Nebraska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Havelock Bank of Lincoln v. Bargen, 321 N.W.2d 432, 212 Neb. 70, 1982 Neb. LEXIS 1164 (Neb. 1982).

Opinions

McCown, J.

This is an action by the plaintiff bank to enforce a personal guaranty agreement executed by the defendant in connection with credit extended to a corporation. The jury returned a verdict for the plaintiff bank in the amount of $2,816.90. The bank has appealed.

The defendant, Duane L. Bargen, was the vice president and a director of Air Structures, Inc., and the owner of approximately 18 percent of its stock. The corporation manufactured blower assemblies for inflatable domes. In February 1978 the corporation had determined that operations would require $20,000 short-term and $80,000 long-term financing. The defendant and John Farrar, the president of the corporation, met with Gordon V. Kuhn, the president and chief executive officer of the plaintiff bank, to discuss the financing. The testimony of defendant and Farrar was that the financing discussed was a total loan package of $100,000, that the personal guaranties would be based on that total, composed of $80,000 long-term and $20,000 short-term debt, and that each stockholder of the corporation was to be liable for guaranteeing the fraction of the total [72]*72$100,000 which corresponded to his stock interest. Kuhn’s testimony was that the only direct credit negotiated was the $20,000 short-term borrowing plus consideration .of additional credit at a later time. Kuhn advised the corporate officers that the bank would require a security interest in various assets of the corporation as collateral, as well as personal guaranties from principals of the corporation. He denied that the personal guaranties were based upon a total loan package of $100,000.

Personal guaranties were prepared by the bank and sent out to the principal stockholders of the corporation for signature. There were apparently seven individual guaranties sent out by the bank totaling $100,500. Each guaranty provided that, in consideration of credit given to the corporation, prompt payment up to the stated amount in the instrument was guaranteed on any and all notes, renewals, and other indebtedness of the corporation. The amount of each individual guaranty was in approximately the same percentage of $100,000 as the stock ownership of the individual in the corporation. By April 27, 1978, the bank had received five individual guaranties totaling $73,500. The defendant’s guaranty in the sum of $18,000 was one of the five. Two guaranties, one for $7,000 and one apparently for $20,000, were never returned to the bank.

On May 1, 1978, Air Structures, Inc., executed a $20,000 note to the bank and a financing statement and security agreement giving the bank a security interest in certain equipment, inventory, and accounts receivable of the corporation. The bank delivered the $20,000 to the corporation on the same date.

The corporate officers testified that Kuhn informed them shortly thereafter that the bank would not advance the entire $100,000 and requested the corporation to establish who would be responsible for the outstanding $20,000 loan. Later in May 1978 [73]*73the corporation held a meeting regarding the $20,000 loan and adopted a verbal resolution setting out the stock ownership of each shareholder and the percentage of debt responsibility of each. On June 6, 1978, a letter was sent to Kuhn at the bank. The letter stated: “Please consider this as an update to the Investor Guarantees earlier written. It has been adopted as a corporate resolution to have each of the investors, by percentage of ownership, be responsible for their share of the Havelock short term debt.

“It is then understood the individuals listed below shall be responsible as indicated: . . . .” Then followed the names of stockholders, each showing the number of shares of stock owned and the percentage of ownership, rounded to the nearest percentage point. The individual percentages totaled 100 percent. The defendant was listed as the owner of 1,300 of the 6,950 shares, and his percentage was rounded to 19 percent. The responsibility of each shareholder was to include principal and interest.

On June 7, 1978, Kuhn replied on behalf of the bank, acknowledging receipt of the letter of June 6, and stated that in the event of default “we understand that the individuals will assume their proportionate share of any loss . . . that the bank might incur.” Kuhn testified that he acknowledged receipt of the letter of June 6 and gave his approval of the distribution.

On September 1, 1978, the $20,000 note was renewed until December 11, 1978, and on that date was again renewed to June 9, 1979. On December 30, 1978, the two smaller stockholders listed in the letter of June 6, 1978, paid $2,160 to the bank, which was their percentage of responsibility outlined in the June 6, 1978, letter. They were released by the bank from their liabilities on the $20,000 loan guaranties.

In a letter dated January 11, 1979, Kuhn advised the president of the corporation that the two smaller stockholders had been released from their guaran[74]*74ties and that when the other guarantors paid their guaranteed portion of the corporate debt they would relieve themselves of any further obligation on their guaranties. In the same letter the bank declared the loan in default and demanded payment in full. Kuhn also wrote to the 20 percent stockholder who had never executed any guaranty and advised him that payment of his proportionate liability in accordance with the June 6, 1978, letter would release him from liability to the bank.

The parties stipulated that the principal amount due and owing on the $20,000 note is $12,669.17 plus interest, which at time of trial was $2,394.49. Air Structures, Inc., is insolvent and unable to make any further payment on the note.

The bank brought this action against the defendant Bargen on his individual guaranty of April 27, 1978, seeking to collect the full amount of the corporate indebtedness. The case was tried before a jury. The jury found that the defendant’s guaranty became a guaranty based upon the proportionate stock ownership of each stockholder and returned its verdict for the plaintiff in the amount of $2,369.13 plus $447.77 interest, for a total of $2,816.90. The plaintiff has appealed.

The jury was instructed that if it found for the plaintiff and found that the guaranty of the defendant applied to the full obligation of Air Structures, Inc., it was to enter judgment of $12,669.17 principal and $2,394.49 interest, for a total of $15,063.66. The jury was also instructed that the burden was upon the defendant to prove by a preponderance of the evidence that the purported guaranty was modified after its execution. The jury was likewise instructed that if it found by a preponderance of the evidence that the defendant’s guaranty was enforceable but was modified and became a guaranty upon the proportionate stock ownership of each stockholder, its verdict would be for the plaintiff in the [75]*75amount of $2,369.13 plus $447.77 interest, for a total of $2,816.90. Counsel had no objection to these instructions and, by agreement and stipulation of counsel, forms of verdict were submitted accordingly, together with a third form of verdict finding in favor of the defendant.

The plaintiff bank contends that the defendant’s $18,000 guaranty was absolute, that the bank did not have the requisite intent to modify the agreement, and that there was no consideration for any modification.

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Havelock Bank of Lincoln v. Bargen
321 N.W.2d 432 (Nebraska Supreme Court, 1982)

Cite This Page — Counsel Stack

Bluebook (online)
321 N.W.2d 432, 212 Neb. 70, 1982 Neb. LEXIS 1164, Counsel Stack Legal Research, https://law.counselstack.com/opinion/havelock-bank-of-lincoln-v-bargen-neb-1982.