C B & F Development Corp. v. Culbertson State Bank ( 1992 )


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  •                                     No.    92-239
    IN THE SUPREME COURT OF THE STATE OF MONTANA
    C B   &   F DEVELOPMENT CORPORATION,
    Plaintiff and Respondent,
    -vs-
    CULBERTSON STATE BANK,
    Defendant and Appellant.                                (2
    ~247 Mont. 497
    , 
    807 P.2d 1363
    .            After a careful
    review of the record, we conclude that substantial evidence was
    presented supporting the jury verdict.
    The Bank contends that evidence of the requisite element of
    contractual consent (offer and acceptance) is not contained in the
    record.   According to the Bank, no written contract between C B          &
    F and the Bank existed.     The Bank's position is that no meeting of
    the minds on essential terms occurred, thus there could be no valid
    offer or unconditional acceptance of that offer.       C B & F contends
    that the Bank erroneously limits its consideration to the August 6,
    1986 letter of commitment to the SBA as though that were the only
    evidence to support a contractual relationship.       C B   &   F refers to
    various other matters presented to establish the contract.
    This case involves two contracts made between three parties.
    "A   contract is either express or implied.   An express contract is
    one the terms of which are stated in words. An implied contract is
    one the existence and terms of which are manifested by conduct."
    Section 28-2-103, MCA.     The first contract, between SBA and C B       &
    F, is an express contract.     A condition precedent to that express
    contract, is the submission to SBA by the Bank of a letter of
    intent to loan C B   &   F an operating line of credit.
    The second contract is that between C B     &   F and the Bank.
    While no written contract existed here, plaintiff contends a
    contract did exist.       As stated in 5 28-2-103, MCA, an implied
    contract is one the existence and terms of which are manifested by
    conduct. See Billings Clinic v. Peat Marwick Main and Co. (1990),
    
    244 Mont. 324
    , 
    797 P.2d 899
    .     Here, we look to the Bank's and C B
    &   F's conduct to see if it is sufficient to establish an implied
    contract.
    The record shows that C B                 &   F specifically requested an
    operating loan commitment letter from the Bank as a prerequisite to
    obtaining the disaster loan from SBA.                   The record shows that the
    Bank assured C B       &   F it would send this letter.              After a twenty
    year business relationship in which the Bank had                          loaned it
    operating money every year, C B           &       F had reason to, and did, accept
    the assurance of the Bank's official.
    The record further shows that a Bank officer spoke personally
    with an SBA officer on several occasions concerning its intent to
    loan money to C B          &   F.   The record establishes that the Bank
    understood that SBA needed a firm commitment and that the letter it
    sent to SBA had been interpreted as such a commitment.                    SBA notes
    indicate its understanding that the Bank would loan C B                     &   F the
    money pursuant to its pre-1986 terms and conditions.
    C B   &   F also understood that the Bank would make an operating
    loan for 1986.       As part of the conditions for such an operating
    loan, the Bank required C B         &   F to repay its outstanding operating
    debt.    The Bank argues that C B             &    F never received a copy of the
    August 6 letter of commitment so it could not have agreed to any
    contractual terms. The record shows that C B                 &   F had been informed
    by SBA of the contents of the Bank letter.                  Subsequently, the Bank
    accepted payment of the C B         &   F debt, knowing that the money came
    from SBA, and fulfilled its own condition for the operating loan.
    The Bank's acceptance of the payment of C B        &   F v s operating
    debt with SBA funds is evidence that the Bank agreed to loan C B              &
    F money.   C B & F 1 sconduct in repaying the loan indicates that it
    understood that in order to receive the new operating line of
    credit, it would have to repay its existing operating debt.           Yet,
    the Bank argues that there can be no contract between it and          C   B   &
    F because essential terms such as the amount of the loan and the
    rate of interest were not established.
    The letter of commitment from the Bank to SBA establishes a
    $41,000 credit limit.         Testimony at trial established that over a
    twenty year business history, the interest rates on the yearly
    operating line of credit fluctuated with the amount borrowed and
    general interest rate.
    In SBA1sLoan Authorization and Agreement to C B         &   F covering
    the 1986 loan to C B      &   F, SBA states that the Bank must provide a
    letter of commitment to SBA indicating an extension of an operating
    line of credit to C B           &   F on llapproximatelythe same terms,
    conditions, and credit limit as granted" prior to the 1986 loan.
    The Bank and C B   &   F understood that the Bank's August 6 commitment
    letter was written with these implied terms. As a result, the Bank
    was required to make the loan on terms and conditions similar to
    those of preceding years.
    The Bank contends that its second condition to extending the
    line of credit was not completed because SBA did not subordinate
    its loan. Testimony by the SBA at trial established that the Bank
    failed to request the subordination so none was issued.
    The elements required to establish an implied contract are:
    identifiable parties, consent, a lawful object and consideration.
    Daniels v. Thomas, Dean      &   Hoskins, Inc. (1990), 
    246 Mont. 125
    , 
    804 P.2d 359
    . The parties to the implied contract were the Bank and C
    B   &   F.   We have discussed, and the record evinces, consent by both
    parties to the operating loan.              As   far as consideration is
    concerned, C B        &   F received its disaster loan and paid the
    delinquent current operating loan to the Bank; and the Bank
    accepted the delinquent amount from the SBA funds.                  We conclude
    that the implied contract between the Bank and C B                       &    F was
    established by substantial evidence.
    C B & F argues that the evidence supports the contractual
    theory of promissory estoppel. Because we conclude that an implied
    contract existed between the Bank and C B          &   F, we do not find it
    necessary to discuss promissory estoppel in detail.                 We do point
    out that substantial evidence exists from which the jury could also
    have concluded that promissory estoppel prevents the Bank from
    denying a contractual relationship between it and C B                &   F.
    We therefore hold that the evidence presented was sufficient
    to justify the jury verdict.
    11.
    Did the District Court err by           instructing the jury on
    equitable estoppel and on a third party beneficiary theory?
    Both plaintiff and defendant provided the court with an
    estoppel instruction which the court gave to the jury.                   The Bank
    offered a promissory estoppel instruction.             C B   &   F's instruction
    merely designated its instruction as one for llestoppel;ll Bank
    the
    contends     the   instruction was   really   an   equitable   estoppel
    instruction.       As such, the Bank argues the instruction was
    inappropriate because equitable estoppel is a defense theory. The
    Bank further argues that the giving of both instructions was
    confusing for the jury.     C B & F argues that its instruction was
    not designated as an equitable estoppel instruction and that
    nothing in the simultaneous giving of the two instructions was
    confusing.
    C B & F's instruction with six elements specifically mentions
    I1silencenas a possible conduct which could indicate the party is
    estopped from denying a contract.     The Bank objects to use of the
    "silence1'element; yet the facts of this case strongly suggest that
    silence could have played a part in analyzing the Bank's conduct.
    This Court has recognized equitable estoppel, promissory
    estoppel, and estoppel by silence. Northwest Potato Sales, Inc. v.
    Beck (1984), 
    208 Mont. 310
    , 
    678 P.2d 1138
    .         But, in so doing we
    have also determined that the lines separating all three kinds of
    estoppel are blurry at best:
    Although we base our decision on estoppel by silence, we
    cannot deny that the facts may fit elements of estoppel
    also appropriate to equitable estoppel.      This is so,
    because as is so often the case in any branch of the law,
    each form of estoppel does not fall into a neatly
    packaged and exclusive category. Rather, the forms of
    estoppel also blend with each other.
    Northwest 
    Potato, 208 Mont. at 317
    , 678 P.2d at 1141.
    We have reviewed and compared both instructions and have
    concluded that under the facts of this case, the jury could
    properly have found for the plaintiff under both instructions. As
    a result, we hold that the giving of both instructions does not
    constitute reversible error.
    The Bank also objects to the District Courtts instruction on
    the theory of third party beneficiary.           The basis for the Bank's
    objection is that the federal district court found no contract to
    exist between SBA and the Bank.         The Bank argues res judicata on
    the issue of any contractual relationship between it and the SBA.
    First, we find res judicata inapplicable.              Res judicata
    requires the same parties, the same subject matter, the same
    issues, and the same capacities of the parties. Filler v. Richland
    County (1991), 
    247 Mont. 285
    , 
    806 P.2d 537
    . The parties on appeal
    are C B   &    F and the Bank.   The action in federal court was an
    action by the Bank against the SBA. The parties are not the same.
    Further, the issues involved are different.         The Bank argued
    to the federal court that SBA had breached an agreement with it to
    subordinate and that this breach caused the Bank damage.            In the
    underlying action now on appeal, C B         &   F argues that the Bank
    breached its agreement with C B     &   F, causing C B   &   F damage.       We
    conclude that the determination by the federal district court did
    not constitute res judicata as to the issues in this case.
    We note that the transcript does contain the Bank's objection
    to the third party beneficiary instruction as presented by C B           &   F.
    The   record    also   shows that   following a       discussion   on    the
    appropriateness of the theory to the case, the Court granted the
    Bank's request for permission to write a limiting instruction to be
    given with the original. The Bank never furnished the instruction
    at the agreed upon time so the court gave the original instruction
    by itself.   We conclude that the Bank's failure to provide the
    instruction, which the court stated that it would give to the jury,
    prevents the Bank from now arguing that the instruction on this
    issue was deficient.
    We hold the District Court did not err by instructing the jury
    on an equitable estoppel theory and on a third party beneficiary
    theory.
    Affirmed.
    We Concur:
    

Document Info

Docket Number: 92-239

Judges: Weber, Harrison, Trieweiler, Hunt, Gray

Filed Date: 12/17/1992

Precedential Status: Precedential

Modified Date: 3/2/2024