No. 84-346
IN THE SUPREME COURT OF THE STATE OF MONTANA
1985
CLARKS FORK NATIONAL BANK,
Plaintiff and Respondent,
ELLAK PAPP and VIOLET PAPP,
husband & wife, d/b/a PAPP
LANDSCAPING CO. ,
Defendants and Appellants.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Carbon,
The Honorable Diane G. Barz, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
Joseph E. Mudd; Bridger Law Office, Bridger, Montana
For Respondent :
Mouat & Martinson, Billings, Montana
Submitted on Briefs: November 2, 1984
Decided: April 30, 1985'
Filed:
Clerk
Mr. Justice Fred J. Weber delivered the Opinion of the Court.
Claxks Fork National Bank (Bank) sued in the Thirteenth
Judicial District, Carbon County, to recover on a delinquent
promissory note. Summary judgment was granted in favor of
the Bank against Ellak Papp and Violet Papp, husband and
wife, for $24,059.59, plus attorney fees, costs of suit and
interest. The Papps appeal from this summary judgment. We
reverse.
The only issue is whether there was a genuine issue of
material fact regarding the promissory note which precluded
summary judgment.
The record before us includes an unverified complaint,
an unverified answer, and affidavits by the Bank President
and both of the individual defendants. The original
promissory note on which the complaint was based is attached
to the judgment. The top of the note shows the lender to be
the Bank and lists the borrowers1 names and addresses as
"Papp, Ellak and Violet dba Papp Landscaping Co. Fromberg,
Montana 59029. " The signature lines show individual
signatures by Violet A. Papp and Ellak Papp without any
further reference to the name Papp Landscaping Co. The note
states that the purpose of credit was the "renewal of # 3 3 6 4 3 "
and that the note is secured by a separate security agreement
dated June 22, 1978. While a copy of the security agreement
was not made a proper part of the record, a purported copy of
that agreement was attached to the defendants1 brief in
opposition to the motion for summary judgment. In addition,
the note grants a security interest in va.rious inventory,
equipment, accounts and other rights to payment and general
intangibles, as well as the following collateral: "all plant
materials, inventory, materials inventory, all accounts
receivable, all vehicles, miscellaneous tools and equipment
now owned or hereafter acquired for use by and for the
business."
The affidavit of the Bank President states that the note
in question was executed in his presence by Ellak Papp and
Violet Papp individually. That affidavit also states that
the note was a renewal of an earlier note. In addition, the
affidavit states that the note was prepared and was signed as
a personal obligation of both individuals, Ellak Papp and
Violet Papp.
The affidavits of Violet A. Papp and Ellak Papp state
that Ellak is the President of Papp Landscaping Co. and
Violet is the Vice-President; that the promissory note in
question was executed by the Papps in their corporate
capacity as President and Vice-President of Papp Landscaping
Co.; that the note was a renewal of a previous note executed
by the company; that the defendants believed they were
renewing an existing obligation between the Rank and the
company; that the Papps were buttressed in their belief that
the note was between the Bank and the company by the fact
that the note was secured by property owned by the company;
that Violet Papp as Vice-President of Papp Landscaping Co.
had provided the Bank with a list of corporate officers which
named Ellak Papp as President and Violet A. Papp as
Vice-President.
Summary judgment allows a court to dispose of those
actions where there is no genuine issue of material fact,
thereby eliminating the burden and expense of an unnecessary
trial. Morales v. Tuomi (Mont. 1985), 693 P.2d 532, 534, 42
St.Rep. 60, 62, citing Van Uden v. Hendricksen (Mont. 1980),
615 P.2d 220, 222, 37 St.Rep. 1431, 1433.
The burden upon the party moving for summary iudgment is
stated in Rule 56 (c), M.R.Civ.P.:
". . . The judgment sought shall be rendered
forthwith if the pleadings, depositions, answers to
interrogatories and admissions on file, together
with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter
of law. . . ."
The burden upon the party opposing summary judgment is
stated in Rule 56 (e), D4.R.Civ.P. :
". . . When a. motion for summary judgment is made
and supported as provided in this rule, an a.dverse
partly may not rest upon the mere allegations or
denials of his pleading, but his response, by
affidavits or as otherwise provided in this rule,
must set forth specific facts showing that there is
a genuine issue for trial. . . ."
The affidavits of the defendants indicate that, at the
time the note was prepared, the Bank knew that Papp
I;a.ndscaping Co. was a corporation and that Ellak a.nd Violet
Papp were the President and Vice-President of that company.
Notwithstanding that knowledge, the Bank contends that the
note itself is determinative. The Bank contends that the
note establishes that the two individuals were doing business
as Papp Landscaping Co., which is an entirely normal manner
of doing business. Citing Keller v. Llewellyn (1977), 175
Mont. 164, 573 P.2d 166 and Silva v. Holme (Cal.~ist.Ct.~pp.
1952), 241 P.2d 21, the Bank argues that because the note and
signatures are not in any way ambiguous or uncertain, no
evidence may be presented to vary the terms of the instrument
itself.
We disagree with the Bank's conclusion. In pertinent
part S 30-3-403 ( 2 ) , MCA states:
"An authorized representative who signs his own
name to an instrument:
" (b) except as otherwise established between the
immediate parties, is personally obligated if the
instrument na.mes the person represented but does
not show that the representative signed in an
representative capacity . . ."
The note itself establishes that the President and
Vice-President of Papp Landscaping Co. signed their own names
to the instrument without showing that they signed in a
representative capacity. This would indicate that there is
personal liability unless they come within the exception
listed in subparagraph (b) .
The affidavits of the defendants state that as hetween
the immediate parties, the note was intended to be a
corporate liability rather than an individual liability. In
contrast, the Bank's affidavit states that the note was
signed as and intended to be the individual liability of the
defendants personally. While it is generally true that a
note cannot be varied by par01 evidence unless it is
ambiguous or uncertain on its face, 5 30-3-403 (2)(b), MCA,
specifically allows proof beyond the provisions of the note
itself. The language of the note itself suggest that the
parties may have "otherwise established" as provided in the
statute. The Papps' affidavits buttress the possibility that
an exception exists. We conclude there is a genuine issue as
to a material fact and that the Bank is not entitled to
summary judgment.
The promissory note refers to a separate security
agreement dated June 22, 1978. No copy of that security
agreement was properly submitted as a part of the a-ffidavits.
We do note, however, that the unsworn copy, attached to
defendants' brief in opposition to the motion for summary
judgment, suggests that the security agreement was executed
by the corporation as distinguished from the individuals.
This may be the same security agreement referred to in the
note upon which suit was brought. It tends to confirm the
existence of a genuine issue of material fact.
The summary judgment is reversed.
We c o n c u r :