Richland National Bank & Trust v. Swenson

NO. 91-071

IN THE SUPREME COURT OF THE STATE OF MONTANA
1991

RICHLAND NATIONAL BANK & TRUST, a National Banking Corporation,
Plaintiff and Respondent,

ROBERT A . SWENSON and JUDY A. SWENSON, husband and wife, and B &
J DRILLING, INC., a Corporation,
Defendants and Appellants,

RICHLAND NATIONAL BANK & TRUST, a National Banking Corporation,
Plaintiff and Respondent,
-v5-
B & J DRILLING, a Corporation, also known as B & J Drilling, INC.,
Defendant and Appellant.

APPEAL FROM: District Court of the Seventh Judicial District,
In and for the County of Richland,
The Honorable Dale Cox, Judge presiding.

COUNSEL OF RECORD:
For Appellant:
L. Randall Bishop; Jarussi & Bishop, Billings,
Montana.
For Respondent:
Thomas M. Monaghan; Lucas & Monaghan, Miles City,

AUG 8 - 1997 Submitted on briefs: May 31, 1991

d
Clerk
Justice R. C. McDonough delivered the Opinion of the Court.

The defendants Robert A. Swenson, Judy A. Swenson, and B & J
Drilling, Inc., (B & J) appeal the orders of the Montana Seventh
Judicial District Court, Richland County, granting summary judgment
to the plaintiff Richland National Bank and Trust (the Bank) on
the defendants' counterclaims for breach of fiduciary duty,
negligence, fraud, tortious interference with business relations
and bad faith against the Bank in its action to collect on certain
promissory notes executed by the Swensons to the Bank. We affirm.
The defendants raise several issues on appeal, which we
restate as follows:
(1) Did the District Court err in concluding that there was
insufficient evidence to raise a genuine issue of material fact
regarding the defendants' counterclaims of breach of fiduciary
duty, negligence, fraud, tortious interference with business
relations and bad faith?
(2) Are the default and default judgment entered against B
& J void for lack of personal jurisdiction?
(3) Did the District Court err in holding that the Swensons
did not have standing to present claims for wrongs to themselves
because such claims are the claims of B & J, a corporation of which
the Swensons are the sole shareholders?
(4) Did the District Court err in concluding that the
plaintiff's counterclaims were compulsory and thus barred by Rule
13(a), M.R.Civ.P.?
(5) Did the District Court err in concluding that the
2
Swensons were not the real party in interest for prosecuting any
claim against the Bank because under 11 U. S C. . 541 (a)(1) the

alleged counterclaims became the property of the Swensons
bankruptcy estate?
In March of 1975, the Swensons went into the seismic drilling
business. They incorporated their business under the name of B &

J Drilling in March of 1979 and are the sole stockholders. The
Swensons began doing business with the Bank in the fall of 1977
when they purchased a home in Sidney with financing arranged
through the Bank. Early in 1978 the Swensons began borrowing money
from the Bank for various business purposes. These were short term
loans and were regularly paid in full.
On December 29, 1980, Mr. Swenson borrowed $60,000 from the
Bank evidenced by a note for one year, to purchase an auger drill

and truck. The drill was not transferred to B & 3; it remained a
personal asset of the Swensons. On December 29, 1981, the note was
renewed in the amount of $54,600 for another year. On February
14, 1983, the note was renewed in the amount of $64,650.07, with

a final maturity date of June 30, 1984. On August 6, 1984 the
promissory note was renewed in the amount of $65,545.43, with a
final maturity date of September 28, 1987. The Swensons' last
renewal promissory note number 33-4946 provided for monthly
payments of $2,338.65 beginning on October 28, 1984, and was signed
by both the Swensons. B & J made seventeen monthly payments on
this note beginning on November 6, 1984 and continuing through

March 10, 1986.
In May of 1985, the Swensons borrowed $7,091.87 to purchase
a 1981 Ford truck. They executed to the Bank promissory note
number 70-7686 in that amount and gave the Bank a security interest
in the truck as collateral. B bc J Drilling made nine monthly
payments on this note beginning on July 8, 1985 and continuing
through March 10, 1986.
On November 15, 1982, B & 5 began borrowing from the Bank for
operating expenses. All of the notes were short term notes.
In November of 1985, B & J borrowed $63,632.49 from the Bank
and executed and delivered its promissory note number 33-9670.
This note represented the renewal of two prior promissory notes
which totaled $43,632.49 and an advance of $20,000. The note was
due November 12, 1986, and it was secured under a security
agreement of the same date by accounts receivable, equipment,
machinery and tools belonging to B & J. The Bank also requested
B & J to sign a guaranty for the debts of the Swensons, including
note number 33-4946, and to sign a security agreement securing
payment of such debts. The security agreement gave the Bank a
security interest in various types of collateral, including its
accounts receivable from Reliable Exploration, Inc. (Reliable).
Reliable was B & J's only customer. B & J had no other source of
income,
In November of 1985, B & J received $23,452.50 from Reliable
in payment of its August invoice and applied the full amount to
promissory note number 33-9670, the operating note. On December
5, 1985, B & J received $21,900 from ~eliablefor its September

invoice. 3 & J applied only $1,900 to the operating promissory
note and deposited the remaining $20,000 in its own checking
account. That day the Bank wrote to B & J and informed them that
In the past we have advanced up to 100% of the current
month's invoices for operating. All future borrowings
against accounts receivable will be limited to a maximum
of 75% of the current month's invoices.
On December 20, 1985, B & J requested and received an
operating loan of $20,000. This loan raised the principal of note
33-9670 to $58,744.60.
In January of 1986, B & J received $37,145 from Reliable for
its October invoice; it applied the full amount to note 33-9670.
Later in January, B & J received $19,013.62 from Reliable for its
November invoice. B & J applied $12,000 to the note and used the
remainder of the check from Reliable for a transmission
replacement.
In February of 1986, B & J requested and received an operating
loan from the Bank of $25,000. This raised the principal of note
33-9670 to $35,180.71.
On March 7, 1986, B & J received $32,670 from Reliable and
applied it to the operating note. It then requested and received
an advance of $20,000 and deposited it into its checking account.
The principal of note 33-9670 then totaled $23,006.06.
On April 23, 1986, B & J requested a loan of $8,400. The Bank
refused the request. Mr. Swenson then contacted Reliable and
requested a direct payment of money in order to keep operating.
Reliable sent a check for $12,652.50. B & J deposited this check
directly into its checking account and never informed the Bank of
this payment. Mr. Swenson testified that he "slid this one by them
5
without them knowing about it right away." B & J made no further
loan requests of the Bank.
On August 14, 1986, Mrs. Swenson brought a check to the Bank
in the amount of $4,404. In her deposition she explained her
actions:
I owed the bank money, which I owed other people money,
too; but in my mind I hated to run to the bank and say,
"I want all of that money. You guys aren't getting any
of this," like they did to me.
So I think I probably was fair enough to say,
"Garth, would you please just give me half of it. You
can have half of it. Because I do know I owe you money.
Because I've always paid you your money, and I do
probably owe you some."
The Bank followed Mrs. Swenson's request and applied
approximately half of the check to the Swensons' debt and deposited
the remainder in B & J's checking account. Shortly thereafter, the
Swensons moved to California leaving behind the auger drill
personally owned by them and all the equipment owned by B & J.
Before leaving Sidney, Mr. Swenson removed the conventional drill
rig belonging to his corporation from the truck upon which it was
mounted and substituted it with an inoperative one. He stored the
conventional rig on his brother-in-law's place near Richland,
Montana. When the Bank inquired about the rig, Mr. Swenson would
not answer the inquiries. From January until March of 1987 the
Bank sold the collateral belonging to the Swensons and B & J.
The Bank filed suit (Civil No. 15,694) on April 3, 1987 to
recover the money owed by the Swensons on notes number 33-4946 and
70-7686 and by B & J on note 33-9670. The Swensons filed a
bankruptcy petition on May 7, 1987 protecting them from any
judgment in that suit. In the bankruptcy, the Swensons did not
list any contingent claims against the Bank. On September 18,
1987, the United States Bankruptcy Court entered its discharge of

the Swensons.
B & J failed to respond to the summons and complaint and a
default judgment was entered against it on June 15, 1987. The Bank
purchased the account receivable owed B & J by Reliable at a
subsequent sheriff's sale. On December 16, 1988, B & J moved to
set aside its default and the judgment entered against it. On
December 19, 1988, the Swensons filed their separate answer and
counterclaim in Civil No. 15,694. On February 2, 1989, the
District Court entered its order setting aside the default
judgment. On February 10, 1989, B & J filed its separate answer

and counterclaim.
On November 2, 1987, the Bank filed a second suit (Civil No.
15,915) against B & J seeking to collect the unpaid principal and

interest on promissory note 33-4946 and to foreclose the
corresponding security agreement. B & J answered and counter-

claimed against the Bank.
On April 17, 1989, the parties stipulated to consolidate the
suits. The parties conducted extensive discovery and submitted
their respective motions for summary judgment. The court granted
summary judgment to the Bank on May 1, 1990, concluding that (1)
there were no facts to support the counterclaims of B & J and the
Swensons against the Bank: (2) the default judgment against B & J
was erroneously set aside, thus the counterclaim of B & J was a
compulsory counterclaim in the first suit and failure to assert it
precluded assertion of it in the second suit; (3) the counterclaims
of the Swensons failed to state a claim because B & J's corporate
right of action cannot be asserted by its stockholders; and (4) the
counterclaims arose out of events taking place before the filing
of bankruptcy and thus became the property of the bankruptcy
estate, thereby precluding the Swensons from personally maintaining
the counterclaims. On February 2, 1990, the defendants filed a
motion to amend their counterclaims. Pursuant to the District
Court's order of May 7, 1990, the defendants amended and
consolidated their counterclaims and the Bank again moved for
summary judgment. The court granted the Bank's motion, holding
that the amended counterclaims only stated one additional count not
considered in its first order, tortious interference with business
relations and that there were no facts to support such claim. The
Swensons and B & J now appeal raising the aforementioned issues.

STANDARD OF REVIEW

In order for summary judgment to issue, the movant must
demonstrate that there is no genuine issue as to all facts deemed
material in light of the substantive principles entitling the
movant to judgment as a matter of law. Rule 56(c), M.R.Civ.P. ;

Frigon v. Morrison-Maierle, Inc. (1988), 233 Mont. 113, 117, 760
P.2d 57, 60; Cerek v. Albertson's, Inc. (1981), 195 Mont. 409, 411,
637 P.2d 509, 511. If the movant meets this burden, the burden
then shifts to the non-moving party to demonstrate a genuine issue
of material fact. Friaon, 760 P.2d at 60. "Mere denial or
speculation will not suffice, the non-moving party must show facts
sufficient to raise a genuine issue." Friqon, 760 P.2d at 60;
Gamble Robinson Co. v. Carousel Properties (1984), 212 Mont. 305,
312, 688 P.2d 283, 287. As will be discussed below, B & J and the
Swensons have failed to demonstrate evidence sufficient to raise
a genuine issue of material fact in light of the substantive
principles of law.
I.
Did the District Court err in concluding that there are no
facts supporting the counterclaims of B & J Drilling or the
Swensons?
The defendants counterclaimed against the Bank alleging
negligence, breach of fiduciary duty, fraud, tortious interference
with business relations and bad faith. The District Court
concluded that there were no facts to support these claims and
granted summary judgment to the Bank. We agree with the District
Court's conclusion.
It is well settled in Montana that "[tlhe relationship between
a bank and its customer is generally described as that of debtor
and creditor . . . and as such does not give rise to fiduciary
responsibilities." Lachenmaier v. First Bank Systems, Inc. (Mont.
1990), 803 P.2d 614, 618, 47 St.Rep. 2244, 2246; Deist v. Wacholz
(1984), 208 Mont. 207, 216, 678 P.2d 188, 193; Simmons v. Jenkins
(1988), 230 Mont. 429, 433, 750 P.2d 1067, 1070. There is a
limited exception to this general rule upon proof of "special
circumstances," as, for example, where a bank is "thrust beyond the
role of a simple creditor into the role of an advi~or.'~
Lachenmaier, 803 P.2d at 618, Deist, 678 P.2d at 193. The security
agreements entered into between the Bank and B & J and the Bank and
the Swensons were entered into as part of the debtor/creditor
relationship. The Bank merely exercised rights it had acquired by
security agreement and law when it foreclosed on the collateral.
There is no evidence that the Bank asserted any influence in the
defendantst business. Even assuming that the Bank owed a fiduciary
duty, there could be no breach of such duty when the Bank acted for
legitimate business reasons in accordance with the security
agreements. Lachenmaier, 803 P.2d at 619; see also Tresch v.
Norwest Bank of Lewistown (1989), 238 Mont. 511, 778 P.2d 874.
The Swensons also argue that the Bank was negligent in
structuring the $60,000 loan for purchase of the auger drill in
December of 1980. However, the Swensons cite no authority to
support the proposition that a negligence action may be based upon
a repayment term of a lawful contract bargained between two
parties. Absent the existence of a fiduciary duty, the law does
not support such a claim.
Mrs. Swenson also contends that a fraud was committed upon
her, and as a result upon B & J, when she signed a security
agreement in blank with the Bank. She alleges that the Bank's
officer Lied to her about what terms would be placed in the
security agreement. The Bank admits that the agreement was signed
in blank and then completed by the Bank and mailed to B & J. It
denies that any fraud or misrepresentation occurred regarding the
terms of the agreement. The record indicates that Mrs. Swenson and
B & J had the security agreement in their possession in December

of 1985, thus she had the means to discover the alleged fraud at
that time. The counterclaim of the Swensons was not filed until
December 19, 1988. Thus, any action for fraud is barred by the two
year statute of limitations. Mobley v. Hall (1983), 202 Mont. 227,

232-3, 657 P.2d 604, 606-7.
The defendants' amended counterclaim also alleges that the
Bank tortiously interfered with the Swensons' and B & J's existing
and prospective business relationship with Reliable. Defendants
contend that this interference occurred when the Bank notified
Reliable that it had a specific assignment of accounts receivable
from B & J and requested that Reliable issue future payments and

drafts with both the Bank and 3 & J named as payee. The Bank
notified Reliable of this prior to notifying B & J that it was

exercising this assignment under the security agreement.
The defendantst contention is without merit. In order to
establish a prima facie case of tortious interference with business
relations, the pleader must show that the acts (1) were intentional
and wil3fuZ; (2) were calculated to cause damage to the pleader in
his or her business; (3) were done with the unlawful purpose of
causing damage or loss, without right or justifiable cause on the
part of the actor; and (4) that actual damages and loss resulted.
Bolz v. Meyers (19821, 2 0 0 Mont. 286, 295, 651 P.2d 606, 611.

Thus, in order to establish a cause of action, it must be shown
that the actor intentionally committed a wrongful act without
justification or excuse. Lythgoe v. First Security Bank of Helena
(1986), 222 Mont. 163, 165, 720 P.2d 1184, 1185. Here, the Bank
was merely exercising its rights to notify account debtors under
the security agreement:
Notwithstanding Secured Party's rights under Section 4
with respect to any and all .. .
. accounts. . Secured
Partv mav at anv time (both before and after the
occurrence of an Event of Default) notifv any account
debtor . . . that such . . .account . . .
- -

has been
assiclned or transferred to Secured Party for securitv
and shall be paid directlv to Secured Partv. If Secured
Party so requests at any time, Debtor will so notify such
account debtors and other obligors in writing and will
indicate on all invoices to such account debtors or other
obligors that the amount due is payable directly to
Secured Party. [Emphasis added.]
The language of the security agreement did not require the Bank to
first notify B & J in advance of any notice to Reliable. The
District Court did not err in concluding that there were no facts
to support the defendants' claim of tortious interference with
business relations.
The defendants also argue that the trial court improperly
denied their motion for leave to amend their counterclaims to state
a cause of action in contract for breach of the implied covenant
of good faith and fair dealing. The defendants point out that the
trial court essentially concluded that the amendment would be
futile and denied the motion, in effect converting the motion into
one for summary judgment.
This Court recently defined the scope of the implied covenant
of good faith and fair dealing in Story v. City of Bozeman (1990),
242 Mont. 436, 791 P.2d 767. We held that the implied covenant
12
exists in every contractual relationship. A breach of the covenant
is a breach of the contract. The standard of compliance is
"honesty in fact and the observance of reasonable commercial
standards of fair dealing in the trade." Section 28-1-211, MCA;
Storv, 791 P.2d at 775. We further held that
[elach party to a contract has a justified expectation
that the other will act in a reasonable manner in its
performance or efficient breach. When one party uses
discretion conferred by the contract to act dishonestly
or to act outside of accepted commercial practices to
deprive the other party of the benefit of the contract,
the contract is breached.
Storv, 791 P.2d at 775. Thus, a breach of the covenant may be
found when the Itdiscretion conferred by the contractg1has been
misused to deprive the other party of the benefit of the bargain.
See e.g. Nicholson v. United Pacific Insurance Co. (1985), 219
Mont. 32, 710 P.2d 1342
According to the Bank, it refused B & J's April 23, 1986,
$8,400 loan request because B & J's only customer and sole source

of income for repayment of the loan, Reliable, was 84 days late in
its payments to B & J and appeared incapable of paying its bills.
Therefore, the Bank believedthat sound business judgment warranted
that it not make the loan. Had the loan been granted, it would
have been under the terms of an existing line of credit as
evidenced by the promissory note from B & J to the Bank dated
November 12, 1985, that provided:
All advances including readvances of all sums repaid
hereunder, now or hereafter made by Bank Payee shall be
evidence [sic] by this note or a similar note. This note
does not constitute a commitment by the Bank to make
readvances or future advances, but may be done at Bank's
discretion.
The plain language of the note gave the Bank the discretion to deny
future loan requests and there is no evidence that such discretion
was misused to deprive the Swensons and B & J of the benefit of
their agreement.
In Story we noted that while the damage award in the seminal
case of Nicholson was excessive in the typical contract case, its
reasoning was still sound. Storv, 791 P.2d at 775. In Nicholson,
the parties entered a lease agreement which provided that the
plaintiff would remodel an office to the defendant's satisfaction.
During the remodeling the defendant decided to forego the new
office and attempted to force the plaintiff to breach by repeatedly
denying satisfaction with the remodeling rather than efficiently
breaching the lease agreement and paying the plaintiff contract
damages. While the tort damages awarded in Nicholson are now
controlled by Storv, the case is a good example of breach of the
honesty in fact standard. The distinctions between the case at bar
and Nicholson are clear. Here the allegations of breach of the
implied covenant of good faith and fair dealing are purely
speculative. There is no evidence of another motive for the Bank
to deny the loan other than sound business reasons.
The District Court granted summary judgment in favor of the
Bank on defendants' counterclaims on May 7, 1990. The court had
granted the defendants leave to amend their counterclaims on May
1, 1 9 9 0 . The defendants moved to amend their counterclaims a
second time to state a cause of action pursuant to Story on June
7, 1990, after the court had issued its first order on the original
counterclaims. The court issued its second order granting the Bank
summary judgment on the amended counterclaims on October 18, 1990,
along with an order and supplemental memorandum denying leave to
file a second amended counterclaim stating a cause of action under
Story.

Rule 1 5 (a), M.R.Civ.P., instructs a district court t h a t l e a v e
t o amend the pleadings shall be freely given when justice so
requires. The rule has been interpreted liberally, allowing
amendment of pleadings as the rule and denying leave to amend as
the exception. Priest v. Taylor (1987), 227 Mont. 370, 377-8, 740
P.2d 648, 653. One exception to the general rule is when the
amendment would be subject to dismissal. Wafstad v. Norwest Bank
of Great Falls (l989), 240 Mont. 322, 324, 783 P.2d 1325, 1326.
Here the defendants, after discovery, failed to raise sufficient

facts under S t o w to withstand a motion for summary judgment. The
District Court did not abuse its discretion in denying the
defendants leave to amend their counterclaims under Story.
11.

Are the default and default judgments entered against B & J

void for lack of personal jurisdiction?
On April 15, 1987, Robert A. Swenson was the registered agent
for service of process for 3 & J. He had moved his domicile to
California. On that day he was personally served with process by
a deputy sheriff of Sacramento County, California. The sheriff's
return shows the Swensons had been sewed only as individual
defendants; it does not indicate that B & J or an agent thereof was
served. Nevertheless, the District Court concluded that 3 & J was
properly sewed with process and it failed to enter the required
appearance within the time specified by law. Its default was
entered.
B & 3 alleges that the judgments against it are void because
of lack of personal jurisdiction over the corporate entity. It
relies on Shields v. Pirkle Refrigerated Freight Lines, Inc.
(lgi'g), 181 Mont. 37, 591 P,2d 1120, and Sink v . Squire (l989), 236
Mont. 269, 769 P.2d 706. The facts of these cases are
distinguishable from the case at bar. Shields involved failure by
a party to properly carry out tfsubstituted serviceqfupon the

secretary of state. Sink involved failure to comply with mandatory
service requirements applicable to the contents and form of a
summons. On the other hand, this case involves an alleged fatal
defect in the return executed by a sheriff acting as a process
server.
Rule 4D, M.R. Civ.P., governs service of process on defendants.
It provides several methods of serving a corporation. The fact
that the registered agent cannot be found in Montana does not
require use of substituted service. lVWhereservice upon any person
cannot, with due diligence, be made personally within this state,
service of summons and complaint may be made by service outside
this state in the manner provided for service within this state,
with the same force and effect as though service had been made
within this state.'$ Rule 4D(3), M.R.Civ.P. One such method of
effecting service upon a domestic corporation is by delivering a
copy of the summons and complaint to the registered agent of the
corporation named in the records of the secretary of state or an
agent authorized by the corporation to accept service of process.
Rule 4D(2) (e), M.R.Civ.P.
We conclude that there was no error in service of process in
this case. The sheriff or other process server does not determine
a defendant's capacity to receive process. Here, Mr. Swensonfs
capacity as the registered agent of the corporation exists as a
result of law (see § 35-1-305, MCA) and B & J's designation and his
consent to act as its registered agent. Moreover, it is the fact
of service rather than the proof of service that is the focus of
a determination of personal jurisdiction:
Indispensable to the timely prosecution of an action is
the service of the summons and complaint. Service of
the summons is the means by which the district court
acquires personal jurisdiction over the defendant.
Clinton v. Miller (lgsl), 124 Mont. 463, 478, 226 P.2d
487, 495; Hassertv v. Sherburne Mercantile Co. (1947),
120 Mont. 386, 392, 186 P.2d 884, 889. Service is also
essential to due process as it notifies the defendant of
the pendency of an action against him thereby giving him
the opportunity to defend himself or his property.
linto on, 124 Mont. at 478, 226 P.2d at 495; Hassertv,
120 Mont. at 396-97, 186 P.2d at 891.
Filing the return, on the other hand, is simply a
ministerial act. The return itself is merely evidence
of service of the summons and complaint, Clinton, 124
Mont. at 479, 226 P.2d at 495. It is filed with the
court only to document on the record the fact that
service has been completed.

[Olther rules governing proof of service provide that
"[fJailure to make proof of service does not affect the
validity of the service. Rules 4D(8) (e) and 5 (f),
M.R.Civ.P.
Livingston v. Treasure County (1989), 239 Mont, 511, 513, 781 P.2d
1129, 1131.
In the case at bar, the District Court adopted the reasoning
in the case of Fisher v. Crest Corp. (Idaho App. 1987), 735 P.2d
1052. In Fisher, a default judgment was obtained against a
corporation and a subsequent motion to set the default aside was
denied. The district court reversed and set the default aside.
The Idaho Court of Appeals reversed the district court. It held
that service of process was adequate to confer jurisdiction over
the defendant corporation even if only one copy of the documents
had been served upon the defendant corporate officer as both an
individual and defendant corporate officer. Fisher, 735 P.2d at
1055. We find the holding of Fisher persuasive. As in Fisher
there are no allegations or record of the corporate officer being
misled by the service. We conclude that the District Court had the
necessary personal jurisdiction over the defendant B & J to enter

its default.
111.
Did the District Court err in holding that the Swensons did
not have standing to present claims for wrongs to themselves when
those claims are the claims of B & J, a corporation of which the

swensons are the sole shareholders?
The Swensons contend that they are entitled to present claims
on behalf of their sole proprietorship. They argue that they were
doing business with the Bank in a personal as well as a corporate
capacity. The District Court concluded that such claims were
essentially those of their corporation and held that the Swensons
as individual shareholders could not prosecute the claims of the
corporation.
We agree. Montana law is clear that the stockholders and
guarantors of a corporation do not have the right to pursue an
action on their own behalf when the cause of action accrues to the
corporation. Bottrell v. American Bank (1989), 237 Mont. 1, 26-
7, 773 P.2d 694, 709-10; Walstad, 783 P.2d at 1328; Moats Trucking
Co., Inc. v . Gallatin Dairies, Inc. (1988), 2 3 1 Mont. 474, 477, 753
P. 2d 883, 885. Here, B & J borrowed operating funds from the Bank;
the Swensons as individuals did not borrow operating funds but had
borrowed from the Bank to purchase a truck. Nor did the Swensons
as individuals request a loan related to the auger rig since it
was refinanced in 1984. The corporate entity, B & J Drilling, was
requesting an advance for operating funds under its promissory note
33-9670. The Bank properly exercised its contractual right and
refused this requested advance. The District Court correctly
concluded that the Swensons as individuals are precluded from
asserting any cause of a c t i o n arising from this refusal by the Bank
to continue financing B & J.
IV .
Finally, our affirmation of the District Court on the above
issues is sufficient to uphold the District Court's grant of
summary judgment to the Bank. Because the Swensons have failed to
present evidence sufficient to raise a genuine issue of material
fact regarding their counterclaims, we need not determine whether
the Swensons are the real party in interest to assert those
counterclaims or whether such counterclaims are compulsory and thus

barred under Rule 13(a), M.R.Civ.P.

The order of the District Court is

AFFIRMED.

We concur:

Chief Justice
 August 8, 1991

CERTIFICATE OF SERVICE

I hereby certify that the following order was sent by United States mail, prepaid, to the
following named:

L. Randall Bishop
JARUSSI & BISHOP
P.O. Box 3353
Billings, MT 59103-3353

Thomas M. Monaghan
LUCAS & MONAGHAN, P.C.
P.O. Box 728
Miles City, MT 59301

ED SMITH
CLERK OF THE SUPREME COURT
STATE OF MONTANA

BY
Depu
\k