Shiplet v. First Security Bank of Livingston, Inc.

blo. 88-141

IN THE SUPREME COURT O F THE S T A T E O F MONTANA

1988

ROBERT S H I P L E T and J A C Q U E L I N E
SHIPLET,
P l a i n t i f f s and A p p e l l a n t s ,

F I R S T S E C U R I T Y BANK O F L I V I N G S T O N , INC.,
a Montana c o r p o r a t i o n ,

D e f e n d a n t and R e s p o n d e n t .

APPEAL FROM: D i s t r i c t C o u r t of t h e S i x t h J u d i c i a l D i s t r i c t ,
I n and f o r t h e C o u n t y of P a r k ,
T h e H o n o r a b l e T h o m a s H o n z e l , Judge p r e s i d i n g .

COUNSEL O F RECORD:

For A p p e l l a n t :

T e r r y Schaplow; Morrow, Sedivy & Bennett, Bozeman,
Montana

For R e s p o n d e n t :

Joe S w i n d l e h u r s t ; H u p p e r t & S w i n d l e h u r s t , L i v i n g s t o n ,
Montana
S i d Thomas; M o u l t o n Law F i r m , B i l l i n g s , M o n t a n a

S u b m i t t e d on B r i e f s : Aug. 11, 1 9 8 8

Decided: S e p t e m b e r 27, 1988

Clerk
Vr. J u s e i c e R. C. 5fcDonough d e l i v e r e d t h e O p i n i o n o f che
Courc.

Roberc and J a c q u e l i n e S h i p l e c ( S h i p l e c s ) a p p e a l from c h e
o r d e r o f r h e D i s c r i c c Courc o f c h e S i x c h J u d i c i a l D i s c r i c r ,
Park Councy, grancing summary judgmenc in favor of Firsc
S e c u r i c y Rank o f L i v i n q s c o n ( B a n k ) . W e affirm.
The S h i p l e c s p r e s e n c one i s s u e f o r r e v i e w :
Did c h e Discricc Courc err i n g r a n c i n g c h e Rank summary
judgmenc on a l l c o u n r s o f c h e complaint?
A complece scacemenc o f c h e f a c e s would b e v e r y l e n g r h y .
However, an oucline of relevanc evencs will provide
sufficient background and more d e c a i l w i l l be g i v e n where
required. The S h i p l e c s o p e r a r e a r a n c h s o u c h o f L i v i n g s c o n .
They h a v e done b u s i n e s s w i c h c h e Bank f o r a number o f y e a r s ,
e n r e r i n g i n c o v a r i o u s l o a n agreemencs i n c h e c o u r s e o f c h e i r
r a n c h i n g operations. In 1978, che S h i p l e r s soughc f u r c h e r
financing for cheir ranch from c h e Rank i n che form o f a
$350,000 l o a n .
The Bank indicaced chac i could nor make che loan
u n l e s s a g u a r a n c y c o u l d b e a r r a n g e d c h r o u g h c h e F a r m e r s Home
A d m i n i s c r a c i o n (FmHA). The Bank c h e n submicced a Requesc f o r
Guarancee [ s i c ] c o FmHA, which l i s c e d a " L i n e o f C r e d i c
C e i l i n g " o f $350,000, a n i n c e r e s c r a c e o f l o % , and a c e r m o f
f i v e years. The C o n c r a c c o f Guarancee [ s i c ] i s s u e d by F H
mA
upon ics approval of che application lisced no cerms
particular co che Shiplecs' loan orher than rhe $350,000
credic ceiling.
Once che guarancy was obtained, che Bank and che
S h i p l e c s executed a one-year p r o m i s s o r y noce f o r 5350,000 a c
a n i n c e r e s c r a t e o f 1 0 % . The S h i p l e c s w e r e n o r a b l e c o r e p a y
c h e c o c a 1 p r i n c i p a l and i n c e r e s c d u e a f c e r one y e a r , and i n
1979 chey execuced a new one-year noce. This began a cycle
of noces, mosc of which were issued for six-monch cerms. The
principal and inceresc scill ouescanding as each noce came
due were carried over co che new noce.
When che 1978 nore came due and ic appeared chae anocher
noce would be necessary, che Bank concacced FmHA and asked
whecher che cerms of che guarancy would prohibic che Bank
from raising che race of inceresr on che loan co reflecc che
overall rise in inceresc races caking place ac chac eime.
The FmHA replied chac according co ics accorneys, such a race
increase was permissible. The 1979 noce carried an inceresc
race of 11.75%. The inceresc race onsubsequent noces
fluccuaced as the prime lending race rose and fell, reaching
a peak of 214% in 1981.
The FmHA guarancy expired in 1.984, ac which eime
pavmencs from che Shiplecs on cheir loan were in arrears.
The FmHA decided chac the Rank would have co concinue che
Shiplecs' loan wichouc a guarancy or presenc a plan of
liquidacion. In February of char year, che Shiplecs and
cheir accorney began meecing wich Rank officials to determine
whac could be done co resolve che sicuacion. Negociacions
resulred in execution of a $400,000 noce and a new,
seven-year FmHA guarancy. The condieions accached co the new
guarancy included complece repayment of inceresc and
operacing credic ar che end of each year, and liquidacion of
some Shiplec real escace holdings in order co repay $338,000
of che loan. When chis final nore reached macuricy on
Sepcember 28, 1985, approximately $348,000 remained
oucscanding.
In Occober of 1985, che Shiplecs filed suic againsc che
Bank based on che increased ineeresc charged on che pose-1978
noces. They alleged breach of concracc, breach of
chird-parcy-beneficiary concracc, bad fairh, fraud, negligenc
infliction of emocional dis~ress, breach of fiduciary ducy
and economic duress. On January 21, 1988, che Discricc Courc
issued an order grancing che Bank's mocion for summary
judgmene as co all chirceen councs enurneraced in che
Shiplecs' cornplainc. This appeal followed.
In order for summary judgrnenc co issue, che moving parcy
muse show chere is no genuine issue as co faces chac are
macerial in lighc of che subscancive principles enticling
chae parcy co judgmenc as a rnaccer of law. If che moving
parey meecs chis burden, che non-moving parey chen has che
burden of showing a genuine issue of macerial face. These
scandards also apply co chis Courc when reviewing che granc
or denial of summary judgrnenc. Frigon v. Morrison-Maierle,
,
Inc. (Monc. 1988) - P.2d - 45 Sc.Rep. 1344, and cases
cited cherein.
I.
The firsc counc of che Shiplecs' complainc alleged
breach of concracc. They argued che Bank represenced co chem
char the applicacion form for che guarancy was a concracc
becween che Bank and che Shiplees for a five-year loan ac an
annual inceresc race of 10%. Shiplecs alleged che Bank
breached chis concracc by raising che race of inreresc
charged on che loan above 10%.
The ~iscriccCourc held chis counr failed for a number
of reasons, including che applicaeion was noc a concracc
Seeween che Bank and che Shiplecs. The courc ruled che
concracc becween che cwo parries was evidenced by che 1978
promissory noce for a cerm of one year ac lo%, and any oral
represencacions made by che Bank prior co che signing of chac
noce merged with che noce's cerms.
On appeal, che Shiplecs direcc cwo arguments ac che
Discricc Courc's holding. Firsc, chey argue Weinberg v.
Farmers Scace Bank of Worden (Monc. 1988), 752 P.2d 719, 45
Sc.Rep. 391, is conerolling in chis case. According KO che
Shiplecs, chis Courc held in Weinherg such a concracc exisced
in a face sicuacion very similar co chis case. In Weinberg,
che farm operacors alleged a seven-year loan agreemenc ac an
inceresc race of 93%. Ilowever, in char case boch pareies had
signed a promissory noce which on ics face lisced a
seven-year rerm and a 94% inceresc race.
The only wricing in chis case concaj-ning che cerms
alleged by che Shiplecs is che applicacion for guarancy.
Thac documenc was signed. only by che Bank's agent, and was
direcced co he FmHA. The FmHA and che Bank later execuced a
separace concracc of guaraney once che applicacion had been
approved. The applicacion was noc a concracc becween che
Bank and che Shiplers.
As co any oral represencacions by che Bank chac che
applicacion was in facr a concracc, che Discricc Courc quoced
language from our decision in Firsc Nacional Moncana Bank of
Missoula v. McGuiness (Monc. 1985), 705 P.2d 579, 42 Sc.Rep.
1288:

[Elvidence of prior oral agreemencs is noc
admissible for che purpose of alcering subsequenc
wriccen agreemenes dealing wich che same subjecc,
and chac ehe prior oral agreemencs and che wriccen
agreemenc will merge inco che subsequenc wrircen
agreemeniz unless izhey are discincc and can srand
independencly of one anocher.
705 P.2d ac 584. Under che doccrine of merger as enunciaced
in McGuiness, any oral represencacions made by che Bank
merged wich che cerms of che nore, which chen represenced che
concracc reached becween chese two parries.
The Shiplecs second argumenc is char an exception co che
doccrine of merger exiscs for evidence of an oral agreernenc
introduced in order co establish fraud. As will be discussed
more fully below, any such evidence would be barred by che
cwo-year scacuce of 1-imicacions f o r fraud-relaced c o r c s found
ac 5 27-2-203, MCA. The Disrricr Courc was correcc in
g r a n c i n g summary judgmenc on c h i s c o u n e .

The S h i p l e c s ' s e c o n d coune a l l e g e d b r e a c h o f a chird-
parry-beneficiary concracc. They a r g u e d c h e y a r e c h i r d - p a r c y
b e n e f i c i a r i e s o f c h e g u a r a n e y c o n c r a c r between c h e Bank and
rhe FmHA. On appeal, rhe Shiplecs argue Weinberg is
c o n e r o l l i n g on c h i s i s s u e a s w e l l . They a s s e r c c h i s Courc
found a chird-parry-benef i c i a r y concracc in Weinberg,
rejecting rhe argumenc chac che guarancy concracc was
scriccly becween che bank and che FmHA. Again, che
d i s c i n g u i s h i n g f a c c o r o f c h e p r o m i s s o r y n o c e i n Weinberg i s
o v e r l o o k e d i n c h e S h i p l e c s ' argumenc.
I n Weinberg, c h e g u a r a n c y c o n c r a c c was n o r h e l d c o b e a
chird-parcy-beneficiary concracc a s such. The bank i n c h a r
case argued under the parol evidence rule found ac 5
28-2-905, MCA, che noce was evidence only of che inicial
a d v a n c e s made t o c h e W e i n b e r g s , which had been r e p a i d . The
Weinbergs a l l e g e d c h e noce was e v i d e n c e o f a n agreemenr f o r a
line of credir lascing seven years. VJe held che parol
e v i d e n c e r u l e d i d n o c a p p l y , b e c a u s e t h e Weinbergs were noc
a ~ c e m p c i n g c o v a r y c h e cerms o f c h e n o c e . They w e r e i n s c e a d
b a s i n g c h e i r argumenc on c e r m s found on c h e n o c e ' s f a c e . We
n here fore a p p l i e d S 28-3-402, MCA, which a l l o w s e v i d e n c e o f
c h e c i r c u r n s c a n c e s u n d e r which a n agreemenc i s made i n o r d e r
t o e x p l a i n , b u r noc m o d i f y , i c s cerms.
The guaraney conrracc in Weinberg was one piece of
e v i d e n c e showing e h e c i r c u r n s c a n c e s s u r r o u n d i n g c h e e x e c u r i o n
of che noce. The documencs u s e d i n p r o c u r i n g c h e g u a r a n e y
and c h e b a n k ' s s u b s e q u e n c a c c i o n s i n r e l i a n c e on c h e g u a r a n c y
c o n c r a c c a l l p e r c a i n e d c o whac c h e bank and c h e Weinbergs had
i n mind when chey e x e c u c e d c h e noce.
 U n l i k e Weinberg, c h e S h i p l e e s a r e n o c s e e k i n g c o e n f o r c e
c h e cerms o f c h e i r noce wich c h e Bank. Inscead, rhey seek KO

e n f o r c e t h e guarancy concracc i c s e l f . The D i s e r i c c C o u r c ' s
cicacion KO che Souch Dakoca Supreme Coure d e c i s i o n i n S w i e r
v. Norwesc Bank (S.D. 1 9 8 7 ) , 409 N.W.2d 121, i s persuasive.
The l o a n i n c h a c c a s e was a n F H emergency l i v e s c o c k l o a n ,
mA
c h e same k i n d o f l o a n i n v o l v e d i n c h i s c a s e . Such l o a n s a r e
g o v e r n e d by r e g u l - a c i o n s found a c 7 CFR 5 s 1980.201 -
ec seq,
which d o n o r p r o h i b i c a bank from r a i s i n g c h e i n c e r e s c r a c e
c h a r g e d on a l o a n d u r i n g c h e l i f e o f c h e g u a r a n c y . Before
r a i s i n g c h e r a r e i c c h a r g e d c h e S h i p l e c s , c h e Bank C O ~ K ~ C K ~ ~

che F H
mA co find our: if chis would violace che guarancy
concracc, and was cold correctly chac i c would nor. The
Discricc Coure was c o r r e c c i n g r a n c i n g summary judgmenc on
c h i s counc.
111.
The chird counc of che Shiplecs' complainc alleged
b r e a c h o f c h e s c a c u c o r y o b l i g a c i o n o f good f a i c h found i n he
Uniform Commercial Code as adopced in Mon~ana. Secrion
30-1-203, MCA, scaces, " [ e l v e r y c o n c r a c c o r ducy w i t h i n c h i s
code imposes an obligacion of good faich," and 5
30-1-202 ( 1 9 ) , MCA, s c a c e s c h a r "good f a i c h " means h o n e s e y i n
face. The S h i p l e c s ' argumenc on a p p e a l s c a c e s b a s i c a l l y c h a c
chere is ample evidence of dishonesry in a number of
r e p r e s e n c a c i o n s made KO chem by c h e B a n k ' s a g e n c . While i c
appears from our review of che record char che Shiplecs
experienced difficulties in dealing wich che Rank, che
evidence before u s does nor supporc a v i o l a c i o n of scacucory
good f a i c h .
Moncana c a s e law on c h i s s u b j e c c i s s c a r c e . However,
b e c a u s e t h e s c a c u c o r y p r o v i s i o n s c i c e d above a r e p a r e o f c h e
Uniform Commercial Code, w e a r e a f f o r d e d c h e o p p o r c u n i c y KO

look KO decj-sions in ocher scaces incerprecing virtually
identical provisions. From our reading of cases such a s
T h i r d N a c i o n a l Rank i n N a s h v i l l e v . Hardi-Gardens Supply of
Illinois, Inc. (M.D. Tenn. 1 . 9 7 4 ) , 380 F.Supp. 930; and ~ i r s c
Bank o f Savannah v . Kilpacrick-Smich C o n s c r u c c i o n Co., Inc.
(Ga. 1.980), 264 S.E.2d 576, i c a p p e a r s c h e gravamen o f c h e
s c a c u c o r y good f a i c h requirement i s whecher c h e cerms o f c h e
agreernenc w e r e c a r r i e d o u c faithfully.
Our review of che r e c o r d b e f o r e u s shows c h e v a r i o u s
n o c e s e v i d e n c i n g agreernenc becween c h e Bank and r h e S h i p l e c s
w e r e i n f a c e c a r r i e d o u r by c h e Bank. The monies a g r e e d upon
w e r e advanced a c c h e r a c e s a g r e e d upon i n w r i c i n g by boch
parcies. Scacemencs made by che Bank's agenc, while nor
a l w a y s s c r i c c l y f o r c h r i g h ~ , d i d noc d e p r i v e S h i p l e c s o f c h e
benefic of che bargains chey scruck wich che Bank. The
D i s c r i c c Courc was c o r r e c c i n g r a n c i n g summary judgmenc on
r h i s counc.
IV.
The S h i p l e c s ' f o u r c h c o u n c a l l e g e d b r e a c h o f c h e i m p l i e d
covenanc of good faich and fair dealing. The Discrice
C o u r c ' s r u l i n g c i c e d a u c h o r i c y from c h i s Courc r e q u i r i n g c h a r
a breach of concracc muse be rhe resulc of some
"impermissible accivicy" before r h e breaching parcy can be
h e l d c o h a v e a l s o b r e a c h e d c h e i m p l i e d c o v e n a n c o f good f a i c h
and f a i r d e a l i n g . S e e , Noonan v . F i r s c Bank Bucce ( M o n ~ .
1 9 8 7 ) , 740 P.2d 631, 44 Sc.Rep. 1124; Nordlund v. School
D i s c r i c c No. 1 4 (MoIIK. 1 9 8 7 ) , 738 P.2d 1 2 9 9 , 4 4 Sc.Rep. 1183;
Nicholson v. Uniced P a c i f i c I n s u r a n c e Co. (Mone. 1 9 8 5 ) , 710
P.2d 1 3 4 2 , 4 2 Sc.Rep. 1822.
The Shiplecs seek co discinguish chis auehoricy by
n o c i n g i n N i c h o l s o n we h e l d a b r e a c h o f c o n c r a c c was n o r a
prerequisite c o b r e a c h o f c h e c o v e n a n c , because che implied
c o v e n a n c o f good f a i c h i s noc a n obligation a r i s i n g from c h e
concracc i c s e l f . Nicholson, 710 P.2d a c 1348. While c h i s i s
c r u e , w e a l s o s e a c e d c h e obligation imposed by c h e c o v e n a n c
is co ace reasonably. Under c h i s s c a n d a r d , we have h e l d c h e
"minimal r e q u i r e m e n c " f o r b r e a c h o f c h e c o v e n a n c i s a c c i o n by
che defendanc char i s " a r b i c r a r y , c a p r i c i o u s o r unreasonable,
and exceeded plaintiffs' juscifiable expeccacion [ c h a r che
defendanc a c e reasonably]." Noonan, 740 P.2d a c 6 3 5 .
I n c h i s c a s e , c h e S h i p l e c s had a j u s c i f i a b l e e x p e c c a c i o n
c h a c c h e Bank would a c e r e a s o n a b l y by l o a n i n g rhem money on
c h e cerms a g r e e d upon i n c h e n o c e s . A s w e found a b o v e , chis
was done. The e v i d e n c e adduced by c h e S h i p l e c s f a i l s c o show
a r b i c r a r y o r u n r e a s o n a b l e conduce by c h e Bank. The Discricc
Courc was c o r r e c c i n g r a n r i n g summary judgment.
v.
Councs five ehrough nine of che complainc alleged
v a r i o u s forms o f f r a u d and f r a u d - r e l a c e d cores. The D i s c r i c c
Courc r u l e d c h e s e c l a i m s w e r e b a r r e d by Montana's cwo-year
s c a c u c e o f l i m i c a c i o n s f o r a c c i o n s b a s e d on f r a u d o r m i s c a k e
found a c S 27-2-203, MCA. On a p p e a l , c h e S h i p l e c s concend
ehey had d e v e l o p e d a c o n f i d e n c i a l r e l a c i o n s h i p wich c h e Bank
s i m i l a r t o c h a c found by c h i s Courc i n Weinberg, which r o l l - e d
che scacuce o f l i m i c a e i o n s .
The e x i s t e n c e o f a c o n f i d e n c i a l r e l a c i o n s h i p , however,
i s noc a n i s s u e h e r e . The a u t h o r i c y c i c e d b 7 S h i p l e c s f o r
5
c h e proposition c h a r c h e s c a c u c e was c o l l e d i n c h i s c a s e i s
37 Am J u r 2d F r a u d and D e c e i c S 4 0 9 :

Where a c o n f i d e n c i a l r e l a c i o n s h i p e x i s c s becween
che p a r e i e s , f a i l u r e c o d i s c o v e r f a c e s conscicucing
f r a u d may be e x c u s e d .

The basis of che Shiplecs' complainc is char che Bank
represenced KO chem it would l o a n chem money a c a r a c e o f 1 0 %
over a period of five years, a n d chen d i d n o r d o s o . In
January of 1978, the Shiplecs signed a noce chac d i d noc
contain the alleged five-year c e r m . Tn J a n u a r y of 1 9 7 9 , chey
s i g n e d a noce c h a t c o n c a i n e d n e i t h e r t h e a l l e g e d c e r m , nor
che a l l e g e d i n c e r e s c r a c e . They had a c c h a r p o i n c certainly
discovered faces s u f f i c i e n c t o conscicuce fraud. T h e r e was
no failure co discover faces, and therefore no n e e d f o r a
confidencial relacionship argumenc. The Discrice Courc' s
r u l i n g was c o r r e c c .
VI .
The S h i p l e c s ' c e n c h c o u n c a l l e g e d negligent i n f l i c c i o n
of emocional discress. Negligent infliccion of emocional
d i s c r e s s i s a narrowly-defined c o r c i n Montana. W e see o u r
c h e cesc f o r c h i s c o r c i n V e r s l a n d v . Caron T r a n s p o r c ( 1 9 8 3 ) ,
206 Monc. 313, 671 P.2d 583, by r e q u i r i n g a n e m o c i o n a l i m p a c t
resuleing from direcc observance of the deach or serious
injury of a close relacive. Thac s i c u a c i o n c l e a r l y i s nor:
p r e s e n e h e r e , and c h e counc i s t h e r e f o r e a c l e a s e m i s l a b e l e d .
The body of c h i s counc, and che Shiplecs' subsequenc
argumencs c o c h e D i s t r i c c Courc and c h i s C o u r c , u s e l a n g u a g e
adopced from o u r d e c i s i o n i n Johnson v . S u p e r s a v e Markecs,
Inc. (Monc. 1 9 8 4 ) , 686 P.2d 209, 4 1 Sc.Rep. 1495, concerning
e m o c i o n a l d i s c r e s s a s a n elemenc o f damages r e s u l t i n g from a
corc. We a r e h e r e a f f i r m i n g c h e Discricc C o u r c ' s g r a n c o f
summary judgmenc i n f a v o r o f c h e Bank on a l l c o u n c s l i s c e d i n
7;he S h i p l e c s ' complainc. Therefore w e need noc r e a c h che
i s s u e o f damages.
VII.
The e l e v e n e h counc o f t h e c o m p l a i n c a l l e g e d p r o m i s s o r y
noLe b r e a c h o f c o n c r a c c . The S h i p l e c s and t h e Bank a l l e g e d l y
a g r e e d i n c e r e s c would b e d u e a c m a c u r i c y , wich a l l i n c e r i m
paymencs a p p l i e d t o p r i n c i p a l . The S h i p l e c s a l l e g e c h e Bank
p a r c i a l l y m i s a p p l i e d some i n c e r i m paymencs c o i n c e r e s c .
Boch p a r c i e s a g r e e c h e Discrice Courc correctly s c a r e d
t h e g e n e r a l r u l e c h a r i n c e r i m paymencs on a d e b c a r e n o r m a l l y
a p p l i e d f i r s c co accrued i n c e r e s c . S h i p l e c s a r g u e , however,
c h e cescimony o f e h e B a n k ' s e x p e r c w i c n e s s c r e a e e d a g e n u i n e
issue of macerial face a s co a possible excepcion co che
rule. The Bank's experc cescified che provision chat
inceresc would be due a c m a c u r i c y meanc, in his opinion,
i n c e r i m payrnencs would b e a p p l i e d c o p r i n c i p a l . The S h i p l e c s
a l s o p o i n c o u c c h a e cwo o f che noces s c a r e e a r l y paymencs
would b e a p p l i e d c o p r i n c i p a l .
A r e c e n c scacemenc o f c h e g e n e r a l r u l e on a p p l i c a c i o n o f
i n c e r i m payrnencs i s found. a c 4 5 Am J u r 2d I n c e r e s c and TJsury
S 99. Known a s c h e "Uniced S c a r e s R u l e , " i c p r o v i d e s i n c e r i m
payrnencs a r e f i r s c a p p l i e d c o a c c r u e d i n c e r e s c u n l e s s c h e r e
is a s c a c u c e o r a n agreernenc c o c h e contrary. See, e.g.,
Shuccs v . P h i l l i p s Pecroleum Co. (Kan. 1 9 8 7 ) , 732 p.2d 1286.
Neicher excepeion i s presene i n c h i s case.
Lack of an agreernenc as co applicacion of incerim
payrnencs is evidenced by che Shiplecs' own b r i e f co chis
Courc. They concend chey have a l w a y s a s k e d c h a r payrnencs b e
applied firsc co p r i n c i p a l , buc che Rank's r e p l y h a s been
" c h e y ' d d o whacever chey wane c o w i c h i c . " There i s l i k e w i s e
no scacuce in Moncana diceacing applicacion of incerim
payrnencs c o p r i n c i p a l . Furcherrnore, c h e noce l a n g u a g e c i c e d
by c h e S h i p l e c s s c a r i n g e a r l y payrnencs would be a p p l i e d c o
p r i n c i p a l was preceded. by he c a v e a r c h a r s u c h e a r l y payrnencs
would noc r e l i e v e c h e d e h c o r o f c h e duey c o c o n c i n u e making
payrnencs u n d e r c h e a g r e e d paymenc s c h e d u l e . This language
therefore d e a l s wiizh paymenes made o u c s i d e ~ h normal c o u r s e
e
of che loan, noc regular incerim paymenes. The Discrice
Courc was c o r r e c e i n g r a n c i n g summary judgmenc on c h i s c o u n c .
VIII.
Counc cwelve of che complaint alleged breach of
fiduciary duey arising from che confidencial relacionship
becween c h e S h i p l e c s and c h e Bank. On a p p e a l , c h e S h i p l e c s
again argue che situation here is analogous co chat in
Weinberg, where a confidencial relacionship was found.
Shiplecs also cice our decision in Deisc v. Wachholz (Monc.
1984), 678 P.2d 188, 41 Sc.Rep. 286, for che proposition char
a confidencial relacionship can exisc becween a bank and ics
customer in cercain sicuacions.
In Deisc, we began wich che general rule chac a
bank-cuscomer relacionship does not ordinarily give rise co
fiduciary responsibilities. However, we found an excepcion
co chis general rule when special circumscances are presenc.
In D ~ ~ s K , plaintiff and her deceased husband had banked
che
wich che defendanc for over 20 years. After che husband's
deach, che bank had caken an accive advisory role in che
plaintiff's finances, and she had relied on char advice.
Deisc, 678 P.2d ac 193-94. Likewise in Weinberg, we found a
confidencial relacionship where che bank "parccipaced in and
encouraged the changes co be made regarding che Weinbergs'
farming operacion." Weinberg, 752 P.2d ac 731.
One celling faccor distinguishes chis case from Deisc
and Weinberg. The Shiplets did nor place such greac reliance
on che Bank's advice. The Shiplecs felt chey knew more abouc
ranching chan did che Bank's agenc. While che Bank advised
che Shiplecs on the operacion of cheir ranch, char advice was
noc always heeded. For example, chey refused co wichdraw
from che FmHA guarancy program when advised co do so in 1979,
and even refused to sell land when required to do so by che
condicions of che seven-year FmHA guarancy issued in 1984.
Furehermore, chey were represented by counsel during che 1984
negociacions.
No special circumscances are presenc in chis case co
create an excepcion co che general rule char a bank's
relacionship wich ics cuseomer is noc a confideneial. one.
The Discricc Courc was correcc in grancing summary judgmen~
on chis counc.
IX.
The Shiplecs final c0un.c alleged Economic Duress, in
~ h a cche Bank's agenc chreacened foreclosure when he had no
legal righc co do so. Shiplees advance chis argumene again
on appeal, scacing che Rank's unwarranced foreclosure chreacs
descroyed cheir free agency and lefc chem wich no choice buc
co sign che noces. The Shiplecs' argumene on chis counc
fails for much rhe same reason as cheir argumene concerning
breach of fiduciary duey. Economic duress, also known as
"business compulsion," concerns che making of conrraccs under
circumscances showing a lack of free will on che pare of one
of che concraccing parries. However,

[economic duress] is noc established merely by
proof char consent was secured by che pressure of
financial circumscances, or by che face char one
parcy insisced upon a legal righc and che ocher
parry yielded co such insistence.

25 Am Jur 2d Duress and Undue Influence § 7.
The record before us shows che noces ac issue
represenred an indebcedness incurred ac che requesc of che
Shiplecs. They were unable co repay even che firsc note
completely, and wich each new note, the indebcedness
compounded. The Shiplecs' claims chac chey had no choice bur
co sign chese noces seem nor from some unlawful chreac by rhe
Bank, bur from che pressure of cheir mouncing debc. True,
had chey nor signed che noces, the Bank could have "pue chem
ouc of business," bur chis would have been chrough
foreclosure, rhe Bank's lawful remedy for failure of
repaymenc. The Discricc Courc was correcc in grancing
summary judgment on chis counc.
 We a f f i r m t h e o r d e r o f the D i s t r i c t Court.

Re& Justice
We Concur:

Justices 6'