Williams v. Waugh

ROONEY, Justice. Appellees-plaintiffs brought a foreclosure action against appellant-defendant, and appellant-defendant counterclaimed for damages from alleged breach of provisions of the lease. This is an appeal from an order granting appellees-plaintiffs’ motion for a summary judgment and dismissing appellant-defendant’s counterclaim. Since the summary judgment was predicated on only a portion of the entire agreement between the parties and, therefore, could not have been with full consideration of whether or not a genuine issue existed as to a material fact, and since there exist genuine issues of material facts, the summary judgment was improper, and we will reverse. On May 16, 1975, the plaintiffs entered into an agreement with the defendant and her husband for the sale of a business known as the Idlewild Cafe and Lounge in Buffalo, Wyoming (hereinafter “basic agreement”), and a lease for the premises. Plaintiffs were sellers and lessors, and defendant and her husband were buyers and lessees. Within the same time frame, defendant and her husband executed a security and financing statement for certain furniture, fixtures, equipment, and kitchen and diningware (hereinafter “first financing statement”), a reassignment of the liquor license, a real estate mortgage on other property owned by defendant and her husband, a promissory note, and an escrow letter. Plaintiffs executed a mortgage release, an assignment of liquor license, an escrow letter, and a bill of sale. The Wyoming Bank and Trust Company was designated escrow agent to hold the basic agreement, the mortgage, the reassignment of the liquor license and the release of mortgage. Thereafter, defendant and her husband were divorced, and defendant, Nancy Williams, succeeded to the interest of her husband, Don Williams, in the transaction. On March 28, 1977, she executed a security and financing agreement (hereinafter “second financing statement”) for the liquor license in favor of plaintiffs. Between December 23, 1976, and October 26, 1977, various third parties secured seven default judgments in justice of the peace or district courts against defendant or against defendant and her husband. During the summer months of 1977, the Internal Revenue Service filed several tax liens, some against defendant and her husband separately and some against them jointly. On August 17, 1977, Internal Revenue agents took the liquor license from the wall of the cafe and lounge, but replaced it within a day. The consideration for the basic agreement sale was $93,150. After initial payments, the balance of $90,000 (with interest at 7½%) was to be paid in twenty semiannual installments. At the time of alleged defaults, the payments were current and the balance due, with interest, was about $61,000. The lease agreement was for a five-year term for $27,000, payable in monthly installments of $450. There is no controversy concerning the foregoing. In the complaint, plaintiffs alleged default “under the terms of the Security [585] Agreements and the Agreement for the sale of the business” in that defendant: (1) allowed the tax liens to be filed; (2) sold some of the secured property without prior approval of plaintiffs and without remitting proceeds of sale to plaintiffs; and, (3) “committing other acts” prohibited by the basic agreement and the financing statements. Further, the complaint alleged that plaintiffs deemed themselves to be insecure in the prospect of payment by virtue of the filing of the tax liens and that defendant was notified of default and failed to cure the same within thirty days. Defendant denied these allegations in her answer. In her counterclaim, defendant alleged failure by plaintiffs to repair the roof of the building as required by the lease, and failure to move an exterior sign as needed for street improvement as required by the lease, all to defendant’s damage. The allegations were denied in an answer to the counterclaim. The trial court found in the summary judgment “that the Plaintiffs are entitled to a judgment foreclosing any and all of Defendant’s right, title and interest in * * EXHIBITS A and B attached to the complaint herein.” A and B are the first and second financing statements. With reference to the counterclaim, the trial court found in the summary judgment “that on the counter-claim of Defendant filed herein the Court finds generally for the Plaintiffs and against the Defendant and Defendant is entitled to nothing hereunder.”1 These findings and the specific reference to exhibits A and B reflect that the court may have based the summary judgment on only part of the contract between the parties. No mention of the basic agreement or lease is made in the summary judgment. The complaint is based on default by defendant of the basic agreement, and it is concerned with the first and second financing statements only insofar as they are supplemental to, and a part of, the basic agreement. The counterclaim is based on the lease. The basic agreement, the lease and the two security and financing statements (hereinafter entire agreement) are all part of a single transaction. As indicated above, plaintiffs allege in the complaint that the default is under terms “of the Security Agreements and the agreement for the sale of the business” by virtue of allowing the tax liens to have been filed “on the business.” It alleges the selling of some of the secured property “without prior approval of” plaintiffs, and of “committing other acts prohibited under the terms of the Security Agreement and Financing Statement and the agreement for the sale of the business.” The basic agreement was filed with the escrow agent. The two financing statements were not. The escrow papers were released to plaintiffs on the basis of the basic agreement as reflected in the escrow letter of May 16, 1978, by plaintiffs’ letter of December 12, 1977 requesting such release, and in the letter of September 9, 1977 from the bank specifically referring to paragraph 11 of the basic agreement as controlling the default and notice of default. Plaintiffs’ attorney stated in his deposition when testifying relative to the execution of the documents that “the documents are all — is one transaction, and they all refer to each other, Mr. Spratt, and they were all part of this agreement.” The basic agreement does refer to the first financing statement. It provides that such financing statement “shall be executed * * * for said fixtures and equipment transferred hereunder.” The first financing statement also refers to the basic agreement. It provides that it “is executed as security for the balance due pursuant to” the basic agreement. Even the second financing statement states that it is “pursuant to” the basic agreement. The terms of the basic agreement, the two financing agreements and the lease agreement of the parties, i. e., the entire agreement, and the terms thereof, must be [586] considered in determining whether or not a genuine issue of a material fact exists in this matter. “ * * * Where a written contract refers to another instrument and makes the terms and conditions of the other instrument a part of it, the two will be construed together as the agreement of the parties. Two instruments executed at the same time as one transaction in order to effectuate a single purpose, and each referring to the other, must be considered together. * * * ” 17 Am.Jur.2d Contracts, § 263, pp. 666, 667. We must review the affidavits, depositions and other matters submitted under oath to determine if ultimate facts set forth therein concerning the issues are un-controverted and make possible a determination of the case as a matter of law. Rule 56(c), W.R.C.P.; Hunter v. Farmers Insurance Group, Wyo., 554 P.2d 1239 (1976); Wood v. Trenchard, Wyo., 550 P.2d 490 (1976). Such facts must be ultimate facts. An allegation, for example, under oath, to the effect that there was a default, or that there was no default, is insufficient. The acts, or failures to act, which constitute the default, or the performing of acts, or failures to perform acts, reflecting performance and thus no default, must be set forth under oath. McCamon v. Darnall Realty, Wyo., 444 P.2d 623 (1968); Cantonwine v. Fehling, Wyo., 582 P.2d 592 (1978). In reviewing an appeal from the granting of a summary judgment and in determining the existence of a genuine issue of material facts, the court must inquire from the viewpoint most favorable to the party opposing the motion. Timmons v. Reed, Wyo., 569 P.2d 112 (1977). Facts asserted by such party and supported by affidavits or other evidentiary material must be taken as true, Trautwein v. Leavey, Wyo., 472 P.2d 776 (1970), and be given every favorable inference which may be reasonably and fairly drawn from them, Bluejacket v. Carney, Wyo., 550 P.2d 494 (1976). The material to which we can look in this ease for these purposes and in these manners are eighteen items filed in this case and in case Civil 53232 consisting of plaintiffs’ answers to defendant’s interrogatories filed February 6, 1978 in this case, depositions of plaintiff, Carl L. Waugh, (defendant there) filed April 20, 1978 in Civil 5323, deposition of William O. Omohundro filed March 16, 1978 in Civil 5323, fifteen affidavits filed in this case and in Civil 5323 in support of motions for summary judgments, for temporary restraining orders, and to dismiss, by parties and potential witnesses in both cases.3 The counterclaim is predicated on violation of terms of the lease, which is part of the entire agreement, just as the complaint is based on the entire agreement. The only reference to the counterclaim, or to the facts alleged in it, in any of the eighteen items, supra, are recitations in the affidavits of defendant and of Don Williams, filed [587] March 13, 1978 in Civil 5323, and the deposition of plaintiff, Carl Waugh, filed April 20, 1978 in Civil 5323, to the effect that the roof did leak and that interior damages resulted. There is nothing at all in the record to controvert these allegations made under oath, thus, there is nothing to support the aforementioned finding of the trial court in the summary judgment “that on the counter-claim of Defendant filed herein the Court finds generally for the Plaintiffs and against the Defendant and Defendant is entitled to nothing thereunder.” All issues of fact involved in the counterclaim are subject to proof, one way or the other. Therefore, this matter must be returned to the trial court for disposition of the issues raised by the counterclaim. As already noted, the trial court based the summary judgment for plaintiffs on their complaint on only part of the entire agreement. In finding that “Plaintiffs are entitled to the judgment foreclosing any and all of Defendant’s right, title and interest in and to the secured property as described in EXHIBITS A and B attached to the complaint herein,” the trial court found (1) the absence of genuine issue as to material facts, and (2) that plaintiffs were entitled to judgment as a matter of law as the same pertained to only part of the entire agreement between the parties, i. e., as the same pertained to complaint exhibits A and B.4 For example, a different result may have been reached as to the fact of default, as to the fact of adequate notice, as to the fact of correction or cure of defaults (if any), or as to the legal question as to whether or not the liquor license was subject to encumbrance of the nature as here alleged to impairment of the security, if the same were with reference to the entire agreement. From the fact that the trial court granted a summary judgment to plaintiffs on the counterclaim, it is obvious that it did not consider the entire agreement and all verified matters concerning it in making its determination in this case. We might review the record for these purposes, but it is not a proper appellate function to do so in the first instance. It is a proper appellate function to examine the record to determine if the consideration of the entire agreement is a consideration of an agreement which actually differs substantially from the portion originally considered by the trial court, and not one which only supplies additional matter of immaterial and nonpertinent nature. In this instance the provisions of the entire agreement are substantially different to a material and pertinent degree. In fact, the basic agreement (also part of the entire agreement) has some provisions which are inconsistent with those of the financing statements (complaint exhibits A and B) in critical areas. For example, the basic agreement provides for a thirty-day period in which to correct a default after notice thereof which is not contained in the financing statements.5 The basic agreement provides that the defendant “shall not have the right to assign, transfer, convey, lease, sublet, mortgage, encumber or in any manner alienate any of their rights ” (emphasis supplied) in the retail liquor license. There is no provision therein prohibiting the placing of encumbrances, etc., on the [588] other items involved in the sale. In the preprinted provisions of the financing statements the placing of encumbrances, etc., on the liquor license itself and on equipment and other personal property items is prohibited. These inconsistencies emphasize the error in relying on only the financing statements in making the necessary determinations for a summary judgment, since the provisions of the basic agreement are controlling. “The rule is well settled that where part of a contract is written or typed and part is printed, and the written or typed and the printed parts are apparently inconsistent or there is reasonable doubt as to the sense and meaning of the whole, the words in writing or typing will control. * * *” 17 Am.Jur.2d Contracts, § 271, p. 679. Accordingly, with reference to the complaint, the predication of the summary judgment on only a portion of the entire agreement was error; and with reference to the counterclaim, the summary judgment was in error inasmuch as there existed genuine issues of material facts. Reversed and remanded. Footnotes [1] This “finding” is in words more usual to a determination after trial than to a summary judgment. [2] In their motion for summary judgment, plaintiffs advised that reliance would be had upon depositions and affidavits filed in case Civil 5323, District Court for Fourth Judicial District, County of Johnson. A supplemental designation of the record here included the depositions and affidavits filed in Civil 5323 and copies of the seven civil actions referred to on page 1, supra, together with a copy of another civil action against defendant Nancy Williams, filed in Justice of the Peace Court in which there was no disposition. Civil 5323 was an action by defendant (plaintiff there) against plaintiffs (defendants there), the city of Buffalo, Wyoming Bank and Trust Company, and William D. Omohundro and Terrance L. O’Brien, for damages alleged to have resulted from the transaction upon which this action is based. The complaint was filed in Civil 5323 on February 6, 1977. Plaintiff in that action (defendant here) received judgment on January 2, 1979 against plaintiffs in this action (defendants there) in the amount of $29,349.00 and she did not recover against the other parties. [3] The parties make reference in their briefs and arguments, and elsewhere, to matters contained in the deposition of defendant (plaintiff there) filed May 15, 1978 in Civil 5323. Although the deposition was taken January 7, 1978, and typed February 12, 1978, it was not signed until April 17, 1978 and not filed until May 15, 1978, three days after the motion for summary judgment was issued by the district judge in this case. Therefore, they did not enter into his consideration of the motion. [4] The basic agreement came before the court as a matter of record as an attachment to an affidavit filed December 13, 1977 in Civil 5323 in support of defendant’s (plaintiff there) application for a temporary restraining order. The lease came before the court as a matter of record as an attachment to the affidavit filed April 10, 1978 in Civil 5323 in support of plaintiffs’ (defendants there) motion for summary judgment. [5] Without analyzing or reaching a conclusion with reference thereto, we note contentions of correction or cure of defaults in that the default judgments were either satisfied or not executed upon; the equipment and personal property allegedly removed was either allegedly done so at direction of health officer or allegedly replaced and such was allegedly consented to by plaintiffs (affidavit filed on May 5, 1978 and affidavit filed in Civil 5323 on March 13, 1978); the alleged damage to booths, carpet, tile, etc., were either allegedly repaired or in process of repair (affidavits filed on February 25, 1978 and May 17, 1978 in Civil 5323); and the IRS had allegedly withdrawn or modified their lien and the license allegedly transferred without lien considerations (affidavits filed on March 13, 1978, and April 7, 1978 in Civil 5323).