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The Bank of Houston v. Action Land & Cattle Co., Inc.

Court of Appeals of Missouri, Southern District, First Division

June 23, 2017

THE BANK OF HOUSTON, Plaintiff-Respondent,
v.
ACTION LAND & CATTLE COMPANY, INC., Defendant-Appellant.

         APPEAL FROM THE CIRCUIT COURT OF HOWELL COUNTY Honorable Truman L. Wiles.

         AFFIRMED.

          OPINION

          MARY W. SHEFFIELD, C.J.

         Action Land and Cattle Company, Inc. ("Action Land") appeals from the trial court's entry of summary judgment for Bank of Houston ("Bank") on Bank's suit to enforce two promissory notes. Action Land claims the trial court erred in entering summary judgment for Bank because the contracts which created the promissory notes were illegal and unenforceable under Section 362.170, which sets the lending limits for financial institutions in Missouri, and Section 362.171, which criminalizes the actions of certain banking officials and employees who participate in making such loans.[1] Action Land's claim is without merit because Section 362.170 and Section 362.171 do not, as a matter of law, provide a defense to borrowers. We affirm the trial court's judgment.

         Factual and Procedural Background

         Our statement of facts is drawn from the parties' summary judgment documents, viewed in the light most favorable to Action Land because Action Land was the non-moving party. See Great Southern Bank v. Blue Chalk Const., LLC, 497 S.W.3d 825, 827 (Mo. App. S.D. 2016).

         In 2009, Action Land executed two promissory notes in favor of Bank, one for $500, 050 and another for $800, 050. These notes were signed by John Sutton ("Mr. Sutton") in his capacity as president of Action Land. Neither note was paid, and, on January 16, 2012, Bank sent Action Land a notice of default and acceleration for each note. Action Land continued to refuse payment.

         On October 15, 2013, Bank sued Action Land seeking enforcement of the promissory notes. Action Land answered, denying the allegations in the petition and raising as an affirmative defense the argument that the promissory notes were "illegal and unenforceable because [Bank] exceeded the legal lending limits imposed by Missouri law."

         Bank thereafter moved for summary judgment. In its statement of uncontroverted material fact, Bank included the facts regarding the execution and nonpayment of the notes as previously stated and supported those statements by providing the notes, the notices of default, and an affidavit made by Bank's president. In its response to Bank's motion for summary judgment, Action Land admitted Bank made two separate loans of $500, 050 and $800, 050 to Action Land. Action Land denied that it had failed to pay the notes, but the affidavit supporting that denial was not included in the record on appeal[2] and Action Land makes no argument on appeal that the notes have been repaid.

         Action Land's response to Bank's motion for summary judgment also included several additional facts. Bank admitted it made additional loans totaling $600, 000 to a company called Cheyenne Enterprises, Inc. ("Cheyenne"). Bank also admitted that its lending limit under Section 362.170 was $1, 497, 250. Bank denied, with appropriate references to exhibits and discovery, Action Land's assertion that Mr. Sutton was a principal of Cheyenne.

         The trial court entered summary judgment for Bank. Action Land appeals.

         Discussion

         In its sole point on appeal, Action Land claims "[t]he trial court erred in granting summary judgment to [Bank] because the contracts entered into between the parties are illegal and unenforceable, in that [Bank] committed a felony by violating RSMo § 362.171 by lending in excess of its limits." To support this claim, Action Land asserts the loans to itself and to Cheyenne had to be aggregated because Mr. Sutton was a principal of both enterprises. Action Land's argument is without merit because, even if Bank violated its lending limits (an issue we need not and do not decide), that fact would not release Action Land from its obligations under the notes.

         Appellate review of a trial court's grant of summary judgment is de novo. Great Southern Bank, 497 S.W.3d at 828. "The criteria on appeal for testing the propriety of summary judgment are no different from those which should be employed by the trial court to determine the propriety of sustaining the motion initially." Id. "Summary judgment will be upheld on appeal if: (1) there is no genuine dispute of material fact, and (2) the movant ...


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