State Bank Of Standish v. Curry

500 N.W.2d 104 (1993)

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Nature of the Case

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Facts

Ds are dairy farmers. Since 1975, they annually obtained funds from P to purchase seed, fertilizer, and chemicals for spring planting. The sum of the operating loan varied little from year to year and was used solely for the planting of crops. Ds would visit the bank yearly to discuss the upcoming spring loan and crop plan with P's officers. The bank would complete the required paperwork and, after the initial visit discuss the loan, simply call Ds back to the bank in March or April to sign the promissory note. Any outstanding balance on the previous year's loan was rolled over and added into a new loan bearing an interest rate of two points over the bank's prime rate, which was then amortized over a five-year period. Monthly payments were made directly from the Michigan Milk Producers Association (MMPA) by assignment of the proceeds from the Ds' milk contract. P had a security agreement on all Ds' personal property, which was, at a minimum, twice the value of the loan. The federal government, in March 1986, implemented a dairy herd buy-out program. Ds discouraged by the increasing economic difficulties with dairy farming in the 1980's, seriously considered the program. The buy-out would have afforded him a debt-free termination of his dairy business. In addition to the money received from the government buy-out, Ds'' registered dairy herd could be sold in Canada for a greater amount than those unregistered herds in the program that would be slaughtered. In 1986, Ds went to the bank in January and February with the sole purpose of discussing the government buy-out program to decide whether they should continue in or get out of the dairy farming business. Ds brought to the bank a written breakdown of the $ 20,000 needed for the upcoming spring loan. Discussions centered on the current trying economic times and whether the Currys should enter the buy-out program. Ds asked the bank officers whether the bank would continue to support their farm. P's officers responded that Ds were doing a good job and had made all their payments and that there was no reason to worry about their future in the dairy business because the bank would support them. Believing they had a promise for the upcoming spring loan on the basis of this conversation with bank officers, Ds did not submit a serious bid in the government's March 1986 buy-out program. In mid-April, Ds stopped at the bank to request an additional $5,000 to tile a field and to inquire about the delay in signing the papers for the spring operating loan. A D officer stated that 'it would probably be a couple of weeks before he got it all done.' Ds contacted the bank in May and were informed that /D would not renew their operating loan for 1986. To acquire the necessary cash to sustain the dairy operation, Ds obtained credit from suppliers and subsequently defaulted on the outstanding promissory note with P. Because of late planting and necessary cutbacks, the production and health of the dairy herd declined. P filed an action for claim and delivery. Ds counterclaimed, alleging economic and emotional damages arising from a breach of the bank's duty of good faith and fair dealing, fraud, duress, and promissory estoppel. The trial court granted P's motion for summary disposition on all counterclaims except promissory estoppel. The court also found no defense to P's claim and delivery action, but stayed judgment until after trial for the purpose of setoff, if any. The jury found by special verdict that P made a clear and definite promise to loan money to Ds for their 1986 farm operating needs and that Ds had justifiably relied on that promise to their detriment. The jury award was set off against the amount due the bank on the promissory note, resulting in a judgment for Ds of $ 56,243.44. The Court of Appeals reversed the trial court's judgment in favor of Ds on the promissory estoppel claim and affirmed the summary disposition on the fraud, duress, and good-faith and fair-dealing claims. Ds appealed.