Opinion
May 16, 1972.
Editorial Note:
This case has been marked 'not for publication' by the court.
Page 347
Petersen, Evensen, Mattoon & Tracey, William F. Mattoon, Pueblo, for defendant-appellant, Donald Wayne Owens, and defendants, Eleanor M. Owens, Don Owens, General Contractor, Inc., and Philip Kalish.
Kettelkamp & Vento, Pueblo, for plaintiff-appellee.
Hodges Harrington, Kerwin & Otten, Arthur E. Otten, Jr., Richard W. Breithaupt, Denver, for defendant, Rainbo Bakers, Inc.
ENOCH, Judge.
Two separate appeals (No. 70--591, 497 P.2d 344 and No. 70--604) were filed in this court, both of which originated from the same judgment of the trial court. These appeals were consolidated by this court for purposes of briefs and oral arguments. However, since the issues are not related and there is some difference in parties, we have found it to be more expedient to determine the two appeals by separate opinions, published on this same date.
Midtown National Bank, plaintiff-appellee (bank), initiated this action, alleging several claims for relief against the named defendants. Trial was to the court and a judgment was entered for the bank against defendant-appellant, Donald Wayne Owens, on three promissory notes for the total amount of $23,368, plus attorney fees of $1,726.51. The other defendants were not affected by this judgment and are not parties to this appeal.
Owens incorporated his general contracting business in the fall of 1967, and this corporation subsequently borrowed money from the bank at different times. Each of these corporation notes was guarnotes personally by Owens. In 1968 these notes came due and were replaced by the three new notes which Owens also personally guaranteed: Exhibit B for $9,000, Exhibit F for $9,000, both executed April 10, 1968; and Exhibit A for $10,000, executed May 13, 1968. On or about April 15, 1968, Owens submitted a personal financial statement to the bank which reflected a solvent position. However, due to financial difficulties, the corporation ceased to do business between May 20 and May 25, 1968. In July 1968, Owens filed a petition in bankruptcy and was subsequently discharged.
In this action the bank sought to recover from Owens the amount due on the three notes on the theory that the bank made the loans in reliance on Owens' financial statement which the bank alleged was materially false. The trial court found in favor of the bank on this theory and entered judgment for it on the three notes. The bank also alleged that Owens willfully and recklessly converted to his own use funds assigned to the bank. No evidence was presented, nor was any finding made by the trial court, on this latter contention.
A creditor may recover from a debtor who has been discharged in bankruptcy if the creditor can show that the creditor's renewal of credit creating the debt was given in reliance upon a materially false financial statement. 11 U.S.C. s 35 . However, it was error for the trial court to deny Owens' motion to dismiss the bank's claims on the two notes executed April 10, 1968 (Exhibits B and F). Though there is sufficient evidence in the record to support the trial court's finding that Owens' financial statement was materially false, the court's conclusion that the bank relied on this false statement in accepting the two notes of April 10th, is not supported by the evidence. The financial statement was not submitted until on or about April 15, 1968, after these two notes were accepted by the bank. The fact that the bank had not relied on this financial statement was so clear that when Owens moved to dismiss the bank's claims on the two notes (Exhibits B and F), the bank joined in the motion 'so far as the cause of action concerning the reliance on the financial statements is concerned . . ..'
The third promissory note (Exhibit A), dated May 13, 1968, was executed and accepted by the bank after delivery of the financial statement and there is sufficient evidence in the record to support the trial court's conclusion that the bank did rely on the statement when it accepted this note.
We agree with Owens that the trial court did misstate the bankruptcy law as applicable to this case in its 'Conclusions of Law.' However, the application of the correct statement of law, 11 U.S.C. s 35, to the facts of this case produces the same result arrived at by the trial court. Therefore, the misstatement in this case is not reversible error. Klipfel v. Neill, Colo.App., 494 P.2d 115.
The judgment as to $8,357.96 on Exhibit A note is affirmed. That part of the judgment for $9,965.65 on Exhibit B note and $5,044.39 on Exhibit F note is reversed with directions to set aside that portion of the judgment and dismiss the claims on these two notes. The award of attorney fees of $1,726.51 is set aside with directions to the trial court to conduct a new hearing, if necessary, to determine the fee for services rendered the bank pertaining to Exhibit A note.
COYTE and DWYER, JJ., concur.