Opinion
Dec. 12, 1972.
Editorial Note:
This case has been marked 'not for publication' by the court.
Page 381
White & Steele, Lowell White, Denver, for plaintiff-appellant.
Simon, Eason, Hoyt & Malone, P.C., William K. Malone, Englewood, for defendant-appellee.
DWYER, Judge.
Federal Deposit Insurance Corporation (plaintiff-appellant) will be referred to as F.D.I.C.; Pierce Dodge, Inc., (defendant-appellee) will be referred to as Dealer; and the Rocky Mountain Bank (not a party to this action) will be referred to as the Bank.
On November 8, 1968, the Bank and the Dealer entered into an agreement providing the terms on which the Bank would buy installment notes which the Dealer acquired from its customers in connection with its retail automobile business. The agreement, dated November 8, 1968, is signed by the Dealer and is in the form of a letter addressed to and accepted by the Bank. It provides in part:
'1. We will sell to you . . . contracts . . . acceptable to you . . ..
'2. You will purchase such contracts from us at the amount of the unmatured installments thereof, less your discount. As a reserve, you will deduct the difference between our time price differential and your discount, and pay this amount to us at the time the contract is sold to you.
'4. In consideration of the purchase by you of such contracts which are acceptable, we agree that in case you are forced to repossess the collateral . . . we will:
A. . . . pay you at once 100% Of the dealer reserve paid to us upon the particular contract involved.'
The agreement also provided that the Dealer would repay the unused portion of insurance premiums advanced and further provided that if a note was prepaid the Dealer would pay to the Bank the unearned part of the Dealer's reserve.
Pursuant to this agreement, the Bank purchased a number of installment loan notes from the Dealer.
On January 8, 1969, the Colorado State Bank Commission closed the Bank and took possession of its assets. On February 5, 1969, the Bank Commissioner sold the Bank's assets to the F.D.I.C.
In August of 1970, the F.D.I.C. filed this action against the Dealer. The F.D.I.C. alleged that defaults had occurred or prepayments had been made on 32 loan contracts purchased by the Bank from the Dealer and that it was entitled to recover the reserves and unearned insurance premiums which the Bank had paid the dealer in purchasing these notes under the agreement of November 8, 1968.
The case was tried to the court. The court found that '(o)n February 5, 1969, the plaintiff, Federal Deposit Insurance Corporation, purchased from the Colorado State Banking Commissioner, who was in possession of the Bank for the purpose of liquidation, certain assets, which included the Pierce Dodge contract.' The court also found that the F.D.I.C. refused to purchase any further loan contracts from the Dealer after it acquired the Bank's assets on February 5, 1969. The court concluded that when the F.D.I.C. refused to perform further under the contract of November 8, 1968, the agreement was terminated, and the F.D.I.C. could not recover the amounts of the unearned Dealer's reserves and insurance rebates accruing after February 5, 1969. The F.D.I.C. has appealed the judgment entered on these findings and conclusions.
The question on appeal is whether the refusal of the F.D.I.C. to accept any installment note contracts after February 5, 1969, prevents its recovering from the Dealer the discounts on loans foreclosed or prepaid after that date. To resolve this issue, it is necessary to construe the contract of November 8, 1969. The construction and legal effect of a contract which is unambiguous are questions of law, and this court is not bound by the trial court's conclusions thereon. Grant Investments Co., v. Fuller & Co., 171 Colo. 86, 464 P.2d 859. See also Radke v. Union Pacific Railroad Co., 138 Colo. 189, 334 P.2d 1077.
The contract provided the terms on which the Bank would purchase installment loan contracts from the Dealer. The agreement contemplates a series of such transactions. When the Bank purchased a note from the Dealer, the rights and obligations of the Bank and the Dealer as to that transaction were fixed and irrevocable. If a default or prepayment occurred with respect to any note purchased by the Bank, the Dealer was obligated repay the discount on that note.
The contract of November 8, 1968, does not bind the Bank to purchase any notes nor does it bind the Dealer to sell any notes. The purpose of the agreement of November 8th is to fix the obligations of the parties as to each transaction as it was separately executed. The refusal of the Bank to purchase additional notes from the Dealer would in no way affect the rights of the Bank which had accrued with respect to transactions which had been completed pursuant to the agreement. Accordingly, the trial court was in error in ruling that the refusal of the F.D.I.C. to purchase additional notes after February 5, 1969, barred the F.D.I.C., as owner of the Bank's assets, from recovery of the rebates which the Dealer had agreed to pay the Bank on notes which the Bank purchased.
The judgment is reversed, and the cause is remanded for further proceedings not inconsistent with the views herein expressed.
COYTE and ENOCH, JJ., concur.