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Cano v. Walker

Supreme Court of Nebraska

September 1, 2017

Eric Cano, appellee,
v.
Michael Walker, appellant, and Billy E. Claborn, Jr., appellee.

         1. Jurisdiction: Appeal and Error. A jurisdictional question which does not involve a factual dispute is determined by an appellate court as a matter of law.

         2. Contracts. Contract interpretation presents a question of law.

         3. Judgments: Appeal and Error. Appellate courts independently review questions of law decided by a lower court.

         4. Jurisdiction: Appeal and Error. Before reaching the legal issues presented for review, it is the duty of an appellate court to determine whether it has jurisdiction over the matter before it.

         5. Final Orders: Appeal and Error. Under Neb. Rev. Stat. § 25-1902 (Reissue 2016), there are three types of final orders which may be reviewed on appeal: (1) an order which affects a substantial right and which determines the action and prevents a judgment, (2) an order affecting a substantial right made during a special proceeding, and (3) an order affecting a substantial right made on summary application in an action after judgment is rendered.

         6. __:__. Numerous factors determine when an order affects a substantial right for purposes of appeal. Broadly, these factors relate to the importance of the right and the importance of the effect on the right by the order at issue. It is not enough that the right itself be substantial; the effect of the order on that right must also be substantial. Whether the effect of an order is substantial depends on whether it affects with finality the rights of the parties in the subject matter.

         7. Jurisdiction: Time: Notice: Appeal and Error. Under Neb. Rev. Stat. § 25-1912 (Reissue 2016), to vest an appellate court with jurisdiction, a party must timely file a notice of appeal within 30 days of the judgment, decree, or final order from which the party is appealing.

         8. Debtors and Creditors: Releases. The voluntary release of one joint debtor operates as a release of his or her codebtors.

         [297 Neb. 581] 9. Promissory Notes: Releases. The unconditional release of one of several makers of a joint and several promissory note, without the consent of the other makers thereof, operates as a release of all.

         10. Contracts: Releases. Under the common-law rule as it has developed in Nebraska, the qualifiers that releases must be "voluntary" and "unconditional" require consideration of general principles of contract interpretation when determining whether the common-law rule is applicable. Generally, the question is whether the language of the release at issue is unqualified such that it amounts to a complete satisfaction of the debt, or whether the language of the release is qualified such that it operates as merely a partial satisfaction of the debt.

         11. Releases. The general rule of law is that a promise to release does not take effect until the agreed promise is completed.

         12. Judgments: Debtors and Creditors: Releases. A judgment creditor may make a valid and binding agreement, either at the time a judgment is entered or later, to release and satisfy the judgment on terms other than receiving full payment of its amount. If the agreement to release or satisfy is executory, there is no release of the judgment until it is performed. The corollary to this rule is that once the relevant promises are performed, the agreement to release becomes effective.

         13. Courts. The doctrine of stare decisis forms the bedrock of Nebraska's common-law jurisprudence.

         14. Courts: Appeal and Error. The doctrine of stare decisis does not require appellate courts to blindly perpetuate a prior interpretation of the law if it was clearly incorrect, but it is entitled to great weight and requires that the courts adhere to their previous decisions unless the reasons therefor have ceased to exist, are clearly erroneous, or are manifestly wrong and mischievous or unless more harm than good will result from doing so.

         15. Courts: Public Policy: Appeal and Error. The doctrine of stare decisis is grounded in the public policy that the law should be stable, fostering both equality and predictability of treatment. By requiring appellate courts to adhere to their previous decisions in most circumstances, the doctrine of stare decisis promotes the evenhanded, predictable, and consistent development of legal principles, fosters reliance on judicial decisions, and contributes to the actual and perceived integrity of the judicial process.

         Appeal from the District Court for Douglas County: Shelly R. Stratman, Judge. Reversed and remanded with directions.

          Warren R. Whitted, Jr., and Keith A. Harvat, of Houghton. Bradford & Whitted, PC, L.L.O., for appellant.

         [297 Neb. 582] Larry R. Forman, of Hillman, Forman, Childers & McCormack for appellee Eric Cano.

          Heavican, C.J., Wright, Miller-Lerman, Cassel, Stacy. Kelch, and Funke, JJ.

          STACY, J.

         This is an appeal from an order denying a motion to discharge judgment filed by one of two judgment debtors who were co-obligors on a promissory note. The issues raised by the parties require us to consider the applicability, and continued viability, of the common-law rule in contracts that :"[t]he unconditional release of one of several makers of a joint and several promissory note, without the consent of the other makers thereof, operates as a release of all.'"[1] We conclude the rule represents settled law in Nebraska, and we find it should have been applied by the district court in this case. Accordingly, we reverse, and remand with directions to discharge the judgment.

         I. FACTS

         Eric Cano filed suit against Michael Walker and Billy E. Claborn, Jr., in October 2012, alleging they had failed to pay amounts due on a promissory note executed in April 2007. Cano prayed for judgment against them "jointly and severally" in the amount of $299, 500, plus interest and penalties. All parties agree the promissory note imposed joint and several liability on Walker and Claborn.

         Cano moved for summary judgment in October 2013. The matter was heard on November 12. At the hearing, Cano represented that the amounts due on the note were $299, 500 in principal, a late charge of $14, 975, and interest of $72, 958.20, for a total of $387, 433.20. On November 20, [297 Neb. 583] the court entered summary judgment in favor of Cano and against both Walker and Claborn for $387, 433.20.

         Cano did not tell the court at the summary judgment hearing that he and Claborn had entered into a "Stipulation" on November 11, 2013, without Walker's knowledge. According to the terms of the stipulation, Claborn agreed to entry of judgment against him for the full amount due on the note, and agreed to pay $40, 000 immediately and an additional $127, 000 by June 2, 2014. Claborn also agreed to provide a new furnace and an air-conditioning unit for Cano's residence in Omaha, Nebraska, on or before December 13, 2013. The parties later agreed this was worth approximately $10, 000. In exchange for these payments and services, Cano agreed not to execute on the judgment against Claborn so long as he complied with the stipulation, and further agreed that "[u]pon satisfaction by Claborn with the terms [of the stipulation], Cano shall forthwith release Claborn completely from such judgment ....''

         After the court entered judgment on the promissory note, Cano attempted to execute on the judgment against Walker in various ways, representing that Walker owed the full amount of the judgment. Walker actively avoided the execution attempts and was held in contempt of court at least once.

         On July 17, 2014, Cano filed what he captioned a "Satisfaction" in the case, which stated in full: "COMES NOW the Plaintiff and shows the Court that the Defendant Billy E. Claborn, Jr. has fully satisfied the Judgment against him in the above-captioned case, provided that the Judgment entered herein against Defendant Michael Walker remains unsatisfied." After filing this satisfaction, Cano continued his attempts to collect the judgment from Walker, and Walker continued to evade collection efforts.

         In November 2015, Cano attempted once again to collect the judgment against Walker by seeking an order in aid of execution from the court. Walker filed an objection, raising for the first time the argument that satisfaction of the [297 Neb. 584] judgment against Claborn operated to satisfy the judgment against Walker as well.

         During the hearing on Walker's objection to Cano's request for an order in aid of execution, the parties argued about the legal effect of the satisfaction Cano had filed. Cano argued the satisfaction operated only as against Claborn, because it stated the judgment "remain[ed] unsatisfied" as against Walker. Walker relied on Nebraska case law holding that '"[t]he unconditional release of one of several makers of a joint and several promissory note, without the consent of the other makers thereof, operates as a release of all.'"[2]

         The court commented that based on the court record, it appeared the entire judgment had been paid. In response to this comment, Cano's counsel, for the first time, informed the court and Walker he had made a "deal" with Claborn to pay $167, 000 "in exchange for a release." Upon learning of the agreement and release, the court informed Cano that the order in aid of execution would be denied and that further proceedings were necessary.

         Thereafter, Walker filed a motion to discharge the judgment, premised on the common-law rule that the release of one joint obligor on a promissory note operates to release all. After holding an evidentiary hearing, the district court overruled Walker's motion for discharge, but exercised its inherent authority to reduce the amount of the judgment by $40, 000-the amount the record showed Claborn had paid to Cano before the summary judgment was entered on the full amount of the promissory note.

         Walker filed this timely appeal, and we moved the case to our docket on our own motion pursuant to our statutory authority to regulate the caseloads of the appellate courts of this state.[3]

         [297 Neb. 585] II. ASSIGNMENTS OF ERROR

         Walker assigns, restated and consolidated, that the district court erred in (1) finding the stipulation between Cano and Claborn did not release both Walker and Claborn from the judgment; (2) finding the satisfaction filed in luly 2014 did not satisfy the judgment entered against both Walker and Claborn; (3) determining it had the inherent power to change the amount of the judgment entered on November 20, 2013; and (4) failing to discharge the judgment against Walker.

         III. STANDARD OF REVIEW

         A jurisdictional question which does not involve a factual dispute is determined by an ...


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