Zornes v. Zornes
292 Neb. 271
| Neb. | 2015Background
- In 2006 Eric and Julia Zornes funded a gifting-as-loans plan; borrowers (including Andy Wolfe) executed promissory notes payable to both Eric’s and Julia’s revocable trusts (joined by "and").
- In July 2009 Andy sold his Lincoln property and wired full payment of his note to Julia’s individual account; Julia, without informing Eric, re‑lent most proceeds to Andy’s wife (Sara Whitney) and retained surplus; Whitney executed new notes payable only to Julia’s trust.
- Eric and Julia separated shortly afterward; they divorced and executed a settlement agreement in August 2011 that did not mention the Andy/Whitney transactions or note proceeds.
- Eric later learned (or claims he later learned) of the payoff and transfer of proceeds and sued in October 2012 for conversion; Julia counterclaimed seeking partition of two other promissory notes (Jason Wolfe and Jason Reed).
- The district court granted summary judgment for Julia on Eric’s conversion claim (finding accord and satisfaction) and partitioned the two remaining notes by giving each party a one‑half interest in each note; Eric appealed and Julia cross‑appealed.
Issues
| Issue | Plaintiff's Argument (Eric) | Defendant's Argument (Julia) | Held |
|---|---|---|---|
| Whether Julia committed conversion by obtaining payment on a note payable to both trusts and retaining proceeds | Julia’s unilateral retention of proceeds converted Eric’s half of the note | Julia had Eric’s consent (knowledge/evidence of discussions, email/title/bank records) so no conversion | Summary judgment for plaintiff denied; genuine issue of material fact (consent) precluded summary judgment for Eric |
| Whether the divorce settlement operated as an accord and satisfaction extinguishing Eric’s claim to the proceeds | No, Eric did not know proceeds had been paid and therefore could not have accepted substitute performance | Settlement resolved marital claims and operated as accord and satisfaction covering proceeds | Summary judgment for Julia on accord and satisfaction reversed; genuine factual dispute whether Eric knew of proceeds at settlement |
| Proper method to partition the Jason Wolfe and Jason Reed promissory notes | Partition as the district court ordered (each gets half of each note) is appropriate | Court should award entire Jason Wolfe note to Julia and entire Jason Reed note to Eric to avoid continued joint control under §3‑110 | Remanded: trial court to assign full ownership (Julia: Jason Wolfe; Eric: Jason Reed) or otherwise equalize after valuing notes and addressing joint‑holder issues |
| Whether Julia was entitled to attorney fees, costs, and expenses | (Eric) District court properly denied fees | (Julia) Uniform Trust Code authorizes awarding fees in trust‑administration proceedings | Denial of fees affirmed (no abuse of discretion); fee statute confers discretion but remand warrants no change |
Key Cases Cited
- DMK Biodiesel v. McCoy, 290 Neb. 286 (summary judgment standard and viewing evidence for nonmoving party)
- Hughes v. School Dist. of Aurora, 290 Neb. 47 (summary judgment principles)
- Rent‑A‑Roofer v. Farm Bureau Prop. & Cas. Ins. Co., 291 Neb. 786 (UCC rule: payee joined by "and" must act jointly)
- Mandolfo v. Mandolfo, 281 Neb. 443 (when UCC applies, common‑law remedies may be displaced)
- Simons v. Simons, 261 Neb. 570 (elements of accord and satisfaction)
- Channer v. Cumming, 270 Neb. 231 (partition is an equitable action reviewable de novo)
- Hoover v. Haller, 146 Neb. 697 (application of partition principles to personal property such as promissory notes)