When Maturity Means Payable: Wyoming Supreme Court Clarifies the Status of Shareholder Promissory Notes and Rejects Re-Characterisation as Capital Contributions

1. Introduction

In Samuel Bruce King and Thayne Routh v. Jeffry V. Sheesley & Drew W. Sheesley, as Trustees of the DCS Trust, 2025 WY 89, the Wyoming Supreme Court decided three consolidated appeals that arose out of a start-up corporation’s internal financing arrangements. The case centres on three 2013 promissory notes (the “Sheesley Notes”) executed by AristaTek, Inc. in favour of founder David C. Sheesley (now held by the DCS Trust). Years after their 24-month terms expired—and after the death of Mr. Sheesley—the remaining shareholders and the company disputed whether the notes were (1) immediately payable, (2) truly “loans” or instead disguised capital contributions, and (3) subordinate to later shareholder advances.

The Court reversed the district court in part, holding that:

Fixed-term shareholder notes become due and payable upon expiration of the stated term, even if the instrument omits a “payable on demand” clause;
The notes were loans, not equity, and could not be re-characterised absent a written amendment;
No equitable priority exists favouring later, disproportionate shareholder advances;
The payee is contractually entitled to attorney’s fees for both trial and appeal; and
Contingent declaratory claims by other shareholders presented no justiciable controversy.

2. Summary of the Judgment

The Supreme Court unanimously:

Reversed the district court’s finding that the Sheesley Notes were not yet payable; instead, the notes matured 24 months after execution and have been due ever since.
Affirmed that the notes are enforceable loans—not capital contributions—and that interest accrued only for the 24-month period specified.
Declined to elevate subsequent unequal loans through equitable subordination, thereby confirming that all founder notes stand pari passu.
Confirmed that paragraph 5 of each note obligates AristaTek to reimburse the DCS Trust for “all reasonable costs and expenses of collection and/or suit, including attorney fees,” covering both trial and appellate work.
Upheld dismissal of contingent counterclaims/third-party complaints by fellow founders King and Routh for lack of a present, justiciable controversy.

The matter was remanded for entry of judgment on principal plus 24 months’ interest and for calculation of reasonable attorney fees under the lodestar method.

3. Detailed Analysis

3.1 Precedents Cited

Y-O Investments, Inc. v. Emken, 2006 WY 112 – Restated that interpretation of an unambiguous note is a question of law reviewed de novo.
Prudential Preferred Properties v. J & J Ventures, 859 P.2d 1267 (Wyo. 1993) – Reinforced that promissory notes are ordinary contracts subject to standard contract principles.
Eiden Construction, LLC v. Hogan & Associates Builders, 2024 WY 138 – Applied the rule that clear contract terms pre-empt judicial re-writing.
In re Kite Ranch, LLC, 2008 WY 39 – Distinguished; the Court clarified that Kite Ranch addressed LLC capital accounts in the absence of written debt instruments, whereas in the present case written notes control.
Forbes v. Forbes, 2022 WY 59 and William F. West Ranch, LLC v. Tyrrell, 2009 WY 62 – Articulated the Brimmer test for justiciability in declaratory actions.
Circle C Resources v. Hassler, 2023 WY 54 – Confirmed the lodestar approach to fee calculation, later invoked for the fee remand.

3.2 Court’s Legal Reasoning

Plain-Language Contract Interpretation
The Court started with the text of the notes. Paragraph 1 promises repayment of “the loan … plus interest … for 24 months,” while Paragraph 2 fixes “the time period of the loan” at 24 months unless “changed by written agreement.” Because no amendment existed, maturity occurred at the 24-month mark, triggering immediate payability. The Court emphasised that “maturity” under UCC § 3-108 and common-law authorities means the debt becomes “demandable.”
Interest Limitation
The notes granted 6% interest only “for 24 months.” Any post-maturity interest would require an express clause; therefore interest stopped accruing after the stated period.
Loan vs. Capital Contribution
The Court rejected AristaTek’s attempt to re-characterise the notes as equity. The instruments are labelled “PROMISSORY NOTE,” employ the word “loan,” and contain repayment language. Paragraph 6 even distinguishes note repayment from “capital distributions.” Applying contract doctrine, the Court refused to insert new words or repurpose the instruments as capital.
No Equitable Subordination
Equitable subordination is an insolvency-driven bankruptcy concept and, even if transposed to corporate disputes, requires inequitable conduct or agreed priority. There was none. Granting priority would “rewrite the promissory notes,” an impermissible judicial action.
Attorney Fees Provision Enforced
Paragraph 5’s broad language (“all reasonable costs and expense of collection and/or suit, including… attorney fees”) covers declaratory or collection litigation regardless of outcome. Accordingly, the DCS Trust is entitled to trial and appellate fees, subject to reasonableness review on remand.
Justiciability and Contingent Claims
King and Routh’s claims were framed as “contingent” and predicated on hypothetical future harm. Under the Brimmer factors, purely anticipatory or speculative disputes cannot be heard under the Declaratory Judgments Act. Hence, dismissal for lack of a present controversy was affirmed.

3.3 Potential Impact of the Decision

Start-Up & Closely Held Corporations: Founder advances frequently straddle the debt/equity line. This case underscores that Wyoming courts will take the paper at its word; if founders wish to subordinate or convert, they must execute explicit written amendments.
Drafting of Shareholder Notes: Parties should consider:
- Adding “payable on demand” or post-maturity interest clauses if desired;
- Inserting subordination or priority terms up-front;
- Ensuring fee provisions align with their risk preferences.
Litigation Strategy: The Court’s reaffirmation of fee-shifting for enforcement means that resisting clear note obligations risks a double financial hit—principal/interest plus the adversary’s fees.
Equitable Subordination Limits: Outside bankruptcy, Wyoming shows reluctance to reorder contractual priorities absent statutory or contractual basis.
Declaratory Actions: Parties cannot secure advisory opinions based on hypothetical scenarios; they must wait until a concrete dispute arises.

4. Complex Concepts Simplified

Promissory Note: A written, unconditional promise by one party (maker) to pay a fixed sum to another (payee) either on demand or at a set time.
Maturity: The date when the note’s term ends and the maker’s duty to pay becomes enforceable.
Equitable Subordination: A doctrine (mainly in bankruptcy) allowing a court to place one creditor’s claim below another’s if fairness so requires; applied sparingly in non-bankruptcy contexts.
Capital Contribution vs. Loan: A capital contribution increases an owner’s equity and typically has no repayment obligation; a loan is debt that must be repaid on specified terms, usually with interest.
Justiciable Controversy: A real, existing dispute that a court can resolve, as opposed to hypothetical or future disagreements.
Lodestar Method: The process of calculating reasonable attorney fees by multiplying reasonable hours worked by a reasonable hourly rate, adjusted for case-specific factors.

5. Conclusion

2025 WY 89 sends a clear message: in Wyoming, fixed-term shareholder promissory notes become payable at maturity—even without explicit “on-demand” language—and courts will not convert them into equity or reorder priority in the name of fairness. The decision fortifies contractual certainty, respects written amendments as the exclusive vehicle for altering repayment terms, and warns litigants that fee-shifting clauses in notes will be enforced. For closely held companies, the case provides a blueprint: treat debt and equity distinctly and memorialise any deviation in writing.

Looking forward, practitioners should expect Wyoming courts to apply the same literal, text-centric approach to similar instruments, reducing litigation over the status of founder loans and reinforcing the primacy of written agreements.