“Maturity Means Due”: The Wyoming Supreme Court’s Definitive Test for Shareholder Promissory Notes in Aristatek, Inc. v. Sheesley (2025 WY 89)

“Maturity Means Due”: The Wyoming Supreme Court’s Definitive Test for Shareholder Promissory Notes
Aristatek, Inc. v. Sheesley, 2025 WY 89 (Wyo. Aug. 6, 2025)

1. Introduction

The consolidated appeal in Aristatek, Inc. v. Jeffry V. Sheesley & Drew W. Sheesley, Trustees of the DCS Trust offered the Wyoming Supreme Court an opportunity to clarify several recurring issues in closely-held corporations:

  1. When does a fixed-term promissory note become immediately enforceable if the document omits the phrase “payable on demand”?
  2. Under what circumstances may courts recharacterize shareholder advances as capital contributions?
  3. Can a court apply equitable subordination to reprioritise insider debt absent contractual language?
  4. How broadly should an attorney-fee clause worded “costs and expenses of collection and/or suit” be read?
  5. What is required to establish a justiciable controversy in declaratory-judgment claims?

By answering those questions, the Court reversed the district court in part, affirmed in part, and set a new, streamlined rule: a term promissory note is due upon its stated maturity unless the parties execute a written extension, even if the instrument lacks any demand language.

2. Summary of the Judgment

  • Notes are Due. All three Sheesley Notes (24-month term; 6 % simple interest) matured long ago; Aristatek must pay principal plus exactly 24 months of interest.
  • No Recharacterization. The notes are unambiguously “loans,” not capital contributions; the Court refused to re-write the instruments by reference to shareholder tax or bookkeeping treatment.
  • No Equitable Subordination. Later, unequal advances by two co-founders hold no priority over the Sheesley Notes; contractual silence cannot be cured through equitable doctrines.
  • Attorney Fees Awarded. Because the suit was one “of collection and/or suit,” the broad fee clause entitles the DCS Trust to reasonable trial- and appellate-level fees, to be calculated on remand under the lodestar method.
  • Dismissal of Third-Party Claims Affirmed. The founders’ contingent declaratory actions failed the Brimmer standing test: they raised only hypothetical future disputes.

3. Analytical Commentary

3.1 Precedents and Authorities Considered

  1. Y-O Investments, Inc. v. Emken, 2006 WY 112.
    Reinforced that interpretation of an unambiguous promissory note is a question of law reviewed de novo.
  2. Hurst v. Metropolitan Property & Casualty Ins. Co., 2017 WY 104.
    Distinguishes situations where ambiguity precludes summary judgment. Here, no ambiguity existed.
  3. Prudential Preferred Properties v. J & J Ventures, 859 P.2d 1267 (Wyo. 1993).
    Treats promissory notes as contracts and applies ordinary rules of interpretation.
  4. In re Kite Ranch, LLC, 2008 WY 39.
    Relied upon by Aristatek to argue for recharacterization but distinguished by the Court because Kite Ranch involved contributions lacking any debt instrument.
  5. Douglas v. Jackson Hole Land Trust, 2020 WY 69.
    Used to uphold fee awards where declaratory actions function as enforcement suits.
  6. Brimmer v. Thomson, 521 P.2d 574 (Wyo. 1974).
    The four-part prudential standing test that continues to govern declaratory-judgment jurisdiction; critical for dismissing third-party claims.

Secondary sources—Williston, C.J.S., Am. Jur., Black's Law Dictionary—supplemented statutory reference to U.C.C. § 3-108 and Wyoming’s Declaratory Judgments Act.

3.2 The Court’s Legal Reasoning

3.2.1 When a Term Note Becomes Due

The district court believed the absence of a “payable on demand” clause postponed repayment until a sale of the company. Justice Fenn, writing for a unanimous Court, rejected that view:

“Maturity, when applied to commercial paper, means the time when the paper becomes due and demandable.” (¶ 17)

Because paragraph 2 fixed a 24-month term “unless changed by written agreement,” and no such amendment existed, the obligation matured automatically. The Court harmonised paragraphs 1, 2, and 6: paragraph 6’s sale-of-company language created a priority rule for sale proceeds; it did not postpone the baseline due date.

3.2.2 Limited Interest Accrual

While siding with the Trust on enforceability, the Court enforced the express interest limitation—“6 % … for 24 months.” This prevents windfalls and underscores textual fidelity.

3.2.3 No Recharacterization to Equity

Aristatek urged the Court to look at informal shareholder behavior and tax treatment, but the Court relied on four textual sign-posts:

  • The heading “PROMISSORY NOTE.”
  • Paragraph 1’s explicit label “loan.”
  • Paragraph 2’s repetition of “loan.”
  • Paragraph 6’s separate reference to “capital distributions,” proving the drafter distinguished debt from equity.

This textual focus comports with Wyoming’s reluctance to let courts “rescue parties from their unwisely made bargains.” (Skaf, 2021 WY 105).

3.2.4 Rejection of Equitable Subordination

Equitable subordination is an insolvency-court doctrine. The Supreme Court refused to import it where:

  1. The corporation remains a going concern.
  2. The notes themselves prescribe no hierarchy.
  3. Applying the doctrine would require the court to insert new repayment terms.

3.2.5 Broad Fee Clause Construed Literally

Citing Douglas, the Court found that a suit for declaratory judgment aimed at enforcing payment still counts as an action “of collection and/or suit.” Consequently, the prevailing creditor receives:

  • Trial-level fees and costs;
  • All appellate fees and costs;
  • To be calculated under the lodestar method with consideration of Wyo. Stat. § 1-14-126(b) factors.

3.2.6 Justiciability of Third-Party Claims

The two founders-creditors (King and Routh) advanced “contingent” declaratory claims triggered only if the Sheesley Notes were enforced. The Court applied the Brimmer test:

“Courts cannot decide the rights of parties upon a state of facts that is future, contingent, and uncertain.” (¶ 37)

Because King and Routh sought merely to pre-empt hypothetical priority battles—and did not actually demand repayment of their own notes—no immediate adversity existed. Dismissal for lack of subject-matter jurisdiction was therefore proper.

3.3 Potential Impact of the Decision

  1. Corporate Finance: Wyoming closely-held entities frequently rely on shareholder notes. The case signals that form prevails over ex-post intent; written amendments are mandatory to alter maturity or status.
  2. Drafting Practices: Lawyers will likely add explicit clauses stating whether a note is (i) payable on demand on or after maturity, (ii) automatically extended, or (iii) convertible to equity. Absent that specificity, maturity alone suffices for enforceability.
  3. Attorney-Fee Clauses: The opinion endorses broad construction when clauses encompass “collection and/or suit,” covering declaratory routes and appeals.
  4. Equitable Subordination Limits: The Court left little room for insider creditors to reprioritise debts through litigation rather than contract, thereby promoting certainty.
  5. Declaratory-Judgment Standing: The reaffirmation of Brimmer keeps speculative priority disputes out of Wyoming courts until an actual breach or demand occurs.

4. Complex Concepts Simplified

  • Promissory Note: A written, unconditional promise by one party (maker) to pay a specific sum to another (payee) either on demand or at a specified time.
  • Maturity Date: The date on which the borrower’s obligation becomes due and the lender can demand payment.
  • Payable on Demand: Language that allows the lender to request payment at any time. Aristatek clarifies that such language is unnecessary once the fixed term ends.
  • Capital Contribution vs. Loan: A contribution increases ownership stake (equity), while a loan creates debtor-creditor status. Equity is repaid only after debts; loans are enforceable per contract.
  • Equitable Subordination: A bankruptcy doctrine that allows a court to lower the priority of a claim if creditor misconduct or unfairness is shown. The opinion limits its use outside insolvency.
  • Lodestar Method: Calculation of attorney fees by multiplying reasonable hours worked by a reasonable hourly rate, then adjusting for case-specific factors.
  • Justiciable Controversy: A real, present dispute where court action will affect the parties’ concrete rights—opposite of hypothetical or contingent disagreements.

5. Conclusion

Aristatek stands as a leading Wyoming precedent for debt instruments between insiders:

Rule of the Case: Absent a written extension or modification, a fixed-term promissory note is automatically due at maturity, and the courts will enforce it strictly according to its text, including interest limitations and fee provisions. Neither informal shareholder understandings nor equitable theories will displace that text.

The decision promotes contractual certainty, warns insider creditors against casual drafting, and cements the breadth of attorney-fee provisions in collection contexts. Future litigants will likely find Aristatek cited whenever they attempt to:

  • Delay payment on matured notes by invoking implied agreements,
  • Recharacterize insider debts as equity, or
  • Invoke equitable doctrines to reorder contractual priorities.

For practitioners, the case is a clarion call: Put every change in writing, define priority expressly, and draft interest clauses with precision. Courts in Wyoming will not fill the gaps.

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