Aboud v. Adams

Decision Date02 March 1973
Docket NumberNo. 9431,INC,WALKER-HINKL,9431
Citation507 P.2d 430,84 N.M. 683,1973 NMSC 26
PartiesRay ABOUD, Plaintiff-Appellee, v. Edith K. ADAMS and the Estate of Clifford L. Adams, Deceased, and Edith K. Adams, Executor De Son Tort, Defendants-Appellants, v., and C. E. (Bob) Burns, Third-Party Defendants-Appellees.
CourtNew Mexico Supreme Court
James B. Cooney, Farmington, Robinson, Stevens & Thompson, Albuquerque, for defendants-appellants

MONTOYA, Justice.

This is an appeal from a decision of the District Court of San Juan County resulting from an action brought therein by plaintiff, the vendor of some real and personal property, to recover damages for breach of contract by the defendants-vendees. For convenience, the parties will be referred to as they appeared below. The trial court awarded damages to the plaintiff and to one of the cross-defendants.

The facts material to this appeal are as follows. Plaintiff Aboud filed a breach of contract action seeking damages on a contract by defendants Mr. and Mrs. Adams to purchase real and personal property consisting of a furnished motel. A binder agreement was signed by plaintiff and defendants on August 16, 1968, and later, on August 23, 1968, a final contract was signed by the plaintiff and Mr. Clifford Adams only, who shortly thereafter took possession of the property in question. After operating the motel Mr. Adams repudiated the contract and returned the property to the plaintiff. Before trial and before defendant Adams died, his wife was joined as a party, as was Burns, a real estate broker who was an employee of Walker-Hinkle, Inc. The defendants then filed a cross-claim against Burns, the real estate broker, which was later amended to include Walker-Hinkle, Inc., his employer, as cross-defendants. Later the pleadings were determined to mean that the cross-defendants, Burns and Walker-Hinkle, Inc., would be considered third-party defendants. After answer, both Burns and Walker-Hinkle, Inc. filed a cross-claim against defendants alleging breach of contract for failing to pay the broker's fee due on the transaction between plaintiff and defendants. Defendants denied the material allegations of plaintiff's complaint and affirmatively alleged that there was no contract since Mrs. Adams had not signed the final documents; and that the plaintiff had acquiesced in the termination of the contract when plaintiff elected to keep the proceeds of the motel operation while defendants were in possession, and had regained possession of the motel premises.

The undisputed findings show that Walker-Hinkle, Inc. was the employer of Burns and both were agents for the plaintiff in connection with the motel sale; that the broker obtained defendants as purchasers; and that plaintiff and defendants signed a binder agreement to pay a purchase price of $211,500, plus $13,500 as broker's fees.

The trial court then made findings of fact which are challenged on this appeal to the effect that defendants had available to them all records of the motel operation before the final contract, and that no erroneous or false representations were made or concealed by either the plaintiff or his agent Burns. Conclusions of law which are challenged on this appeal are that the final contract called for the payment of a purchase price of $214,000; that Mr. Adams then took possession of the property, but subsequently repudiated the contract and returned the property to the plaintiff; that later, through the efforts of Walker-Hinkle, Inc., plaintiff found another purchaser for the property for the best obtainable price of $200,000; that plaintiff incurred attorney's fees in the amount of $4,000 and Walker-Hinkle, Inc. incurred a like expenditure in the amount of $1,500; that Walker-Hinkle, Inc. was entitled to the broker's commission in the amount of $13,500, which defendants had agreed to pay. In addition, defendants challenge a portion of the special damages awarded plaintiff.

Judgment was entered in behalf of plaintiff for $14,000 damages, plus additional special damages of $698.22, and $4,000 for attorney's fees, and also awarded Walker-Hinkle, Inc. damages of $13,500 on broker's fees and $1,500 for attorney's fees incurred.

The defendants contend that the agreement was conditional and never became effective and that, if effective, they were entitled to rescind because of misrepresentations made by plaintiff's agent which were relied upon. It is further contended that, if there was a breach of contract, the trial court failed to apply the proper measure of damages and erred in ordering payment of broker's fees by defendants. Another contention is that the trial court erred in awarding attorney's fees as an item of damages, and further erred in its disposition of proceeds from the operation of the motel during the time defendants were in possession.

The first question we must resolve is whether the contract in question was conditional. Defendants do not deny that the sales contract dated August 23, 1968, was executed and signed by Mr. Adams only, although both Mrs. Adams and her deceased husband had signed the prior binder agreement.

The trial court considered and had the contracts before it and defendants contended at the trial that they took possession of the motel on a trial basis only. There is conflicting evidence in the record concerning the existence of any conditions being attached to the agreement. In considering the conflicting evidence on this point, the trial court weighed the same and made the following findings of fact:

'4. The defendant Clifford Adams signed a contract of sale (PX--5) which was also signed by plaintiff Aboud, but which was never signed by Mrs. Adams.

'5. Clifford Adams took possession of the motel and operated it for a period of time.

'6. Clifford Adams subsequently repudiated the contract to purchase the motel, vacated the premises and surrendered it to the plaintiff Aboud, and re-took without consent all consideration he had deposited with the escrow agent.'

A review of the record indicates that these findings are supported by the evidence and, therefore, will not be disturbed on appeal. It is the trial court's function to weigh the sufficiency of the evidence. In Cave v. Cave, 81 N.M. 797, 474 P.2d 480 (1970), this court stated:

'At the outset, we must state the rules which govern our review of the court's findings. If supported by substantial evidence, we will not question them. Any disputed fact is to be resolved in favor of the defendants (prevailing party in the lower court) and the evidence is to be viewed in the aspect most favorable to the successful parties. The trial court is to determine credibility and weight. All reasonable inferences are to be indulged in to support the findings made; evidence and inferences to the contrary are disregarded. (Citations omitted.) * * *'

For a very comprehensive definition of the substantial evidence rule, see Tapia v. Panhandle Steel Erectors Company, 78 N.M. 86, 428 P.2d 625 (1967).

The next contention advanced by defendants is that if the contract was effective they were entitled to rescind because it had been induced by plaintiff's misrepresentations. Primarily, the basis of the argument is twofold. First, that the records of the motel operation had not been available to defendants; and second, that defendants relied on the representation of the broker as agent of plaintiff that the motel would gross $56,000 per year. As to the first contention, the applicable findings of the trial court are:

'7. Clifford Adams and Mrs. Adams had inspected the premises and had available to them all the records of the operation of the motel before they signed the binder (PX--1).

'8. Mr. Adams further inspected the motel premises and had available to him the records of the motel operation before he executed the contract of sale (PX--5).

'9. The Adams were both knowledgeable and experienced in motel operation and in the buying and selling of such businesses.'

Whether or not the defendants had inspected the premises or had access to the business records of the motel operation before signing the contract of sale is a question of fact.

Defendants correctly appraise the relevant evidence on this question when they state: 'Certainly the evidence which was presented on the issue was contradictory.' Obviously defendants meant 'conflicting' instead of 'contradictory.' However, defendants go on to state:

'Nevertheless, an examination of the substance of all the evidence bearing on the proposition can lead one only to the conclusion that the court's findings are not supported by substantial evidence. * * *'

If the evidence is as defendants state 'contradictory (sic),' it is not the function of this court to delve into the trial court's mind to see if the 'substance' of the evidence supports a contrary finding on the disputed evidence. See Tome Land & Improvement Co. v. Silva, 83 N.M. 549, 494 P.2d 962 (1972); Cooper v. Burrows, 83 N.M. 555, 494 P.2d 968 (1972); Williams v. Vandenhoven, 82 N.M. 352, 482 P.2d 55 (1971); Trujillo v. Romero, 82 N.M. 301, 481 P.2d 89 (1971); Wood v. Citizens Standard Life Insurance Company, 82 N.M. 271, 480 P.2d 161 (1971); Tapia v. Panhandle Steel Erectors Company, supra.

The evidence revealed that Mrs. Adams testified she had not seen a gross receipts tax report prior to the time Mr. Adams signed the contract. On the other hand, plaintiff testified that defendants were shown the books and records, including the gross receipts reports for the Bureau of Revenue. The expertise of defendants in relation to motel operations is also present in the record. Furthermore, the record reveals that defendants had an unimpeded and unrestricted opportunity to throughly examine the property and that they did in fact make such examination of the property as they desired.

Defendants rely mainly on plaintiff's...

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