Armijo v. Henry

• Decision Date: 27 February 1907
• Citation: 14 N.M. 181,89 P. 305
• Parties: ARMIJO et al.v.HENRY et al.
• Court: New Mexico Supreme Court

14 N.M. 181

89 P. 305

ARMIJO et al.

v.HENRY et al.

Supreme Court of the Territory of New Mexico.

Feb. 27, 1907.

Syllabus by the Court.

Where two parties enter into an agreement concerning the sum of money due from one to the other, and a note is given for the amount agreed upon, such note is not void for failure of consideration, in whole or in part, where there was no fraud or mistake, and where each of said parties had the same means of ascertaining the validity of the amount claimed by the payee in the note.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 7, Bills and Notes, §§ 166-212.]

A note given to settle the amount claimed to be due on a tax sale certificate, afterwards ascertained to be void, is not an usurious contract, although the 3 per cent. penalty provided by statute is included in said note; neither party at the time intending to give or take a rate of interest greater than that provided by law.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 47, Usury, §§ 23, 24.]

The rule for computing and applying partial payments, known as the “Massachusetts Rule,” is the proper rule in this territory.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 39, Payment, § 121.]

In a suit in equity, where a foreclosure of a deed of trust is sought, the note secured by which provides for an attorney's fee of 10 per cent. in case of suit, it is not error for the court to allow such attorney's fee; the note and deed of trust being executed at the same time, by the same parties, and in the furtherance of the same general object.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 35, Mortgages, §§ 1669-1679.]

Appeal from District Court, Bernalillo County; before Justice Ira A. Abbott.

Action by Perfecto Armijo and others against J. A. Henry and others. From the decree, defendants appeal, and plaintiffs bring cross-appeal. Reversed, and cross-appeal dismissed.

On May 1, 1895, Perfecto Armijo and wife executed to Alonzo C. Henry their promissory note for $3,000 due in one year from date, with 12 per cent. interest from maturity, and 10 per cent. additional for attorney's fees in case of legal proceedings to enforce collection. This note was secured by a deed of trust, in which J. A. Henry is named as trustee, executed by the same parties, on the west half of block 7 of the Francisco Armijo y Otero addition to the town of Albuquerque. On June 7, 1896, Armijo and wife executed another note for $500 to said A. C. Henry, payable one year after date, with interest at 12 per cent. per annum from maturity, which also provided for an additional sum of 10 per cent. on the amount found due in the event of a suit to collect the note or any part thereof. This note was also secured by a deed of trust on the same property, and in which J. A. Henry is named as trustee. On April 3, 1897, Armijo and wife executed another promissory note for the stated consideration of $2,029.60 to A. C. Henry, due six months after date, with interest at 12 per cent. per annum after date, and with a provision that, if not paid at maturity, and collected by an attorney or by legal proceedings, an additional sum of 10 per cent. on the amount as attorney's fees might be collected. All of these were indorsed without recourse by A. C. Henry, and the said J. A. Henry is the legal owner and holder of said notes. Each of the trust deeds mentioned was duly executed, acknowledged, and recorded. The last note mentioned was given to clear up some tax sale certificates held by J. A. Henry, and others, and the consideration for such note was the amount of such tax sale certificates, including the costs of the tax sale and 3 per cent. per month from the date of such sales up to the date of the note. One of the tax sale certificates was bought by Henry from one G. W. Johnston, on April 3, 1897, for which said Henry paid said Johnston the sum of $444; that being the amount of the tax sale certificate, with 3 per cent. per month interest from the date of the sale. It is conceded that there were irregularities in the publication and sales represented by these tax sale certificates, and that such tax sales were in fact void. It is not shown, however, that these facts were known to either Armijo or Henry at the time the last-named note was given; but it does appear that both of them at that date believed the tax sales to be valid liens against the property of Armijo, including the property covered by the deeds of trust heretofore mentioned. At the time this note was given, Henry had brought suit to foreclose the two first-mentioned deeds of trust, and the foreclosure suits were still pending in the district court, although they were subject to dismissal for failure on the part of Henry to file copies of the notes and deeds of trust with his complaint in that case.

In April, 1898, Perfecto Armijo and wife signed a warranty deed to the premises described by these deeds of trust, in which J. A. Henry was named as grantee, which deed was placed in escrow in the hands of one J. M. Moore, to be delivered to Henry under certain conditions, which conditions were never fulfilled. Henry, however, obtained possession of this deed and had it recorded. On June 14, 1899, J. A. Henry, as trustee in said deeds of trust, and being then the owner of all the indebtedness secured thereby, sold the property at trustee's sale, after advertisement, and at said sale the property was bid in for him, but no deed was ever executed to carry the sale into effect, nor has he or any other person ever claimed title to the property in controversy by reason of such sale. The property was leased by Armijo to the city of Albuquerque and used as a city hall. Considerable rent was collected at the rate of $75 per month, and later at the rate of $45 per month; the last lease being made by Henry after the Armijo lease expired. Considerable sums of money were also paid out by Henry for taxes and insurance upon the property, and some money for repairs. The money so received for rents was, by the trial court, credited to Armijo as of the dates received, upon the notes in question, under what is known as the “Massachusetts Rule,” or “United States Rule,” of computation and application of partial payments; and upon the amounts paid out by Henry for taxes, insurance, and repairs, the court allowed him interest at the rate of 12 per cent. from the time said sums were so paid. On May 1, 1901, Armijo and wife conveyed the property in controversy to Alfredo J. Otero by warranty deed, subject to the liens of Henry on said premises.

Several suits were pending between Armijo and A. C. and J. A. Henry, and an interpleader filed by the city for rents held by it; but all of said suits were consolidated, a supplemental and amended complaint was filed by Armijo and wife, setting out the above transactions and praying for the setting aside of the tax sale certificates hereinbefore set out, the deed from Armijo to Henry, and the trustee's sale by Henry as trustee, and for an account. The Henrys answered and filed a cross-bill setting out the notes and deeds of trust above mentioned, the payment of taxes, insurance, and repairs made by him, and praying for an accounting and a decree foreclosing said trust deeds in case the deed from the Armijos was held to be void, and for general relief; and, upon the answer to said cross-bill, the replication thus making up the issues, the case was tried in the district court of Bernalillo county, Otero in the meantime having been made a party, and from the decree of that court setting aside the deed from Armijo and wife to J. A. Henry, setting aside the sale made by the trustee, J. A. Henry, on June 14, 1899, holding the tax sales made to G. W. Johnston and J. A. Henry to be void, and rendering a decree for $6,466.27, the amount found due on accounting by the court, together with attorney's fees for $646.62, being 10 per cent. of said amount, and for foreclosure of the trust deeds on default of payment thereof, the appellants appealed to this court. The appellees also filed a cross-appeal to that part of the decree providing for attorney's fees, and from the allowance of interest since the 25th day of May, 1904, at which time an alleged tender of the amount claimed to be due by the Armijos was made to said Henry.

A note given to settle the amount claimed to be due on a tax sale certificate, afterwards ascertained to be void, is not a usurious contract, although the three per cent penalty provided by statute is included in said note, neither party at the time intending to give or take a rate of interest greater than provided by law.

H. B. Fergusson, for appellants.

Summers Burkhart and W. B. Childers, for appellees.

MANN, J.

Counsel for appellant assigns numerous errors as to the findings of fact made by the trial court and its refusal to make certain findings asked by appellant. A careful perusal of the evidence, however, convinces us that the findings made by the court were fully justified by the evidence, and contain all the material facts necessary to an adjudication of the matters in issue. This court has firmly established the rule that, where the findings of fact of the trial court are based upon substantial evidence to sustain them, they will not be disturbed by this court. The statement of facts above given is substantially as found by the trial court, and there seems to be no dispute as to the correctness of its conclusion of law as to the invalidity of the tax sales of the property to Henry and to his assignors, or as to the invalidity of the deed from the Armijos to Henry, which was placed in Moore's hands, but never delivered to Henry with Armijo's consent. These conclusions of the trial court and that part of the decree setting them aside are not assigned as error, and consequently will not be considered by this court. The only remaining questions are: (1) Whether there was a failure, or partial failure, of the consideration of the $2,029.60...