Bogle v. Potter

• Decision Date: 23 February 1961
• Docket Number: No. 6596,6596
• Citation: 68 N.M. 239,360 P.2d 650,1961 NMSC 25
• Parties: Inez Fay BOGLE, Potter Company, a corporation, by Inez Fay Bogle, a Stockholder, Plaintiffs-Appellants, v. M. M. POTTER and Potter Company, a corporation, Defendant-Appellees.
• Court: New Mexico Supreme Court

Page 650

360 P.2d 650

68 N.M. 239

Inez Fay BOGLE, Potter Company, a corporation, by Inez Fay

Bogle, a Stockholder, Plaintiffs-Appellants, v. M. M. POTTER and Potter Company, a corporation,

Defendant-Appellees.

No. 6596.

Supreme Court of New Mexico.

Feb. 23, 1961.

Rehearing Denied April 14, 1961.

C. R. Brice, H. M. Dow, Roswell, for appellants.

Bigbee & Stephenson, Santa Fe, Adams, Foley & Calkins, Albuquerque, for appellees.

CARMODY, Justice.

Plaintiff-appellant seeks to have us review the action of the trial court in overruling her motion, praying the entry of judgment on the basis of an alleged compromise of two separate lawsuits.

The circumstances requiring an opinion on this matter, which is actually a cross-appeal, are extremely unusual and such that they could very possibly never recur.

The parties will be designated by their names, in order to make for clearer understanding of the situation.

Plaintiff, Mrs. Bogle, filed two suits in the lower court, one in her own individual capacity against Mr. Potter and the Potter Company, a corporation. The other case was by the Potter Company by Mrs. Bogle, as a stockholder and individually, against Mr. Potter. For all practical purposes, Mrs. Bogle will, for the purpose of this opinion, be considered as the appellant, and Mr. Potter as the appellee.

The two cases aforementioned were tried together, and, at the close of the trial, the court did not announce its decision, but expressed a tentative opinion in such a way that the parties assumed that Mrs. Bogle would be successful in both cases. Shortly thereafter, Potter, through his attorneys, made a written offer of compromise and settlement. After the offer was made, the attorneys for the parties and Potter spent several hours with a firm of accountants, in order to determine, if possible, whether or not Potter would be free from tax liability under the terms of the offer of settlement. The accountants, although wishing to make an additional examination of the facts, gave an oral opinion that if the settlement were handled in a certain way, Potter would be free from tax liability. The attorneys for the parties thereupon attempted to prepare a final stipulation of settlement, but such was never agreed upon. Thereafter, within a few days, Potter discharged his attorneys and nothing further was done in reference to the agreement.

Mrs. Bogle then filed what is termed a motion for judgment, in the two original cases. This motion sought to have the court enter judgment, as provided by the letter of proposed settlement. A hearing was had on the motion, Mrs. Bogle submitting the testimony of Potter's former attorney and certain other witnesses; and Potter thereupon, at the close of Mrs. Bogle's testimony, moved that the motion for judgment be denied. The trial court orally denied Mrs. Bogle's motion.

Thereafter, findings of fact and conclusions of law were made by the court in the two original cases, and judgment was entered thereon in favor of Mrs. Bogle. At the same time, requested findings and conclusions were made by the parties with respect to the motion for judgment, and the court adopted Mrs. Bogle's requested findings of fact as its own, but denied her requested conclusions of law, and concluded from the facts found that Mrs. Bogle was not entitled to enforce the compromise.

The court's findings and conclusion are as follows:

'Findings of Fact

'1. Motion for judgment was filed in this cause, based upon the offer and acceptance of a compromise of said two suits, although filed only in Cause No. 21681. Before the filing of said motion the Court had heard all the testimony in said two causes as consolidated suit, and had announced in substance the following:

"I feel that I should make this tentative finding, which goes to the heart of the two cases. It will tentatively find that this entire line of business transactions between these parties was induced by a promise of marriage and that the transactions from the time of the inception of the partnership to the time that the sons engaged counsel to file this law suit, was tained with fraud.'

'2. The above two suits each presented controversial questions of fact and law which were yet to be determined by the Court from the evidence, when on April 18, 1958 the defendant through his attorneys of record made an offer in writing to compromise the two cases, which offer of compromise was in words and figures, as follows, to-wit:

"April 18, 1958

"Judge C. R. Brice

Roswell, New Mexico

"Dear Judge Brice:

"At the direction of our client, Mr. Bean and the writer make the following proposal for the complete settlement of the Potter Company and Bogle cases against him.

"Mr. Potter, subject to the approval of Bassett, Johnston & Deason, accountants, as to freedom from tax liability, will assign and transfer all of the common stock now standing of record in his name in the Potter Company to the Potter Company Corporation, in consideration of the cancellation and settlement by that corporation of all of its claims against him, including the indebtedness now shown to be owing by him on the books of the corporation; and in further consideration of the payment by the corporation of the following items:

Attorneys' fees to Reese, McCormick, Lusk & Paine $5000.00

Expenses of said attorneys 300.00

Attorneys' fees to Bean, Osborn & Snead 5000.00

M. M. Potter for the purpose of paying his federal and state income taxes on account of dividends and salary credited to him for the year of 1957. 2500.00

"Final settlement will be effected by the transfer and assignment of the stock above mentioned and the dismissal with prejudice of the two cases above mentioned, which are now pending in the District Court of Chaves County, New Mexico; and in addition thereto Mr. Potter by this instrument will guarantee that there are no outstanding corporate debts other than as shown by the books, except attorney's fees and cost due James W. Stagner of Carlsbad, New Mexico, and small current purchases for supplies, etc. which may have been made during the month of April and which have not been billed to the corporation.

"Mr. Potter also desires that some mutually agreeable representative of the parties be designated to check and receive all of the personal property shown in the inventories and belonging to the corporation, and expresses his willingness to devote such of his time as may be necessary to acquaint the representative with any pending unfinished business matters affecting the corporation and as may be necessary to effect the transfer of possession of all of the above mentioned personal property.

"GLR SO Very truly yours,

(signed) Geo. L. Reese, Jr.'

'3. The plaintiff accepted said offer of compromise which was again approved on the same day by the defendant, after being reduced to writing by his counsel of record.

'4. Thereafter the defendant and his attorneys of record met with the tax accountants Bessett, Johnston & Deason, at which time defendant's counsel stated to them the facts upon which they wanted their opinion on the question of whether, if such compromise was made as outlined in the offer of compromise copied in Finding of Fact No. 1 above, the plaintiff and defendant Potter would be subject to any tax because of such compromise.

'5. After considering the question presented to them the said firm of Bassett, Johnston and Deason stated to defendant and his counsel that it was their opinion that any such compromise was free from tax liability. It was agreed that a formal opinion would be delivered to defendant to that effect.

'6. Before a formal opinion could be sent to defendant and his counsel by said accountants, the defendant Potter discharged his counsel and accountants, but not until after said informal opinion had been communicated to them.

'7. It was the opinion of the accountants that the compromise agreement as proposed by defendant and accepted by plaintiff was free from tax liability on either the plaintiff or the defendant Potter; and only their discharge prevented them from formally presenting such opinion and approval of said offer of compromise to the defendant and his attorneys.

'8. The plaintiff was ready, able and willing to carry out the terms of this offer of compromise as accepted by her, in all of its details, and is still able, ready and willing to do so.

'9. After defendant Potter entered into said compromise agreement, although accepted in all its terms by plaintiff, he has failed and refused to carry out its terms.

'10. The offer of compromise was made in good faith by the defendant originally and was accepted in good faith by the plaintiff.

'Conclusion of Law

'The Court concludes, as a matter of law, from the facts found by the Court, that the plaintiffs are not entitled to enforce the offer and acceptance of compromise of the said two cases made by the defendants and accepted by the plaintiffs, and judgment thereon will be for the defendants.'

Potter thereupon appealed from the judgments entered in the two cases, and Mrs. Bogle appealed from the judgment which was entered on the motion for judgment. As a result, three appeals were filed in this court, being causes numbered 6592, 6593 and 6596.

Potter filed a motion to dismiss the appeal from the judgment denying the motion for judgment (No. 6596), arguing it was not an appealable matter, and after argument we entered the following order:

'Now, therefore, it is by the court ordered, all concurring, That the Motion to Dismiss be and the same is hereby overruled.

'It is further ordered that the appeal in this cause proceed simultaneously with appeals in Cause No. 6592 and Cause No. 6593; that said three appeals be consolidated for argument and consideration in this Court, the appeal herein being handled and considered as a cross-appeal in said Causes No. 6592 and 6593.'

Potter has renewed his motion in his answer brief, but we will abide by our above ruling.

By reason of the facts above...