Burden v. Colonial Homes, Inc.

• Decision Date: 01 April 1968
• Docket Number: No. 8450,8450
• Citation: 441 P.2d 210,79 N.M. 170,1968 NMSC 56
• Parties: A. L. BURDEN and H. P. Orts, Plaintiffs-Appellees, v. COLONIAL HOMES, INC., Defendant-Appellant.
• Court: New Mexico Supreme Court

Page 210

441 P.2d 210

79 N.M. 170

A. L. BURDEN and H. P. Orts, Plaintiffs-Appellees, v. COLONIAL HOMES, INC., Defendant-Appellant.

No. 8450.

Supreme Court of New Mexico.

April 1, 1968.

Rehearing Denied June 7, 1968.

[79 NM 170] Girand, Cowan & Reese, Malcolm L. Shaw, Hobbs, for appellant.

Lowell Stout, Ray H. Potter, Hobbs, for appellees.

OPINION

CHAVEZ, Chief Justice.

This is an appeal by defendant-appellant Colonial Homes Inc., from a summary judgment rendered in favor of plaintiffs-appellees, A. L. Burden and H. P. Orts, in an action for recovery under a compromise agreement, or for damages for breach of contract, and for money had and received. The suit was originally instituted by A. L. Burden and Alamo Sales Corporation against Colonial Homes, Inc. H. P. Orts was added later as a party by agreement of the parties for the reason that Alamo Sales Corporation was dissolved and H. P. Orts, along with A. L. Burden, was successor in interest of Alamo Sales Corporation. Appellant answered denying appellees' claims and pleading affirmatively agreements of compromise, settlement and release of all claims.

Appellee Burden and appellant entered into a franchise agreement dated June 12, 1961, under which Burden was to be dealer and distributor for appellant, in a certain geographical area, of swimming pool panels which were fabricated for appellant by Minnesota Mining and Manufacturing Company, hereinafter referred to as '3M.' Under the franchise agreement, Burden was required to pay to appellant certain amounts of money to be applied as credit against the purchase by Burden from appellant of pool panels. The amount remaining unapplied of these deposits or franchise payments on the Burden contract is $3,300. Alamo Sales Corporation and appellant entered into a similar franchise agreement dated June 1, 1961, whereby Alamo Sales Corporation was the dealer and distributor for appellant. The amount remaining as unapplied deposits or franchise payments under this contract is $5,000.

Burden and appellant executed an agreement dated October 22, 1964, entitled 'AGREEMENT OF COMPROMISE, SETTLEMENT AND RELEASE OF ALL CLAIMS.' Under this compromise agreement, it was stated that the amount of unapplied deposits was $3,300; that defects in the pool panels resulted in financial loss and damage to Burden; that appellant had brought an action against 3M in federal court in California asserting in that suit a potential liability of appellant to Burden for dealer's damages; that Burden and appellant wished to settle all rights and liabilities between them and to liquidate the amount of dealer damages; that they therefore agreed to cancel and terminate their franchise agreement; that Burden released and discharged appellant from any and all claims; and that appellant would, in full settlement and reimbursement of damages to Burden, pay to Burden a settlement sum of $6,186.92 'out of and upon obtaining satisfaction from 3M of any judgment which Colonial (appellant) may obtain in said action.' The compromise agreement also stated:

'This Agreement shall not be effective for any purpose unless Colonial recovers in said action damages against 3M as a result of Colonial's liability to Dealer (Burden). If said recovery shall be more or less than said Settlement Sum, Dealer and Colonial agree that said recovered sum, rather than the amount set forth in (3) above ($6,186.92), shall constitute the Settlement Sum.'

The settlement sum included the $3,300 in unapplied deposits or franchise payments. Alamo Sales and appellant executed a similar compromise agreement dated October 22, 1964. The terms of that agreement vary in pertinent part, only in that the amount of unapplied deposits or franchise payments is $5,000 and the settlement sum of $8,224.10 included the $5,000 in unapplied deposits or franchise payments.

Although findings of fact are not necessary in a summary judgment proceeding, Federal Building Service v. Mountain States T. & T. Co., 76 N.M. 524, 417 P.2d 24, the trial court made the following findings of fact: That the pool panels to be provided under the contract proved defective, to the financial loss and damage to appellees in the amounts of $6,186.92 including the deposit of $3,300, and $8,224.10 including the deposit of $5,000, and that the $3,300 and $5,000 amounts are still retained by appellant as unapplied deposits; that by the terms of the compromise agreements, appellant agreed to pay to A. L. Burden the sum of $6,186.92 and to Alamo Sales Corporation the sum of $8,224.10, out of any recovery from 3M made by appellant in its civil action in the federal court in California; that appellant recovered from 3M the sum of $1,003,000, but appellant failed and refused to pay amounts due appellees totalling $14,411.02; that the federal court in California prepared a memorandum regarding the suit in the federal court in California on or about December 10, 1964, in which it set out the amount of liability of appellant to dealers and distributors, foreseeable with reasonable certainty and attributable to 3M's breach of contract; that the provisions of the California settlement were kept secret by the parties thereto; that the $3,300 and $5,000 payments made to appellant was deposits to be applied on future purchases and were not franchise payments; that there was no evidence or factual basis to support appellant's claim that the deposits were forfeited; that the compromise agreements did not change or limit the amounts due appellees as to the unapplied deposits; and that appellants did not and could not urge in the suit in California any liability to return the unapplied deposits as an element of damage against 3M, and it would not have been possible for appellant to have recovered the unapplied deposits in that action because such deposits were held by appellant.

The trial court rendered summary judgment for appellees in the amounts of $4,939.28 and $6,893.19, plus interest thereon at the rate of 6% per annum from December 11, 1964, until paid. The $4,939.28 figure is the unapplied deposits or franchise payments of $3,300, plus $1,639.28, which was computed by the trial court as follows:

$74,743.00/$87,755.71 $2,886.92, less 1/3rd the product thereof.

The $6,893.19 figure is the unapplied deposits or franchise payments of $5,000, plus the figure of $1,893.19 (which should be $1,830.68), and was computed by the trial court as follows:

$74,743.00/$87,755.71 $3,334.10 (sic), less 1/3rd the product thereof.

The memorandum of the federal court in California was incorporated by reference in the trial court's findings and it stated the amount of liability of appellant to dealers and distributors, foreseeable with reasonable certainty and attributable to 3M's breach of contract, to be $74,743. The $87,755.71 figure was incorporated from the trial court's own memorandum decision into its conclusions of law. The figure was stated in the trial court's memorandum decision to be the total amount of dealers' settlement claims made in the action in California. This figure was obtained from the exhibit attached to the deposition of Malcolm Shaw, which exhibit showed the total of settlement sums in the compromise agreements between appellant and dealers, excluding deposits.

Thus, the trial court allowed recovery to appellees to the full extent of their unapplied deposits or franchise payments, plus a pro rata share along with other dealers, who had made compromise agreements with appellant, in the amount recovered by appellant from 3M for liability of appellant to dealers and distributors attributable to 3M's breach, less one-third attorneys' fees, plus interest on the sum of these amounts. The deduction of attorneys' fees was made pursuant to an agreement of the parties and is not questioned on appeal.

The trial court considered the...