Cano v. Lovato

Decision Date29 April 1986
Docket NumberNos. 7915,7926,s. 7915
Citation734 P.2d 762,1986 NMCA 43,105 N.M. 522
PartiesBernie and Elena CANO, Plaintiffs-Appellees-Cross-Appellants, v. Placido LOVATO, Defendant-Third-Party Plaintiff-Appellant-Cross-Appellee, v. ESTATE OF Niven S. ROBINSON, et al., Third-Party Defendants-Fourth-Party Plaintiffs-Appellants, v. NEW MEXICO TITLE COMPANY, Fourth-Party Defendant-Appellant.
CourtCourt of Appeals of New Mexico
OPINION

ALARID, Judge.

This case is a quiet title action brought by Bernie and Elena Cano (the Canos) against Placido Lovato (Lovato). Lovato joined the Estate of Niven R. Robinson (the Estate) in the action, and the Estate joined New Mexico Title Company (N.M. Title). The trial court quieted title in the Canos, and granted other forms of relief to Lovato and the Estate. Lovato, the Estate, and N.M. Title appeal from that portion of the judgment quieting title in the Canos, and the Canos cross-appeal from that portion of the judgment granting Lovato a lien against the subject property. The Estate and N.M. Title also appeal various other rulings of the trial court. The specific positions on appeal are as follow:

(1) Lovato and the Estate challenge the validity of the tax sale at which the Canos bought the property;

(2) Lovato and the Estate challenge the trial court's refusal to find superior title in Lovato as a good faith purchaser;

(3) Lovato and the Estate challenge the constitutional adequacy of notice of the tax sale;

(4) N.M. Title challenges the trial court's conclusion that it was negligent as an agent for the Estate;

(5) the Estate challenges its measure of damages granted by the trial court;

(6) the Canos challenge the trial court's imposition of an equitable lien on the property in favor of Lovato; and

(7) the Canos challenge the amount of the lien.

We remand for a fact-finding under issue (2), involving the good faith purchaser. We conditionally affirm the other issues on appeal, however, because, depending on the outcome under issue (2), they could reappear as issues for decision. We first outline the facts and various procedural matters. We then address the issues as presented in the above sequence.

FACTS

The residential property in question is located in Albuquerque, in Bernalillo County. On July 8, 1980, Lovato signed a purchase agreement with the Estate to purchase the property, along with a single trailer on the property, from the Estate. Niven Robinson died in 1979, and his wife died in 1978. The Estate was administering the property. On August 1, 1980, Lovato took possession of the land, and made various improvements on the land. Pursuant to the purchase agreement, on September 30, 1980, the Estate and Lovato entered into a real estate contract. The Estate had signed the contract earlier in September, but Lovato signed the contract and tendered a down payment on September 30. The contract price was $28,000.00; Lovato made a down payment of $12,000.00, leaving a principal balance of $16,000.00 at 8% interest.

The real property taxes on the property remained unpaid for the years 1976, 1977, 1978 and 1979. Lovato's purchase of the property was conditioned upon proration of the 1980 taxes, together with payment by the Estate of any delinquent taxes, penalties and interest. However, there was no requirement that any such taxes be paid prior to closing.

The Estate retained N.M. Title to secure a title insurance policy for the property, and to act as closing agent for the transaction between the Estate and Lovato. On July 23, 1980, an employee of N.M. Title performed a tax search of the property at the Bernalillo County Treasurer's office and discovered the delinquency in the property taxes. This information was forwarded to N.M. Title. N.M. Title did not inform the Estate or Lovato of the delinquent taxes, nor did N.M. Title make any inquiry of the New Mexico Property Tax Division (Division) in Santa Fe as to the possibility of a tax sale to collect payment of back taxes.

The tax "account" on the property was transferred to the Division for collection sometime prior to September 30, 1980. Pursuant to statute, notice of the pending tax sale was published on August 22, 1980, and notice of the sale was sent by certified mail to "Robinson, Niven, Etux [sic], 4217 4th St., NW, Albuquerque, NM 87107." No notice was mailed or otherwise given to Lovato, who, at the time, had no recorded interest in the property. The notice was returned to the Division with a notation that the taxpayer, Robinson, did not reside at the address shown. The address was derived from the current property tax schedule.

On September 30, 1980, the same day the real estate contract was executed by Lovato, the Division conducted a sale of the property. The Canos were the successful bidders for the property, paying $1,900.00 which included delinquent taxes, penalties and interest. The Canos were given a receipt for the property on September 30, and the Division executed a tax deed on that date. The deed was not physically delivered to the Canos until approximately one month after the sale.

On September 29, 1980, a second tax search was updated by N.M. Title, at which time the notation, "transferred to P.T.D. for collection", appeared on the tax receipt (tax bill) and tax rolls in the County Treasurer's office. The tax searcher took no action in response to this information. Subsequently, on October 3, 1980, the real estate transaction was closed when the Estate approved, and signed, the "Seller's Closing Statement" provided by N.M. Title. This closing statement reflected the outstanding delinquent taxes. Pursuant to the agreement between the parties and N.M. Title, sufficient money was withheld from the closing for the payment of any delinquent taxes. On or about October 9, 1980, N.M. Title attempted to pay such taxes, and discovered that a sale of the property was conducted to satisfy the delinquent ad valorem taxes. N.M. Title then returned this money to an escrow account set up for the transaction. N.M. Title, pursuant to its duties as closing agent, also recorded the real estate contract with the Bernalillo county clerk on October 9, 1980.

The Canos received a tax deed executed on September 30, on or about November 1, 1980 and recorded this deed on November 7, 1980, with the County Clerk.

Lovato remained in possession of the property and had no notice of any adverse claims to the property until early October, 1981, shortly after the Canos filed a complaint in forcible entry and detainer in Bernalillo County Metropolitan Court. By agreement of the parties, the action was dismissed and refiled as a quiet title action in the district court on February 12, 1982. Subsequently, the Estate and N.M. Title were joined in the litigation.

After trial on the merits, the court entered findings of fact and conclusions of law on March 23, 1984, and a judgment on March 23, 1984. The judgment, in pertinent part, directed that: (1) the Canos held superior title to Lovato and the Estate; (2) Lovato was to vacate the property on or before April 1, 1984; (3) Lovato was awarded a lien against the property, based on the improvements placed thereon, in the amount of $37,500.00, subject to offset for the rental value of the property during Lovato's possession; (4) Lovato was given the right, at his option, to remove certain improvements from the property at his expense; (5) the real estate contract between Lovato and the Estate was rescinded; (6) the Estate and N.M. Title would reimburse Lovato for the money he paid under the contract, including the down payment, and installment payments, with interest; and (7) the Estate was to be indemnified and held harmless by N.M. Title for any sums due Lovato. From this judgment, Lovato, N.M. Title, and the Estate appeal, and the Canos cross-appeal.

PROCEDURAL MATTERS

We note, initially, that subsequent to the original findings, conclusions and judgment, "supplemental" findings and conclusions, and a "supplemental" order (judgment) were filed on May 29, 1984. These reflect various additions to the originals, and the parties often refer to this supplemental set in their arguments. Motions to amend the judgment, and the findings and conclusions were timely filed by Lovato and the Canos on April 2, 1984. However, these motions were deemed denied when not ruled upon by May 2, 1984, NMSA 1978, Section 39-1-1, and the court was, therefore, without authority to enter the supplemental findings and order on May 29. We do not consider them for purposes of the appeal.

Secondly, Niven Robinson was a named defendant in a prior quiet title action filed by the Canos. A default judgment was entered in Bernalillo County District Court, on September 16, 1981, against Niven Robinson or his unknown heirs. The parties on appeal do not contend that the Estate was foreclosed from arguing the issue of the validity of the Canos' title, nor did the trial court foreclose the Estate. We assume but do not decide, that the Estate could properly contest the validity of the Canos' title in this action.

Thirdly, the Estate argues at the beginning of its brief-in-chief that a remand is proper, with directions to the trial court to "take evidence on the sufficiency of notice and procedure for the tax sale to the Canos." The remand is proper, argues the Estate, because the trial court granted the Canos' motion for summary judgment on the...

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