Cochran v. Gordon, 6928

• Decision Date: 14 December 1961
• Docket Number: No. 6928,6928
• Citation: 69 N.M. 346,1961 NMSC 169,367 P.2d 526
• Parties: J. Albert COCHRNA and Evelyn A. Cochran, Plaintiffs-Appellees, v. Andrew J. GORDON and Deweylee S. Gordon, Defendants-Appellants.
• Court: New Mexico Supreme Court

Page 526

367 P.2d 526

69 N.M. 346

J. Albert COCHRNA and Evelyn A. Cochran Plaintiffs-Appellees, v. Andrew J. GORDON and Deweylee S. Gordon Defendants-Appellants.

No. 6928.

Supreme Court of New Mexico.

Dec. 14, 1961.

Mayo T. Boucher, Belen, for appellants.

John E. Hall, Albuquerque, for appellees.

COMPTON, Chief Justice.

This is an action for the recovery of monies paid on a contract involving the purchase of certain real estate, for an accounting, and for the foreclosure of an equitable lien upon the premises. The controversy stems from a written contract between the parties, which reads:

'October 13, 1950

'We, Andrew J. Gordon and Deweylee S. Gordon, husband and wife, of our own free will, do hereby enter into an agreement with J. Albert Cochran and His Wife, Evelyn A. Cochran, for the sale of one-half (1/2) interest in the Amber Acres Ranch, located in Socorro County, New Mexico; and more specifically on M. R. G. C. D. Maps 138 and 139, and containing approximately 550 acres. It is further understood and agreed that said half interest includes all equipment on ranch, personal effects not included.

'It Is Understood and Agreed that all lands covered in this transaction are covered with quitclaim deeds, all of which have long passed the legal statute of limitations for redemption by prior owners. Action has been initiated and will be pursued to secure clear title and abstracts through legal channels to all lands involved. Costs involved in securing such additional title and abstracts will be borne on a fifty-fifty basis. All taxes up to and including 1949 have been paid by parties of the first part--Gordons'.

'In return for the half interest (1/2), the parties of the second part--Cochrans', agree to pay parties of the first part the sum of Twenty-Two Thousand Five Hundred & No/100 Dollars ($22,500.000), with Five Thousand & No/100 Dollars ($5,000.00) initial payment to be made this date. Balance of land payments will be made as mutually agreed, and at a rate of 3% interest on deferred payments. Interest to be paid annually.

'The parties of the first part further agree to reimburse parties of the second part all monies paid or invested as capital stock at a rate of 10%, within three (3) years, should they desire to withdraw from said partnership for any reason, at the end of the three-year period. In the event of withdrawal, this agreement will then become null and void.

'Both parties mutually agree to enter into this agreement with the sole thought of developing the lands into a paying farm-ranch enterprise, and any profits derived from this transaction shall be returned to capital investments, except as may be mutually agreed from time to time.

's/ Andrew J. Gordon

'Andrew J. Gordon

's/ Deweylee S. Gordon

'Deweylee S. Gordon'

Subsequently, on or about the 6th day of August, 1951, appellees notified the appellants in writing that they were withdrawing from the partnership agreement. The notice reads:

'Release of Agreement.

'To A. J. Gordon and whoever it might concern:

'As of this date, I withdraw from the partnership of your agreement with me made October 13, 1950, and release you and your wife from land sales of one-half interest in your land in Socorro Co., described in your sales agreement, as such agreement gave me the privilege of doing. So I claim no further interest in your lands named in that agreement.

's/ Al Cochran

'J. A. Cochran'

Appellants denied that they were indebted to appellees in any amount and, by counterclaim, sought damages in the amount of $30,000.00 due to appellees' abandonment of the contract. It developed after the proceedings were instituted that appellants had sold the premises to R. S. Miller and W. R. Watson under a purchase contract.

The ambiguity in the contract became immediately apparent to the trial court and by reason thereof resort was had to extrinsic evidence in arriving at the intention of the parties. The court made the following findings:

'1. That on October 13, 1950, defendants executed and delivered to plaintiffs a written agreement for the sale of an undivided one-half (1/2) interest in approximately 550 acres of land situate in Socorro County, New Mexico, and known as Amber Acres together with a one-half (1/2) interest in all equipment on the ranch, a copy thereof is marked Exhibit A, attached to plaintiffs' complaint; that a more detailed description of said lands is shown in plaintiffs' Exhibit No. 22.

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'3. That at the same time of making of the written agreement, plaintiffs and defendants entered into an oral agreement for the operation of the farm on said Amber Acres whereby the defendants were to reside on and manage and operate the said farm properties, and plaintiffs were to remain in Albuquerque and furnish operation money in an undetermined amount from time to time, and that the plaintiff, A. J. Cochran, would devote such time over the week-ends as he could to farming operations; that neither partner would draw compensation as such until the farm was on a paying basis; that profits and losses in the farming operation would be shared on a 50-50 basis.

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'5. That the written agreement is ambiguous, and extrinsic evidence is necessary to clarify and interpret it, and simultaneously with the making of said written agreement, there were certain oral agreements respecting some of the provisions thereof and which were a part of the agreement respecting the sale and purchase of the undivided one-half (1/2) interest in said real estate.

'6. That the said written agreement, respecting the sale and purchase of an interest in the Amber Acres property, is construed and interpreted by the Court, after resorting to extrinsic evidence and to the consideration of the oral agreements made simultaneously therewith, as follows:

'(a) The defendants were to sell and convey to the plaintiffs an undivided one-half (1/2) interest in the Amber Acres ranch property, together with a half interest in all equipment on the ranch, personal effects not included.

'(b) The costs involved in securing additional abstracts and clearing title would be borne by the parties on a 50-50 basis.

'(c) The total price to be paid by plaintiffs for said undivided one-half (1/2) interest was the sum of $22,500.00, of which $5,000.00 was to be paid at the time of the making of said agreement, and the balance of $17,500.00 at such times and in such amounts as the parties would thereafter mutually agree, said balance to bear interest at 3% per annum until paid, interest payable annually.

'(d) The Cochrans had the right to withdraw from said purchase contract at any time within three (3) years from the date of making if they for any reason should become dissatisfied with the arrangement, and in the event of withdrawal the Gordons would repay Cochrans all monies which they had paid on said one-half (1/2) interest in the lands or which they had invested as capital stock, such as farming machinery and equipment, livestock, and capital improvements to or development of the land. The obligation on the part of the Gordons to repay said monies accrued at the end of the three-year period, that is to say, October 13, 1953, and the sums so advanced and to be repaid would bear interest at the rate of 10% per annum from date of payment until repaid.

'(e) Any profits arising from the farming operations would be invested in improvement of the land as capital.

'(f) The monies paid by the Cochrans were to be credited one-half (1/2) thereof to the payment of the one-half (1/2) interest in the lands, and one-half (1/2) to an 'operations account' to be used for the clearing, levelling, and development of the land, purchase of machinery, and for carrying on normal farm operations, and that the Gordons, to the extent of their ability, would contribute an equal amount to the socalled 'operations account.'

'7. Between October 13, 1950, and August 4, 1951, plaintiffs paid to defendants $12,001.34 to apply on the purchase of the one-half interest in said Amber Acres property.

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'14. That between August 4, 1951, and the filing of this suit there were numerous conferences between the plaintiffs and defendants, or some of them, and correspondence passed between them pertaining to the settlement and adjustment of their respective claims and obligations, and during such time various proposals were...