Cortez v. Cortez

• Decision Date: 20 February 2009
• Docket Number: No. 30,717.,30,717.
• Citation: 2009 NMSC 008,203 P.3d 857
• Parties: Diana CORTEZ, Petitioner-Petitioner, v. Sergio Rene CORTEZ, Respondent-Respondent.
• Court: New Mexico Supreme Court

203 P.3d 857

2009 NMSC 008

Diana CORTEZ, Petitioner-Petitioner, v. Sergio Rene CORTEZ, Respondent-Respondent.

No. 30,717.

Supreme Court of New Mexico.

February 20, 2009.

Rosner & Chavez, L.L.C., Mary W. Rosner, Las Cruces, NM, for Petitioner.

Keithly & English, P.C., Shane A. English, Anthony, NM, for Respondent.

OPINION

BOSSON, Justice.

{1} Marital settlement agreements are contracts executed by divorcing spouses setting forth the present and future obligations of the parties. They are to be interpreted and enforced according to their terms, when clear, including even the extreme case of enforcing a forfeiture of one spouse's property interest to the other. But when clarity is lacking or important terms are absent, and the parties have substantially complied with their obligations to each other, then equity must intervene to avoid a forfeiture when not to do so would be unfair. Our Court of Appeals having ruled differently, we reverse and uphold the ruling of the district court.

BACKGROUND

{2} Husband and Wife were married for fourteen years and had two children together before Wife filed for divorce. The divorce action proceeded over a nine-month period, and in that time Husband and Wife, aided by legal counsel, engaged in a series of negotiations regarding alimony, custody, assets, and debts. Before a final agreement had been reached, Wife obtained Husband's consent to relocate with the children to Las Vegas, Nevada, on a trial basis.

{3} Husband and Wife eventually entered into a marital settlement agreement, which was adopted and approved by the district court as a Stipulated Final Judgment of Dissolution of Marriage. At that time, Husband and Wife owned two properties: their marital residence in Santa Teresa, New Mexico, and a rental property located in Juarez, Mexico. Under the terms of the marital settlement agreement, Husband was awarded the rental property and Wife was awarded the marital residence. The marital residence was subject to two mortgages-a first mortgage with a balance of approximately $57,000, and a second mortgage with a balance of approximately $15,000. The marital settlement agreement directed that Wife would be responsible for making payments on the first mortgage and Husband would be responsible for paying off the second mortgage.

{4} Husband had been a joint borrower with Wife on the first mortgage, and he remained liable on that obligation to the mortgagee despite Wife's assumption of the payments. Accordingly, Wife was required to have Husband removed from the first mortgage within two years of the divorce either by transferring the existing mortgage into her name individually, by refinancing as the sole borrower, or by selling the property. In the interim, Husband was protected by a forfeiture clause in the marital settlement agreement which specified that if Wife fell sixty days behind on the mortgage payments while Husband remained liable on that debt, Husband had a right to cure all or part of her delinquency and obtain a lien on the property in that amount. In the event that Husband cured all of the delinquency, he could also take sole title to the marital home unless Wife redeemed the property within thirty days by re-paying the delinquent amount to Husband.¹

{5} Almost immediately following the effective date of the divorce on September 5, 2006, Wife fell sixty days past due on the first mortgage. Husband elected to cure the delinquency by paying the entire past-due amount of $1,454.45. On November 28, 2006, Husband notified Wife that he intended to take over her entire interest in the property unless she exercised her right of redemption and reimbursed the delinquent amount to him within thirty days.

{6} On December 28, 2006, the final day of the redemption period, Wife mailed a check to Husband for the full past-due amount via overnight express mail from Las Vegas, Nevada. Delivery was first attempted on the following day, December 29, but the check was not actually received by Husband until January 4, 2007. The next day, Husband notified Wife that he rejected the redemption check because he had not received it within the thirty-day period. Thereafter, he claimed her interest in the marital residence as his own under the terms of the marital settlement agreement.

{7} Husband filed a motion in the district court to obtain complete title to the residence, and Wife responded that her redemption payment was timely because it had been sent within the thirty-day period. The district court sua sponte employed the "mailbox rule," and found that "[a]lthough actual delivery of the redemption payment was made after the expiration of the [thirty-day] redemption period, [Wife's] deposit of the redemption payment in the mail on the payment due date constitutes timely payment under the mailbox rule." The court awarded Husband full reimbursement for what he had paid to cure the delinquency, and affirmed Wife's title to the marital residence. On Husband's appeal, the Court of Appeals reversed, holding that a check placed in the mail on the last day of the redemption period, and not received that same day, was untimely. Cortez v. Cortez, 2007-NMCA-154, ¶ 1, 143 N.M. 66, 172 P.3d 615. We apply a de novo standard of review to address the legal conclusions of the district court. Strata Prod. Co. v. Mercury Exploration Co., 121 N.M. 622, 627, 916 P.2d 822, 827 (1996).

DISCUSSION

{8} We must decide whether Wife's act of placing a redemption check in the mail on the final day of the allotted period constitutes a "payment" under the terms of the marital settlement agreement. Wife correctly notes that the marital settlement agreement does not contain any express language regarding the method of making a payment. Rather, it states only that "[Wife] shall have the right to redeem the property from [Husband] by paying [Husband] ... within thirty (30) days." At issue is whether the term "paying" within the context of this agreement requires actual delivery within the thirty-day period, or whether "paying" is satisfied upon mailing. Having moved out of state, Wife contends that payment by mail was clearly contemplated in the agreement and that in the absence of additional limiting language, any silence should be interpreted to avoid forfeiture.

Mailbox Rule

{9} As a general rule, a check must be both mailed and received to constitute payment. See, e.g., Werne v. Brown, 955 P.2d 1053, 1055 (Colo.Ct.App.1998) ("Generally, payment by mail is not effective until receipt by the creditor...."). However, the "mailbox rule" provides a limited exception and states that a check, properly addressed with postage prepaid, constitutes payment at the moment it is deposited into the mail, provided the parties either have a custom of payment by mail or have expressly authorized payment by mail. See 60 Am.Jur.2d Payment §§ 11, 17 (2007) ("A debtor does not make a payment of a debt merely by placing a check in the mail, unless the obligee has expressly or by implication directed or consented that payment may be made in such manner."). Other jurisdictions recognize instances where the act of mailing a check constitutes delivery of payment. See Werne, 955 P.2d at 1055 (holding that the timely mailing of a payment before the expiration of a thirty-day period cured a default); Wiers v. White, 142 Fla. 628, 196 So. 206, 209 (1940) ("It has been held in well-reasoned cases that by depositing a note in the mail with the intent that it should be transmitted to the payee or assignee in the usual way, the maker or assignor parts with his domination and control over it, and it and the delivery is in legal contemplation complete."); Neuman v. Ferris, 432 So.2d 641, 643 (Fla.Dist.Ct. App.1983) (finding that the mailing of a check on the final day of a grace period constituted delivery upon deposit); Finn v. Nat'l City Bank, 36 N.Y.S.2d 545, 546 (City Ct.1942) (mailing of check by bank constitutes delivery to prevent attachment of debt); see also Bingo v. Comm'r of Internal Revenue, 61 T.C.M. (CCH) 2782 (1991) ("The mailing of properly addressed checks may constitute delivery to the addressees.").

{10} The mailbox rule in this form has never been expressly adopted in New Mexico. Our courts have adopted the common law "mailbox rule," which provides an evidentiary presumption that items properly mailed will be received by the recipient in ordinary course. See Schneider Nat'l, Inc. v. State ex rel. Taxation & Revenue Dep't, 2006-NMCA-128, ¶ 13, 140 N.M. 561, 144 P.3d 120. This evidentiary rule differs from the "mailbox rule" used in matters of contract construction, as set forth above, and therefore does not apply to the present dispute. Nevertheless, our Court of Appeals was compelled to evaluate the forfeiture clause in light of the mailbox rule because of the lower court's decision. Applying the rule, the Court determined that Wife's check could constitute payment at the time of mailing, only if (1) the marital settlement agreement expressly authorized payment by mail, or (2) the parties had established a pattern of mailing payments. Cortez, 2007-NMCA-154, ¶ 9, 143 N.M. 66, 172 P.3d 615. The Court found no basis for either exception. Id.

{11} We acknowledge there are situations where the mailbox rule might apply to render a payment timely on the date of mailing. However, we agree that neither exception applies in this case. The contract was silent with regard to mailing, and the parties had no established pattern of mailing as this was the first time a payment had been attempted under the forfeiture clause. Therefore, we are not comfortable relying on the mailbox rule in this particular instance.

{12} This does not end our inquiry however. We turn to our well-established principle that an appellate court "will affirm the district court if it is right for any reason and if affirmance is not unfair to the appellant." Maralex Res., Inc. v. Gilbreath, 2003-NMSC-023, ¶ 13, 134 N.M. 308, 76 P.3d 626 (internal...