First Interstate Bank of Lea County v. Heritage Square, Ltd.
| Decision Date | 03 June 1992 |
| Docket Number | No. 19955,19955 |
| Citation | 1992 NMSC 37,833 P.2d 240,113 N.M. 763 |
| Parties | FIRST INTERSTATE BANK OF LEA COUNTY, Plaintiff-Appellee, v. HERITAGE SQUARE, LTD., a New Mexico limited partnership, Lonnie A. Pierce and Eula Pierce, husband and wife, and Virgil Ford and Marie Ford, husband and wife, Defendants-Appellants, and Aloysuis K. Marczyk, et al., Defendants. |
| Court | New Mexico Supreme Court |
After trial to the bench1, judgment was entered in favor of plaintiff, First Interstate Bank of Lea County, on its complaint for foreclosure and money due against defendants Marczyk and Lombard on property leased to Heritage Square, Ltd., holder of a second mortgage on the subject property.. Heritage appeals the judgment contending that a modification of the lease permitted it to offset an amount from each monthly payment to be applied to its debt, and that the court's judgment prejudiced its right to collect amounts due under two promissory notes. We affirm in part and reverse in part.
In 1986, Marczyk and Lombard purchased a shopping center in Hobbs, New Mexico, from Heritage whose general partners during all material times were Gaylon Lovelady, Virgil Ford, and Marie Ford. Marczyk and Lombard executed a promissory note in favor of plaintiff secured by a first mortgage on the property, and made two other notes in favor of Heritage secured by a second mortgage on the property. Heritage subsequently assigned the notes to defendants Ford and Pierce. At the same time, Marczyk and Lombard leased the property back to Heritage in a five-year master lease. Upon receipt of the monthly lease payments from Heritage, Marczyk and Lombard would pay plaintiff on its note and also pay Heritage, as agent for Ford and Pierce, on their notes.
In mid-1987, Heritage began deducting from the monthly lease payment an amount equal to the monthly payment owed on the Ford and Pierce notes. Although Marczyk and Lombard objected to Heritage's failure to pay the entire monthly lease amount and to the manner in which Heritage was paying on the Ford and Pierce notes, the offsetting continued through December 1989. During this time period, Marczyk and Lombard notified Heritage in writing that it should make full payment to them and bring the account current. In 1989, when Marczyk and Lombard defaulted on plaintiff's note, the district court, pursuant to the terms of the mortgage, appointed plaintiff the receiver of the property.
At trial, plaintiff denied any modification of the lease, based on the continuing claim by Marczyk and Lombard that payments should have been made to them according to the terms of the lease. The court, finding no written modification altering the performance of Heritage under the lease, ordered the proceeds from the sale of the property to be applied to plaintiff's debt. The court also ruled that Heritage, Ford, and Pierce were entitled to judgment against Marczyk and Lombard on their notes and were awarded attorney fees, costs, and interest, but they were not entitled to receive monies collected by the receiver under the lease.
Heritage, Ford, and Pierce challenge the court's finding regarding modification of the lease with respect to an offset of the monthly payment. An appellate court will not disturb the trial court's findings of fact that are supported by substantial evidence. Cave v. Cave, 81 N.M. 797, 799, 474 P.2d 480, 482 (1970). Substantial evidence means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Id. This court will indulge all reasonable inferences and resolve all disputed facts in favor of the trial court's findings. Id.
Contrary to Heritage's contention, we find substantial evidence to support the trial court's finding that the master lease had not been modified. Although the record is unclear as to the exact date of the alleged modification, it appears Heritage began to offset the monthly payment in 1987. In June 1987, Lombard specifically requested Heritage to pay immediately any amounts due under the lease. A July 1989 letter from Lombard to Heritage clearly requests that Heritage cease offsetting the monthly lease payment, comply with the written terms of the lease, and tender the full monthly payment to Marczyk and Lombard. Consistent with this correspondence is the deposition testimony of Marczyk that the monthly offset by Heritage was an absolute violation of the terms of the master lease. Finally, with reference to the provision in the lease granting a "right to offset" to either party, that right only could be exercised if the other party defaulted on an obligation. The record contains no evidence that Marczyk and Lombard were in default on the Ford and Pierce notes during the times when Heritage was offsetting the monthly lease payment.
A court's authority to appoint a receiver can be derived from several sources. Court receivers are appointed by virtue of a court's equity jurisdiction or statutory authority. Receivers may be provided for in a variety...
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...(1991). In addition, the Attorney General contends that under the law-of-the-case doctrine, see First Interstate Bank v. Heritage Square, 113 N.M. 763, 766-67, 833 P.2d 240, 243-44 (1992), Judge Castellano should not have revisited and reversed Judge Blackmer's decision regarding We reject ......
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...or statutory authority. Receivers [also] may be provided for in a variety of contracts.” First Interstate Bank v. Heritage Square, Ltd., 113 N.M. 763, 766, 833 P.2d 240, 243 (1992). Additionally, the Legislature has enacted statutory provisions governing the creation and administration of r......