FIRST NAT. BANK IN ALBUQUERQUE v. ROWE

• Decision Date: 24 November 1948
• Docket Number: No. 5125,5125
• Citation: 199 P.2d 987,52 N.M. 366
• Parties: FIRST NAT. BANK IN ALBUQUERQUE v. ROWE.
• Court: New Mexico Supreme Court

52 N.M. 366

199 P.2d 987

FIRST NAT. BANK IN ALBUQUERQUE

v.ROWE.

No. 5125.

Supreme Court of New Mexico.

Nov. 24, 1948.

[199 P.2d 988, 52 N.M. 367]

Miller & Chavez and Hannett & Hannett, all of Albuquerque, for appellant.

Rodey, Dickason & Sloan, Frank M. Mims, and Jackson G. Akin, all of Albuquerque, for appellee.

SADLER, Justice.

The question for decision is whether the trial court erred in holding the appellant, defendant below, to the trial of a single issue which the parties had stipulated in advance should be the sole one for determination, after granting defendant leave to amend in a respect that injected a new and independent issue.

The suit was one to foreclose two certain real estate mortgage executed by the defendant, allegedly as collateral security for money already loaned, and as collateral security as well for money to be loaned by plaintiff bank to L. & B. Packing Company, a co-partnership composed of George Lescallett and Neil Bungard. The co-partnership was engaged in large scale carrot farming near Los Lunas, New Mexico, during the years 1945 and 1946. During the same period, Lescallett was manager of the Albuquerque office of the Reconstruction Finance Corporation where the defendant served as his secretary from December, 1939, to August, 1946.

In 1945 the partnership borrowed money from the plaintiff bank to finance its operations for that year. They proved unsuccessful and by January, 1946, the partnership had become indebted to the bank to the extent of $12,000 evidenced by the partnership note in that sum. It was secured by chattel mortgages of the partnership equipment and an assignment of a lease held by the partnership from the Atchison, Topeka and Santa Fe Railway Company, including the vegetable packing shed. This security comprised practically all the assets of the partnership.

In February, 1946, the partnership sought further loans from the plaintiff to finance the current crop year. On February 21, 1946, and for value received, the partnership executed a note to plaintiff for $12,000 maturing January 2, 1947, and a few days later on February 27, 1946, the partnership note to plaintiff in the sum of $5,000 with the same maturity was executed. In order to secure an aggregate indebtedness of the defendant, L. & B. Packing Company, up to a total of $24,000, the defendant Regina Rowe, on February 27, 1946, executed and delivered to plaintiff the two real estate mortgages whose foreclosure was asked in this suit. Each mortgage contained a clause making it securityfor 'any indebtedness at any time owing by debtor to mortgagee.'

The $12,000 note dated February 21, 1946, was a renewal of indebtedness then owing the plaintiff bank representing partnership losses for the 1945 crop year. The $5,000 note executed on February 27, 1946, represented the initial advance of the new loans from the bank to finance the 1946 cropping year to approximate the agreed sum of $12,000, to make a total indebtedness of the partnership to the bank, if advances to the full extent agreed were made, in the sum of $24,000. The two real estate mortgages mentioned were made and delivered to secure said total indebtedness as claimed by the plaintiff bank. According to the defendant's contention the mortgages mentioned were not to secure the $12,000 note dated February 21, 1946, a copy of which was attached to the plaintiff'scomplaint as Exhibit 'A.' Each mortgage had a copy of the $5,000 note attached. No copy of the $12,000 note was attached to either. After the pleadings were made up, a pre-trial stipulation was entered into by the parties agreeing to all the facts save one. The one remaining fact left open for trial by the stipulation is contained in paragraph 6 thereof, reading as follows:

'6. The only issue to be determined in this case is whether the promissory note shown as Exhibit 'A' to the complaint is secured by the two real estate mortgages shown as Exhibits 'C' and 'G' thereof.'

When the plaintiff had introduced testimony on the single issue reserved for trial, counsel for defendant Rowe asked leave to amend her answer by adding the following allegations, to-wit:

'That at the time the defendant, Regina Rowe and just before she signed the mortgages represented by Plaintiff's Exhibits 'C' and 'G' she made inquiry of plaintiff's agent as to the risk involved in her behalf and plaintiff's agent undertook to make a disclosure to the effect that the debtor was indebted to plaintiff in the amount of $12,000.00, but failed to further disclose that the debtor had no free assets; That all the assets of the debtor were mortgaged to the creditor; That the $12,000.00 note, in fact, represented a renewal note of past and over-due debts. Wherefore, defendant, Regina Rowe prays that plaintiff's foreclosure suit be dismissed.'

In proposing the amendment counsel stated that upon inquiry of plaintiff's agent as to the risk involved at time of signing the mortgages the latter, although undertaking to do so, had failed to make full disclosure by informing defendant that the partnership had no 'free' assets. The trial judge denied the application to amend, pointing out that such not only was an issue outside the stipulation, but also something which very well might have been ascertainedby deposition or otherwise prior to trial.

Again, and at the conclusion of the trial, counsel for defendant renewed his application to amend the answer and leave so to do was granted by virtue of the following proceedings, to-wit:

'Mr. Chavez: I would like to ask permission of the Court at this time to again offer the amendment to my answer, but before I do so, I would like to settle the law. It isn't only on the basis of the testimony that there is fraud and I want to re-offer my amendment to our answer to conform to the evidence under Rule 15b. I believe under the rule, such procedure is permissable.

'The Court: The Court is fully cognizant of that. The Court has based its ruling on the stipulation. In thinking it over, I believe the Court will reverse itself insofar as refusing to permit the amendment and allow the amendment. However, I...