First Nat. Bank of Santa Fe v. Wood

• Decision Date: 12 April 1974
• Docket Number: No. 9742,9742
• Citation: 86 N.M. 165,1974 NMSC 31,521 P.2d 127
• Parties: The FIRST NATIONAL BANK OF SANTA FE, Plaintiff-Appellant and Cross-Appellant, v. Paul D. WOOD, Defendant-Appellant and Cross-Appellee.
• Court: New Mexico Supreme Court

Page 127

521 P.2d 127

86 N.M. 165

The FIRST NATIONAL BANK OF SANTA FE, Plaintiff-Appellant and Cross-Appellant, v. Paul D. WOOD, Defendant-Appellant and Cross-Appellee.

No. 9742.

Supreme Court of New Mexico.

April 12, 1974.

[86 NM 165] Gallagher & Ruud, Albuquerque, for appellant.

White, Koch, Kelly & McCarthy, Santa Fe, for appellee.

OPINION

MONTOYA, Justice.

This is an appeal from a judgment awarding plaintiff-appellee First National Bank of Santa Fe (hereafter Bank) the amount of $30,000 plus interest and attorney's fees on its claim based on two $15,000 promissory notes, a continuing guarantee, and a $30,000 note which was an extension of the two $15,000 notes. The defendant-appellant Paul D. Wood (hereafter Wood) appeals. The Bank cross-appeals from the portion of the judgment denying certain cost items.

The facts as found by the trial court are essentially as follows. On July 28, or 29, 1969, Wood applied to the Bank for a line of credit to permit borrowings by Wood up to a maximum of $30,000. The Bank agreed to establish the line of credit and to lend Wood up to $30,000 with interest. While these monies were to be loaned to Wood, it was contemplated by Wood, and made known to the Bank by Wood, that the proceeds of the loans were to be actually used by other parties or entities. The monies, when loaned by the Bank, were to be deposited in an account at the Bank designated 'J. B. Kitten, Trust Account.' One of the conditions set by the Bank for establishment of the line of credit was that Wood and his wife should sign and deliver to the Bank a contract called 'Continuing Guaranty of Promissory Note.' Wood did in fact affix his signature on the first signature line of the document, but failed to have his wife sign. Instead, Wood placed the document in the possession of one George Mellen and/or J. B. Kitten. The purported signature of Mrs. Paul D. Wood was written below the genuine signature of Paul D. Wood by some third person. Before August 4, 1969, the document was sent or delivered to the Bank. The Bank accepted and relied upon the Continuing Guaranty submitted by Wood and upon the authenticity of the signature thereon. The Bank was unaware of the lack of the true signature of Mrs. Paul D. Wood on the document until after the filing of the answer to the original complaint in this matter. On July 30, 1969, after approval of the line of credit and after Wood had promised to furnish the Continuing Guaranty signed by him and his wife, Wood signed the promissory note dated July 30, 1969, in the face amount of $15,000. All typing on this note was placed thereon before it was presented to Wood for signature. The Bank, after Wood's execution and delivery of the July 30, 1969, note, promptly made the appropriate $15,000 credit of the J. B. Kitten Trust Account as directed by Wood. During that some day the Bank, at Wood's request, furnished Wood with five or six printed promissory note forms used by the Bank. After leaving the Bank's offices, Wood signed all of the printed from notes payable to the Bank and authorized Kitten to use the signed note forms in connection with Wood's line of credit at the Bank. Wood's signatures on these notes were all on the first or top signature line, and without any indication whatsoever that he was signing in a representative capacity. On August 5, 1969, Kitten went of the Bank with a note signed by Wood, which had already been completed in the form it finally appeared, or which was completed at the Bank pursuant to Kitten's instructions. This note, dated August 5, 1969, in the face amount of $15,000 was taken in good faith by the Bank and pursuant to instructions given by Wood to the Bank on July 30, 1969. The Bank promptly credited the full amount to the J. B. Kitten Trust Account, pursuant to directions contained on the note. On or about December 2, 1969, Kitten brought to the Bank a promissory note bearing Wood's authentic signature. The blanks in the note form had either been completed by Wood, or by Kitten pursuant to authority from Wood, or were filled in at the Bank pursuant to Kitten's instructions within his authority from Wood. This note was dated November 11, 1969, in the amount of $30,000 bearing interest at 9 1/2% per annum, payable 90 days after its date. At that time the interest was paid on the July 30 and August 5, 1969, notes up to November 11, 1969. Acting in good faith reliance upon Kitten's authority from Wood...