First Nat. Bank of Albuquerque v. Energy Equities Inc., 2769

• Citation: 569 P.2d 421,91 N.M. 11,1977 NMCA 98
• Decision Date: 23 August 1977
• Docket Number: No. 2769,2769
• Parties: , 22 UCC Rep.Serv. 716 FIRST NATIONAL BANK IN ALBUQUERQUE, Plaintiff-Appellee and Cross-Appellant, v. ENERGY EQUITIES INCORPORATED, formerly Greater Southwest Corporation, Bernard C. Luce, Jr., D. W. Falls, James A. McKinnon, G. R. McNary, Estate of Henry S. Birdseye, and Geomet, Inc., Defendants-Appellants and Cross-Appellees.
• Court: Court of Appeals of New Mexico

Page 421

569 P.2d 421

91 N.M. 11, 22 UCC Rep.Serv. 716

FIRST NATIONAL BANK IN ALBUQUERQUE, Plaintiff-Appellee and Cross-Appellant, v. ENERGY EQUITIES INCORPORATED, formerly Greater Southwest Corporation, Bernard C. Luce, Jr., D. W. Falls, James A McKinnon, G. R. McNary, Estate of Henry S. Birdseye, and Geomet, Inc., Defendants-Appellants and Cross-Appellees.

No. 2769.

Court of Appeals of New Mexico.

Aug. 23, 1977.

[91 NM 13] Martin E. Threet, Threet, Threet, Glass, King & Maxwell, Albuquerque, for appellants Falls & McKinnon.

Thomas L. Bonham, Albuquerque, for appellant Geomet, Inc.

Quincy D. Adams, Adams & Foley, Albuquerque, for appellant G. R. McNary.

William A. Sloan, Robert M. St. John, and Victor R. Marshall, Rodey, Dickason, Sloan, Akin & Robb, P. A., Albuquerque, for appellee.

OPINION

LOPEZ, Judge.

The First National Bank in Albuquerque (hereinafter referred to as the bank) brought an action in the district court of Bernalillo County to recover on a promissory note and various guaranties. The note was executed by Energy Equities, Incorporated (hereinafter referred to as Energy Equities), formerly Greater Southwest Corporation, and guaranteed by Barnard C. Luce, Jr., James A. McKinnon, G. R. McNary, D. W. Falls, Henry S. Birdseye, and Geomet, Inc. (hereinafter referred to as the guarantors). Judgment was entered against Energy Equities and Barnard C. Luce by default. Some of the remaining guarantors cross-claimed against each other and counterclaimed against the bank. By agreement of counsel, the case was submitted to the court without a jury upon documentary evidence, depositions and exhibits. The court entered judgment against the guarantors for $100,000.00, interest at seven and one-half percent, plus attorneys' fees and court costs. On the cross-claims, the court granted each guarantor a right of contribution against the other guarantors along with a right of indemnity against the primary debtor, Energy Equities. The defendants' counterclaims against the bank were dismissed. The court retained jurisdiction for the purpose of determining cross-claims of Falls, McKinnon, McNary, and Geomet for indemnity and damages, on the grounds of fraud, against the defendant Luce.

The guarantors, with the exception of Energy Equities, Luce, and the estate of now deceased Birdseye, have appealed the judgment in favor of the bank. The bank has cross-appealed the trial court's judgment as to the rate of interest which was granted.

The issues on appeal are: (1) the liability of the guarantors to the bank; (2) the liability of the guarantors to each other; and (3) whether the bank is entitled to ten percent interest on the unpaid balance of the note.

Facts

On January 7, 1971, Energy Equities executed a promissory note for $100,000.00 plus interest at eight percent, payable to the bank on May 7, 1971. On the same day the defendant-guarantors, Luce, Falls, McKinnon, McNary, and Birdseye executed a "Continuing Guaranty" covering the credit extended to Energy Equities and any renewals thereof. In a typewritten addendum those guarantors agreed "it is expressly understood that this guaranty is to apply to renewals of the original note." In Section 4 of the continuing guaranty those same guarantors authorized the bank to change or renew the original credit:

"(4) Guarantors authorize Bank, without notice or demand and without affecting their liability hereunder, from time to time to (a) renew, compromise, extend, accelerate or otherwise change the time for payment of, or otherwise change the terms of the indebtedness or any part thereof, including increase or decrease of the rate of interest thereon . . .."

The original note was not paid when due but was renewed several times by the bank. The last renewal note executed by Energy Equities is dated June 5, 1972, for $100,000.00 plus interest at seven and one-half percent payable December 4, 1972. In the event of default the note provided for interest at the rate of ten percent on the unpaid balance. The note also provided for payment of all costs of collection including reasonable attorneys' fees not to be less than ten percent of the unpaid amount of the note at the time of enforcement.

On May 4, 1972, Geomet executed a "Continuing Guaranty" of Energy Equities' indebtedness to the bank, presumably to include the renewal note dated June 5, 1972, because the form which Geomet signed was identical to the form signed by the previous guarantors; i. e., it contained a Section 4 clause expressly covering renewals of the original credit. The continuing guaranty which Geomet signed did not contain the typewritten addendum expressly covering renewals of the original note. The district court determined that Geomet was acting as another guarantor, in addition to the other guarantors, not as a substitute for any guarantor.

The renewal note was not paid when due on December 4, 1972, and was in default at that time although interest accrued up to that date was paid.

We are going to discuss the appeals in three groups: McKinnon and Falls, McNary, and Geomet. We will discuss McKinnon and Falls' points in order.

(1) McKinnon-Falls Appeal

Point I

In their first point McKinnon and Falls declare the standard of review to be applied by an appellate court. Because the case was tried on documentary evidence, McKinnon and Falls ask this Court to make independent findings of fact. The standard of review in cases like this was carefully set forth by the Supreme Court of New Mexico in Valdez v. Salazar, 45 N.M. 1, 107 P.2d 862 (1940) where the Court said:

"From a consideration of the authorities cited, we deduce the following: Where all or substantially all of the evidence on a material issue is documentary or by deposition, the Supreme Court will examine and weigh it, and will review the record, giving some weight to the findings of the trial judge on such issue, and will not disturb the same upon conflicting evidence unless such findings are manifestly wrong or clearly opposed to the evidence."

In Kosmicki v. Aspen Drilling Co., 76 N.M. 234, 414 P.2d 214 (1966) the Supreme Court reaffirmed the review procedure outlined in Valdez. The Court said:

"We have never said, and we never intended to suggest, that the review in this court in cases where the proof was all documentary should be in the nature of a de novo trial, nor have we ever intimated that the findings of the trial court were to be totally disregarded. . . .

". . .

"It should be amply clear that we have never countenanced a review of documentary evidence to the exclusion of the findings. None of the cases cited above have so indicated. To the contrary, we may only review the documentary evidence to determine whether it supports the findings, and we will not disturb the findings 'unless such findings are manifestly wrong or clearly opposed to the evidence.' Valdez v. Salazar, supra."

We follow this well-established rule and give some weight to the district court's findings, Martinez v. Universal Constructors, Inc., 83 N.M. 283, 491 P.2d 171 (Ct.App.1971), even though we are not bound by the findings. House of Carpets, Inc. v. Mortgage Investment Co., 85 N.M. 560, 514 P.2d 611 (1973); State ex rel. State Highway Commission v. Trujillo, 82 N.M. 694, 487 P.2d 122 (1971).

Point II

McKinnon and Falls contend that the bank released the guarantors, or rather the court erred by adopting a finding which determined that no agreement was ever reached by the bank to release McKinnon and Falls. Finding of fact no. 9 reads:

"9. At various times some of the defendants discussed with FNBIA (First National Bank in Albuquerque) the possibility that FNBIA would release one or more of the defendants. However, no binding agreement or meeting of the minds was ever reached by FNBIA and the defendants, and FNBIA never released or contracted to release any of the defendants."

We have examined the evidence and we are unable to find any definite agreement that McKinnon and Falls were to be released. There is evidence that McKinnon and Falls attempted to be relieved of the guaranty agreement, but there is no evidence that an agreement was made.

The trial court found no binding agreement. We cannot disturb such a finding unless it is manifestly wrong because there is substantial evidence to the contrary or the finding is not supported by substantial evidence. The challenged finding is, however, supported by substantial evidence.

Point III

McKinnon and Falls argue that the court erred in findings nos. 3 and 4 and conclusion of law no. 2. Findings nos. 3 and 4 state:

"3. On or about January 7, 1971, for valuable consideration, defendants Luce, Falls, McKinnon, McNary and Birdseye properly executed and delivered to FNBIA a continuing guaranty as shown in Exhibit B to FNBIA's First Amended Complaint. Those defendants thereby guaranteed repayment of the credit extended by FNBIA to Southwest, (now known as Energy Equities), and any renewals thereof. In Section 4 of the continuing guaranty those defendants authorized FNBIA to change or renew the original credit, and in a typewritten addendum those defendants agreed that 'this guaranty is to apply to renewals of the original note'.

"4. The original note was not paid when due, and was successively renewed by FNBIA, the last renewal note being properly executed and delivered to FNBIA on or about May 4, 1972 by Energy Equities, the successor to Southwest, in the principal amount of $100,000.00 . . .."

Conclusion of law no. 2 reads:

"2. Each of the defendants is jointly and severally liable to FNBIA for the full balance outstanding on the note shown as Exhibit A to plaintiff's First Amended Complaint, in the principal amount of $100,000.00 plus interest thereon at ten percent per annum from December 4, 1972 to date of payment to FNBIA. . . ."

McKinnon and Falls contend that Energy Equities' initial obligation was to be for only one year, and the guarantors were therefore released by the renewals beyond...