Frontier Leasing, Inc. v. C.F.B., Inc.

• Citation: 96 N.M. 491,632 P.2d 726,1981 NMSC 73
• Decision Date: 10 August 1981
• Docket Number: No. 13073,13073
• Parties: FRONTIER LEASING, INC., a New Mexico corporation, and Wayne Lovelady's Frontier Ford Corporation, a New Mexico corporation, Plaintiffs-Appellants, v. C.F.B., INC., a purported South Dakota corporation, Frank Farrar and Francis Graham, Defendants-Appellees.
• Court: Supreme Court of New Mexico

Page 726

632 P.2d 726

96 N.M. 491

FRONTIER LEASING, INC., a New Mexico corporation, and Wayne

Lovelady's Frontier Ford Corporation, a New Mexico

corporation, Plaintiffs-Appellants, v. C.F.B., INC., a purported South Dakota corporation, Frank

Farrar and Francis Graham, Defendants-Appellees.

No. 13073.

Supreme Court of New Mexico.

Aug. 10, 1981.

[96 NM 491] Bruce E. Pasternack, Albuquerque, for plaintiffs-appellants.

Moses, Dunn, Beckley, Espinosa & Tuthill, Victor E. Carlin, Daniel Behles, Albuquerque, for defendants-appellees.

OPINION

RIORDAN, Justice.

Plaintiffs Frontier Leasing, Inc. (Frontier Leasing) and Wayne Lovelady's Frontier Ford Corporation (Frontier Ford) filed an action against defendants Francis Graham, Frank Farrar, and C.F.B., Inc. (C.F.B.) for monies due under certain lease agreements with Frontier Leasing and for amounts due for vehicle parts purchased on an open account with Frontier Ford. The trial court granted summary judgment in favor of defendant Graham on the ground that Graham was not liable individually on the debts. Plaintiffs appeal the court's grant of summary judgment in favor of Graham. We reverse.

Frontier Leasing entered into a series of vehicle leasing agreements with a business entity identified at various times as Royal Crown Bottling Corp., Royal Crown Bottling Co. and Royal Crown Bottling Company of New Mexico (Royal Crown). The first two agreements were made with Royal Crown Bottling Corp. and Royal Crown Bottling Co. respectively and were signed by the general manager in the following manner The third and fourth agreements were made with Royal Crown Bottling Company of New Mexico and were signed by defendant Graham as follows:

On or about August 31, 1979, Royal Crown returned the four vehicles to Frontier Leasing. At the time the vehicles were returned, Royal Crown was in arrears on the monthly lease payments. On or about September 20, 1979, Frontier Leasing notified Farrar and Graham of additional monies due under the termination clause of the leases. Thereafter, suit was filed to recover the monies due under the lease agreements and also to recover amounts due on the open account with Frontier Ford.

Plaintiffs contend that they were dealing with either a partnership or a proprietorship owned by defendants Farrar and Graham and that Farrar and Graham are personally liable on the debts. Graham claims, however, that he was not acting in his individual capacity but as an agent of C.F.B., a South Dakota corporation doing business in New Mexico under the various name derivations of Royal Crown. Plaintiffs claim that they had never heard of C.F.B. until after the leases and accounts were in default. None of the forms of Royal Crown's name are registered with the New Mexico Corporation Commission.

On November 26, 1979, Graham moved for summary judgment on the ground that the liability to Frontier Leasing and Frontier Ford was that of C.F.B. and not his as an individual. On December 11, 1979, C.F.B. filed a voluntary petition in bankruptcy in the United States Bankruptcy Court for the District of New Mexico. Graham states that notice of this filing was entered in the state district court on December 14, 1979. However, this notice was not included in the record on appeal. Graham's motion for summary judgment was heard on January 21, 1980. At that time, the district court was informed that C.F.B. and Farrar intended to remove the case to the federal bankruptcy court. Graham was opposed to its removal. The district court granted Graham's motion for summary judgment and entered an order the same day.

The issues on appeal are:

I. WHETHER THIS COURT HAS JURISDICTION TO CONSIDER THE APPEAL, and

II. WHETHER THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT.

I. Jurisdiction

On January 28, 1980, an application for removal of this cause to the federal bankruptcy court was apparently filed by defendants C.F.B. and Farrar. No copy of the removal application was ever filed in the state district court.

On February 19, 1980, the plaintiffs filed a notice of appeal with respect to the state court's grant of summary judgment. On April 1, 1980, plaintiffs filed a "notice" with the state court which stated that an application for removal had been filed on January 28, 1980, in the United States Bankruptcy Court for the District of New Mexico. A copy of the application for removal was not attached thereto.

Defendant Graham argues that this Court no longer has jurisdiction to hear this appeal since an application for removal was filed in federal bankruptcy court. We do not agree with this contention. Although the application for removal was apparently filed with the bankruptcy court, the defendants failed to follow the necessary procedure to perfect the removal.

Interim Bankruptcy Rule 7004(c) of the Rules of the United States Bankruptcy Court for the District of New Mexico states:

Promptly after the filing of the application and bond, when required, the party filing the removal application shall give written notice thereof...