Fuqua v. Trego

Decision Date14 January 1943
Docket NumberNo. 4737.,4737.
Citation47 N.M. 34,133 P.2d 344
PartiesFUQUA et al.v.TREGO et al.
CourtNew Mexico Supreme Court


Appeal from District Court, Union County; David Chavez, Jr., Judge.

Action by J. L. Fuqua, Jr., and others against Wilbur L. Trego and another to recover on a note, for appointment of a receiver to foreclose a purchase money lien, and for other relief, wherein Rhea R. Wanser intervened seeking to recover on a note and to enforce a lien against the property involved, to which petition of intervention the plaintiffs and J. H. Rankin the receiver filed a demurrer. From an order sustaining the demurrer, the intervener appeals.

Reversed with directions.

The appointment of receiver is in nature of an “equitable execution” whereby court may reach only actual interests of debtor in property.

Fred C. Stringfellow and John B. Tittmann, both of Raton, for intervener-appellant.

O. P. Easterwood, of Clayton, for J. H. Rankin, receiver-appellee.

MABRY, Justice.

Defendant, the City Drug Store of Clayton, New Mexico, operating as a partnership in which plaintiffs-appellees, Fuqua, Murphy and Trego, had an interest, became insolvent and upon petition of the said owners a receiver was appointed by the District Court of Union county on July 14, 1941. Thereafter under a second amended complaint filed on behalf of the said Fuqua and Murphy and against the said Wilbur Trego and Carmyne Trego, the plaintiffs under said amended complaint, claimed a separate indebtedness of $1,500 owing to each of the two from the said defendants, this being on account of a promissory note alleged to represent the purchase price of the stock, furniture, fixtures and business of the said drug store. The said plaintiffs likewise claimed a lien against any and all property of the said Wilbur Trego used in the operation of the said drug store. This second amended complaint prayed judgment against defendants for the amount alleged due upon the said note, for the appointment of a receiver, the foreclosure of the purchase money lien, the sale of the property to satisfy the lien, etc.

Intervener-appellant, Rhea R. Wanser, thereafter filed herein her petition in intervention purporting to set up three causes of action hereinafter to be more specifically referred to, and to this petition in intervention the receiver, one J. H. Rankin, and likewise plaintiffs, demurred. The demurrer was sustained, generally, and intervener Wanser appeals. For convenience the parties, appellees and appellant, will, at times, be hereinafter referred to as plaintiffs and intervener, respectively.

Intervener, in her amended petition in intervention to which the demurrer was directed, alleged that she had originally sold the furniture and fixtures used in said drug store to one Murphy, one of the plaintiffs, and one Markham, and had taken their promissory note upon which there was a balance due on the purchase price of said furniture and fixtures in the sum of $2,100; that at the time of said sale the said Murphy and Markham executed contracts agreeing to give said intervener a good and valid lien upon the said furniture and fixtures to secure the said balance upon the purchase price; that a note and chattel mortgage were so executed in behalf of intervener, but due to the “gross negligence or intentional fraud” of the said Murphy and Markham they failed to acknowledge said chattel mortgage so as to entitle it to be filed of record. Intervener alleges other facts and circumstances in support of her alleged reliance upon the said Markham and as an excuse and justification for not herself taking possession of and examining the said mortgage to ascertain whether it had been fully and completely executed in conformance with the said agreement by which she was so assured of a valid mortgage lien upon the chattels in question. Intervener, because of the said circumstances, claims an equitable lien upon the said chattels under the agreement to give such a lien, upon the theory that equity considers that done which ought to be done. Wooley et al v. Shell Petroleum Corp. et al., 39 N.M. 256, 45 P.2d 927; Mutual Life Ins. Co. of New York v. Owen et al., 39 N.M. 421, 48 P.2d 1024. Is it fatal to intervener's lien, under the circumstances here relied upon, that the chattel mortgage itself failed to create the lien which all parties understood and agreed was to result? We think not. Under the facts pleaded does an equitable lien exist which can be enforced nevertheless? We think so. Intervener questions the contention of appellees, and the legal conclusion arrived at by the trial court, to the effect that the contract providing for such a lien became merged in the mortgage thereafter given, notwithstanding it was, of itself, ineffectual to create the lien, since the receiver so taking without notice of her claim of lien held free of such claim.

The petition further alleges that after the said purchase from intervener the said Markham sold his interest in the drug store and business to plaintiff Fuqua, and that the said Fuqua, for a separate and independent consideration, then and there assumed and agreed to pay this indebtedness owing by Markham and Murphy to intervener Wanser, and that he has now likewise become obligated to pay said indebtedness; that subsequent to the last aforementioned transaction, the said Wilbur Trego purchased the said drug store from plaintiffs Fuqua and Murphy, and as a part of the consideration therefor himself agreed to assume and pay all indebtedness of said business including the said $2,100 due intervener; that thus both the said Fuqua and Trego came into the picture as guarantors of the said indebtedness owing intervener, and, for a consideration, themselves assumed and agreed to pay it.

For her second cause of action and by her second count, intervener alleges that the said Murphy is indebted to her in the sum of $2,399.75, with interest, on account of a judgment theretofore recovered by her against him in another action in the District Court of Union county; and she asks that anything found owing to the said Murphy in the suit herein be impounded by the court and held by the receiver for the purpose of satisfying such judgment. Insolvency on the part of Murphy and other necessary facts were alleged as a basis for the alleged right to so tie up and impound, for her benefit, anything found owing the said Murphy.

In the third count of her petition intervener alleges again that she sold the furniture and fixtures used in the said drug store to the said Markham and Murphy and that there is a balance due on the purchase price in the sum of $2,100 as evidenced by a promissory note; that plaintiff Fuqua thereafter bought the interest of the said Markham, and as a part of the consideration therefor, assumed and agreed to pay all outstanding indebtedness owing by said business including that owing to intervener.

Intervener further shows that she thereafter, but prior to filing the within suit, filed suit upon such note against the said Fuqua in a separate action in the District Court of Union county, to which was interposed to her complaint, and overruled by the court, a demurrer; and that the said Fuqua appealed from the order so overruling, to this court; that said cause is still pending and undecided, for which reason intervener has not been able to prosecute her said suit to judgment and has thereby exhausted her present and immediate remedy at law against the said Fuqua in that particular suit; that the said Fuqua is wholly insolvent excepting as to any interest in the drug store property, now in the hands of a receiver, that may be found owing to him at the conclusion of the within suit.

The demurrer was directed separately to each of the three counts of the petition. Numerous objections are urged to the petition. Although the demurrer contains numerous separate paragraphs, with some of these being further divided into sub-paragraphs, as we understand it, the objections sought to be raised to the petition are substantially as follows: (a) that the matters pleaded and relied upon in said count have heretofore been adjudicated by the court in another action; (b) that the transactions so set out, and as they relate to the purchase and sale as between the various parties, plaintiffs and defendant, violate the New Mexico Bulk Sales law, which would deny intervener her remedy; (c) that the execution of the chattel mortgage, incomplete and ineffectual though it be to create a lien because not acknowledged, having absorbed by merger the prior contract between the parties concerned to give such a mortgage lien, no such lien can now be relied upon; (d) that intervener has elected her remedy in a prior action and has proceeded on the note against Murphy, omitting to ask for the foreclosure of any equitable lien created by the contract executed prior to the execution and delivery of the said chattel mortgage; (e) that there is no privity of contract between the said intervener on the one side and either the said Fuqua or Trego on the other, and the petition, therefore, does not state a cause of action.

[1] There is no merit to any of the points urged by plaintiffs' demurrer. The intervener alleges she is the owner of a note executed by Murphy upon which the sum of $2,100, with interest, is unpaid, and that plaintiffs Fuqua...

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