Glover v. Innis

• Decision Date: 03 March 2011
• Docket Number: No. 10CA0139.,10CA0139.
• Citation: 74 UCC Rep.Serv.2d 181,252 P.3d 1204
• Parties: Alan GLOVER, personal representative of the Estate of Juel Richard Noren, a/k/a Juel R. Noren, deceased, Plaintiff–Appellee,v.Dain D. INNIS, Norma J. Innis, and Richard L. Innis, Defendants–Appellants.
• Court: Colorado Court of Appeals

252 P.3d 1204

74 UCC Rep.Serv.2d 181

Alan GLOVER, personal representative of the Estate of Juel Richard Noren, a/k/a Juel R. Noren, deceased, Plaintiff–Appellee,

v.Dain D. INNIS, Norma J. Innis, and Richard L. Innis, Defendants–Appellants.

No. 10CA0139.

Colorado Court of Appeals, Div. IV.

March 3, 2011.

Elder & Phillips, P.C., Keith Boughton, Grand Junction, Colorado, for Plaintiff–Appellee.John Dudgeon, Wheat Ridge, Colorado, for Defendants–Appellants.Opinion by Judge MILLER.

Defendants, Norma J. Innis, Richard L. Innis, and their son Dain D. Innis, appeal the trial court's summary judgment in favor of plaintiff, the personal representative of the Estate of Juel Richard Noren. We reverse and remand for further proceedings.

I. Background

Defendants and Mr. Noren (decedent), with his wife who predeceased him, owned adjacent residential property in Mesa County. The Norens divided their time between Colorado and Carson City, Nevada. Defendants contend that they and the Norens became friends and that defendants looked after the Norens' property while they were in Nevada. Sometime after the death of Mrs. Noren, decedent and defendants engaged in discussions that resulted in defendants arranging for an attorney to draft a promissory note payable by defendants to decedent in the principal amount of $250,000, together with a related agreement (agreement) and warranty deed conveying decedent's Mesa County property (property). The draft agreement recited that decedent had sold his property to himself and Dain and Norma Innis as joint tenants by the warranty deed in consideration for, among other things, the promissory note.

Defendants signed the note and agreement in November 2003 and sent them with the unsigned warranty deed to decedent in Nevada, but the parties did nothing further with the documents until one and one-half years later. At that time, decedent signed the agreement and warranty deed. He apparently retained the note, which defendants had previously sent him, because it was found among his effects at his Nevada home after he died.

The terms of the note required defendants to pay $250,000 in monthly installments commencing on January 1, 2007. Decedent died and this action was filed before any payments were due, and defendants never made any payments on the note. Defendants maintain that decedent never accepted the note, refused to accept and waived any payment under it, and repeatedly expressed his intent to give them the property.

Plaintiff filed this action, initially claiming, among other things, that defendants had obtained the property by fraud, undue influence, and civil theft, that the conveyance of the property to defendants was illusory, and that the entire transaction should be declared void and rescinded. Defendants pled several defenses, including waiver. Plaintiff moved for summary judgment on the illusory transaction theory. The trial court denied the motion, holding that the contract was not illusory because defendants promised to execute the note and deposit money in a bank account for maintenance of the property.

Plaintiff then moved for partial summary judgment on the note. Defendants opposed the motion, relying on their deposition testimony regarding conversations and dealings with decedent, as well as an affidavit of Harold Richardson, decedent's Carson City neighbor and co-guardian. The affidavit related statements made by decedent concerning his arrangements for the property and also stated that the affiant had seen a document signed by the Norens indicating that after their deaths the property would be given to defendants. The trial court declined to consider defendants' evidence, granted the motion, and entered judgment on the note with interest.

Shortly thereafter, the trial court conducted a bench trial on plaintiff's only remaining claims for breach of a provision in the agreement establishing the bank account and for an accounting. (Plaintiff withdrew all other unresolved claims.) The trial court found in defendants' favor and plaintiff has not appealed that order.

Defendants moved for post-trial relief, seeking to reduce the amount of prejudgment interest awarded under the promissory note. The trial court denied their motion.

II. Analysis

We review a trial court's entry of summary judgment de novo. Newflower Market, Inc. v. Cook, 229 P.3d 1058, 1061 (Colo.App.2010). Summary judgment is appropriate when no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. C.R.C.P. 56(c); G & A Land, LLC v. City of Brighton, 233 P.3d 701, 703 (Colo.App.2010). The nonmoving party is entitled to the benefit of all favorable inferences that may reasonably be drawn from the facts, and all doubts must be resolved against the moving party. Newflower Market, 229 P.3d at 1061.

A. Renunciation

Defendants contend that the trial court erred by characterizing their waiver defense as a renunciation defense under section 4–3–604, C.R.S.2010, and then rejecting it. We agree.

In order to resolve this issue, we must construe section 4–3–604 and related provisions of the Uniform Commercial Code, sections 4–1–101 through 4–9.7–109, C.R.S.2010(UCC). We review matters of statutory interpretation de novo. Richmond American Homes of Colo., Inc. v. Steel Floors, LLC, 187 P.3d 1199, 1204 (Colo.App.2008). When interpreting a statute, we must effectuate the intent and purpose of the General Assembly. Id. When possible, we discern the intent of the General Assembly from the plain and ordinary meaning of the statutory language. Id. We avoid interpretations that defeat the obvious legislative intent. People v. Dist. Court, 713 P.2d 918, 921 (Colo.1986). When possible, we interpret a statute to give consistent, harmonious, and sensible effect to all of its parts. Id. “Statutes must be construed to further the intent of the legislature as evidenced by an entire statutory scheme.” Bynum v. Kautzky, 784 P.2d 735, 737 (Colo.1989).

Here, defendants did not plead renunciation as a defense, but did plead waiver. The trial court, however, observed that “[w]hat Defendants call a waiver is more commonly called a renunciation.” It then held that defendants had offered no evidence that decedent had renounced his rights under the note in the manner required by section 4–3–604, and the court accordingly granted plaintiff's motion for partial summary judgment.

Under section 4–3–604(a) an obligee may discharge the obligation of another person to pay an instrument by (1) an intentional voluntary act, such as surrender, cancellation, or destruction of an instrument, or (2) a signed writing renouncing his or her rights under the instrument. See Ebrahimi v. E.F. Hutton & Co., 794 P.2d 1015, 1019 (Colo.App.1989) (a renunciation of rights under a negotiable instrument must be in writing if the instrument itself is not surrendered); Metro Nat'l Bank v. Roe, 675 P.2d 331, 332 (Colo.App.1983). Because decedent was in possession of the uncancelled note upon his death and defendants produced no signed writing renouncing decedent's rights under the note, we agree with the trial court that decedent did not renounce his rights to collect under the note for purposes of section 4–3–604.

However, renunciation under section 4–3–604 is not the exclusive means of discharging an obligation under a note. See 2 James J. White & Robert S. Summers, Uniform Commercial Code § 16–12, at 144 (5th ed. 2008) (“The events that discharge one's liability on a negotiable instrument are many.”). Section 4–1–103(b), C.R.S.2010, provides that principles of law and equity supplement the UCC unless explicitly displaced by a particular UCC provision. More specifically, section 4–3–601(a), C.R.S.2010, makes clear that the obligation of a party to pay under an instrument can be discharged either as stated in the UCC or by any act or agreement that would discharge an obligation to pay under a simple contract. See also Clovis Nat'l Bank v. Thomas, 77 N.M. 554, 425 P.2d 726, 732 (1967) (citing New Mexico's UCC counterpart to section 1–1–103, the court held that because there is “no particular provision of the code which displaces the law of waiver, ... the code provisions are supplemented thereby”); McGlothin v. Huffman, 94 Ohio App.3d 240, 640 N.E.2d 598, 600 (1994) (the Ohio UCC renunciation provision is not the sole method by which an obligation under a promissory note can be discharged); Burton v. Nat'l Bank of Commerce of Dallas, 679 S.W.2d 115, 118 (Tex.App.1984) (the renunciation statute “is permissive rather than mandatory,” and therefore is not the exclusive method by which a promissory note can be released); see also § 4–1–306, C.R.S.2010 (a claim arising out of an alleged breach may be discharged without consideration in an authenticated record); § 4–3–117, C.R.S.2010 (providing for modification, supplementation, or nullification of obligation to pay an instrument by separate agreement).¹

Furthermore, the renunciation statute applies only if the defendant asserts renunciation as a defense. Ebrahimi, 794 P.2d at 1019 (the statute does not apply when a party asserts that the right to receive interest under a promissory note was waived); see also Adams v. White, 173 Colo. 51, 54–55, 476 P.2d 36, 37–38 (1970) (construing comparable provisions in predecessor statute).

We are aware that another division of this court, in an opinion predating Ebrahimi, declined to consider testimony concerning an oral release from liability under a note, holding that under section 4–3–604 (which was then codified as 4–3–605), “renunciation of rights in a negotiable instrument must be either in writing or by the delivery or surrender of the instrument to the party to be discharged.” Metro Bank, 675 P.2d at 332. The opinion, however, does not consider the effect of sections 4–1–103(b) and 4–3–601(a). Moreover, the opinion is silent on whether the defendant pled waiver as a defense. We therefore decline to follow the opinion...