Investment Co. of the Southwest v. Reese

Decision Date21 April 1994
Docket NumberNo. 21213,21213
Citation117 N.M. 655,875 P.2d 1086,1994 NMSC 51
PartiesINVESTMENT CO. OF THE SOUTHWEST, Plaintiff-Appellant, v. Harold K. REESE, Jr., a/k/a Hal Reese, d/b/a Reese Prescription Drug, Brenda Y. Reese, his wife, and Johnny Cope, Defendants-Appellees.
CourtNew Mexico Supreme Court

FROST, Justice.

The issue before us is one of first impression in New Mexico: Whether the federal statute of limitations contained in 12 U.S.C. Sec. 1821(d)(14) (Supp. IV 1992) of the United States Banking Code applies to a successor in interest to the Federal Deposit Insurance Corporation (FDIC). The district court held that the successor in interest could not take advantage of the federal limitations period and granted summary judgment dismissing Plaintiff's complaint. We reach a contrary conclusion and accordingly reverse.


On June 3, 1983, Defendant-Appellees Harold Reese and Johnny Cope (collectively "Reese") executed a promissory note (the Cope Note) for $28,152.77, payable to the First City National Bank of Lea County, New Mexico.1 Regular payments were made on the note until June 15, 1985, the due date of the final balloon payment. For the purpose of bringing an action to collect on the note under the six-year New Mexico statute of limitations, this was the date the loan went into default. NMSA 1978, Secs. 37-1-1, 37-1-3(A) (Repl.Pamp.1990).

Two and a half months later, on August 30, 1985, First City National Bank was declared insolvent. The FDIC was appointed receiver of the bank and took possession of the Cope Note. This date marked the beginning of the six-year federal statute of limitations during which the FDIC could sue for repayment of the note under Sec. 1821(d)(14).

No further payments were made on the Cope Note for more than five years.2 Then, on April 26, 1991, the FDIC assigned all its right, title, and interest in the Cope Note in a bulk sale along with fifty-two other distressed commercial loans to G.A. Financial Management (G.A. Financial), a private corporation.

Within a few days, on May 3, 1991, G.A. Financial assigned the Cope Note to Plaintiff-Appellant Investment Company of the Southwest, Inc. (Investment) as part of a bulk sale of twenty-eight individually identified notes.

June 15, 1991, almost a month and a half later, marked six years from date the Cope Note went into default, thus ending--barring any defenses--the enforcement period allotted by the New Mexico statute of limitations.

Investment made several attempts to negotiate payments from Reese. On August 29, 1991, one day before the federal statute of limitations under Sec. 1821(d)(14) expired, Investment filed a complaint in the District Court of Bernalillo County to collect on the Cope Note. The court rendered summary judgment for Reese, explaining in a written decision issued February 1, 1993, that the six-year federal statute of limitations did not apply to a successor in interest to the FDIC.


The relevant statute is from the federal Banking Code:

(14) Statute of limitations for actions brought by conservator or receiver

(A) In general

Notwithstanding any provision of any contract, the applicable statute of limitations with regard to any action brought by the Corporation as conservator or receiver shall be--

(i) in the case of any contract claim, the longer of--

(I) the 6-year period beginning on the date the claim accrues;


(II) the period applicable under State law....
(B) Determination of the date on which a claim accrues

For purposes of subparagraph (A), the date on which the statute of limitation begins to run on any claim described in such subparagraph shall be the later of--

(i) the date of the appointment of the Corporation as conservator or receiver; or

(ii) the date on which the cause of action accrues.

12 U.S.C. Sec. 1821(d)(14).

Investment argues that the six-year statute of limitations began when the FDIC became receiver for the Cope Note, and that this is supported by the clear language of the statute, Sec. 1821(d)(14)(B)(i). The dispute centers around whether Investment, as a successor in interest to the FDIC, is also a successor to the FDIC's statute of limitations. If Investment can succeed to the statute of limitations, then it timely filed this action one day before the end of the six-year limitations period.

The parties raise a number of issues concerning the applicability of the New Mexico statute of limitations for filing claims on promissory notes.3 Because we conclude that the benefit of the federal statute of limitations was transferred to Investment as a successor in interest, we need not discuss the state limitations issues. The exclusion of these state-related issues means there are no questions of material fact. The sole question is whether Sec. 1821(d)(14) permits the limitations period to run against Investment as it did against the FDIC. Only the conclusion of law is challenged, so the standard of review is whether the district court correctly applied the law to the facts. Farmers, Inc. v. Dal Mach. & Fabricating, Inc., 111 N.M. 6, 8, 800 P.2d 1063, 1065 (1990). We hold that the statute in question was not correctly applied to the undisputed facts.


Citing Federal Debt Management, Inc. v. Weatherly, 842 S.W.2d 774 (Tex.Ct.App.1992), rev'd sub nom. Jackson v. Thweatt, Nos. D-3057 & D-3437, 1994 WL 70405 (Tex. filed Mar. 9, 1994), and Tivoli Ventures, Inc. v. Tallman, 852 P.2d 1310 (Colo.Ct.App.1992) (Smith, J., specially concurring), rev'd sub nom. Tivoli Ventures, Inc. v. Bumann, 870 P.2d 1244 (Colo.1994), Reese argues that there is nothing in the express language of Sec. 1821(d)(14) to suggest that anyone other than the FDIC is entitled to the six-year federal statute of limitations. He points out that the section heading--"Statute of limitations for actions brought by conservator or receiver"--refers only to the FDIC in its capacity as conservator or receiver. Sec. 1821(d)(14). It makes no mention of any subsequent holders, assigns, transferees, private parties or anyone else.

New Mexico courts as a matter of policy seek to adhere to the plain meaning of statutes where the language is unambiguous. V.P. Clarence Co. v. Colgate, 115 N.M. 471, 473, 853 P.2d 722, 724 (1993); State v. Jonathan M., 109 N.M. 789, 790, 791 P.2d 64, 65 (1990). We look first to the legislation itself when attempting to ascertain legislative intent. United States Brewer's Ass'n v. Director of N.M. Dep't of Alcoholic Beverage Control, 100 N.M. 216, 219, 668 P.2d 1093, 1096 (1983), appeal dismissed, 465 U.S. 1093, 104 S.Ct. 1581, 80 L.Ed.2d 115 (1984). But when the literal wording of the language runs counter to the apparent intent of the statute, or when it creates consequences that the legislature could not have desired, Incorporated County v. Johnson, 108 N.M. 633, 634, 776 P.2d 1252, 1253 (1989); State v. Herrera, 86 N.M. 224, 225-26, 522 P.2d 76, 77-78 (1974); or when the literal meaning leads to conclusions that are unjust or nonsensical, Trujillo v. Romero, 82 N.M. 301, 305, 481 P.2d 89, 93 (1971); State v. Nance, 77 N.M. 39, 46, 419 P.2d 242, 247 (1966), cert. denied, 386 U.S. 1039, 87 S.Ct. 1495, 18 L.Ed.2d 605 (1967)--then the Court must look beyond the four corners of the statute.4 The court's task is to acknowledge the well-reasoned views of other courts and to compare the law with other laws that have similar ramifications. The court should also read the statute in light of the common law, examine the intentions of congress in passing the law, and place the law in the context of relevant public policies. We think that federal precedent, analogous laws, relevant common law principles, congressional intent, and policy concerns justify the conclusion that the statute of limitations in Sec. 1821(d)(14) is applicable to a successor in interest to the FDIC. We now address these considerations.


We have discovered, to date, at least twenty opinions, published and unpublished, that discuss whether the benefit of the applicable federal statute of limitations can be transferred from the FDIC to a private successor in interest. All federal and state courts have held that a successor in interest to the FDIC enjoys the benefits of the six-year statute of limitations.5 These include significant authority dealing with a different federal limitations statute, 28 U.S.C. Sec. 2415(a) (1988), which also runs after six years. Four of the five cases interpreting 2415(a) have held that this statute of limitations applies to a successor in interest. The most important of these cases is the recent opinion of the Fifth Circuit Court of Appeals, FDIC v. Bledsoe, 989 F.2d 805 (5th Cir.1993).6 Section 2415(a) is a general limitations statute which applies to many federal agencies. Section 1821(d)(14) is a more recent codification, which specifically applies the six-year limitations statute to the FDIC. Because Bledsoe and the other cases deal with an earlier incarnation of the statute we consider, they offer important guidance on the proper interpretation of Sec. 1821(d)(14). Bledsoe specifically discussed both statutes and concluded that, under either one, the transfer of the limitations period was the same. 989 F.2d at 811. We will compare and contrast these two statutes in greater detail below.

Only four state court decisions have held that the federal limitations period cannot be transferred to a private party by the FDIC.7 Notably, all four of these cases have been reversed since Reese filed his appeal. The most prominent of these cases, Weatherly, 842 S.W.2d at 774, was reversed on this issue by the Texas Supreme Court. Jackson v. Thweatt, Nos. D-3057 & D-3437, 1994 WL 70405 (Tex. filed Mar. 9, 1994) [hereinafter Weatherly II ]. The...

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