Joslin v. Gregory

• Citation: 134 N.M. 527,80 P.3d 464
• Decision Date: 21 August 2003
• Docket Number: No. 22,959.,22,959.
• Parties: Dennis JOSLIN, Plaintiff-Appellant, v. Michael L. GREGORY and Mary Diana Gregory, Defendants-Appellees.
• Court: Court of Appeals of New Mexico

80 P.3d 464

134 N.M. 527

Dennis JOSLIN, Plaintiff-Appellant, v. Michael L. GREGORY and Mary Diana Gregory, Defendants-Appellees.

No. 22,959.

Court of Appeals of New Mexico.

August 21, 2003.

Certiorari Denied November 6, 2003.

Jacob D. Caldwell, Stephen Natelson, Natelson Law, Firm Taos, NM, for Appellant.

Michael L. Gregory, Las Vegas, NM, for Appellees.

Certiorari Denied, No. 28,314, November 6, 2003.

OPINION

FRY, Judge.

{1} In this case we consider whether, under NMSA 1978, § 37-1-16 (1957), Defendants Michael L. Gregory and Mary Diana Gregory made "any partial or instalment payment" that revived Plaintiff Dennis Joslin's cause of action on a promissory note so as to remove the bar of the statute of limitations. The trial court granted summary judgment in favor of Defendants, ruling that they had made no payments that revived the cause of action and that the statute of limitations therefore barred Plaintiff's claim. For the reasons that follow, we agree with the trial court that Defendants made no partial payments within the meaning of the revival statute. We therefore affirm.

BACKGROUND

{2} The relevant facts are undisputed. On April 14, 1988, Defendants executed a note (the Gregory note) to First Federal Savings and Loan Association of Las Vegas (the Bank), agreeing to pay $73,725 with 12% interest per year. At approximately the same time, Defendants assigned to the Bank three notes payable to Defendants and secured by mortgages, the installment payments on which were to go toward paying the Gregory note. These three notes were referred to as the Campbell note, the Gannon note, and the McKechnie note. Defendants assigned the Campbell note and the McKechnie note to the Bank on April 13, 1988, and assigned the Gannon note to the Bank on May 16, 1988. The Gregory note also provided that the Bank would "renew this loan for subsequent one year intervals on the remaining principal balance due at the rate of interest in effect at the time for loans secured by commercial real estate."

{3} On April 14, 1989, Defendants and the Bank entered into a "Modification/Extension Agreement For Installment Loans" (extension agreement). The extension agreement stated that Defendants' indebtedness on the Gregory note had been reduced, and the parties agreed to continue the terms of the original note with the interest rate remaining at 12%. The extension agreement was to mature on April 14, 1990.

{4} The Bank fell on hard times. On November 16, 1990, the Resolution Trust Corporation (RTC) took over the Bank. Subsequently, the Federal Deposit Insurance Corporation (FDIC) took over as successor-in-interest to the RTC. No modification or extension agreement to the Gregory note occurred after 1989, but payments on the three assigned notes continued to be made as before; that is, the payments on the assigned notes went to the Bank's successors-in-interest despite the absence of an extension agreement. The Campbell note was paid off and released in 1992, and the Gannon note was paid off and released in 1994. In 1995, Plaintiff purchased the Gregory note, and in early 1996, the FDIC assigned both the Gregory and McKechnie notes to Plaintiff, who continued to receive monthly installments on the McKechnie note. On October 29, 1997, the McKechnie note was paid off and released. Plaintiff contends there remains a balance owing on the Gregory note in excess of $25,000 and filed this suit on September 2, 1999, to recover against Defendants.

{5} Both parties moved for summary judgment. Defendants argued that if the Bank and its successors had complied with the Gregory note's requirement for annual renewal and adjustment of interest, the payments from the assigned notes would have satisfied Defendants' obligation to the Bank in full and there would be no principal balance due. In addition, Defendants argued that the applicable statute of limitations barred Plaintiff's claim and that the payments from the three notes could not revive Plaintiff's cause of action because they were not voluntarily made. The court granted Defendants' motion, ruling that the six-year statute of limitations had run. NMSA 1978, § 37-1-3(A) (1975). Plaintiff appeals, arguing that the payments made on the three assigned notes until the release of the McKechnie note on October 29, 1997, constituted partial payments that tolled the running of the statute of limitations, and that he therefore brought his suit within the six-year limitations period.

STANDARD OF REVIEW

{6} "Summary judgment is appropriate where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law." Self v. United Parcel Serv., Inc., 1998-NMSC-046, ¶ 6, 126 N.M. 396, 970 P.2d 582. Because the facts underlying the application of the statute of limitations and the revival statute are undisputed, we review the partial payment issue as a pure question of law. See Tabet Lumber Co. v. Romero, 117 N.M. 429, 432, 872 P.2d 847, 850 (1994)

(stating that where the facts are undisputed, whether a particular payment is a "final payment" as defined by statute is a question of law); Yarger v. Timberon Water & Sanitation Dist., 2002-NMCA-055, ¶ 7, 132 N.M. 270, 46 P.3d 1270 (stating that the legal effect of undisputed facts is a pure question of law).

DISCUSSION

{7} We note at the outset that Plaintiff litigated this case pursuant to the assumption that the Gregory note had matured on April 14, 1990, and that the statute of limitations had therefore begun to run on April 15, 1990. Consistent with this assumption, Plaintiff pursued his claim against Defendants on the sole ground that the payments on the three assigned notes constituted voluntary payments, each of which revived Plaintiff's cause of action under Section 37-1-16. Plaintiff could have litigated this case under the alternative theory that no breach of Defendants' obligations under the note occurred until after the last payment on the McKechnie note in October 1997. Under this theory, the statute of limitations would not have begun to run until the time it became clear to the Bank's successors that no additional payments were forthcoming, which was less than six years prior to the filing of Plaintiff's lawsuit. Plaintiff could have argued that because Defendants personally never made any payment on the note, Defendants and the Bank had agreed and intended that the Campbell, Gannon, and McKechnie continuing note payments would satisfy Defendants' obligation on their acknowledged indebtedness to the Bank. See Pope v. The Gap, Inc., 1998-NMCA-103, ¶ 13, 125 N.M. 376, 961 P.2d 1283 (explaining that controlling determination in contract is the "objective manifestations of mutual assent by the parties"). Consistent with this understanding, there would have been no need to extend the note when the extension agreement matured, and neither party would have deemed it a breach when the parties failed to enter into a further extension agreement. Under this analysis, breach—and commencement of the limitations period—did not occur until 1997.

{8} However, this is not the argument Plaintiff made below or in this appeal. We will not decide this case on a theory not explored or argued by the parties on appeal. See In re Doe, 98 N.M. 540, 541, 650 P.2d 824, 825 (1982)

(holding that the appellate court will not reach issues the parties failed to raise on appeal). Instead, we will analyze the case as presented by the parties—based on the undisputed fact that the Gregory note matured at the expiration of the extension agreement in April 1990.

{9} The parties agree that the Gregory note matured on April 14, 1990. Consequently, the entire balance of the note became due and payable on that date and, under ordinary circumstances, the statute of limitations would have begun to run. See Inv. Co. of the Southwest v. Reese, 117 N.M. 655, 656, 875 P.2d 1086, 1087 (1994)

(stating that statute of limitations on a note begins to run when the loan goes into default). However, because the FDIC succeeded the RTC in taking over the Bank, Defendants argued below that the federal statute of limitations governed, and that the limitations period may not have begun to run until November 16, 1990, the date the RTC took over the Bank. 12 U.S.C. § 1821(d)(14)(B)(i) (stating that a claim accrues for purposes of the six-year limitations period on the later of the date the cause of action accrues or "the date of the appointment of the [FDIC] as conservator or receiver"). Assuming without deciding that the more favorable federal statute applies, the limitations period on Plaintiff's claim would have run, absent revival, in November 1996, well before Plaintiff's September 2, 1999, complaint. The question is whether Defendants did anything to revive the claim on the note and lift the limitations bar pursuant to the revival statute.

{10} Under New Mexico's revival statute:

Causes of action founded upon contract shall be revived by the making of any partial or instalment payment thereon or by an admission that the debt is unpaid, as well as by a new promise to pay the same; but such admission or new promise must be in writing, signed by the party to be charged therewith.

§ 37-1-16. In this case Plaintiff does not claim that Defendants provided a written admission or new promise. Rather, Plaintiff contends the payments that were made on the three assigned notes, and applied toward the Gregory note, constituted partial payment under the revival statute.

{11} In analyzing Plaintiff's argument, we first turn to New Mexico case law, much of which predates the current version of the revival statute. See, e.g., Gentry v. Gentry, 59 N.M. 395, 285 P.2d 503 (1955)

; Marine Trust Co. v. Lord, 51 N.M. 323, 184 P.2d 114 (1947); Cleland v. Hostetter, 13 N.M. 43, 79 P. 801 (1905). Previous versions of the statute differ from the current version in just one respect: the earlier iterations do not contain the language explicitly recognizing that a partial...