Laughlin v. Laughlin.

• Decision Date: 28 November 1944
• Docket Number: No. 4815.,4815.
• Citation: 49 N.M. 20,155 P.2d 1010
• Parties: LAUGHLINv.LAUGHLIN.
• Court: New Mexico Supreme Court

49 N.M. 20

155 P.2d 1010

LAUGHLIN

v.LAUGHLIN.

No. 4815.

Supreme Court of New Mexico.

Nov. 28, 1944.Rehearing Denied Feb. 27, 1945.

Appeal from District Court, Dona Ana County; Numa C. Frenger, Judge.

Action under the Declaratory Judgment Act by W. H. Laughlin against Ida M. Laughlin to determine the rights and interests of the parties in certain real estate. From the judgment, plaintiff appeals.

Affirmed.

Rental value of farm which was separate property of wife could be set off against any claim husband might have for his part of community funds paid to settle wife's separate mortgage debt.

[155 P.2d 1011 , 49 N.M. 22]

Whatley & Garland, of Las Cruces, for appellant.

Edwin Mechem, of Las Cruces, for appellee.

BRICE, Justice.

This action was brought by plaintiff (appellant here) under the ‘Declaratory Judgment Act’, 1941 Comp. § 25-601 et seq., to determine the rights and interests of the parties to certain real estate and upon such determination ‘to set over to the party or parties whom the court shall determine to be the owner or the owners of the same,’ their respective interests or shares therein. The appellant claims title to a half interest in a 97 acre farm by virtue of an alleged oral contract with appellee; and a half interest in a 14 acre tract of land, upon the theory that it was paid for by community funds, the parties being husband and wife.

The first question is whether the appellant is the owner of an interest in the 97 acre farm.

It is alleged by appellant, and his theory was supported by his evidence, that after marriage the parties entered into an oral agreement in which it was determined that defendant's (appellee's) land was not worth the mortgage indebtedness against it, that in fact the mortgagees refused to accept the land in settlement of such indebtedness; that the parties agreed they would undertake to pay off the indebtedness and improve the land by farming it, and when the encumbrances should be paid, each of the parties would be entitled to a one-half interest therein. It is this oral agreement that is the basis of appellant's claim to an interest in the 97 acre farm, which, appellant asserts, was fully performed by the parties.

The parties were married in 1921, and divorced during the pendency of this suit in the district court. The appellee, prior to marriage, was the owner and operator of the 97 acre farm situated in Dona Ana County, New Mexico. At the time the parties were married it was encumbered by two mortgages securing notes in the sum of $3,000 and $5,000, respectively. During the years of 1922, 1923 and 1924 the farm was operated jointly by the parties; thereafter, with the exception of one year, it was leased to third parties.

The proceeds of the crops produced from the operation of the farm during the years mentioned were deposited in a bank in the name of appellant and used by the parties as a joint checking account. Out of these funds the parties paid $10,040.50 in settlement of appellee's debts and interest thereon, due on her two mortgage indebtednesses in the principal sums of $3,000 and $5,000 respectively, and interest thereon amounting to $2,040.58.

Upon the payment of the $5,000 indebtedness the parties caused the notes and mortgage to be assigned by the mortgagee to appellant. In apparent explanation of this transaction appellee executed, acknowledged and had recorded, a document entitled ‘Declaration of Lien’ in which the execution of the five $1,000 notes secured by the mortgage on the 97 acre tract was recited, and then it is stated therein: ‘Whereas, my husband W. H. Laughlin has paid out of his separate funds to said the First National Bank of Las Cruces the full amount of the aggregate sums specified in said promissory notes, to-wit, the sum of $5000; in consideration of which said the First National Bank of Las Cruces has by its endorsement on said promissory notes in due form of law, assigned, transferred and made over all and singular said five promissory notes unto my said husband, who in consideration thereof has become and now is the legal owner, entitled to the possession of the same and of the mortgage deed given to secure the payment thereof.’ It is further stated therein that the appellee, in consideration of the premises, and to secure her husband in the payment of the promissory notes in question, certified that appellant was ‘possessed of a lien in and upon’ the 97 acres of land, subject to a $3000 indebtedness secured by a mortgage due another person, being the balance of the appellee's indebtedness which the parties likewise paid out of the funds mentioned.

Regarding this alleged agreement the trial court found as follows:

‘That no agreement was made between the parties shortly after they were married, or, to-wit, in the first part of the year 1922, as claimed by plaintiff, to the effect that they would jointly farm and operate said real estate and improve it thereby to realize from the products thereof money enough to pay off said notes and mortgages, and that upon payment thereof that each party should own an undivided one-half interest in and to said real estate; and that no such agreement was ever made.

‘That no agreement was made between the parties after said notes and mortgages were fully paid off, claimed by plaintiff to have been made pursuant to and in furtherance of the claimed agreement set out in the preceding finding, and being to the effect that said real estate was of the value of $10,000 and that plaintiff should have a lien thereon in the amount of half of said value.’

We have examined the record and are satisfied that there is substantial evidence in support of these findings of the trial court. Regarding the assignments of the notes and mortgages (admitted to have been executed by the mortgagees with the consent of the appellee) and the ‘Declaration of Lien’ executed by appellee about twenty years ago, we need only state that the trial court found upon substantial evidence that they were made without consideration and were never intended to be binding on the appellee, and that we are bound by such finding. But in any event the appellant claims no lien on appellee's 97 acre tract of land by virtue of the assignments of the mortgages and the execution of the ‘Declaration of Lien’ which has been described; but asserts that these assignments and the declaration in question were made in ‘pursuance’ of, and presumably to secure the enforcement of, the alleged oral agreement which this action was instituted to enforce, and which the court found was never made.

These findings settle every issue tendered by the complaint. No right to a lien is asserted, nor is any claim made therein that appellant is entitled to re-imbursement for his part of community funds used in improving appellee's farm. The allegations of increased value in paragraphs 6 and 6 1/2 were made in support of appellant's claim of title and not by way of claim for reimbursement for his part of community funds expended in improving appellee's farm.

It follows that the alleged oral agreement, the assignments of the notes and mortgages and the ‘Declaration of Lien,’ are eliminated from consideration; and with them goes appellant's claim of title to an interest in the 97 acre farm.

The question of appellant's right to a lien against appellee's farm for such expenditures was injected into the case by the parties, and decided against appellant below. It is presented here and argued pro and con in the briefs of the parties. Under the circumstances we will take cognizance of it as we would a cause of action duly pleaded. In re Field's Estate, 40 N.M. 423, 60 P.2d 945.

The trial court concluded that appellant was not entitled to a lien on appellee's farm to secure payment to him of any sum of money claimed to be due him on account of any expenditure of community funds in the payment of appellee's mortgage debts and for improving her farm, for the following reasons: (a) Because the funds used for such payments and expenditures were the separate funds of appellee; (b) if the appellant had in fact an interest in such funds, the small expenditures did not increase the value of the property, but such increase was the result of ‘natural causes;’ (c) if any such funds were so used, in the absence of a contract providing for reimbursing the community (and no such contract was proved), it is conclusively presumed that such funds were a gift to the appellee.

The first question is whether the trial court erred in holding that the funds derived from the parties' farming operations on appellee's farm, with which appellee's mortgage debts were paid and improvements made, were all the separate funds of appellee. It was the opinion of the trial court that such funds were appellee's, by virtue of Sec. 65-304 N.M.Sts.Ann.1941, which is as follows: ‘All property of the wife owned by her before marriage and that acquired afterwards by gift, bequest, devise or descent, with the rents, issues and profits thereof is her separate property. The wife may without the consent of her husband convey her separate property.’

It is the contention of the plaintiff that the labor, skill, industry, and ability of the parties belonged to the community, and that the portion of the income derived from the farm due thereto (which, it is asserted, was the larger part), belonged to the community.

The common law was adopted in New Mexico in 1876, the effect of which is stated in Beals v. Ares, 25 N.M. 459, 185 P. 780, 788, as follows: ‘When the Legislature in 1876 adopted the common law as the rule of practice and decision, the whole body of that law as limited in the case of Browning v. Estate of Browning, supra [3 N.M.(Gild.) 659, 9 P. 677], came into this jurisdiction. Where it found a statute counter to its provisions, it yielded to the statute, but it gave way only in so far as the statute conflicted with its principles. In so far as was possible it operated in conjunction...