MacCollum v. Perkinson

• Citation: 185 Ariz. 179,913 P.2d 1097
• Decision Date: 05 March 1996
• Docket Number: No. 1,CA-CV,1
• Parties: , Blue Sky L. Rep. P 74,090 M.S. MacCOLLUM, M.D., Plaintiff-Appellant, Cross-Appellee, v. John W. PERKINSON and Verna Perkinson, husband and wife; Douglas E. Smith and Jane Doe Smith, husband and wife, Defendants-Appellees, Charles L. Regester and Joan Regester, husband and wife; Defendants-Appellees, Cross-Appellants. 94-0001.
• Court: Arizona Court of Appeals

Page 1097

913 P.2d 1097

185 Ariz. 179, Blue Sky L. Rep. P 74,090

M.S. MacCOLLUM, M.D., Plaintiff-Appellant, Cross-Appellee, v. John W. PERKINSON and Verna Perkinson, husband and wife; Douglas E. Smith and Jane Doe Smith, husband and wife, Defendants-Appellees Charles L. Regester and Joan Regester, husband and wife; Defendants-Appellees, Cross-Appellants.

No. 1 CA-CV 94-0001.

Court of Appeals of Arizona Division 1, Department C.

March 5, 1996.

As Corrected March 13, 1996.

Appeal from the Superior Court of Maricopa County, Cause No. CV 92-04477; The Honorable Jonathan H. Schwartz, Judge.

The Law Office of John R. Tellier by John R. Tellier, Phoenix, and Hammond, Natoli & Tobler, P.C. by Phil B. Hammond, Phoenix, for Appellant/Cross-Appellee MacCollum.

Grant, Williams, Lake & Dangerfield, P.C. by L. Richard Williams, Mark C. Dangerfield, Phoenix, for Appellees Smith.

O'Connor, Cavanagh, Anderson, Westover, Killingsworth & Beshears, P.A. by Richard M. Lorenzen, Phoenix, for Appellees/Cross-Appellants Regester.

OPINION

TOCI, Judge.

The first issue raised in this appeal is whether only one spouse's signature on a partnership note and deed of trust is sufficient to bind the marital community. We conclude that because the marital community has only a personal property interest in partnership property, the marital community does not acquire "an interest in real property" when the partnership acquires real property. Thus, one spouse's signature on a partnership note and deed of trust is sufficient to bind the marital community.

The second issue raised is whether the trial court erred in denying MacCollum's motion for leave to amend his complaint to state, among other claims, a claim for relief for violation of the securities fraud statutes. We conclude that MacCollum's proposed amended complaint stated a claim for relief on all theories alleged, including the theory that the promissory note executed by Regester/PST Enterprises is a "security" under the securities fraud statutes. The trial court therefore erred in denying the motion for leave to amend.

I. FACTS AND PROCEDURAL BACKGROUND

In June of 1986, M.S. MacCollum, M.D., received a Private Offering Memorandum ("POM") from defendant Charles L. Regester. The POM offered "investment interests" in a promissory note. The invested funds were to be used to purchase real property for development, lease, and resale. According to the POM, the investors were to receive the principal invested, interest on the principal, and "bonus interest" from the lease, refinancing or sale of the property. Although the POM stated that the promissory note might or might not be secured, it also stated that in the event of default, investors could "enforce their rights on the real property and other assets of Borrower [Regester] to recover their investment." The M.S. MacCollum, M.D. Limited Pension Plan ("MacCollum Plan") responded to the POM by delivering a check in the amount of $100,000 to Regester.

In September of the same year, the Regester/PST Enterprises general partnership was formed. Its partners were Charles L. Regester, and PST Holdings, both of whom had a fifty percent interest in the partnership. PST Holdings, a general partnership, was composed of John W. Perkinson, Douglas E. Smith, and Anthony L. Tominac. Regester then informed the investors in writing, including the MacCollum Plan, that the partnership would purchase property in Mesa.

After the Regester/PST Enterprises partnership purchased the Mesa property, Regester prepared a promissory note for $100,000, payable to the MacCollum Plan, secured by a "Junior Deed of Trust." The entire unpaid principal balance of the note was to be paid on or before November 19, 1991. The maker of the note was "Register/PST Enterprises." Although Regester, Perkinson, Smith, and Tominac signed the note, it was not signed by any of the partners' spouses. The deed of trust identified Regester/PST Enterprises as the trustor. The investors, including the MacCollum Plan, were the beneficiaries. ¹

Although Regester had earlier notified the investors in writing that the purchase of the Mesa property would be financed in part with funds from the partnership, the balance of the purchase price consisted of a partnership loan. Regester/PST Enterprises borrowed approximately $1,250,000 from the Arizona Bank and secured the loan with a first deed of trust on the Mesa property. The partnership was unable to pay the Arizona Bank when the loan fell due in June of 1988. As a result, the Arizona Bank threatened legal action.

To prevent foreclosure, Lou Regester Furniture Co., Inc., a company controlled by Regester, purchased the note and deed of trust and obtained an assignment of the bank's interest. Regester financed the purchase of the Arizona Bank note and deed of trust by a loan from Valley National Bank. Lou Regester Furniture Co. then proceeded with a trustee's sale on August 30 or 31, 1989, at which it purchased the property. This transaction extinguished the investors' second deed of trust lien securing payment of their promissory notes.

Alleging that the MacCollum Plan note was not paid on its due date of November 19, 1991, MacCollum filed a complaint seeking recovery under the promissory note. ² The defendants' answers asserted that the note was actually an "equity investment" that was not to be paid until the property was sold, leased, or refinanced. The defendants contended that, because none of these events occurred, they had no liability.

Both parties attempted to narrow the issues for trial. MacCollum moved for partial summary judgment. Asserting that the defendants had defaulted on the note, he requested judgment on the note for the unpaid principal balance and interest against the defendants and their spouses. Defendants moved for summary judgment, contending that the partners' marital communities were not liable for the promissory note obligations.

The trial court granted both motions. It held that the promissory note evidenced a debt--a loan to the partnership. Thus, the partnership was obligated because the due date on the note had passed. The trial court concluded, however, that under Meritor Savings Bank v. Camelback Canyon Investors, 783 F.Supp. 455 (D.Ariz.1991), joinder of both spouses was required by Ariz.Rev.Stat.Ann. ("A.R.S.") section 25-214(C) (1991). The court ruled that, because the partners' spouses had not executed the promissory note, the partners' marital communities were not liable for the MacCollum note obligations.

Before the summary judgment motions were argued, MacCollum moved to file a second amended complaint. He generally sought to assert additional claims based on the theory that his note was a security. The court denied the motion and later denied MacCollum's motion for reconsideration. After summary judgment was entered, MacCollum filed a motion for judgment on the pleadings, which the court granted. The court entered judgment on the promissory note in favor of MacCollum and against defendants Regester, Perkinson, Smith and Tominac, but not against their marital communities. This appeal followed.

II. DISCUSSION

A. Liability of Marital Communities

The first issue presented is whether A.R.S. section 25-214 requires the signature of the non-partner spouse on a partnership promissory note and deed of trust to subject the marital community to liability for a default in such instruments. Because this is a question of statutory interpretation, we review it de novo. Blum v. State, 171 Ariz. 201, 204, 829 P.2d 1247, 1250 (App.1992).

In general, community property is liable for debts incurred for the benefit of the community. A.R.S. § 25-215(D) (1991). A presumption in favor of a community obligation arises "when either spouse incurs a debt during marriage for the benefit of the marital community." United Bank of Ariz. v. Allyn, 167 Ariz. 191, 198, 805 P.2d 1012, 1019 (App.1990). This presumption must be overcome by clear and convincing evidence that the debt is the separate obligation of one of the spouses. Id.

Additionally, although generally spouses have equal rights to bind the community property, certain transactions will not bind the community unless both spouses join in the transaction. A.R.S. § 25-214. These include "[a]ny transaction for the acquisition, disposition or encumbrance of an interest in real property" and "[a]ny transaction of guaranty, indemnity or suretyship." A.R.S. § 25-214(C)(1), (2).

The trial court, relying on Meritor Savings, agreed with defendants that this transaction was one involving the acquisition and encumbrance of real property. Thus, according to the trial court, the joinder of the partners' spouses was required to subject their respective communities to liability for the transaction. We disagree. We recently rejected a similar argument in Chase Bank of Arizona v. Acosta, 179 Ariz. 563, 880 P.2d 1109 (App.1994).

In Acosta, we held that, even in absence of joinder by the non-partner spouse, a partner's marital community could be held liable for the partnership's debt resulting from a real estate transaction conducted by the partnership. We stated a number of principles that are applicable here. First, the interest of a partner in partnership property is personalty. Id. at 572, 880 P.2d at 1118. If community funds are used to acquire a partnership interest, that interest is "community personal property." Id. Second, because the community has no interest in specific partnership property, the partner spouse is entitled to deal with partnership assets without the consent of the non-partner spouse. Id. Third, the real estate exception in section 25-214(C)(1) "does not apply to a spouse's partnership interest for the simple reason that it is not realty, but personalty." Id. Thus, in Acosta, we concluded that because the community has no interest in specific partnership assets, it does not "acquire or dispose or encumber real property" when the partnership deals...