Nosker v. Trinity Land Co.

• Decision Date: 21 April 1988
• Docket Number: No. 8479,8479
• Citation: 1988 NMCA 35,107 N.M. 333,757 P.2d 803
• Parties: Kenneth NOSKER, Plaintiff-Appellee, Cross-Appellant, v. TRINITY LAND COMPANY, Defendant-Appellant, Cross-Appellee.
• Court: Court of Appeals of New Mexico

Page 803

757 P.2d 803

107 N.M. 333

Kenneth NOSKER, Plaintiff-Appellee, Cross-Appellant, v. TRINITY LAND COMPANY, Defendant-Appellant, Cross-Appellee.

No. 8479.

Court of Appeals of New Mexico.

April 21, 1988.

[107 N.M. 335] S. Thomas Overstreet, P.C., Alamogordo, for plaintiff-appellee, cross-appellant.

Norman D. Bloom, Jr., Darrell N. Brantley, Fettinger, Bloom & Brantley, Alamogordo, for defendant-appellant, cross-appellee.

OPINION

DONNELLY, Chief Judge.

Defendant Trinity Land Company (Trinity) appeals from the trial court's award of $25,000.00 in damages in favor of plaintiff Kenneth Nosker (Nosker) based upon a determination that Nosker owned certain irrigation equipment which Trinity wrongfully converted to its own use. We discuss: (1) whether Nosker's claim was barred by res judicata; (2) whether the items of irrigation equipment were fixtures; and (3) whether the trial court's finding of conversion is supported by substantial evidence.

This case has been submitted for decision by the court following its submission to an advisory panel pursuant to an experimental plan. See Patterson v. Environmental Improvement Div., 105 N.M. 320, 731 P.2d 1364 (Ct.App.1986); Stoll v. Dow, 105 N.M. 316, 731 P.2d 1360 (Ct.App.1986). A majority of the panel rendered a decision reversing the trial court. Nosker filed a response memorandum opposing the proposed disposition. This court has considered the transcript and briefs, together with the opinions of the advisory committee and the response memorandum. We adopt the recommendation of the majority as modified and reverse the decision of the trial court.

Nosker was the owner of "Three Rivers Farm" in Otero County, New Mexico. In 1975, Trans Union Leasing Corporation (Trans Union) leased irrigation equipment to Nosker, James L. Wimberly, and James L. Wimberly Enterprises, Inc. Shortly thereafter, the irrigation equipment was installed on the property. In March 1977, Nosker sold the farm to Don and Jacquelyn Maddoux (Maddoux) by real estate contract. Nosker and Wimberly executed an assignment of their interest in the equipment lease. Maddoux then took possession of the irrigation equipment. Neither the lease nor any notice under the Uniform Commercial Code has ever been filed with the Otero County Clerk.

In June 1977, Maddoux executed a promissory note, secured by a mortgage on the real property, in favor of Crocker National Bank of San Francisco (Crocker). Maddoux defaulted on the note and, in January 1979, Crocker instituted foreclosure proceedings. Trans Union, a named defendant in the foreclosure proceedings, failed to file an answer and a default judgment was entered against it.

In February 1979, Maddoux entered into a contract to sell the farm and all associated equipment to Three Rivers Land Company, Inc. (Three Rivers) and Marvel Engineering (Marvel). When Maddoux refused to close the contract, Three Rivers and Marvel sued and obtained a preliminary injunction compelling conveyance of the property. Warranty deeds to the farm and a bill of sale purporting to convey the irrigation system and personal property on the farm, to the purchasers, were executed. Thereafter, the district court dissolved the preliminary injunction and revoked the deeds because specific performance was rendered impossible by the foreclosure proceedings initiated by Crocker. No appeal was taken from the judgment in the foreclosure action.

In October 1979, Crocker purchased the farm at the foreclosure sale, and then sold it to Trinity. When Trans Union failed to receive payments under the equipment lease entered into with Nosker and Wimberly, Trans Union terminated the lease and sued Nosker for the unpaid balance of monies due under the equipment lease. In settlement of that lawsuit, on December 3, 1981, Trans Union executed a quitclaim bill of sale for the irrigation equipment to Nosker in exchange for certain monies. Nosker then brought this suit against Trinity, claiming Trinity wrongfully converted the irrigation equipment to its own use. Trinity defended, arguing that Nosker's claim was barred by res judicata through Trans Union's loss of title to the irrigation equipment in the foreclosure suit, and claiming that it had obtained title to the irrigation equipment pursuant to the foreclosure sale. The trial judge found that Nosker's claim was not barred by res judicata and that Trinity had converted the irrigation equipment. The trial judge awarded Nosker $25,000.00 in damages but denied interest on the damage award and denied attorney fees.

I. CLAIM OF RES JUDICATA

Trinity argues on appeal that the trial court erred in concluding that Nosker's claim was not barred by res judicata. Specifically, Trinity claims that the prior foreclosure proceeding precludes this action because the parties are in privity, the cause of action is the same, and because there was a final decision on the merits in the prior foreclosure action adjudicating the matters involved herein. Nosker responds that his claim was not barred by res judicata because the subject matter of the two suits differed. Nosker maintains that the present action concerns irrigation equipment which was outside the subject matter involved in the foreclosure action. We agree.

Under the doctrine of res judicata, a prior judgment on the merits bars a subsequent suit involving the same parties or privies based on the same cause of action. Myers v. Olson, 100 N.M. 745, 676 P.2d 822 (1984). Ordinarily, res judicata will preclude a claim where there has been a full and fair opportunity to litigate issues arising out of that claim. Montana v. United States, 440 U.S. 147, 99 S.Ct. 970, 59 L.Ed.2d 210 (1979); Slide-A-Ride of Las Cruces, Inc. v. Citizens Bank of Las Cruces, 105 N.M. 433, 733 P.2d 1316 (1987). For res judicata to apply, the traditional rule is that the two actions must involve circumstances wherein: (1) the parties are the same or in privity; (2) the two causes of action are substantially the same; (3) there has been a final decision in the first suit; and (4) the first decision was adjudicated on the merits. Slide-A-Ride of Las Cruces, Inc. v. Citizens Bank of Las Cruces; First State Bank v. Muzio, 100 N.M. 98, 666 P.2d 777 (1983).

Here, there is no dispute that the parties were in privity and that there was a final decision rendered on the merits in the foreclosure action. The main point of contention therefore, is whether the cause of action in the two proceedings is substantially the same.

In addressing the issue concerning whether or not there is an identity of the two causes of action, we look to the Restatement (Second) of Judgments (1982). Under the rule set forth in Section 24 ¹ thereof, a cause of action is examined in light of the underlying transaction which gave rise to the litigation, without regard to the various legal theories that may be available to the parties. Accordingly, a claim is essentially equated with the transaction from which it springs. Id.

Applying the factors specified in Section 24, we agree that the suit herein is not barred by principles of res judicata. The trial court found, in part:

45. [Trinity] did not purchase the Equipment at the Crocker foreclosure sale. The notice of foreclosure and the special master's bill of sale obtained by [Trinity] pursuant to the Crocker foreclosure sale * * *, though lists similar equipment, does not include the Equipment to [Nosker].

46. The Equipment did not become part of the real estate that was the subject matter of the Crocker foreclosure suit.

In its appeal herein, Trinity failed to specifically challenge the above key findings of fact. These findings are supported by substantial evidence. Findings of fact adopted by the trial court and not directly attacked on appeal must be accepted as true by the reviewing court. City of Roswell v. Reynolds, 86 N.M. 249, 522 P.2d 796 (1974); State ex rel. State Highway Comm'n v. Sherman, 82 N.M. 316, 481 P.2d 104 (1971); Scott v. Jordan, 99 N.M. 567, 661 P.2d 59 (Ct.App.1983). A reviewing court is bound by findings not specifically attacked by an appellant. Drake v. Rueckhaus, 68 N.M. 209, 360 P.2d 395 (1961); see SCRA 1986, 12-213(A)(3).

The doctrine of res judicata does not bar Nosker's claim because the unchallenged findings are conclusive in determining that Trinity did not purchase the equipment at the foreclosure sale, either as a fixture to the real property or as personal property. Thus, the causes of action in this suit and the foreclosure suit are not the same because the subject matter is not the same.

II. CLAIM OF CONVERSION

We jointly discuss the second and third issues raised by Trinity on appeal.

Trinity argues that the trial court's determination that it converted the irrigation equipment is not supported by substantial evidence. Specifically, Trinity contends that an action for conversion will not lie because any exercise of dominion and control or use of the equipment by Trinity occurred at a time when Nosker no longer had a possessory interest in the property. Trinity also maintains that an action for conversion based upon Nosker's interest in the equipment lease with Trans Union could not exist because Nosker had previously assigned his interest to Maddoux and because Trans Union had terminated the equipment lease in 1980. Trinity also asserts that there was no conversion based upon Nosker's interest under the bill of sale executed by Trans Union because Nosker failed to make a timely demand upon Trinity thereafter for a return of the equipment. We agree.

Conversion is defined as the unlawful exercise of dominion and control over personal property belonging to another in exclusion or defiance of the owner's rights, or acts constituting an unauthorized and injurious use of another's property, or a wrongful detention after demand has been made. Bowman v. Butler, 98 N.M. 357, 648 P.2d 815 (Ct.App.1982); Taylor v. McBee, 78 N.M. 503, 433 P.2d 88 (Ct.App.1967). The elements of...