Three Rivers Land Co., Inc. v. Maddoux

• Decision Date: 28 September 1982
• Docket Number: No. 13925,13925
• Citation: 1982 NMSC 111,98 N.M. 690,652 P.2d 240
• Parties: THREE RIVERS LAND COMPANY, INC., and Marvel Engineering Company, Plaintiffs-Appellees, v. Don MADDOUX and Jacquelyn Maddoux, Maddoux Family Trust, David Emmert, as Temporary Successor Trustee, and David Emmert, Individually, Defendants-Appellants.
• Court: New Mexico Supreme Court

Page 240

652 P.2d 240

98 N.M. 690

THREE RIVERS LAND COMPANY, INC., and Marvel Engineering

Company, Plaintiffs-Appellees, v. Don MADDOUX and Jacquelyn Maddoux, Maddoux Family Trust, David Emmert, as Temporary Successor Trustee, and David Emmert, Individually,

Defendants-Appellants.

No. 13925.

Supreme Court of New Mexico.

Sept. 28, 1982.

Walter R. Parr, Las Cruces, for defendants-appellants

Marian Matthews, Albuquerque, for plaintiffs-appellees.

OPINION

EASLEY, Chief Justice.

Three Rivers Land Company and Marvel Engineering Company sued Don and Jacquelyn Maddoux (Maddoux), Maddoux Family Trust, and David Emmert as trustee and individually for breach of contract and fraud. Maddoux filed a motion to dismiss, which was denied by the trial court. Leave to file an interlocutory appeal was granted, and we reverse.

We discuss:

1. Whether the doctrine of election of remedies is a defense in New Mexico.

2. Whether the elements of legal capacity and same cause of action under the doctrine of res judicata are present.

The case on appeal depends greatly on the understanding of an earlier case. We find it appropriate to discuss the facts surrounding the cases and the procedural posture of both. CV-58-79 (Case I)

In the earlier case (Case I), Three Rivers and Marvel Engineering sued Don and Jacquelyn Maddoux, Maddoux Trust, and David Emmert, in his capacity as temporary successor trustee, for specific performance of certain purchase and lease contracts and for a preliminary injunction to force the defendants to close the contracts. The trial court granted the preliminary injunction and ordered the conveyance of the real property.

Before or on the closing date of the purchase and lease agreements, Three Rivers and Marvel knew that Crocker National Bank and Security Bank and Trust Company were foreclosing on the property. On that same day, the trial court granted a preliminary injunction against Maddoux and the Family Trust, directing defendants to transfer possession of the property to Three Rivers and Marvel. The court also ordered the clerk of the district court to issue deeds to Three Rivers and Marvel, since the defendants would not.

While in possession, Three Rivers and Marvel commenced farming operations and protected the property from wind and water erosion. They noticed that the dikes and dams on the property were not of sufficient size and strength to protect the property. This defect had not been disclosed. Maddoux and the Family Trust had also represented that a gas well could be purchased for $8,000. To make this well operational, however, Maddoux and the Family Trust had to perform certain acts that they had not intended to perform. Three Rivers and Marvel remained in possession about a year, after which they were ousted by the foreclosure actions of Crocker National Bank and Security National Bank and Trust Company. The property was sold to Trinity Land Company, which was owned by Three Rivers and Marvel.

Before entry of judgment, Three Rivers sought two times to amend the complaint to include a claim for damages. The trial judge denied the motions, stating that he did not want to confuse questions of law and equity.

Because of the foreclosures by the two banks, the material representations regarding the number of irrigable acres, the question regarding the availability of the gas well, and the existence of latent defects on the property, the trial court decided that specific performance was an inappropriate remedy. The trial court then dissolved the preliminary injunction, revoked the deeds, and granted attorney fees and costs. No appeal of this case was taken.

CV-209-80 (Case II)

This is the case properly before us on interlocutory appeal. The case is almost identical to Case I, with the exceptions that in Case II the claim in law is for damages and the status of defendant David Emmert is slightly different.

Emmert, a Colorado resident, filed an answer alleging inter alia that the trial court lacked personal jurisdiction over him and that res judicata, collateral estoppel, and election of remedies bar this action. The trial court denied all Emmert's affirmative defenses and entered judgment in favor of Three Rivers. No appeal was taken.

Maddoux filed a motion to dismiss, asserting that res judicata and collateral estoppel bar this suit. The motion was denied, and an interlocutory appeal was taken.

1. Election of Remedies

Maddoux argues that Three Rivers and Marvel are barred from bringing Case II under the doctrine of election of remedies. Three Rivers and Marvel contend that the doctrine is no longer applicable in New Mexico and rely on Buhler v. Marrujo, 86 N.M. 399, 524 P.2d 1015 (Ct.App.1974).

We point out that a motion to dismiss is an inappropriate pleading with which to raise the doctrine of election of remedies. A motion to dismiss tests the legal sufficiency of the complaint. Caroll v. Bunt, 50 N.M. 127, 172 P.2d 116 (1946). "A motion to dismiss under Rule 12(b)(6) is properly granted only when it appears that the plaintiff cannot recover or be entitled to relief under any state of facts provable under the claim." Jones v. International Union of Operating Engineers, 72 N.M. 322, 325, 383 P.2d 571, 573 (1963) (citations omitted). A close reading of Maddoux's contentions reveals that he does not challenge the legal sufficiency of the complaint but instead, asserts that this action is barred under the doctrine of election of remedies. The doctrine pertains to the choice or adoption of one of two or more existing remedies; the use of one remedy precludes pursuing the other. Franciscan Hotel Co. v. Albuquerque Hotel Co., 37 N.M. 456, 24 P.2d 718 (1933).

We further note that Maddoux said that he raised election of remedies in his motion to dismiss. Our careful examination of his motion shows that he did not. Moreover, if he raised it at the hearing, he did not provide us with the transcript of that hearing. It is the duty of the appellant to see that the record is properly before us. State ex rel. State Highway Commission v. Sherman, 82 N.M. 316, 481 P.2d 104 (1971). We will not consider matters not contained in the record on appeal. Adams v. Loffland Brothers Drilling Co., 82 N.M. 72, 475 P.2d 466 (Ct.App.1970). However, when both parties have thoroughly briefed the issue, when there is no objection from the appellee, when the question raised is of such fundamental importance that its ramifications will affect the law, and when remanding the question will serve only to thwart judicial economy, we have the discretion to hear and decide the issue. See DesGeorges v. Grainger, 76 N.M. 52, 412 P.2d 6 (1966). We therefore address the issue.

In Buhler, supra, Judge Sutin held the doctrine of election of remedies to be procedural and therefore not a defense. We disagree. The mere fact that the doctrine is procedural does not preclude its use as a defense. The two concepts are interrelated. Substantive law " 'creates, defines and regulates the rights and duties of the parties * * * which may give rise to a cause for action,' " while procedural law prescribes " 'the legal machinery by which the substantive law is determined.' " Honaker v. Ralph Pool's Albuquerque Auto Sales, Inc., 74 N.M. 458, 465, 394 P.2d 978, 983 (1964) (quoting Petty v. Clark, 113 Utah 205, 214, 192 P.2d 589, 593-94 (1948)). Relying on Judge Sutin's reasoning, we would have to say that res judicata is not a defense. This is unequivocally not so; res judicata is a defense. N.M.R. Civ.P. 8(c), N.M.S.A.1978 (Repl.Pamp.1980). Similarly, election of remedies is a defense in New Mexico. We therefore overrule Buhler.

Election of remedies is a rule of judicial administration. Honaker v. Ralph Pool's Albuquerque Auto Sales, Inc., supra. Its underlying purpose is to prevent " 'vexatious and multiple litigation of causes of action arising out of the same subject matter.' " Honaker, supra, at 466, 394 P.2d at 984 (quoting Dial Press, Inc. v. Phillips, 23 N.J.Super. 543, 548, 93 A.2d 195, 197 (1952)). However, the doctrine has been abused by lawyers and courts, Hine, Election of Remedies, A Criticism, 26 Harv.L.Rev. 707 (1913), and it has been obscured and misunderstood. Note, Election of Remedies: A Delusion?, 38 Colum.L.Rev. 292 (1938). Moreover, "[i]t has been constantly criticized as harsh and not a favorite of equity." Bernstein v. United States, 256 F.2d 697, 705 (10th Cir. 1958) (citation omitted). As an equitable doctrine, it is controlled by principles of equity, including the principle that courts will invoke equity to the end that justice may be served. Pugh v. Phelps, 37 N.M. 126, 19 P.2d 315 (1932).

The doctrine of election rests upon the principle that he who seeks equity must do it, and means, as the term is ordinarily used, that where two inconsistent or alternative rights or claims are presented to the choice of a party, by a person who manifests the clear intention that he should not enjoy both, then he must accept or reject one or the other; and so, in other words, that one cannot take a benefit under an instrument and then repudiate it.

Peters v. Bain, 133 U.S. 670, 695, 10 S.Ct. 354, 362, 33 L.Ed. 696 (1890).

Since the doctrine is one of equity, we will review the trial court's decision based on the abuse of discretion standard. An abuse of discretion will be found when the trial court's decision is contrary to logic and reason. Federal Land Bank of Wichita v. Burgett, 97 N.M. 519, 641 P.2d 1066 (1982). The trial court twice denied Three Rivers' motion to amend the complaint for damages in Case I on the belief that mixing questions of law and equity would unnecessarily confuse matters. This fact, coupled with the undisputed and admitted bad acts by Maddoux, suggests that Maddoux should not be allowed to benefit from the doctrine. Therefore, we find no abuse of discretion. The trial court is affirmed.

2. Res Judicata

Maddoux contends that Three Rivers split their cause of action, and thus, under the...