RUYBALID V. SEGURA, 1988-NMCA-084, 107
N.M. 660, 763 P.2d 369 (Ct. App. 1988)
EVELYN F. (SEGURA) RUYBALID,
Petitioner-Appellee,
vs.
DAVID G. SEGURA, Respondent-Appellant, and ADELA SEGURA,
Intervenor-Appellant
COURT OF APPEALS OF NEW MEXICO
1988-NMCA-084, 107 N.M. 660, 763 P.2d 369
September 29, 1988, Filed
APPEAL FROM THE DISTRICT COURT OF SANTA
FE COUNTY, PAUL "PABLO" MARSHALL, Judge
David R. Sierra, Santa Fe, New Mexico,
Attorney for Petitioner-Appellee.
Eileen R. Mandel, Caldwell, Lenssen,
Mandel and Jesmer, Santa Fe, New Mexico, Attorneys for Respondent-Appellant.
Morton S. Simon, The Law Offices of
Morton S. Simon, Santa Fe, New Mexico, Attorneys for Intervenor-Appellant.
{1} This appeal arises out of
the divorce of Petitioner-Appellee, Evelyn (Segura) Ruybalid (Evelyn), from
Respondent-Appellant, David Segura (David), which was granted in June 1982. The
issues on appeal arise from the post-1984 judgment collection efforts of Evelyn
against a piece of real property which the trial court found to be David's
separate property. He received that property in 1977, by gift from his parents,
prior to marriage. David's mother, Adela Segura (Adela) (Intervenor-Appellant),
attempted to reform the deed granting the property to David, and attempted to
intervene in the original divorce proceedings in order to accomplish that
{*662} end. David declared bankruptcy in 1984,
which precluded the enforcement of Evelyn's judgment against the property.
{2} The original divorce
decree and property judgment were affirmed on appeal to the supreme court and
their validity is not at issue in the present appeal. David challenges the
money judgment in Evelyn's favor on nine grounds. Adela challenges the trial
court's denial of her motion to intervene. We consolidate into the following
three issues:
1. Whether the trial court abused its discretion when it
denied Adela Segura's motion to intervene.
2. Whether the trial court erred when it allowed Adela and
David, at their own option, to reform the 1977 deed, but ruled that such
reformation would have no effect upon Evelyn's position as a judgment
lienholder.
3. Whether the trial court erred when it denied David's claim
for a homestead exemption in the property located at 910 Dunlap Street in Santa
Fe, New Mexico.
{3} We affirm on issues one
and two, and reverse and remand on issue three.
{4} Given the protracted
nature of this case, we find it necessary to provide a brief summary of the
factual setting. The parties were married in May 1977. In April 1977, David's
parents, Bernabe and Adela Segura, made a gift to David of the property at 910
Dunlap Street in Santa Fe by warranty deed. David did not record the deed at
the county clerk's office. The parties resided at the same address until their
marriage deteriorated in mid-1980. The property as described in the granting
deed consisted of a main house and duplex to the rear of the house, located at
910-1/2 Dunlap Street.
{5} In July 1980, Evelyn
filed a petition for dissolution of marriage. During the same month, her
attorney filed the 1977 deed of public record with the Clerk of Santa Fe
County. In August 1980, David attempted to reconvey the property to his
parents. In the divorce proceeding, the trial court found the attempted
conveyance to be void and fraudulent, and this ruling was subsequently upheld
by the supreme court. The trial court also determined the Dunlap Street
property to be David's separate property.
{6} In June 1982, the trial
court entered its judgment and decree of divorce, setting forth the final
distribution of marital property which reflected a money judgment in favor of
Evelyn in the amount of $47,145.50. In addition, the judgment specifically
imposed a lien upon David's separate property as it was described in the 1977
deed. David appealed this judgment to the supreme court. Since David posted no
supersedeas bond, Evelyn filed a complaint in foreclosure, seeking to enforce
her judgment lien upon the real estate. David then filed his first claim for a
homestead exemption. In a July 1983 decision, the supreme court remanded the
case to the trial court with instructions to incorporate the negative valuation
of a piece of community property.
{7} In January 1984, the
trial court, pursuant to the supreme court's instructions and after a
rehearing, adjusted the judgment for Evelyn from $47,145.50 to $55,146.50, plus
attorney fees and costs. In addition, the trial court issued a writ of
execution against the duplex at 910-1/2 Dunlap Street. Evelyn also filed
several writs of garnishment after the adjusted judgment, in attempts to
satisfy her judgment.
{8} Soon after the entry of
the adjusted judgment in March 1984, David filed a voluntary petition of
bankruptcy under chapter seven of the Federal Bankruptcy Code in the Federal
Bankruptcy Court for the District of New Mexico. The petition listed the Dunlap
Street property, as described in the 1977 deed, as part of the bankrupt estate,
and it also included a second claim for a homestead exemption. During the same
month, Evelyn obtained an order from the trial court allowing the sale of
David's separate property, but the Clerk of the Bankruptcy Court filed a notice
of stay of any court proceedings to enforce a lien against any property in the
custody of the Bankruptcy Court. In July 1984, David filed a third claim for a
homestead exemption.
{*663} In all three
filings, the property described for the claim of homestead exemption was identical
to the property described in the 1977 deed. In September 1984, David filed an
amended claim of exemptions specifically stating that he was supporting his two
children from a previous marriage, and that he was therefore entitled to hold
exempt a homestead in the amount of $20,000, pursuant to NMSA 1978, Section
42-10-9 (Cum. Supp. 1984).
{9} In August 1984, despite
the notice of stay, Evelyn further attempted to enforce her judgment and
complaint in foreclosure by publishing, in the Santa Fe New Mexican, a notice
of intent to sell at auction the Dunlap Street property. At this point, David
and his mother, Adela, requested reformation of the deed by the trial court
claiming that the description in the 1977 deed mistakenly included the duplex
and the main house. Adela and her daughter, Lori, then filed a motion to
intervene and a complaint in intervention asking the trial court to reform the
deed to reflect the actual intention of the parties--to transfer only the
duplex at 910-1/2 Dunlap Street to David.
{10} The trial court ruled
that Adela and David could reform the deed as requested without the court's
intervention or assistance. The court further ruled, however, that any
reformation would be subject to Evelyn's prior judgment lien and to the rights
of the trustee in bankruptcy. The court also ruled that David was not entitled
to a homestead exemption, concluding that David did not have legal custody of
his children. Alternatively, the trial court concluded that if David was
entitled to an exemption at all, it would be for the tract he claimed to own at
910-1/2 Dunlap Street. Additionally, the trial court denied, in its conclusions
of law, Adela's and Lori's motion to intervene in the action.
{11} David, Adela and the
trustee in bankruptcy filed their notice of appeal on a timely basis in
February 1985. After the filing of that notice of appeal, all claims of the
trustee in bankruptcy were settled by stipulation, whereby Evelyn and the
trustee agreed they would release and discharge each other from any and all
claims arising out of the original divorce action. Evelyn also waived any right
to make any claim as a secured or unsecured creditor against the bankrupt
estate of David.
{12} We first consider
whether the trial court abused its discretion when it denied Adela's motion to
intervene and her claim for relief. The denial of a motion to intervene will
not be reversed absent a clear abuse of discretion by the trial court.
See
Richins v. Mayfield, 85 N.M. 578,
514 P.2d 854 (1973). We believe that the
trial court essentially allowed Adela to intervene, since it heard her claims
and allowed her to fully develop her case before the court. Although the trial
court ultimately denied her proposed conclusion of law that her motion to
intervene be granted, Adela did obtain a full hearing of her claims. The court
concluded that her claim for reformation of the 1977 deed was allowed, as long
as it did not effect the rights of Evelyn.
{13} Intervention is an act
or proceeding whereby a person is permitted to become a party in an action
between other persons, after which the litigation proceeds with the original
and intervening parties.
State v. Reese, 78 N.M. 241,
430 P.2d 399
(1967). SCRA 1986, 1-024 provides for intervention of right and permissive
intervention. Rule 1-024(A)(2) allows intervention of right upon timely
application:
when the applicant claims an interest relating to the
property or transaction which is the subject of the action and he is so
situated that the disposition of the action may as a practical matter impair or
impede his ability to protect that interest, unless the applicant's interest is
adequately represented by existing parties.
Rule 1-024(B)(2) allows permissive intervention "when an
applicant's claim or defense and the main action have a question of law or fact
in common."
{14} Adela argues that
permissive intervention applies here. She relies upon
Richins v. Mayfield
to argue that intervention will be allowed, even after a final judgment, when
it is necessary to preserve a right
{*664} which
cannot otherwise be protected. She further contends that the trial court found
common questions of law and fact between the intervenors and the original
parties to the action, but it erroneously rejected Adela's motion to intervene.
{15} We do not find Adela's
arguments to be persuasive. First, her reliance upon
Richins is
misplaced since there were not the exceptional circumstances of a final
judgment here which the intervenors were attempting to re-open in order to
intervene. Moreover, although there may Well be common issues of law and fact
between the intervenors and the original parties, we believe that Adela's
interests were adequately represented by David and were heard by the trial
court. Hence, Adela's motion to intervene was properly denied under the ambit
of Rule 1-024(A)(2) which precludes intervention when "the applicant's
interest is adequately represented by existing parties." Furthermore, we
find no abuse of discretion by the trial court since Adela was allowed the full
opportunity to present her claim to the court.
{16} We now consider whether
the trial court erred when it allowed Adela and David, at their own option, to
reform the 1977 deed, but ruled that such reformation would have no effect upon
Evelyn's position as a judgment lienholder. We do not find error here either,
and therefore affirm the trial court.
{17} The trial court
specifically allowed for the reformation of the deed in its conclusion of law
no. 2, as long as such reformation did not adversely affect the rights of
either Evelyn, as a judgment lienholder, or of the trustee in bankruptcy. In
addition the trial court limited the scope of reformation of the deed by
accepting Evelyn's defenses of the statute of limitations, collateral estoppel,
laches, and the legal priority of a judgment lienholder.
{18} David primarily argues
in his brief that the court erred in not granting the full reformation of the
deed since there was a mutual mistake of intent between Adela and himself. He
argues that a court in New Mexico can only grant reformation upon the finding
of a mutual mistake of the parties to an instrument when that instrument does
not actually reflect their agreement. David relies upon numerous cases
including
Butler v. Butler, 80 N.M. 36,
450 P.2d 922 (1969);
Smith v.
Loos, 78 N.M. 339,
431 P.2d 72 (1967);
Leigh v. Hertzmark, 77 N.M.
789,
427 P.2d 668 (1967); and
Wright v. Brem, 81 N.M. 410,
467 P.2d 736
(Ct. App. 1970). We are not convinced by his arguments in reliance on these
cases.
{19} In
Wright, an
action for the reformation of a deed for the sale of real estate, this court
stated that a deed may be reformed if (1) there has been a mutual mistake, or
(2) a mistake by one party accompanied by fraud or other inequitable conduct by
the other party. 81 N.M. at 411, 467 P.2d at 737.
See also Butler, 80
N.M. at 38, 450 P.2d at 924 (equity will grant reformation of written
instruments only where there was a mutual mistake, or a unilateral mistake
together with fraud or inequitable conduct by the other party). Furthermore, in
Smith, an action to set aside the settlement of a personal injury claim,
this court held that the settlement agreement could not be set aside because
the agreement accomplished the intent of the parties--an end to any further
contention between the litigants. We do not find any of the foregoing cases
applicable to the present facts.
{20} In the instant case, the
issue of fraud or inequitable conduct was neither raised below nor in the
docketing statement and, therefore, it is not an issue on appeal.
State v.
Najar, 94 N.M. 193,
608 P.2d 169 (Ct. App. 1980). In spite of David's
argument that Adela was mistaken in the amount of property she and her husband
intended to grant to David, the trial court did not find any mistake. In the
absence of such finding, it is well established that the deed must be accepted
as written.
See Leigh v. Hertzmark, 77 N.M. at 792, 427 P.2d at 671.
Moreover, in addition to the lack of a finding of mutual mistake of fact, David
did not show that Adela made a unilateral mistake, which may have supported
reformation where the conveyance
{*665} is
by gift.
Butler, 80 N.M. at 38, 450 P.2d at 924.
{21} Even though the trial
court did not find mutual mistake of fact, David contends that since the trial
court allowed the parties, at their own option, to reform the 1977 deed, it
also implicitly found that there was a mutual mistake. He argues this point
despite the trial court's rejection of both his and Adela's proposed findings
pertaining to intent and mistake of fact. It is well established that the
failure of a trial court to make a specific finding of fact is regarded as a
finding against the party having the burden of establishing that fact.
Gibbons
& Reed Co. v. Bureau of Revenue, 80 N.M. 462,
457 P.2d 710 (1969);
Brundage
v. K. L. House Constr. Co., 74 N.M. 613,
396 P.2d 731 (1964). Therefore, in
the absence of mistake, the trial court properly denied David's and Adela's
request for the judicial reformation of the 1977 deed.
{22} The court did, however,
allow David and Adela, at their own option, to reform the deed, so long as such
reformation would not interfere with Evelyn's position as a judgment
lienholder. We believe that any reformation of the deed should not affect
Evelyn since, as a judgment lienholder, she essentially has the legal position
of a bona fide purchaser for value without notice of any claims or
encumbrances.
{23} The supreme court has
held that reformation will not affect the rights of a bona fide purchaser or
any encumbrancer of land without notice or knowledge of the claimed mistake in
the title,
Kimberly, Inc. v. Hays, 88 N.M. 140,
537 P.2d 1402 (1975);
see
66 Am. Jur.2d
Reformation of Instruments § 65 (1973).
See also
Pacheco v. Martinez, 97 N.M. 37,
636 P.2d 308 (Ct. App. 1981) (reformation
is not proper relief as against a subsequent bona fide purchaser or
encumbrancer of land, or where such relief is not properly pleaded and proven).
In the present case, there is no evidence to prove that judicial reformation
should be granted to the appellants. More importantly, Evelyn, as a judgment
lienholder, is an encumbrancer of land,
see Black's Law Dictionary 473
(5th ed. 1979), and the record shows that she was without notice of the claimed
mistake in the title until she attempted to execute her judgment against
David's property. The trial court found that all parties were proceeding under
the assumption that the 1977 deed was valid, and that it included both the
duplex and the main house located at 910 Dunlap Street.
{24} Given the fact that
Evelyn is a judgment lienholder without notice of the claimed mistake, she is
also supported by NMSA 1978, Section
14-9-3 (Repl. Pamp. 1988), which provides:
No deed, mortgage or other instrument in writing, not
recorded in accordance with Section 14-9-1 NMSA 1978, shall affect the title or
rights to, in any real estate, of any purchaser, mortgagee in good faith or judgment
lien creditor, without knowledge of the existence of such unrecorded
instruments. (Emphasis added.)
A judgment lien creditor is synonymous with a judgment
lienholder. This section precludes David and Adela from reforming the 1977 deed
in a manner that would restrict Evelyn's efforts to execute her judgment
against the property at issue here. Furthermore, in light of Section 14-9-3,
Adela and David incorrectly argue in their brief that Evelyn, in order to
prevail, must stand as a "bona fide purchaser or encumbrancer for
value." The evidence clearly shows Evelyn to be a judgment lien creditor
and therefore protected by the statute. She may also be considered to be an
encumbrancer for value since she has an outstanding money judgment against
David's property.
{25} Consequently, since the
record shows Evelyn to be a judgment lienholder, and because there is no
evidence that she had any notice of the claimed mistake in the 1977 deed until
she attempted to execute her judgment, the trial court was correct in ruling
that any reformation of the deed is not effective against the rights of Evelyn.
The trial court is accordingly affirmed on this issue.
{26} We now consider whether
the trial court erred when it denied David's claims for a
{*666}
homestead exemption in his property located at 910 Dunlap Street. We
believe that the trial court erred in its interpretation of the homestead
statute, and we therefore reverse and remand on this issue. Section 42-109
1 provides for the homestead
exemption:
A married person, widow, widower or person who is supporting
another person shall have exempt a homestead in a dwelling house and land
occupied by him although the dwelling is on land owned by another, provided
that the dwelling is owned, leased or being purchased by the person claiming
the exemption. Such a person has a homestead of twenty thousand dollars
($20,000) exempt from attachment, execution or foreclosure by a judgment
creditor, and from any proceeding of receivers or trustees in insolvency
proceedings, and from executors or administrators in probate.
The trial court adopted Evelyn's arguments against the
homestead exemption and, in its conclusions of law, denied David's entitlement
to the exemption. The court concluded that David is not entitled to the
exemption for three reasons: (1) none of his children live with him; (2) he is
not the sole supporter of his two children; and, (3) he did not have legal
custody of his children. Thus, the trial court concluded that, as a matter of
law, David is not supporting his children according to the conditions the court
considered. We believe the trial court erred in so concluding, and conclusions
of law are reviewable on appeal. Edens v. New Mexico Health & Social
Serv's Dept, 89 N.M. 60, 547 P.2d 65 (1976).
{27} The purpose of a
homestead exemption, and of exemptions in general, is to benefit the debtor and
the debtor's dependents.
In re Niemyjski, 26 B.R. 466 (Bankr. D.N.M.
1983). Moreover, exemption statutes in New Mexico should be liberally
construed.
Laughlin v. Lumbert, 68 N.M. 351,
362 P.2d 507 (1961). We
believe that the trial court misconstrued the language of the statute.
{28} The statute is clear and
unambiguous. Under the rules of statutory construction, legislative intent is
determined primarily by the language of the statute itself; words are given
their ordinary meaning unless a different intent is clearly indicated.
State
v. Pedroncelli, 100 N.M. 678,
675 P.2d 127 (1984). Further, courts must
take the statute as they find it and construe it according to the plain meaning
of the language employed.
Perea v. Baca, 94 N.M. 624,
614 P.2d 541
(1980). Nowhere in Section 42-10-9 does it require the claimant of a homestead
exemption to have legal custody of his children, to be their sole supporter, or
to have his children reside with him. The trial court, however, concluded that
David was not entitled to the exemption for failing to satisfy those
conditions. The statute requires only that the claimant be
"supporting" another person. In effect, the trial court imposed
additional requirements upon the application for a homestead exemption. If the
legislature had intended there to be additional requirements, it would have
included them in the homestead provision. Hence, we conclude the trial court
erred in its interpretation of Section 42-10-9.
{29} Still at issue, however,
is whether David is "supporting another person" as required by the
statute. It is undisputed that he is the owner of at least the duplex at
910-1/2 Dunlap Street, and that he was under a court order to furnish support
for his two minor children at the time of the original action. It is also
undisputed that he had contributed approximately $3,500 in child support from
September 1983 through October 1984. The question remains though, whether David
is truly supporting his two children pursuant to the statute. The statute does
not define the term "support," nor do current New Mexico cases
indicate the extent of financial contribution that one parent must make in
order to be supporting a child. Consequently, we reverse and remand on this
issue for the trial court to determine whether David is in fact supporting
{*667} his children pursuant to the meaning of
Section 42-10-9.
{30} Based upon the foregoing
discussion, we affirm the trial court on the first two issues. We reverse and
remand on the third issue with instructions for the trial court to determine
whether David Segura is entitled to a homestead exemption on the basis of his
contributions to the support of his children. No attorney fees are granted to
appellee.
ALARID, Judge, HARVEY FRUMAN, Judge, RUDY S. APODACA, Judge
1.
We consider the 1984 version of the statute in effect at the time of this
appeal.