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Nature of Suit Code: 140
Nature of Suit: Negotiable Instruments
Cause of Action: 

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UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

INVESTMENT COMPANY OF THE SOUTHWEST, ) 

INC., a New Mexico corporation, ) 

) 

Plaintiff-Appellee, ) 

) 

FILED 

Uoited St@ie~ Cou,t of Appeals 

Tenth Ci.rruit 

JUN 2 3 1Q91 

ROBERT L. HOECKER 

Clerk 

and ) 

) 

J .A. CARDWELL, ) 

No. 90-2129 

(D.C. No. 89-880-JP) 

(D. N.M.) 

) 

Defendant, ) 

) 

v. ) 

) 

B.D. REYNOLDS, JR., ) 

) 

Defendant-Appellant. ) 

ORDER AND JUDGMENT* 

Before ANDERSON, TACHA, and BRORBY, Circuit Judges. 

After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of • this appeal. See Fed. R. App. P. 

34(a); 10th Cir. R. 34.1.9. In addition, the parties have 

stipulated to submitting this case on the briefs. 

therefore ordered submitted without oral argument. 

* 

The case is 

This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppal. 10th Cir. R. 

36.3. 

Appellate Case: 90-2129 Document: 010110128277 Date Filed: 06/28/1991 Page: 1 
This appeal arises from the efforts of plaintiff Investment 

Company of the Southwest, Inc. to recover on promissory notes 

executed by defendants J.A. Cardwell and B.D. Reynolds. The 

district court granted Investment Company's motion for summary 

judgment against both defendants, and they filed a timely notice 

of appeal. Following briefing in this court, the parties 

stipulated to dismissal of defendant Cardwell. Therefore, this 

1 appeal now concerns only defendant Reynolds. We affirm. 

Facts 

On March 1, 1982, Reynolds executed a promissory not~ in 

favor of Security National Bank of Lubbock, Texas, in the 

principal amount of $150,000.00. At the time, Reynolds was 

operating a Mack Truck dealership in Hobbs, New Mexico. He was an 

experienced businessman and had been involved in many financing 

and loan arrangements over the years. The money from the note was 

used to purchase stock in First City Financial Corporation, a bank 

holding company. 

Through a series of assignments, the note was ultimately 

transferred to First City National Bank. On April 4, 1984, 

Reynolds executed an allonge with that bank which modified and 

extended the terms of the note. First City was later succeeded by 

Moncor Bank, which ultimately became New Mexico National Bank. In 

1986, New Mexico National went into receivership, and the Federal 

1 Investment Company originally filed separate complaints 

against the two defendants. These actions were consolidated in 

the district court, and one notice of appeal was filed. 

2 

Appellate Case: 90-2129 Document: 010110128277 Date Filed: 06/28/1991 Page: 2 
Deposit Insurance Corporation (FDIC) took over. The FDIC later 

transferred various assets of the bank to Investment Company, 

including this note. Investment Company then filed this lawsuit 

to collect on the note, which was in default. 

In a related, but independent, proceeding, the First National 

Bank of Lea County (later known as First City National Bank) filed 

suit against Reynolds and others in February, 1984. In that 

action, the bank sought to collect on several defaulted promissory 

notes. The note at issue here was not among them. In 

April, 1984, Reynolds signed a settlement agreement in that case 

which stated, in part, 

C. Upon execution of the Note, First City 

[National Bank] shall dismiss the lawsuit presently 

pending in District Court, without prejudice, and 

Reynolds, Cardwell, and Russell, in consideration of the 

release of said lawsuit, hereby release First City from 

any claims which they or any one of them may now have 

against First City resulting from any past actions of 

First City, its officers or directors. 

D. This Agreement shall survive and continue to 

bind all the parties following compliance with all of 

the foregoing provisions and shall be binding upon the 

parties, their heirs, successors and assigns. 

Rec. Vol. I doc. R-21, Attachment 1 at 2. 

Prior to signing the settlement agreement, Reynolds consulted 

with his attorney. At the time, both men believed that the 

promissory note in this case was invalid because it was executed 

under duress. 

took place: 

In Reynolds' deposition, the following colloquy 

Q. Was [your attorney] or anyone else aware of the 

settlement agreement conference that you had here in 

Albuquerque prior to actually having the meeting? 

A. Yes. 

3 

Appellate Case: 90-2129 Document: 010110128277 Date Filed: 06/28/1991 Page: 3 
Q. When did he become aware of that? 

A. The morning we had the meeting, prior to 

meeting with them. 

Q. Is that a contact that you made? 

A. We made it as a group. 

Q. Where were you at when that was done? 

A. If I'm not mistaken, [he] picked us up at the 

airport and we had breakfast at the Marriott across the 

street from the bank and discussed this. 

Q. At the time you had your meeting with [your 

attorney] were you aware of the fact that, in your 

opinion, there was a problem with the stock loan note? 

A. Well, I felt like the stock loan note was phony 

and illegal. 

Q. Mr. Russell said in his deposition 

hindsight the biggest mistake you-all made 

listening to [your attorney]. 

that in 

was not 

A. That's correct. He begged us not to make the 

settlement. 

Rec. Vol. I doc. R-21, Attachment 2. Despite his concerns, and 

his attorney's advice, Reynolds signed the agreement. 

In the district court, Reynolds argued that the promissory 

note, settlement agreement and allonge are invalid because they 

were procured under duress. Specifically, he contended that 

various bank officers threatened to call all his outstanding loans 

unless he purchased stock in First City Financial Corporation. 

The settlement agreement and allonge were allegedly part of the 

coercion, as First City Financial was the holding company for 

First City National Bank. Reynolds also asserted Investment 

Company was not a holder of the note. The district court, while 

questioning Reynolds' argument regarding the validity of the 

4 

Appellate Case: 90-2129 Document: 010110128277 Date Filed: 06/28/1991 Page: 4 
waiver contained in the settlement agreement, nevertheless ruled 

that the D'Oench, Duhme doctrine governs this case, thus 

extinguishing any affirmative defenses. See 12 u.s.c. § 1823(e); 

D'Oench, Duhme & Co. v. FDIC, 315 U.S. 447 (1942). The court also 

ruled Investment Company was a proper transferee of the note. 

Because we hold that Reynolds waived all claims against First City 

National Bank and its successors, we need not reach application of 

this doctrine. See Colorado Flying Academy, Inc. v. United 

States, 724 F.2d 871, 880 (10th Cir. 1984)("we can affirm on any 

grounds that find support in the record"), cert. denied, 476 U.S. 

1182 (1986). Further, we agree with the district court that 

Investment Company is the proper party to enforce this note. 

Standard of Review 

We review the grant of summary judgment in the same manner as 

the district court. Abercrombie v. City of Catoosa, 896 F.2d 

1228, 1230 (10th Cir. 1990). It is appropriate only where there 

are no genuine issues of material fact and one party is entitled 

to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 

477 U.S. 242, 250 (1986); Fed. R. Civ. P. 56(c). Once such a 

motion is properly supported, however, the non-moving party has 

the burden of showing material factual issues exist. Brown v. 

Parker-Hannifin Corp., 746 F.2d 1407, 1412 (10th Cir. 1984). 

Resting on allegations made in the pleadings is insufficient. Id. 

It is with these principles in mind that we address Reynolds' 

arguments. 

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Appellate Case: 90-2129 Document: 010110128277 Date Filed: 06/28/1991 Page: 5 
Investment Company's Status as Holder of the Note 

Pursuant to N.M. Stat. Ann.§ 55-1-201(20) (1990 Supp.), a 

"holder" is defined as "a person who is in possession of. an 

instrument . issued or indorsed to him or to his order or to 

bearer or to blank." There is no dispute in this case that 

Investment Company is in possession of both the allonge and the 

promissory note. Reynolds' argument, therefore, is limited to his 

assertion that the note was not properly indorsed to Investment 

Company. 

The documents filed in conjunction with Investment Company's 

motion for summary judgment follow the transfer of the note from 

Security National Bank through three other institutions to Rio 

Grande Valley Bank. Reynolds does not dispute these transfers. 

First City National Bank then acquired Rio Grande Valley Bank. 

First City subsequently changed its name to Moncor Bank, then was 

succeeded by New Mexico National Bank. 2 In July 1986, the FDIC 

was appointed as receiver for New Mexico National. In a loan sale 

agreement dated October 21, 1986, the FDIC transferred certain 

assets, including this note, to Investment Company. In addition 

to the transfer documents identifying this chain of assignments, 

Investment Company also filed affidavits from the FDIC and its own 

president attesting to the transfers. See Rec. Vol. I doc. R-22, 

affidavit of Bob Tinley and attachment 3. 

2 Reynolds admits these transfers 

Opening Brief at 15. 

6 

occurred. See Appellant's 

Appellate Case: 90-2129 Document: 010110128277 Date Filed: 06/28/1991 Page: 6 
Reynolds' primary argument in response to these documents is 

that New Mexico National Bank is not identified by name in the 

loan sale agreement. This argument is not persuasive. The loan 

sale agreement identifies the Moncor Banks, New Mexico National's 

predecessor, as a "former bank" whose assets are included in the 

transfer. Further, affidavits from the FDIC and Investment 

Company attest to the transfer of this note. Reynolds has not 

offered any evidence to dispute these documents. We therefore 

affirm the district court on this issue. 

Settlement Agreement 

The settlement agreement which Reynolds signed in 1984 waives 

any and all claims against First City National, its successors and 

assigns. In New Mexico, there is a strong presumption in favor of 

the enforceability of settlement agreements. See Gonzales v. 

Atnip, 692 P.2d 1343, 1344 (N.M. Ct. App. 1984), cert. denied, 693 

P.2d 591 (1985); see also Sun Country Sav. Bank of N.M., F.S.B. v. 

McDowell, 775 P.2d 730, 733 (N.M. 1989)("The McDowells negotiated 

and executed the stipulation (which waived their claims]; thus, we 

see no reason why they should not be bound by its terms."). In 

order to overcome enforcement of a settlement, Reynolds must 

produce clear and convincing evidence that the agreement should be 

set aside. Quintana v. Motel 6, Inc., 693 P.2d 597, 598 (N.M. Ct . 

App. 1984). As a matter of law, Reynolds failed to do so. 

Reynolds asserts the settlement agreement is invalid becau1 

it is the product of economic duress. It is undisputed, howeve 

that Reynolds consulted with his attorney prior to signing 

7 

Appellate Case: 90-2129 Document: 010110128277 Date Filed: 06/28/1991 Page: 7 
• 

agreement. He admits both he and his counsel had concerns 

regarding the validity of the promissory note in this case. 

Despite these concerns, he freely signed the document. Under 

these circumstances, we hold Reynolds failed, as a matter of law, 

in showing the agreement is unenforceable. See Hastain v. 

Greenbaum, 470 P.2d 741, 748 (Kan. 1970)(no duress where party 

consulted with counsel prior to signing settlement agreement); 

Carrier v. William Penn Broadcasting Co., 233 A.2d 519, 521 (Pa. 

19 6 7 ) ( same ) . generally Annotation, Economic Duress or 

Business Compulsion in Execution of A Promissory Note, 79 A.L.R. 

3d 598, 614 (1977). Because the settlement agreement applies to 

all future claims and is binding on First City National's 

successors and assigns, it is binding here. 

Consequently, the judgment of the United States District 

Court for the District of New Mexico is AFFIRMED. 

Entered for the Court 

Wade Brorby 

Circuit Judge 

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