Opinion ID: 2612531
Heading Depth: 2
Heading Rank: 1

Heading: whether the judgment granted relief within the theory of the case.

Text: Appellant contends that the court erred by granting relief that was not within the theory of the case as tried. Appellant asserts that although the court limited the theories of the case to contract and agency, a judgment was entered based on the theory of negotiable instruments. Specifically, appellant argues that the court's conclusions of law demonstrate that the decision was based entirely on NMSA 1978, Sections 55-3-101 to -805, the article in the Uniform Commercial Code dealing with negotiable instruments. As a consequence, appellant contends it was prejudiced because it was unable to raise various defenses arising out of NMSA 1978, Sections 55-3-302(2) and -305. We disagree and find that the trial court's conclusions of law are subject to an interpretation sounding in contract. The challenged conclusions state: 8. A check is not just a mere order for payment of money. It is a contractual obligation of the drawer. 9. A check on which payment has been stopped comes within the classification of money due by contract. 10. When Farmers stopped payment on the check to Ogden, it was liable to Ogden for the consequences of its conduct. In such event the relation between Farmers and Ogden became the same as if the check had been dishonored and notice thereof given to Farmers. (a) The effect, so far as Farmers is concerned, is to change its conditional liability to one free from condition, and Farmers' situation is like that of the maker of a promissory note, due on demand. 11. Farmers' defenses against Dal are not available to Farmers against Ogden who had no knowledge of the trailer not conforming to specifications. (emphasis added) (citations omitted). When a conclusion of law is challenged, the standard of review is whether the law was correctly applied to the facts. Texas Nat'l Theatres, Inc. v. City of Albuquerque, 97 N.M. 282, 639 P.2d 569 (1982). We view the findings of fact in a manner most favorable to the appellee, indulging the decision with all reasonable inferences in support of it and disregarding all contrary evidence. Id. at 287, 639 P.2d at 574. In this case, we find that the law of contracts was correctly applied to the undisputed findings of fact. Moreover, the court's findings of fact do not support any conclusions based on the law of negotiable instruments. The conclusions of law must be founded on and supported by the findings of fact. In re Will of Carson, 87 N.M. 43, 529 P.2d 269 (1974). The unchallenged findings make no mention of facts relating to negotiable instruments, although these findings of fact do support conclusions that relate to contract law. The trial court's findings of fact are to be liberally construed so as to sustain the judgment. See Wine v. Neal, 100 N.M. 431, 671 P.2d 1142 (1983). Moreover, although we find no discrepancy in the court's decision, if a conflict did exist between the conclusions of law and the findings of fact, the latter would prevail. See Carson, 87 N.M. at 44, 529 P.2d at 270. The findings support the conclusion that a contract existed for delivery of the trailer. The court found that Farmers agreed to the delivery plans, knew the price of the trailer on delivery, and guaranteed Ogden payment of $4,120 upon delivery. Ogden agreed to pick up the trailer, but only after confirming with Farmers that payment was due on delivery. The court further found that Ogden relied on Farmers' assurances before he undertook the trip to Arkansas to procure the trailer from Dal. Because appellant has not disputed these findings, we accept them as the basis for the court's decision. Kerr v. Akard Bros. Trucking Co., 73 N.M. 50, 385 P.2d 570 (1963). In light of these findings, Ogden fulfilled his obligations under the contract for delivery. The presumption upon review favors the correctness of the trial court's actions. Appellant must affirmatively demonstrate its assertion of error. See State v. Serrano, 76 N.M. 655, 417 P.2d 795 (1966); State v. Weber, 76 N.M. 636, 417 P.2d 444 (1966). Appellant has failed to show that the court's conclusions were based erroneously on the law of negotiable instruments. The court's mere reference to the check, as the form of payment, fails to persuade us that the law of negotiable instruments was applied. We find that the form the payment took is irrelevant. Regardless of how the payment was made, Farmers' contractual liability was not discharged. Upon reviewing the record, we find that the judgment is subject to an interpretation based on a straightforward contract theory. Therefore, Farmers' argument regarding its possible statutory negotiable instruments defenses is moot because the court's decision was not based on the law of negotiable instruments, but on contract law.