Court Opinion

ID: 9532992
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:27:06.410646+00
Date Added: 2024-06-11T13:28:53.191754
License: Public Domain

WATSON, Justice (concurring specially)- I would add the following facts to those recited in the opinion: The mortgage against the one-third interest in the lands (actually a security agreement) provided that the secured indebtedness might be increased or decreased from time to time. The loan for $30,475 was deemed by all parties as part of this “open-end” agreement with the Bank even though a separate security agreement on the cattle had been executed. No contention was ever made by the parties that, after he acquired the deed, the position of James” Morrow, Sr., to the Bank differed materially from that of the intervening lien holder in Heller v. Gate City Building & Loan Association, 75 N.M. 596, 408 P.2d 753 (1965). There we said: “ * * * [A] first mortgagee making future advances, which are optional and not obligatory under the first mortgage, with actual knowledge of an intervening lien, cannot obtain priority for subsequent advances over the intervening lien.” (Emphasis added.) 75 N.M. at 600, 408 P.2d at 755. The only finding by the trial court as to the Bank’s actual knowledge of the Morrow deed was that it had such knowledge “prior to the extension agreement.” There was no finding that any loans were made at the time of the extension agreement or afterward, or that the two notes here sued upon were not for loans made prior to the extension agreement. Thus, there are no findings to support Conclusions 5 and 6. I agree that there was substantial evidence to support Finding 17. The $31,-395.30 was received from the sale of cattle pledged to the Bank for its loan. The down payment received on this sale had already been paid to the Bank and applied on the Bank’s account with James Morrow, Jr., who testified that upon the receipt of the balance of the proceeds of the sale he mailed to Mr. Reeves at the Bank “a deposit on the cattle. The balance on the payment.” I believe this is sufficient for the court to find that payment was made on the secured indebtedness. As in Schreiber v. Armstrong, 70 N.M. 419, 374 P.2d 297 (1962), appellant’s theory of later ratification of the misapplication was not preserved for our review by requested findings and conclusions. I agree that appellee James Morrow, Sr., was prejudiced by the failure to give credit for this payment on the loan for which his land was then pledged. Appellant contends under its Point III that the bank loan was actually reduced more by the application of the proceeds of a later sale of cattle pledged to the loan company than if the proceeds of the pledged assets had been strictly applied to the respective debts. This may be, but the $31,395.30 payment, once having been made to the Bank, immediately accrued to the benefit of the junior lien holder and could not be withdrawn to his detriment. In re McElmurray, 47 F.Supp. 15 (E.D. S.C. 1942); Wilson v. Morse Mill Company, 225 Ark. 405, 282 S.W.2d 803 (1955); First National Bank of Grand Haven v. Honeyman, 6 Dak. 275, 42 N.W. 771 (1889). Appellant did not question the crediting to the indebtedness at the Bank of the proceeds derived from the sale of cattle which had been given as security on an indebtedness to the loan company; therefore, this credit can only be considered as another proper payment to the Bank. The credits of these payments being sufficient to discharge the lien of the mortgage as to James Morrow, Sr.’s, land, I concur in the affirmance on this ground alone.