Court Opinion

ID: 9845812
Source: CourtListenerOpinion
Date Created: 2023-09-24 03:28:39.676091+00
Date Added: 2024-06-11T09:16:22.340482
License: Public Domain

MONTGOMERY, Justice (specially concurring). I concur wholeheartedly with what I take to be one of the Court’s holdings in the majority opinion — that the agreement of September 9, 1988 was effective to transmute the parties’ previously held community property into Mr. English’s separate property, with reference to which the real estate contract at issue in this case either remained or became valid. I therefore join in most of the majority’s discussion of this issue,1 except that I disagree with the statements that the real estate contract was void as to the property, even if properly characterized as community property, at the time it was acquired by Mr. English. In my view, the question whether a contract is void or not must be determined with reference to the identity of the party asserting its invalidity and in light of the purpose of the statute or other legal pronouncement declaring it to be void.2 A party who is a stranger to the marital relationship lacks standing to assert the invalidity of the contract, because the purpose of the statute declaring it “void and of no effect” is to protect the assets for the benefit of the community, not to provide a weapon for invalidation of an otherwise perfectly lawful transaction. The majority are at pains to point out that the decision today overrules no prior cases. This is understandable in view of the considerable body of case law, much of which is cited in the majority opinion, holding that a conveyance or contract to convey community property, not signed by one of the spouses, is absolutely void — void for all purposes. However, as the majority opinion intimates, existing New Mexico case law has placed this state out of the mainstream of other community property states by following the “void and of no effect” doctrine to such an extent that the purpose of the statute (NMSA 1978, Section 40-3-13(A) (Repl.Pamp.1989)) giving rise to the doctrine has been forgotten, and an overly mechanistic, unrealistic and rigid application of the doctrine has been followed instead. Although all of the community property states require both spouses to join in deeds or other instruments conveying or agreeing to convey community real property, in none of them are the consequences of non-joinder by one of the spouses so rigorously and inflexibly tied to the notion that the agreement is a “nullity” as in New Mexico. No community property state continues to use the term “void” in its statutes governing this kind of transaction nor takes the view that a spouse is incapable of ratifying a real property transfer, as the statutes cited in the majority opinion demonstrate. The lesson to be learned from the other community property states is reflected in cases from Idaho and Arizona. Even before Idaho replaced its “void” statute with a modern “equal control” statute, case law had ameliorated the harshness of this adjective, if literally applied, in certain situations. In Tew v. Manwaring, 94 Idaho 50, 480 P.2d 896 (1971) (decided under former law), the Supreme Court of Idaho held that an agreement to purchase a home could not be invalidated at the behest of the buyer, saying: While it is true that a contract to convey the community real estate is void if not signed and acknowledged by both the husband and wife under this statute, this is not an inexorable rule and does not defeat the contract between the [sellers] and [the buyer]. First, this statute was enacted for the purpose of protecting the community and cannot be invoked to gain advantage over the community especially where the plaintiffs [sellers] have fully performed. Further, [buyer’s] actions, especially subsequent to the formation of the contract, are clearly such that he should be es-topped to deny that a contract existed or assert that it is invalid for want of acknowledgement by the wife. Id. at 53, 480 P.2d at 899. See also Geronimo Hotel & Lodge v. Putzi, 151 Ariz. 477, 728 P.2d 1227 (1986) (declining to follow Sims v. Craig, 96 N.M. 33, 627 P.2d 875 (1981)). The holding in Geronimo assessing liability against the signing spouse essentially parallels that in Conley v. Davidson, 35 N.M. 173, 291 P. 489 (1930), in which this Court allowed an action for damages to be maintained by the buyer against the seller under a real estate purchase agreement where the seller’s wife refused to join in the conveyance. The Court in Adams v. Blumenshine, 27 N.M. 643, 204 P. 66 (1922), had held that even though the “void and of no effect” law then in effect (1915 N.M.Laws, ch. 84, § 1) covered only conveyances and not contracts to convey, since the conveyance would be void without the wife’s joinder the contract “would likewise be void and of no effect, at least so far as specific performance of the contract is concerned.” Id. at 651, 204 P. at 68. Despite this holding, the Court in Conley permitted an action against the seller-husband for damages. A review of other New Mexico cases on this point is similarly instructive. The decision in Conley was followed in Potter v. Connor, 38 N.M. 431, 34 P.2d 1086 (1934) (absence of joinder by seller’s wife does not invalidate contract for sale of community realty when invalidity asserted by buyer); in Treadwell v. Henderson, 58 N.M. 230, 269 P.2d 1108 (1954) (wife estopped after divorce from asserting non-joinder defense, having promised buyer deed to community realty); in Viramontes v. Fox, 65 N.M. 275, 335 P.2d 1071 (1959) (failure on part of seller’s wife to join in contract to convey community realty not available to buyer as defense in seller’s damages suit for breach of contract); and in Pickett v. Miller, 76 N.M. 105, 412 P.2d 400 (1966) (in action by sellers where wife willing to convey community realty, lack of signature not a defense available to buyers who breached contract). Thus, well before enactment of the Community Property Act of 1973 a significant body of New Mexico case law affirmed the enforceability of contracts to convey community real estate in various circumstances, and several of those cases (Potter, Viramontes, and Pickett) rebuffed attempts by the contract vendees to have the contracts declared void. According to Professor Bingaman, however, the express inclusion in Section 40-3-13 of all “contracts to transfer, convey or mortgage” any interest in community real property has the effect of reversing the holding in Viramontes v. Fox. Bingaman, The Community Property Act of 1973: A Commentary and Quasi-Legislative History, 5 N.M.L.Rev. 1, 32-33 (1974). If indeed the statute has that effect, then it would seem that the other cases cited above, beginning with Conley v. Davidson, would also fall, although as recently as 1985 this Court cited Treadwell v. Henderson with approval. Otero v. Wheeler, 102 N.M. 770, 774, 701 P.2d 369, 373 (1985).3 In this posture, New Mexico has repudiated even the modest inroads into the “void and of no effect” doctrine gained under prior case law and now stands alone among the community property states as the only example of militant enforcement of this concept. The concept is pernicious — not necessarily wrong in all its applications — in my opinion because it produces legal consequences from people’s acts without regard for the underlying purpose or purposes of the legal rules which are applied to those acts. In the instance of the “void and of no effect” rule of Section 40-3-13, a contract to convey community real estate which lacks the signature of one of the spouses is treated as an absolute nullity — as though the piece of paper were never signed. This, of course, is contrary to reality; the parties did sign the piece of paper, and for the law to refuse to recognize that historical fact and accord it any significance whatsoever, no matter what the circumstances, is for the law to blind itself to a moment of historical reality. If there is a reason to do this — a reason for the law to ignore the parties’ actions — then that consequence may very well be justified; but if no reason exists and no purpose is served by treating the parties’ deliberate actions as though they never occurred, then the law achieves results which, in laymen’s eyes at least, make it appear to be the ass that Dickens’ character said it was. The purpose behind Section 40-3-13 has recently been re-articulated by this Court: “to safeguard the interest of a spouse in community real property.” Arch Ltd. v. Yu, 108 N.M. 67, 72, 766 P.2d 911, 916 (1988). See also Treadwell v. Henderson, 58 N.M. at 243, 269 P.2d at 1116 (Sadler, J., dissenting): “[T]he protection afforded by this statute is primarily for the benefit of the wife [sic] against efforts by the husband [sic] to appropriate her [sic] just and lawful share of community real estate.” And, until very recently (see below), in every case in which the statute has been applied to invalidate a contract or conveyance (except one: Hannah v. Tennant, 92 N.M. 444, 589 P.2d 1035 (1979)4) the invalidation has been declared at the behest of the seller(s) under the contract or the grantor(s) under the deed or their successors in interest. In no case, according to my research, has the grantee or the vendee, or a successor of one of them, successfully invoked the statute to invalidate a conveyance or a contract (again, except in Hannah). See Arch, Ltd. v. Yu; Marquez v. Marquez, 85 N.M. 470, 513 P.2d 713 (1973); Mounsey v. Stahl, 62 N.M. 135, 306 P.2d 258 (1957); McGrail v. Fields, 53 N.M. 158, 203 P.2d 1000 (1949); Frkovich v. Petranovich, 48 N.M. 382, 151 P.2d 337 (1944); Jenkins v. Huntsinger, 46 N.M. 168, 125 P.2d 327 (1942); Terry v. Humphreys, 27 N.M. 564, 203 P. 539 (1922); Adams v. Blumenshine. And so it does not amount to much of a break with existing case law — particularly in light of the Conley line of cases — to hold (as I believe we do in this case) that, at -least where the sellers have “ratified” the contract by executing a designation agreement under Section 40-3-8(A)(5), the statute may not be invoked by the vendees under a real estate contract to avoid their otherwise just and legitimate obligations under that contract. The “very recent” instance, noted in the preceding paragraph, of an application of the “void and of no effect” doctrine at the behest of someone other than a spouse or a successor is, of course, this Court’s decision on June 13, 1990 in C & L Lumber & Supply, Inc. v. Texas American Bank, cited in the majority opinion. In that case, in which I did not participate, the panel held that a mortgage could be successfully attacked as void by lien claimants (under mechanic’s and materialman’s lien claims) to upset the priority of an otherwise valid and prior first-mortgage lien on real property. The mortgage in question in that case was given by a husband without his wife’s joinder; in a foreclosure action by the bank mortgagee against various lien claimants long after the wife had deeded any interest in the property to the husband, the lienors successfully invalidated the bank’s mortgage. Thus, the “void and of no effect” doctrine has received its fullest and most inexorable application in a very recent decision of this Court, allowing complete strangers to the marital relationship — not even parties having some contractual or other legal relationship with the community — to raise issues of characterization of the spouses’ property and to strike down as “void” a juridical act of one of them. In this state, then, a contract, conveyance or mortgage of community property without one spouse’s joinder is void, void, void — no matter who raises the issue and no matter what the consequence on other parties’ rights. This is a situation that cries out for legislative correction, in the same or a similar way that this unjust, inflexible approach has been corrected in the other community property states. Fortunately in the present case, the intervention of another statute — that recognizing a husband and wife’s ability to deal with their property as they see fit and to change its characterization in order to prevent an unjust result — has rescued the plaintiffs below and this Court from another unsound application of the “void and of no effect” doctrine and statute. For that reason, I happily concur. WILSON, J., concurs.  . I am willing to assume that the property was community property at the time of the conveyance to Mr. English, although I am dubious about applying the presumption in NMSA 1978, Section 40-3-12(A) (Repl.Pamp.1989) (property which is not shown to be separate property is presumed to be community property) for the benefit of a stranger to the community. A strong argument can probably be made that it is only the spouses (or their successors in interest) who are entitled to invoke this presumption and that parties asserting a claim against the community must avail themselves of, or be subject to, any presumptions provided by other rules of law. For example, since the Sanchezes' defense that the real estate contract is void is an affirmative defense, Otero v. Buslee, 695 F.2d 1244, 1248 (10th Cir.1982), they have the burden of showing by a preponderance of the evidence that the facts are as they claim them to be. Nevertheless, as I say, I will regard the property as community property for purposes of this concurring opinion.   . Cf. Romero v. Garcia, 89 N.M. 1, 546 P.2d 66 (1976) (husband’s deed of community property, though void for lack of wife’s joinder, sufficient for purpose of color of title); NMSA 1978, § 44-5-4 (judgments, conveyances and contracts founded on gambling loss void, but holder in due course takes free of defect); NMSA 1978, § 55-2-201, comment 4 ("Failure to satisfy the requirements of [this section of the Uniform Commercial Code covering formation of sales contract] does not render the contract void for all purposes, but merely prevents it from being judicially enforced in favor of a party to the contract.”).   . Otero is a case of recent vintage recognizing— Jenkins v. Huntsinger and McGrail v. Fields to the contrary notwithstanding — that a wife could ratify, or be estopped from disavowing, a contract not signed by her to convey community realty. To be fair, it is possible to read the case as holding that the wife only ratified, or was estopped from denying, her husband’s execution of the contract on her behalf under a power of appointment, but the case comes very close to doing what Jenkins and McGrail say cannot be done.   . It is very possible that Hannah was wrongly decided, although the only issue really dealt with in the opinion was whether the word "join” in the statute means actually "sign” or only that the non-signing spouse be ready, willing and able to participate in the transaction. 92 N.M. at 445, 589 P.2d at 1036. There was no issue in Hannah about the effect of an interspousal agreement designating the property as separate or community, because there was no such agreement. Hannah should be either overruled or limited to its facts.