Court Opinion

ID: 9575115
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:11:44.540304+00
Date Added: 2024-06-11T12:44:44.969569
License: Public Domain

OPINION LOPEZ, Judge. Plaintiff-employee (Woods) brought suit to recover for breach of his employment contract. Defendant-employers (partnership) counterclaimed for conversion of funds and for defamation. The trial court awarded Woods $2,381.18 plus interest and costs, less a set-off of $560.00 in favor of the partnership. We affirm. In January, 1970, Woods entered into a written contract of employment with the partnership to serve as general manager of two food establishments in Albuquerque. The first establishment opened in late February and the second opened one month later. The contract provided that Woods would receive a fixed salary, an automobile allowance, and a bonus of one percent (1%) of the gross sales. The term of the contract was one year and it had no provision for prior termination. Subsequently, the partnership opened a third Albuquerque store and Woods assumed supervision of it, as well. Woods sought modification of his written contract, asking that he be compensated for managing the third establishment and that sales from it be included in calculating his annual bonus. Woods alleged that he was promised an increase in salary which would commence at some time after the expiration of the first year’s employment. He also alleges that he was promised that sales from the third establishment would be included in calculating the bonus. The trial court found that the agreed upon bonus was not paid by the partnership when due, that the bonus became due to Woods at the end of the contract year, that Woods made proper demands for the bonus in the usual manner and at the usual place for payment, that the partnership did not offer to pay Woods any of his bonus at any time after the bonus became due, and that the partnership refused to pay the bonus after proper demand. The court further found that Woods met all the conditions precedent owing on his part, that his salary and car allowance were paid by the partnership under the terms of the employment contract, that the partnership breached the employment contract in failing to pay the agreed upon bonus before there was any known problem with Woods’ performance of the contract, that the partnership did not become aware of the $560.00 shortage caused by Woods until after his termination of employment, and that this discovery was not a factor in Woods’ termination. The court concluded that the partnership breached the contract by failing to pay the bonus agreed upon in the contract, that Woods is entitled to recover his bonus under the contract, and that this recovery is subject to a set-off of $560.00 representing an amount which Woods converted to his own use without the expressed permission of the defendant. The partnership appeals alleging that Woods’ conversion of $560.00 from his employers bars the recovery of any bonus compensation otherwise due. The partnership contends that Woods embezzled its funds. Its brief states: “For purposes of this appeal, Appellants do not dispute that Woods’ bonus would have been payable but for his embezzlement of funds from cash registers under his control.” This is a new development. The partnership’s fifth defense and first counterclaim alleged that Woods converted funds to his own use without authorization. The partnership’s requested findings of fact also claimed conversion. We find no contention in the record that Woods embezzled the funds.  Defenses raised for the first time on appeal cannot be relied upon to reverse the judgment. Romero v. Sanchez, 83 N. M. 358, 492 P.2d 140 (1971); Western Farm Bureau Mutual Ins. Co. v. Barela, 79 N.M. 149, 441 P.2d 47 (1968).  Simple conversion is not embezzlement. State v. Prince, 52 N.M. 15, 189 P. 2d 993 (1948); compare State v. Moss, 83 N.M. 42, 487 P.2d 1347 (Ct.App.1971). The partnership contends that Woods is not entitled to recover because he breached an implied duty to render honest and loyal service. This is known as the “faithless servant” doctrine. Turner v. Kouwenhoven, 100 N.Y. 115, 2 N.E. 637 (1885). This doctrine has never been adopted as the law in New Mexico and has been substantially restricted ' by the New York courts. See Herman v. Branch Motor Express Co., Inc., 67 Misc.2d 444, 323 N.Y.S. 2d 794 (1971).  The rule in conversion in New Mexico is given in Crosby v. Basin Motor Co., 83 N.M. 77, 488 P.2d 127 (Ct.App. 1971): “The measure of damages, in conversion, is the value of the property at the time of conversion with interest. * * * ”  It is the function of the courts to interpret and enforce a contract as made by the parties. See Hopper v. Reynolds, 81 N.M. 255, 466 P.2d 101 (1970). The primary objective in construing a contract is to ascertain the intent of the parties. Schultz & Lindsay Construction Co. v. State, 83 N.M. 534, 494 P.2d 612 (1972). In the case at bar there was no intention of the parties to apply a forfeiture of the bonus payable to Woods. The partnership asks this court to go beyond the intention of the parties to apply the “faithless servant” rule. We conclude that to apply this doctrine would be not only inequitable and unjustified in this case but also a radical departure from the applicable law of contracts in this state.  We think that the trial court was correct in enforcing the contract between the parties without applying the “faithless servant” doctrine. See Clem v. Bowman Lumber Company, 83 N.M. 659, 495 P.2d 1106 (Ct.App.1972). There is substantial evidence in the record to support the findings and conclusions of the trial court. State ex rel. Reynolds v. Lewis, 84 N.M. 768, 508 P.2d 577 (1973). We, therefore, conclude that the court below committed no error and that the judgment of the trial court is hereby affirmed. It is so ordered. SUTIN, J., concurs. HERNANDEZ, J., dissenting.