Court Opinion

ID: 9528105
Source: CourtListenerOpinion
Date Created: 2023-08-07 03:37:07.469125+00
Date Added: 2024-06-11T13:26:30.628343
License: Public Domain

Justice ERICKSON
dissenting:
I would affirm the result reached by the trial court and the court of appeals. See Bigelow v. Nottingham, 833 P.2d 764 (Colo.App.1991). I specifically dissent from section II of the majority opinion in which the majority concludes that the “evidence falls far short of establishing that Haberl knowingly consented to the [impairment of his collateral] for purposes of section 4-3-606(l)(b) of the Code.” Moreover, while the majority does not reach all of the issues on which we granted certiorari, I would also conclude that the statute of frauds is *1376not applicable under the facts of this case for purposes of discharging the Haberls from liability, pursuant to section 4-3-606(l)(b) of the Code, for the negotiable instrument they made in favor of the Bige-lows that is secured by a deed of trust on real property.1
In my view, section 4-3-606(l)(b) does not require that parties provide only written consent to the impairment of their collateral. Rather, consent to the impairment of collateral securing negotiable instruments is a factual determination to be made by the trier of fact, in this case the trial court, and may be determined based on a review of the facts and surroundingcircumstances including the parties prior course of conduct, as well as any alleged verbal consent, or written consent.
The majority implies that the only factual circumstances evidencing Haberl’s consent to the subordination of the Bigelow deed of trust is the telephone conversation between Haberl and Hazouri. However, the record contains substantial evidence indicating a prior course of conduct involving Haberl and the subject property which leads to the inescapable conclusion that Haberl knew that the Bigelow deed of trust not only would be, but must be, subordinated to that of Midland.2
The property was transferred on three separate occasions, and each transfer included a rider providing that the Haberls would subordinate their “Third Note & Trust Deed to a new first mortgage and the existing second mortgage [i.e. the Bige-low deed of trust] if [the property is subsequently] refinanced.” Moreover, when Ha-berl consented to the subordination of his own deed of trust to Midland’s new mortgage, the subordination agreement provided that “the parties [including Haberl] hereto desire that [Midland’s] Deed of Trust be a first and -prior lien,” on the property and that the “Midland deed of trust shall be a first and prior lien.”
It is in the context of evidence indicating an eight year history of the Haberls agreeing to the subordination of both the Bige-low and Haberl deeds of trust to that of a subsequent first mortgage refinancing that the trial court heard the unrefuted evidence of Haberl’s consent by silence. The majority errs in replacing its own factual determinations for those of the trial court. “It is axiomatic that an appellate court cannot substitute itself as a finder of fact, and that the factual findings of the lower court sitting without a jury are not to be disturbed on appeal unless clearly erroneous and not supported by the record.” Ge-bhardt v. Gebkardt, 198 Colo. 28, 30, 595 P.2d 1048, 1050 (1979). The record contains ample support for the factual determination that Haberl consented to the subordination of the Bigelow deed of trust. Because the statute of frauds does not require the consent of Haberl to be in writing, I would affirm the judgment of the court of appeals.
I am authorized to say that Justice MUL-LARKEY joins in this dissent.

. It is undisputed that the deed of trust originally granted by the Haberls to the Bigelows is sufficient to satisfy the statute of frauds. It is also undisputed that the subordination agreement given by the Bigelows to Midland is contained in a writing that is sufficient to satisfy the statute of frauds.

. I note that pursuant to an agreement between APE and Haberl, the Haberl note was subsequently paid in full. Pursuant to the telephone conversation between Haberl and Hazouri, Ha-berl learned that APE believed that the Bigelows were legally obligated to subordinate their deed of trust and that APE would likely sue the Bigelows if they refused to subordinate. Haberl also learned that the Bigelows’ subordination was crucial to APE’s completing the refinancing of the property. Had the Bigelows failed to subordinate their own deed of trust, there was a significant risk of default, including a default on APE's obligation to pay off the Haberl note. Accordingly, it was in Haberl’s best interest to ensure the success of APE’s attempt to obtain the Bigelow subordination agreement. It is not surprising that Haberl failed to object when he was informed that obtaining the Bigelow subordination agreement was crucial to the success of APE’s refinancing efforts. Haberl should not now be heard to complain that his interest in the collateral was substantially impaired when the effect of that impairment was the satisfaction of a note payable to him.