{ "id": 1590269, "name": "SUNWEST BANK OF FARMINGTON, a New Mexico banking corporation, Plaintiff-Appellee, v. Don KENNEDY, Sharon Kennedy, Edith Kennedy, and Estate of Troy Kennedy, Deceased, and/or the Heirs-at-Law of Troy Kennedy, Defendants-Appellants", "name_abbreviation": "Sunwest Bank v. Kennedy", "decision_date": "1990-01-12", "docket_number": "No. 18124", "first_page": "400", "last_page": "403", "citations": [ { "type": "official", "cite": "109 N.M. 400" }, { "type": "parallel", "cite": "785 P.2d 740" } ], "court": { "name_abbreviation": "N.M.", "id": 8835, "name": "Supreme Court of New Mexico" }, "jurisdiction": { "id": 52, "name_long": "New Mexico", "name": "N.M." }, "cites_to": [ { "cite": "781 P.2d 1323", "category": "reporters:state_regional", "reporter": "P.2d", "year": 1989, "opinion_index": 0 }, { "cite": "776 P.2d, 710", "category": "reporters:state_regional", "reporter": "P.2d", "year": 1989, "opinion_index": 0 }, { "cite": "55 Wash.App. 86", "category": "reporters:state", "reporter": "Wash. App.", "case_ids": [ 8847556 ], "year": 1989, "opinion_index": 0, "case_paths": [ "/wash-app/55/0086-01" ] }, { "cite": "258 Or. 188", "category": "reporters:state", "reporter": "Or.", "case_ids": [ 2109960 ], "weight": 2, "year": 1971, "opinion_index": 0, "case_paths": [ "/or/258/0188-01" ] }, { "cite": "602 P.2d 209", "category": "reporters:state_regional", "reporter": "P.2d", "case_ids": [ 10446044 ], "opinion_index": 0, "case_paths": [ "/p2d/602/0209-01" ] }, { "cite": "88 Cal.Rptr. 654", "category": "reporters:state", "reporter": "Cal. Rptr.", "year": 1970, "opinion_index": 0 }, { "cite": "10 Cal.App.3d 63", "category": "reporters:state", "reporter": "Cal. App. 3d", "case_ids": [ 4401330 ], "year": 1970, "opinion_index": 0, "case_paths": [ "/cal-app-3d/10/0063-01" ] }, { "cite": "503 S.W.2d 112", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 10120128 ], "opinion_index": 0, "case_paths": [ "/sw2d/503/0112-01" ] }, { "cite": "338 N.E.2d 179", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1975, "pin_cites": [ { "parenthetical": "holding co-makers liable on note despite subsequent sale of corporate assets and bank having misfiled security agreement thereby losing interest in collateral" } ], "opinion_index": 0 }, { "cite": "62 Ill.2d 16", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 2971614 ], "year": 1975, "pin_cites": [ { "parenthetical": "holding co-makers liable on note despite subsequent sale of corporate assets and bank having misfiled security agreement thereby losing interest in collateral" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/62/0016-01" ] }, { "cite": "345 A.2d 453", "category": "reporters:state_regional", "reporter": "A.2d", "case_ids": [ 8022328 ], "opinion_index": 0, "case_paths": [ "/a2d/345/0453-01" ] }, { "cite": "34 L.Ed.2d 301", "category": "reporters:federal", "reporter": "L. Ed. 2d", "year": 1972, "opinion_index": 0 }, { "cite": "93 S.Ct. 442", "category": "reporters:federal", "reporter": "S. Ct.", "year": 1972, "opinion_index": 0 }, { "cite": "409 U.S. 1008", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6439171, 6439012, 6439332, 6438844, 6439531, 6438700, 6439085, 6439640, 6438779, 6438908, 6439422 ], "year": 1972, "opinion_index": 0, "case_paths": [ "/us/409/1008-07", "/us/409/1008-05", "/us/409/1008-08", "/us/409/1008-03", "/us/409/1008-10", "/us/409/1008-01", "/us/409/1008-06", "/us/409/1008-11", "/us/409/1008-02", "/us/409/1008-04", "/us/409/1008-09" ] }, { "cite": "462 F.2d 254", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 1338687 ], "opinion_index": 0, "case_paths": [ "/f2d/462/0254-01" ] }, { "cite": "766 F.2d 744", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 343766 ], "opinion_index": 0, "case_paths": [ "/f2d/766/0744-01" ] }, { "cite": "105 N.M. 756", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1598959 ], "weight": 2, "year": 1987, "pin_cites": [ { "page": "757" }, { "page": "538" } ], "opinion_index": 0, "case_paths": [ "/nm/105/0756-01" ] }, { "cite": "97 N.M. 288", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1555209 ], "weight": 4, "year": 1982, "pin_cites": [ { "page": "291", "parenthetical": "\"[A] party to a note may be discharged on his obligation if a material alteration is made in the renewal without his consent.\"" }, { "page": "578", "parenthetical": "\"[A] party to a note may be discharged on his obligation if a material alteration is made in the renewal without his consent.\"" }, { "page": "291" }, { "page": "578" } ], "opinion_index": 0, "case_paths": [ "/nm/97/0288-01" ] }, { "cite": "44 N.M. 636", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1566871 ], "weight": 2, "year": 1940, "pin_cites": [ { "page": "641" }, { "page": "562" } ], "opinion_index": 0, "case_paths": [ "/nm/44/0636-01" ] }, { "cite": "106 N.M. 523", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 707446 ], "weight": 2, "year": 1987, "pin_cites": [ { "page": "527" }, { "page": "156" } ], "opinion_index": 0, "case_paths": [ "/nm/106/0523-01" ] } ], "analysis": { "cardinality": 650, "char_count": 11771, "ocr_confidence": 0.779, "pagerank": { "raw": 5.305008338252093e-08, "percentile": 0.3350542830875468 }, "sha256": "0eda80e38138401e4f5026e26c171b899c5ba8c0666ed115473624482860ca0e", "simhash": "1:003f4730fbbb3a52", "word_count": 1860 }, "last_updated": "2023-07-14T16:43:28.780053+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "SOSA, C.J., and WILSON, J., concur." ], "parties": [ "SUNWEST BANK OF FARMINGTON, a New Mexico banking corporation, Plaintiff-Appellee, v. Don KENNEDY, Sharon Kennedy, Edith Kennedy, and Estate of Troy Kennedy, Deceased, and/or the Heirs-at-Law of Troy Kennedy, Defendants-Appellants." ], "opinions": [ { "text": "OPINION\nBACA, Justice.\nDefendants Kennedys appeal the district court of San Juan County\u2019s grant of summary judgment to plaintiff Sunwest Bank of Farmington (Sunwest). The other defendants to the action have not contested the judgment. We affirm.\nFACTS\nIn September 1982, the Kennedys borrowed $165,000 from Valley Bank, the predecessor of Sunwest, for the use of Kennedy, Inc., a corporation owned by the Kennedys, with its principal asset a car dealership. At the time that the promissory note was issued, in addition to assuming primary liability on the note, the Kennedys each signed an \u201cUnconditional and Continuing Guaranty\u201d with the bank, obligating them to \u201cpay any and all liabilities, obligations or indebtedness, of any kind or nature\u201d of the corporation.\nThe original term of the note was one year, although the parties contemplated annual renewals allowing the loan to be repaid over a ten-year period; it was extended twice, in September of 1983, and September of 1984. In December 1984, the Kennedys sold their interest in the corporation to the other defendants in this suit, James Copeland, James Clark, Charlie Craven, and Santex, Inc. Copeland, Clark, and Craven also executed personal guarantees on the payment of the note.\nIn August 1985, Kennedy, Inc., now doing business as Copeland-Graven Pontiac, Oldsmobile-Nissan, Inc., executed a modification of the note, contemplating a three-year amortization, and, because Copeland and Clark had bought out the interests of Craven and Santex, Inc., Sunwest released Craven from his personal guarantee. These actions were accomplished without notice to the Kennedys.\nThe note subsequently went into default, leaving an amount owed of $104,730.30. Sunwest then brought this suit to collect.\nThe issue we consider on this appeal is whether the bank, by releasing Craven from his personal guaranty of the note and by extending the terms of the note without notice to the Kennedys, affected a discharge of the Kennedys\u2019 liability on the note.\nIn determining whether summary judgment was proper, the evidence on appeal is considered in a light most favorable to the party opposing the motion. Green v. General Accident Ins. Co. of Am., 106 N.M. 523, 527, 746 P.2d 152, 156 (1987).\nA. Did Craven and Santex, Inc. Become Co-Makers of the Note by Subsequently Guaranteeing the Indebtedness?\nThe Kennedys argue that, by the terms of the \u201cAssumption of Indebtedness\u201d agreement signed by Craven and Santex, Inc., those parties became co-makers or co-debtors with the Kennedys. Thus, they contend that, because Sunwest subsequently released Craven and Santex from their obligation as guarantors, the Kennedys also were released to the extent of their right of contribution.\nThe Kennedys correctly state the law that such a release by the holder of a note operates to discharge the obligations of subsequent parties and co-debtors who are jointly and severally bound, absent the approval of the maker. See Wood v. Eminger, 44 N.M. 636, 641, 107 P.2d 557, 562 (1940). The applicability of this argument, however, is premised upon Craven and Santex being elevated to the status of co-maker or co-debtor.\nThe Kennedys also correctly define a maker as the party that \u201cengages that he will pay the instrument according to its tenor at the time of his engagement.\u201d NMSA 1978, \u00a7 55-3-413(1). In accordance with this definition, the Kennedys contend that Copeland and Craven, when they assumed the indebtedness, became makers by agreeing to be co-equal with the Kennedys. They argue that Copeland and Craven specifically agreed to become liable \u201cas if the Transferee had executed such instruments as of the dates thereof as the principal obligor[,]\u201d purportedly citing to the record, but without citation. Sunwest, however, has directed our attention to that language in the record. By the \u201cAgreement for Assumption of Indebtedness,\u201d Kennedy, Inc. assumed the debt vis-a-vis the Kennedys, as transferee. Neither Craven nor Santex, Inc. were party to this agreement, and neither assumed any liability through it. Additionally, by the terms of the agreement, the Kennedys agreed that the assumption of indebtedness by Kennedy, Inc. did not relieve the Kennedys from personal liability for the debt.\nSunwest also directs our attention to the \u201cContract of Sale,\u201d in which Craven and Santex, Inc. agreed with the Kennedys to take over payment of the loan. However, this agreement is between, inter alia, the Kennedys, Craven, and Santex. Sunwest was not party to this agreement. Thus, although the contract may give rise to a cause of action between the Kennedys, Craven, and Santex, Inc., it has no effect on the Kennedys\u2019 obligations vis-a-vis Sun-west.\nIt is apparent, therefore, that the Kennedys\u2019 argument that Craven and Santex were co-makers fails. Although Craven did sign a personal guarantee of the loan, and both parties executed the \u201cContract of Sale\u201d with the Kennedys, they did not assume by these actions primary liability for the note. Because Craven was not a co-maker but merely a subsequent guarantor, it is equally apparent that Sunwest\u2019s release of their obligations is irrelevant to the Kennedys\u2019 on-going liability. The cited authority states that a release discharges subsequent parties; the Kennedys did not undertake their obligation contemplating Craven\u2019s participation, and none of the cited authority, and indeed none that our research disclosed, indicates that the release of subsequent obligors relieves earlier obligors from responsibility.\nB. Did Sunwest Materially Alter the Kennedys\u2019 Obligation Without Consent?\nThe Kennedys argue that Sunwest, by releasing co-guarantors and by extending the time period for payment of the note, materially altered the terms of the note without consent, thus discharging the Kennedys\u2019 obligation. See First Nat\u2019l Bank in Albuquerque v. Abraham, 97 N.M. 288, 291, 639 P.2d 575, 578 (1982) (\u201c[A] party to a note may be discharged on his obligation if a material alteration is made in the renewal without his consent.\u201d); see also NMSA 1978, \u00a7 55-3-606; Western Bank v. Aqua Leisure, Ltd., 105 N.M. 756, 757, 737 P.2d 537, 538 (1987). As already discussed, Craven was a subsequent guarantor, and his guaranty ran only to Sun-west; his release could not affect the Kennedys\u2019 rights.\nThe Kennedys contend that they did not sign as co-makers and that therefore the language in the note stating: \u201cIf I\u2019m signing this Note as comaker, I agree to be' equally responsible with the borrower * * *. You may extend or change the terms of payment and release any security without notifying me or releasing me from my responsibility on this Note[,]\u201d is not applicable to them and does not signify their consent to an extension. However, they did sign personal guarantees, stating in part: \u201c[Sunwest] may from time to time and without affecting or impairing Guarantors\u2019 liability hereunder * * * modify or amend any * * * and all of the collateral, security, guarantees, documents and instruments evidencing the Guaranteed Obligations * * Most significantly, the Kennedys signed the original note as makers. They received the benefits of the original obligation and undertook an obligation to repay the note. See NMSA 1978, \u00a7 55-3-413(1). Additionally, in transferring the debt from the Kennedys to Kennedy, Inc., pursuant to NMSA 1978, \u00a7 55-3-603(2), and with Sunwest\u2019s consent, the Kennedys agreed that their personal liability\u2014their liability\u2019as the makers of the note\u2014to repay the indebtedness remained unaltered. Their liability as makers to repay was absolute.\nThe Kennedys maintain that, notwithstanding their status as makers and their obligations pursuant to their personal guarantees and their agreement, in the transfer, to continuing personal liability, they never consented to the extension of the note. They contend that, although they consented to modification or amendment, they did not consent to an extension, which they conclude is a term of art not synonymous with modification or amendment.\nWe find, however, that this argument is without merit. The parties to the original note contemplated continuing modification of the note over a ten-year period. Furthermore, the Kennedys\u2019 status as makers, and not as accommodation parties or sureties, seals their fate. Although a surety or accommodation party to a note may be discharged when the holder unauthorizedly grants an extension, see NMSA 1978, \u00a7 55-3-606(1), and Official Comment 1; J. White and R. Summers, Handbook of the Law Under the Uniform Commercial Code 524-25 (2d ed.1980), the maker of the note does not have this defense available. See, e.g., F.D.I.C. v. Blue Rock Shopping Center, Inc., 766 F.2d 744 (3d Cir.1985); United Am. Life Ins. Co. v. Perillo, 462 F.2d 254 (9th Cir.), cert. denied, 409 U.S. 1008, 93 S.Ct. 442, 34 L.Ed.2d 301 (1972); Toomey v. Cammack, 345 A.2d 453 (D.C.1975); Wohlhuter v. St. Charles Lumber & Fuel Co., 62 Ill.2d 16, 338 N.E.2d 179 (1975) (holding co-makers liable on note despite subsequent sale of corporate assets and bank having misfiled security agreement thereby losing interest in collateral); Commerce Union Bank v. May, 503 S.W.2d 112 (Tenn.1973) (despite subsequent transferee\u2019s failure to insure building against fire as required and without maker\u2019s consent, maker liable for note). The Kennedys, as makers, remain primarily liable on the note, and, although they undoubtedly have recourse against the other parties to the note by virtue of the contract of sale, they have no defense against Sun-west\u2019s claim.\nThe Kennedys nevertheless maintain that Abraham states that \u201ca party to a note may be discharged * * * if a material alteration is made in the renewal without his consent.\u201d 97 N.M. at 291, 639 P.2d at 578. They contend that, because they gave no consent to the extension, they must be discharged. We note the permissive language used in Abraham and the factual posture of that case, which involved a renewal rather than a mere extension, where it was not evident that the parties intended extensions from the totality of the circumstances, and where indices of fraud were evident. By contrasting the facts of Abraham with the facts presented to us today, it is apparent that the Kennedys intended that the note would be renewed and that they participated in the transactions regarding the note with full awareness of their on-going liability.\nThus, in light of the Kennedys\u2019 agreement to remain personally liable as makers, we hold that the district court did not err in granting summary judgment, and we AFFIRM.\nIT IS SO ORDERED.\nSOSA, C.J., and WILSON, J., concur.\n. The Kennedys have not argued that by virtue of the sale of the dealership and subsequent assumption of their debt by Kennedy, Inc., the corporation became primary obligor and the Kennedys became sureties as a matter of law, and therefore the significance of their express consent to continuing liability on this possible change of status and the possibility of invoking the suretyship defenses under NMSA 1978, Section 55-3-606 need not be considered. Cf. Westinghouse Credit Corp. v. Wolfer, 10 Cal.App.3d 63, 88 Cal.Rptr. 654 (1970); Smiley v. Wheeler, 602 P.2d 209 (Okla.1979); Twombley v. Walk, 258 Or. 188, 482 P.2d 166 (1971); Hemenway v. Miller, 55 Wash.App. 86, 776 P.2d, 710, review granted, \u2014 Wash. -, 781 P.2d 1323 (1989).", "type": "majority", "author": "BACA, Justice." } ], "attorneys": [ "F.D. Moeller, Farmington, for defendants-appellants.", "Tansey, Rosebrough, Gerding & Strother, James B. Payne, Farmington, for plaintiff-appellee." ], "corrections": "", "head_matter": "785 P.2d 740\nSUNWEST BANK OF FARMINGTON, a New Mexico banking corporation, Plaintiff-Appellee, v. Don KENNEDY, Sharon Kennedy, Edith Kennedy, and Estate of Troy Kennedy, Deceased, and/or the Heirs-at-Law of Troy Kennedy, Defendants-Appellants.\nNo. 18124.\nSupreme Court of New Mexico.\nJan. 12, 1990.\nF.D. Moeller, Farmington, for defendants-appellants.\nTansey, Rosebrough, Gerding & Strother, James B. Payne, Farmington, for plaintiff-appellee." }, "file_name": "0400-01", "first_page_order": 436, "last_page_order": 439 }