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Docket Number

No. 5468.

Attorney(S)

O'Sullivan Dunleavy and Robert Emmet Clark, Albuquerque, for appellants. Owen B. Marron and Alfred H. McRae, Albuquerque, for appellee. Maurice Sanchez, Albuquerque, for intervenor.

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Summary of Opinion: CHAVEZ v. CHAVEZ ET AL., No. 5468 (Supreme Court of New Mexico, May 22, 1952)

Factual and Procedural Background

In 1946 husband and wife defendants (Alfonso and Dora Chavez) purchased a tract of land in Bernalillo County, paying a $1,000 down payment from community funds; Dora later paid $500 which was reimbursed to her father from community funds, and the remainder was paid from community funds. The property was deeded to them as joint tenants, and they occupied it as their home.

On July 23, 1948 the plaintiff filed a tort action against Alfonso Chavez; on July 31, 1948 Alfonso deeded his interest in the property to his wife. On January 8, 1949 the plaintiff recovered judgment against Alfonso for $3,500, which was docketed and executions returned nulla bona. On February 4, 1950 this action was filed to foreclose the judgment lien. The United States intervened to foreclose its judgment lien as well.

The trial court found the July 31, 1948 conveyance from Alfonso to Dora was without consideration and made to defraud creditors, set it aside, adjudged Alfonso the owner of a one-half interest, and ordered the judgment liens foreclosed against that one-half interest, subject to a prior lien. The Supreme Court opinion treats the case as if the deed had not been made.

Separately, the property had been sold for delinquent taxes in 1937 to the State of New Mexico. On February 2, 1950 Dora, as one of the grantees in the former owner's deed, paid $8.86 under Sec. 76-740, N.M.S.A. 1941 Comp., to exercise the preferential right of repurchase and obtained a deed from the State Tax Commission naming her as grantee.

Legal Issues Presented

Whether the July 31, 1948 conveyance from Alfonso to Dora was fraudulent and could be set aside as made to defraud creditors.
What effect Dora Chavez's repurchase (redemption) from the state's tax sale under Sec. 76-740 has on title and on preexisting judgment liens.
Whether the alleged gift from Dora's father used to redeem destroyed the joint tenancy so that the entire title vested in Dora.
Whether Alfonso was entitled to a homestead exemption that would prevent the judgment lien or its enforcement against his interest (raised by defendants on appeal).

Arguments of the Parties

Appellants / Defendants (Alfonso and Dora Chavez)

Alfonso deeded his interest to Dora to prevent the property from being subjected to the plaintiff's judgment; the defendants argued the deed or subsequent events affected title or exemptions in their favor.
Defendants contended that when Dora obtained the deed from the State Tax Commission her title was new—that she secured a new title from the State.
They argued the money used by Dora to redeem the property was a gift from her father, which, the defendants say, destroyed the joint tenancy and vested the entire title in Dora (although Alfonso allegedly owes her one-half of that sum).
Defendants asserted Alfonso was entitled to a $1,000 homestead exemption and that his deed could not be set aside for the purpose of defeating the plaintiff's judgment.

Appellee / Plaintiff and Intervenor

The plaintiff sought foreclosure of his judgment lien against any interest of Alfonso in the property; the United States intervenor sought foreclosure of its judgment lien as well.
The trial court and appellee treated the conveyance to Dora as a fraudulent transfer voidable as against creditors and treated the defendants' interests as subject to the judgment liens.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Langhurst v. Langhurst, 49 N.M. 329, 164 P.2d 204	Holds that a preferential right of repurchase (under the tax statute) is a right of redemption.	The Court relied on Langhurst to conclude the deed obtained from the State was only a redemption/right of repurchase and did not create a new title defeating preexisting liens; Langhurst was also cited in support of the statement that Alfonso's obligation to repay Dora does not alter the character of the interests.
Sanchez v. New Mexico State Tax Commission, 51 N.M. 154, 180 P.2d 246	Holds that valid liens existing at time of a tax sale survive the tax sale when former owner redeems under Sec. 76-740.	The Court used Sanchez to deny the defendants' contention that Dora secured a new title from the State and to hold that existing liens attached despite the redemption.
Smith v. Borradaile, 30 N.M. 62, 227 P. 602	Establishes that a redemption from a tax sale by one cotenant operates as a redemption for all cotenants.	The Court applied Smith to hold that after the redemption the title vested in the defendants as joint tenants and that the judgment liens attached to Alfonso's one-half interest.
Zaring v. Lomax, 53 N.M. 273, 206 P.2d 706	Referenced for comparison (cited "Cf.").	Used as a comparative authority in discussing cotenancy and redemption principles.
McDonald v. Lambert, 43 N.M. 27, 85 P.2d 78, 120 A.L.R. 250	Earlier decision whose approval of transmutation of community funds into joint tenancy was contrary to the Court's present approval; now expressly overruled.	The Court expressly overruled McDonald v. Lambert and disapproved its contrary construction of Sec. 65-206.
Newton v. Wilson, 53 N.M. 480, 211 P.2d 776	Earlier decision contrary to approval of transmutation; now expressly overruled; the Court adopts the dissenting opinions' construction of Sec. 65-206.	The Court overruled Newton v. Wilson and adopted the dissenting view as to the construction of Sec. 65-206, requiring clear, strong and convincing proof for transmutation.
National Agricultural College v. Lavenson, 55 N.M. 583, 237 P.2d 925	Holds that an issue not presented to the trial court may not be considered on appeal.	The Court relied on this precedent to refuse to consider defendants' homestead-exemption contention because it was not presented to the trial court.

Court's Reasoning and Analysis

The Court reviewed the facts and reached its conclusions by applying established principles concerning tax-sale redemptions, cotenancy, fraudulent conveyances, and community property transmutations:

Conveyance and Fraudulent Intent: The trial court found Alfonso's July 31, 1948 conveyance to his wife was without consideration and made to defraud creditors. The Supreme Court accepted the trial court's findings and proceeded on the basis that the deed could be set aside.
Nature of the State Deed and Effect on Liens: The Court determined that the deed obtained from the State Tax Commission upon repurchase under Sec. 76-740 is merely a right of redemption (not a new title that extinguishes existing liens). Relying on Langhurst and Sanchez, the Court held that liens existing at the time of the tax sale survive the sale when the former owner redeems.
Redemption by One Cotenant: Citing Smith v. Borradaile (and analogous authorities), the Court applied the rule that redemption by one cotenant operates as redemption for all cotenants. Consequently, after redemption the defendants held title as joint tenants and existing judgment liens attached to Alfonso's one-half interest.
Gift Argument and Character of Interests: The defendants' claim that the money used in redemption was a gift to Dora (and thus destroyed joint tenancy) was considered; the Court noted Alfonso owes Dora half that amount but held that such an obligation does not alter the character of the cotenants' interests (citing Langhurst).
Transmutation and Standard of Proof: The Court addressed the legal effect of converting community funds into property held in joint tenancy by husband and wife. It expressly overruled prior contrary decisions (McDonald v. Lambert and Newton v. Wilson) and adopted the standard that proof of such a transmutation must be "clear, strong and convincing"; a mere preponderance of the evidence will not suffice.
Homestead Exemption Not Considered: Defendants' homestead-exemption contention was not presented to the trial court; the Court followed National Agricultural College v. Lavenson in declining to consider that issue on appeal and noted the statutory procedure (Sec. 21-116) for claiming such exemptions should have been followed.
Final Disposition of Other Contentions: The Court found the remaining contentions of the defendants without merit under the facts of the case.

Holding and Implications

Holding: The judgment of the trial court is affirmed. The conveyance from Alfonso to Dora was set aside as a fraudulent transfer, Alfonso was adjudged to own a one-half interest in the property, and the judgment liens were properly foreclosed against that one-half interest (subject to a prior lien held by defendant Orr).

Implications:

Direct effect: The plaintiff's and intervenor's judgment liens attach to and may be foreclosed against Alfonso Chavez's one-half interest in the property; the trial court's decree of foreclosure is affirmed.
Property-title and tax-sale law: The Court clarifies that a redemption under Sec. 76-740 is a right of redemption and does not create a new title that defeats preexisting liens; redemption by one cotenant redeems for all cotenants.
Community-property transmutation standard: The opinion expressly overrules McDonald v. Lambert and Newton v. Wilson and adopts the requirement that transmutation of community funds into separate (joint tenancy) property must be proved by clear, strong and convincing evidence rather than by a mere preponderance. This alters the controlling standard for such transmutations in New Mexico.
Procedural point: Claims not raised at trial (for example, homestead exemption) may not be raised for the first time on appeal.

It is so ordered. LUJAN, C.J., and SADLER, COMPTON and COORS, JJ., concur.

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CHAVEZ v. CHAVEZ ET AL.

McGHEE, Justice.

The former opinion is withdrawn and the following is substituted:

In this case we have a decree foreclosing judgment liens in favor of the plaintiff and intervenor against the one-half interest of Alfonso Chavez in a tract of land in Bernalillo County.

In 1946 the defendants, who were then and are still husband and wife, purchased the realty and made a down payment of $1,000 from community funds. The wife later paid $500 on the purchase price with money given to her by her father but he was later reimbursed for the full amount from community funds. The balance was paid off monthly from community funds through two security transactions. The property was deeded to the defendants Chavez as joint tenants, and they have been in actual possession of it since the time of its purchase.

On July 23, 1948, the plaintiff herein filed suit against the defendant, Alfonso Chavez, for a tort, and on July 31 following the latter deeded his interest in the property in question to his wife, Dora Chavez, in order, as he testified and the trial court found, to prevent it being subjected to the payment of a judgment in the tort case. On January 8, 1949, the plaintiff recovered judgment against Alfonso Chavez for $3,500. The judgment was docketed immediately in the office of the County Clerk of Bernalillo County. Executions were issued on the judgment and returned nulla bona. The judgment remained unpaid and on February 4, 1950, this action was filed to foreclose such judgment lien. The United States of America was allowed to intervene as of March 1, 1950, and seek foreclosure of a judgment lien held by it against Alfonso Chavez.

The trial court found the conveyance of July 31, 1948 from Alfonso Chavez to Dora Chavez was without consideration and made for the purpose of defrauding his creditors. It was set aside and Alfonso Chavez was adjudged the owner of a one-half interest in such real property, and the judgment liens were ordered foreclosed against such interest, subject to a prior lien held by defendant Orr. We will treat the case as if the deed from Alfonso Chavez to his wife had not been made.

The property had actually been sold in the year 1937 to the State of New Mexico for delinquent taxes, and deed therefor seasonably filed for record in the office of the County Clerk and then delivered to the Tax Commission. On February 2, 1950, the defendant Dora Chavez, as one of the grantees in the deed from the former owner, exercised the preferential right of repurchase granted by Sec. 76-740, N.M.S.A. 1941 Comp., by paying to the State Tax Commission the sum of $8.86 and securing its deed to the property in which she is named as the grantee.

The deed from the former owner to the defendants Chavez purported to convey a fee simple title to them and it was so treated by such grantees; but, as the property had theretofore been sold to the State of New Mexico for delinquent taxes, it actually conveyed only the preferential right of repurchase. We have held this is nothing more than a right of redemption. Langhurst v. Langhurst, 49 N.M. 329, 164 P.2d 204; Sanchez v. New Mexico State Tax Commission, 51 N.M. 154, 180 P.2d 246. In the latter case we also held valid liens existing against real property at the time of its sale to the State survive a tax sale where the former owner redeems under section 76-740, supra. The contention of the defendants Chavez that Dora Chavez secured a new title from the state when she obtained the deed from the State Tax Commission is denied.

It is a well settled principle of law that a redemption from a tax sale by one cotenant operates as a redemption for all cotenants. Smith v. Borradaile, 30 N.M. 62, 227 P. 602; 14 Am.Jur. (Cotenancy) Sec. 54, p. 123. Cf. Zaring v. Lomax, 53 N.M. 273, 206 P.2d 706. Such doctrine will be applied in this case. With the property redeemed from the tax sale the title thereto became vested in the defendants Chavez as joint tenants, each owning a half interest therein, and the judgment liens attached to the one-half interest of Alfonso Chavez.

The defendants Chavez further contend that as the money with which the redemption was made was a gift to Dora Chavez by her father this destroyed the joint tenancy of Alfonso Chavez and the entire title became vested in Dora Chavez. Alfonso Chavez owes her half of such amount, but such fact does not change the character of the interests. Langhurst v. Langhurst, supra.

Our approval of the transmutation of community funds into property held in joint tenancy by husband and wife is directly contrary to our decisions in McDonald v. Lambert, 43 N.M. 27, 85 P.2d 78, 120 A.L.R. 250, and Newton v. Wilson, 53 N.M. 480, 211 P.2d 776, which cases we now expressly overrule. We adopt the dissenting opinions of Mr. Justice Sadler in each case so far as they state his construction of the statute, Sec. 65-206, N.M.S.A. 1941 Comp., declaring either husband or wife may enter into any engagement or transaction with the other, or with any other person respecting property, which either might, if unmarried; subject, in transactions between themselves, to the general rules of common law which control the actions of persons occupying confidential relations with each other. See Clark, Transmutations In New Mexico Community Property Law, 24 Rocky Mt.L.Rev. 273.

Proof to support such transmutation must be clear, strong and convincing; a mere preponderance of the evidence will not suffice to effect it.

As the author of the opinion in Newton v. Wilson, and the trial judge in McDonald v. Lambert, which was affirmed on a ground different from that on which the writer actually decided the case, a personal word in explanation may be pardoned. The writer favored overruling McDonald v. Lambert in the Newton case, but as a majority could not be marshalled so to do and the same result would have followed had the contract in question been held legal, he did not note his disagreement with the McDonald case, but went ahead and wrote the majority opinion as printed. Now that a majority can be obtained to overrule these cases and thus give the statute, Sec. 65-206, supra, the vitality and effect which the writer believes was intended by the legislature when it was enacted, he willingly assumes the task.

The defendants Chavez say they have occupied the property as a home since 1946; that Alfonso Chavez is now and was the head of the family at the time of the execution and delivery by him of the deed to his wife, and, therefore, he was and is entitled to a homestead exemption of $1,000, and that although his deed was made with the intention of preventing the plaintiff subjecting his interest to the payment of a judgment it cannot be set aside for such reason. They cite numerous authorities in support of such contention. That question, however, was not presented to the trial court and it may not, therefore be considered here. National Agricultural College v. Lavenson, 55 N.M. 583, 237 P.2d 925. If Alfonso Chavez desired to claim a homestead exemption, he should have claimed it in his answer in accordance with the provisions of Sec. 21-116, N.M.S.A. 1941 Comp.

The remaining contentions of the defendants Chavez are without merit under the facts present in this case.

The judgment will be affirmed.

It is so ordered.

LUJAN, C.J., and SADLER, COMPTON and COORS, JJ., concur.

CHAVEZ v. CHAVEZ