       IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number: _______________

Filing Date: April 3, 2014

Docket No. 32,017

LUZ CORONA,

       Plaintiff-Appellee,

v.

DANIEL CORONA and MARIA CORONA,
husband and wife, SAMUEL CORONA and
MARCIANA CORONA, husband and wife,
and JOSE LUIS CORONA and MARTA
CORONA, husband and wife,

       Defendants-Appellants.

APPEAL FROM THE DISTRICT COURT OF DOÑA ANA COUNTY
Jacinto Palomino, District Judge

Lilley & O’Connell, P.A.
Michael W. Lilley
Jerome O’Connell
E’rin O’Connell
Las Cruces, NM

for Appellee

Cervantes Law Firm, P.C.
Joseph Cervantes
Las Cruces, NM

L. Helen Bennett
Albuquerque, NM

for Appellants

                                  OPINION


                                     1
BUSTAMANTE, Judge.

{1}      This case involves an effort by a sister to collect a substantial sum of money from her
brothers for obligations incurred almost fifteen years ago. Appellee, Luz Corona, allowed
the statute of limitations to run on each of these debts. We consider whether payments made
well after the expiration of the statute of limitations revived the debts. We conclude that the
district court’s findings that the payments sufficed to revive all the loans and guaranties are
supported as to some of the appellants but not as to others. We therefore reverse in part and
affirm in part the district court’s determination of revival.

{2}     Appellants also make a number of arguments to the effect that, even if the debts and
guaranties are enforceable, their liability is limited because the business entity that borrowed
the funds is no longer extant or because one brother arranged the loans independently of the
others, and the amount owed is limited by the terms of one or more agreements. We affirm
the district court as to these arguments.

FACTUAL BACKGROUND

{3}     In September 1999 Daniel Corona, Jose Luis Corona, and Samuel Corona (the
Brothers) together with their wives, Maria Corona, Marciana Corona, and Marta Corona (the
Wives) (collectively, Appellants) entered into an arrangement through which Luz provided
a “revolving line of credit” to Coronas Concrete Company, Inc. (Coronas Concrete
Company), a construction company owned by the Brothers. Luz is the Brothers’ sister. The
parties executed a promissory note, loan agreement, and security agreement (collectively,
the Agreement) to memorialize the arrangement. All of the documents referred to “Coronas
Concrete Company, Inc.” as the borrower. The promissory note and loan agreement were
signed by Appellants as individual guarantors. Both of these documents specified that the
balance of principal and interest owed was to be paid in full by September 30, 2000. Both
also provided that the prevailing party would be entitled to reasonable attorney fees and costs
in the event of a dispute. Finally, both the promissory note and loan agreement stated that
“Coronas Concrete Company, Inc.” could borrow up to seventy thousand dollars and that
interest would be charged at a rate of eight percent. The parties agree that, in spite of this
language, Appellants requested and Luz agreed to lend monies totaling well over that limit,
although they dispute the total amounts lent and paid.

{4}     Around the same time, Luz provided approximately $70,000 as a down payment for
the purchase of land that was eventually titled in the name of “Coronas Concrete Company,
Inc.” The parties did not memorialize the terms of this loan in writing. The parties appear
to agree that the loan principal was to be repaid within a year and that interest would accrue
at eight percent if the principal was not paid within that time. We refer to this arrangement
as the “Land Loan.”

{5}    A year later, a $42,000 certificate of deposit owned by Luz was used to cover an
unpaid line of credit owed by Coronas Concrete Company. Like the Land Loan, the parties

                                               2
failed to document the terms of this arrangement in writing. We refer to this arrangement
as the “CD Loan.”

{6}     Coronas Concrete Company borrowed from and repaid Luz in various transactions
between 1999 and late 2000. Between September 2000 and November 2008, there were no
payments made to Luz by Coronas Concrete Company, its successor companies, or
Appellants. In November 2008 Luz received a check for $20,000 issued by Las Cruces
Concrete Construction, LLC, one of the successor companies to Coronas Concrete Company
owned by the Brothers. Since this payment is at the crux of the district court’s findings, we
will refer to it as “the $20,000 payment.” Between November 2008 and February 2010 Luz
received payments totaling $63,000, including the $20,000 payment. Each of the checks
issued to Luz beginning in November 2008 was drawn on an account held by Las Cruces
Concrete Construction, LLC, and all the checks after the $20,000 payment indicated that the
check was a “payment on loan.” Although the checks were issued by Las Cruces Concrete
Construction, LLC, the funds were treated as draws against the profits allocated after taxes
to Daniel, Jose Luis, and Samuel Corona.

{7}     The district court found that in 2009 the parties entered into an oral settlement
agreement in which Luz accepted Appellants’ offer of $100,000 to be paid in monthly
installments of $5,000. This agreement was never memorialized in writing and there was
no discussion between the parties as to whether the settlement applied to the Agreement, the
Land Loan, the CD Loan, or all three arrangements. Appellants breached the terms of the
settlement agreement when they failed to pay $5,000 per month as agreed.

PROCEDURAL BACKGROUND

{8}       Luz filed suit in 2010 alleging breach of contract, breach of good faith and fair
dealing, and breach of promissory note. Appellants filed a motion for summary judgment,
arguing that Luz’s claims were barred by the statutes of limitations and, therefore, the terms
of the Agreement, Land Loan, and CD Loan were unenforceable. See NMSA 1978, § 37-1-
3(A) (1975) (limitations period for written contracts is six years); NMSA 1978, § 37-1-4
(1880) (limitations period for unwritten contracts is four years). Luz filed a cross-motion
for partial summary judgment, arguing that all of the debts were revived pursuant to NMSA
1978, Section 37-1-16 (1957). The district court agreed with Luz and ruled that the statutes
of limitations did not bar her claims because “[Appellants’] tender of partial payments . . .
and [their] admissions of liability and willingness to repay [Luz] following the expiration
of the applicable statute of limitations, [revived Luz’s claims].” Based on this ruling, the
district court granted partial summary judgment to Luz and ordered that “because
[Appellants’] debt and liability to [Luz] were revived as a matter of law, the sole issue for
trial is the amount and extent of [Luz’s] damages.”

{9}     The matter proceeded to a bench trial. In spite of the district court’s ruling on
summary judgment, the district court heard evidence on and permitted the parties to litigate
the issue of whether the loans were revived. At the conclusion of the trial, the district court

                                              3
made the following findings of fact pertinent to this appeal.

       5.      The Promissory Note states Defendants specifically waive a right to
               demand of non-payment in the event the note is not paid at maturity.

       6.      The Promissory Note states that any delay or omission in the
               enforcement of the Promissory Note does not affect the liability of
               Defendants.

       ....

       10.     Defendants Samuel Corona, Jose Luis Corona, Maria Corona, Marta
               Corona, and Marciana Corona authorized Defendant Daniel Corona
               to act as their agent with respect to the loan agreement with Luz
               Corona.

       11.     Daniel Corona acted as the authorized agent of Defendants Samuel
               Corona, Jose Luis Corona, Maria Corona, Marta Corona, and
               Marciana Corona with respect to Luz Corona’s loans and the amounts
               repaid to Luz Corona.

       ....

       26.     Luz Corona’s Certificate of Deposit in the amount of $42,000.00 that
               was used to pay Defendants’ Line of Credit was a loan from Luz
               Corona to Defendants subject to the terms of the Promissory Note.

       ....

       29.     The November 2008 payment predates the Settlement Agreement and
               the parties did not agree as to which debt the payment was to be
               applied.

       30.     The $63,000 that was repaid was not directed to any specific loan
               owed.

       31.     In 2009, Plaintiff and Defendants entered into a verbal executory
               accord (a/k/a “settlement agreement”) for the resolution of all monies
               owed to her by Defendants.

       ....

       33.     Defendants defaulted on the settlement agreement by failing to timely
               tender the $5,000.00 monthly payment.

                                             4
       34.    Under New Mexico law[,] Luz Corona, as the non-breaching party,
              had the ability to elect between either enforcing the executor[y]
              accord or enforce the terms of the original loan agreement.

       35.    Luz Corona elected to enforce the original loan agreement and seek
              repayment of the entire outstanding loan balance, interest and
              attorney[] fees owed by Defendants.

       ....

       40.    The monies paid to Luz Corona from Daniel Corona, Jose Luis
              Corona, and Samuel Corona’s subsequent business entities to Luz
              Corona were in fact payments from Daniel Corona, Samuel Corona,
              and Jose Luis Corona, individually, in equal shares.

       ....

       42.    Defendants admit they currently owe Luz Corona an undetermined
              amount of money.

{10}   Based on these findings, the district court entered the following conclusions of law:

       4.     Defendants tendered partial payments to Luz Corona on the unpaid
              balance of her loan between November 2008 and February 2010, and
              which constituted a revival of their contract with Luz Corona under
              New Mexico law. In addition, Defendants admitted liability to
              Plaintiff in depositions, and which also served to revive the loan via
              a signed writing by signing the checks for partial payments, and
              which denoted in writing “Payment on Loan[.]” See NMSA 1978,
              Section 37-1-16.

       5.     Defendants’ 2008 payment to Luz Corona revived all of the debts
              owned by Coronas Concrete Company and Daniel Corona, Samuel
              Corona, and Jose Luis Corona as guarantors; and, therefore, the
              statute of limitations has not run on the enforcement of all funds
              owed by Defendants’ to Luz Corona.

       6.     The $20,000.00 payment in 2008 was a loan payment that applied to
              all the outstanding debts (promissory note, certificate of deposit, and
              land loan) owed by Defendants to Luz Corona in pro rata shares.

       ....

       21.    Luz Corona is owed $244,121.53 in unpaid princip[al] and interest.

                                            5
        22.     Defendants are liable to Luz Corona for her reasonable attorney[]
                fees and costs, in an amount to be determined by the [c]ourt.

In separate proceedings, Appellants were ordered to pay $98,217.46 in attorney fees.

DISCUSSION

{11} The parties do not dispute that Luz brought her claims after the statute of limitations
had run on the Agreement, the Land Loan, and the CD Loan. Rather, the issues on appeal
pertain to three questions, broadly stated: (1) which, if any, of the debts were revived; (2)
who is liable for which debt; and (3) the amount of liability.

Standard of Review

{12} In general, “[w]e review de novo whether a particular statute of limitations applies.”
Jaramillo v. Gonzales, 2002-NMCA-072, ¶ 8, 132 N.M. 459, 50 P.3d 554. Here, however,
the threshold question is not whether the statute of limitations apply on their terms. The
parties agree that they do. Instead, the question is whether the statute of limitations clock
began running anew due to revival. Were the facts undisputed, our review of the district
court’s conclusions of law would be de novo. See Joslin v. Gregory, 2003-NMCA-133, ¶
6, 134 N.M. 527, 80 P.3d 464 (stating that where the facts are undisputed, this Court reviews
whether partial payment revives the statute of limitation “as a pure question of law”). Here,
the facts were disputed at trial and the district court’s decision depended on its examination
of Appellants’ conduct and their intent. Thus, we review whether Appellants’ conduct was
sufficient to revive the debts as a factual question. See Citizens Bank of Clovis v. Teel, 1987-
NMSC-087, ¶ 8, 106 N.M. 290, 742 P.2d 502 (“It has long been recognized that, when the
words of acknowledgment or promise do not expressly refer to the debt sought to be
recovered, whether they are to be deemed as referring to such debt is usually a question of
fact.”); Enriquez v. Cochran, 1998-NMCA-157, ¶ 20, 126 N.M. 196, 967 P.2d 1136 (stating
that where “the [district] court’s decision must be based on its conclusions about a party’s
conduct and intent,” the appellate court reviews “whether the court’s findings and decision
are supported by substantial evidence”). Similarly, the questions of who is liable and the
amount of liability are also fact-dependent inquiries. See Mascarenas v. Jaramillo, 1991-
NMSC-014, ¶ 6, 111 N.M. 410, 806 P.2d 59 (examining whether the evidence was sufficient
to support the district court’s factual findings where the appellant challenged those findings
and stating that “[i]t has been firmly established in this jurisdiction that only the trier of facts
may weigh the testimony, determine the credibility of witnesses, reconcile inconsistent or
contradictory statements of a witness, and say where the truth lies”).

{13} We therefore review the record to determine whether the district court’s factual
findings are supported by substantial evidence. “Substantial evidence is such relevant
evidence that a reasonable mind would find adequate to support a conclusion.” Ponder v.
State Farm Mut. Auto. Ins. Co., 2000-NMSC-033, ¶ 7, 129 N.M. 698, 12 P.3d 960 (internal
quotation marks and citation omitted). Under this standard of review, “we review the

                                                 6
evidence in the light most favorable to upholding the finding and indulge all reasonable
inferences in support of the [district] court’s decision.” Robertson v. Carmel Builders Real
Estate, 2004-NMCA-056, ¶ 20, 135 N.M. 641, 92 P.3d 653. We review the district court’s
application of the law to those facts de novo. See Ponder, 2000-NMSC-033, ¶ 7.

Revival of the Loans

{14} We begin with the question of whether each of the loans and the guaranties signed
by Appellants were revived, making the loans and guaranties enforceable. New Mexico’s
revival statute provides that

        [c]auses of action founded upon contract shall be revived by the making of
        any partial or insta[l]lment payment thereon or by an admission that the debt
        is unpaid, as well as by a new promise to pay the same; but such admission
        or new promise must be in writing, signed by the party to be charged
        therewith.

Section 37-1-16. Partial payment of a debt “will renew a barred debt when such payment
is made under circumstances that warrant a clear inference that the debtor acknowledges and
is willing to pay a further indebtedness.” Joslin, 2003-NMCA-133, ¶ 14 (quoting II Calvin
W. Corman, Limitation of Actions § 9.12.3, at 93 (1991)).

{15} The district court found that the $20,000 payment “revived all of the debts ow[]ed
by Coronas Concrete Company and [Appellants] as guarantors” and that “[t]he $20,000
payment in 2008 was a loan payment that applied to all the outstanding debts.” Appellants
argue that there was insufficient evidence that they intended to restart the limitations period
as to any loan and that, because the $20,000 payment did not reference any particular loan,
it was insufficient to restart the clock as to all of the loans. We conclude to the contrary that
the evidence was sufficient to support the district court’s findings.

{16} At trial, Luz demonstrated that (1) the $20,000 payment followed contentious
discussions between Daniel Corona and Luz over how much was owed to Luz; (2) the
payment was divided equally between the Brothers individually; (3) the Appellants admit
that they owe Luz money but dispute the amount owed; and (4) after the $20,000 payment,
Appellants made seventeen more payments to Luz, which were divided between the Brothers
and notated “payment on loan.”

{17} Appellants rely on the general proposition that where there are multiple debts, a
payment that does not specify that it applies to those debts cannot revive all of the debts. See
4 Williston on Contracts, § 8:31, at 582 (4th ed. 2004) (“If the creditor can only establish the
making of a payment, and the further fact that a larger sum was due the creditor, there is
generally no sufficient evidence to submit to the jury in an action by the creditor for the
remainder of the claim.”). Here, however, Luz provided evidence not only of the payment
and a larger debt, but also of the circumstances surrounding the payment. Viewed in the

                                               7
light most favorable to the judgment, the evidence was sufficient to permit the district court
to conclude that the $20,000 payment was a payment on all of the debts owed by Appellants
to Luz and, therefore, revived the statute of limitations applicable to those debts.

Revival of the Guaranties

{18} Resolution of the question of revival as to the loans does not address whether the
guaranties associated with the loans are also revived. This question has not yet been
addressed in New Mexico. Appellants point to a New Jersey case stating that although part
payment by the maker of the contract might suffice to restart the limitations period as to the
maker, such payment “did not inure of itself to create liability in the guarantor.” Marinelli
v. Lombardi, 196 A. 701, 703 (N.J. 1938). We agree that this is the general rule. See
E.W.H., Annotation, Acknowledgment, New Promise, or Payment by Principal as Tolling
Statute of Limitations as Against Guarantor, 84 A.L.R. 729 (1933) (“In most of the
jurisdictions in which the point has arisen, it has been held that a payment by a principal
debtor will not operate to toll the [s]tatute of [l]imitations as to a guarantor of the debt[.]”);
accord 4 Williston, supra § 8:42, at 680; 54 C.J.S. Limitations of Actions § 374 (2013).

{19} But the weight of authority also indicates that where the acknowledgment, promise,
or part payment by the primary debtor is ratified by co-debtors or guarantors, the statute of
limitations will be revived as to them as well. See PNL Asset Mgmt. Co. v. Brendgen &
Taylor P’ship, 970 P.2d 958, 964 (Ariz. Ct. App. 1998) (holding that the statute of
limitations as to the guarantors was revived where the guarantors knew of and consented to
partial payments and stating, “Where one joint obligor knows of and consents to an
acknowledgment by the other or ratifies it, the statute is restarted as to both.”); Watkins
Prods., Inc. v. Rains, 120 N.W.2d 368, 371 (Neb. 1963) (stating that payment by the
principal debtor “operate[s] only to toll the statute of limitations as to the principal debtor
who made the payment, but not as to a surety who did not voluntarily pay, authorize, or
ratify it”); 4 Williston, supra § 8:42, at 680 (“It is generally held that a new promise or part
payment by a principal debtor or obligor after the debt is barred will not renew the liability
of the surety unless the principal obligor and surety were joint obligors or the surety has
agreed to the new promise or part payment.”); 54 C.J.S. Limitations of Actions § 374 (stating
that “a promise or acknowledgment by a principal debtor will not affect the running of the
statute of limitations as to his or her guarantor, absent some clear indication that the debtor
was acting as an agent of the guarantor” and that an acknowledgment or promise by a joint
debtor cannot bind another debtor unless the first debtor’s “act can be shown to have been
ratified”) (footnote omitted); 51 Am. Jur. 2d Limitation of Actions § 311 (2011) (“However,
if one joint obligor knows of and consents to an acknowledgment by the other or ratifies it,
the limitations period is restarted with respect to both of them.”).

{20} The more nuanced approach set out in these authorities does not conflict with the
categorical rule relied on by Appellants. The general rule against revival of the statute with
respect to guaranties is based in the principle that “[a] guarantor’s consent to the debtor’s
future conduct may not be presumed merely on the basis of the original guarantee.” United

                                                8
States v. Rollinson, 866 F.2d 1463, 1469 (D.C. Cir. 1989). This reasoning is obviously
irrelevant in cases where the guarantor in fact consents to or ratifies the debtor’s conduct.
See PNL Asset Mgmt. Co., 970 P.2d at 964 (citing Rollinson and stating, “Here we need not
look to the original guaranty for the consent. . . . The . . . guarantors necessarily knew and
consented to the partial payments and written acknowledgments made by [the debtor].”); cf.
Rollinson, 866 F.2d at 1468-69 (discussing the rationale behind the rule and instances in
which a guarantor might agree to assume responsibility for a debtor’s future undertakings).

{21} The ratification rule is also consistent with this Court’s holding in Joslin, in which
the Court considered whether payments made by the assignee of a note constituted partial
payment on a debt sufficient to revive the debt and permit an action against the assignor.
2003-NMCA-133, ¶¶ 4, 5. Relying on the principle that “a partial payment must be
voluntary in order to revive a debt[,]” the Court held that “the payments . . . cannot remove
the statutory bar to [the assignee’s] claim” because “once the initial assignment . . . was in
place, the payments made . . . by the notes’ payors could not be deemed ‘voluntary’
payments by [the assignor]” because the assignor had no control over the payments. Id. ¶¶
15, 17. Applying this reasoning to guarantors, we conclude that a payment by a principal
obligor, without consent or ratification by the guarantor, is not a voluntary act by the
guarantor and, hence, cannot bind the guarantor. If the guarantor consents to or ratifies the
payment, however, then the guarantor is deemed to have joined in the payment, which is
sufficient to revive the debt as to the guarantor.

{22} We now apply these concepts to the facts here. The district court found that Daniel
acted as the Brothers’ agent in all financial matters. “An agent is a person who, by
agreement with another called the principal, represents the principal in dealings with third
persons or transacts some other business, manages some affair or does some service for the
principal, with or without compensation.” Madsen v. Scott, 1999-NMSC-042, ¶ 8, 128 N.M.
255, 992 P.2d 268 (quoting UJI 13-401 NMRA). “[A] plaintiff bears the burden of showing
that there was an agency relationship.” San Juan Agric. Water Users Ass’n v. KNME-TV,
2011-NMSC-011, ¶ 43, 150 N.M. 64, 257 P.3d 884.

{23} Here, Jose Luis and Samuel testified that Daniel acted as the agent of Coronas
Concrete Company in financial matters with their approval. They also testified that they
knew about and approved the settlement agreement negotiated by Daniel. Jose Luis also
testified that he knew about and approved the $20,000 payment. Samuel testified that Daniel
“had the authority to make arrangements” with Luz and that Daniel was “authorized” to
make payments, divided equally between the Brothers, to Luz. Daniel Corona also testified
that he “represent[ed his] brothers in financial dealings with Luz.” He stated, “In all of the
financial matters, I represented all of my brothers in all of the financial matters, in order to
save time” and that “in all of the transactions, . . . I was the representative of the companies
and also of my brothers.” This evidence is sufficient to permit the district court’s finding
that Daniel was his brothers’ agent in all pertinent dealings with Luz.

{24}   The $20,000 payment was initiated by Daniel Corona, a guarantor. Thus, the statute

                                               9
of limitations was revived as to him and his guaranty is enforceable. In addition, although
Daniel Corona signed the $20,000 payment, the evidence supports the district court’s finding
that Samuel and Jose Luis approved of it, as discussed above. Thus, Jose Luis’ and Samuel’s
personal guaranties are also enforceable because they consented to or ratified the $20,000
payment and because Daniel was acting as their agent.

{25} The situation is different with regard to the Wives. By stipulation of the parties, the
Wives did not appear at the hearing. There was no testimony or other evidence presented
indicating that they knew about or approved of the $20,000 payment or subsequent
payments. Nor was there evidence that they knew about or ratified the settlement agreement.
Given that “[t]he guarantor is a favorite of the law and is entitled to have the guaranty
strictly construed in . . . her favor[,]” we conclude that the evidence was insufficient that the
Wives ratified the part payment. Sunwest Bank of Clovis, N.A. v. Garrett, 1992-NMSC-002,
¶ 19, 113 N.M. 112, 823 P.2d 912. Thus, the statutes of limitations were not revived as to
the Wives’ guaranties and those guaranties are no longer enforceable.

{26} Our conclusion on the enforceability of the guaranties raises a related question: to
which loans do the guaranties apply? The district court found that the CD Loan was “subject
to the terms of the [p]romissory [n]ote.” Appellants argue that this finding was in error
because “[t]he evidence was unequivocal that th[is] loan[] w[as] separate and apart from the
revolving line of credit that was the subject of the written contracts.” But they do not direct
us to any evidence, much less unequivocal evidence. The appellate court presumes that the
district court is correct, and the burden is on the appellant to clearly demonstrate that the
district court erred. See In re Estate of Heeter, 1992-NMCA-032, ¶ 15, 113 N.M. 691, 831
P.2d 990 (“This court will not search the record to find evidence to support an appellant’s
claims.”). We decline to examine Appellants’ contention regarding the CD Loan any
further.

{27} The parties agree that the Land Loan is not subject to the terms of the Agreement.
In addition, although the district court made a finding that the CD Loan was subject to the
terms of the Agreement, there is no similar finding with respect to the Land Loan. We infer
that the district court found that the Land Loan was not subject to those terms. Thus, neither
the guaranties nor the attorney fee provisions of the Agreement apply to the Land Loan.
Consequently, we reverse the award of attorney fees to the extent it was based on the
enforcement of the Land Loan and the terms of the Agreement. See Paz v. Tijerina, 2007-
NMCA-109, ¶ 9, 142 N.M. 391, 165 P.3d 1167 (“In determining whether an attorney fee
award is appropriate, New Mexico follows the American rule which states that, in the
absence of statute, court rule, or contractual agreement, the prevailing party will not
normally receive attorney fees.”).

{28} Finally, we decline to examine Appellants’ undeveloped argument that the security
agreement is not enforceable. This Court has no duty to review an argument that is not
adequately developed. See Headley v. Morgan Mgmt. Corp., 2005-NMCA-045, ¶ 15, 137
N.M. 339, 110 P.3d 1076 (declining to entertain a cursory argument that relied on several

                                               10
factual assertions that were made without citation to the record).

Liability Unaffected by Identity of Borrowers

{29} Having determined that all of the loans were revived and that the Brothers’, but not
the Wives’, personal guaranties of the Agreement and CD Loan are enforceable, we next
address Appellants’ arguments that liability should be limited because (1) Coronas Concrete
Company was the borrower, or (2) Daniel Corona acted alone in negotiating and managing
the loans with Luz. Appellants first argue that the district court erred in finding them
individually liable for breach of the loan terms. As regards the loans subject to the
Agreement, although Coronas Concrete Company was the borrower and, therefore, primary
obligor, Appellants assumed liability as secondary obligors when they individually
guaranteed the loan. Since Coronas Concrete Company did not repay the monies subject to
the guaranties, Luz had the option to pursue recovery from the guarantors under the terms
of the promissory note and loan agreement. Thus, since Luz’s claims are against the
Brothers as guarantors, not against Coronas Concrete Company, this argument is unavailing.

{30} As regards the Land Loan, Appellants’ liability is based on whether Coronas
Concrete Company or Appellants borrowed those monies. The district court found that the
loan was to Appellants individually, not to Coronas Concrete Company. Luz testified that
the loan was to the Brothers, not Coronas Concrete Company. Jose Luis Corona testified
that the owners of the property were “[m]y brothers Daniel, Samuel, and me” but also
implied that they were owners of the land by virtue of their ownership of Coronas Concrete
Company. Daniel Corona testified that Luz provided the funds “[f]or the purpose of having
a partnership on that land” with him, Samuel, and Jose Luis Corona. The fact that Daniel
described the “partnership” as between Luz and the Brothers indicates that he understood
the transaction to involve the Brothers as individuals rather than Coronas Concrete
Company. This testimony supports a finding that Luz loaned the Brothers money to
purchase the land.

{31} It does not, however, support a finding that the Wives were also borrowers of these
funds. We conclude that the district court erred in finding that the Wives were borrowers
with regard to the Land Loan and holding them liable for repayment of the Land Loan.

{32} Appellants also argue that, because Daniel Corona acted alone and not as their agent,
the other Appellants cannot be held liable for any outstanding loans. The district court found
to the contrary that “[Appellants] Samuel Corona, Jose Luis Corona, Maria Corona, Marta
Corona, and Marciana Corona authorized [Appellant] Daniel Corona to act as their agent
with respect to the [A]greement with Luz” and that “Daniel Corona acted as the authorized
agent of [Appellants] Samuel Corona, Jose Luis Corona, Maria Corona, Marta Corona, and
Marciana Corona with respect to [Luz’s] loans and the amounts repaid to Luz.” We have
already determined in the revival discussion above that there is substantial evidence
supporting the district court’s finding that Daniel Corona acted at all times as the Brothers’
agent with regard to all financial matters involving Luz. That discussion fully answers this

                                             11
contention by them.

{33} As we have noted, however, there was no testimony by or about the Wives with
regard to this issue. Although Luz bore the burden of proof at trial, she does not direct us
to any evidence supporting a finding of agency on behalf of the Wives. In fact, the limited
testimony on the matter is contrary to the district court’s finding that Daniel acted as an
agent for the Wives in managing the loans. Daniel testified that “[the W]ives were always
kept out of all of [the financial matters].” Samuel testified that his wife, Marciana, never
“authorized Daniel Corona to incur or undertake any debt for [Samuel or her] personally[.]”
Jose Luis’s testimony was to similar effect.

{34} In summary, as pertains to the Agreement, the evidence supports the district court’s
finding that the Brothers are liable as guarantors of the monies lent to Coronas Concrete
Company. As to the Land Loan, the district court’s finding that the loan was made to the
Brothers is also supported by substantial evidence. The district court erred, however, in
finding that the Wives were borrowers under that loan. Since they were not, they cannot be
liable for the Land Loan. Finally, we conclude that the evidence supports the district court’s
finding that Daniel Corona acted as his brothers’ agent in negotiating the loans and
settlement agreement, and in making the payment that revived the loans, but that it does not
support a finding that he acted as an agent for the Wives.

Amount of Liability

{35} We turn finally to the question of the extent of the Brothers’ liability. Appellants
make two arguments. First, they maintain that, as guarantors, they cannot be held liable for
modifications to the Agreement and, therefore, their liability must be limited to the amount
originally contemplated in the Agreement—$70,000. Second and alternatively, they contend
that their liability is limited to the amount of the settlement agreement—$100,000. We
address these arguments in turn.

{36} Because the promissory note and loan agreement made repeated references to a
$70,000 cap on the amount to be borrowed, Appellants contend that any liability under the
guaranties must be limited to that amount. In spite of this language, Coronas Concrete
Company borrowed more than that amount. Appellants argue that, by loaning the business
more than the amount stated in the Agreement, Luz “material[ly] altere[d] . . . the terms of
the [p]romissory [n]ote and [l]oan [a]greement” and that the modification “vitiated the
personal guarant[i]es of the [Appellants] as a matter of law.” They maintain that the
modification either “nullified” the guaranties altogether or, if the guaranties remain intact,
had no effect on the limit of liability under them such that Appellants’ liability is limited to
$70,000. Luz agrees that the Agreement was materially modified but maintains that
substantial evidence supports the district court’s implicit finding that the parties agreed to
the oral modification of the Agreement and, therefore, it should be enforced. See Medina
v. Sunstate Realty, Inc., 1995-NMSC-002, ¶ 14, 119 N.M. 136, 889 P.2d 171 (stating that
“New Mexico adheres to the general rule . . . that a written contract may be modified . . . by

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subsequent oral agreement” (internal quotation marks and citation omitted)).

{37} “As a general rule, a change in the underlying agreement which materially modifies
the legal effect of the instrument has the effect of discharging a guarantor from his or her
obligation, unless the guarantor consents to the change.” Levenson v. Haynes, 1997-NMCA-
020, ¶ 21, 123 N.M. 106, 934 P.2d 300. Consent must be affirmative; “acquiescence or
consent [to the modification] may not be predicated upon [guarantors’] mere silence or
passivity” even if the guarantors know of the change. Pac. Nat’l Agric. Credit Corp. v.
Hagerman, 1935-NMSC-088, ¶ 25, 39 N.M. 549, 51 P.2d 857. Since we have determined
that the guaranties of the Wives are no longer enforceable, we need not address whether they
consented to modification of the Agreement and instead focus on whether the Brothers
agreed to the modification.

{38} Here, although Appellants attempt to paint the modification to the Agreement as
unilateral by Luz, the testimony supports the district court’s implicit finding that she and
Daniel Corona, acting as agent for Samuel and Jose Luis as well as Coronas Concrete
Company, agreed to the modification. Luz testified that the Brothers “requested” monies
in excess of $70,000. Daniel Corona testified that Coronas Concrete Company “borrowed
a total of more than $70,000 from [Luz].” Viewed in the light most favorable to the verdict,
this evidence supports an inference that the Brothers not only consented to, but affirmatively
requested, alteration of the Agreement to exceed the initial loan amount of $70,000.
Consequently, their liability under the guaranties was not nullified by the modification, nor
is it limited to $70,000.

{39} Finally, Appellants contend that any liability for breach of the settlement agreement
must be limited to the amount of the settlement, or $100,000. The district court concluded
that the settlement agreement functioned as an accord, which “is a method of discharging a
contractual obligation by substituting for such contract an agreement for the satisfaction
thereof and performing the substituted agreement.” Nat’l Old Line Ins. Co. v. Brown, 1988-
NMSC-071, ¶ 10, 107 N.M. 482, 760 P.2d 775. As the district court noted, if the obligor
unjustifiedly fails to fully perform the accord, “the [obligee] may bring an action on the
original claim.” Id. ¶ 20; see S.R. Shapiro, Comment Note: Remedies for Breach of Valid
Accord or Compromise Agreement Involving Disputed or Unliquidated Claim, 94 A.L.R.2d
504, § 2[c] (1964) (“In other words, if an executory accord is breached by one party, the
other party may treat the agreement as rescinded and may revert to the rights and remedies
he had under the parties’ antecedent relationship[.]”).

{40} Appellants do not explicitly challenge the district court’s finding that the settlement
agreement was an accord nor do they argue that it was not breached. Those findings are
therefore conclusive. See Rule 12-213(A)(4) NMRA (“The argument shall set forth a
specific attack on any finding, or such finding shall be deemed conclusive.”). That being the
case, we discern no basis on which to limit liability to the settlement amount where Luz
chose, as permitted by law, to pursue full remedies under the Agreement, the CD Loan, and
Land Loan.

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CONCLUSION

{41} We reverse the district court to the extent that it found that (1) the Wives’ personal
guaranties in the Agreement, which cover the line of credit and CD Loan, are enforceable;
and (2) the Wives are liable as borrowers for breach of the Land Loan. Because the Land
Loan is not subject to the Agreement, we also reverse the award of attorney fees and costs
to the extent any of those fees were incurred in recovery of that loan. We affirm on all other
issues and remand for proceedings to determine whether any of the fees awarded are
associated with enforcement of the Land Loan and for amendment of the judgment as it
pertains to the Wives.

{42}   IT IS SO ORDERED.

                                              _____________________________________
                                              MICHAEL D. BUSTAMANTE, Judge

WE CONCUR:

_____________________________________
MICHAEL E. VIGIL, Judge

_____________________________________
M. MONICA ZAMORA, Judge




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