Opinion
Berenbaum, Berenbaum & Susman, Joseph Berenbaum, Stephen T. Susman, Denver, for plaintiff-appellant.
Brenman, Sobol & Baum, Richard Kranzler, Stephen Berkowitz, Denver, for defendants-appellees.
DWYER, Judge.
Plaintiff, Irving Pasternak, was the owner of all the capital stock of Dream House Acres, Inc. (Dream House) Defendants, Bernard M. Robin and Mel Kupetz, were the owners of all the capital stock of MelBern Construction Co., Inc. (Mel-Bern) Plaintiff, as the assignee of Dream House, brought this action to recover on promissory notes executed by Mel-Bern and by the individual defendants. The execution of the notes was admitted by the defendants, but they asserted the affirmative defenses of (1) lack of consideration, (2) laches, (3) payment, and (4) accord and satisfaction. The case was tried to the court, and judgment entered in favor of defendants.
Dream House sold and conveyed a group of 53 unimproved lots to Mel-Bern in November 1962, and a second group of 23 lots in June 1963. Mel-Bern intended to build houses on the lots. Mel-Bern agreed to pay the purchase price of the lots as they were sold and this obligation was secured by deeds of trust. Mel-Bern built and sold a number of houses and then experienced financial difficulties. The parties agreed that Mel-Bern would recovery the unsold lots and by deeds dated June 24, 1964, and December 10, 1964, Mel-Bern reconveyed the unsold lots to Dream House. The lots not reconveyed were lots which Mel-Bern had sold, but for which it had not paid Dream House the agreed price. The four promissory notes involved in this action were executed by Mel-Bern and by the individual defendants and delivered to Dream House. The dates and amounts shown on the notes are as follows: October 1, 1964, $12,152; October 13, 1964, $698; December 28, 1964, $1,665; March 17, 1965, $1,479.
The extent of the oral reconveyance agreement and the intent of the parties relative to it are determinative of the validity of the notes sued on.
Defendants contend, and so testified, that in return for their reconveyance of the unsold lots, plaintiff agreed to forgive all outstanding obligations including those for lots sold by defendants for which there had not been an accounting at the time of the reconveyance. As part of this agreement, defendants testified that they reconveyed the unsold lots and signed several undated blank notes. Under the circumstances as alleged by defendants, their reconveyance constituted the total consideration due plaintiff in exchange for this forgiveness of all outstanding obligations. Therefore, no independent consideration would exist to support the notes when they were filed in by plaintiff subsequent to the date of the reconveyance.
Plaintiff, on the other hand, contends that the reconveyance agreement was limited in extent; that the reconveyance satisfied only the indebtedness for lots which were returned; and that defendants remained liable for outstanding obligations on the lots sold prior to the reconveyance. Further, as testified to by plaintiff's business manager, plaintiff contends that the notes were duly executed on the dates shown on their face, and that the amounts of the notes represent the extent of the outstanding and unsatisfied obligations of defendants.
Thus, lack of consideration is the pertinent defense, and credibility of the witnesses the decisive factor.
However, the court made no finding as to whether there was a lack of consideration for the notes. Nor did the court determine whether the notes were signed in blank or executed as shown on their face.
The trial court found that the notes were discharged by either payment or accord and satisfaction. But, under the facts in the record, neither of these legal principles is applicable. Defendants admitted that nothing was paid on the notes. And, as to an accord and satisfaction, defendants do not contend that the reconveyance of the property constituted a satisfaction of the notes, rather, it is their contention that the reconveyance discharged all their obligations under the original contract of purchase.
As an additional basis for denying plaintiff's claims, the trial court held that the doctrine of laches applied. But that doctrine is inapplicable here. Mere delay, short of the running of the applicable statute of limitations, does not in and of itself constitute laches. Norman v. Boyer, 111 Colo. 531, 143 P.2d 1017. This suit on the notes was instituted within the applicable statutory time limitation. The fact that defendants' financial condition improved during this period is no defense to plaintiff's action on the notes.
Since the findings upon which the judgment is based are not supported by the evidence, the judgment is reversed for a new trial.
Judgment reversed and cause remanded.
SILVERSTEIN, C.J., and COYTE, J., concur.