October 22, 2018- New Mexico Military Institute v. NMMI Alumni Association, Inc., No. A-1-CA-35621

1 	IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
2 Opinion Number: 	___ _
3 Filing Date: OCTOBER 22, 2018
4 No. A-1-CA-35621
5 NEW MEXICO MILITARY INSTITUTE,
6 	Plaintiff-Appellee,
7 V.
8 NMMI ALUMNI ASSOCIATION, INC.,
9 a New Mexico non-profit corporation,
10 	Defendant-Appellant.
11 	APPEAL FROM THE DISTRICT COURT OF CHAVES COUNTY
12 Jane Shuler Gray, District Judge
13 	Hinkle Shanor, LLP
14 Richard E. Olson
15 	Parker B. Folse
16 Roswell, NM
17 for Appellee
18 	Keleher & McLeod, P.A.
19 	Jeffrey A. Dahl
20 Michael G. Smith
21 	Albuquerque, NM
I
22 	for Appellant
Court of Appeals of New Mexico
Filed 10/22/2018 10:05 AM
Mark Reynolds

1 	OPINION
2 KIEHNE, Judge.
3 	{t} 	The New Mexico Military Institute (NMMI) sued the New Mexico Military
4 Institute Alumni Association, Inc. (the Association), claiming that the Association
5 breached its contractual obligation to maintain a proper financial accounting system
6 and also alleging that the Association was NMMI' s agent. NMMI asked that the
7 Association be made to tum over donations it received while acting as NMMI' s
8 agent. After a bench trial, the district court found that the Association had not
9 breached its contractual obligations to NMMI, but it also found that the contract
10 between the Association and NMMI was terminable at will, that the Association was
11 	NMMI' s agent, and that NMMI had legally terminated the contract and revoked the
12 Association's authority to act as its agent. Based upon its latter findings, the district
13 	court imposed a'constructive trust over donations that the Association received while
14 acting as NMMI' s agent.
15 	{2} 	The Association appeals, claiming that: (1) NMMI lacked standing to bring
16 	~ts claims against the Association; (2) the district court's ruling that the contract was
17 terminable at will should be reversed because NMMI did not raise that theory until
18 	after trial; 	(3) the district court's agency determination was not supported by
19 	substantial evidence; (4) imposition of a constructive trust was improper;.and (5)
20 requiring the Association to tum over donations that it received to NMMI violated

1 the donors' intent. We hold that NMMI had standing, we affirm the district court's
2 agency finding and the imposition of the constructive trust, and we reject the
3 Association's claim that the constructive trust violates the donors' intent. Because
4 we conclude that NMMI had a right to terminate its agency relationship with the
5 Association regardless of the existence of the contract between them, we do not
6 reach the questions of whether the contract was terminable at will or whether NMMI
7 appropriately terminated the contract.
8 BACKGROUND
9 	{3} 	NMMI is a state-funded school that provides students with up to four years of
10 high school and two years of junior college instruction. The Association is a non-
11 	profit corporation whose purpose, as stated in its articles of incorporation, is "to
12 promote the interest and welfare of [NMMI]. . .; to afford a permanent means of
13 	contact 	between 	[NMMI] 	and 	its 	alumni; 	to 	create, 	establish 	and 	maintain
14 	scholarships and student loan funds; and to collect and administer trust funds and
15 	endowments for the use and benefit of [NMMI]; and to do generally any and all
16 things which may be deemed advisable, necessary or desirable in the interest of the
17 	[NMMI], its students and faculty." The Association's bylaws also describe its
18 	purposes as being, among other things, "[t]o promote the interest and welfare of the
19 	[NMMI,]" to "foster[] lifelong connections between its Alumni and [NMMI,]" and
20 to "help establish and maintain scholarships, in conjunction with the New Mexico
2

1 Military Institute Foundation (the NMMI Foundation), for deserving cadets to attend
2 	[NMMI.]"
3 	{4} 	The Association was incorporated in 1964 and was originally staffed by
4 NMMI employees. In 1993 the Association and NMMI entered into a Memorandum
5 of Agreement 	(MOA), 	and 	the 	staffers 	handling 	alumni 	communication 	and
6 coordination 	left 	the. employment 	of NMMI 	and 	became 	employees 	of the
7 Association. The employees'. duties did not change. NMMI continued to provide
8 office space and utilities to the Association free of charge. The Association staff also
9 used NMMI phone lines and email servers, and used "@nmmi.edu" email addresses.
10 	{5} 	The Association and NMMI entered into a series of agreements between 1993
11 	and 2013. The first was the 1993 MOA referenced above. In 2001 the Association
12 	and NMMI entered into a new MOA (the 2001 MOA). They entered into a third
13 	MOA in 2012 (the 2012 MOA). The 2001 MOA contained a number of affirmative
14 covenants requiring the Association to do a number of things unless excused in
15 	writing 	by NMMI. 	These 	included maintaining the 	Association's 	status 	as 	a
16 501 ( c )(3) corporation; maintaining the composition of the membership of its board
17 	of directors in accordance with its bylaws; employing an executive secretary selected
18 	by its board of directors; and retaining advisory and other professional services as
19 	deemed necessary to perform its primary function of supporting NMMI; serving as
20 the primary repository of records relating to NMMI alumni; providing NMMI
3

1 publications to alumni, cadets, and patrons; maintaining a database with continued
2 updates of all alumni to be used by NMMI for fundraising programs; and receiving
3 donations and disbursing those funds in conformity with any conditions imposed by
4 the donors and in accordance with NMMI rules and regulations governing financial
5 aid to cadets.
6 {6} 	The 2012 MOA contained the same affirmative covenants. The 2012 MOA
7 also contained language stating that NMMI had reviewed the Association's articles
i
8 and bylaws and "found them acceptable" and that any proposed amendments would
9 be provided to NMMI for consideration and comment. All three MOAs contained
10 provisions obligating the Association to manage, document and track its financial
11 	activity and provide financial information to NMMI. The 1993 and 2001 MO As
12 	contained language stating that the Association was not NMMI's agent. The 2012
· 13 	MOA, however, did not contain this language and did not say anything about
14 whether an agency relationship existed between the parties.
15 	{7} 	NMMI, the Association, and the NMMI Foundation, a non-profit foundation
16 that provides primarily financial support to NMMI, provided financial support to the
17 Association, and holds scholarship funds for students ofNMMI, also entered into an
18 	"Alliance Agreement" to coordinate fundraising efforts. The Alliance Agreement
19 	outlined the duties of each party relating to fundraising. This agreement required that
20 the Association supply an annual budget to the Alliance Committee, a group made
4

•. 	1 up ofrepresentatives from the NMMI Foundation, NMMI, and the Association for
2 approval.
3 {8} 	The Association held funds given to it by donors for the purpose of providing
4 scholarships 	to 	NMMI 	students. 	Some 	of 	these 	funds 	had 	donor-imposed
5 restrictions. The scholarship committee, which consisted of representatives from
6 NMMI, the Association, and the NMMI Foundation, met each February to award
7 scholarships 	from 	those 	funds. 	Students 	seeking 	scholarships 	would 	contact
8 NMMI' s financial aid office, and if.a scholarship was awarded to a student using the
9 Association's funds, NMMI would bill the Association at th~ end of the academic
10 year.
11 	{9} 	In July 2009, NMMI hired a new president and superintendent, Major General
12 	Jerry Grizzle. General Grizzle reviewed the agreements between NMMI and the
13 	Association that were then in force, 	including the 	2001 	MOA and the Third
14 Amended Alliance Agreement. General Grizzle believed that the 2001 MOA was
15 	outdated and wanted to update it to reflect "current p~ocesses, procedures, titles."
16 General Grizzle also became concerned about the Association's operations and
17 believed it was "in violation of every condition" in the 2001 MOA. Beginning in
18 	2010, General Grizzle had discussions with successive board presidents of the
19 	Association about his concerns. General Grizzle's primary· concern was his belief
20 that the Association was not complying with the MOA's provisions governing
5

1 financial accounting and management of its finances. These efforts resulted in the
2 parties signing the 2012 MOA.
3 	{IO} 	The 	Association, 	however, 	still 	did 	not 	provide 	any 	audited 	financial
4 statements to NMMI, and it appeared to General Grizzle that the Association was
5 not likely to file a timely, audited tax return. Thus, on February 21, 2013, NlVJMl's
6 Board of Regents sent a letter to the Association stati1:1g that it intended to terminate
7 the 2012 MOA because _the Association had not maintained an adequate financial
8 accounting system and had not provided NMMI with a copy of its annual audit, and
9 asking it to cure these problems within thirty days. The Association did not respond
10 to this letter. In April 2013, NMMI sent a final notice to the Association that it was
11 	terminating the relationship between NMMI and the Association. On this same date,
12 NMMI removed the Associatiqn from its offices on NMMI property.
13 	{11} 	NMMI brought suit against the Association in June 2013 claiming that the
14 Association breached its contractual obligation to maintain an adequate financial
15 	accounting system, and that the Association was in possession of funds that it
16 received on behalf of NMMI while acting as NMMI' s agent. It asked the district
17 court to: freeze the Association's accounts; prohibit the Assoc_iation from using
18 	NMMI's name, logos, and trademarks; impose a constructive trust on funds in the
19 	Association's custody; appoint a receiver; order the Association to account for funds
6

1 it received while an agent of NMMI; and order the Association to transfer all funds
2 received for the benefit ofNMMI or its cadets to an appropriate custodian.
3 	{12} 	The district court held a one-week bench· trial. Most of the evidence and
4 argument focused on the Association's allegedly inadequate accounting system, but
5 the parties also tried the issue of whether the Association was NMMI' s agent. After
6 the trial, the district court issued an initial set of findings of fact and conclusions of
7 law, finding that the Association acted as NMMI's agent, that the Association did
8 not breach the 2012 MOA, and that NMMI had improperly terminated the 2012
9 MOA. The district court then issued a judgment and order, imposing a constructive ·
10 trust 	over 	funds 	in 	the 	Association's 	custody, 	and 	stating 	that 	because 	the
11 	Association was·NMMI's agent, it had a duty to convey these funds to NMMI or the
12 NMMI Foundation if NMMI so directed. After post-trial motions filed by both
13 	parties, the district court issued supplemental findings of fact and conclusions oflaw,
14 reiterating that the Association had acted as NMMI' s agent, and stating that "NMMI,
15 	as the principal, [could] terminate the Association's authority to act as its agent for
16 	any reason." The district court also found that the 2012 MOA was terminable at will.
17 The court issued an amended judgment reiterating its agency finding and the creation
18 	of a constructive trust over funds in NMMI's custody. The Association appeals from
19 the district court's ruling and its imposition of a constructive trust.
7

1 DISCUSSION
2 A. 	NMMI had standing to sue the Association
3 	{13} 	New Mexico's standing doctrine requires litigants to allege that "( 1) they are
4 directly injured as a result of the action they seek to challenge[,] (2) there is a causal
5 relationship between the injury and the challenged conduct[,] and (3) the injury is
6 likely 	to 	be 	redressed 	by 	a 	favorable 	decision." 	ACLU of N.M 	v. 	City 	of
7 Albuquerque, 2008-NMSC-045,, 1, 144 N.M. 471, 188 P.3d 1222. Whether a party
8 has standing presents a question of law that we review de novo. Id , 6.
9 	{14} 	Here NMMI alleged in its complaint that the Association acted as its agent,
10 that 	"[a]lumni 	and 	others 	have 	made 	numerous 	and 	substantial 	monetary
11 	contributions to the Association on the condition, both express and implied, that
12 those funds direct~y benefit NMMI," and that because the relationship between
13 	NMMI and the Association had been terminated, the Association should not be
14 allowed to retain control over funds that were intended to benefit NMMI. These
15 	claims allege an injury to NMMI in the form of loss of access to and control over
16 	funds intended to support its students and programs.
17 	{15} 	NMMI further alleged that it had demanded the return of the funds, but that
18 the Association had not responded to the demand, and apparently could not or would
19 not act on the demand because its board had ~plit into two factions _with contrary
20 aims. These allegations were sufficient to allege a causal connection between
8

;
1 NMMI's 	loss 	of access to 	and· control over the funds 	and the 	Association's
2 unwillingness or inability to return the funds to NMMI, despite its obligation to do
3 so as NMMI's agent. See, e.g., Moser v. Bertram, 1993-NMSC-040, ,-r 6, 115 N.M. ·
4 766, 858 P.2d 854 (stating that an "agent stands in a fiduciary relationship with his
5 or her principal, a position of great trust and confidence commanding the utmost
6 good faith"); Restatement {Third) of Agency § 8.01 (Am. Law Inst. 2006) ("An
7 agent has a fiduciary duty to act loyally for the principal' s benefit in all matters
8 connected with the agency relationship."). Finally, a favorable decision would
9 redress NMMI's alleged injury by giving it control over funds that the Association
10 had raised on NMMI' s behalf.
11 	{16} 	The Association claims, however, that NMMI failed to prove that it suffered
12 	any injury because the district court rejected NMMI's claim that it violated the 2012
13 	MOA. The Association acknowledges NMMI's argument that as its agent, "the
14 Association must return property that it can no longer rightfully possess after the
15 	termination of the agency relationship[,]" but asserts that NMMI lacks standing
16 because: (1) NMMI failed to prove that it suffered any injury; (2) NMMI failed to
17 offer evidence "that would suggest that the Association was not the proper party to
18 	hold and administer the funds under its control"; (3) "no language in the MOA ...
19 	suggest[s] that [NMMI] is the proper owner or trustee of the Association's funds";
9

I 	and (4) "[t]here is also no law on point that holds that an agent must disgorge its own
2 property to a principal absent any breach of fiduciary duty."
3 	{17} 	These arguments lack merit. The premise of the Association's arguments is
4 that NMMI needed to demonstrate that the Association committed some breach of
5 duty, or caused some harm, to justify NMMI' s decision to terminate the agency
6 relationship. But as we will explain at further length in response to the Association's
7 substantial evidence claim, NMMI was entitled to terminate the Association's status
8 as its agent for any reason or no reason. The Association was therefore obligated to
9 tum over to NMMI all donations that it had collected on NMMI' s behalf, even if its
IO 	conduct was ·faultless. Here, NMMI sufficiently demonstrated that it had standing
11 	by alleging 	and proving that the Association was 	its 	agent, 	that the 	agency
12 relationship had been terminated, and that nevertheless the Association would not or
13 	could not tum over to NMMI the donations that it had collected on NMMI' s behalf.
14 	We therefore conclude that NMMI had standing to pursue its claims against the
15 	Association. See Am. Fed'n of State, Cty. & Mun Employees, Council 18 v. Bd. of
16 	Cty. Comm 'rs, 2016-NMSC-017, 132, 373 P.3d 989 (holding that injury-in-fact
17 requirement to obtain standing is satisfied where the plaintiff "show[s] that [it] is
18 	imminently threatened with injury, or, put another way, that [it] is faced with a real
19 risk of future injury, as a result of the challenged action or statute" (internal quotation
20 marks and citation omitted)).
10

1 B.
2
3 	{18}
The district court's determination that the Association was acting as
NMMl's agent is supported by substantial evidence
The Association next claims that substantial evidence does not exist to support
4 the district court's finding that the Association acted as NMMI's agent, because
5 there 	was 	no 	evidence that NMMI 	exercised the 	degree 	of control 	over the
6 Association required to support the existence of an agency relationship. We disagree.
7 	{19} 	"On appeal, we will not disturb a finding of agency if [it is] supported by
8 substantial evidence." Gallegos v. Citizens Ins. Agency, 1989-NMSC-055, 117, 108
9 N.M. 722, 779 P.2d 99. "Substantial evidence is such relevant' evidence that a
10 reasonable mind would find adequate to support a conclusion." State ex rel. King v.
11 	B & B Inv. 	Grp., Inc., 2014-NMSC-024, 112, 329 P.3d 658 (internal quotation
12 marks and citation omitted). "[W]hen considering a claim of insufficiency of the
13 	evidence, the appellate court resolves all disputes of facts in favor of the successful
14 party and indulges all reasonable inferences in support of the prevailing party." Las
15 	Cruces Prof'l Fire Fighters v. City ofLas Cruces, 1997-NMCA-044, 112, 123 N.M.
16 	329, 940 P.2d 177.
17 	{20} 	"An agent is one authorized by another to act on his behalf and under his
18 	control." Hansler v. Bass, 1987-NMCA-106, 128, 106 N.M. 382, 743 P.2d 1031.
19 	Whether an agency relationship exists is a question of fact to be determined "from
20 	all 	of the facts 	and circumstances of the case, together with the conduct and
21 	communications between the parties." Brown v. Cooley, 1952-NMSC-083, 18, 56
11

1 N.M. 630, 247 P.2d 868. The existence of an agency relationship does not depend
2 on the name that the parties use to describe their relationship. See Chevron Oil Co.
3 v. Sutton, 	1973-NMSC-1 l 1, 1 4, 85 N.M. 679, 515 P.2d 1283 (stating that "the
·4 majority rule is that the manner in which the parties designate a relationship is not
5 controlling, and if an act done by one person on behalf of another is in its essential
6 nature one of agency, the one is the agent of the other, notwithstanding heis not so
7 called").
8 	{21} 	Here, the Association does not dispute that it acted on NMMI's behalf, but
9 claims that NMMI did not exercise sufficient control over the Association to render
10 the Association its agent. In determining whether an agency relationship. exists, the
11 	"principal consideration" is "the control, or right to control" the agent's conduct.
12 Shaver v. Bell, 1964-NMSC-255, 1 16, 74 N.M. 700, 397 P.2d 723. The principal,
13 	however, need not control, or have a right to control, all aspects of the agent's
14 activities. "Thus, a person may be an agent although the principal lacks the right to
15 	control the full range of the agent's activities, how the agent uses time, or the agent's
16 	exercise of professional judgement." Restatement (Third) of Agency § 1.01 cmt. c
17 	(Am. Law Inst. 2006).
18 	{22} 	In New Mexico, our case law has not required a particularly invasive level of
19 	control to support a finding that a principal-agent relationship exists. For example,
20 	in Shaver, a plaintiff who was injured after slipping in a puddle of gasoline at a
12

1 service station sued both the actual operators of the station (Bass and Hendrix) and
2 the man who had leased the station and sold gasoline to them (Bell) for negligence.
3 Bell argued that Bass and Hendrix were not his agents because he could not control
4 their operation of the gas station, and he obtained summary judgment on that basis.
5 Shaver, 1964-NMSC-255, ,I l. Our Supreme Court reversed, holding that a dispute
6 	of fact existed about whether Bass and Hendrix were Bell's agents, although Bell
7 did not control their day-to-day activities, where: ( 1) Bell provided "certain specified
8 equipment" to the station; (2) Bell provided advertising for the station and paid its
9 utilities; (3) Hendrix and Bass agreed to purchase gasoline sold by Bell; (4) B~ll
10 	employed a "[s]tation [s]upervisor" to check on the station every week or two; and
11 	(5) Bell "sometimes suggested the price at which the gasoline should be sold, _as well
12 	as ways to increase the business of the station, [although] these were suggestions
13 	only." Id. 113, 25-26. Similarly, in Chevron Oil, our Supreme Court held that an
14 issue of fact existed about whether Chevron, who had leased a gas station to a man
15 	named Sharp, but did not control his day-to-day operations, was in a principal-agent
16 relationship where Chevron required Sharp to promote Chevron's products, to
17 remain open for certain hours, and to meet minimum standards of cleanliness and
18 	order, and where Chevron provided Sharp with gasoline, advertising, and uniforms,
19 and allowed his customers to pay with Chevron credit cards. 	1973-NMSC-111, 17.
20 	And in Gallegos, 	our Supreme Court held that an insurance agency was in a
13

1 principal-agent relationship with an insurance salesman where the salesman had
2 access to the insurance agency's office building and rate books, solicited business
3 for the insurance agency, and received price information from the insurance agency
4 to relay to his customers. 	1989-NMSC-055, ,-r 18.
5 {23} 	We conclude that substantial evidence supported the district court's finding
6 that NMMI exercised sufficient control over the Association to place them in a
7 principal-agent relationship. First, there was abundant evidence to support the
8 existence of a close relationship between NMMI and the Association, and that the
9 donations it solicited were for the benefit of NMMI and its students. The district
10 	court found that "[t Jhe Association, as an affiliated entity, has provided support to
11 	NMMI by raising funds on behalf of NMMI that were intended to benefit NMMI
12 	and its cadets[,]"; that "[t]he Associatioffsolicited donations on behaif·ofNMMI,";
13 	that "[o]n behalf of NMMI, the Association created and established endowments,
14 	including those for scholarships, intended to benefit [the Association],"; and that the
15 	Association "solicited and raised funds to promote and help fund NMMI's] annual
16 homecoming festivities," to "offset and support the costs of various NMMI programs
17 and cadet activities[,]" and to "create and establish professorial endowments at
18 	NMMI." All three MOAs, the Association's by-laws, and the Association's articles
19 	of incorporation described the Association's purposes as promoting the interest and
20 welfare of NMMI and collecting and administering trust funds and endowments for
.14

1 the use and benefit of NMMI. The 	2001 	and 2012 MOAs specified that the
2 Association would serve as the primary repository of records relating to alumni for
3 NMMI. The Association's scholarship funds were solicited on behalf of NMMI's
4 students.
5 {24} 	There 	was 	also 	substantial 	evidence 	of NMMI's power to 	control 	the
6 Association's fundraising activities. The_ district court found that as an "affiliated
7 entity with NMMI, the Association has been permitted to use the name 'NMMI' in
8 its corporate title and allowed the use ofNMMI's name and marks in its letterhead";
9 that "[u]ntil NMMI declared the [2012 MOA] to be terminated, the Association's
10 	office was located on the campus ofNMMI"; up until the-2012 MOA, all previous
11 	MOAs stated that the Association was not an agent of NMMI; and that "[a]ll three
12 	MOAs required the Association to undertake several commitments[,]" including the
13 	maintenance of an adequate financial accounting system and submission to annual
14 	audits. Any changes to the Association's bylaws and its articles of incorporation
15 	required NMMI approval. The 2001 and 2012 MOAs also required the ~ssociation
16 to do 	a number of things, "unless excused by [NMMI] in writing," including
17. maintaining its existence as a tax-exempt organization, employing an executive
18 	secretary, organizing its staff and retaining advisory and other professionals services
19 	as it deemed necessary." These provisions indicate a level of control on the part of
20 	NMMI, as they outline the basic structure and organization.that the Association was
15

1 to have and make clear where the Association had authority to exercise its own
2 professional discretion.
3 	{25} 	The 2012 MOA also required the Association to provide NMMI publications
4 to alumni, provide and maintain a database with continued updates of all alumni, and
5 to receive and disburse scholarship funds in conformity with all conditions imposed
6 by the donors and in accordance with NMMI rules governing financial aid to cadets.
7 Students at NMMI had to apply for Association-administered scholarships through
8 NMMI' s financial aid office, and the Association provided the scholarship funds for
9 students to NMMI.
10 	{26} 	This evidence established that NMMI exercised at least as much, if not more,
11 	control over the Association as did the principals in Shaver, Chevron Oil, and
12 	Gallegos. To be sure, the Association pointed to contrary evidence, such as the
13 	testimony of its past president, John Phinizy, and its former executive secretary,
14 	David Romero, that NMMI did not control the Association's actions; NMMI's
15 	audited financial statements, which appeared to disclaim any ability to control the
16 Association's daily operations; and statements in the 1993 and 2001 MOAs that
17 explicitly 	disclaimed 	a 	principal-agent 	relationship 	between 	NMMI 	and 	the
18 	Association. But on substantial evidence review, "[t]he question is not whether
19 	substantial evidence exists to support the opposite result, but rather whether such
20 evidence 	supports 	the 	result 	reached." 	Sandoval 	v. 	Baker 	Hughes 	Oilfield
16

1 Operations, Inc., 2009-NMCA-095, 141, 146 N.M. 853, 215 P.3d 791 (internal
2 quotation marks and citation omitted). Having concluded that the evidence was
3 sufficient to support the district court's finding that the Association acted as NMMI' s
4 agent, we affirm that finding.
5 	C.
6
7
8
9 	{27}
NMMI had the power to 	terminate its agency relationship with· the
Association, regardless of whether the 2012 MOA was terminable only
for cause, and the district court's imposition of the constructive trust was
proper
The Association vigorously argues that NMMI could only terminate the 2012
10 MOA for cause, and given that the district court found that the Association did not
11 	violate the 2012 MOA, NMMI suffered no injury that would entitle it to end the
12 parties' relationship or justify the imposition of a constructive trust requiring that it
13 	transfer the scholarship funds in its possession to NMMI. The Association also
14 argues that the district court's post-trial finding that the 2012 MOA was terminable
15 	at will cannot justify the order requiring it to tum over its scholarship funds to
16 NMMI, and should be reversed, because NMMI did not raise the terminable-at-will
17 theory until after trial concluded. Moreover, the Association argues that even if the
18 	district court's agency finding was supported by the evidence, that "would not justify
19 the tral)sfer of funds to [NMMI]." The Association therefore asks this Court to
20 reverse the district court's judgment and "order the immediate return of the funds"
21 	to the Association. In response, NMMI argues that because the Association was its
22 agent, it therefore could e.nd its agency relationship regardless of whether the 2012
17

1 MOA was terminable only for cause, and even if the Association complied with all
2 	of its obligations to NMMI. Whether NMMI as principal could terminate its agency
3 relationship with the Association without cause presents a question of law that we
4 review de novo. See Bank of N.Y. Mellon v. Lopes, 2014-NMCA-097, ,r 6,336 P.3d
5 443 ("We review issues of law de novo.").
6 	{28} 	Although the parties have not cited any New Mexico cases that have directly
7 addressed the issue, the overwhelming, if not unanimous, weight of authority is that
8 a principal has the power to terminate an agency relationship at any time and for any
9 reason, even if the principal and agent have signed a contract providing that their
10 relationship is irrevocable or may be terminated only for cause. The Restatement
11 	(Second) of Agency.§ 118 (Am. Law Inst. 1958) states that "[a]uthority terminates
12 	if the principal or the agent manifests to the other dissent to its continuance[,]" and
13 	Comment b to this section explains that "[t]he principal has power to revoke and the
14 agent has power to renounce, although doing so is in violation of a contract between
15 	the parties." A principal or agent who terminates the relationship in violation of such
16 a contract may still be subject to liability to the other party for breach of contract.
17 Restatement (Second) of Agency § 118 cmts. b, c. There is an exception to this rule
18 	where the agent's authority is a "power given as security[,]" Restatement (Second)
19 	of Agency§ 138 (Am. Law. Inst. 1958), but that does not apply here.
18

1 {29} 	The Restatement (Third) of Agency § 3 .10 (Am. Law Inst. 2006) similarly
2 states that "[n]otwithstanding any agreement between the principal and agent, an
3 agent's actual authority terminates ... if the principal revokes the agent's actual
4 authority." Comment b to this section also states that the principal's power to revoke
5 an agent's authority "is not extinguished because an agreement between principal
6 and agent states that the agent's actual authority shall be irrevocable or shall not be
7 revoked except under specified circumstances[,]" although exercising that power
8 "may constitute a breach of contract." Comment b further explains that "[t]he
9 rationale for the power to revoke ... is that agency is a consensual relationship."
10 	The power to revoke is justified because an agent with authority "holds ongoing
11 	power to act with adverse consequences for the principal[,]" and thus a principal
12 	should not be compelled to accept the services of an agent that has lost the principal' s
13 	confidence. Restatement (Third) of Agency § 3.10 cmt. b. The principal may,
14 however, still be liable for breach of contract if it has wrongfully terminated an
15 	agent's authority (except that specific performance is not a remedy available to the
16 agent). Id.
17 {30} 	Case- law from 	other jurisdictions confirms application 	of these general
· 18 	principles, and the Association has not cited any authority to the contrary. See, e.g.,
19 	Gov't Guarantee Fund of Republic of Finlandv. Hyatt Corp., 95 F.3d 291,300 (3d
20 	Cir. 1996) (stating that agency relationship is ordinarily terminable even if the
19

1 parties agreed the relationship could not be terminated); Woolley v. Embassy Suites,
2 Inc., 278 Cal. Rptr. 719, 724 (Ct. App. 1991) (stating that "[i]t is a cardinal principle
3 	of agency law that a principal who employs an agent always retains the power to
4 revoke the agency"); Ireland v: 	Wynkoop, 539 P.2d 1349, 1362 (Colo. App. Ct.
5 	1975) (reversing portion of injunction that purported to prevent principal from
6 terminating agent's authority, noting that principal has the power to terminate an.
7 agency relationship at any time, even in breach of a contract).
8 	{31} 	Because the district court found that the Association was NMMI's agent (a
9 finding that we have already held was supported by substantial evidence), it follows
10 that NMMI could terminate the Association's authority to act as its agent without
11 	cause, even if the 2012 MOA could only be terminated for cause, and despite the
12 	district court's finding that the Association did not breach the 2012 MOA. While we
13 	are sympathetic with the Association's protests that it did not breach any duty to
14 NMMI, mismanage any of its funds, or give NMMI any cause to terminate their
15 	relationship, 	the 	law 	is 	clear that 	NMMI 	needed 	no 	cause 	to 	terminate 	the
16 Association's status as an agent. The Association further argues that allowing NMMI
17 to terminate their relationship without cause violates New Mexico law requiring. the
18 	enforcement of contracts, because the 2012 MOA only allows termination for cause.
19 But as we have stated, the law allows a principal to terminate an agent's authority to
20 act regardless of any agreement to the contrary. If the Association believed that
20

1 NMMI breached the 2012 MOA by terminating the relationship, the Association
2 could have asserted a breach of contract counterclaim in the district court, but it did
3 not do so.
4 	{32} 	Because NMMI had the power to terminate its agency relationship with the
5 Association, it follows that the district court properly imposed a constructive trust
6 requiring the Association to tum over funds it solicited on NMMI's behalf while
7 acting as NMMI's agent. "The imposition of a constructive trust is an equitable
8 remedy ... within the broad discretion of the district court." In re Estate of Duran,
9 2003-NMSC-008, , 35, 133 N.M. 553, 66 P.3d 326. "A constructive trust will be
10 	imposed to prevent unjust enrichment that would result if the person having the
11 	property were permitted to retain it." Id., 34 (internal quotation marks and citation
12. omitted).
13 	{33} 	As an agent, the Association owed fiduciary duties to its principal, NMMI.
14 Hydro Res. Corp. v. Gray, 2007-NMSC-061, , 40, 143 N.M. 142, 173 P.3d 749
15 	(stating that "agency is afiduciary relationship, whereby the agent is required to act
16 	only in the interest of the principal"). As part of its fiduciary duty, the Association
17 was required to respect NMMI's interest in the donations that it solicited on NMMI's
18 	behalf. See Restatement (Third) of Agency§ 8.12 (Am. Law Inst. 2006) (stating that
19 	an agent has a duty "not to deal with the principal's property so that it appears to be
20 the agent's property" and "to keep and render accounts to the principal of money or
21

1 other property received or paid out on the principal's account"). Once NMMI
2 terminated the Association's status as an agent, it was required to tum over those
3 funds to NMMI. See Restatement (Third) of Agency§ 8.05 cmt. b (Am. Law Inst.
4 2006) ("A former agent who continues to possess property of a principal has a duty
5 to return it and to comply with ... management and record-keeping rules[.]"). It
6 would therefore have been unjust for the district court to allow the Association to
7 retain those funds in the face ofNMMI's demand for their return. The district court
8 therefore acted within its discretion by imposing the constructive trust.
9 D.
10
11
12 	{34}
The 	Association's 	claim 	that 	the 	district 	court's 	imposition 	of 	a
constructive 	trust 	violated 	the 	donors' 	intent 	and 	New 	Mexico
testamentary law lacks merit
The Association's final claim is that the district court's constructive trust
13 	violated the intent of donors who made testamentary gifts to the Association to be
14 	administered by the Association. We hold that this claim is meritless.
15 	{35} 	As discussed above, the district court's imposition of the constructive trust
16 was based on its finding that the Association was NMMI' s agent, and on its
17 conclusion 	that 	NMMI, 	as 	principal, 	was 	entitled 	to 	terminate 	the 	agency
18 relationship and require the Association, as its agent, to turn over all funds that it
19 	received 	while 	acting 	as 	NMMI' s 	agent. 	The 	Association 	claims 	that 	it 	is
20 nevertheless entitled to keep the funds that it received and solicited on NMMI' s
21 	behalf because the donors intended that the Association should be in charge of
22

1 administering and distributing those funds. In support of this claim, the Association
2 cites In re Cable Family Trust, 2010-NMSC-Ol 7, 148 N.M. 127,231 P.3d 108 and
3 In re Estate of Seymour, 1979-NMSC-069, 93 N.M. 328,600 P.2d 274 for the legal
4 principle that a _donor ''may do as he or she wishes with his or her money" and that
5 courts should therefore strive to give effect to a donor's intent. The Association,
6 relying on Schwarzkopf v. American Heart Association, 541 So. 2d 1348 (Fla. Dist.
7 Ct. App. 1989) and National City Bank of Michigan/Illinois v. Northern Illinois
8 	University, 818 N.E.2d 453 (Ill. App. Ct. 2004), also argues that a court "has no
9 authority to alter the terms of a decedent's will, even if there is evidence that there
10 	is a more cost effective and efficient means of operation."
11 	{36} 	The Association's arguments, however, do not grapple with the district court's
12 actual ruling or demonstrate that it was wrong. We have no quarrel with the principle
13 	that courts should attempt to give effect to the intent of donors or testators with
14 respect to the disposition of their assets, or with the Association's reliance on Cable
15 	and Seymour for that general proposition. But the district court found that the funds
16 	at issue here were donated to the Association in its capacity as an agent for NMMI,
17 and that NMMI was therefore entitled to demand that they be turned over to it. The
18 	Association has cited no authority for the proposition that where an agent receives
19 	or solicits funds on behalf of its principal, it is entitled to keep those funds, even in
20 the face of a demand from its principal for their return, merely because the donor
23

1 intended that the agent be the one to administer the funds. 	Accordingly, the
2 Association has failed to demonstrate that the district court erred. See In re Adoption
J of Doe, 1984-NMSC-024, ,r 2, 100 N.M. 764, 676 P.2d 1329 ("We assume where
4 arguments in briefs are unsupported by cited authority, counsel after diligent search,
5 was unable to find any supporting authority.").
6 {37} 	Similarly, we also have no reason to dispute the principle that a court may not
7 modify a will or gift merely because there's a more efficient way ofdistributing the
8 funds. But the district court's decision was not based on efficiency concerns, and the
9 Association's 	argument 	and 	authority 	on 	this 	point 	are 	theref~re 	irrelevant.
10 	Accordingly, we reject the Association's challenge to the district court's order
11 	directing it to tum over funds that it received while acting as NMMI's agent.
12 	CONCLUSION
13 	{38} 	We affirm the district court's judgment.
14 {39} 	IT IS SO ORDERED.
15
16
17 WE CONCUR:
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21
24