April 03, 2014 – Luz Corona v. Daniel Corona and Maria Corona, husband and wife, Samuel Corona and Marciana Corona, husband and wife, and Jose Luis Coronoa and Marta Corona, husband and wife, No. 32,017

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IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number:

Filing Date: _ Apnil 3, 2014

NO. 32,017

LUZ CORONA,
Plaintiff-A ppellee,

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-A ppellants.

APPEAL FROM THE DISTRICT COURT OF DONA 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
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.

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(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.”

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{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 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

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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’]

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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 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.

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. . . .
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.
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.

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{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.
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

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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

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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 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

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{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

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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 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

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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

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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 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

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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} 	T h e
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

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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 of limitations was revived as to him and his guaranty is enforceable. 	In

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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

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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

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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 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

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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

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[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 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’

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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

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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
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

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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

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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.
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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