author: SHORES, Justice. BEATTY, Justice

text:
    INTERNATIONAL RESORTS, INC., et al. v. Wesley C. LAMBERT et al.
    SC 2121.
    Supreme Court of Alabama.
    Sept. 30, 1977.

      B. Clark Carpenter, Jr. and Barry N. McCrary of Dixon, Wooten, Boyett, McCrary & Thornton, Talladega, for appellants.
    Betty C. Love of Love, Love, Lawrence & Burton, Talladega, for appellees.
   SHORES, Justice.

This is an appeal from a judgment for the plaintiffs based upon a jury award of $100,-000 which was reduced to $50,000 in a re-mittitur required by the trial court.

Prior to and on July 5, 1971, the defendants, International Resorts, Inc., were the owners and developers of certain real estate known as Point Aquarius which is located on Lake Logan Martin in Talladega County. The development was divided into lots according to a Master Plan prepared by Robert Trent Jones, a golf course architect. This Master Plan was not based upon a survey; however, but rather upon a general rendition of the subdivision. On July 5, 1971, the plaintiffs, Mr. and Mrs. Wesley C. Lambert, Jr., physically inspected the lot marked S-4 with Mr. Johnny Ray and Mr. Bill Beckham, who were representatives of the defendants. The defendants represented to the plaintiffs that this lot was Lot S-4 Golf East (hereinafter Lot S-4) which they had chosen from the Master Plan. The lot was staked with tall white stakes, one of which was marked Lot S-4, and the plaintiffs walked off the lot as presented by the defendants. Thereafter, Mr. Lambert signed an installment sales contract for that lot. Following this, a sign with Mr. Lambert’s name on it was placed on Lot S-4.

On July 16, 1971, the defendants mortgaged Lot S-4 to the Commonwealth Financial Corporation. After the plaintiffs were told on August 17, 1971, that the lot was available, they made a down payment of $839.50 according to the contract.

Meanwhile, on July 31,1971, Mr. and Mrs. Reuel Fick had executed an installment sales contract for the lot designated on the Master Plan as S-9 Golf East.

During the summer of 1972, Moody Ray of the survey firm of Ray, Peoples, and White met with the defendants’ project coordinator to determine where to locate the country club parking lot which had not been provided for in the Master Plan. The parking lot was designed in such a manner as to encroach into an area directly adjoining plaintiffs’ Lot S-4 and the Ficks’ Lot S-9 Golf East. This caused the lots in plaintiffs’ area, called Block 4 after the survey, to be shifted northward. The net effect of this shift was that the lot designated S^4 was re-assigned to a location outside Block 4. Although the record is not clear, apparently the plaintiffs were given equity in a lot designated on the Master Plan as J-2 by someone prior to February, 1975. The lot designated J-2 was some distance from the original location of Lot S-4.

In response to their request of July 10, 1972, the plaintiffs received a copy of the original contract. While the record is not clear on this point, either just prior to July 10, or about six months later, the plaintiffs apparently received a notice that their interest, for income tax purposes, was being applied to Lot J-2. The record is clear, however, that the plaintiffs contacted the defendants after the first notice and they were sent a photostatic copy of their original contract. About a year after the plaintiffs received the first notice, they received a similar notice.

The property was surveyed in 1972 or 1973 and the lot originally designed S-4 was re-named by Moody Ray (or by someone in his firm) as Lot 75, Block 4.

Sometime in 1974, Mr. Lambert discovered that the sign with his name on it, which had been placed on Lot S-4, had been removed from the lot.

On February 25, 1975, Mr. Lambert received a telephone call from Mr. Jim Pihak-is who informed him there had been a mistake and that Mr. Lambert no longer owned Lot S-4. Thereafter, the plaintiffs traveled to Point Aquarius. When they arrived, they met Mr. Bud Abbott. They inspected their Lot S^4 and discovered that the stakes which had originally been placed on the property had been moved, reducing the size of that original lot. The plaintiffs were also told by Mr. Abbott that they could have Lot J-2 but they could not have their money refunded. When the Lamberts inspected Lot J-2, they found their sign had been placed on it. The plaintiffs were then shown a document that disclosed the lot originally designated S-4 had been deleted and that a smaller lot designated S-9 was now in its place. Further, the plaintiffs were told that Lot S-9 was owned by Mr. Fick. Although the Ficks were re-assigned to a portion of the lot originally designated Lot S-4, now Lot 75 in Block 4, they refused to accept it.

The plaintiffs then filed this action on July 29, 1975, alleging fraud and breach of contract; and, following a judgment in their favor, the defendants appealed, raising, among others, the following issues:

1. That the allegations of fraud and breach of contract are not supported by the evidence;
2. That the statute of limitations bars plaintiffs’ action for fraud; and
3. The verdict was excessive.

The first issue presented is whether a prima facie case of fraud was established by the plaintiffs. The relevant portions of plaintiffs’ original complaint are as follows:

“COUNT ONE
“1. On or about July 5, 1971, the defendants showed to plaintiffs a certain parcel of land and, along with plaintiffs, stepped off said parcel of land. Defendants represented to plaintiffs that, by entering into an installment sales contract, plaintiffs were purchasing the parcel of land that had been shown to and stepped off by plaintiffs.
“2. The representations made by the defendants were false and the defendants knew they were false.
“3. Plaintiffs believed the representations and in reliance upon them entered into an installment sales contract (a copy of which is attached hereto and marked Exhibit A) as purchaser of the aforementioned parcel of land.
“4. Plaintiffs first became aware that defendants representations were false on April 28, 1975.
“COUNT TWO
“1. Plaintiffs reallege Paragraph 1 of Count One.
“2. The representations made by defendants were false and defendants, without knowledge of the true facts, recklessly misrepresented them.
“3. Plaintiffs reallege Paragraph 3 of Count One.
“4. Plaintiffs reallege Paragraph 4 of Count One.
“COUNT THREE
“1. Plaintiffs reallege Paragraph 1 of Count One.
“2. The representations made by defendants were false and were made by mistake, but with the intention that Plaintiffs should rely upon them.
“3. Plaintiffs reallege Paragraph 3 of Count One.
“4. Plaintiffs reallege Paragraph 4 of Count One.”

The original complaint was amended by adding two counts. Count Five, relevant here, follows:

“COUNT FIVE
“1. On or about July 5, 1971, the defendants showed to plaintiffs a certain parcel of land and, along with plaintiffs, stepped off said parcel of land. Defendants represented to plaintiffs that by entering into an installment sales contract plaintiffs were purchasing the parcel of land shown to and stepped off by plaintiffs. On to-wit: July 5,1971, in reliance upon said representation by defendants, the plaintiff, Wesley C. Lambert, Jr., signed an installment sales contract to purchase Lot S-4 which had been stepped off and shown to plaintiffs by defendants. On to-wit: August 17, 1971, the plaintiff paid to the defendants the sum of $839.52 upon defendants falsely representing to plaintiffs that said Lot S-4 was free and clear and could be purchased by plaintiffs.
“2. The representations made by defendants on to-wit: August 17,1971, at a dinner meeting in Mobile, Alabama, by the defendants, were false and the defendants knew they were false when made.
“3. Plaintiffs believed the representations and in reliance upon them paid to defendants the sum of $839.52 as a down payment on Lot S-4 Golf East, a copy of which is attached to the original Complaint and marked Exhibit A.
“4. Plaintiffs first became aware that the defendants’ representations were false on or about to-wit: February 26, 1975.”

The definition of “legal fraud” is found in Title 7, § 108, Alabama Code:

“Misrepresentations of a material fact, made wilfully to deceive, or recklessly without knowledge, and acted on by the opposite party, or if made by mistake and innocently, and acted on by the opposite party, constitute legal fraud.”

Regardless of whether the representations were made wilfully, recklessly or mistakenly, it has been held that there must be (1) a false representation, (2) the false representation must concern a material existing fact, (3) the plaintiff must rely upon that false representation, and (4) the plaintiff must be damaged as a proximate result. Shafer v. Timmons, 51 Ala.App. 157, 283 So.2d 609 (1973); Pihakis v. Cottrell, 286 Ala. 579, 243 So.2d 685 (1971).

The defendants argue that the plaintiffs have not proved the allegations of their complaint. They also argue that, inasmuch as the plaintiffs have been offered a lot of equal value for the lot for which they contracted, they should not have been awarded punitive damages. We disagree with both of these contentions.

It is argued that, to recover, the plaintiffs must prove that the defendants had an intention to deceive the plaintiffs at the time they sold Lot S-4 to them. The defendants contend that, inasmuch as they did not know that a parking lot would be built which would require the plaintiffs to be shifted to another lot, they should be exonerated from liability. As a general rule, an intent to deceive is an indispensable element to the successful maintenance of a tort action for fraud and deceit. 37 Am. Jur.2d, Fraud and Deceit, § 188. However, it is equally well-established that an action for damages will lie when one makes representations relied upon by another without knowing or caring whether they are true or false. Cooper v. Schlesinger, 111 U.S. 148, 4 S.Ct. 360, 28 L.Ed. 382 (1884); Mid-State Homes, Inc. v. Johnson, 294 Ala. 59, 311 So.2d 312 (1975).

This is such a ease. The record is replete with evidence from which the jury could have concluded that the defendants represented to the plaintiffs that they were buying a particular piece of real property which the plaintiffs inspected and which was represented to them to be for sale at a particular price. They acted on this representation and began paying for that lot. Thereafter, the defendants informed them that the lot they had purchased had been “re-designated” and given another lot number. They continued to make payments. It was only after they had made another trip to Point Aquarius that they learned that their payments had been applied to a different piece of real estate. The plaintiffs did not purchase a colored square on an advertising map; they purchased a piece of real estate on a particular site, with specified boundaries as represented to them by the agents of International Resorts. Real estate, by its very nature, is unique and one piece cannot be substituted for another as if they were identical in value and appeal to the purchaser.

The following appears at 37 Am.Jur.2d, Fraud and Deceit, § 239:

“The doctrine of caveat emptor applies generally to the sale of land, as regards conditions open to observation. The doctrine does not, however, bar the right of a purchaser to rely upon statements and representations of material facts made by the vendor to induce the purchaser to enter into the contract for the purchase of the land, nor exempt the vendor from responsibility for the statements and representations which he makes to induce the purchaser to act, when under the circumstances these amount to fraud in a legal sense. . . . ”

The pattern of conduct by International Resorts, through its agents, as displayed by the record before us, indicates a total disregard for its obligations under the contract it made with these plaintiffs. There is evidence from which the jury could have concluded that International Resorts misrepresented the facts to these plaintiffs and, whether made intentionally to deceive, or merely made recklessly without regard to their truth, if made so heedlessly without any regard to the consequences, they were sufficient to support the jury verdict.

We have carefully reviewed the entire record in this case. Although the defendants argue several grounds for reversal, we do not find error for doing so. They argue vigorously that the award was excessive. The jury’s verdict was originally $100,000. The award of punitive damages is a matter reserved to the discretion of the jury in proper cases. The trial court, on motion for new trial, has remitted the verdict as it had a right to do. Vest v. Gay, 275 Ala. 286,154 So. 297 (1963). We are not inclined on this record to further reduce it. The judgment appealed from is, therefore, affirmed.

AFFIRMED.

TORBERT, C. J., and BLOODWORTH, MADDOX, FAULKNER, JONES, ALMON and EMBRY, JJ., concur.

BEATTY, J., dissents.

BEATTY, Justice

(dissenting).

I dissent.

The majority opinion discusses a reckless misrepresentation and states in substance that the pattern of conduct by International Resorts through its agents, whether done willfully or recklessly, provides evidence sufficient to support the jury verdict in favor of the plaintiffs.

I do not agree. There is no evidence in the record to support the verdict under either Count One or Count Two of the complaint. Count One alleges that the defendants on or about July 5, 1971 made false representations willfully to the plaintiffs and Count Two alleges that the defendants on or about July 5, 1971 made false representations recklessly to the plaintiffs.

The record discloses that Wesley Lambert, after physically inspecting Lot S-4 on July 5, 1971, signed an installment sales contract for it and that on August 17, 1971 the Lamberts made the down payment for Lot S-4. The record is bare of any conduct on the part of the defendants that they did anything with respect to the Lamberts’ Lot S-4 until the summer of 1972. The record reveals that sometime during the summer of 1972, about a year after the contract was made, Moody Ray met with International Resorts’ project coordinator to determine where to locate the country club parking lot because a sufficiently large one had not been provided for in Robert Trent Jones’ Master Plan. The manner in which the parking lot was designed caused encroachment into an area directly adjoining plaintiffs’ Lot S — 4. This resulted in re-designations of lots in plaintiffs’ area with the plaintiffs’ lot being re-designated and re-assigned.

In order to sustain the verdict under Count One this Court must find from this record evidence establishing that the defendants knew the representations were false when they were made on July 5,1971. The record shows that no one knew until the summer of 1972 that a larger parking lot which had not been provided for in the Master Plan would be needed. In other words, the record is completely bare with respect to any consideration of enlargement of the parking lot before the summer of 1972. The requirement of an enlarged country club parking lot, about a year after the representations were made, cannot furnish an inference that the defendants knew the representations they made on July 5, 1971 were false. There is also no evidence in the record which will furnish an inference that the defendants knew on July 5, 1971 that Lot S-4 would have to be re-assigned to another location. Indeed, there are no facts in the record which will furnish an inference that the defendants knew that the representations they made on July 5th were false. Therefore, as alleged in Count One there are no facts in the record from which a reasonable inference can be drawn that the defendants knew the representations were false when they were made.

In order to sustain the verdict under Count Two this Court must find from the record evidence establishing that the defendants on July 5, 1971, without knowledge of the facts recklessly misrepresented to the plaintiffs that they were purchasing Lot S-4. Simply because the record shows that later the plaintiffs’ interest was switched to Lot J-2, plaintiffs’ sign was moved, and the defendants told the plaintiffs a mistake had been made and they no longer owned Lot S-4, these facts can not support a reasonable inference that the representations were made recklessly. Black’s Law Dictionary 1435, (4th ed. 1968) defines reckless as “not recking; careless, heedless, inattentive; indifferent to consequences. . ” Because the record shows no one knew until the summer of 1972 that a larger parking lot would be needed, how can that fact support a reasonable inference that the representations made at the time of sale were reckless? The plaintiffs have alleged that the defendants’ fraud through recklessness occurred on the date the sale was made and the record absolutely fails to show that anyone knew at that time changes in the dimensions of the parking lot would be required. Furthermore, from the record there is no evidence to indicate that anyone expected or even suspicioned that the parking lot would have to be enlarged. As I have previously shown, there is no evidence in the record which will furnish an inference that the defendants knew on July 5th that Lot S-4 would have to be re-assigned to another location. There is not the slightest suggestion that the plaintiffs’ and defendants’ conduct was not done at arms length or in a businesslike-manner. The record discloses no facts which will support a reasonable inference that the defendants’ misrepresentations were reckless as alleged in Count Two.

The majority has made a mistake in reasoning that the pattern of conduct displayed by International Resorts, through its agents, is evidence from which the jury could have concluded that the representations were either willful or reckless. In painting with a broad brush, the majority has allowed the jury to consider the questionable business practices of the defendants, which occurred at a much later time, to support the allegations of fraud charged on July 5,1971. The facts in the record and the reasonable inferences simply do not support the allegations in Counts One and Two.

I would agree, however, that the plaintiffs are entitled to recover their money back because a prima facie case was established under Count Three but the defendants are not guilty of a type of fraud which under the law justifies punitive damages. Therefore, the plaintiffs are entitled to compensatory damages, interest, and costs.

Accordingly, for the error of the trial court in awarding punitive damages I would reverse and remand the case.


source: Caselaw Access Project

author: PER CURIAM.

license: Public Domain

text:
    AETNA INSURANCE COMPANY, a corporation, v. SPRING LAKE, INC., a corporation, et al.
    SC 2143.
    Supreme Court of Alabama.
    Sept. 30, 1977.

      Abram L. Phillips, Jr., and Victor T. Hudson, of Pillans, Reams, Tappan, Wood, Roberts & Vollmer, Mobile, for appellant.
    Edward L, Hardin, of Hardin, Stuart & Moncus, Birmingham, for appellee, Spring Lake, Inc., Eight Mile Development Corp. and pro se.
    Billy C. Bedsole, of Stockman & Bedsole, Mobile, for appellee, Willie Lee Flott.
   PER CURIAM.

Appellant, Aetna Insurance Company, filed a suit for declaratory judgment against Spring Lake, Inc., Eight Mile Development Corporation, Edward Hardin, Jr., and Willie Lee Flott to determine whether Aetna should be required to provide coverage under a policy of liability insurance issued to Spring Lake and Eight Mile. The trial court held that Aetna was obligated to defend Spring Lake and Eight Mile and to pay any judgment rendered against them up to the limits of coverage provided in the policy. We reverse.

Spring Lake, Inc., is a recreational facility located in Mobile County, Alabama. It consists of a swimming lake or pool, dance pavilion, refreshment stand, and picnic grounds. Eight Mile Development Corporation owns the land upon which the facility is situated and leases it to Spring Lake. Edward Hardin, Jr., was a corporate officer of and attorney for both corporations.

On June 9,1973, Delviekie Flott drowned in the Spring Lake swimming facility. Approximately three months later, on September 20,1973, Willie Lee Flott filed an action in the Circuit Court of Mobile County against Spring Lake for damages for the death of Delviekie Flott. The summons and complaint was served upon Spring Lake on October 12, 1973.

At the time of the drowning Spring Lake and Eight Mile had in force and effect a policy of insurance issued by Aetna providing liability coverage upon its business operations. This liability policy was purchased in August, 1972, along with a fire insurance policy and a workmen’s compensation policy by Hardin from the Jackson Insurance Agency in Birmingham, Alabama. The Jackson Agency is an independent agent writing fire and casualty insurance through various companies, one of which is Aetna. The effective date of each policy was August 1, 1972, and the policies covered a three year period of time through August 1,1975. The named insureds on the liability policy were Spring Lake and Eight Mile and their address was shown as being in care of Ed Hardin, Jr., at his Birmingham office address. The policies were delivered to Hardin in August of 1972.

Hardin learned of the drowning either in June, 1973, just after the occurrence, or in October, 1973, just after Spring Lake was served with the summons and complaint. Upon learning of the drowning, Hardin gave his secretary, Mrs. Askins, the date of the drowning, June 9, 1973, and asked her to call the Jackson Agency to see if coverage was effective on that date. Mrs. As-kins testified that she telephoned the Jackson Agency and talked with an unidentified lady who advised her that coverage under the policy was not effective until August 1, 1973. Relying upon this information, Hardin failed to notify Aetna of the drowning or to forward the suit papers. His law firm assumed the defense of the Flott suit. There is nothing in the record to indicate that a search was made for the policy when Hardin learned of the drowning to ascertain the effective date.

In the summer of 1974, Hardin and his law partners decided to terminate their association with the other owners of the Spring Lake and Eight Mile development. At that time an unsuccessful search was made to locate the insurance policies, so they could be cancelled. Hardin cancelled the policies in August of 1974 by filing a lost policy cancellation release.

In the summer of 1975 the insurance policies were discovered by one of Hardin’s law partners in a storage room while he was gathering together Spring Lake and Eight Mile records to return to the remaining owners of the development. The policies were turned over to another of Hardin’s law partners handling the defense of the Flott suit against Spring Lake. A letter dated June 16, 1975, containing a copy of the Flott complaint was sent to the Jackson Agency notifying them of the drowning and impending suit.

The policy contains in that section entitled “CONDITIONS” the following:

“4. Insured’s Duties in the Event of Occurrence, Claim or Suit:
“(a) In the event of an occurrence, written notice containing particulars sufficient to identify the insured and also reasonably obtainable information with respect to the time, place and circumstances thereof, and the names and addresses of the injured and of available witnesses, shall be given by or for the insured to the company or any of its authorized agents as soon as practicable.
“(b) If claim is made or suit is brought against the insured, the insured shall immediately forward to the company every demand, notice, summons or other process received by him or his representative.
“5. Action Against Company: No action shall lie against the company unless, as a condition precedent thereto, there shall have been full compliance with all of the terms of this policy . . . ”

Aetna filed the declaratory judgment action to determine its obligations under the policy and sought to avoid liability under the policy claiming the insureds failed to comply with the conditions of the policy. Aetna also sought and obtained an injunction against prosecution of the death action by Willie Lee Flott pending resolution of the declaratory action.

The trial court held the conditions were met for two reasons:

“The Court further finds that the Complainant, through their duly authorized agent, denied coverage to the Respondents by advising them that said policy was not in effect on June 9, 1973, and that such denial constituted a waiver of the rights of the Complainant to assert other policy provisions and conditions as a defense to their obligations to the Respondents under the policy contract. The Court further finds that the Respondents did comply with the conditions and provisions of the policy contract and that their report of the loss or accident of June 9, 1973, to the Complainant was reasonable, timely noticed under the circumstances, and the relief prayed for by the Complainant is therefore denied.”

Aetna appeals the decision of the trial court. The first issue is whether the trial court erred in ruling that the appellees complied with the conditions and provisions of the policy requiring notice.

The terms “as soon as practicable” and “immediately” (as they are used in the policy in question) mean that notice must be given “within a reasonable time” in view of all the facts and circumstances of the case. Southern Guaranty Ins. Co. v. Thomas, 334 So.2d 879 (Ala.1976); American Liberty Ins. Co. v. Soules, 288 Ala. 163, 258 So.2d 872 (1972); Pan American Fire and Casualty Co. v. DeKalb-Cherokee Counties Gas District, 289 Ala. 206, 266 So.2d 763 (1972); 18 A.L.R.2d 443.

The issue in this case is whether the appellees gave notice of the drowning within a reasonable time in view of all the facts and circumstances as a matter of law. Southern Guaranty Ins. Co. v. Thomas, supra; Couch on Insurance 2d, § 49:81, Vol. 13, p. 687.

In Thomas, supra, 334 So.2d at 882-883, this court stated:

“Where facts are disputed or where conflicting inferences may reasonably be drawn from the evidence, the question of the reasonableness of a delay in giving notice is a question of fact for the jury. Provident Life & Accident Insurance Co. v. Heidelberg, 228 Ala. 682, 154 So. 809 (1934). Conflicting inferences concerning the reasonableness of a delay may sometimes be drawn where the insured offers evidence of mitigating circumstances.
“ ‘However, where an insured fails to show a reasonable excuse or the existence of circumstances which would justify a protracted delay, the Court should as a matter of law hold that there has been a breach of the condition as to notice
“Zurich General Accident & Liability Insurance Co. v. Harbil Restaurant, Inc., 1 A.D.2d 433, 184 N.Y.S.2d 51, 53 (1959). Accord, Provident Life & Accident Insurance Co. v. Heidelberg, supra; Annot., 18 A.L.R.2d 443, 504ff. See also Lennon v. American Farmers Mutual Insurance Co., 208 Md. 424, 118 A.2d 500 (1955), where it was held that
“ ‘[wjhere the facts are undisputed and only one conclusion is reasonably possible, the question whether or not the insured under a liability policy complied with the requirement of notice is a question for the court; but where the facts are disputed or more than one conclusion is reasonably possible, the question is one for the jury.’ ”

The facts in this case are not disputed. The first notice Aetna received of the drowning was through the letter of June 16, 1975, over two years after the occurrence and approximately twenty-one months after suit was filed. Upon discovery of the policy in 1975, Aetna was given notice through its agent Jackson Insurance Agency. The only extenuating circumstance offered by the appellees, and supported by the record, concerning the two year period between the accident and notice to Aetna is the reliance appellees placed on the telephone call to an unidentified lady at the Jackson Agency who stated that the effective date of the policy began August 1, 1973. There is nothing in the record to indicate that the policy was lost at the time the call was placed to the Jackson Agency. To the contrary, the testimony of Hardin shows that the policy was first discovered to be lost in the summer of 1974 when Hardin and his law partners decided to terminate their relationship with Spring Lake and Eight Mile.

In judging the reasonableness of a delay in giving notice to an insurer, there are only two factors to consider: the length of delay and the reasons for the delay. Southern Guaranty Ins. Co. v. Thomas, supra. It is without doubt that a delay of over two years from the time of the accident to the time of notice is unreasonable, absent extenuating circumstances.

As stated above, the only extenuating circumstance is the reliance placed on the telephone call to the Jackson Agency. However, other circumstances cannot be ignored. Hardin was the corporate officer in charge of securing insurance coverage for Spring Lake and Eight Mile. He secured such coverage in August of 1972 through a friend and client, Mr. Weinard, who was employed by the Jackson Agency at that time. The record shows the following correspondence transpired between the Jackson Agency and Hardin in regard to the liability insurance policy:

a. On August 17,1972, Weinard wrote to Hardin regarding the policy.
b. On August 21, 1972, Hardin responded to Weinard’s letter of the 17th.
c. On August 24, 1972, the Jackson Agency billed Spring Lake for the policy.
d. On February 25, 1973, Jackson Agency billed Spring Lake for the balance of unpaid premium.
e. On March 25,1973, Jackson Agency again billed Spring Lake for the unpaid premium.
f. On July 10,1973, a month after the Flott drowning, Ivey Jackson wrote Hardin reminding him that the policy was almost a year old and some premium remained unpaid.
g. On September 4, 1973, Ivey Jackson again wrote Hardin regarding the policy.
h. On September 19, 1973, Ivey Jackson again wrote Hardin regarding the policy.
i. In August, 1974, Hardin acting for Spring Lake prepared and filed a Lost Policy Cancellation Release, in order to cancel the policy and obtain repayment to Spring Lake of $799.00 in prepaid but unearned premiums on the policy.

The above clearly shows that Hardin was aware, or should have been aware, that Spring Lake and Eight Mile had liability insurance coverage from August, 1972. Particularly, the letter of July 10, 1973, specifically noted that as of August 1, 1973,' the policy was one year old. In light of these facts, any reliance Hardin reposed in the statement of an unidentified lady at the Jackson Agency that the effective date of the policy began August 1, 1973, is unreasonable. The trial court erred in holding that the appellees complied with the conditions of notice under the policy.

Aetna also contends that the trial court erred in holding that Aetna had denied liability coverage, thereby waiving the right to assert policy provisions and conditions. The issue is whether the record factually supports a finding that Aetna had the requisite knowledge to effect a waiver.

As a general rule there can be no waiver without knowledge. North River Ins. Co. v. Flippo, 236 Ala. 128, 181 So. 114 (1938); Security Ins. Co. v. Laird, 182 Ala. 121, 62 So. 182 (1913); Finch v. Life & Casualty Ins. Co. of Tennessee, 253 Ala. 408, 45 So.2d 16 (1950); Alabama State Mutual Assur. Co. v. Long Clothing & Shoe Co., 123 Ala. 667, 26 So. 655 (1899). See also, 44 Am.Jur.2d, Insurance, § 1507.

The trial court made no formal findings of fact but we presume that the trial court made such finding or findings as would support the decree rendered. Grund v. Jefferson County, 291 Ala. 29, 277 So.2d 334 (1973).

Appellees argue in their brief that the unidentified lady at the Jackson Agency to which a telephone call was made in 1973 denied coverage, thus waiving Aetna’s right to demand compliance with the provisions and conditions of notice. The trial court’s decree is obviously based on such a finding. Grund v. Jefferson County, supra.

In regard to what facts Aetna could be charged to have knowledge of, we quote from the deposition of Hardin’s secretary, Mrs. Askins, regarding her telephone conversation with the unidentified lady at the Jackson Agency:

“Q. Did you ever tell her about a lawsuit of Willie Lee Flott against Spring Lake, Inc. which had been served on Spring Lake, Inc.?
“A. No, I didn’t, not her, not at that time.
“Q. Did you ever tell anybody at Jackson at any time?
“A. No. I never talked to Jackson but once that I can remember.
“Q. All right, and you never told them about this lawsuit?
“A. No.
“Q. Okay.
“A. I didn’t have the lawsuit at the time I talked to them.
“Q. Well, never told them of one, whether you had it in your possession or not, is that right?
“A. Well, I can’t remember exactly what I said to the lady that day other than I did want to know if the coverage was effective, because, in effect, that’s what I was calling to see about.
“Q. But my question is, at the time you called, the one time you talked to Jackson, you do not recall telling them about a lawsuit that had been served on Spring Lake as a defendant where Willie Lee Flott was the plaintiff?
“A. No. sir.”

The above constitutes the only evidence in the record regarding notice of the drowning to Aetna or the Jackson Agency save the letter of June 16, 1975. It is obvious., that Aetna could not be charged with knowledge of even the minimal facts upon which a waiver could be sustained. The trial court erred in holding that Aetna had denied liability and waived its right to assert conditions under the policy.

The decree of the trial court is hereby reversed.

REVERSED AND REMANDED.

TORBERT, C. J., and BLOODWORTH, JONES, ALMON and EMBRY, JJ., concur.

      . The declaratory judgment action was dismissed as to Hardin personally.


author: ALMON, Justice.

text:
    Ronald E. DREWES v. BANK OF WADLEY.
    SC 2148.
    Supreme Court of Alabama.
    Sept. 30, 1977.

      Wiley D. Wood, II, Roanoke, for appellant.
    Larkin Radney, of Radney, Radney & Barnes, Alexander City, for appellee.
   ALMON, Justice.

The Bank of Wadley sued Ronald E. Drewes as guarantor of a note for money lent to Dot Development Company, Inc. The issue at trial was whether Drewes signed in his representative capacity as President of Dot Development or in his individual capacity. Drewes appeals from a $30,000.00 jury verdict in favor of the bank. We affirm.

The note in question was for $51,537.39. Drewes signed it in his representative capacity as President of Dot Development Co., Inc. The guaranty payment clause on the reverse side of the note was signed by Drewes, “Ronald E. Drewes, Pres.” This note was a renewal of three previous notes. Note 1, for $25,041.50, was signed by Drewes as an individual and as president. He also signed the guaranty clause individually. Drewes admits this. The guaranty clause of Notes 2 and 3, for $15,125.00 and $10,083.33, respectively, were signed, “Ronald E. Drewes, Pres.” The collateral for Note 1 was a “list of equipment per attached sheet;” Note 2, “advance on a contract which is attached;” and Note 3 listed the assignments of a contract attached to the note. The collateral for the renewal note was a “list of equipment attached.”

Appellant sought through discovery, but was refused on grounds of irrelevance, a random sampling of notes executed to the Bank of Wadley by closely held corporations. His purpose was to establish custom, policy, or habit, and “[a]lso to see if it was the bank’s policy to have all closely held corporations sign in a corporate capacity, not only as maker, but as a guarantor of payment, and if Mr. Phillips was seeking to trick Mr. Drewes in individually signing as guarantor of payment.” Appellant signed the note in the presence of Mr. Wyner Phillips, Vice-President of the Bank. Mr. Phillips was subsequently convicted of embezzlement.

The day of trial the court excused Mr. Phillips on the written suggestion of Phillips’ psychiatrist. Mr. Phillips’ deposition was read to the jury.

The pre-trial order narrowed the issue to whether Drewes had signed the guarantor provision in the note in his individual capacity or his representative capacity as President of Dot Development Company, Inc. The issue of damages was specifically resolved in the pre-trial order. In part, that order provides as follows:

“4. Stipulations and Admission.
“(a) Plaintiff admits that he has received $20,607.05 as a result of the disposition of the collateral offered by DOT DEVELOPMENT, INC. and plaintiff has in his possession a trailing machine and brick saw. Plaintiff and defendant both agree that should plaintiff recover a judgment against defendant that defendant will only have to pay the amount owed after all collateral has been sold and all applicable credits have been applied. . .”

This order was binding on the issues triable by the parties. Rule 16, Alabama Rules of Civil Procedure. Thus, Drewes cannot complain on appeal that the court improperly instructed the jury on the issue of damages or that the evidence does not support the damage verdict. Moreover, there was no objection to the court’s oral charge.

Drewes alleges that the trial court abused its discretion by denying him inspection of the Bank of Wadley’s books to determine its policy, habit, or custom regarding guaranteeing loans to closely held corporations.

The scope of discovery is governed by Rule 26. In part, Rule 26(b)(1) provides as follows:

“Parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action . . . . It is not ground for objection that the information sought will be inadmissible at the trial if the information sought appears reasonably calculated to lead to the discovery of admissible evidence.”

The rule makes it plain that discovery is not limited to matters competent as evidence at trial. “Relevancy,” as used in our discovery rules, means relevant to the subject matter of the action and there is a reasonable possibility that the information sought will lead to other evidence that will be admissible. 8 Wright and Miller, Federal Practice and Procedure, § 2008.

The broad scope given our discovery rules necessarily requires that the trial court be vested with considerable discretion in ruling on such matters. This especially applies to cases where, such as this case, there is a claim that the information sought is irrelevant. The trial court is in the best position to judge such a matter and this court will not reverse the trial court unless under all the circumstances there has been an abuse of discretion. Campbell v. Regal Typewriter Co., Inc., 341 So.2d 120 (Ala., 1976). The federal courts’ longer experience with such discovery rules has likewise lead them to bestow broad discretion in the trial court on such matters as relevancy. Swanner v. United States, 406 F.2d 716 (5th Cir., 1969); In re Surety Association of America, 388 F.2d 412 (2nd Cir., 1967).

We cannot say that the trial court abused its discretion by denying Drewes the opportunity to inspect the Bank’s books to ascertain its policy, habit, or customs in regard to loans to closely held corporations. Assuming that a custom was found it would not be admissible. McKinney v. Darden, 192 Ala. 369, 68 So. 269 (1915); Singleton v. Thomas, 73 Ala. 205 (1882). Further, there is no indication that the inspection would have led to other admissible evidence.

Drewes also claims that the trial court erred in admitting into evidence the deposition of Wyner Phillips, Vice-President of the Bank, when Drewes obtained the loan in question for Dot Development Co. As noted earlier, the trial court excused Mr. Phillips from appearing in court on the basis of a letter from his psychiatrist. Drewes maintains that the appellees failed to demonstrate Phillips was sufficiently ill under Rule 32(a)(3) to allow the use of his deposition. We disagree. The medical excuse was sufficient and the deposition was properly admitted. It was the opinion of the physician that if Mr. Phillips appeared in court it would be “extremely detrimental to his continued recovery.” It is not necessary that a person be on his deathbed to be “ill” within the meaning of that term under Rule 32(a)(3). Cunningham v. Lowery, 45 Ala.App. 700, 236 So.2d 709 (1970).

Lastly, Drewes claims that the trial court erred in admitting his personal financial statement into evidence. Drewes claims the financial statement was introduced solely to show that he was a person of sufficient means and able to pay the judgment.

As stated earlier, the only issue at trial was whether Drewes signed the guarantor provision of the note in his individual capacity or his representative capacity as President of Dot Development Company.

The Bank argues that it would be useless to require Drewes to sign both the note and the guaranty clause in his representative capacity, for obvious reasons. In this regard, the Bank adduced evidence showing that it required Drewes to submit a personal financial statement in connection with the loans to Dot Development Company. It was for the purpose of showing the capacity in which Drewes signed the guaranty clause, the Bank argues, that it introduced Drewes’ financial statement.

It is not uncommon for banks to require a personal financial statement when an individual signs as a guarantor. The fact that the Bank of Wadley did or did not require a personal financial statement would tend to establish the fact of capacity. The trial court did not abuse its discretion in admitting Drewes’ financial statement. Bradley v. Jones, 282 Ala. 331, 211 So.2d 465 (1968).

The judgment of the trial court is hereby affirmed.

AFFIRMED.

TORBERT, C. J., and BLOODWORTH, JONES and EMBRY, JJ., concur.

      . A study by the Project for Effective Justice found that a frequent and serious complaint lawyers have about discovery is that the opposition attempts to get information not relevant to the case. Glaser, Pretrial Discovery and the Adversary System, 1968.


author: BEATTY, Justice.

text:
    The ALABAMA YOUTH SERVICES BOARD, a Public Board, et al. v. Robert L. (Bob) ELLIS et al.
    SC 2161.
    Supreme Court of Alabama.
    Sept. 30, 1977.
    Rehearing Denied Dec. 2, 1977.

      Truman Hobbs, Robert D. Segall and Claud W. Lavender, Jr., Montgomery, for appellants.
    John P. Carlton, Ronald L. Stichweh, Charles E. Clark and Lee B. Lloyd, Birmingham, for appellees.
   BEATTY, Justice.

This is an appeal from an order of the Jefferson County Circuit Court enjoining the Alabama Youth Services Board from closing the Alabama Boys Industrial School (ABIS); from diminishing its level of services; requiring the Board to include a specific curriculum; requiring a certain level of funding; and requiring the Board to convey the ABIS land to The First National Bank of Birmingham, as Trustee. We reverse and remand.

The plaintiffs, various public officials of Jefferson County and the City of Birmingham, a number of private citizens, together with the legal guardian of a student at ABIS, filed this action on September 23, 1976 in the Circuit Court of Jefferson County seeking declaratory and injunctive relief. Specifically, their complaint alleged that the services and funds available to ABIS had been substantially reduced, and that this facility would ultimately be closed, all in contravention of Tit. 55, § 289 et seq. The plaintiffs sought an interpretation of Act No. 816, Regular Session, 1973 Legislature, and a mandatory injunction providing for maintenance of ABIS at its present location and its services at the level of the time of Act No. 816’s passage, and for the conveyance mentioned above.

Named as defendants were the Alabama Youth Services Board, the members of that Board, ABIS, a public corporation, and The First National Bank of Birmingham, as Trustee. The Board moved to dismiss the complaint for lack of jurisdiction and venue. This motion was denied. The merits were considered at a hearing on October 11, 1976, and a final decree entered on October 13, 1976. The relief sought was therein provided. A motion filed by the Board to vacate the decree on grounds of lack of venue and of evidence was denied. This appeal ensued, pending the outcome of which this Court has granted a stay of the trial court’s decree.

The first issue presented by the defendant-appellants concerns the venue of the action. Because the Alabama Youth Services Board and its board members are named defendants, should the action have been filed in Montgomery County rather than in Jefferson County? If so, the trial court committed reversible error in failing to transfer the case. City Stores Company v. Williams, 287 Ala. 385, 252 So.2d 45 (1971).

There is a considerable body of law in this state, as there is elsewhere, requiring an action against a state agency or a state official in his official capacity to be brought in the county of official residence. A statement of the general rule appears in 92 C.J.S. Venue § 115, p. 817:

A governmental body is generally regarded as having its residence for purposes of venue in the county where its principal place of business is located, or in the place where its domicile is fixed by law. .

The question was not directly at issue in First Nat. Bank of Linden v. Alston, 231 Ala. 348, 165 So. 241 (1936), a suit to effect a change in ownership of a bond. However, the state treasurer was a material respondent, and the necessity for filing the suit in Montgomery County was accepted by this Court against several other objections. But in Kelley v. Lingo, 280 Ala. 128, 190 So.2d 683 (1966), the question was directly in issue. This Court held that a person seeking a remedy from the Director of Public Safety for a revocation of his driver’s license because of a driving-while-intoxicated conviction, must file his action in Montgomery County, “the official residence of the Director of Public Safety of the State of Alabama.” And in Tri-State Corporation v. State ex rel. Gallion, 272 Ala. 41, 128 So.2d 505 (1961), because the governor of the state and the director of the State Department of Conservation were necessary parties, venue in Montgomery County, the county of their official residences, was upheld. The same result attended in ABC Board v. Owen, 54 Ala.App. 419, 309 So.2d 459 (1975) where the action was one to review the action of the Alabama Alcoholic Beverage Control Board in suspending a beer license. The Court of Civil Appeals held that the trial court had erred in failing to transfer the case from Madison County to Montgomery County.

A significant case on this issue arose when the Circuit Court of Madison County issued a writ of prohibition against the Alabama State Bar and its officials from further prosecution of disciplinary proceedings against a deputy district attorney of the Twenty-Third Judicial Circuit. There was a difference of opinion in this Court on whether there was a jurisdictional or a venue problem presented by the order of the Madison County Circuit Court. The majority opted for the former view, holding that the decision of Ex parte Alabama Textile Products Corp., 242 Ala. 609, 7 So.2d 303 (1942), controlled:

. [wjhere a board or commission of state-wide jurisdiction has its principal place of business in Montgomery, the Circuit Court of Montgomery County is the only court which would have authority to issue a supervisory writ. [Alabama State Bar v. Watson, 289 Ala. 729, 732, 272 So.2d 240, 242 (1972)].

The minority, on the other hand, considered the issue one not of jurisdiction but of venue which properly was in Montgomery County but which had been waived by a failure to object. Watson, supra at 735, 272 So.2d 240. Whichever view was correct, this Court as a whole recognized that the proper forum was located in Montgomery County.

Contrary to the plaintiffs’ contentions, nothing is contained in either Ex parte Do-than-Houston County Airport Authority, 282 Ala. 316, 211 So.2d 451 (1968) or Boswell v. Citronelle-Mobile Gathering, Inc., 292 Ala. 344, 294 So.2d 428 (1974) which modifies this legal stance. Ex parte Do-than simply held that venue was waived by the filing of a general appearance. While recognizing that venue in a suit against a state official ordinarily would be laid in Montgomery County, his official residence, the Citronelle case held that the general rule did not apply because the particular legislative act in question, in creating the remedy, also gave the aggrieved party the right to sue in his, the aggrieved party’s, residence. In that connection, we take judicial notice of terms of the statute creating the Department of Youth Services:

. The principal offices of the department shall be located at the state capital. . . . [Tit. 55, § 289(13); Acts of 1973, No. 816, § 3, appvd. September 5, 1973];

and the Youth Services Board:

The principal offices of the board shall be located at the state capital. . . . [Tit. 55, § 289(14); Acts of 1973, No. 816, § 4, appvd. Sept. 5, 1973].

The plaintiffs, on the other hand, have cited us to Rule 82(c), ARCP and Tit. 7, § 294, Alabama Code, as laying venue in Jefferson County. Rule 82(c) provides:

Where several claims or parties have been joined, the suit may be brought in any county in which any one of the claims could properly have been brought. Whenever an action has been commenced in a proper county, additional claims and parties may be joined, pursuant to Rules 13, 14, 22 and 24, as ancillary thereto, without regard to whether that county would be a proper venue for an independent action on such claims or against such parties.

Because one of the plaintiffs’ claims concerns real estate located in Jefferson County, it is maintained, this suit is properly in Jefferson County. Title 7, § 294 provides:

The bill must be filed in the county in which the defendant, or a material defendant, resides; and if to enjoin proceedings on judgments in other courts, it may be filed in the county in which such proceedings are pending, or judgment rendered; and in case of non-residents, in the county where the subject of the suit or any portion of the same, is when the cause of action arose, or the act on which the suit is founded was to be performed; or if real estate be the subject-matter of the suit, whether it be the exclusive subject-matter of the suit or not, then in the county where the same, or a material portion thereof is situated.

The concern for real estate arises from the prayer that the land, whose title is held by the Alabama Boys Industrial School, be conveyed to The First National Bank of Birmingham, as trustee. Such an allegation does not make this real estate the “subject matter” of this suit, however. “Subject matter” under Section 294 refers to the nature of the cause of action and of the relief sought. The allegation that one of the parties owns real estate, or has substantial rights in real estate which are dependent upon the settlement of the controversy, is not enough to make real estate the “subject matter” of the suit. Clark v. Sanders, 267 Ala. 674, 103 So.2d 370 (1958). The nature of this action and of the relief sought was a declaratory judgment, seeking a judicial construction of Act No. 816, which is Tit. 55, Chap. 7A, §§ 289(ll)-(47), and for a court order establishing a financial floor on the operation of the Alabama Boys Industrial School because of an alleged statutory mandate. Moreover, the allegations in this case pertaining to the location of real estate in Jefferson County, while they may resolve a venue question in an ordinary case, do not control a case such as this where the action is one against a state agency. Tri-State Corporation v. State, supra, for example, was a case concerning real estate located in a county other than Montgomery County. On the issue of venue, however, this Court held that Montgomery County furnished the proper forum because the material defendants had their official residences in that county.

Plaintiffs insist that Jefferson County holds the proper venue because the Alabama Boys Industrial School itself is a material defendant. In that connection, the trial court, in its order, found that the school was a public corporate entity, was duly represented at the trial, and participated in it.

Is ABIS a material defendant? Such a defendant is one whose position is antagonistic to that of the plaintiffs because relief is sought against him. Wilder v. Crook, 250 Ala. 424, 34 So.2d 382 (1948). There is nothing alleged in this complaint which is antagonistic to the interest of ABIS; indeed, the contrary is true. The gist of the entire suit is to sustain the operation of ABIS against a reduction of its financial resources by the Alabama Youth Services Board. Therefore the School could not be a material defendant.

The trial court also found that ABIS retained its independent corporate identity. We suppose that this finding was made to comport with the requirements of Tit. 7, § 294 as applied to a corporate domicile. If ABIS is in fact a “public corporate entity,” the record fails to disclose any service of process upon it or any appearance by it in these proceedings. The record discloses that Mr. Lavender, the attorney for the Alabama Youth Services Board, made it clear to the court that he did not represent ABIS:

CHARLES CLARK:
Mr. Lavender represents every other named Defendant and appears for them.
CLAUDE LAVENDER:
With the exception of Alabama Boys Industrial School which, in my opinion, is not a corporate entity, no longer a corporation.
COURT:
In what status do you appear in the Court?
MR. LAVENDER:
As representative of the Alabama Youth Services Board.

The motion to dismiss filed by him represents him as “ATTORNEY FOR YOUTH SERVICES BOARD, and its members.” The answer he filed contains the same recital.

Accordingly, the trial court could not have proceeded against that “public corporate entity” without extending to it the right of process and an opportunity to respond.

Finally, it is clear that The First National Bank of Birmingham was not a material defendant, but was joined in this action only as a “proper” party. No relief was sought from that Bank, and the trial court’s order granted none against that Bank. At most the Bank was only a proper party as a corporate trustee. Such a party cannot control venue where, as here, it has no interest in the principal matter in controversy. First National Bank of Birmingham v. Johnson, 227 Ala. 40, 148 So. 745 (1933).

Because we have found that the venue of this action lies in Montgomery County instead of Jefferson County, it was reversible error for the trial court to overrule the defendant Alabama Youth Services Board’s motion to dismiss and motion to vacate judgment which were brought in timely fashion to the trial court’s attention. The judgment is reversed and the cause remanded to the trial court with direction to enter an order not inconsistent with this opinion.

REVERSED AND REMANDED.

TORBERT, C. J., and MADDOX, FAULKNER and SHORES, JJ., concur.


author: TORBERT, Chief Justice.

text:
    Eloise WRAY and Charles Hatmaker v. Irby C. HARRIS and wife, Martha Harris.
    SC 2257.
    Supreme Court of Alabama.
    Sept. 30, 1977.
    Rehearing Denied Nov. 18, 1977.

      Jack Livingston of Jack Livingston and Ronald A. Drummond, Scottsboro, for appellants.
    William D. Scruggs, Jr. of Scruggs, Rains & Wilson, Fort Payne, for appellee.
   TORBERT, Chief Justice.

Appellants, Eloise Wray and Charles Hat-maker, filed suit seeking the specific performance of a written lease agreement they had entered into with the appellee, Irby Harris. Also named as a defendant below was Harris’s wife, Martha. Since certain issues in regard to damages were presented, a trial by jury was had, and the jury returned a verdict of $40,000 for the appellants against Irby Harris. Martha Harris had been dismissed as a party on motion of the defendants at the conclusion of the plaintiffs’ case. After Irby Harris filed a motion for new trial along with a motion for judgment notwithstanding the verdict, the trial court entered a final judgment denying specific performance and ordering a remittitur of the verdict to $25,000. The appellants contend that the trial court erred in not granting specific performance, and they petition this court to reverse that judgment and to reinstate the full amount of the jury verdict.

Eloise Wray and Charles Hatmaker, plaintiffs at the trial court level, agreed to go into the truck stop business together. Wray had past experience in operating a restaurant and Hatmaker was an experienced gas station operator, so the plaintiffs decided to divide their responsibilities at the truck stop in the same fashion. Irby Harris, the defendant, was the Union 76 oil jobber for DeKalb County for some time prior to the agreement which is the basis of this suit, and he owned a tract of land near Interstate 59 which was suitable for use as a truck stop.

On March 6,1972 Harris agreed to build a filling station, restaurant, and ten motel units on his property near Interstate 59, and he further agreed to lease the realty and improvements to the plaintiffs with an option to purchase after ten years. The terms of the written agreement, which was prepared by Harris’s former attorney, are as follows:

“This agreement is made and entered into on this, the 6th day of March, 1972, by and between Irby C. Harris (hereinafter referred to as Harris) and Charles Hatmaker and Eloise Wray (hereinafter referred to as Lessee).
“This agreement is made for and in consideration of the mutual promises hereinafter set out:
“1. That the Lessee has, on this day, paid to Harris the sum of $1,000, receipt of which is hereby acknowledged, and the Lessee does hereby promise to pay an additional sum of $9,000 by August 1, 1972; and the total of these two payments being $10,000 shall then be considered as a contract to construct a building. If construction is not begun by 8/1/72, $1,000 deposit will be refunded.
“2. Harris does hereby contract and agree to build a building approximately 40' X 84' plus 36' X 66' containing a filling station, restaurant, and ten motel units on certain property located on Highway No. 35 within the City Limits of Fort Payne, Alabama, and located generally to the West of Abbott’s Marina and Shell Station. Such construction shall be started no later than August 1, 1972, and after the completion of the said building and improvements on said property, he will enter into a lease with the Lessee for a monthly land rental of $350 per month for a period of ten years. At the end of that time, the Lessee may exercise their option to purchase the said property and the improvements thereon at an amount of $65,000, payable in monthly installments for ten years.
“3. The Lessee further agrees to finance the construction cost above the said amount of $10,000 at the Fort Payne Bank to be repaid within ten years from the date of the loan, such funds to be paid to Harris as the contractor and builder of the buildings referred to above. Harris further agrees to make any mortgage, or to co-sign, or to act as guaranty for the loan to aid the Lessee in obtaining the construction cost of the building to be constructed on the said property.”

Each of the parties — Wray, Hatmaker and Harris — signed this agreement. Martha Harris, Irby’s wife, did not sign this agreement, nor was any evidence presented that she participated in the negotiations surrounding the agreement.

In October of 1972 Harris sold his Union 76 distributorship to Bill Davenport. At the time of the sale Harris and his wife entered into a written agreement with Davenport Gas & Oil Company, leasing to it all of the truck stop property “used for and constituting an oil and gasoline service station including drives and parkways and excluding all other portions of said property.” Under the lease Davenport was given the right to supply the truck stop with Union 76 products for a period of ten years at a rental of two cents for each gallon of fuel sold at the truck stop. These rental payments were to be paid monthly to Irby and Martha Harris. -

Construction on the truck stop was completed in May of 1973. Harris offered to put Wray and Hatmaker in possession of the premises if they would execute his lease agreement. However, Wray and Hatmaker refused to sign the Harris lease because it gave one cent per gallon of the petroleum lease revenues to Harris. Wray and Hat-maker then offered their own lease agreement, which would have completely divested Harris of any of the petroleum lease revenues. Harris refused to sign the Wray-Hatmaker lease, so the appellants instituted this action for specific performance on July 11, 1973. After this breakdown in negotiations between Harris and the appellants occurred, Harris testified that he spent an additional $35,000 on improvements for the truck stop. Harris leased the truck stop property to Lowell and Donald Fobbus on July 16, 1973.

Wray and Hatmaker contend that, by entering into the petroleum lease in October 1972, Harris attempted to lease the truck stop property twice, and that specific performance of the March 6, 1972 agreement should be decreed. We agree that a decree of specific performance should have been granted, and we therefore reverse the trial court’s decision on this issue.

It is true that “[t]he equitable remedy of specific performance of agreements for the sale of lands rests largely in judicial discretion, directed and regulated by defined rules.” Carlisle v. Carlisle, 77 Ala. 339, 341 (1884). Thus, the exercise of discretion by the trial court is guided, and the decision to grant or deny specific performance can be overturned when shown to be palpably erroneous. Although the trial judge in this case did not give any reasons for his denial of specific performance, the appellants presented a clear case revealing the inadequacy of their remedy at law: the contract was for a lease of certain realty and an option to purchase the same. Since this certain portion of real property is recognized as being unique, and since the option would be forever lost without the granting of specific performance, the March 6,1972 agreement was the proper subject of an action for specific performance. See Ala.Code tit. 9, § 52 (1958).

However, several requirements must be met before a decree will be issued:

“The contract must be just, fair, and reasonable; must not have originated in mistake, or surprise, or violation of confidence, or breach of trust, or advantage of condition, nor been obtained by any un-conscientious or unfair methods; must be reasonably certain in respect to the subject-matter, the terms, and stipulations; must be founded on a valuable consideration, and its performance not work hardship or injustice.”

Carlisle v. Carlisle, 77 Ala. 339, 341 (1884). The appellees claim that the March 6, 1972 agreement failed to meet these requirements and thus justified the denial of specific performance. We disagree.

The appellees argue that the description of the realty in the March 6 agreement was inadequate, and that the agreement thus violated the Statute of Frauds, Ala.Code tit. 20, § 3(5) (1958). However, the contract identified the city in which the realty was located, the property sold was “certain, — in that it [could] be made certain,” Homan v. Stewart, 103 Ala. 644, 650, 16 So. 35, 36 (1894), and the highway on which it was located was identified. This court has held that “a general uncertain description can be made specific and certain by parol evidence of concurrent facts and circumstances sufficient to that end.” Dobson v. Deason, 248 Ala. 496, 498, 28 So.2d 418, 419 (1946); accord, Goodwyn v. Jones, 288 Ala. 71, 77, 257 So.2d 320, 325 (1971); Hamilton v. Stone, 202 Ala. 468, 80 So. 852 (1919). The evidence presented in this case (subsequent performance of the parties, etc.) did not contradict the description of the land given in the writing, but instead made that description certain. Hamilton v. Stone, 202 Ala. at 469, 80 So. at 853; cf. Howison v. Bartlett, 141 Ala. 593, 37 So. 590 (1904) (description made certain by a survey required by the contract).

The appellees contend that specific performance should be denied since equity will not enforce a contract resulting in hardship or injustice. The appellees claim that they would lose $35,000 in improvements and extensive petroleum lease revenues if a decree of specific performance were issued. We fail to find any merit in the appellees’ contention, for it is based on two incorrect presumptions: that a vendor, to avoid a decree for specific performance, can voluntarily erect improvements on the realty and thereby claim hardship and injustice as a defense; and that Wray and Hatmaker will not be the victims of injustice if a decree of specific performance is not issued. Though the appellees were the perpetrators of their own injury, the trial court will be able to adjust the equities on remand to avoid any unjust enrichment to Wray and Hatmaker.

It is claimed that the appellants, Wray and Hatmaker, are guilty of inequitable conduct, and thus should be denied equity in this case. It is true that Wray and Hatmaker did not pay the $10,000 in earnest money on time, but it is also true that Harris received the money when paid and retained it without objection. He therefore waived any right he might have had to assert that delinquency. The other alleged instances of inequitable conduct — failure to arrange financing, refusal to take possession under the Harris lease — are likewise without merit.

Specific performance will not be withheld when the defendant-vendor has executed a second lease to a third party covering only a portion of the realty involved in the contract. Since the Davenport Gas & Oil Company was not joined as a defendant in this suit, we will not adjudicate its rights in reference to those of Wray and Hatmaker. However, Harris did not part with all of the truck stop property in the Davenport lease, and that portion retained would be subject to a decree of specific performance.

Though a decree of specific performance is in order against the appellee, Irby C. Harris, the dismissal of his wife by the trial court was not in error. Mrs. Harris did not sign the March 6, 1972 agreement, nor did she in any way participate in the negotiations surrounding said agreement. Her signatures on the Davenport petroleum lease and on the proposed Harris lease merely indicated her acquiescence to the terms stated in those documents, which differ from those in the March 6 agreement. This, without more, will not be sufficient to bind Mrs. Harris to the March 6 agreement. Williams v. Owens, 273 Ala. 625, 628, 143 So.2d 633, 636 (1962).

Since we hold that specific performance should be granted, this court must address the issue of damages. The jury in this case awarded the appellants $40,000 in damages, which the trial judge remitted to $25,000. For the reasons given below, we question the necessity of allowing any of these damages on remand.

Wray and Hatmaker were allowed to recover their out-of-pocket expenses and the reasonable value of their services as damages. Both of these expense items were incurred in preparation for the performance of the agreement. Thus, since specific performance has been granted, Wray and Hatmaker have been “put in the position [they] bargained for and should not recover expenses [they] would have had if the contract had been properly performed.” D. Dobbs, Law of Remedies § 12.8, at 843 (1973). Thus, these items should not be allowed in the calculation of damages on remand.

Neither should Wray and Hatmaker recover damages for profits lost while performance was delayed. “Profits speculative, conjectural or remote, are not, generally, regarded as an element in estimating the damages.” Brigham & Co. v. Carlisle, 78 Ala. 243, 248 (1884); accord, Port City Construction Co. v. Henderson, 48 Ala.App. 639, 646, 266 So.2d 896, 902 (Civ.App.1972). Wray and Hatmaker were starting a new business, and they had no prior records on which profits could reasonably be based. Therefore, expected profits are not allowable as damages in this case. Paris v. Buckner Feed Mill, Inc., 279 Ala. 148, 151, 182 So.2d 880, 883 (1966); Blankenship v. Lanier, 212 Ala. 60, 62, 101 So. 763, 765 (1924); Taylor v. Shoemaker, 34 Ala.App. 168, 172, 38 So.2d 895, 899 (1948), cert. denied, 251 Ala. 601, 38 So.2d 900 (1949).

The issue of damages is remanded to the trial court with instructions to mold a decree “to protect the rights of all parties and do complete justice between them.” Moss v. Cogle, 267 Ala. 208, 216, 101 So.2d 314, 321 (1958). Since this court has ordered specific performance, the trial court, acting as a court of equity, is empowered to adjust the quantity of damages awarded even though no cross-appeal was entered. Grooms v. Brown-Marx Co., 239 Ala. 284, 286, 195 So. 215, 217 (1940).

The trial court’s denial of specific performance is reversed, and the case is remanded for a reassessment of the damages in accordance with this opinion. The trial court’s order dismissing Mrs. Harris as a party defendant is hereby affirmed.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

MADDOX, FAULKNER, SHORES and BEATTY, JJ., concur.

      . Mr. Harris was represented by his former attorney at the trial court level. The attorneys who represented him on appeal had no connection with the drafting of the agreement at issue.


text:
    In re John W. MOBLEY and Forest B. Brooks v. Richard H. MOORE and The Dixie Company, Inc., etc. Ex parte Richard H. Moore and The Dixie Co., Inc., Petitioners.
    SC 2327.
    Supreme Court of Alabama.
    Sept. 30, 1977.

      Thomas A. Johnston, III, and Irvin J. Langford, Mobile, for petitioners.
    William S. Shulman and Herbert P. Fei-belman, Jr., Mobile, opposed granting the writ.
   ALMON, Justice.

This case is before us by original petition for writ of mandamus to Judge Ferrill D. McRae. Petitioners Richard H. Moore and The Dixie Co., Inc., claim Judge McRae abused his discretion in granting a jury trial in the case of John W. Mobley and Forest B. Brooks v. Richard H. Moore and The Dixie Company, the petitioners.

The complaint in Mobley et a 1. v. Moore et al., filed June 9,1976, alleges that in 1964 Moore leased a quick foods restaurant to Mobley and Brooks. A clause in the lease states that the lessor agrees not to open a similar place of business within 2 miles of the restaurant during the term of the lease. Dixie, in which Moore is a 50% stockholder, began construction of the Colonial Dixie Restaurant within lh mile of the plaintiff’s (Mobley’s and Brooks’) restaurant. Count 1 alleges irreparable injury and Count 2, breach of contract. They prayed for a temporary restraining order, a permanent injunction, and $50,000.00 damages. Petitioners filed their answers on June 28, 1976.

On August 20,1976, the trial court denied the temporary restraining order. A demand for a jury trial as to the money damages in Count 2 and the factual issues in Count 1 came August 24,1976. Petitioners filed on August 28, 1976, a motion to strike the jury demand on grounds that the plaintiffs’ failure to comply with Rule 38 of the Alabama Rules of Civil Procedure. The petitioners’ motion was denied as was a later motion to set aside the trial court’s order, the effect of which granted plaintiffs their jury demand. Rule 38(b), ARCP reads:

“(b) Demand. Any party may demand a trial by jury of any issue triable of right by a jury by serving upon the other parties a demand therefor in writing at any time after the commencement of the action and not later than 30 days after the service of the last pleading directed to such issue. Such demand may be indorsed upon a pleading of the party, and such demand shall be deemed to be a demand for a struck jury.”

Rule 38(d) provides that a failure to demand a jury trial as required by Rule 38 is a waiver of trial by jury. Rule 39(b) provides that notwithstanding the failure to demand a jury, “the court in its discretion upon motion may order a trial by jury of any or all issues.” Rule 39(b), ARCP.

The record does not indicate that plaintiffs gave any reasons for the tardy demand for a jury trial. Plaintiffs’ brief does state that at the oral argument on petitioner’s motion to strike plaintiffs’ jury demand, plaintiffs explained that by denying the temporary restraining order “the whole tenor of the case had changed from a suit basically equitable in nature, to an action for damages.” Plaintiffs’ brief further states, “Judge McRae agreed that by declining to issue the temporary injunction, the case was principally an action for breach of written agreement.” While that may be true, it does not determine whether the plaintiffs had a right to jury trial on the issue of breach of contract.

[I]' The merger of law and equity under the Alabama Rules of Civil Procedure, and in other merged systems, has supplanted the procedural distinction existing between law and equity with the distinction between jury and non-jury cases. Donaldson and Walls, Merger of Law and Equity in Alabama, 33 Ala.Law 134, 142 (1972). Rule 38 explicitly preserves the right to a jury trial on any issue previously recognized as tria-ble by a jury. Rule 38, ARCP. Under the merged system, it is contemplated that a suit will embrace both jury issues and non-jury issues without affecting the parties’ right to a jury trial. Poston v. Gaddis, 335 So.2d 165 (Ala.Civ.App., 1976), cert. denied, 335 So.2d 169 (Ala., 1976); see also Committee Comments to Rules 2, 38, and 39, ARCP.

Count 2 of plaintiffs’ complaint alleges breach of contract, an issue traditionally tried by a jury. Thus, plaintiffs had a right to a jury trial unless waived under Rule 38.

The trial court has discretion to grant relief under Rule 39(b) to a party who waives the right to a trial by jury. In the absence of showing the trial court abused its discretion we will not issue a writ of mandamus. Breekenridge v. Leslie, 270 Ala. 23, 115 So.2d 493 (1959).

Petitioners urge that we accept the standard established by some Federal Courts of Appeal in reviewing a trial court’s use of discretion under Rule 39(b). Particularly, petitioners urge that we follow Noonan v. Cunard S. S. Co., 375 F.2d 69 (2nd Cir., 1967), which held that some cause beyond mere inadvertence is required to invoke the trial court’s discretion under Rule 39(b).

There is no general agreement on the standard trial courts should use in exercising its discretion under Rule 39(b). In some jurisdictions a jury trial should be granted in the absence of strong and compelling reasons to the contrary. Swofford v. B & W, Inc., 336 F.2d 406 (5th Cir., 1964), cert. denied, 379 U.S. 962, 85 S.Ct. 653, 13 L.Ed.2d 557; A M F Tuboscope, Inc. v. Cunningham, 352 F.2d 150 (10th Cir., 1965). In others, the court has no discretion about special circumstances. General Tire & Rubber Co. v. Watkins, 331 F.2d 192 (4th Cir., 1964), cert. denied, 377 U.S. 952, 84 S.Ct. 1629, 12 L.Ed.2d 498. For a collection of cases decided on this issue, see 64 A.L.R.2d 506 and 6 A.L.R.Fed. 217.

The Court of Civil Appeals has recently addressed this issue and followed Swofford v. B & W, Inc., supra, holding that the trial court should exercise its discretion liberally in favor of granting a jury trial in the absence of strong and compelling reasons to the contrary. Clayton v. Simpson, 346 So.2d 457 (Ala.Civ.App., 1977).

We agree with the Court of Civil Appeals. The right to a trial by jury is strongly engrained in our legal heritage and is protected by Section 11 of Article I, of the Constitution of Alabama 1901. In addition, it is the intention of Rule 38(a), ARCP, that nothing in the Alabama Rules of Civil Procedure abridges this fundamental right as declared by our Constitution and by statute. This weighs heavily against a finding of abuse of discretion.

The record evidences no prejudice to the petitioners by allowing the plaintiffs their right to a jury trial. In absence of such prejudice, the trial court will not be reversed for exercising its discretion under Rule 39(b).

The writ is hereby denied.

WRIT DENIED.

BLOODWORTH, JONES, EMBRY and BEATTY, JJ., concur.


author: SHORES, Justice.

text:
    Harvey T. HUTTO v. Vanity Fair MILLS et al.
    SC 2329.
    Supreme Court of Alabama.
    Sept. 30, 1977.
    Lydia Quarles of Emond & Vines, Birmingham, for appellant.
    Thomas B. Huie, Birmingham, for appel-lees.
   SHORES, Justice.

Hutto, an employee of Tag Construction Company, Inc., was injured while working on a construction site where his employer was building a mill for Vanity Fair Mills. He received Workmen’s Compensation benefits from Tag Construction, but brought this action against William C. Bedsole, the job superintendent for Tag Construction at the time of the injury; Dale Blankenship, a vice-president of Tag Construction at the time of the injury; and R. L. Burt, foreman for Tag Construction. He also sued Vanity Fair Mills, the owner of the premises upon which the building was being constructed, alleging that, as such owner, Vanity Fair “ . . . had the right to control the method and manner in which the work . was performed.” He alleged negligence on the part of all defendants.

At the end of the evidence, the trial court directed a verdict in favor of all defendants. The plaintiff appealed.

After the case was tried and the appeal was taken, this court held in Childers v. Couey, 348 So.2d 1349 (1977), that, under Title 26, § 312, Code, as amended, co-employees of the plaintiff, which all of the individual defendants are in this case, are not third party tort feasors against whom a suit may be maintained. Therefore, we must affirm the trial court in granting a motion for directed verdict against these defendants. Although the plaintiff argues that this issue was not raised by these defendants, we cannot agree. Each filed a motion to dismiss which is sufficient to raise the issue.

Vanity Fair, of course, is not protected from liability by virtue of the 1973 amendment to Title 26, § 312. It is, therefore, necessary to examine the record to determine whether a jury issue was made as to its liability.

The real property upon which the mill was being constructed was acquired by the Industrial Development Board of the City of Jackson and leased to Vanity Fair Mills. The Industrial Development Board agreed with Vanity Fair to construct the building in accordance with plans and specifications furnished by Vanity Fair.

Tag Construction was engaged to construct the building. This corporation was formed in 1972 and does construction work for Vanity Fair as well as for others. It, like Vanity Fair, is a wholly owned subsidiary of VF Corporation, a holding company.

Plaintiff contends that Vanity Fair “controlled” the work being done at the site where he was injured. However, there is nothing in the record to support this contention. The evidence does show that Mr. Blankenship was Vice-President and General Manager of Tag Construction Company, as well as Chief Operating Engineer for Vanity Fair. At the time of the injury complained of, he was being paid by Tag Construction Company and was, in that capacity, in charge of the project. There is also some evidence that when Tag Construction Company was formed in 1972, some of the employees of Vanity Fair became employees of the new corporation. The record is devoid, however, of any evidence that Vanity Fair controlled the affairs of Tag Construction Company, which was admittedly a separate entity. The plaintiff also asserts that when people were hired to work for Tag Construction Company, they were frequently interviewed in the offices of Vanity Fair in Monroeville. The offices of Tag Construction were located nearby; but, according to Mr. Blankenship, this was a mere matter of convenience. It was simply more convenient than doing the paper work at the job site. There is no question but that all employees, including Blankenship, were paid by Tag Construction Company.

At the time of the trial, Tag Construction Company was still engaged in the construction business and had some fifty employees. The plaintiff has simply failed to show by the evidence that Vanity Fair controlled the operations of Tag Construction Company, and has failed to produce any evidence that Vanity Fair controlled the project upon which he was working at the time of his injuries. The trial court, therefore, properly directed a verdict in its favor.

The judgment appealed from is affirmed.

AFFIRMED.

TORBERT, C. J., and MADDOX, FAULKNER and BEATTY, JJ., concur.