author: MADDOX, Justice. BLOODWORTH, Justice (dissenting).

text:
    GENERAL TELEPHONE COMPANY OF the SOUTHEAST v. ALABAMA PUBLIC SERVICE COMMISSION et al.
    SC 1288.
    Supreme Court of Alabama.
    May 21, 1976.
    Rehearing Denied July 2, 1976.

      Hill, Hill, Carter, Franco, Cole & Black, Montgomery, Ward W. Wueste, Jr., Durham, N. C., for appellant.
    Carl L. Evans, Montgomery, for Alabama Public Service Commission.
    Maurice F. Bishop, Birmingham, for the' State of Alabama and Hon. George C. Wallace, as Governor.
    Oliver W. Brantley, Troy, for 13 Ala. Municipalities.
   MADDOX, Justice.

This is an appeal by General Telephone Company of the Southeast under the provisions of Title 48, Section 90, Code of Alabama 1940, Recomp.1958, from a decree of the Circuit Court of Montgomery County which affirmed an order of the Alabama Public Service Commission dated April 15, 1974.

General Telephone filed its petition with the Commission on September 13, 1973. It sought an increase in annual revenues from intrastate telephone service in Alabama of $2,147,649, which it claimed would enable it to earn 9.5% on the reasonable value of its property devoted to the public service in Alabama, and which would permit it “to fully perform its duties to the public and to enlarge its plants, facilities and equipment to continue to provide adequate service.”

General Telephone alleged that it had provided various service improvements, including the establishment of Extended Area Service (EAS) between Andalusia and Red Level and between its Dothan exchange and Columbia, Headland, Midland City, Newton and Pinckard. Additional EAS was established between New Brockton and Enterprise and between the exchanges of Daleville, Ozark, Echo, Enterprise and Newton. The company also alleged that the changes in the type of service from toll or long distance to EAS was of benefit to its customers, but resulted in a reduction to the company in income available for return and in the rate of return for the company which was not offset by increased rates from movement of various small exchanges into larger exchange rate groups.

The company contended that as a result of service improvement programs, including elimination of multi-party service in all but eight exchanges, increases in intrastate telephone plant in-service amounted to $20,832,441 between May 31, 1971, and the period ending April 30, 1973, adjusted to the level of April 30, 1974, pursuant to the provisions of Title 48, Section 52, Code of Alabama 1940, Recomp.1958. The company also claimed that the increase in telephone plant in-service was financed in substantial part through the sale of securities, which resulted in a substantial increase in the cost of capital to it, because of the increased cost of borrowing money.

On October 11, 1973, the Commission issued its order of suspension of the proposed schedules of rates and charges to April 15, 1974, and gave notice of hearing to begin on November 12, 1973, which was subsequently changed to November 14, 1973. On November 14, petitions to intervene were filed on behalf of George C. Wallace as Governor of the State of Alabama, and on behalf of the cities and towns of Brundidge, Andalusia, River Falls, Dozier, Pinckard, Kinston, Ariton, Dothan, McKenzie, Brantley and Abbeville. On November 30, 1973, petition for intervention was filed on behalf of the City of Geneva, with a subsequent petition of intervention filed on behalf of the City of Elba on January 16, 1974. Hearings were held on November 14, 1973, and on February 19, 21, 22, March 8, 9, and 11, 1974.

On February 22, 1974, the APSC issued an Order on Remand in Docket No. 16474 reducing General Telephone’s approved rates by 30 cents per month for residential telephones or $206,158 annually. The effect of the reduction, says General Telephone, was to increase the revenue sought in the present case to $2,389,578 on an annual basis.

On April 15, 1974, the APSC issued its order making findings and conclusions as to the rate base for General Telephone, its operating income, its debt equity ratio, its cost of capital, and found a rate of return on rate base of 7.20%. The Commission then denied the proposed schedule of rates and charges, giving, in part, as its reason for the denial, the statement:

“While we are fully aware that this rate of return of 7.20 per cent is less than has been permitted in the past and is considerably less than the Company requested, nevertheless, it is a net profit and permits a return to equity as of the end of the test period of 11.05 per cent. Furthermore, under this rate of return, General Telephone will earn 2.29 times its interest coverage which will protect an ‘A’ rating for its bonds. Utilities, being monopolies, generally speaking, are better situated in times of inflation than are many nonregulated industries, and it seems reasonable to expect the utilities to tighten their belts and use every effort to make their operations more efficient.
“Inflation is an insidious malady in the body of our society. To accept the premise that the only answer to increased cost of production is to increase prices is to accept the proposition that there is no ultimate end to the upward spiral of prices, wages, and cost of living ad in-finitum.
“If inflation and the erosion of the dollar is ever to be contained, it must begin somewhere. We feel that the rate of return allowed this Company, General Telephone Company of the Southeast, will permit the Company to continue to serve the people of its area, to make a reasonable profit, and to be able to finance future expansion of its system.”

On April 18, 1974, appellant filed its Notice of Appeal and appeal bond for security of costs.

Subsequently, the company filed application for supersedeas on April 29, 1974, and obtained supersedeas of the order of the Commission on May 24, 1974. Supersedeas has been continued in effect.'

Each of the intervenors in the proceedings before the Commission filed motions to intervene and were allowed to intervene by order of the circuit court and each of the intervenors and the Commission filed an answer and cross-bill to bill in the nature of a bill of complaint.

In an order dated May 24, 1974, the Circuit Court of Montgomery County entered an order remanding the case to the APSC for further proceedings, and directed the Commission to make findings as to the rate base, revenues, expenses and rate of return in a manner consistent with the computations which the circuit court had expressly approved in Case No. 38653, by order dated February 1, 1974, which order was subsequently appealed by various of the inter-venors in the present case, to this Court and affirmed in State of Alabama v. Alabama Public Service Commission, 293 Ala. 553, 307 So.2d 521 (1975). On July 3, 1974, the APSC filed a petition for Writ of Mandamus in this Court seeking to have the order of remand dated May 24, 1974, reviewed and vacated, but the matter was dismissed by this Court by order dated July 15,1974.

On July 22, 1974, the APSC issued a supplemental order and made findings in compliance with the order of the circuit court, dated May 24, 1974, with regard to appellant’s rate base, expenses, revenues and rate of return. The Commission concluded:

“Applying the income available for return at April 30, 1974, of $3,874,436 to the rate base as of April 30, 1974, as hereinbefore found of $52,609,198.00 results in a rate of return on rate base at April 30, 1974, of 7.36%.”

The circuit court reviewed the order and on May 6, 1975, found that it was supported by the substantial weight of the evidence, and was due to be affirmed. General Telephone appealed and “asks that the Court review the case upon the certified record, make its independent findings of fact and conclusions of law, and set aside the Order of the Commission as being confiscatory and remand to the Commission to establish just and reasonable rates and charges

General Telephone argues two basic issues: (1) the evidence was insufficient to sustain the finding by the APSC that a 7.36% rate of return was reasonable and (2) the rate of return is not equal to that generally being earned by others in the same general locality in business undertakings attended by corresponding risks and uncertainties and is so low as to result in the confiscation of its property. In short, the primary issue argued by General Telephone is that the rate of return allowed by the APSC is confiscatory.

In determining what is a fair return in order to avoid confiscation, a number of controlling legal principles are used. These principles are set out in detail in Alabama Public Service Commission v. Southern Bell Tel. & Tel. Co., 253 Ala. 1, 42 So.2d 655 (1949). We consider it unnecessary to set out all of the legal principles noted by the Court in the Southern Bell case, but the plain holding of that case is that the law of this state not only requires that the utility be permitted to charge just and reasonable rates which will enable it to earn a fair net return on the reasonable value of its properties, but it takes cognizance of the fact that the utility is at all times required to furnish adequate service to the public and to construct plant and facilities for enlargement and improvement of its service. It also recognizes that a utility should earn a return sufficient to inspire confidence in the financial soundness of the enterprise so that it can raise the necessary capital on reasonable terms to discharge its duty to the public.

The determination of a fair return to provide the public with adequate service is a question of fact within the legislative realm of rate-making. The rate of return in any given case calls for expert judgment not bound by any hard and fast rule or set formula. That judgment has been entrusted by the legislature to the Commission. This Court’s inquiry ordinarily goes no further than to ascertain whether there is evidence to support the findings of the Commission. Alabama Gas Corp. v. George C. Wallace, as Governor, 293 Ala. 594, 602, 308, So.2d 674 (1975).

In the case at bar, however, we have a rate case where the constitutional issue of confiscation is raised. Therefore, we must recognize the distinction between the limited scope of review when the action of the Commission is within the sphere of legislative authority and the broad scope of review which must be afforded when the question is whether the Commission has acted beyond the boundaries of legislative authorities. It is clear from our cases that a duty rests on this Court to examine the order of the Alabama Public Service Commission on the issue of confiscation and the schedule of intrastate rates and in this connection to exercise our independent judgment on both the facts and the law involved. Alabama Public Service Commission v, Southern Bell Tel. & Tel. Co., 253 Ala. 1, 42 So.2d 655 (1949). Of course, the ultimate question in every rate case is a fair rate of return from a predetermined rate base. What will constitute a fair return in a given case is not capable of exact mathematical demonstration. It is a matter more or less of approximation, about which conclusions may differ. State v. Alabama Public Service Commission, 293 Ala. 553, 307 So.2d 521 (1975). The conclusions of the parties in this appeal differ widely.

In their briefs, and during oral argument, General Telephone and the interve-nors used complicated mathematical computations to show, respectively, that the Commission order was confiscatory, on the one hand, and completely reasonable and just on the other hand. In fact, the inter-venors said they “parted company” with the Commission’s order in some instances. They did not. cross-appeal, however.

The main disagreement, though not the only one, between the parties revolves around a question of how to treat $13,783,-000 of unamortized investment tax credits and deferred income taxes. The telephone company contends that these items are properly includable in the rate base since the deferrals were included in the capital structure at zero cost. The company cites a statement by the Alabama Public Service Commission in Re South Central Bell Telephone Co., Docket 16392, 89 PUR 3 Ed. 519, 522 (1971), in support of its position. There, the APSC said:

“It was also proposed that we should eliminate the accumulated income tax deferrals associated with the accelerated depreciation and unamortized investment tax credit reserve from the company’s rate base. These items were included by the company in the rate base, but were assigned a zero rate of return. Interve-nors’ witnesses agreed that the practical result is the same either way. We have handled this problem below in our treatment of rate of return so that the company will not earn on the accumulated tax deferrals or investment tax credit reserve. In view of our treatment of rate of return, these items should not be eliminated from the rate base. This treatment is not inconsistent with intervenors’ proposals.”

•Our research shows that regulatory commissions are not in harmony on the treatment which should be given to these so-called “deferrals.” A majority of regulatory agencies appear to exclude unamortized investment tax credits and deferred income taxes from the rate base on the ground that they represent customer contributed cost-free capital. See PUR Dig. 2 Ed. Vol. 9 § 192.1, Valuation, at 7040. It appears that even the Alabama Public Service Commission has on at least one occasion excluded such cost-free capital from the rate base.

Even though the “confiscation” question was not raised in State v. Alabama Public Service Commission, 293 Ala. 553, 307 So. 2d 521 (1975), what this Court said there is abundantly true here. There, this Court opined:

“The ultimate question in a rate case is a fair rate of return from a predetermined rate base. Various formulae and complicated calculations have been developed by experts in the field of rate making in determining first, a reasonable rate base, and second, a fair rate of return on such reasonable rate base. In State of Alabama et al. v. Southern Bell Telephone and Telegraph Co., 274 Ala. 288, 148 So.2d 229, we quoted the following from the book ‘A Telephone Rate Case’ by E. D. Smith:
“ ‘What will constitute a fair return in a given case is not capable of exact mathematical demonstration. It is a matter more or less of approximation, about which conclusions may differ; %. * * >

“In the opinion in State of Alabama et al. v. Southern Bell Telephone and Telegraph Co., supra, at page 297, 148 So.2d at page 237, this court wrote:

“ ‘The above, we think, demonstrates the difficulties confronting the court in the determination of a rate case. The record in such a case is abundant with the testimony of experts who demonstrate their conclusions by varied formulae and computations. The ultimate question of a fair rate of return should not be a composite of the results mechanically reached by these formulae, with little regard given to the question sought to be determined, that is, the fair rate of return.’ ” [Emphasis added.]

The telephone company argues that the record affirmatively shows that the 7.36% return on rate base will not result in an 11.05% return on equity, which the company contends the Commission found was reasonable.

Intervenors, on the other hand, take the same evidence and arrive at a totally different rate of return to equity. They accomplish this primarily by deducting the “deferrals” — or cost-free funds — from the capital structure.

Under one method, the intervenors say that the record shows that 93.06% of the plant in-service is invested capital and the balance is in the cost-free funds. They argued orally:

Now that computes very briefly, taking everything that the company presented, 55% debt, 44% equity and 1% preferred stock — you get down to where the Commission found that the net earnings were $3,988,890.00. That was the Commission’s finding in its original order, and that computes out to a rate earned on common stock of 10.66%, if you take that, and that’s in this record. Now, I state to you that a rate of return of 10.66% or 11.03% (sic) as the Commission found, because they made an adjustment I am going to tell you about, a minor adjustment — if you take the 10.66% or 11.03% (sic) return to common equity, that is a far cry from confisca: tion — and the record in this case shows it.”

A higher rate of return on common equity is accomplished by the intervenors under their second computation.

Here’s the argument:

“This record shows, without any question, and they don’t deny it in their briefs, that they calculated their income tax returns, and filed them, with the debt cost of 6.77%. This record shows, and they don’t deny it, and when they came in and asked for rates before the Commission, they set up a debt cost of 7.42%. That amounts to some money. And then the Commission, I don’t know why, this is where we parted with the Commission, the Commission then found a debt cost of 6.95% — more than they swore they are paying at the debt cost on the income tax return — and we say the Commission gave them every consideration, where we said in our argument that it should be 6.77% — that is exactly what they swore to when they filed their tax returns — but in any event, they allowed a 7.42% * * * that calculates a rate of return of 11.32% on common. Now, I say that when you talk about 10.66% under one approach — when you talk about 11.36% on common, — if you use your 6.77%, you are obviously not discussing or concerned with any issue of confiscation.”

Faced with these conflicting calculations which are based upon the same record, and with the duty to make a determination of the question upon our independent judgment as to both law and facts, we find that the best way to determine what actually happened would be to remand the cause to the Commission for a limited reopening of the hearing.

It has been said that “[E] labórate calculations which are at war with realities are of no avail.” Lindheimer v. Illinois Bell Tel. Co., 292 U.S. 151, 164, 54 S.Ct. 658, 663, 78 L.Ed. 1182, 1191 (1934). If the opinions and prophecies of the experts were wrong, and confiscation, in fact, did occur, we would be under a duty to make sure that the utility received a reasonable return on the value of the property used at the time that it was being used for the public service. Alabama, Public Service Commission v. Southern Bell, supra.

The telephone company argues in brief:

“In th.e present case, since the Commission said that the rate of return earned by the Company under its existing rates produced a fair rate of return on rate base, the question no longer remains whether the Company can earn an 11.05% rate of return on equity. It is a fact that the 7.36% return on rate base only produces 7.93% return on equity, far below the 11.05% found reasonable.
“Courts reviewing Commission decisions have consistently held that it is prima facie confiscation if the rates prescribed by the Commission do not produce the return on equity for the Company which the Commission prophesied or predicted the Company could earn.”

The company cites the New York decision in New York Tel. Co. v. New York Public Service Commission, 29 N.Y.2d 164, 324 N.Y.S.2d 53, 272 N.E.2d 554, 556 (1971), in support of the above-quoted argument. There, the court remanded the cause to the Commission to reopen the hearing to determine, from actual experience, the effect of the Commission’s order. There, the Court of Appeals of New York held that where, according to the telephone company’s figures, the actual experience yielded a significantly lower return than that deemed reasonable by the Public Service Commission, the refusal of the Commission to reopen proceedings to consider the actual operating experience of the company in arriving at a proper rate was arbitrary. The court said:

“The majority of the Commission does not deny confiscation, but was of the opinion that the Company could by way of a new rate proceeding secure whatever relief it believes it can justify under the changed conditions. The dissenting Commissioners pointed out that the evidence was clear that there was a present confiscation of the Company property and it was no answer to invite the Company to file new rates which would again be subject to suspension, during which period the Company would be accorded the privilege of continuing its operations under the alleged confiscatory rates.
******
“The law is well-settled that the Commission may not rely on a reckoning when actual experience is available and establishes that the predictions have been substantially incorrect. (West Ohio Gas Co. v. Public Utilities Comm. [No. 2], 294 U.S. 79, 82, 55 S.Ct. 324, 79 L.Ed. 773.) In Lindheimer v. Illinois Bell Tel. Co., 292 U.S. 151, 164, 54 S.Ct. 658, 663, 78 L.Ed. 1182 the court said, ‘Elaborate calculations which are at war with realities are of no avail’. This principle applies not only in cases where the rate proceeding fixes the rate but especially where the Commission directs refunds. (West Ohio Gas Co. v. Public Utilities Comm. [No. 2], supra). There the court said (294 U.S. p. 82, 55 S.Ct. p. 325) : ‘To prefer the forecast to the survey is an arbitrary judgment.’ In a recent case, Boston Gas Co. v. Department of Public Utilities, [359] Mass. [292], (269 N.E.2d 248, pp. 257-259, 1971) the court held that the Commission must consider evidence of attrition which has actually occurred since the test period. The Massachusetts case rationale is not new. Commissions are bound to take into account drastic changes in economic circumstances. (See Atchison, T. & S. P. Ry. Co. v. United States, 284 U.S. 248, 52 S.Ct. 146, 76 L.Ed. 273.) This court made this clear in People ex rel. Consolidated Water Co. of Utica v. Maltbie, 275 N.Y. 357, 367-368, 9 N.E.2d 961, 964, app. dsmd. 303 U.S. 158, 58 S.Ct. 506, 82 L.Ed. 724 in this statement: ‘If the opinion or prophecy of the expert witnesses given in May, 1932, was proven wrong by events occurring during the interval, the commission could, of course, not base any finding upon the discredited opinion. If the commission was bound to take judicial notice of such events, its decision must be based upon them rather than upon the discredited prophecy. If proof of such events was necessary, it might be offered by the party who challenged the opinion. In any case the party who attacks the correctness of the decision must show that intervening events have destroyed the force of opinion testimony upon which the decision is based.’
“Where there is a great disparity between the predicted rate of return found necessary by the Commission and the return actually earned, a suitable adjustment should be made to reflect the attrition trend or the erosion that has taken place. In Matter of Bronx Gas & Elec. Co. v. Maltbie, 271 N.Y. 364, 375, 3 N.E.2d 512, 516, the court said: ‘ “Experience” — how much better this is than expert testimony, whether dealing in history or prophecy.’
“Turning to the suggestion made by the Commission that the Company is restricted to the initiation of a new rate proceeding, it is only necessary to point to the comment made by Justice Cardozo in West Ohio Gas Co. v. Public Utilities Comm. (No. 2) (supra, 294 U.S. p. 83, 55 S.Ct. p. 325): ‘Present confiscation is not atoned for by merely holding out the hope of a better life to come’.”

The Commission, in its order, has determined that a 11.05% return to equity is just and reasonable. This finding is supported by substantial evidence in the record. If the 11.05% return on equity has not been produced, it would be an indication that the overall rate of return of 7.36% was not sufficient, from the outset, to result in a fair rate on equity. If however, experience shows to' the contrary, then the only question remaining is whether the prescribed rates of return meet the legal standards to be applied where confiscation is alleged. In view of the wide variations between the parties on the prospective returns that would result from the order, it is appropriate to test those returns by a practical yardstick — the actual experience under the order.

The remand of this case to the Commission should not be considered as a routine procedure which the Court will follow when confiscation is alleged. Rate-making is legislative, and not judicial. Alabama Public Service Commission v. Southern Bell T. & T. Co., 253 Ala. 1, 42 So.2d 655 (1949). While a remand will not always be appropriate, neither will it be inappropriate.

When this Court finds it “expedient” to do so, it can remand a cause to the Commission for further proceedings or evidence. Title 48, Section 82, Code; Alabama Public Service Commission v. Atlantic Coast L. R. Co., 253 Ala. 559, 45 So.2d 449 (1950). This Court has remanded causes to the Commission in prior cases. In Alabama Public Service Commission v. Southern Bell T. & T. Co., 268 Ala. 312, 106 So.2d 163 (1958), this Court said:

“Before a decision can be made finally as to whether rates and charges approved by the Commission are reasonable and just to both the Company and the public, there must be a new determination by the Commission of the ‘reasonable value’ of the Company’s property in accordance with what has been said in this opinion and a new rate order approved. If, after such redetermination and refixing of rates, the Company feels it is aggrieved to the exent warranting appeal to the courts, then that course will be open to it. The courts stand ready to protect the rights of a utility as well as the interests of the public. However, we would emphasize that the responsibility for fixing rates and charges which are reasonable and just to both the utilities and the public rests with the Commission and not with the courts. So long as the Commission pursues its statutory authority, within constitutional limits, the courts should not interfere with its determinations.
“The decree of the circuit court is reversed and the cause is remanded to the Commission for further proceedings in accordance with this opinion. In the meantime, the supersedeas order made in the circuit court, and the bonds given pursuant thereto, as required by law, shall remain and continue in full force and effect until final disposition of this cause. See: Birmingham Electric Co. v. Alabama Public Service Commission, 254 Ala. 140, 157, 47 So.2d 455.”

We elect to remand this case. Under our statutory scheme, the company will not be harmed since it has been permitted to supersede the order of the Commission pending a judicial review. There is no danger of irreparable harm to the subscribers either, as the excess, if any, of the proposed rates over that authorized by the Commission after remand would be refunded.

As we view the matter, the Commission has determined that an 11.05% return to equity is reasonable.

This rate of return to equity might become unreasonable because of changed economic conditions. If the company thought the rate was too low, it could file a rate hike proposal. If these intervenors thought the 11.05% return to equity became unreasonable because of changed economic conditions, they could file a complaint and charge that the rates were unfair and unreasonable; likewise, the Commission, “whenever it deems that the public interest so requires” may make investigation. The whole purpose of rate-making is to insure that the rates “shall be reasonable and just to both the utility and the public.” Title 48, §§ 52, 57, Code.

In view of what we have said, we remand this cause to the Commission with instructions to reopen the hearing within sixty days after receipt of the certificate of judgment from this Court for the limited purpose of determining the actual rate of return earned under the rates allowable on the Company’s property devoted to public service, as defined in the statute. The Commission, after considering this additional evidence, is directed to determine whether the rate of return allowed by the order here on appeal produced a return to equity of 11.05% which the Commission has determined was reasonable. If not, the Commission should approve a new rate.

In the meantime, the supersedeas order made in the circuit court, and the bonds given pursuant thereto, as required by law, shall remain and continue in full force and effect until final disposition of this cause. Alabama Public Service Commission v. Southern Bell T. & T. Co., 268 Ala. 312, 106 So.2d 163 (1958).

REMANDED WITH DIRECTIONS.

MERRILL, JONES, ALMON and EM-BRY, JJ., concur.

HEFLIN, C. J., and BLOODWORTH, FAULKNER and SHORES, JJ., dissent.

BLOODWORTH, Justice

(dissenting).

I most respectfully dissent.

In Mr. Justice Maddox’ majority opinion, he writes that General Telephone argues (for reversal) two basic issues: (1) that the evidence is insufficient to sustain the APSC’s finding that a 7.36 percent rate of return on the rate base is reasonable; and, (2) that the rate of return to equity is not 11.05 percent as found by APSC. Justice Maddox concludes, “In short the primary issue ... is that the rate of return [7.36 percent] is confiscatory.”

As to the first inquiry, I understand the case is remanded to the APSC for a determination as to whether the 7.36 percent rate of return on the rate base has produced a return to equity of 11.05 percent according to “actual experience.”

The main disagreement between the parties, the majority opinion states, is how to treat $13,783,000 of unamortized investment tax credits and deferred income taxes. The opinion concludes that a majority of regulatory agencies appear to exclude this item from the rate base on the ground that it represents “customer contributed cost-free capital.” Is it not our duty to determine which view this Court should take in handling this item ?

It seems unwise, to me, to set this precedent by remanding this case to the APSC to determine “from actual experience, the effect of the Commission’s order.” Of course, actual experience is always better than predictions as to future performance. But, if this case is remanded to determine “actual experience,” why shouldn’t we do so in all such rate cases when the question of “confiscation” is raised? In view of the fact that the APSC functions in a legislative capacity, it seems perfectly proper that it act “prospectively.”

Although this Court has remanded cases to the APSC previously, it was not to determine “actual experience” vis-a-vis the issue of confiscation. In Alabama Public Serv. Com’n. v. Southern Bell T. & T. Co., 268 Ala. 312, 106 So.2d 163 (1958), cited by the majority, the case was remanded because the Commission erred in excluding costs of reproduction, inter alia.

It may be appealing to remand to get the benefit of “actual experience.” But, to do so in every case will place an unreasonable burden of delay on litigants, on the APSC, on the courts, but most of all on those least able to bear the burden, the consumer. Remandment will delay unduly the time it takes rate cases to journey through the courts.

Thus, I must conclude that we should not remand this case but should ourselves make a determination from the record as to whether the 7.36 percent rate of return is confiscatory or not.

HEFLIN, C. J., and FAULKNER, and SHORES, JJ., concur.

      . Docket No. 16474 refers to an application filed by General Telephone with the Alabama Public Service Commission on 23 September, 1971, seeking an increase in intrastate rates from its Alabama customers in the amount of $2,504,450 annually. For a complete history of that case, see State v. Alabama Publio Service Commission, 293 Ala. 553, 307 So. 2d 521 (1975).

      . “The commission deducted from a gas company’s rate base, as an item of cost-free capital, a substantial amount representing accumulated deferred income taxes arising from the use of accelerated depreciation under the Internal Revenue Code. Re Mobile Gas Service Corp., Docket 14908, Sept. 12, 1960.” PUR. Dig. 2 Ed.Vol. 9 § 192.1, Valuation, at 7040.

      . “COMPANY APPENDIX A CORRECTED

       ALT, AMOUNTS TAKEN FROM RECORD, PAGE 1883 NOTE: The above factual information is per the Balance Sheet of GTSE at 4/30/73”


source: Caselaw Access Project

author: FAULKNER, Justice.

license: Public Domain

text:
    Thomas L. ALEXANDER, Jr., et ux. v. J. T. DISMUKES, etc.
    SC 1535.
    Supreme Court of Alabama.
    June 25, 1976.
    Rehearing Denied July 23, 1976.
    W. A. Jenkins, Birmingham, for appellants.
    Samuel Maples and Douglas Corretti, Birmingham, for appellee.
   FAULKNER, Justice.

The issue before us is whether or not a court’s acceptance and ratification of a special master’s report should be upheld. We affirm.

The dispute arose over a contract for the construction of a new residential dwelling in Birmingham. Thomas L. Alexander, Jr. and his wife, Lola B. Alexander, entered into a contract with J. T. Dismukes, d/b/a Dismukes Construction Company, on October 30, 1972, for the construction of a new home. The work was to be done according to plans and specifications approved by the Alexanders. The price bargained for was $60,000, $5,000 of which was to be paid upon completion of the foundation and $15,000 upon completion of the roof.

Under the terms of the contract the builder, Dismukes, agreed to begin construction in thirty days and complete the house within six months. If financing were obtained through the FHA or VA, which it was, the builder was required to complete the house in substantial compliance with the plans and specifications as approved or modified by the FHA or VA. Changes during the course of construction were to be in writing, signed by the builder and the buyers.

Although the contract was signed in October of 1972, the building permit was not obtained until April of 1973. Actual work on the house began shortly after April 30. During the course of construction the Alexanders paid Dismukes $20,500 for laying the foundation and putting up the roof. Dismukes finished work on the house in late October or early November, 1974; the last work on the heating and air conditioning was not completed until December. The Alexanders, not satisfied with the finished house, refused to pay Dismukes the balance on the contract price.

Litigation began when Dismukes filed a complaint on November 13, 1974, asking that a mechanics’ and materialmen’s lien be lodged against the property. Dismukes wanted a lien for $42,500, $39,500 due under the contract, plus $3,000 for “extras” that he installed allegedly at the Alexanders’ request.

The Alexanders answered and counterclaimed for $20,000 for failure to comply with the original contract, the plans, and the specifications. They listed twelve “deviations,” among them Dismukes’ failure to set the house the correct distance back from the boundary line, finishing construction twenty months behind schedule, and causing the Alexanders to incur additional interest charges. Dismukes’ response was that the delay was due to the Alexanders’ conduct and material shortages.

On February 26, 1976, the trial court, pursuant to Rule 53, A.R.C.P., appointed a special master to resolve the monetary dispute. The costs of the master’s services were to be included in court costs. That same day the master began hearing testimony and examining evidence; the oral hearing was completed by the afternoon of February 28. On March 2, the master personally inspected the subject premises. Four days later the master filed his report with the court, finding that the house was built in a good and workmanlike manner, and substantially conforming to the plans and specifications. Most of the delays were said to be the fault of the Alexanders and these offset the delays caused by Dis-mukes. The market value of the house was not dimfnished because of the slight deviations from the plans and specifications. In the master’s opinion, whatever error there was, was error without injury. Thus the counter-claim was denied. The master recommended a lien be granted in favor of Dismukes for $41,296.11, $39,500 due on the contract, plus $1,794.11 for certain specified “extras,” extra wall paper, electrical features, a higher garage door, and solid rather than hollow outside doors. Certain of Dismukes claims were barred because they were not in writing signed by both parties. It was suggested that the master’s fee of $1,000 be divided between the parties.

On March 17, the Alexanders filed objections to the master’s report, and eight days later amended their objections. The thrust of the objections was that the house was in fact located nine feet closer to the street than called for in the plans. This, they contend, could not be deemed substantial compliance by the master; furthermore, the master failed to consider ordering specific performance.

A hearing on the objections was set for April 1. On April 3, the court entered a final decree confirming, ratifying, and accepting the master’s report. After their motion to set aside the decree and grant a rehearing was denied, the Alexanders perfected this appeal.

The Alexanders first argue that neither the form nor the content of the master’s report meets the requirements of Rule 53(e)(1), A.R.C.P., reading in part: “He shall file the report with the clerk of the court in an action to be tried without a jury, unless otherwise directed by the order of reference, shall file with it a transcript of the proceedings and of the evidence and the original exhibits.”

The proceedings before the master were recorded, but not transcribed until after the final decree. No transcript of the evidence was filed.

As the Alexanders state in brief, there is a dearth of Alabama law on the subject. For guidance we must turn to the decisions interpreting the corresponding Federal Rule of Civil Procedure. The Alexanders submit that In Re Maggioli Co., 3 F.R.D. 83 (D.C.1943) gives the clearest indication of how the federal courts have interpreted Rule 53(e) (1). We agree that In Re Mag-gioli is to be the guide. There the master in a bankruptcy proceeding failed to file with his report a transcript of the proceedings and of the evidence and omitted filing the original exhibits. The creditors alleged that this was a violation of Rule 53(e)(1). Since Rule 80(a) F.R.C.P. providing for the appointment of a stenographer was extant, and not abrogated until 1946, the court stated that it was the master’s duty to propose the appointment of a stenographer and attempt to collect the initial cost. A transcript must be prepared so that the trial judge can rule intelligently on the master’s report and determine if the master has erred. The court further ruled that the master’s report could stand without imposing the requirement of filing a transcript of the evidence. “To do otherwise would allow the petitioners to take advantage of their own failure to make a seasonable objection to the master’s neglect in performing his duties.”

In the case at hand there was a reported present recording the testimony offered before the special master. The Alexanders knew that the proceedings were being recorded, yet they did not list the lack of a transcript of the evidence with their other objections to the master’s report. They did not argue this at the hearing on the objections to the master’s report. It was not until they filed their motion to set aside the decree and grant a rehearing did they register their objection to the lack of a transcript. For this reason they cannot now complain that a transcript of the evidence was not filed with the trial judge. Any objections are to be deemed waived; the form of the master’s report is acceptable.

The content of the master’s report is to be accepted, under Rule 53(e), A.R. C.P. unless the findings of fact are “clearly erroneous.” We do not think they are. There was evidence properly in the record, testimony by appraisers and expert witnesses, to show that the market value of the house was more than the contract price. The evidence admitted to show amelioration of the property could certainly be used by the master to calculate the value of the “extras” installed. We opine that the master did not err in his conclusions of law. There was ample evidence to support his conclusion that the finished house was in substantial conformity with the plans and specifications and that the Alexanders’ counter-claim for damages was not well taken.

We cannot say that the findings of fact are “clearly erroneous” or that the conclusions of law are in error.

The decison is due to be affirmed.

AFFIRMED.

HEFLIN, C. J., and BLOODWORTH, ALMON and EMBRY, JJ., concur.


author: WRIGHT, Presiding Judge.

text:
    James E. POSTON and Anna Poston v. Hubert D. GADDIS and Martha A. T. Gaddis.
    Civ. 688.
    Court of Civil Appeals of Alabama.
    April 28, 1976.
    Rehearing Denied June 2, 1976.

      Joe S. Pittman, Enterprise, for appellants.
    Cassady & Fuller, Enterprise, for appel-lees.
   WRIGHT, Presiding Judge.

Judgment for damages in the sum of $8,888.74 for breach of contract against defendant James E. Poston was rendered by the court sitting without a jury. Judgment denying counterclaim for abuse of process was rendered against defendant Anna Pos-ton. Defendants each appeal. We reverse.

Plaintiffs and defendant James E. Pos-ton entered into a contract for the construction and sale of a house in consideration of payment by plaintiffs of $38,500.00. During construction certain changes were made departing from the original plans and specifications. Such changes resulted in an overrun from the contract price. The authorization for many of the changes was disputed in the evidence. Defendant presented plaintiffs a statement for the increased price due to the alleged overrun. Plaintiffs disputed the overrun and authorization of the changes in construction. Defendant refused to convey to plaintiffs unless paid some $43,000.00, and placed the house on the market for sale.

Plaintiffs brought suit against Poston and his wife for specific performance and damages for breach of contract, requesting trial by jury. Lis pendens was filed. Defendants each filed counterclaims for damages. Defendant Anna Poston counterclaimed for attorney fees and costs for defending plaintiffs’ suit when she was not a party to the contract between plaintiffs and James Poston.

Subsequent to plaintiffs filing suit, defendants sold and conveyed the property to James and Charlotte Oliver. Plaintiffs amended suit and added the Olivers as defendants for specific performance. In said amendment plaintiffs withdrew their jury demand. Defendants then filed jury demands. Plaintiffs moved to dismiss defendants’ jury demands.

The learned trial judge granted the motion to dismiss defendants’ jury demands. The judgment discussed at some length the application of Rule 38 ARCP to the issues presented in the case. The court stated that the main thrust of action was specific performance, though elements of damage were claimed by various parties. Therefore, it was concluded that as no right to a jury trial was known at common law on a bill for specific performance, no rights existed under Rule 38, ARCP.

The matter proceeded to trial on complaint and counterclaims. Judgment was entered denying specific performance to plaintiffs, denying relief on defendants’ counterclaims but granting damages to plaintiffs for breach of contract.

Plaintiffs do not appeal from denial of specific performance. Defendants Poston appeal.

The first and primary issue presented by defendants’ appeal is that the court erred in denying the right to a jury trial on the cause of action of breach of contract and on the counterclaims.

Rule 38(a) ARCP provides:

“The right of trial by jury as declared by the Constitution of Alabama or as given by a statute of this State shall be preserved to the parties inviolate.”

The Committee Comment to Rule 38 states that the rule is intended to preserve the same right to jury trial as was known under prior practice. Prior practice gave the right to a jury trial in all cases permitted at common law and by statute at the time of the adoption of the state constitution. W & H Machine & Tool Co. v. National Distill. & C. Corp., 291 Ala. 517, 283 So.2d 173.

With the adoption of the Alabama Rules of Civil Procedure, the common law forms of actions at law and in equity were abolished. Actions and defenses of a legal and equitable nature may now be joined and intermingled in the one form of “Civil Action.” Rule 2, ARCP. Thus the right to trial by jury is not now determined by the common law form of action but by the issues presented by the pleadings in the “Civil Action.” This is made clear by the phrasing of the following partial quote from Subsection (b) of Rule 38: “Any party may demand a trial by jury of any issue triable of right by a jury . . . .” (Emphasis ours.)

The trial court was correct in its observation that there was no common law right to a trial by jury in the solely equitable action for specific performance. However, the action before it included legal claims for damages for breach of contract and abuse of process. These issues of fact, though joined with a claim for specific performance, are purely legal matters over which common law equity had no jurisdiction.

Under our new rules of practice and procedure it will not be unusual for the court to be trying equitable issues and legal issues in the same action. The court in most instances decides the first without the assistance of a jury. A jury, if requested, must try the latter.

Under the prior system equity assumed jurisdiction when there was no adequate remedy at law. It was often said that equity having assumed jurisdiction properly, it would proceed to do complete justice between the parties though there might be an invasion into areas of law. Alabama, Tenn. & Northern Ry. Co. v. Aliceville Lumber Co., 199 Ala. 391, 74 So. 441. This principal was espoused to prevent multiplicity of actions. It was upon this principle that a court of equity would in some instances augment recognized equitable relief by granting damages incidental to such relief. Swofford v. B & W, Incorporated, 336 F.2d 406 (5th Cir. 1964). Such damages were granted by the court without a jury, even though the granting of damages was recognized as peculiarly within the province of a jury trial at law. Stow v. Bozeman’s Executors, 29 Ala. 397; Whaley v. Wilson, 112 Ala. 627, 20 So. 922.

However, we know of no case of the granting of damages by a court of equity except as determined to be incidental and augmental to the equitable relief primarily sought and upon which the equitable jurisdiction was founded.

In the instant case, though requesting specific performance in a first claim, plaintiffs proceeded in other claims to seek a determination of breach of contract and damages therefor. Such damages were not incidental to the granting of specific performance but as an alternative form of relief. After amendment adding the Olivers as defendants, appellant-defendants were admittedly unable to specifically perform and could only respond to the claim for breach of contract and damages. It must follow that the counterclaims of defendants sounded in damages only and were, without question, legal claims which could only be tried to a jury.

Rule 38, Federal Rules of Civil Procedure is applied in relation to the Seventh Amendment of the United States Constitution. The Seventh Amendment is not materially different from Section 11 of the Alabama Constitution. Each holds the right to a jury trial inviolate and preserves such right as it was at common law at the time the amendment was adopted. Baltimore & Carolina Line v. Redman, 295 U.S. 654, 55 S.Ct. 890, 79 L.Ed 1636; W & H Machine & Tool Co., supra.

Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 79 S.Ct. 948, 3 L.Ed.2d 988 was an early application of Federal Rule 38 to a case involving mixed issues of law and equity. That case was followed three years later by Dairy Queen, Inc. v. Wood, 369 U.S. 469, 82 S.Ct. 894, 8 L.Ed.2d 44. Dairy Queen, supra applied Beacon Thea-tres, supra, and amplified it in relation to legal issues which may be “incidental” to equitable issues. The court speaking through Mr. Justice Black (who also authored Beacon Theatres, supra) said:

“But the constitutional right to trial by jury cannot be made to depend upon the choice of words used in the pleadings.”

The fact that the instant case began with a “purely equitable” claim for specific performance may not infringe upon the right of either party to try to a jury a purely legal issue which may follow thereafter.

Plaintiffs’ argument that the determination of damages was made by the court as. an incident to the equitable action of specific performance is not logically acceptable. First, because the issue of damages was a legal issue even at common law. After merger of issues in equity and in law in one trial, the excuse of multiplicity of suits which permitted courts of equity to determine incidental damages no longer exists. Thus, it can be said that in such cases the rules of procedure expand the rigljt to a jury trial rather than limiting it. There is presented a classic example of the expansion of the right to a jury trial effected by the adoption of the new rules of procedure in the case of Ex parte Garrett, 294 Ala. 535, 319 So.2d 665 (1975). Second, the damages granted cannot be termed incidental to the equitable action of specific performance because the equitable relief was denied. The only relief granted plaintiffs was damages for breach of contract. That relief was contrary to the nature of specific performance and was purely legal at common law. The denial of a jury trial to defendants in this case points glaringly to the danger of determining such right because of the wording of an initial pleading. It is no longer possible to make a blanket categorization that an action is “purely equitable” or “purely legal.” The trial court made that error in the instant case. The effect was to deny the equitable relief and proceed to try and render judgment on patently legal issues without granting to defendants their right to a trial by jury. For this the judgments in favor of plaintiffs and against defendants must be reversed.

The question of whether the plaintiffs had a right to withdraw their jury demand without consent of defendants under Rule 38(d) ARCP is not necessary to determine on this appeal. The subsequent demand of defendants was timely filed after the amended complaint of plaintiffs under Rule 38(b).

It is the opinion of the court that upon remandment the issues presented by plaintiffs’ claim for breach of contract, and the defendants’ counterclaims, if properly permitted by the pleadings to reach the trial stage, must be tried to a jury unless otherwise waived by the parties.

The claim for specific performance, having been properly tried to the court, judgment entered thereon without appeal, is not disturbed.

REVERSED AND REMANDED.

BRADLEY and HOLMES, JJ., concur.


author: BLOODWORTH, Justice.

text:
    In re James E. POSTON et al. v. Hubert D. GADDIS et al. Ex parte Hubert D. GADDIS and Martha A. T. Gaddis.
    SC 1902.
    Supreme Court of Alabama.
    July 9, 1976.
    Kenneth T. Fuller, Enterprise, for petitioner.
    None for respondent.
   BLOODWORTH, Justice.

Petition of Hubert D. Gaddis and Martha A. T. Gaddis for Certiorari to the Court of Civil Appeals to review and revise the judgment and decision of that Court in Poston et al. v. Gaddis et al., 58 Ala.App.-, 335 So.2d 165.

WRIT DENIED.

HEFLIN, C. J., and FAULKNER, AL-MON and EMBRY, JJ., concur.


text:
    PEAVY’S SERVICE CENTER, INC. v. ASSOCIATES FINANCIAL SERVICES COMPANY INC. and Carroll Kenworth Truck Sales, Inc.
    Civ. 744.
    Court of Civil Appeals of Alabama.
    April 28, 1976.
    Rehearing Denied June 2, 1976.

      Philip Dale Segrest, Montgomery, for appellant.
    Bruce J. Downey, III, Montgomery, for appellees.
   WRIGHT, Presiding Judge.

This case concerns the difficulties associated with a 1973 Kenworth diesel truck. The facts, as stipulated pursuant to Rule 10(e), ARAP, are as follows: Carroll Kenworth Truck Sales sold the truck to W. O. Barton on November 22, 1972. The sale was upon a conditional sales contract by which Carroll retained a security interest. Carroll assigned the contract to Associates Financial Services Co., Inc., which duly perfected'its security interest.

Barton later delivered the truck to Pea-vy’s Service Center, Inc. for repairs. Repairs costing $1,300.00 were made and the truck was returned to Barton, without payment. Thereafter Barton again took the truck to Peavy’s for repairs. The bill on this occasion was $2,151.05, which was not paid. Peavy’s retained possession of the vehicle, asserting a common law possessory mechanic’s lien on the vehicle.

Associates filed a complaint, motion for writ of attachment and affidavit in support thereof on August 8, 1975. Peavy’s answered, contending its common law mechanic’s lien as to the $2,151.05 was superi- or to Associates’ perfected security interest in the truck. Peavy’s does not contend its claim regarding the $1,300.00 bill is superi- or to Associates’ perfected security interest. See Ford Motor Cr. Co. v. Howell Bros. T. & A. Repair, Inc., 57 Ala.App. 46, 325 So.2d 562.

Associates amended its complaint to include Carroll Kenworth as plaintiff. The trial court, on September 11, 1975, entered judgment in favor of Associates and Carroll Kenworth; holding that Associates’ perfected security interest was superior to Peavy’s mechanic’s lien. The court further found that Associates had not authorized repair of the vehicle by language in the contract requiring the buyer to keep the vehicle in good condition and repair. Peavy’s argues on appeal that both of these holdings were erroneous.

Alabama is one of the states which provides two mechanic’s liens. Title 33, Section 25, Code of Alabama (1940) sets out the statutory mechanic’s lien. However, it merely supplements, not supplants, the common law mechanic’s lien. Howell v. Dodd, 229 Ala. 393, 157 So. 211. The common law lien is a possessory lien and is lost by release of the property. Alexander v. Mobile Auto Co., 200 Ala. 586, 76 So. 944. The statutory lien is not dependent upon maintaining possession, but may be perfected after release of the property. Gober Motor Co. v. Valley Securities Co., 23 Ala.App. 290, 124 So. 395. Though the liens serve the same purpose and arise under similar circumstances, they are distinct and separate.

Prior to passage of the Uniform Commercial Code both the common law and statutory mechanic’s liens were subordinate to a secured party under a conditional sales contract, chattel mortgage, etc. Owens v. Tarleton, 36 Ala.App. 366, 56 So.2d 382; Tallassee Motor Co. v. Gilliland Bros., 22 Ala.App. 21, 112 So. 758. The UCC, by Section 9-310 (Title 7A, § 9-310, Code), changed this rule as to the common law possessory lien.

“When a person in the ordinary course of his business furnishes services or materials with respect to goods subject to a security interest, a lien upon goods in the possession of such person given by statute or rule of law for such materials or services takes priority over a perfected security interest unless the lien is statutory and the statute expressly provides otherwise.”

The purpose of this basic change, as stated in Comment 1 to Section 9-310, is to make liens for claims arising from work intended to enhance or preserve the value of the collateral superior to an earlier security interest.

The “unless” clause in Section 9-310 provides that certain possessory liens may become subordinate to a prior perfected security interest. This occurs when (1) the lien is statutory and (2) the statute expressly makes the lien subordinate. In 1965, the legislature, simultaneously with passage of the UCC, amended Title 33, Section 25 so as to subordinate that statutory lien to a prior perfected security interest, unless the secured party authorized the repairs. Bryce Hospital Credit Union, Inc. v. Warrior Dodge, Inc., 50 Ala.App. 15, 276 So.2d 602.

Undoubtedly, the purpose of the amendment was intended to subordinate the lien given by Title 33, Section 25, Code of Alabama (1940), to a prior perfected security interest as permitted by Section 9-310, UCC. However, such amendment was unnecessary and had no actual effect. The priority given by Section 9-310 did not change the law as to a lien arising and perfected under Title 33, Sections 25-28. Such lien is not a possessory lien. Section 9-310 applies only to possessory liens. This state does not have a statutory mechanic’s possessory lien such as the common law lien. Therefore, Section 9-310 did not give priority to the statutory lien. The 1965 amendment merely codified the law of priority as it then existed. The amendment did nothing to subordinate the priority given the common law possessory lien by Section 9-310 of the UCC.

The Court of Appeals of Tennessee was presented a similar question as here in Forrest Cate Ford v. Fryar, 8 UCC 239 (1970), as was the Supreme Court of Tennessee in the case of Manufacturers Acceptance Corp. v. Gibson, 220 Tenn. 654, 422 S.W.2d 435 (1967).

We conclude that a common law possessory mechanic’s lien by virtue of Section 9-310 UCC has priority over a prior perfected security interest. The amendment to Title 33, Section 25, Code, has no application to such lien.

We perceive no need to discuss other contentions of appellant presented in brief and oral argument.

REVERSED AND REMANDED.

BRADLEY and HOLMES, JJ., concur.


author: EMBRY, Justice.

text:
    In re PEAVY’S SERVICE CENTER, INC. v. ASSOCIATES FINANCIAL SERVICES COMPANY, INC., et al. Ex parte ASSOCIATES FINANCIAL SERVICES COMPANY, INC., et al.
    SC 1904.
    Supreme Court of Alabama.
    July 9, 1976.
    Bruce J. Downey, III, Montgomery, for petitioner.
   EMBRY, Justice.

By denying the writ we do not pass on what the law was, regarding common law and statutory mechanic’s liens in relation to conditional sales contracts, chattel mortgages, etc., prior to passage of the Uniform Commercial Code.

WRIT DENIED.

HEFLIN, C. J., and BLOODWORTH, FAULKNER and ALMON, JJ., concur.


author: BRADLEY, Judge.

text:
    Robert G. LUDDEKE v. METROPOLITAN LIFE INSURANCE CO.
    Civ. 763.
    Court of Civil Appeals of Alabama.
    April 28, 1976.
    Rehearing Denied June 9, 1976.
    William H. Saliba, Mobile, for appellant.
    Ben H. Harris, Jr., Mobile, for appellee.
   BRADLEY, Judge.

The Circuit Court of Mobile County granted defendant’s request for summary judgment. Plaintiff appeals to this court. We affirm.

The pleadings and affidavits filed by both parties show, without dispute, that plaintiff was an employee of International Paper Company on December 9, 1968. On that date during the course of his employment with International, plaintiff received a very serious injury as a result of an accident, which caused him to be permanently and totally disabled. As a result of that accident, plaintiff received workmen’s compensation benefits as provided by Alabama law.

Prior to the accident, plaintiff had been insured under a group insurance policy procured by International Paper. The policy included health insurance benefits. The health benefits portion of the group policy contained the following exclusion:

“No Weekly Indemnity shall be paid under the Group Policy for any period of disablement arising out of or in the course of any employment for wage or profit.”

Plaintiff contends on appeal that the provision in question does not apply to International Paper, the employer who obtained the group policy, but does apply to other employers for whom plaintiff might be working. Defendant responds that the provision is applicable to International Paper as well as any other employer.

The trial court, in its order granting summary judgment, construed this provision to exclude from indemnity coverage any period of disability for which the employee received workmen’s compensation payments. Such a construction is erroneous; it is not supported by the express terms of the contract, but creates a new provision not bargained for. Alabama Farm Bureau Mutual Casualty Insurance Co. v. Tubbs, 293 Ala. 432, 304 So.2d 589. There is no mention of workmen’s compensation in the provision.

However, this error will not result in reversal of the summary judgment. The plain meaning of the provision coupled with the undisputed facts in the case indicate that there is no genuine issue of material law or fact here, and summary judgment for defendant is proper, Lanton v. Holly Realty Co., 56 Ala.App. 78, 319 So. 2d 276; Birmingham Television Corp. v. Water Works, 292 Ala. 147, 290 So.2d 636.

The language of the policy provision is so clear and unambiguous as to obviate the need for interpretation. Indemnity coverage is excluded where the disablement arises “out of or in the course of any employment for wage or profit.” The phrase “any employment” plainly includes employment at International Paper. There is not the slightest suggestion to the contrary in the contract.

In Strickland v. Equitable Life Assur. Soc. of United States, 172 F.Supp. 729, the U. S. District Court for the Middle District of Alabama rendered summary judgment for the insurer on the basis of the following exclusion in an accidental death and dismemberment insurance policy:

“No payments shall be made under this policy for any loss resulting from or caused directly or indirectly, wholly or partly, by
“(f) bodily injuries arising out of and in the course of the employee’s employment.”

In that case the United States District Court said that no ambiguity existed in that provision of the insurance policy.

Likewise, in the case at bar, the policy exclusion is very clear on this point and must be enforced as written. The plaintiff was undisputedly injured during the course of his employment, and the insurance policy sued on unequivocally excludes weekly indemnity for such injuries.

Although Alabama Farm Bureau Mutual Casualty Insurance Co. v. Tubbs, supra, has been cited for one aspect of the present opinion, it is not apt authority for appellant’s contention that the policy exclusion should be strictly construed against the insurer, and appellant’s interpretation adopted. There is simply no room in the provision for any construction which would allow employment at International Paper to escape the exclusion. Unless there is room for differing interpretation the maxim of construction urged by appellant has no applicability.

There being no genuine issue as to any material fact, defendant was entitled to summary judgment. Although we disagree with the trial court’s theory of the case, its judgment is the correct result and is affirmed, Sosebee v. Alabama Farm Bureau Mut. Cas. Ins. Co., 56 Ala.App. 334, 321 So.2d 676.

Affirmed.

WRIGHT, P. J., and HOLMES, J., concur.


author: SHORES, Justice.

text:
    In re Robert G. LUDDEKE v. METROPOLITAN LIFE INS. COMPANY. Ex parte Robert G. Luddeke.
    SC 1909.
    Supreme Court of Alabama.
    July 16, 1976.
    William H. Saliba, Mobile, for petition^ er.
    Ben H. Harris, Jr., Mobile, for respondent.
   SHORES, Justice.

Petition of Robert G. Luddeke for Cer-tiorari to the Court of Civil Appeals to review and revise the judgment and decision of that Court in Luddeke v. Metropolitan Life Insurance Co., 58 Ala.App. —, 335 So.2d 172.

WRIT DENIED.

HEFLIN, C. J., and MADDOX, JONES and BEATTY, JJ., concur.


text:
    Carlos Lloyd ADAMS v. Georgia Rea Strain ADAMS.
    Civ. 783.
    Court of Civil Appeals of Alabama.
    June 30, 1976.

      John C. Schmarkey, Birmingham, for appellant.
    James M. Fullan, Jr., Birmingham, for appellee.
   BRADLEY, Judge.

The parties to this appeal were divorced by the Circuit Court of Jefferson County, Birmingham Division, on November 20, 1975. Motion for new trial was denied on January 6, 1976. The appellant-husband appeals from that portion of the November 20 decree awarding the appellee-wife his interest' in the jointly-owned residence, his interest in a 1972 Chevrolet automobile, his interest in four cemetery lots, his interest in the household goods and furnishings, and requiring him to pay $600 per month alimony, $1,250 attorney fees, and to maintain in force life insurance with appellee as beneficiary. Appellant also appeals from the denial of the motion for new trial.

The note of testimony filed in the trial court prior to the rendition of the decree on the merits shows that the case was submitted on the complaint and testimony of six witnesses plus the answer and seven exhibits. No court reporter was present during the proceedings and the testimony of the witnesses was not recorded. The record on appeal contains the pleadings and the exhibits, but does not contain a transcript of testimony of the witnesses, or a statement thereof under Rule 10, ARAP.

Appellee in brief argues that in the absence of any memorandum of the testimony of the six witnesses who testified in this cause, this court has no alternative but to affirm the judgment of the trial court, which had before it evidence that is not available to this court. Appellee also moves this court to affirm the decree of the trial court and to award her the extraordinary remedy of damages and double costs as permitted by Rule 38, ARAP, for frivolous appeals. Appellee also requests that we award her a reasonable sum for the services of her attorney in defending the decree now on appeal.

Previously, the principle was well settled in Alabama that the trial court’s findings and conclusions on the facts would not be reviewed when it affirmatively appeared there was evidence before the trial court that was not in the record on appeal. Davis v. Wolff, 53 Ala.App. 700, 304 So.2d 201, judgment reversed for other reasons 293 Ala. 408, 304 So.2d 203, on remand 53 Ala.App. 740, 304 So.2d 206. Furthermore, there are many cases in this state holding that where all the evidence is not in the record, it is presumed that the missing evidence was sufficient to support the judgment or decree from which the appeal was taken. Alabama Digest, Appeal & Error, <&>P07(4).

The Committee Comment to Rule 10, ARAP, purports to say that the new appellate rules have abolished this principle:

“Since each party has the option to include such matters as he deems relevant and appropriate, this rule will abolish the existing presumption that if there is an omission from the record of any matter essential to a decision of any question presented on appeal, the ruling of the trial court will be deemed correct. Thus such cases as Melton v. Melton, 288 Ala. 452, 261 So.2d 887 and Davis v. City Federal Savings & Loan Association, 288 Ala. 236, 259 So.2d 262 are superseded.”

Rule 10 does expressly provide that both appellant and appellee shall have the right to designate of what the record shall consist. By this provision, much of the scope of Davis v. Wolff, supra, and similar cases is vitiated: where existing matter is omitted from the record by appellant, appellee can no longer rely solely on the omission to gain affirmance, but must designate for inclusion in the record whatever else is available to help his case. The new rules thus shift emphasis away from technical imposition on appellant in favor of a mutual burden on both parties to assemble a record containing everything pertinent to a consideration on the merits.

However, the change accomplished by the rules has no application to the present case. The premise for the relaxation of the Davis v. Wolff principle in most situations is the equal opportunity to designate matters for inclusion afforded to both parties. There is no such equality here. No transcript of testimony was made below; it is thus impossible for ap-pellee to place such non-existent matter in the record by designation. Appellant, and appellant alone, is granted the opportunity under Rule 10(d) to prepare a statement of the proceedings in lieu of the usual transcript. Appellee has no right to initiate such a statement, but is allowed only to propose amendments and raise objections to appellant’s version.

Under these circumstances, the statement appearing in the Committee Comment is based on a faulty premise. Until such time as ARAP, 10(d), is amended to provide the requisite equality of opportunity in the preparation of the statement of evidence, the strict penalty for omission of this vital material must rest on the party entirely responsible for initiating its inclusion, the appellant. Where, as here, it affirmatively appears that oral testimony was considered by the trial court in reaching its decision, and this testimony is not present in the record either as a transcript or as a Rule 10(d) summary, it continues to be conclusively presumed that the testimony is sufficient to support affirmance.

A second cogent reason supports our disavowing the Committee Comment in the instant case. The argument urged on appeal is directed exclusively to the proposition that the trial judge’s decree, based on evidence heard ore tenus, was plainly and palpably erroneous. Reversal on such ground must be solidly based on the appellate court’s conclusion that the evidence virtually compels a result inconsistent with the trial judge’s findings, Sparkman v. Williams, 260 Ala. 472, 71 So.2d 274. It is impossible for an appellate court to make such a determination where none of the oral testimony is communicated to it.

Under ARAP it is not necessary to submit the entire transcript; however, there is a minimum below which an appellant who bases his argument on the weight and sufficiency of the evidence may not fall and still present a reviewable issue. The complete absence of any transcript or 10(d) statement of oral testimony falls below such a minimum.

As was pointed out above, the note of testimony shows that six witnesses testified in this case. Their testimony is not in the record on appeal. It is quite obvious that the trial court heard evidence which is not before us; consequently we must assume that the oral evidence is sufficient to support the decree rendered, and we have no alternative but to affirm.

That aspect of appellee’s motion asking that the sanctions authorized by Rule 38, ARAP, be invoked is denied. Rule 38 does not establish a standard for what constitutes a frivolous appeal; instead it commits the question to a determination by the appellate court in which the appeal is argued. Rule 38, ARAP, therefore authorizes the imposition of sanctions as a matter of the sound judicial discretion vested in the appellate court. Having examined all aspects of the appeal herein, we do not feel sanctions are called for. The request for attorney’s fee on appeal will be granted. In view of the circumstances in this case, we consider the sum of $600 to be a reasonable fee for counsel’s services to appellee on this appeal and that amount is hereby awarded.

MOTION TO INVOKE RULE 38, ARAP, DENIED; ATTORNEY’S FEE AWARDED; JUDGMENT AFFIRMED.

WRIGHT, P. J., and HOLMES, J., concur.


author: HOLMES, Judge.

text:
    Thomas E. JERNIGAN v. Jimmie T. JERNIGAN.
    Civ. 725.
    Court of Civil Appeals of Alabama.
    June 30, 1976.

      James C. Barton and J. William Rose, Jr., Birmingham, for appellant.
    James L. Shores, Jr., Birmingham, for appellee.
   HOLMES, Judge.

This is an appeal from the Circuit Court of Jefferson County. The trial court ordered appellant Thomas E. Jernigan to pay $10,500 as attorney’s fee to the attorney of his former wife, Jimmie T. Jernigan, the appellee in this cause. Appellant now prosecutes this appeal from that order of the trial court.

The issue before this court is whether the learned trial court erred to reversal by its above described order, which compensated appellee’s attorney for services rendered after a decree of divorce was entered between appellant and appellee. We find that the learned trial court did so err, and reverse and remand the cause.

The record reveals the following pertinent facts:

The parties were divorced on April 18, 1969, by the Circuit Court of Jefferson County. The trial court’s decree made provision for property settlement, alimony, child custody and visitation, attorney’s fee, and other matters. Several provisions of this decree are germane to this appeal.

The decree ordered appellant to establish an irrevocable alimony trust with a corpus of $750,000 in favor of appellee. This trust was to be set up within three years from the date of the decree. Appellant was to maintain an escrow account in the amount of $750,000 prior to establishment of the trust.

Additionally, appellant was directed to convey the parties’ homeplace, free of encumbrances, to appellee.

The decree also ordered appellant to pay $75,000 for the fees of appellee’s attorneys: $25,000 of this sum was to be paid directly to the attorneys, while the remaining $50,000 was to be paid to appellee, who would in turn pay the monies over to her attorneys. This arrangement was motivated by federal and state income tax considerations. In this regard, appellant executed the following agreement in connection with the trial court’s decree:

“To: Jimmie T. Jernigan
“As further consideration for the memorandum of Agreement entered into today, I hereby agree to pay to you as additional property settlement an amount equal to any federal and state income taxes (including interest and penalties) which you may have to pay by reason of the disallowance of the deduction which you will claim for the $50,000 legal fee which you will pay your attorneys for their services in connection with your periodic alimony arrangements.
“/s/ Thomas Edgar Jernigan”

Appellee subsequently claimed the above-mentioned $50,000 as a deduction on her federal income tax. The permissibility of the deduction was challenged by the Internal Revenue Service. At this point, ap-pellee discharged the attorneys who had represented her in the divorce proceedings and retained new counsel, who presently represents appellee on this appeal. Appel-lee’s new counsel represented her in various proceedings before the Internal Revenue Service, including litigation in the United States Tax Court. Through counsel’s efforts, the propriety of the $50,000 deduction was accepted by the Internal Revenue Service, so that no additional taxes, interest, or penalties were incurred by appellee due to that deduction having been claimed by her.

After the divorce decree, and before the trust noted above was established, various aspects of the trust not provided for in the decree had to be agreed upon by the parties. Certain problems also existed concerning funding of the trust. These matters required negotiations and other services of some extent between the parties’ attorneys.

Apparently, there was also extensive disagreement between the parties after the divorce decree concerning custody and visitation of the children, which required some effort on the part of the attorneys to rectify.

As noted earlier, appellant was to convey the parties’ homeplace to appellee free and clear of encumbrances. There was a $44,000 mortgage indebtedness on the home which appellant did not satisfy until over three years after the entry of the original decree, when counsel for appellee filed with the circuit court a petition to enforce the terms of the original decree.

Appellee’s present counsel, who represented her in the tax litigation, also handled the trust, child visitation, and mortgage matters discussed above.

In July of 1975, appellee filed a petition for attorney’s fee with the trial court. The petition prayed that the trial court order appellant to pay appellee a reasonable sum for the services of her attorney in the matters described above.

The trial court on October 20, 1975, ordered appellant to pay $10,500 to appellee as attorney’s fee. Appellant appeals from that order.

We note at the outset appellant’s contention that the trial judge was precluded from awarding appellee attorney’s fees due to her ability to pay those fees herself. However, a party’s affluence does not mean that he or she cannot be awarded attorney’s fees, especially where, as here, both parties are apparently capable of paying their own attorneys. An award of attorney’s fees is a matter for the sound discretion of the trial judge. See 8 Ala.Dig. Divorce <®==>221, 223.

Our disposition of this case requires that we initially discuss the pertinent law of Alabama concerning awards of attorney’s fees in divorce cases.

It is settled law that the trial court has the power to grant counsel fees incident to a decree of divorce. See 8 Ala.Dig. Divorce ®=5221.

The power of the trial court to award attorney’s fees in related proceedings between the parties, which proceedings occur subsequent to the decree of divorce, was originally in some dispute. See Sims v. Sims, 253 Ala. 307, 45 So.2d 25, 15 A.L.R. 2d 1246. The Alabama Supreme Court case of Rochelle v. Rochelle, 235 Ala. 526, 179 So. 825, dealing with a contempt proceeding to enforce payment of accrued alimony installments, made the following statement in this regard:

“We think the court was correct in declining to award to complainant an amount for attorney’s fees for prosecuting this suit. 19 Corpus Juris 228, § 544. It is like collecting any other sort of moneyed judgment. In divorce and alimony causes, the right to an attorney’s fee is an incident to alimony, or separate maintenance. When the right to a decree fixing alimony or maintenance is exhausted, so is the right to an attorney’s fee. McEvoy v. McEvoy, 214 Ala. 112, 106 So. 602; Higgins v. Higgins, 222 Ala. 44, 130 So. 677.” (235 Ala. at 529, 179 So. at 829)

The Sims case, supra, dealt with a petition to modify the provisions of a prior divorce decree, and discussed the trial court’s power to award counsel fees at some length. It was there held that counsel fees could be granted by the trial court in connection with proceedings to modify a prior divorce decree. The Sims court discussed the question before it as follows, in part:

“But we are constrained to hold that the court has such power, since it is in the nature of a continuous proceeding in a case where the [marital] relation did exist and was only terminated by the decree which also provided for an attorney’s fee and alimony, Epps v. Epps, 218 Ala. 667, 669, 120 So. 150, and the right to fix alimony is not exhausted. . . Although the power to award alimony is dependent upon the relation of husband and wife, yet when the decree of divorce makes provision for alimony that provision may be increased or decreased by subsequent proceedings, though the right to do so is not reserved in the divorce decree. Epps v. Epps, supra; Aiken v. Aiken, supra; Garlington v. Garlington, 246 Ala. 665, 22 So.2d 89. So that the court having the power to alter the allowance may provide for an attorney’s fee as a feature of the power.
“A divorce with provision for alimony created a duty as there provided. It is continuing if so decreed notwithstanding a severance of the relation. If it is provided to be continuing, it is subject to the future control of the court whose jurisdiction over it continues to meet changed conditions. . . .” (253 Ala. at 311, 45 So.2d at 29)

The Sims holding that counsel fees could be granted in modification proceedings has been followed innumerable times by the court of Alabama. See, e. g., Lyons v. Lyons, 279 Ala. 329, 185 So.2d 121; Constantine v. Constantine, 274 Ala. 374, 149 So.2d 262; Gambrell v. Gambrell, 268 Ala. 671, 110 So.2d 248.

Rochelle and Sims were distinguished in Keith v. Paden, 255 Ala. 294, 51 So.2d 9, and Jordan v. Jordan, 266 Ala. 386, 96 So. 2d 809. Those cases hold that while attorney’s fees may be awarded in modification proceedings, “. . . the allowance of a solicitor’s fee is not appropriate in a proceeding looking to the enforcement of an award already made.” (Jordan v. Jordan, 266 Ala. at 390, 96 So.2d at 812) We note that this statement in Jordan' referred to past-due alimony installments, which are a debt of record against the husband. Blackwood v. Kilpatrick, 52 Ala.App. 505, 294 So.2d 753.

The rationale of the decided cases is apparently that the trial court’s power to award attorney’s fees upon rendition of original decrees is retained with respect to modification proceedings. However, that power is lost when an award becomes final. The distinction thus appears to be between enforcing the performance of an award which has already been finalized, and proceedings and negotiations to change an award or which lead up to its finalization. Child custody provisions, and periodic alimony awards which have not accrued, are never truly final, but are subject to the power of the court to modify on account of changed conditions. 8 Ala.Dig. Divorce ®=>245, 303. Similarly, an award, even though embodied in a decree of divorce, which is not in sufficiently final form so that it can be performed by the parties, is subject to the power of the court so that attorneys’ fees may be awarded for services looking to its finalization.

Section 39(3) of Tit. 34, Code of Alabama 1940, passed by the legislature in 1970, permits attorney’s fees to be awarded “in all suits for the recovery of alimony, maintenance or support in which . a contempt of court citation has been made by the court against either party . . .” While the judicial proscription against awards of counsel fees was thus abrogated in this particular situation, it remains in effect as to enforcement proceedings where no contempt citation is made.

Application of the foregoing principles to the situation before us gives the following results:

(1) The services rendered by ap-pellee’s counsel in connection with the tax matters discussed above are not the subject of a fee award by the trial court. The terms of the divorce decree, together with the companion agreement executed by appellant, supra, show an obligation to pay ap-pellee $50,000 as attorney’s fee and to reimburse her for any tax liability incurred in that regard. Appellant’s agreement to pay appellee’s tax liability makes no mention of attorney’s fees for litigating that liability; such a provision could easily have been inserted had the parties so intended. A court cannot rewrite a contract for the parties. Williston on Contracts, 3d Edition, § 610A; Board of School Com’rs. of Mobile County v. Hudgens, 274 Ala. 647, 151 So.2d 247.

It is clear that attorneys’ fees incurred in tax litigation were not contemplated by the parties as payable by appellant. Appellant’s obligation as set out by the decree and agreement is in its final form; no necessary particulars of performance are omitted. The services of appellee’s counsel did not concern finalizing or modifying that obligation, but instead were completely collateral to any proceeding over which the court retained the power to award counsel fees.

(2) Similarly, it was not permissible for attorney fees to be awarded for services which concerned appellant’s satisfaction of the mortgage liability on the homeplace. This obligation of appellant was also final, and counsel’s services looked toward enforcing its performance.

(3) However, counsel fees could properly be awarded for services rendered in connection with the trust agreement. These services concerned specifying or modifying the requisite details of the trust between the parties, and were compensable by the court.

(4) Counsel’s services which concerned settling the parties’ disagreements as to visitation and custody were also compensa-ble by way of a fee award. Child custody matters are never final, as noted earlier, and counsel’s services involved negotiations to modify the parties’ arrangements in order to prevent litigation.

Our examination of the trial court’s order in the cause, the record, and briefs of counsel has not shown what value can be placed on the various different services performed by appellee’s attorney. The pleadings and the record clearly demonstrate that the proceedings in the trial court emphasized counsel’s efforts as regards the tax matter, which efforts are not the subject of a fee award.

The learned trial court is in the most advantageous position to ascertain the value of counsel’s services for which a fee award may properly be made. We therefore reverse and remand the cause to the trial court for entry after a hearing, if such is necessary, of an appropriate award compensating appellee’s attorney for his services regarding the trust and child custody matters discussed above.

REVERSED AND REMANDED WITH INSTRUCTIONS.

WRIGHT, P. J., and BRADLEY, J„ concur.