author: PER CURIAM. MADDOX, Justice FAULKNER, Justice. SHORES, Justice MADDOX, Justice

text:
    DELVIEW MEADOW GOLD DIVISION BEATRICE FOODS COMPANY et al. v. ALABAMA DAIRY COMMISSION and Associated Milk Producers, Inc.
    SC 2716.
    Supreme Court of Alabama.
    June 30, 1978.
    Rehearing Denied Aug. 4, 1978.
    After Remand Sept. 28, 1979.
    Rehearing Denied May 9, 1980.

      Oakley Melton, Jr., and Curtis H. Springer, Montgomery, for appellants.
    Charles M. Crook, Montgomery, for ap-pellee Alabama Dairy Commission.
    Henry C. Chappell, Jr., Montgomery, for appellee-intervenor Associated Milk Producers, Inc.
   PER CURIAM.

This is an appeal by Delview Meadow Gold Division Beatrice Foods Company and others (hereinafter referred to as Distributors) involving Order 2-76 of the Alabama Dairy Commission. The order was previously declared valid by this court in Alabama Dairy Commission v. Delview Meadow Gold Division, Beatrice Foods Company et al., 345 So.2d 278 (Ala.1977).

Under current regulations promulgated by the Dairy Commission, milk producers are paid a Class I price by milk distributors for that portion of milk sold by the distributors for consumption as fluid milk. A much lower Class II price is paid for other milk purchased from the producers which is usually used in making cheese and other milk products. Order 2-76 changes this classification and pricing structure for buttermilk which is made from milk powder rather than fluid milk.

In making buttermilk, distributors may choose to use either fluid milk or cheaper milk powder. However, under the provisions of Order 2-76, if a distributor receives surplus fluid milk from a producer and the distributor then manufactures and sells buttermilk made from milk powder, he must pay the producer for an equivalent portion of the producer’s otherwise surplus milk at the Class I price as though such fluid milk had been used in making the buttermilk.

Order 2-76 further provides that distributors may pass increased costs resulting from the regulation on to consumers through an increase in the wholesale price of buttermilk.

The Dairy Commission enacted Order 2-76 on January 16, 1976. On February 9, 1976 the Distributors filed a timely petition for writ of certiorari in the Montgomery County Circuit Court seeking a review of the new regulation. It was alleged that Order 2-76 was invalid and violative of the Due Process Clause of both the state and federal constitutions.

On February 23, 1976 the trial court entered an order suspending the operation of Order 2-76 pending a final determination on its validity. The order further required the Distributors to monthly pay into an escrow fund an amount equal to the difference between what was actually paid to producers and what would have been paid to them if Order 2-76 were in effect.

On April 7,1976 the Montgomery County Circuit Court declared Order 2-76 invalid as being beyond the powers of the Dairy Commission. The decree was based upon this court’s decision in Dark’s Dairy v. Alabama State Milk Control Board, 278 Ala. 693, 180 So.2d 527 (1965). The Dairy Commission then appealed the circuit court’s ruling to this court.

On appeal the Distributors asserted that Dark’s Dairy was controlling. They further argued the previously asserted “due process” claim as well as alleged violations of the Commerce Clause of the federal constitution and of the “equal protection” provisions of both the state and federal constitutions.

On April 15,1977 a majority of this court reversed the circuit court’s order, holding that Dark’s Dairy was not controlling, and reversed and remanded the cause. This court did not address the asserted “due process” or “commerce clause” or “equal protection” claims in that opinion. These various constitutional challenges were once again raised in the Distributors’ application for rehearing which was denied on May 20, 1977.

The Distributors thereafter filed the following motions in Montgomery County Circuit Court: motion to set case for hearing on constitutional questions; motion to remand to the Dairy Commission; and motion to refund escrow fund (to the Distributors) or, in the alternative, motion to hold entire escrow fund intact pending completion of all judicial proceedings. In addition to these various motions, the Distributors filed an amendment to their original petition for certiorari which once again raised “due process,” “commerce clause,” and “equal protection” claims.

All motions and the amendment were denied by the trial court on June 16,1977, and the escrow funds were disbursed. Notice of appeal to this court was filed by the Distributors from the June 16, 1977, order. A motion for summary dismissal was subsequently filed by the Dairy Commission on the grounds that the issues raised on this appeal were before the court in the prior appeal involving Order 2-76. The cause was thus submitted on the motion and the merits.

Briefly stated, the Distributors make the following contentions on this appeal:

(1) Order 2-76 places a substantial burden on interstate trade of milk powder in violation of the Commerce Clause of the federal constitution;

(2) Order 2-76 violates the Distributors’ rights under the Due Process and Equal Protection Clauses of the Fourteenth Amendment to the federal constitution and similar provisions of the state constitution; and

(3) The June 28, 1976, trial court order was entered at a time when that court was without jurisdiction to make any decree affecting the rights of the parties and was therefore null and void.

Title 22, section 226, Code of Alabama 1940 (§ 2-13-63, Code 1975), establishes the procedure for review of Dairy Commission orders. This statute provides in pertinent part as follows:

“§ 226. Certiorari to review. — Any person affected by any order or action of the board, who deems himself aggrieved by any such order or act may within ten days after receiving notice of any such action or order, have such order, or action reviewed by a writ of certiorari by filing in the circuit court of the county wherein said action or order was taken or made, a verified petition setting out the specific order or action, or any part or parts thereof whereby said person deems himself aggrieved, and such court shall only consider such matters as contained in the petition. . . . [N]o new or additional evidence shall be taken or heard by the court. . . . Upon final hearing, such court shall have jurisdiction to reverse, vacate or modify the order complained of, if upon consideration of the issues before the court, the court is of the opinion the order is unlawful or unreasonable.”

Under the clear wording of this statute, review by the circuit court of orders of the Dairy Commission must be limited to a consideration of the evidence presented in the hearing before the Dairy Commission and the issues contained in the petition for cer-tiorari. No similar provision is made in Title 22, section 226, nor in any other statute specifically relating to the Dairy Commission, concerning review by this court of circuit court judgments. However, we have stated that on appeal of Dairy Commission actions this court is governed by the same rules of review as'was the circuit court. White Way Pure Milk Company v. Alabama State Milk Control Board, 265 Ala. 660, 93 So.2d 509 (1957). Thus, in the present appeal, this court may only consider evidence placed in the first instance upon the record developed before the Dairy Commission and issues raised thereafter in the petition for certiorari to the circuit court.

As previously stated, the Distributors did not assert their “commerce clause” and “equal protection” claims in the original petition for certiorari to the circuit court. Thus, under this court’s interpretation of our rule of review under Title 22, section 226, we decline to consider these two contentions for the first time on this appeal.

We note that Title 7, section 1072, Code of Alabama 1940 (§ 6-6-640, Code 1975), which governs the procedure for amending petitions for certiorari, states, in pertinent part, the following:

“. . . any of the pleadings in such proceedings may be amended as often as occasion may require to attain the ends of justice, and by striking out parties and adding new parties; and upon the issues thus presented, the court shall award the relief, if any, to which the petitioner is entitled.”

This statute pertains only to amendments while the “proceedings are in progress” and not to amendments after judgment. Ex parte Hennies, 33 Ala.App. 229, 34 So.2d 17 (1947).

Although we specifically decline to consider the merits of the Distributors’ constitutional challenges to Order 2-76 based upon alleged “commerce clause” and “equal protection” violations, this cause must nevertheless be remanded to the circuit court for its consideration of a single issue — the Distributors’ “due process” claim. We reach this result because the Distributors raised this constitutional claim in the original petition for certiorari. When the circuit court ruled that Order 2-76 was invalid, it did not need to address the “due process” issue because it held that Dark’s Dairy was controlling. Upon review, this court did not address the alleged “due process” violation nor did we remand to the circuit court for its consideration thereof. We therefore believe this cause must be remanded now for a consideration by the circuit court of the merits of the Distributors’ federal and state “due process” claim because this issue, though properly presented, has never been ruled upon by either the circuit court or this court.

The final contention made by the Distributors on this appeal, that the circuit court order of June 28,1976, continuing the escrow fund arrangement created by that court on February 23, 1976, was null and void, is without merit.

“In Barran v. Roden, 263 Ala. 305, 307, 82 So.2d 398, 399 (1955), this Court set out a limitation, on the rule that, after an appeal is taken, the trial court cannot rule on any matter involving the appeal:
. . The rule is stated to be that after an appeal is taken, the lower court may proceed in matters which are entirely collateral to that part of the case which is taken up (by the appeal) but it can do nothing in respect to any matter or question which is involved in the appeal, and which may be adjudged by the appellate court.’ This is a limitation on the rule that after an appeal is taken the trial court cannot, pending that appeal, pass upon any matter involved on the appeal .
‘As to those matters which are entirely collateral to the questions involved on appeal, the court and parties are free to proceed notwithstanding the appeal if taken, or without affecting the right to appeal if not then taken. 4 C.J.S. Appeal and Error § 212e, p. 401.’
“Accord: Francis v. Scott, 260 Ala. 590, 72 So.2d 93 (1954); Ex Parte Taylor, 251 Ala. 387, 37 So.2d 656 (1948); Ex Parte City Council of Montgomery, 114 Ala. 115, 14 So. 365 (1896).”

Osborn v. Riley, 331 So.2d 268, 271 (Ala.1976).

Accordingly, this cause is remanded to the circuit court for a consideration of the Distributors’ claim that Order 2-76 violates the Due Process Clause of the federal constitution and similar provisions of the state constitution.

REMANDED WITH DIRECTIONS.

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

MADDOX, J., with whom SHORES and BEATTY, JJ., join, dissents.

EMBRY, J., dissents.

MADDOX, Justice

(dissenting).

On the original appeal of this case, Ala. Dairy Com’n v. Delview Meadow Gold, etc., Ala., 345 So.2d 378 (1977), Delview spent several pages of its brief arguing that the trial court’s order invalidating Order No. 2-76 was correct because “[a] state regulatory agency is prohibited from erecting trade barriers which are clearly a burden on interstate commerce between the several states.”

On application for rehearing, Delview argued:

“NUMEROUS LEGAL AND CONSTITUTIONAL ERRORS IN PER CURIAM OPINION
“At the very outset, the per curiam opinion rendered herein permits Order 2-76 of the Alabama Dairy Commission to discriminate against the interstate sale of out-of-state powdered milk to milk distributors in Alabama in violation of the Commerce Clause of the United States Constitution, Article 1, § 10, clause 2 and § 8, clause 3. The per curiam opinion is also contrary to the statutory and case law of Alabama and is contrary to the principles of law enunciated in cases from the Supreme Courts of the States of North Carolina, Florida, Delaware, Pennsylvania, New Jersey, Mississippi, Montana, Kentucky, Arizona and Colorado. The per curiam opinion is also expressly contrary to the decisions of the United States Supreme Court in Baldwin v. Seelig, 294 U.S. 511, 55 S.Ct. 497, 79 L.Ed. 1032; Hood v. DuMond, 336 U.S. [525] 527, 69 S.Ct. 657, 93 L.Ed. 864 [865]; Dean Milk Co. v. City of Madison, Wisconsin, 340 U.S. 349, 71 S.Ct. 295, 95 L.Ed. 329; Polar Ice Cream and Creamery Co. v. Andrews, 375 U.S. 361, 84 S.Ct. 378, 11 L.Ed.2d 389; and Lehigh Valley Cooperative Farmers, Inc. v. United States, 370 U.S. 76, 82 S.Ct. 1168, 8 L.Ed.2d 345.
“The per curiam opinion would also permit a violation of Appellees’ constitutional rights under the due process clauses of the Constitutions of Alabama and the United States. Arcadia Dairy Farms, Inc., 289 N.C. 456, 223 S.E.2d 323.
ORDER 2-76 VIOLATES THE COMMERCE CLAUSE OF THE UNIT- . ÉD STATES CONSTITUTION
“Although the constitutional question concerning violation of the Commerce Clause by Order 2-76 was thoroughly argued in briefs, discussed in detail with the Court on oral argument, and submitted as an issue in this case, the per curiam opinion fails to mention the Commerce Clause or even attempt to distinguish this case from the foregoing decisions of the United States Supreme Court and the highest Courts of ten sister states. . . .” [Emphasis added.]

I am of the opinion that arguments on the Federal constitutional question were initially considered, but unfortunately, as it turns out, were not addressed by this Court .in the original opinion. In other words, I am of the opinion that the Federal constitutional claim, even though not written to, was an issue in the original appeal and was decided adverse to Delview. Therefore, I naturally dissent.

SHORES and BEATTY, JJ., concur.

AFTER REMAND

FAULKNER, Justice.

Order 2-76 of the Alabama Dairy Commission (the buttermilk regulation”) is before us again. Delview Meadow Gold appeals from an order of the Circuit Court of Montgomery County which held that Order 2-76 did not violate the due process provisions of the United States and Alabama Constitutions. We reverse.

On June 30,1978, this case was remanded to the Circuit Court with directions that the court consider the claim made by Delview Meadow Gold and other distributors of dairy products that Order 2-76 of the Alabama Dairy Commission (ADC) violated the due process clause of the United States Constitution and similar provisions in the Alabama Constitution of 1901. Delview Meadow Gold Division Beatrice Foods Co. et al. v. Alabama Dairy Commission, 383 So.2d 511 (Ala.1978). The Circuit Court delayed the hearing and ruling in this case until the United States Court of Appeals for the Fifth Circuit rendered its decision in Dairymen, Inc. v. Alabama Dairy Commission, 584 F.2d 707 (1978), where it held Alabama’s milk quota regulations in ADC Order 3-75-1, to which Order 2-76 is an amendment, unconstitutional since those regulations conflict with the commerce clause of the Constitution. On March 12, 1979, the lower court issued a decree holding that ADC Order 2-76 did not violate the due process provisions of the United States and Alabama Constitutions.

Simply stated, Order 2-76 requires that if a milk distributor receives surplus milk (Class II milk) from the farmer-producer, the distributor may choose to use it in making buttermilk or not, but if he makes and sells buttermilk made from milk powder, he must pay for an equivalent portion of the surplus milk just as though such surplus milk had been used in making the buttermilk; that is, at the Class I price. A carryover provision allows the farmer-producer, when he has not shipped surplus milk equal to his share of the distributor’s sale of buttermilk made from milk powder, to receive a credit which can be carried until he actually ships surplus milk.

The distributors contend that Order 2-76 deprives them of their property without due process of law by requiring them to make compensatory payments to milk producers for surplus milk they never actually use in making buttermilk. They also argue that Order 2-76 should be held unconstitutional and void since it is merely an amendment to Order 3-75-1, determined to be unconstitutional by the United States Court of Appeals.

A state may not act to deprive any person of his property without due process of law. U. S. Const. amend. XIV; Ala. Const. art. 1 § 6. ADC Order 2-76, however, deprives distributors of their property, money, in a manner that is arbitrary and unreasonable. The distributors’ money is taken by the ADC to be paid to producers for milk presently or subsequently received but never used in making the buttermilk. Although the money taken is designed as “compensatory payments” such payments are effectively a tax or penalty for the benefit of the producers on the distributors for their use of milk powder. Other courts have recognized that payments labeled compensatory may be more accurately described as penalties on milk distributors. See, Kass v. Brannan, 196 F.2d 791 (2d Cir. 1951). The ADC by this penalty arbitrarily and unreasonably discriminates against a legitimate production process.

In Appeal of Arcadia Dairy Farms, Inc., 289 N.C. 456, 223 S.E.2d 323 (1976), the Supreme Court of North Carolina in considering the North Carolina Milk Commission’s amendment to Milk Marketing Order No. 2, requiring distributors reconstituting milk for Class I sales to pay to producers selling milk to other distributors in the market area an amount equal to the difference between the Class I and normal Class II prices, stated:

“To interpret GS 106-266.8 [the amendment] as conferring upon the Commission power to require a distributor of ‘reconstituted’ milk to make such payments for the benefit of producers, with whom it has no dealings, would also give rise to serious doubt as to whether such exaction would be a violation of Article I, § 19, of the Constitution of North Carolina, which provides, ‘No person shall be * * * in any manner deprived of his * * * property, but by the law of the land.’ ”

The ADC lacked authority under Title 22, § 223(1), Code of Alabama (Recomp. 1958) (as amended) to promulgate an order that in effect requires distributors to pay the premium Class I price for milk not used in a premium product. See Code 1975, §§ 2-13-50 and 51. The distributors will have to pay the Class I price for milk whenever they make buttermilk from milk powder irrespective of whether they do so for greater profit, convenience, because no fresh milk is available, or only sporadically. The milk that they are required to purchase for premium prices, even though it is not used in making buttermilk, is actually milk which is produced in excess of what is needed for fluid milk consumption and thus should come under the lower minimum price, Class II price. Whether the ADC computes the amount of milk for which the distributors pay the Class I price, the fluid milk price, on the basis of any one of the three methods allowed by the statute, Order 2-76 is still arbitrary and unreasonable and thus violates the due process provisions of the Constitution of the United States and the Constitution of Alabama 1901.

We hold that the unconstitutionality of Order 2-76 relates back to the date of its adoption—not from the date of this decision.

REVERSED AND RENDERED.

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

SHORES and BEATTY, JJ., concur in the result.

MADDOX, EMBRY and ALMON, dissent.

SHORES, Justice

(concurring in the result).

I concur in the result only because I think we are bound, at least by principles of comity, to follow the U. S. Fifth Circuit Court of Appeals’ view of the federal constitutionality of the involved regulations.

BEATTY, J., concurs.

MADDOX, Justice

(dissenting).

This case, involving Pricing Order 2-76, has had a long and tortuous journey. The facts are sufficiently set out in an opinion, which I authored, in Alabama Dairy Commission v. Delview Meadow Gold, 345 So.2d 278 (Ala.1977). Joining me then were Chief Justice Torbert, Justices Almon, Shores, Embry and Beatty. Justice Jones concurred in the result, and Justices Blood-worth and Faulkner, dissented. On that appeal, a majority of this Court upheld the Order 2-76, and as I expressed in a dissenting opinion, on June 30, 1978, all the constitutional claims advanced by the distributors on that first appeal were submitted and decided adverse to them; nevertheless, a majority (5-4) of this Court allowed the distributors to litigate again in the circuit court what they dubbed a “due process” claim. I must respectfully point out that the “due process” issue was presented by the distributors in their original petition for certiorari in the circuit court wherein they sought review of Order 2-76, and I must further point out that the constitutional issue was extensively argued in brief on the first appeal in this case.

While the matter was pending before the circuit court, an entirely different action was proceeding through the Federal District Court, which culminated in a decision by the Fifth Circuit Court of Appeals that Alabama Dairy Commission Order 3-75-1, to which Order 2-76 was an amendment, was unconstitutional as violative of the interstate commerce clause. Dairymen, Inc. v. Alabama Dairy Commission, 584 F.2d 707 (5th Cir. 1978). As I understand it, the Dairy Commission no longer enforces that order; nevertheless, the result reached today will determine who is entitled to more than 2 million dollars involved in Order 2-76.

The circuit court found that, irrespective of the decision in Dairymen v. Alabama Dairy Commission, supra, the distributor’s “due process” claim was not meritorious. I think that the circuit court was correct. I personally think that the Fifth Circuit decision is in error, because I do not believe it follows prior decisions of the Supreme Court of the United States in milk regulation matters; nevertheless, even assuming the correctness of the Fifth Circuit decision, I do not believe that Order 2-76 would be invalid. In short, I think that the trial judge could have found that the purpose and goal of Order 2-76 was employed, not solely for the economic well-being of producers, but was designed also for consumer protection, in that, unregulated sales of buttermilk made from powder would be destructive by reason of the potential disturbance of the balanced distribution structure in Alabama built up during years of regulation. The uncontradicted testimony was that Alabama was a “deficit” milk producing state, and that failure to regulate the distribution and sale of buttermilk made from powder would aggravate this situation. Unless Nebbia v. New York, 291 U.S. 502, 54 S.Ct. 505, 78 L.Ed. 940 (1934), has been overruled, I thought a state could guarantee a fresh, wholesome supply of milk — a legitimate consumer interest.

“Due process” means fundamental fairness. Under Order 2-76, the distributors were not forced to buy milk they did not need, they were only required to pay a higher price for Class II milk if they bought and used powder, based upon the amount of buttermilk made from powder. I think it only incidental that the powder came across state lines. Order 2-76 would have required the same procedure for powder purchased in Alabama. In short, I see no conscious attempt to burden interstate commerce.

Under Order 2-76, the distributors were allowed a regulated price for the buttermilk which the distributors made from powder; therefore, they received an economic advantage of buying powder at a cheaper price and getting a higher regulated price from the consumer. Using a balancing approach, I would uphold the trial judge’s finding that the “due process” clause was not violated. In Great Atlantic and Pacific Tea Co., Inc. v. Cottrell, 424 U.S. 366, 96 S.Ct. 923, 47 L.Ed.2d 55 (1976), the Supreme Court stated that where the purpose and goal of the restriction employed is consumer protection and not the economic well-being of the present milk industry, and the means chosen do not involve an attempt to control commerce in another state or otherwise to produce an extraterritorial effect, and does not operate to discriminate against or place an embargo on interstate commerce, the obvious local interest at stake outweighs whatever national interest there might be in the prevention of the state restrictions having an incidental impact on interstate commerce. Furthermore, I do not find that Order 2-76 is substantially different in its effect from milk orders issued by other states or by the federal government dealing with buttermilk. I do not find that it is unfair to the distributors. Consequently, I respectfully dissent.

EMBRY, J., concurs.

      . Class I milk prices, fluid milk prices, are higher than Class II milk prices, the prices paid for surplus milk. Class I milk or fluid milk includes all homogenized milk, pasteurized milk, premium milk, low fat milk, skim milk, buttermilk, chocolate milk, flavored milk and milk drinks, buttermilk produced from non-fat milk powder, and shrinkage, excluding swill returns, which exceed 2% if milk is received on farm weights or l‘/2% if milk is received on other than farm weights. Class II milk includes milk used in the plant for cottage cheese, soft serve mixes, sour cream, yogurt, dips, dressing, shrinkage, swill returns, dump-age, fluid cream products containing 10% or more butterfat, and milk delivered to non-Grade A plants.


source: Caselaw Access Project

author: BEATTY, Justice. JONES, Justice

license: Public Domain

text:
    Jerry Wayne DUTTON v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a corporation.
    No. 78-678.
    Supreme Court of Alabama.
    Feb. 8, 1980.
    Rehearing Denied May 16, 1980.

      David M. Olive, Birmingham, for appellant.
    Edgar M. Elliott, Birmingham, for appel-lee.
   BEATTY, Justice.

Defendant Jerry Wayne Dutton appeals from the denial of his motion to vacate a judgment entered by the Jefferson County Circuit Court declaring that plaintiff, State Farm Mutual Automobile Insurance Company, was under no duty to pay any damages that might be awarded defendant in his separate action at law against certain parties insured by State Farm and that State Farm was not obligated to defend that action. We affirm.

In 1977, State Farm issued to Earnest F. Hallmark a policy of liability insurance covering a 1965 Ford automobile owned by Mr. Hallmark. Under the policy, State Farm agreed:

To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of
(A) bodily injury sustained by other persons, and
(B) property damage,
caused by accident arising out of the ownership, maintenance or use .. . of the owned motor vehicle; and to defend, . . . any suit against the insured alleging such bodily injury or property damage and seeking damages which are payable hereunder . . . . [Emphasis added.]

The definitions section of the policy provides, inter alia, that

[T]he unqualified word “insured” includes
(1) the named insured, and
(2) if the named insured is a person or persons, also includes his or their spouse(s), if a resident of the same household, and
(3) if residents of the same household, the relatives of the first person named in the declarations, or of his spouse, and
(4) any other person while using the owned motor vehicle, PROVIDED THE OPERATION AND THE ACTUAL USE OF SUCH VEHICLE ARE WITH THE PERMISSION OF THE NAMED INSURED OR SUCH SPOUSE AND ARE WITHIN THE SCOPE OF SUCH PERMISSION.

The record discloses that on September 26, 1977, the insured automobile, a 1965 Ford Mustang, was being driven by one Karen Klein, a minor then fourteen years of age, when it was involved in a collision with a vehicle driven by Jerry Wayne Dut-ton. Miss Klein had acquired possession of the automobile earlier that day when Mike Hallmark, the seventeen year old son of Earnest Hallmark, lent it to her at her request, for her own purposes, without the knowledge or consent of his parents; indeed, both parents testified that Mike had been specifically told by them not to allow anyone else to use the car. Mike did not have his own key to the Mustang, and on the day of the accident was told by his mother not to drive the automobile “unless he just went to the store and back.” On March 15,. 1978, Dutton filed a suit for damages against Mike Hallmark and his brother Alfred Hallmark — the record owner of the vehicle — alleging that the Hallmarks negligently entrusted the car to Karen Klein at a time when they knew or, in the exercise of reasonable care, should have known, that Miss Klein was an incompetent driver. Prior to trial in the damage action, State Farm filed an action in equity against Dutton and the Hallmarks seeking a declaration that it had neither a duty to defend the Hallmarks in Dutton’s action for damages nor any obligation to pay any damages awarded Dutton in that case. Dutton now appeals from the trial court’s decree in favor of State Farm.

The' evidence clearly shows that Mike Hallmark was an “insured” under the terms of the liability policy, as he is the son of Earnest Hallmark (“the first person named in the declarations”) and was a resident of the same household as Earnest Hallmark. The issue on this appeal is whether the injuries sustained by Mr. Dutton in the collision with the Hallmark vehicle (driven at the time by Karen Klein) were the result of an “accident arising out of the ownership, maintenance or use” by Mike Hallmark of the owned motor vehicle.

It is clear that there is coverage only if the alleged negligent entrustment of the Hallmark automobile by Mike, a bailee, can be said to be an incident of his ownership, maintenance, or use of the car. Mike did not own the vehicle, nor was he maintaining it; State Farm’s duty to defend Mike and to pay any damages awarded against him in the Dutton lawsuit is thus contingent on whether the accident arose out of Mike’s “use” of the Mustang. We hold that it did not.

This Court has not previously addressed the precise question posed in this case. However, it is claimed by the parties that the recent case of Cooter v. State Farm Fire and Casualty Co., Ala., 344 So.2d 496 (1977) provides some insight. In Cooter, the named insured under a homeowner's insurance policy allegedly negligently entrusted his automobile to his son. The policy contained an exclusion which was to the effect that there was no coverage for bodily injury or property damage arising out of the ownership, maintenance or use of a motor vehicle owned, operated by, rented or loaned to any insured. In affirming a declaratory judgment holding that there was no coverage under the homeowner’s policy, we stated:

We now consider State Farm’s second contention — that plaintiff’s injuries arose out of the insured’s ownership as well as his son’s use of the vehicle. This argument stands over against the appellant’s contention that liability is grounded upon negligent entrustment of the vehicle, not its negligent use by the one to whom it is entrusted. It is on this point that we agree with appellee, State Farm, and thus affirm the trial Court.

In the instant case, State Farm contends that Cooter supports a proposition of law that governs in this situation; that is, that one who negligently allows another to operate a motor vehicle is not using the vehicle, but is instead exercising an incident of ownership. Coverage would thus be afforded only if the owner negligently permitted someone else to use his car, and not if — as in this case — a mere bailee negligently entrusted the owner’s vehicle to a third party. Although at first glance we were impressed with the soundness of this line of argument, we are forced to reject it because the language utilized in Cooter does not affirmatively exclude the possibility that a bailee who entrusted a vehicle to a third party known to be incompetent could have been “using” the vehicle. In fact, both the Ohio Court of Appeals and the Ohio Supreme Court agreed that a bailee who allowed a friend to drive her father’s automobile was “using” the car, and she herself was benefited by the friend’s transporting her to school in the car. See Brown v. Kennedy, 49 N.E.2d 418 (Ohio App.1942), aff’d, 141 Ohio St. 457, 48 N.E.2d 857 (1943). Being impressed with the logic employed by the Ohio courts, we are unwilling to concede that Cooter mandates the conclusion argued by State Farm in this case.

Our analysis of cases from other jurisdictions, however, has convinced us that Mike Hallmark was not “using” his father’s automobile at the time of the collision in this case because it is uncontradicted that the journey undertaken by Miss Klein was at her request, for her own purposes, and was not in any sense beneficial to Mike Hallmark.

The Brown case, supra, supports our utilization of a “benefit test” in determining that the Hallmark automobile was not in this instance being used by Mike Hallmark, even though those decisions concluded that the subject vehicle was, at the time of the accident, being used by the bailee who permitted a third party to drive. As was stated by the Ohio Court of Appeals:

The word “use” is defined as the “Purpose served — a purpose, object or end for useful or advantageous nature.” (Oxford English Dictionary.)
This implies that the person receives a benefit from the employment of the factor involved. It is this benefit, purpose, or end which defines the use. [Emphasis added.] [49 N.E.2d at 419.]

After concluding that the bailee-entrustor was “using” the car in Brown because of the benefit that accrued to her, the court observed:

The instant case is easily distinguishable from one where the person given permission to use the car transfers its entire use to another. Had the daughter in this case loaned the automobile to White, who took it and drove it unaccompanied by the daughter, and for his own separate purposes, an entirely different situation would have been presented. The difference is that the daughter never ceased to use the car for purposes within the permission given by the insured. [49 N.E.2d at 421.]

A case virtually on all-fours with the factual situation presented here by the instant case is Samuels v. American Automobile Insurance Co., 150 F.2d 221 (10th Cir. 1945). In that case, the named insured turned her vehicle over to her son, Richman, without any express limitations or restrictions concerning the use of the car. Rich-man lent the car to Kresge at a time when Kresge was allegedly intoxicated. Unaccompanied by and on no errand for Rich-man, Kresge had an accident. The Tenth Circuit Court of Appeals affirmed the district court’s decree adjudging that the insurer was not obligated to defend Richman, nor to pay any damages awarded against him in the actions that arose out of the accident. In addressing the question whether Richman, the bailee, was using the vehicle at the time of the collision, the appellate court stated:

There can be’ no question that Richman had permission from the named insured to use the insured automobile at the time of the accident. It is equally clear that at the time of the accident Kresge had neither the express nor implied permission of the named insured to use such automobile. Neither had the named insured delegated to Richman authority to permit Kresge to use the automobile. At the time of the accident, Kresge was using the automobile solely in his own behalf. He was not using it to serve any purpose, benefit, or advantage of Rich-man. It is true that the words “use” and “using” are broader than the words “operate” and “operating.” Webster’s New International Dictionary, 2d Ed., defines the word “use” as follows: “Act of employing • anything.” The New Century Dictionary defines it as follows: “To employ for some purpose, put into service, or make use of * * *; apply to one’s own purposes.” Where A operates B’s automobile, with B’s consent and for B’s purpose, benefit, or advantage, it may be said that B is using-the automobile, but, where A operates B’s automobile, with B’s consent, solely for A’s purposes, and in no sense for any purpose, benefit, or advantage of B, it cannot be said that B is using the automobile. [150 F.2d at 223.]

The facts, in the case at hand are even stronger than those in the Samuels case, for here the undisputed evidence is that Mike Hallmark was expressly prohibited by his parents from lending the Mustang to anyone. Indeed, his own use of the vehicle was restricted. Also, the evidence is uncontradicted that Karen Klein was on an errand of her own at the time of the accident, and that Mike Hallmark was not even aware of her actual destination. In view of the Brown and Samuels cases, we are unable to find that the foregoing facts provide any inference that the accident in question arose out of Mike Hallmark’s “use" of the Hallmark automobile on September 26, 1977. Accordingly, the judgment of the trial court denying coverage must be, and is, affirmed.

AFFIRMED.

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

JONES, J., dissents.

JONES, Justice

(dissenting):

I respectfully dissent.

In registering my dissent, it is important to emphasize that I do not disagree with the majority opinion’s statement of the issue or its initial analysis of that issue. For further clarification I would point out that it is not Karen (the minor to whom the car was entrusted) who is sought to be covered by State Farm automobile liability insurance. Rather, it is Mike Hallmark (admittedly an insured) whose act of negligent entrustment is made the gravamen of Jerry Wayne Dutton’s suit, who is sought to be covered. The majority opinion correctly states: . . there is coverage only if the alleged negligent entrustment of the Hallmark automobile by Mike [an insured under the policy], can be said to be an incident of his ownership, maintenance, or use of the car.”

My disagreement with the holding of the majority is this: I believe the act of en-trustment of an automobile (which, if negligent, is one of the two-pronged factual tests that constitutes an actionable tort of negligent entrustment) is.such use of an automobile that mandates coverage under the provisions of the instant policy. The fact that an additional use (i. e., the negligent operation) of the car by the entrustee is a necessary element of the tort does not mandate against the insured’s/entrustor’s use in his act of entrustment.

Indeed, Webster’s definition of “use”— “act of employing anything” — lends itself inexorably to the paraphrase, in the context of this case, that Hallmark committed the act of employing the car by entrusting it to another. That the consummated tort consists of the additional element of negligent use or operation by the entrustee does not take away or void the first element — the act of employing the car by entrusting it to another. If the act of putting the car into service by entrusting it to another is negligently done and the entrustee negligently drives the entrusted car into another with resultant injuries, such act of employment (the entrustment) constitutes use of the insured vehicle.

The majority, in my opinion, falls into error by tracking the rationale (and thus the conclusion) of Samuels. There, the 10th Federal Circuit after reciting the primary definition of “use” from Webster’s New International Dictionary, and the primary and secondary definitions from the New Century Dictionary, elected to accept the secondary meaning, “apply to one’s own purposes.” After abandoning all other choices of meaning, the Samuels Court draws from “one’s own purposes” the rationale that use, in the context of entrustment, is dependent upon the continuing use or operation of the entrusted vehicle for the entrustor’s purpose or benefit.

This rationale, it seems to me, erroneously premises the meaning of use on the agency or respondeat superior theory. It says, in effect, that the entrustor’s use depends upon the entrustee’s use for the entrustor’s purpose or benefit; and this in spite of the dictionary’s primary definitions to the effect that “use” means the act of employing, or putting into service, the car for some purpose. Surely, the act of entrustment, of itself, fits these primary meanings of the word “use.” Not only does the agency requirement, derive from a secondary meaning (“apply to one’s own purposes”), but, certainly, the various meanings of “use” are not to be construed as mutually exclusive.

The majority opinion correctly analyzes Cooter and rejects State Farm’s contention that entrustment invokes an incident of ownership, and not use, of an automobile. As the majority implies, this is an “almost persuaded” type argument; and, interestingly enough, it led the insurer’s counsel during his oral argument of the instant case to suggest that, perhaps, had the homeowner insured in Cooter not been the owner of the entrusted vehicle, the Homeowner coverage would apply.

To better understand this candid admission (or, more correctly, near admission), we must first understand State Farm’s contention in Cooter. There, the Homeowner policy excluded coverage for injuries caused by accident arising out of ownership, maintenance, or use of a motor vehicle. Cooter contended that negligent entrustment, not ownership or use of the vehicle, was the gravamen of his action; thus, the Homeowner’s exclusion did not. apply. We held the exclusion valid, reasoning that the tort of negligent entrustment consists of the dual acts of negligent entrustment and negligent operation of the car by the entrustee; thus, the motor vehicle exclusion is applicable.

Writing within the ownership context of Cooter, we had no hesitancy in agreeing with State Farm’s position. This is not to say, however, that we would have held to the contrary had the homeowner insured entrusted a nonowned vehicle to another. Indeed, as the author of Cooter, I can say, categorically, that the distinction between owner and bailee was given no consideration by the Court in upholding the homeowner insurer’s invocation of the “motor vehicle” exclusion. The logic of Cooter’s rationale breaks down and is lost unless its holding is consistently applied to both owners and nonowners who allegedly negligently entrust a motor vehicle to another.

To be sure, it is our holding in Cooter that persuades me to the opposite conclusion here. Within the broad scheme of insurance coverage afforded by Homeowner liability insurance and Automobile liability insurance, the validity of the “automobile” exclusion for negligent entrustment under the former requires validity of coverage for “use of automobile” under the latter. The public policy of this. State, as expressed in the Safety-Responsibility Act, militates strongly against a hiatus of coverage. Under the majority opinion in this case, coupled with Cooter, there is no liability coverage afforded in this State, through the standard policies available, for a nonowner who is sued for allegedly entrusting an automobile to another.

We say to the Homeowner liability insured, who is sued for negligent entrustment of a vehicle (whether or not owned by him), the “ownership, maintenance and use of a motor vehicle” exclusion precludes coverage. We say to the nonowner Automobile liability insured, who is sued for negligent entrustment of a vehicle, the “use of a motor vehicle” provision of the policy is not met and, thus, there is no coverage. In my opinion, this result was neither contemplated nor intended by the Legislature, the State Insurance Commissioner, the insurer, or the insured.

      . § 32-7-1, et seq., Ala.Code 1975.


author: MADDOX, Justice.

text:
    Clarence SKIPWORTH, Parnell Skipworth, Elsie Gossett and Eva Joseph v. Mary Burke SKIPWORTH.
    78-767.
    Supreme Court of Alabama.
    May 2, 1980.

      Noble J. Russell and Robert Straub, Decatur, for appellants.
    Kenneth Shelton, Decatur, for appellee.
   MADDOX, Justice.

This appeal involves an application of Alabama’s homestead laws.

The trial court, interpreting Alabama’s homestead law, set aside to decedent’s common-law wife [Skipworth v. Skipworth, 360 So.2d 975 (Ala.1978)] a piece of property which was less than 160 acres in area, but was valued at more than $6,000. The trial court found that the property, a city lot on which were located improvements, was not the decedent’s homestead; nevertheless, the trial judge set aside, in fee, the entire property to the surviving widow. The collateral heirs of the decedent, appellants here, claim that the trial court misapplied the law to the facts. We agree with their argument.

Many of the background facts are set out in the opinion on the prior appeal, Skipworth v. Skipworth, 360 So.2d 975 (Ala.1978), but we set out a few in this opinion for a better understanding of the legal issue presented.

The evidence shows without question that when the decedent, Bill Skipworth, married Mary Burke, he owned and lived in the subject property on which he had claimed a homestead exemption. He and Mary lived there for a short time immediately after their marriage and ran a small shop in connection with the living quarters. They later moved to Mary’s home at 604 Moulton Street in Decatur, where they lived for many years. Following this, they moved to a farm, also owned by Mary Burke, and they were living there at the time of Bill’s death. Bill diéd intestate in October, 1976, without issue. His heirs at law, two brothers and two sisters (the appellants), contested Mary’s petition to have the subject property set aside for her, in fee, as homestead property. The trial court heard all testimony ore tenus, and found as follows:

“1. The petitioner has been judicially determined to be the widow of Bill Skip-worth, the decedent.
“2. The decedent was not survived by any children or children of deceased children.
“3. The decedent at the time of his death owned the suit property which consisted of a store building and the lot in the city of Decatur. It was conceded that the property is less, than 160 acres, but was worth more than $6,000.00.
“4. The decedent left no Last Will and Testament.
“5. The decedent had, during a portion of his lifetime, maintained a homestead in a portion of the suit property. Although he continued to use it and sometimes referred to it as his home, he had abandoned it as his principal home and was living with the petitioner at another location at the time of his death. At the time of death, the suit property did not have the character of a homestead.
“6. All the debts of the decedent’s estate have been paid.
“7. The suit property constituted all of the real estate owned by the decedent at the time of his death.”

The trial court concluded that “[t]he petitioner is entitled to have the suit property vest in her absolutely in fee simple under the statutes pertaining to homestead.”

The appellants admit that the findings of fact are amply'supported by the evidence, but they contend that the trial court erroneously applied the law to those facts. The appellee, on the other hand, argues that the finding that “the suit property did not have the character of homestead” is palpably wrong, but that the trial court reached the correct result in setting aside the homestead in her favor.

The definition of “homestead property” was cogently discussed in Mordecai v. Scott, 294 Ala. 626, 320 So.2d 642 (1975), when Chief Justice Heflin, writing for the Court, stated that:

“In general, the homestead law provides to named survivors a homestead not exceeding 160 acres in area which is exempt from administration and the payment of debts. Title 7, Sections 661, 663, 697, Code of Alabama, 1940 (Recompiled 1958). Although the term ‘homestead’ is not defined in the statute, this court has stated that ‘[a] homestead, in law, means a home place, or place of the home, and is designed as a shelter of the homestead roof, and not as a mere investment in real estate, or the rents and profits derived therefrom.’ Griffin v. Ayers, 231 Ala. 493, 496, 165 So. 593, 595 (1936). It has been further defined as ‘the roof that shelters and the land used in connection therewith for the comfort and sustenance of the family * * * ’ Moseley v. Neville, 221 Ala. 429, 431, 129 So. 12, 14 (1930), quoted in Griffin v. Ayres, supra. Normally the land must have been occupied by decedent prior to his death. Turner v. Turner, 107 Ala. 465, 18 So. 210 (1895). Contiguous real estate used for rental or commercial purposes and not used by the homeowner or his family is not within the ‘homestead.’ Griffin v. Ayers, supra; Turner v. Turner, supra. But see Cade v. Graffo, 227 Ala. 11, 148 So. 591 (1933), where contiguous property rented to others was determined to be part of the homestead because it was also used by the owner in connection with the homeplace.”

“Where the trial court makes findings after hearing witnesses ore tenus, every presumption will be indulged in favor of the court’s findings, and its findings will not be disturbed on appeal unless they are found to be palpably wrong.” Russell v. Russell, 361 So.2d 1053 (Ala.1978). We find that the evidence adduced at trial adequately supports the finding of the trial court that, at the time of Bill’s death, the subject property did not have the character of a homestead. Cf. Garrett & Sons v. Jones, 95 Ala. 96, 10 So. 702 (1891).

Mordecai v. Scott, supra, does hold “. . . that a homestead of unlimited value vests absolutely in the eligible survivors where the homestead is all the real estate owned by decedent in the state at his death, decedent’s estate owes no debts and the property has not been devised, provided it doesn’t exceed 160 acres.” In Mordecai, this Court construed the second sentence of what is now Code 1975, § 6-10-60 in context with Code 1975, § 6-10-62 to reach the result it reached. The rule of Mordecai, however, is based upon a finding that the subject property was; in fact, homestead property. In the instant case we have no such finding. In fact, we have a finding to the contrary; therefore, the rule of Mordecai is inapplicable.

In view of the fact that the trial court found that the suit property did not have the character of homestead, can its judgment setting aside the entire suit property be sustained? We hold that it cannot.

The law in effect at the date of the decedent’s death provided that when a decedent has no homestead exempt to him at the time of death a surviving widow could have an exemption established as follows:

“Exemption in lieu of homestead.- If such decedent, at the time of his death, has no homestead exempt to him from levy and sale under process, his widow and minor child, or children, or either, shall be, unless they have obtained the benefits of such exemption under section 654 of this title, entitled to homestead exemption out of any other real estate owned by him, which in value, area, interest, and estate, shall conform to the provisions of the preceding section; and if such decedent at the time of his death has no homestead exempt to him from levy and sale under process, and has no other real estate out of which an exempt homestead can be carved, the widow and minor children, or either of them, may, by petition in the probate court or by bill in equity, have the homestead or any other real estate owned by the decedent at the time of his death sold, and six thousand dollars of the purchase money therefor applied by the court in accordance with the provisions of section 687; provided such petition or bill in equity is filed before a final distribution of the assets of decedent’s estate has been made. And in no case, and under no circumstances, shall the widow and the minor children, or either of them, be deprived of homestead or six thousand dollars in lieu thereof, if they or either of them apply therefor in manner as herein provided before final distribution of the decedent’s estate. Provided, however, if the widow and minor child, or children, or either, have obtained the benefits of any exemption under section 654 of this title, the amount of exemption received under section 654 and the amount of exemption received under this section shall total only six thousand dollars.” Code 1940 (Recomp.1958), Tit. 7, § 662.

The legislature has made specific provision for carving out the homestead in cases such as this and for selling the property and paying the widow when carving out the homestead cannot be done. The trial court should have followed the procedure outlined in Code 1940 (Recomp.1958), Tit. 7, § 662.

Because the trial court erred in setting aside the entire property, in fee, to the widow as a homestead, the cause is due to be reversed and remanded.

REVERSED AND REMANDED.

TORBERT, C. J., and JONES, SHORES and BEATTY, JJ., concur.


text:
    OPINION OF THE JUSTICES.
    No. 272.
    Supreme Court of Alabama.
    May 8, 1980.
   Members of the Senate

State Capitol

Montgomery, Alabama

Dear Sirs:

The Honorable McDowell Lee, Secretary of the Senate, has forwarded to the Justices of the Supreme Court the following Senate Resolution No. 209, which requests an advisory opinion of the Justices relative to H.B. 287, to-wit:

BE IT RESOLVED BY THE SENATE OF THE LEGISLATURE OF ALABAMA, That we respectfully request the Honorable Chief Justice and Associate Justices of the Supreme Court or a majority of them, to give this body their written opinions on the following important constitutional question which has arisen concerning H.B. 287, pending before the Senate, a copy of which is attached to this resolution and made a part hereof by reference.
House Bill 287, as introduced, raised revenue for the Highway Department and has been amended and substituted in the House of Representatives and in the Senate. While the bill still produces revenue for the Highway Department, it is now in the form of 4$ per gallon tax on gasoline. Does the changing of the revenue producing device violate Section 61 of the Constitution as a bill so altered or amended as to change its original purpose?
RESOLVED FURTHER, That the Secretary of the Senate is hereby directed to send sufficient true copies of the pending bill, H.B. 287, with all House and Senate amendments and substitutes, to the Clerk of the Supreme Court of Alabama, and to transmit this request to the Justices of the Supreme Court forthwith upon adoption of this Resolution.

The answer to the sole question propounded by your request is in the negative.

Section 61 of the Constitution of Alabama of 1901, provides that “no bill shall be so altered or amended on its passage through either house as to change its original purpose.” The “purpose” of a bill within this section has been held to mean its general purpose, not mere details through which its purpose is manifested and effectuated. Opinion of the Justices, 361 So.2d 536 (Ala.1978); State Docks Commission v. State, 227 Ala. 521, 150 So. 537 (1933).

In Opinion of the Justices, supra, this Court held that the bill under scrutiny altered the original bill passed only in the method of effectuating its purpose, which remained unchanged from the original bill. The general purpose of the original bill was to provide monies for capital improvements for public educational purposes. The original bill employed a direct appropriation of $250,000,000 from the Alabama Special Educational Trust Fund, over a designated period. The substitute bill altered the financing method to provide instead for a bond issue of $220,325,000 by the Alabama Public School and College Authority. We held that since only the financing method had been altered, § 61 had not been violated, because the general purpose of each of the two bills — to provide monies for capital improvements for public education purposes — was identical. See also, Opinion of the Justices, 264 Ala. 181, 86 So.2d 1 (1956); Opinion of the Justices, 252 Ala. 525, 41 So.2d 758 (1949).

The same rationale is applicable to the two proposals here under scrutiny. The general purpose of House Bill No. 287 is to raise revenue exclusively for highway purposes. The general purpose of the Senate Finance and Taxation Committee’s substitute to House Bill No. 287 is identical. Only the method of financing is altered. House Bill No. 287 originally proposed to raise revenue by removing the sales tax exemptions from motor fuel, gasoline and lubricating oil. The Senate committee’s substitute proposes to raise the revenue by imposing a four cents per gallon tax on gasoline. While the details through which the bill’s purpose would be effectuated are different, the general purpose of each version of the bill — raising revenue for construction and maintenance of highways throughout the state — is the same. Both versions levy a tax incident to the sale of gasoline, even though the tax is measured differently.

It is, therefore, our opinion that the constitutional prohibition of § 61 has not been violated in that the Bill in question has not been so altered or amended on its passage as to change its original purpose. Opinion of the Justices, 361 So.2d 536 (Ala.1978).

Respectfully submitted,

C. C. Torbert, Jr., Chief Justice

Hugh Maddox, Reneau P. Almon Janie L. Shores Eric Embry Associate Justices


text:
    The DAVEY TREE EXPERT COMPANY v. James O. WILLIS.
    78-276.
    Supreme Court of Alabama.
    May 9, 1980.
    William D. Ginn and David J. Hooker of. Thompson, Hiñe & Flory, Cleveland, Ohio, Thomas A. Caddell of Caddell, Shanks, Harris, Moores & Murphree, Decatur, for appellant.
    Norman Roby, Decatur, for appellee.
   MADDOX, Justice.

The sole issue addressed in this appeal is whether the trial court erred to reversal in admitting certain hearsay testimony of statements made by an agént of the defendant. We reverse and remand for new trial.

This action was commenced in the Circuit Court of Morgan County. Plaintiff/appel-lee James O. Willis alleged that defendant/appellant The Davey Tree Expert Company,. an Ohio company which, among other services, contracts nationwide to clear utility easements of trees and shrubs, had misrepresented its intention to employ Willis as a subcontractor for a three-year period to bury cable for Davey’s employer, South Central Bell Telephone Company. Willis started to work for Davey in January, 1976; his work was terminated by Davey six months later. All the questions in this case revolve around a meeting on December 28, 1975, between Davey representatives and Willis which was followed by Willis’ employment by Davey.

Willis sought recovery under two theories, one for breach of contract and one for fraud. Before trial Willis abandoned his theory of recovery for breach of contract, and his case was tried to a jury solely on the issue of Davey’s allegedly fraudulent representation. The jury rendered a verdict in favor of Willis in the amount of $185,000. Davey moved for judgment notwithstanding the verdict or, in the alternative, for a new trial. The trial court overruled those motions and entered judgment on the verdict. Davey then perfected its appeal to this Court.

Willis is in the business of burying cable for the telephone company. He had worked for the Hill Service Company in the years preceding his employment by Davey in essentially the same position, as one of several subcontractors in connection with Hill’s easement work for the telephone company. Willis’ employment by Hill had been under a written contract.

Hill’s contract for the telephone work came up for bid in 1975; Davey rather than Hill was the successful bidder; and Davey was to take over the contract work from Hill as of January 2, 1976, or within four days after the crucial meeting between Da-vey representatives and Willis. It is undisputed that Davey’s representatives Ken Shuford and J. D. Brooks came to Birmingham to set up Davey’s operations and to interview some of Hill’s subcontractors to see if any of them were interested in continuing their wire-burying operations as subcontractors to Davey.

One of the subcontractors whom Davey contacted and interviewed was Willis. Both Willis and the Davey representatives testified at trial about their meeting at a Birmingham Holiday Inn on December 28, 1975. It was following this meeting that Willis commenced work for Davey in early January, 1976.

The parties disagree as to what representations were, in fact, made by Davey representatives and the intent with which the representations were made.

J. D. Brooks, an account manager for Davey, was present at the meeting and took notes. As Brooks recorded, and later testified, there was a discussion between Willis and Shuford, Davey’s area manager, about the price which Davey would be willing to pay Willis to perform wire-burying work. Willis and Shuford agreed that Willis would be paid his asking price of $.10 per foot for burying cable and would be paid various other agreed charges for other tasks to be performed by Willis; that Davey would consider paying license fees and liability insurance premiums and that Davey would furnish trailers and plows to Willis so that Willis could do the work.

Brooks testified that he did not recollect any statement by Willis that Willis would not work unless he was given a three-year contract. Indeed, Brooks expressly denied that either he or Shuford made any representation to Willis about the term of his employment, whether for three years or otherwise.

Ken Shuford, Davey’s area manager, was the person who allegedly made the “representation” about a three-year contract. Shuford testified that at the December meeting, there was no discussion about the term of the contract. In fact, Shuford testified that Willis approached him in April, 1976, after a draft contract had been prepared, and offered to forego a written agreement in favor of a “gentlemen’s agreement” for a three-year deal. Shuford stated that he had agreed to pay Willis on an interim experimental basis, the $.10 per foot Willis had demanded, but refused to consider a long-term deal unless Willis would agree to discuss a reduction in the fees then being paid to Willis since Davey was losing money at those rates.

Needless to say, Willis’ recollection of the December meeting was different, especially as to the term of the agreement. Willis testified that at the December meeting he “made a real solid point” about a three-year period and that Shuford’s response was “[I]f we can agree you will have it as long as we have it.”

Davey raises several issues which it claims necessitate reversal; we discuss only one: Whether an agent’s declaration against interest of his principal may be admitted in evidence if it is not made contemporaneously with the transaction in issue.'

During the trial, one George Creel, a former Davey subcontractor, was questioned as to whether he had heard one Ronnie Roberts, a Davey supervisor, make any statement as to Davey’s intentions concerning the subcontractors. He answered, over objection:

“A. Ronnie Roberts told me from the start we should have even known then that they didn’t intend to keep any of us, he said they just needed us to get things going in order to get their own people and trucks down here so they could take it over without having any trouble.”

The evidence shows that Roberts was not an employee of Davey in December, 1975, when the discussions with subcontractors took place. In fact, Roberts did not join Davey until April, 1976.

Creel’s testimony about the claimed statement by Roberts was inadmissible and was erroneously introduced. In Cone v. Ragn, 288 Ala. 352, 261 So.2d 28 (1972), this Court reaffirmed the well-recognized proposition that an agent’s declaration against interest is not admissible if it relates to a past transaction. Quoting from Alabama Great Southern R. R. Co. v. Hawk, 72 Ala. 112, 47 Am.Rep. 403 (1882), the Court stated:

“The rule is well established, that it is not within the scope of an agent’s authority to bind his principal by admissions having reference to by-gone transactions. The only ground upon which the admissibility of an agent’s declaration can be justified, is, that they, must have been made while in the discharge of his duties as agent, and be so closely connected with the main transaction in issue as to constitute a part of the res gestae.”

288 Ala. at 353, 261 So.2d at 29. On the basis of Cone, Creel’s testimony about Roberts’ asserted statement was inadmissible.

We have examined the entire record and find that Davey was probably prejudiced by the erroneous admission of Creel’s testimony.

Because this reversal may be based upon this single issue, we do not address appellant’s argument that the evidence was insufficient to show that Davey had a present intent to defraud Willis at the time of the alleged misrepresentation.

The cause is due to be reversed and remanded for new trial.

REVERSED AND REMANDED.

TORBERT, C. J., and FAULKNER, JONES, ALMON, SHORES, EMBRY and BEATTY, JJ., concur.


text:
    Garry GURLEY, a/k/a Buck Gurley and Cora Lee Gurley v. BLUE RENTS, INC., a corp.
    78-622.
    Supreme Court of Alabama.
    May 9, 1980.

      Sidney H. Schell of Pillans, Reams, Tap-pan, Wood, Roberts & Vollmer, P. C., Mobile, for appellants.
    William H. McDermott of McDermott, Slepian, Windom & Reed, Mobile, for appel-lee.
   MADDOX, Justice.

This is an appeal from a judgment setting aside a certain conveyance of real estate by appellant Garry Gurley to his wife, appellant Cora Lee Gurley, as having been done to defraud appellee Blue Rents, Inc., a creditor of appellant Garry Gurley.

The fundamental issues presented for our review are:

(1) Whether the appellee’s áction to set aside an alleged fraudulent conveyance was commenced before the running of the statute of limitations;

(2) Whether the trial court was correct in finding that the conveyance was fraudulent and based upon inadequate and insufficient consideration; and

(3) Whether the judgment entered by the trial court holding the conveyance for naught was overbroad and thereby improperly entered.

After having considered each of these issues, we conclude that the judgment of the trial court is due to be affirmed.

The evidence received at trial revealed that on March 6, 1974, the appellants Garry Gurley and his wife, Cora Lee Gurley, purchased a certain parcel of land in Mobile County, Alabama as joint tenants with right of survivorship. The purchase price was $26,000.00. In order to finance the purchase, the Gurleys executed a mortgage to the Commercial Guaranty Bank of Mobile mortgaging the subject property and other properties for the sum of $40,092.48. The other real property was owned separately and individually by Mrs. Gurley.

The payments on the mortgage were nearly $400 a month and from time to time Mr. Gurley could not make the payments and was consistently late. Then on February 10, 1975, Mr. Gurley conveyed his respective interest in the property to his wife. Mr. Gurley estimated that at this time there was approximately $24,000 still owing on the original purchase price. Upon receiving the property, Mrs. Gurley immediately, sold various properties owned by her, paid off the mortgage and refinanced the subject property at a lower rate. She currently stands as the sole record owner of the property.

The record shows that on June 29,1974, a short time after the appellants consummated the purchase of the subject property, appellant Garry Gurley entered into the first of a series of business transactions with the appellee, Blue Rents, Inc. It appears that Mr. Gurley rented and purchased equipment from Blue Rents and had equipment repaired by it. These transactions were conducted on a credit account basis; and Gurley became delinquent in making payments. On February 12,1975, some two days after Gurley had conveyed his interest in the subject property, a suit was instituted against him by Blue Rents which sought the recovery of over $10,000 for accounts due and owing from Garry Gurley as of December 1, 1974. Judgment was entered on this claim in favor of Blue Rents on February 1, 1977. On August 8, 1977, Blue Rents commenced the present action seeking to set aside the February 10, 1975, conveyance. On April 26, 1979, the trial court entered judgment in favor of Blue Rents, setting aside the conveyance and holding it for naught. The Gurleys thereafter perfected an appeal to this Court.

I

The threshold issue is whether the appel-lee commenced its action within the statutory time limits of the applicable statute of limitations. To answer this question requires a consideration of which statute of limitations is indeed applicable to actions of the type here involved. We are dealing with a creditor’s suit to set aside an alleged fraudulent conveyance, a conveyance wherein a husband/debtor conveyed to his wife his respective share in property held by them as joint tenants with right of sur-vivorship. It was commenced some two and one-half years after the conveyance took place. The question is whether it was timely filed.

In determining which statute should apply, we recognize the longstanding rule pronounced by this Court in Van Ingin v. Duffin, 158 Ala. 318, 48 So. 507 (1909). In that case the Court held:

“A bill to set side a fraudulent conveyance is a suit for the recovery of land and governed by the statute of limitations. Washington, Adm’r, v. Norweed, 128 Ala. 383, 30 So. 405. The statute provides that actions for the recovery of lands must be commenced within ten years ‘after the cause of action has accrued.’ Code 1907, §§ 4832, 4834, par. 2. [Now Code 1975, § 6-2-33.]”

In Van Antwerp v. Van Antwerp, 242 Ala. 92, 5 So.2d 73 (1941), the court, citing Van Ingin, reaffirmed its 1909 decision in holding that:

“It has been held in many cases by this Court that a suit in equity to set aside a deed to land for fraud where the land is in the possession of the grantee is a suit to recover land and is controlled by the ten year statute.”

We recognize the authority of these decisions; however, emphasis must be placed upon the fact that these decisions solely address conveyances of land, land which would have been readily subject to levy and execution had it not been fraudulently conveyed. The question is thus raised whether the attempted recovery of a debtor’s respective interest in a joint tenancy can be treated in the same way. Is it an action for the recovery of land? In this regard the appellants assert the premise that in order for any action to qualify as an action for the recovery of land, a real property interest must exist which is visible and tangible, subject to delivery to the sheriff on execution. They contend that one’s interest in a joint tenancy does not rise to this requisite level, being only a contingent remainder, not tangible nor reducible to possession. They thus argue that an action for the recovery of one’s interest in a joint tenancy is not an action for the recovery of land and the ten-year statute of limitations does not apply. We cannot agree with this logic because it totally ignores the decision of this Court in Nunn v. Keith, 289 Ala. 518, 268 So.2d 792 (1972). In Nunn, the Court availed itself of the opportunity to discuss at length the attributes of joint tenancies in the state of Alabama. Justice Somerville, writing for the majority, declared that by virtue of the 1945 amendment to Ala.Code, Tit. 47, § 19 (1940), the legislature accomplished the revival of common law joint tenancies in Alabama. In addition, he declared that the 1951 amendment to § 19 did not change this, but rather served to remove the common law requirement of unity of time in establishing joint tenancies. In his opinion, Justice Somerville outlined the characteristics of the common law joint tenancy thus revived. At 289 Ala. 520-521, 268 So.2d 794, he wrote:

“In a joint tenancy at common law each tenant was seized of some fractional share while at the same time each owned the whole. The most significant feature of such a tenancy was the right of surviv-orship. When one joint tenant died, the deceased’s share was owned by the surviving tenants jointly, until only one remained, who then owned the fee. The last survivor took nothing by survivorship as he had always owned the whole. The deaths of the other joint tenants merely removed impediments to the survivor’s complete ownership.”

There is no doubt that the decision in Nunn finds application to the joint tenancy presently under review since that tenancy was created subsequent to Nunn; thus relying on Nunn, we must find that on the date of the alleged fraudulent conveyance Garry Gurley was seized of a clearly definable one-half interest in the subject property while at the same time he owned the whole. His conveyance was, therefore, clearly a conveyance of land, one which, if executed to defraud his creditors, would clearly prejudice those creditors. We are thus constrained to conclude that the present action, which seeks to recover that which Mr. Gur-ley conveyed, is an action to recover land. As a result, the precedential rulings of Van Ingin, supra, and Van Antwerp, supra, govern, requiring an application of Code 1975, § 6-2-33, the ten-year statute of limitations. The action was clearly commenced within these time limits and was, therefore, timely filed.

II

Having determined that the action was properly maintained, we now turn our. attention to the question of whether the trial court was correct in finding that the present conveyance defrauded the appellee. In resolving this issue, we find it highly significant that we are dealing with a conveyance of real property between husband and wife, one of whom was in financial difficulty. Any time an alleged fraudulent conveyance involves a husband and wife, the approach which must be taken by the court is affected. Exactly how it is affected varies from state to state [In this regard see Annot. 35 A.L.R.2d 8 and 37 Am.Jur.2d Fraudulent Conveyances § 25 (1976)]. In Alabama, the fact that a conveyance took place between a husband and wife does not raise any presumption of fraud, nor does it represent a badge of fraud. Instead, it alters the scrutiny with which the court must consider the conveyance. In Umphrey v. Barfield, 238 Ala. 11, 13, 189 So. 64, 65 (1939), this Court reasoned that “. while this relationship [the husband-wife relationship] is not within itself a badge of fraud, ‘yet under all the authorities, supported by reason and common sense,’ transactions between persons occupying such relationship are to be jealously watched and must be subjected to closer scrutiny than would be required of a stranger.” Thus, the very fact that Mr. and Mrs. Gurley were the sole parties to the conveyance should have completely changed the way in which the trial court viewed the conveyance. It was essential that the conveyance be more closely scrutinized.

In addition, the relationship of the parties necessitated a shift in the burden of proof. This Court has held on numerous occasions that when a husband conveys certain property to his wife and that conveyance is attacked as a fraud on the husband’s existing creditors, the wife bears the burden of proving that the conveyance was based upon a valuable consideration, substantial and not merely nominal. Smith v. Wilder, 270 Ala. 637, 120 So.2d 871 (1960); Dutton v. Lindler, 238 Ala. 363, 191 So. 210 (1939). The wife is thus laden with the initial responsibility of proving the bona fide character of the underlying transaction.

After reviewing the record and transcript of the trial, it is clear that the trial court, hearing evidence ore tenus, did not approach the case in the manner outlined above, but we find no error here. The trial court required the appellee to carry the burden of proof in establishing fraud in accordance with the requirements espoused by this Court in Roddam v. Martin, 285 Ala. 619, 235 So.2d 654 (1970). In doing so it determined that the appellee had met its burden and further concluded that the appellants failed to show the presence of any adequate consideration. Although the approach thus taken by the trial court on who had the burden of proof was incorrect because it placed an improper burden upon the appellee, we hold that the appellants were not prejudiced thereby. As far as the findings and conclusions of the trial court are concerned, we recognize that when a trial court hears evidence ore tenus, the posture of the case on appeal is totally ■changed. As noted by this Court on numerous occasions:

“Where the trial court makes findings after hearing witnesses ore tenus, every presumption will be indulged in favor of the court’s findings, and its findings will not be disturbed on appeal unless they are found to be palpably wrong.” Russell v. Russell, 361 So.2d 1053, 1054 (Ala.1978).

After reviewing the record, we find no clear or palpable error in the trial court’s determinations. We, therefore, affirm the trial court’s finding that the present conveyance perpetrated a fraud upon the appellee.

The final issue to be resolved rests upon the question of whether the trial court erred in the scope of its judgment setting aside the conveyance and holding it for naught. The relevant portion of the judgment which is questioned .appears as follows:

“It is, therefore, ORDERED, ADJUDGED and DECREED by the Court that the conveyance by Defendant Garry Gurley, also known as Buck Gurley, to Defendant Cora Lee Gurley, which was recorded March 6, 1975 in Real Property Book 1431, page 437 of the probate records of Mobile County, Alabama and which purported to convey the following described property in Mobile County, Alabama:
“The South Half of the Southeast Quarter of the Northeast Quarter of Section 13, Township 3 South, Range 3 West, Mobile County, Alabama
is hereby SET ASIDE and held for naught as having been executed for the purpose of defrauding Plaintiff herein, who was at that time a creditor of Defendant Garry Gurley.”

The appellants contend that this judgment is overbroad and violates the well established rule espoused by this Court in Brown v. Andrews, 288 Ala. 111, 257 So.2d 356 (1972). In Brown, Justice McCall reasserted the position assumed by the Court in First National Bank of Birmingham v. Love, 232 Ala. 327, 167 So. 703 (1936), that a fraudulent conveyance is valid as to all the world, except the creditors of the grantor. As to those creditors, the conveyance is voidable and may be set aside at their option. If they choose to exercise their option and set aside the conveyance, the conveyance will be set aside only as to them. The appellants contend that the present judgment violates these principles in that it set aside the conveyance and held it for naught. We disagree. As we construe the judgment, it did not deal with the present conveyance in the abstract; rather, it concerned the relative rights of the present litigants. It only held the conveyance for naught as to Blue Rents, Inc. Thus viewing the effect of the judgment, we find no difficulty with its character or scope.

Other issues raised by the parties need not be addressed in passing upon the merits of the present appeal. Having found no error, we conclude that the judgment of the trial court is due to be affirmed.

AFFIRMED.

TORBERT, C. J., and JONES, SHORES and BEATTY, JJ., concur.


author: BEATTY, Justice. MADDOX, Justice

text:
    EDUCATORS’ INVESTMENT CORPORATION OF ALABAMA, INC. v. William H. AUTREY.
    78-861.
    Supreme Court of Alabama.
    May 9, 1980.

      Don F. Wiginton, Birmingham, for appellant.
    P. Richard Hartley, Greenville, for appel-lee.
   BEATTY, Justice.

This is an appeal from the trial judge’s entry of summary judgment for the defendant in an action for indebtedness on a promissory note. The trial court found that the action was barred under the doctrine of res judicata. We affirm.

Educators’ Investment Corporation of Alabama was formed as a publicly held stock company in Birmingham, Alabama, in 1955. From its inception, Educators’ maintained a company policy of repurchasing its corporate stock from any shareholder who tendered his shares.

William H. Autrey purchased a total of 2,277 shares of common stock of Educators’ between November 16, 1970, and October 21, 1974, for a total price of $8,435.34. The corporation awarded an additional 596 shares of dividend stock to Autrey during that period.

In addition to purchasing Educators’ common stock, Autrey borrowed $20,000 from Educators’ on March 22, 1973, for which a renewal note was executed. It is on the renewal note that Educators’ brings this action. Educators’ took shares of its common stock owned by Autrey as security on this note.

In the general business recession of 1973-74, the number of shares of Educators’ stock offered by its shareholders for redemption by the company dramatically increased and the corporation was unable to meet the demand for redemption. On September 14, 1974, its Board of Directors resolved to redeem no more stock until further action by the board.

A common stock shareholder, Reva W. Allman, on behalf of herself and all others similarly situated, brought suit in the United States District Court for the Northern District of Alabama, Southern Division. Reva W. Allman, et al. v. Educators’ Investment Corporation of Alabama, Inc., et al. (CA 76-H-0441-2, N.D.Ala.1977). Reva W. Allman was a shareholder who had purchased shares of the common stock of Educators’ allegedly in reliance upon a commitment by Educators’ to repurchase its own stock. When Educators’ ceased to repurchase its stock, she brought the action described above. This change of policy and refusal by Educators’ to repurchase its common stock was one of the principal claims asserted in this action.

On May 31, 1977, a final judgment was entered by United States District Judge James H. Hancock between the shareholders, as a class, and the corporation, its officers and directors. The final judgment adopted the proposed stipulations of pro tanto settlement which dismissed this issue, along with other matters raised by the shareholders with prejudice and on the merits. The stipulations provided that Educators’ would pay 2.5 million dollars to a custodian who would collect and distribute the money to the shareholders. The stipulations also provided that Educators’ would have a right of offset against this money on any shareholder who was then or thereafter in default on a loan with Educators’.

On September 2, 1977, Educators’ filed the instant case in the Circuit Court of Butler County. One of Autrey’s defenses was that the action was barred because the subject matter of the action had been tried in the federal court.

A fair reading of Judge Hancock’s decree in the Allman case by us indicates to us that Judge Hancock primarily ruled upon all claims which the stockholders had against Educators’ and its officers “. based on any acts, omissions or representations of the Settling Defendants in connection with the offer and sale of stock of Educators’ . . . .” In his decree Judge Hancock expressly authorized and approved the stipulations of pro tanto settlement entered into by the parties in that case. The stipulations expressly adopted a plan of offset that could be employed in the event a stockholder with indebtedness to Educators’ was in default:

Said instruments of conveyance and transfer shall further provide that Educators shall have a direct right of offset against payments which may thereafter become due and payable from the Settlement Fund to any person whose indebtedness to Educators is then or thereafter in default. Educators shall be entitled to exercise such right of offset by giving written notice' to the custodian of the Settlement Fund and the person whose indebtedness is in default, which notice shall contain a sworn statement of the amount due and owing to Educators. The Custodian of the Settlement Fund shall notify the person whose indebtedness is claimed to be in default of the claim of Educators. Unless objection is received by the Custodian within ten days from the date of such notice, the custodian shall immediately pay directly to Educators any and all amounts which may become due and payable to such person from the Settlement Fund, until the amount due and owing to Educators is paid in full. In the event objection is received by the Custodian to such payment, the Custodian shall retain all sums otherwise due such person until given a release of such funds by Educators, by the person against whom the claim is made or until Educators provides the Custodian with a certificate of judgment in favor of Educators and against the person against whom the claim is made. “Indebtedness” as used in this Settlement shall not include indebtedness incurred in connection with the purchase of common stock of Educators.

It is axiomatic that “. . . to sustain a plea of res judicata, the parties must be the same, the subject matter the same, the point must be directly in question, and the judgment must be rendered on that point.” Bryan v. W. T. Smith Lumber Co., 278 Ala. 538, 542, 179 So.2d 287, 291 (1965).

In the instant case, the parties are the same. Autrey was a member of the class that settled with Educators’.

The subject matter was the same. It is not contended that the debt in the instant case is of -a different type than that to which Educators’ was given a right of offset in,the stipulations.’

The point in question in the instant case and those ruled on in Allman are not identical. However, in the settlement stipulations, the federal court went into some detail on the options open to Educators’ in the event of a default on an indebtedness by one of its shareholders. In particular, the stipulations provided for the election by Educators’ to offset a debt owed by a shareholder against monies payable to the shareholder from the Settlement Fund. Although it is argued that the stipulations did not expressly address the precise question whether the setoff remedy was to be exclusive, under our cases dealing with res judicata, that argument, even if valid, is not determinative. The proper inquiry is whether the issue was actually litigated or whether it could have been litigated. See Wheeler v. First Alabama Bank, Ala., 364 So.2d 1190 (1978). As we stated in McGruder v. B & L Construction Co., Ala., 331 So.2d 257 (1976):

[A] judgment in a former action between the same parties is not only conclusive of the questions actually litigated, but [of those] which could have been litigated in the former suit. . . . [Emphasis added.]

Earlier, in McCormick v. McCormick, 221 Ala. 606, 130 So. 226 (1930), this Court observed:

A judgment of a court of competent jurisdiction rendered on the merits is conclusive between the parties as to all matters, within the issues, matters which the issues were broad enough to cover, and which were presented or might have been presented on the trial. .

In this case, it is clear from the documents that were before the trial court that there was no genuine issue for trial. Because the issue of the corporation’s remedies for indebtedness was before the trial court in the •prior suit between the same parties and because the specific question of exclusivity at least could have been determined, we hold that the trial court properly granted summary judgment on the res judicata' ground. That judgment is, accordingly, affirmed.

AFFIRMED.

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

TORBERT, C. J., and MADDOX and SHORES, JJ., dissent.

BLOOD WORTH, J., not sitting.

MADDOX, Justice

(dissenting).

Summary judgment, in my opinion, was inappropriate.' I dissent.

I agree that in the instant case, the parties are the same as those in the federal action. I also agree that the subject matter of the two actions was the same insofar as that subject matter dealt with an “indebtedness” owed by a shareholder to the corporation; however, I cannot agree that the stipulation in the federal action which adopted a plan of offset, by its terms, made offset the exclusive remedy of the corporation to recover its debt from the shareholder, Autrey. It is my opinion that the fact that Educators’ exercised its right of offset under the provisions of the stipulated agreement, did not necessarily bar it from seeking to recover the entire debt by filing an action on the promissory note. Because the stipulation does not state whether the plan was the exclusive remedy available to Educators’ it is my opinion that there remains a material issue of fact to be decided by the trier of fact.

TORBERT, C. J., and SHORES, J., concur.


author: JONES, Justice.

text:
    FORD MOTOR CREDIT COMPANY, a corp. v. Steve CARMICHAEL.
    79-79.
    Supreme Court of Alabama.
    May 9, 1980.

      James T. Upchurch, III, of Rushton, .Stakely, Johnston & Garrett, P. A., Montgomery, for appellant.
    Frank S. Teel, of Teel & Teel, Rockford, for appellee.
   JONES, Justice.

Appellee Steve Carmichael brought suit against Appellant Ford Motor Credit Company and Appellant’s employee, Mercer Jones (not directly involved in this appeal), alleging that Defendants wrongfully converted personal property left in Appellee’s automobile when the vehicle was repossessed by Defendants.

Service was made on Ford Motor Credit Company by certified mail on January 26, 1978. Co-defendant Jones was never served and never entered an appearance. On February 27, 1978 (32 days after service), Carmichael applied for entry of default against Ford Motor Credit Company, which was made on that date by the Circuit Clerk. On February 28, the Court entered a default judgment against Ford Motor Credit Company for $15,000. No disposition was made as to co-defendant Jones until October 20, 1978, when, upon Plaintiff’s motion, he was dismissed from the case.

Some five months after entry of the default judgment, on August 2, 1978, Appellant Ford Motor Credit Company filed a Rule 60(b) motion to set aside the default judgment on grounds of “mistake, inadvertence, surprise, or excusable neglect.” After a hearing on the motion, the Court, on October 5, 1978, overruled the motion on the condition that the Plaintiff file a remit-titur reducing the judgment to $5,000. Plaintiff so filed and a final order was entered by the Court upon the remittitur. Ford Motor Credit Company appealed to the Court of Civil Appeals, which held that the trial Court was “without authority to take the action it took regarding the remit-titur” and remanded to the trial Court for proper consideration of Defendant’s Rule 60(b) motion. See Ford Motor Credit Company v. Carmichael, 373 So.2d 1121 (Ala.Civ.App.1979).

Upon remand, the trial Court dismissed the Rule 60(b) motion, and reinstated the $15,000 judgment on the grounds that Appellant’s motion was barred as having come more than four months after entry of the default judgment. Ford Motor Credit Company appeals, alleging the trial Court erred in determining the four-month period from the date of entry of the judgment rather than from the date on which the judgment was rendered final which, according to Appellant, was not until October 20, 1978, when final disposition was made as to co-defendant Jones. We agree.

Rule 60(b), ARCP, states in pertinent part:

“(b) Mistakes; inadvertence; excusable neglect; newly discovered evidence; fraud, etc. On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment. The motion shall be made within a reasonable time, and for reasons (1), (2), and (3) not more than four months after the judgment, order, or proceeding was entered or taken. A motion under this subdivision does not affect the finality of a judgment or suspend its operation. . . . ” (Emphasis added.)

By its terms, the Rule makes clear that it applies only to final judgments; and interlocutory orders and judgments are not subject to the restrictive provisions of the Rule until they become final. See 6A Moore’s Federal Practice, ¶ 60.01(1) at 4008-4009; 7 Moore’s Federal Practice, ¶ 60.20 at 242. It follows, therefore, that where an interlocutory order or judgment is made final, the four-month period of the Rule is computed from the time of final judgment, and that' the effect of the second sentence of the Rule, quoted above, is that the motion for reasons (1), (2), and (3) must be made within a reasonable time and in any event not more than four months after the final judgment, order, or proceeding was entered or taken. See, 7 Moore’s Federal Practice, ¶ 60.28(2), note 36 at 339.

A judgment by default is ordinarily final and subject to Rule 60(b) at the time of its entry. 6A Moore’s Federal Practice, ¶ 60.03(5), at 4032; 7 Moore’s Federal Practice, ¶ 60.28(2), note 36 and accompanying text at 399. But a judgment by default, rendered in advance against one of several defendants, is interlocutory, until final disposition is made as to all the defendants. Ex parte Mason, 213 Ala. 279, 104 So. 523 (1925); Long v. Gwin, 188 Ala. 196, 66 So. 88 (1914). It follows, therefore, that, where an action involves multiple claims or parties, any adjudication which adjudges fewer than all of the claims or parties is, absent a Rule 54(b) order, interlocutory, Rule 54(b), ARCP, Chambers v. Chambers, 356 So.2d 634 (Ala.1978); and 'the terms and limitations of Rule 60(b) do not apply. 6A Moore’s Federal Practice, ¶ 60.03(4), at 4031-4032; 7 Moore’s Federal Practice, ¶ 60.20, at 243.

In the instant case, the trial Court entered a default judgment against Appellant Ford Motor Credit Company on February 28, 1978. No Rule 54(b) order was entered by the Court with respect to this adjudication, with the result that judgment remained interlocutory until October 20, 1978, when the Court dismissed Appellant’s co-defendant, thereby rendering the adjudication final. Appellant’s Rule 60(b) motion was made on August 2, 1978, some five months after entry of the default judgment but well in advance of when the judgment became final. It follows, therefore, that the trial Court erred in dismissing Appellant’s Rule 60(b) motion for failure to bring the motion within the four-month period, after entry of final judgment, allowed by the Rule. Accordingly, Appellant is entitled to a hearing on the merits of the motion. We hold, therefore, that the trial Court erred to reversal in denying the Rule 60(b) motion on the stated ground, and this cause is due to be remanded to the trial Court for further proceedings.

REVERSED AND REMANDED.

TORBERT, C. .J., ' and MADDOX, SHORES and BEATTY, JJ., concur.

      . We recognize that this motion, at the time it was originally filed, was more properly a Rule 55 motion to set aside a default judgment. As a Rule 60(b) motion, it was prematurely filed and prematurely ruled upon in the first instance by the trial Judge. However, we deem it to be properly before us now as a 60(b) motion. Upon remand of this cause after appeal to the Court of Civil Appeals, the motion was ruled upon as a .ripe motion at trial level. It has been treated and accepted as such by all parties; and, given its current posture, we accept it for our consideration as a 60(b) motion.

      . It can be noted, also, that the doctrine of laches, or delay, applies to a Rule 60(b) motion. Thus, if a motion for relief under clause (1), or (2), or (3) is not made “within a reasonable time,” it will be denied although made within the maximum four-month period after final judgment. See, 7 Moore’s Federal Practice, ¶ 60.28(2), note 34 and accompanying text at 397.