author: FAULKNER, Justice.

text:
    ALABAMA GAS CORPORATION v. ALABAMA PUBLIC SERVICE COMMISSION.
    80-686.
    Supreme Court of Alabama.
    Nov. 5, 1982.
    Rehearing Denied Dec. 30, 1982.

      Douglas Arant and William Michael Warren, Jr., of Bradley, Arant, Rose & White, Birmingham, and Robert C. Black of Hill, Hill, Carter, Franco, Cole & Black, Montgomery, and Alex S. Lacy, and Haydn M. Trechsel, Birmingham, for appellants.
    Charlie D. Waldrep Thomas L. Stewart, and Michael G. Kendrick, Birmingham, for appellee Alabama Public Service Com’n.
    Charles A. Graddick, Atty. Gen., and Wendell Cauley, Charles A. Guyton, and Thomas F. Parker, IV, Asst. Attys. Gen., for the State of Alabama and other affected customers of the Alabama Gas Corp.
   FAULKNER, Justice.

This is an appeal by Alabama Gas Corporation (“Alabama Gas” or the “Company”) from an order of the Alabama Public Service Commission (“Commission”) granting in part and denying in part Alabama Gas’s application for rate increase. This appeal is taken pursuant to the provisions of Code 1975, § 37-1-140, which provides for direct appeals to the Supreme Court of Alabama.

Alabama Gas initiated this proceeding on December 3, 1980, by filing a petition with the Commission requesting new schedules of rates for natural gas service to become effective January 3, 1981. The proposed rate schedules were designed to provide additional annual operating revenues of approximately $12,250,000, an increase of 4.4%.

Petitions for intervention were received from the Attorney General of the State of Alabama, Legal Services Corporation of Alabama, Alabama Consumers Alliance, John Paul Ripp and Robert Earl Duke. The above were determined to be affected by these proceedings within the provisions of § 37-1-87, Code 1975, and were permitted to intervene.

Direct testimony was prefiled by Alabama Gas and, beginning on April 7, 1981, Company witnesses were cross-examined at length. Subsequently, the Attorney General prefiled testimony and on May 13 and 14, 1981, presented his witnesses for cross-examination. The hearings were concluded on May 21, 1981, and briefs were submitted by the Company and the Attorney General on May 29, 1981.

On July 2,1981, the Commission issued its order granting a $4.3 million increase. The Commission’s order was based on a “test-year” which ended on September 30, 1980, with a six-month limitation on post-“test year” adjustments.

Alabama Gas filed its Notice of Appeal, together with a bond for security of costs bn July 7, 1981. Application for supersede-as pursuant to § 37-1-141, Code 1975, was also filed with this Court. An appellate expert was appointed to aid and assist the Court in this case. See Code 1975, § 37-1-143; Rule 33(a), Rules of Appellate Procedure.

On July 30, 1981, this Court issued a partial supersedeas bond allowing the Company to collect an additional $2 million rate increase (a total of $6.3 million, having been determined by adding $2 million to the increase of $4.3 million granted by the Commission).

On May 18, 1982, the Company renewed its application to supersede the order of the Commission. This Court held:

(1) That the application for renewed su-persedeas be denied;
(2) That the additional increase in rates of $2,000,000 granted by the order of this Court dated July 30, 1981, should be subsumed by this order and that Alabama Gas was entitled to have the order of the Commission of July 2, 1981 (APSC Docket No. 18328)-, superseded to the extent that Alabama Gas could charge and collect, pending appeal, revenues that would produce an annual increase of fourteen million dollars ($14,000,000) over the annual rate of revenue in effect immediately prior to the filing of the proposed rates of Alabama Gas on December 3, 1981. The annual increase of $14,-000,000 includes the additional $2,000,000 granted by the order of Court dated July 30, 1981.

Alabama Gas raised the following issues on appeal:

I

Whether on appeal from a Public Service Commission order in which a utility alleges confiscation, this Court’s standard of review of exercising its independent judgment eliminates the presumption of correctness given agency orders.

II

Whether the Commission’s order reflects reasonable rate-making policy in allowing only those known and measurable pro-for-ma adjustments to revenues and expenses which occurred within six months of the end of the test year.

III

Whether the rate of return found by the Commission is confiscatory.

IV

Whether the Commission’s order with respect to depreciation, year end customer adjustment and regulatory commission expenses is based upon legal evidence of substantial weight and probative force.

V

Whether the Commission’s adjustment for rate base and operating income is proper.

VI

Whether the Commission’s order utilizes reasonable rate-making procedures regarding amortization of deferred federal income taxes.

I

WHETHER ON APPEAL FROM A PUBLIC SERVICE COMMISSION ORDER IN WHICH A UTILITY ALLEGES CONFISCATION, THIS COURT’S STANDARD OF REVIEW OF EXERCISING ITS INDEPENDENT JUDGMENT ELIMINATES THE PRESUMPTION OF CORRECTNESS GIVEN AGENCY ORDERS.

Alabama Gas alleges that the Commission’s order confiscates its property in violation of the 5th and 14th Amendments of the United States Constitution, as well as §§ 6 and 13 of Article 1 of the Alabama Constitution. From this, Alabama Gas states that the Court must “exercise its own independent judgment in evaluating both the law and the facts presented in this appeal and not presume the Commission’s order is valid or reasonable.” The Attorney General agrees, citing Alabama Power Co. v. Alabama Public Service Comm’n, 390 So.2d 1017 (Ala.1980), that where confiscation is alleged the Court should exercise its own independent judgment in a broad scope evaluation of all the law and facts relevant to the case, not merely those raised on appeal. The Attorney General states, however, that there is no authority for Alabama Gas’s view that by alleging confiscation it establishes a presumption of invalidity or unreasonableness of the Commission’s order.

The Commission submits that even under the broader standard of review, mere allegations of confiscation will not suffice. The Commission states “The Company must show that the conclusions are arbitrary and unsupported by the evidence in order for this Court to disturb the order of the Commission.” We agree with the Commission.

In Alabama Power Company v. APSC, 390 So.2d 1017 (Ala.1980), this Court recognized a dual standard of review of rate cases:

“A limited scope of review exists when the action is within the Commission’s scope of authority, and this court’s inquiry ordinarily goes no further than to ascertain whether there is evidence to support the Commission’s findings. Id. Indeed, presumptions are generally indulged in favor of the orders of the Commission, the major presumption being that the Commission’s order is prima facie just and reasonable. See State v. Alabama Public Service Comm’n, 293 Ala. 553, 307 So.2d 521 (1975); Alabama Gas Corporation v. Wallace, 293 Ala. 594, 308 So.2d 674 (1975). In contrast, a much broader scope of review of the Commission’s orders is required when confiscation is alleged; in that event, this Court must exercise its own independent judgment on the facts and the law. General Telephone Company of the Southeast v. Alabama Public Service Commission, supra .” Id. at 1025.

Decisions in the past have been silent on the proof necessary by the utility to allow the Court to broaden its review to judge the constitutional issue. As a result thereof, this Court has judged utility rate cases where confiscation is alleged under the broad scope of review.

The issue now is whether the broader scope of review (the independent judgment test), is to continue to be the proper method of judicial review when confiscation is merely alleged by a utility company. In Public Service Comm’n v. General Telephone Co., 555 S.W.2d 395 (Tenn.1977), the Tennessee Supreme Court stated that the substantial evidence standard is the proper method for judicial determination of the issue of confiscation in rate cases. The Court continued:

“We ... hold that the scope of review articulated in T.C.A. § 4-523(h) provides adequate standards within constitutional limits for judicial determination of the issue of confiscation in rate cases.
“Tennessee Code Annotated § 4-523(h) provides that a court may reverse or modify the PSC if the rights of the petitioner have been prejudiced because the decision is:
“(1) in violation of constitutional or statutory provisions;
“(2) in excess of the statutory authority of the agency;
“(3) made upon unlawful procedure;
“(4) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.”

Similarly, § 37-1-124, Code 1975, prescribes that the Commission’s order shall be taken as prima facie just and reasonable and that this court shall set aside the order only if it finds that:

(1) The Commission erred to the prejudice of appellant’s substantial rights in its application of the law; or
(2) The order, decision or award was procured by fraud or was based upon a finding of facts contrary to the substantial weight of the evidence.

Using the broad scope of review when confiscation is merely alleged has rendered this code section almost meaningless.

We hold that the Company has the burden of clearly establishing from the record that the Commission’s order is confiscatory in order to invoke this Court’s independent review.

In St. Joseph Stock Yards Company v. United States, 298 U.S. 38, 56 S.Ct. 720, 80 L.Ed. 1038 (1936), Chief Justice Hughes, writing for the Court, stated:

“The established principle which guides the court in the exercise of its judgment on the entire case is that the complaining party carries the burden of making a convincing showing and that the court will not interfere with the exercise of the rate-making power unless confiscation is clearly established.” (Citations omitted.) (At 53.)

We agree with Chief Justice Hughes that confiscation must be clearly established by the complaining party in order to invoke a broader scope of review in utility rate cases. With this case we prospectively adopt the stricter standard, i.e. that confiscation must be clearly established by the utility in order to invoke the broader scope of review.

II

WHETHER THE COMMISSION’S ORDER REFLECTS REASONABLE RATE-MAKING POLICY IN ALLOWING ONLY THOSE KNOWN AND MEASURABLE PRO-FORMA ADJUSTMENTS TO REVENUES AND EXPENSES WHICH OCCURRED WITHIN SIX MONTHS OF THE END OF THE TEST YEAR.

The Company filed its testimony and exhibits with the Commission based on a twelve-month operating period ending September 30, 1980. The Company adjusted operating income for the test period via numerous “pro-forma” adjustments, purporting to reflect “known and measurable” changes which occurred or would occur after September 30,1980. The Company contends that changes that do occur and can be reasonably estimated within one year after the end of the test period should constitute “known and measurable” changes. The Commission, however, made no adjustments to test year expenses for changes occurring more than six months after the end of the test year.

While the circumstances of each ease may vary, so as to require a flexible rule, under the facts of this case, the six-month post-test year period is arbitrary and capricious. We therefore hold that the Commission’s order setting a six-month post-test year period is unreasonable under the facts of this case.

Ill

WHETHER THE RATE OF RETURN FOUND BY THE COMMISSION IS UNJUST AND UNREASONABLY LOW, RESULTING IN CONFISCATION OF THE COMPANY’S PROPERTY.

In the present case, the Commission made findings as to the Company’s cost of capital, the three major components of which are long-term debt, preferred stock and common stock equity. Mr. Jackson, an expert for the Company, calculated that the cost rates associated with long-term debt, preferred stock, and common equity are 7.91%, 4.70%, and 15.25% respectively. While agreeing with the Company’s finding on cost of preferred stock, the Commission found that the Company’s cost of long-term debt is 7.07% and common equity is 14%.

The Company argues that since no other witness testified as to these components, there is no evidence upon which the Commission could base a lower rate of return on long-term debt or common equity. We find no authority for the proposition that the Commission is rigidly bound to the recommendation of any particular witness. The Commission’s function is to sit as an expert administrative body analyzing the evidence and exercising its own expert judgment thereon. Alabama Gas Corp. v. Wallace, 293 Ala. 594, 308 So.2d 674 (1975). The Commission’s duty is to fix rates in a fair and reasonable manner. See, e.g., § 37-1-80, Code 1975; Illinois Cent. R.R. v. Thomas Alabama Kaolin Co., 275 Ala. 236, 153 So.2d 794 (1963). The question of what constitutes just and reasonable rates must be determined in the light of all the relevant facts. Birmingham Elec. Co. v. Alabama Public Service Comm’n, 254 Ala. 140, 47 So.2d 455 (1949).

This court on numerous occasions has listed several legal principles which control the determination of a fair rate of return in order to avoid confiscation:

“I. The reasonable rate of return depends upon many circumstances. It cannot be developed by a rule of thumb calculation. It must be determined in the exercise of a fair, enlightened and independent judgment of all relevant facts.
“II. The rate of return must be equal to that generally being earned by others in the same general locality in business undertakings attended by corresponding risks and uncertainties....
“HI. The return must be sufficient to assure the investor’s confidence in the financial soundness of the utility enterprise and enough to maintain and support its credit so that it will be able to raise the money necessary to improve and expand its service to the discharge of its public duties....
“IV. In determining the reasonableness of rates, it is necessary to consider the effect of the rates imposed in the light of the utility’s present situation and in light of its requirements and opportunities .... ”

Alabama Power Company v. Alabama Public Service Comm’n, 390 So.2d 1017, 1024 (Ala.1980); Alabama Public Service Comm’n v. South Central Bell, 348 So.2d 443, 446 (Ala.1977). See, Alabama Public Service Comm’n v. Southern Bell T. & T. Co., 253 Ala. 1, 42 So.2d 655 (1949). Continental Telephone Company of the South v. Alabama Public Service Comm’n, 376 So.2d 1358, 1361 (Ala.1979).

Mr. Jackson,.the Company expert, used three techniques in developing his estimate in regard to a fair rate of return: discounted cash flow, and bond yield plus risk premium and comparable earnings methods.

Using the discounted cash flow (DCF) method, Mr. Jackson developed his DCF cost of equity estimate of 14.78% to 15.33% by applying a 20% adjustment to the standard DCF method. The Commission accepted the DCF theory but disagreed with the 20% adjustment in that it departed from commonly accepted financial theory. We agree with the Commission that the adjustment is inconsistent with the DCF theory.

Another method employed by Mr. Jackson was bond yield plus risk premium. Using an average bond yield on A-rated utility bonds since October, 1979, and a risk premium developed from his own study, Mr. Jackson developed a cost of equity estimate of 16.33%. The Commission argues, and we agree, that little weight should be given this approach. The Commission’s order stated:

“[W]e have some concern with his method of developing his risk premium value. He began by computing a dividend yield and growth rate for Moody’s Natural Gas Distribution Common Stock Index for each year 1960-1979. From this sum he subtracted the average annual Moody’s A-rated utility bond yield for each year to develop a risk premium. He then went through several averaging processes to develop his risk premium of 3.25%.
“A most obvious question in Mr. Jackson’s methodology is his use of two different groups to measure the risk differential. The risk premium should be a measure of the risk differential between a company’s or a group of companies’ required rate of return on equity and that company’s or group of companies’ bond yield. Mr. Jackson did not use the same groups to develop required rates of return and bond yields; thus, it is difficult for the Commission to recommend this approach.”

Mr. Jackson testified that he did not place primary reliance on any one particular method but he did agree that the best measure of the cost of common equity capital was the relation of earnings to book value for representative companies over a period of time. That relation was the basis of Mr. Jackson’s comparable earnings analysis.

The order of the Commission concerning the comparable earnings study stated:

“The comparable earnings study consisted of a review of several financial indicators for a group of comparison companies from 1975 through 1979. ... Mr. Jackson did not develop a specific cost of equity estimate in his comparable earnings study; he did, however, conclude that since the average current return of 14.2% in 1979 for his group of comparison companies resulted in a market-to-book ratio on average of .90, the companies were not earning their cost of equity. From this he further concluded that Alabama Gas Corporation’s cost of equity was something greater than 14.2%.

“Aside from the question of the risk comparability of the comparison companies, there were other questions raised in Mr. Jackson’s comparable earnings testimony. There were no results beyond 1979 considered in regard to the comparison companies. Alabama Gas Corporation’s financial position improved appreciably in 1980 relative to 1979. Also, Mr. Jackson, at least prior to cross-examination, seemed to assume that a firm’s market-to-book ratio was solely a function of its earned rate of return on book equity. Mr. Jackson agreed during cross-examination that other factors besides rates of return on equity affected a firm’s market-to-book ratio and he also had considered these other factors in reaching his conclusion that a 14.2% rate of return resulted in a market-to-book ratio of .9. Unfortunately, that review was not provided in his testimony. Finally, in reaching his conclusion that a 14.2% rate of return on equity was less than the cost of equity for Alabama Gas Corporation because that rate of return had resulted in comparable firms having an average market-to-book of .9, Mr. Jackson failed to consider several indicators of risk that would suggest Alabama Gas Corporation had a lower required rate of return on equity.

“The record shows at least two factors that suggest Alabama Gas Corporation’s risk and consequently its required rate of return are lower than that of the comparison companies. First, it was developed that several of the comparison companies were either holding companies with gas pipeline and exploration subsidiaries or gas distribution companies that engaged in pipeline and exploration activities. Second, Alabama Gas Corporation has a higher equity ratio than the average of the comparison companies, 51% in 1979, vs. 43.7% for the group. Mr. Jackson testified that common equity investors perceive their risk exposure as being directly proportional to the degree of leverage employed by the Company and given the lower leverage employed by Alabama Gas Corporation relative to the average of the comparison companies, one must conclude that the Company has less risk and a lower required rate of return in relation to these comparison companies.

“The Commission agrees that the impact of the Company’s higher equity ratio, all other things being equal, is a lower cost of equity, and having discounted Mr. Jackson’s risk premium estimate and questioned his DCF analysis, we find the range of a fair rate of return on common equity to be lower than the 15% to 16.5% range. After considering all testimony, exhibits and evidence of record, the comparable earnings approach appears to have certain merit, even though all the companies were not exactly the same. It was noted that the equity ratio of the Company is relatively high causing the risk factor to decrease and certain items may not have been considered in determining the market price/book value relationship. The 14.2% calculated by Mr. Jackson seems to be consistent with the comparable sample of the industry. However, the lesser risk due to higher equity is also to be considered when using this method. A return on equity of 14% is, therefore, considered just and reasonable.”

This Court finds that a rate of return of 14.2% is consistent with the evidence in the record. The Commission arbitrarily disregarded .2% in its order.

IV

WHETHER THE COMMISSION’S ORDER WITH RESPECT TO DEPRECIATION, YEAR END CUSTOMER ADJUSTMENT AND REGULATORY COMMISSION EXPENSES IS BASED UPON LEGAL EVIDENCE OF SUBSTANTIAL WEIGHT AND PROBATIVE FORCE.

A. Depreciation

Alabama Gas Corporation claimed depreciation expense of $6,893,279 in its cost of service based on a remaining life depreciation study. The Commission rejected the utility’s study, and accepted instead the $5,277,755 depreciation expense estimate of the Attorney General’s witness, Mr. Weiss. The basic difference between the Company’s and the Commission’s figures on allowable depreciation is negative salvage value.

Negative salvage occurs when the cost of removing an asset from utility service exceeds the positive salvage value of the asset. The Commission did not dispute the fact that negative salvage is a proper element of utility cost; however, the Commission would not allow the Company to collect the cost of negative net salvage until it is incurred.

By requiring Alabama Gas to wait until an asset is actually retired to collect the expense, the cost of present use will be paid for by future customers, not the present customers who benefit from the assets. This is inconsistent with the policy of many public utilities commissions and courts throughout the nation.

The New York Public Service Commission in In re: Consolidated Edison Company of New York, 29 P.U.R. 4th 327 (N.Y.P.S.C.1979), stated:

“We conclude that we should allow some revenue to meet decommissioning expense because it is a legitimate cost of service which should be paid by those customers using the nuclear plant. Decommissioning is a necessary expense associated with an investment that no party contends is imprudent or unjustified. Under these circumstances, the most equitable choice is to allow the utility to recover the cost from customers. Moreover, the company should begin to provide for these costs now, collecting them from the customers deriving benefit from the plant rather than from those who are taking service at the time the plant is decommissioned.”

See also, In re Connecticut Natural Gas Corp., 37 P.U.R. 4th 287 (Conn.P.U.C.1980); Providence Gas Co. v. Burke, 419 A.2d 263 (R.I.1980); Connecticut Light & Power v. Public Utilities Control, 176 Conn. 191, 405 A.2d 638 (1970); In re Iroquois Gas Corp., 85 P.U.R. 3rd 356 (N.Y.P.S.C.1970); Missouri Public Service Commission v. Rich-Hill-Hurne Gas Co., 72 P.U.R.3rd 245 (Mo.1968).

A fundamental objective in utility ratemaking is that customers who benefit from a service should bear the costs of providing that service. To recognize net salvage (positive or negative) only when it is actually experienced instead of distributing the amounts over the service life of the related property violates this basic principle.

B. Year-end Customer Adjustment

Alabama Gas argues that the Commission’s year-end customer adjustment increasing operating revenues $673,245 and cost of gas $410,142 is not supported by the record.

Initially, Alabama Gas Corporation’s witness, Mr. Turner, proposed to increase test year revenues and cost of gas to reflect the number of residential and small commercial customers at September 30,1980, as though they had been customers for the full year. This was accomplished by spreading the increase in number of customers between September 30, 1979, and September 30, 1980, evenly throughout the test year. The Attorney General’s witness, Mr. Peterson, adopted the same methodology as Turner, except that he used the actual increase in customers each month instead of the average.

Alabama Gas Corporation then offered a second witness, Mr. Patzke, who corrected the Attorney General’s figures to reflect the acquisition of the Rainbow City gas system during 1979 and 1980. On rebuttal, Alabama Gas Corporation’s witness, Mr. Turner, stated that no adjustment should be made when the number of customers is actually declining. Based on Turner’s rebuttal testimony, the Company changed its position to argue that no adjustment should be made.

The Commission, however, correctly adopted an adjustment increasing test-year operating revenues and cost of gas to reflect the number of residential and small commercial customers at the end of the test-year as though they had been customers for the full year.

V

WHETHER THE COMMISSION’S ADJUSTMENT FOR RATE BASE AND OPERATING INCOME IS PROPER.

The Company asserts that certain of the rate base and operating income adjustments made by the Commission in its order are erroneous and not supported by the evidence. We disagree.

A. Allowance for Funds Used During Construction (AFUDC).

At the end of the test-year, Alabama Gas had a total of $622,623 of construction work in progress (CWIP). The Commission multiplied this amount by the authorized rate of return (8.23%) to obtain a figure of $51,927 which was used to reduce revenue. Alabama Gas argues that this adjustment is unsupported by any evidence in the record and misstates operating income for purposes of setting rates.

This Court in Alabama Power Co. v. APSC, 359 So.2d 776 (Ala.1978), said that it is appropriate to include CWIP in rate base, but that when CWIP is included, allowance for funds used during construction (AFUDC) should be credited to operating income to prevent a double return on the CWIP. The theory of AFUDC is that investors are entitled to compensation for funds used to construct new plants, prior to the time the plant is placed in service. A conflicting interest, however, is that customers should not be burdened with the carrying costs of such new plants.

The Commission’s order includes CWIP in rate base and includes the funds by which CWIP was financed in the Company’s capitalization, and then deducts AFUDC from the net operating income requirement. This Court finds that the Commission’s treatment of AFUDC in this cause is consistent with past agency treatment of AFUDC and with Alabama Power Co. v. APSC, supra.

B. Book Value

The Company argues that the method used by the Commission in developing a revenue requirement for the Company is confiscatory. This Court finds that the Commission is under no constitutional requirement to use any particular method in establishing rates; but that the fair net return allowed must justly compensate the Company for the property it devoted to public service. See, e.g., Federal Power Commission v. Natural Gas Pipeline Co., 315 U.S. 575, 62 S.Ct. 736, 86 L.Ed. 1037 (1942); Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591, 64 S.Ct. 281, 88 L.Ed. 333 (1942). Under the provisions of § 37-1-80, Code of Alabama 1975, the reasonable value of a public utility’s property, or “rate base,” is “the original cost thereof, less the accrued depreciation, as of the most recent date available.”

Company witness Richard J. Patzke developed the statutory rate base as follows:

Utility Plant in Service $178,877,613
Accumulated Provision for Depreciation (67.832.3961
Net Utility Plant in Service $111,045,217
Working Capital 8.195.903
Total Statutory Rate Base $119,241,120

The Attorney General’s witness, Mr. Peterson, testified that the rate base should be $83,708,668 computed as follows:

Plant in Service $178,877,613
Accumulated Provision for Depreciation (67,832.3961
Net Plant in Service $111,045,217
Working Capital:
Materials & Supplies 4,418,124
Prepayments 815,557
Cash Working Capital (3,896,041)
Unamortized Regulatory Commission Expense 58,529
Customer Deposits (6,554,327)
Customer Advances for Construction (2,420,184)
Accumulated Deferred Federal Income Taxes (19,172,000)
Accumulated Deferred Investment Tax Credit (586,207)
Total Rate Base $83,708,668

The Commission rejected Peterson’s finding and found the rate base to be $111,402,-944, detailed as follows:

Plant in Service: $178,877,613
Accumulated Provision for Depreciation $67,832,396
Less: Depreciation
Adjustment (411,893) (67,420,503)
Net Plant in Service $111,457,110
Working Capital:
4,418,124 Materials and Supplies
815,557 Prepayments
(3,490,286) Cash Working Capital
Total Working Capital 1,743,395
Construction Work-in-Progress 622,623
Rate Base $113,823,128
Less: Customer Advances for Construction 2,420,184
TOTAL STATUTORY RATE BASE $111,402,944

In determining a statutory rate base for Alabama Gas Corporation, there was no disagreement among the parties as to the depreciated book cost of plant in service. The Attorney General’s witness wanted to deduct certain items of non-investor supplied capital from plant as shown in his computations above. The Commission chose instead to add some items to capital as shown in its schedule above.

This Court finds that the rate base for Alabama Gas was properly calculated. The primary purpose for computing a rate base is to make certain that the capital of a utility is actually invested in utility plant, and not in non-utility assets.

Section 37-1-80, Code 1975, states in pertinent part:

“Every utility shall be entitled to such just and reasonable rates as will enable it at all times to fully perform its duties to the public and will, under honest, efficient, and economical management, earn a fair net return on the reasonable value of its property devoted to the public service.”

We conclude that under the evidence and the rate base as determined by the Commission, Alabama Gas Corporation will have an opportunity to earn a fair net return on the reasonable value of its property devoted to the public service.

C. Interest Income

Alabama Gas claims that the Commission arbitrarily and erroneously reduced revenue requirements by crediting operating income with non-utility interest income of $157,802, net of income taxes. We agree with Alabama Gas that there is no evidence to support the Commission’s treatment of interest income. The Commission gives no explanation as to why interest income was used to adjust net utility operating income; thus, the adjustment should be reversed, and operating income required from customers should be increased $157,802.

D. Profit on Preferred Stock Redemption and Debt Redemption

The Commission reduced required operating income by $16,000 representing “profit on preferred stock redemption” and by $126,768 representing “profit on debt redemption.”

The Commission credited the gain on reacquisition of preferred stock and debt redemption to current income. The Commission’s treatment of these items is consistent with other recent decisions of the Commission and is fair and reasonable.

VI

WHETHER THE COMMISSION’S ORDER UTILIZES REASONABLE RATE-MAKING PROCEDURES REGARDING AMORTIZATION OF DEFERRED FEDERAL INCOME TAXES.

The Company asserts that compliance with the part of the Commission’s order requiring the Company to amortize the “excess” in the deferred tax reserve resulting from the federal income tax rate reduction from 48% to 46% over a five-year period “violates the applicable Internal Revenue Code provisions and regulations and may result in the loss of the right to take accelerated depreciation.”

This Court finds that the Commission did not violate generally accepted accounting principles, or the provisions of the FERC Uniform System of Accounts. The accounting principles promulgated by the Accounting Principles Board refer to nonregulated industries, and specifically recognize that, in the case of a regulated company, different principles might apply. The FERC Uniform System of Accounts for Natural Gas Companies that was in effect during the test year did not specifically discuss changes in tax rates.

The Company also claims that a five-year amortization of the overaccrual might violate the tax normalization accounting requirements of the Internal Revenue Code. The Commission argues, however, that the order will have no effect on the Company’s qualifying for the benefits of § 167 of the Internal Revenue Code.

IRC § 167(7 )(3)(G) provides that:

“In order to use a normalization method of accounting with respect to any public utility property — (i) the taxpayer must use the same method of depreciation to compute both its tax expense and its depreciation expense for purposes of establishing its cost of service for ratemaking purposes and for reflecting operating results in its regulated books of account, and (ii) if, to compute its allowance for depreciation under this section, it uses a method of depreciation other than the method it used for the purposes described in clause (i) [straight-line], the taxpayer must make adjustments to a reserve to reflect the deferral of taxes resulting from the use of such different methods of depreciation.”

Furthermore, with respect to adjustments to the reserve for deferred income taxes, IRS Regulation 1.167(1 )-l(h)(2) provides, in part:

“The taxpayer must credit the amount of deferred Federal income tax .. . for any taxable year to a reserve for deferred taxes, a depreciation reserve, or other reserve account.... With respect to any account, the aggregate amount allocable to deferred tax under Section 167(7) shall not be reduced except to reflect the amount for any taxable year by which Federal income taxes are greater by reason of the prior use of different methods of depreciation.... An additional exception is that the aggregate amount al-locable to deferred tax under Section 167(7) may be properly adjusted to reflect asset retirements or the expiration of the period for depreciation used in determining the allowance for depreciation under Section 167(a).”

Accordingly, this Court finds that the Commission’s order did not violate generally accepted accounting principles, or the provisions of the FERC Uniform System of Accounts.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED FOR FURTHER PROCEEDINGS CONSISTENT WITH THIS OPINION.

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

MADDOX, J., not sitting.

      . In a subsequent appeal (Case No. 81-804), this Court granted supersedeas in the amount of $14,000,000.00 — the $2,000,000.00 superse-deas involved in this case being subsumed in the subsequent appeal.


source: Caselaw Access Project

author: ADAMS, Justice.

license: Public Domain

text:
    BANNER WELDERS, INC., a Corporation v. Melvin L. KNIGHTON.
    80-832.
    Supreme Court of Alabama.
    Dec. 17, 1982.

      Ralph Gaines and Sidney J. Hardy of Gaines, Cleckler & Goodrich, Talladega, for appellant.
    Herbert D. Jones, Jr. and J.L. Klinefelter of Burnham, Klinefelter, Halsey & Love, and John R. Phillips of Phillips’ & Rice, Anniston, for appellee.
   ADAMS, Justice.

This appeal involves an action under the Alabama Extended Manufacturer’s Liability Doctrine and was tried before a jury in the Circuit Court for Calhoun County. Melvin Leo Knighton (plaintiff) received a verdict and judgment in the amount of $225,-000.00 for personal injuries sustained on a shuttle welder. Banner Welders, Inc. (defendant), moved unsuccessfully for post-judgment relief under Rule 50, Alabama Rules of Civil Procedure, and then appealed.

Five issues are presented for our consideration by this appeal. They are:

1. Did the trial court err to reversal by allowing into evidence certain color photographs, offered by plaintiff, which purportedly showed or suggested post-accident safety modifications to the shuttle welder?
2. Did the evidence establish plaintiff’s misuse of the shuttle welder, thereby entitling defendant to a directed verdict?
3. Did the evidence establish that plaintiff was contributorily negligent, or that he assumed the-risk of injury, in his operation of the shuttle welder?
4. Did the remarks made by plaintiff’s counsel during closing argument improperly influence the jury so as to require a new trial?
5. Did the evidence establish that the shuttle welder had undergone a substantial change between the time of its manufacture and the date of plaintiff’s accident, thereby precluding plaintiff from making out a case under the Alabama Extended Manufacturer’s Liability Doctrine and entitling defendant to a directed verdict?

We answer the questions posed by these issues in the negative, and we affirm the judgment of the trial court. Each issue will be considered separately.

Plaintiff’s original complaint alleged negligence in the failure to provide guards on the shuttle welder to prevent personal injury, and negligence in failing to provide warnings of the danger inherent in it. Subsequently, the complaint was amended to include a count for breach of implied warranty and a count under the Alabama Extended Manufacturer’s Liability Doctrine. Defendant pleaded the general issue; contributory negligence; misuse of the product; assumption of the risk of injury; and other matters not essential to an understanding of this case.

Plaintiff was a shuttle welder operator employed at Universal Products’ Bostrom plant in Piedmont, Alabama. On February 11,1977, he was injured while operating the shuttle welder. The shuttle welder has a moving carriage powered by air pressure. It takes pieces of metal, in this case Jeep seat frames, to different stations for welding. The carriage moves away from the operator, taking the metal pieces to the welding stations. They are then returned to the operator, who removes them. The machine was manufactured by defendant specifically for plaintiff’s employer. Defendant’s expert witness, Tom Rosenberg, a mechanical engineer and vice-president of manufacturing for Banner Welders, Inc., testified that the shuttle welder was custom built and was unique. Rosenberg acknowledged it was known that at times the welder would jam due to various causes.

Such a jam occurred on the date of the accident. At the time, plaintiff had operated the shuttle welder for three or four months. Plaintiff’s testimony revealed that when the jam occurred, plaintiff turned off the master electrical switch. He tried unsuccessfully to dislodge the stuck frame with a three-foot metal pipe which he had previously used successfully for the same purpose. While plaintiff was attempting to unjam the shuttle welder, his supervisor, Bob Adams, came by. Adams instructed plaintiff to use a screwdriver to loosen the frame. He borrowed one from a fellow employee and returned to the shuttle welder. Plaintiff testified that in attempting to dislodge the frame, he kept one foot on the floor, placed his knee over the carriage, and reached up. At that point, apparently, the carriage caught his arm, the frame broke loose, and he was pulled into the shuttle welder. As a result, he broke his hip and wrist, and had to undergo a total hip replacement.

Plaintiff testified that when the accident occurred, the carriage moved toward him, unlike previous occasions when it would not move, or would move away from him. Plaintiff’s supervisor testified that even with the air turned off, the machine still could move because of compressed air in the lines. Adams acknowledged that to bleed air out of the lines, a small valve on the side of the machine had to be used. It was disputed at trial as to whether plaintiff was correctly instructed regarding what to do in the event the shuttle welder jammed.

Arnold Martin, a “certified safety professional,” testified as an expert witness for plaintiff. Martin explained that at the time of the shuttle welder’s manufacture, the state of the art required that in the interest of safety it should have been made with guards on both sides and in the rear to prevent someone from entering it. He also stated that a warning should have been placed on the shuttle welder. He explained as follows:

The other thing, and probably more hazardous, was decals or a sign should have been placed on the machine to the effect that after the power had been turned off, the electrical power, No. 1, the air system should have been turned off; No. 2, the lines bled, because as long as there was pressure in there, there was a possibility that any part stuck in there would trip the machine when they were unjammed; and, the third thing was that a trained maintenance man, or another trained employee, only should have unjammed the machine.

Subsequent to plaintiff’s accident, protective barrier guards were installed on the shuttle welder.

I. The Color Photographs

Defendant contends that the trial court erred to reversal by allowing certain color photographs, offered by plaintiff, to be admitted into evidence. The basis of defendant’s contention is that the photographs showed post-accident modifications to the shuttle welder, which were apparently made for the purpose of making the machine safer. Generally, evidence of subsequent repairs is not admissible to establish negligence, although it may be admissible to show identity of ownership, to show control of the locus, to contradict or impeach a witness, or to lessen the weight of an expert opinion. Norwood Clinic, Inc. v. Spann, 240 Ala. 427, 199 So. 840 (1941). Another permissible use may occur where such evidence is offered to establish a condition existing at the time of the accident. Leeth v. Roberts, 295 Ala. 27, 322 So.2d 679 (1975). Defendant contends that the photographs were not admissible under any exceptions to the general rule. Assuming, without deciding, that defendant is correct on that point, we find, with the exception of plaintiff’s exhibits one, six, nine, and ten (to which defendant objected at the time they were offered), that defendant failed to preserve error as to the photographs.

Defendant theorizes that it preserved error as to all photographs by its motion in limine, and that an objection to the photographs, at the time they were offered into evidence, was unnecessary. We disagree. At the beginning of trial, defendant orally moved for a motion in limine:

MR. GAINES: If it please the Court, on behalf of the Defendant, we move for an order in limine, Judge, if that is the way it is supposed to be phrased, and I think it is, and ask the Court to enter an Order preventing or prohibiting the attorneys for the Plaintiff from going into any evidence regarding any change or changes made in the machine in question after this accident; and also, prohibiting them from offering any photographs of the machine showing a changed condition after the accident in question. And, Judge, we believe that we are entitled to this. We believe that the overwhelming law of many jurisdictions is that such evidence is not admissible if any changes are made, whether they are for remedial purposes or precautionary purposes, of taking precautionary measures. Evidence of subsequent steps is not admissible to prove say negligence, I mean any design defects they claim. It is not admissible as evidence of any of the unreasonable danger, dangerous nature, of the machine in question. We have a number of citations, if the Court would like to look at them. We don’t believe that the evidence should be admitted in the case, and we ask for an order in limine prohibiting it.

After that, plaintiff and defendant argued their positions to the trial judge, who viewed the disputed photographs and rendered a decision on their admissibility. The judge ruled that some photographs were admissible, that others were not admissible, and that some would be admissible only after objectionable portions were cut off:

THE COURT: Let her mark them and then I will go get the scissors. On Plaintiff’s Exhibit 1,1 am going to cut off that part right through there (indicating). And on Plaintiff’s Exhibit 2, I am going to cut off that (indicating). On 3,1 don’t see any problem. No. 4, it is at such a distance that I don’t really see any problem. No. 6, there doesn’t seem to be any problem. I think that one, No. 7, there is no way to correct it. No. 8 — look at it.
MR. GAINES: That is all right
THE COURT: No. 3, No. 6, No. 2, and No. 1, there seems to be no objection. No. 7, first of all, I don’t think it is a very good picture and it has got that pole right in the middle of it. I sustain the objection to No. 7. I overrule your objection to 4 and I think that is more of a duplication, No. 5 is. I sustain your objection to 5. As far as 9, 9 will be all right. 10— MR. GAINES: I don’t even know what that is.

In Acklin v. Bramm, 374 So.2d 1348 (Ala.1979), this court effectively overruled Bradford v. Birmingham Electric Co., 227 Ala. 285, 149 So. 729 (1933), and held that use of a motion in limine is permissible in this jurisdiction. Defendant contends that because its motion in limine was granted, it was not required to object again when the photographs were offered into evidence. This court has not previously been called upon to answer this question. Our review of the facts in this case leads us to conclude that it is unnecessary for us to answer that question. We find defendant’s motion inadequate to preserve the error asserted in the absence of objections to the photographs at the time they were admitted into evidence.

The Supreme Court of Iowa has noted the proper use of a motion in limine:

The motion should be used, if used at all, as a rifle and not as a shotgun, pointing out the objectionable material and showing why the material is inadmissible and prejudicial. Since no one knows exactly how the trial will proceed, trial courts would ordinarily be well advised to require an evidentiary hearing on the motion when its validity or invalidity is not manifest from the face of the motion.

Lewis v. Buena Vista Mutual Insurance Association, 183 N.W.2d 198 at 201 (Iowa 1971), State v. Garrett, 183 N.W.2d 652 at 654 (Iowa 1971).

More broadly, the Supreme Court of Washington has discussed the considerations applicable to the granting or denying of a motion in limine:

Taken together, these cases indicate that the trial court should grant such a motion if it describes the evidence which is sought to be excluded with sufficient specificity to enable the trial court to determine that it is clearly inadmissible under the issues as drawn or which may develop during the trial, and if the evidence is so prejudicial in its nature that the moving party should be spared the necessity of calling attention to it by objecting when it is offered during the trial. To enable the court to make such a determination prior to trial and “out of context” the moving party should provide a memorandum of authorities showing that the evidence is inadmissible. If the court does not have the benefit of legal arguments, it can hardly be said to have abused its discretion if it denies a motion asking it to rule on the admissibility of evidence before it knows what the issues and circumstances are. [Citations omitted.]

Fenimore v. Donald M. Drake Construction Company, 87 Wash.2d 85, 549 P.2d 483 at 488 (1976).

Encompassed in the above-quoted authorities is the concept that, as specifically as possible, a motion in limine must apprise the trial court of its object. This is especially true in the case of exhibits which the non-movant may seek to offer into evidence. A broad-based motion which leaves the trial court to speculate as to the motion’s object may be insufficient to preserve subsequent error which is not called to the trial court’s attention. This is the case here. It is clear from the record that the defendant initially did not object to plaintiff’s exhibits one, two, three, and six. Of those, two and three were later entered into evidence without objection. Although, in ruling on defendant’s motion in limine, the trial court found plaintiff’s exhibit four to be admissible, it was later offered into evidence with defendant’s consent. Therefore, defendant cannot allege error as to that photograph. Plaintiff’s exhibits five and seven were never offered into evidence. Plaintiff’s exhibit eight was offered without objection, which defendant concedes. As to these photographs, defendant failed to preserve error by either failing to object to their introduction or by implicitly waiving objection, as in the case of plaintiff’s exhibit four.

The record reveals that the remaining photographs, plaintiff’s exhibits one, six, nine, and ten, were objected to by defendant at the time they were offered into evidence. Therefore, we will consider the propriety of the trial court’s allowing these photographs into evidence. Defendant’s objection to the photographs, and reason for its motion in limine, was that they purportedly showed post-accident modifications to the shuttle welder in the form of guard screens and posts which were later installed. The guard screens and posts were red in color and readily stood out against the background of the shuttle welder, which was dark green. In response to defendant’s motion in limine, the trial judge used a pair of scissors to cut off portions of the photographs containing the post-accident modifications. On appeal, defendant contends this was reversible error because that action emphasized to the jury the defendant had something to hide. We cannot agree.

Plaintiff’s exhibits originally were color photographs measuring eight by ten inches. Plaintiff’s exhibits one, six, nine, and ten, were trimmed along the borders to eliminate the objectionable modifications. The result was four color photographs with dimensions ranging from approximately eight by nine inches, to approximately five by seven inches. We find no error in the trial court’s action. This court has often said that where physical evidence or statements contain objectionable matter or references which cannot be separated from the whole, they may, nevertheless, be admitted under proper circumstances. Central of Georgia Railway Company v. Steed, 287 Ala. 64, 248 So.2d 110 (1971); Sims v. Struthers, 267 Ala. 80, 100 So.2d 23 (1958); Hunt v. Ward, 262 Ala. 379, 79 So.2d 20 (1955); Sims v. State, 253 Ala. 666, 46 So.2d 564 (1950); Pittman v. Calhoun, 233 Ala. 450, 172 So. 263 (1937); Kennedy v. State, 85 Ala. 326, 5 So. 300 (1888). The converse, logically, is true, applying the above-cited cases. Where objectionable matter can be separated from proffered evidence, the objectionable matter may be deleted and the remainder admitted.

We find the case of Rogall v. Kischer, 1 Ill.App.3d 227, 273 N.E.2d 681 (1971), authority supporting the trial court’s action in trimming the photographs. There, photographs showing damage to plaintiff’s automobile were allowed into evidence over defendant’s objection. The photographs had “car damage” written on them with arrows indicating the damaged parts of the vehicle. The trial court judge allowed the photographs to be admitted after they were trimmed to remove the writing contained on them. The Illinois Appellate Court sanctioned the trial court’s action. Similarly, it upheld the showing of a motion picture to the jury, after excluding certain inflammatory portions. Although Rogall v. Kischer did not involve the issue of trimming a photograph to remove evidence of post-accident modifications or repairs, the same result still applies. Where a photograph depicts objectionable material which is capable of being severed, the remainder of the photograph may be admitted into evidence in the trial court’s discretion. The vesting of that discretion in the trial court in the admission of photographs is well established.

Photographs and testimony are relevant and admissible to help the jury to better understand the persons, object, locale, or conditions in issue. However, relevancy and introduction of both testimony and photographs are within the sound discretion of the trial court. This discretion is not reviewable in the absence of a gross abuse of that discretion. Costarides v. Miller, 374 So.2d 1335 (Ala.1979); Moon v. Nolen, 294 Ala. 454, 318 So.2d 690 (1975).

Raines v. Williams, 397 So.2d 86 at 88 (Ala.1981), quoted with approval in Shiver v. Waites, 408 So.2d 502 (Ala.1981).

Reviewing photographs trimmed by the trial court, we are unable to conclude that their admission was an abuse of discretion, in light of the above-cited principles. Instead, we find that the trial court wisely exercised its discretion by trimming the photographs and admitting them into evidence. By so doing, the jury was afforded additional views of the shuttle welder to aid them in their resolution of the issues presented at trial.

II. Plaintiffs Alleged Misuse of the Shuttle Welder

Next, defendant argues that plaintiff did not make out a case under the Alabama Extended Manufacturer’s Liability Doctrine and, therefore, it was entitled to a directed verdict. It theorizes that plaintiff misused the shuttle welder by disregarding its safety devices and attempting to dislodge the Jeep seat frame which had jammed. In McCaleb v. Mackey Paint Manufacturing Co., 343 So.2d 511 at 514 (Ala.1977), citing and quoting Atkins v. American Motors Corp., 335 So.2d 134 (Ala.1976), this court stated: “The user’s misuse of the product constitutes a valid defense under the ‘extended manufacturer’s liability doctrine.' ” We further observe that “[o]rdinarily, the conduct of the plaintiff, in his use of an alleged defective product, is a factual issue for the jury.” Beloit Corporation v. Harrell, 339 So.2d 992 at 997 (Ala.1976).

The principles applicable to the granting of a directed verdict are well established.

A directed verdict is proper only where there is a complete absence of proof on an issue material to the claim or where there are no disputed questions of fact on which reasonable people could differ. Deal v. Johnson, 362 So.2d 214 (Ala.1978). In considering a motion for directed verdict, the court must apply Rule 50(e), ARCP, under which “a question must go to the jury, if the evidence, or any reasonable inference arising therefrom, furnishes a mere gleam, glimmer, spark, ... or a scintilla in support of the theory of the complaint....” Dixie Electric Company v. Maggio, 294 Ala. 411, 318 So.2d 274 (Ala.1975).
In addition, the trial court must view the entire evidence, and all reasonable inferences which a jury might have drawn therefrom, in the light most favorable to the non-moving party. Alabama Power Company v. Taylor, 293 Ala. 484, 306 So.2d 236 (1975); Vintage Enterprises, Inc. v. Cash, 348 So.2d 476 (Ala.1977). Also, this Court’s function in reviewing a motion for a directed verdict is to review the tendencies of the evidence most favorably to the non-movant, regardless of a view we may have as to the weight of the evidence, and we must allow such reasonable inferences as the jury were free to draw, not inferences which we may think the more probable. Beloit Corp. v. Harrell, 339 So.2d 992 (Ala.1976).

Caterpillar Tractor Company v. Ford, 406 So.2d 854 at 856 (Ala.1981).

Assuming, without deciding, that the defense of misuse of the product properly applies to the instant fact situation, we conclude that the evidence was conflicting as to plaintiff’s “use” of the shuttle welder. A jury question, therefore, was created. Viewing the evidence in a light most favorable to plaintiff, the jury could conclude that he did not misuse the shuttle welder. Defendant’s argument on this issue cannot be a basis for reversal.

III. Assumption of the Risk and Contributory Negligence

Defendant also argues that the evidence showed plaintiff’s actions in unjamming the shuttle welder constituted assumption of the risk, or alternatively, contributory negligence. It insists that the trial court erred by not granting its motion for a new trial. A trial court’s granting or denying of a motion for a new trial is largely discretionary. Chavers v. National Security Fire & Casualty Co., 405 So.2d 1 at 9-10 (Ala.1981) (Chavers); ConAGRA, Inc. v. Masterson, 290 Ala. 273 at 279-80, 276 So.2d 134 at 140 (1973). In Chavers, this court stated:

The new trial rule simply permits a trial judge to consider the evidence which was before the jury, weigh it in light of what he observes during the course of the trial, and allow another jury to pass on the case if he is convinced that the jury verdict returned is unjust. It does not, however, where there is some evidence to support the verdict, permit the trial judge to enter a JNOV in favor of the party opposing the verdict. A JNOV is never proper unless it would have been proper to grant a directed verdict in favor of the same party.

Chavers, at 10.

In the instant case there was conflicting evidence bearing on the defenses raised by defendant. The jury could conclude that plaintiff neither assumed the risk, nor was contributorily negligent in his efforts to unjam the shuttle welder. “Verdicts are presumed to be correct and that presumption is strengthened when a new trial is denied by the court.” Cooper v. Peturis, 384 So.2d 1087 at 1089 (Ala.1980); Gavin v. Hinrichs, 375 So.2d 1063 (Ala.1979); Elba Wood Products, Inc. v. Brackin, 356 So.2d 119 (Ala.1978). We will not disturb the trial court’s ruling on a motion for a new trial unless it is “plainly and palpably erroneous.” ConAGRA, Inc. v. Masterson, supra; Shepherd v. Southern Railway Company, 288 Ala. 50, 256 So.2d 883 (1970). We cannot reach that conclusion here, and, therefore, we cannot disturb the trial court’s ruling and judgment.

IV. Plaintiff’s Comments During Closing Arguments

Defendant argues that during closing arguments, on several separate occasions, plaintiff made highly prejudicial remarks, to which objections were made and sustained. Plaintiff’s argument, made by James L. Klinefelter, Esq., and by John R. Phillips, Esq., contained the following remarks.

MR. KLINEFELTER: “I want to read a quote to you by C.C. Torbert—
MR. GAINES: I hate to interrupt—
MR. KLINEFELTER: It is not a case; it is just a statement from him about the importance of a Jury.
THE COURT: All right, go on.
MR. KLINEFELTER: “I think they made more money, more profit — ”
MR. GAINES: We object, Your Honor. That is improper argument.
THE COURT: Sustained.
MR. PHILLIPS: “There is one other thing that is involved in this case, punitive damages. Punitive damages are those damages which the law allows — ”
MR. GAINES: Excuse me. We object to this. There is no grounds for claiming any punitive damages in this case, none whatsoever.
THE COURT: Sustained.
MR. PHILLIPS: “Now, Banner Welder is not going to live or die on whether you return a verdict in this case. They are a big business, and they make — ”
MR. GAINES: Excuse me again. I hate to interrupt; but that is objectionable. That is not proper argument.
THE COURT: Sustained.
MR. PHILLIPS: “The art was good enough and known by this company to do exactly what I said they ought to have done. I bet you you couldn’t buy one of those Shuttle Welders without getting — ”
MR. GAINES: That is improper argument; and we object.
THE COURT: Sustained.

Defendant contends that the remarks were ineradicable and improperly influenced the jury’s verdict. We observe that although defendant objected to plaintiff’s remarks, it did not request curative instructions or move for a mistrial. Moore v. State, 364 So.2d 411 at 414 (Ala.Cr.App.1978), recited the familiar rule concerning preservation of error in improper argument of counsel:

In the absence of an objection by counsel, a motion to exclude, a ruling on the objection, or a refusal of the trial judge to rule thereon, improper argument or remarks by counsel are not subject for review by this court. Brown v. State, 50 Ala.App. 471, 280 So.2d 177; Veith v. State, 48 Ala.App. 688, 267 So.2d 480; Hutcherson v. State, 40 Ala.App. 417, 114 So.2d 572.
However, an exception to this rule exists where the comment is so prejudicial that its effect is ineradicable. Anderson v. State, 209 Ala. 36, 95 So. 171; Christian v. State, Ala. 351 So.2d 623; Gunnels v. Jimmerson, Ala. 331 So.2d 247. But, in view of the materiality of the appellant’s mental condition, we do not believe that the comment falls within this exception. See Lyons v. State, 53 Ala.App. 111, 298 So.2d 42.
It is our judgment that, without a timely objection, this court has nothing to consider.

Lawrence v. Alabama Power Company, 385 So.2d 986 (Ala.1980); Richardson v. State, 354 So.2d 1193 (Ala.Cr.App.1978).

The question which next arises is whether defendant’s alleged error came within the exception to the general rule. We find that it does not. None of the remarks were so invidious that they could not have been cured by requested instructions from the trial court. Nor do we find that the four instances cited from the record, when considered together, cumulatively created ineradicable prejudice. Instead, we find that the error alleged by defendant falls within the situation considered by this court in Prescott v. Martin, 331 So.2d 240 (Ala.1976):

We are not of the opinion that the statement in the instant ease is so strongly prejudicial as to be beyond cure by the trial court. We also recognize that the trial court has a great deal of latitude in determining the prejudicial effect of statements made in argument. Central of Georgia Railway Company v. Phillips, 286 Ala. 365, 240 So.2d 118 (1970). See also: McClard v. Reid, 190 Tenn. 337, 229 S.W.2d 505, 506 (1950).
Since the statement was of such a nature that it could be and was cured by the trial court, and since no motion for mistrial was made, there is no error for this court to consider. See, e.g., Montana v. Nenert, (Mo.App.1950), 226 S.W.2d 394, 400, 401, and Logwood v. Nelson, 35 Tenn.App. 639, 250 S.W.2d 582, 586 (1952).

Prescott v. Martin, at 247. Accordingly, we find defendant’s allegation of reversible error to be without merit.

V. The Allegation of Substantial Change

Lastly, defendant argues that it was entitled to a directed verdict because the evidence showed the shuttle welder had been substantially changed after it left defendant’s hands. Defendant points to the fact that the “ground blocks” on the shuttle welder were changed. On cross-examination Bob Adams, a witness for the defense and plaintiff’s supervisor, gave the following testimony:

Q. I will ask you, Mr. Adams, from the time that machine was installed in Piedmont until the time that Mr. Knigh-ton was hurt, did you all modify that welding machine in any manner?
A. The only thing we changed was the ground blocks on it, because we went to a different type of ground to get a better weld.
Q. But you didn’t—
A. That was all.
Q. You didn’t change the carriage or the welding guns?
A. No, nothing that operates the machine, just the welding is all.

Defendant correctly calls to our attention the fact that to prevail under the Alabama Extended Manufacturer’s Liability Doctrine, a plaintiff must establish that the product “was expected to, and did, reach the user without substantial change in the condition in which it was sold.” Atkins v. American Motors Corp., 335 So.2d 134 at 141 (Ala.1976); Casrell v. Altec Industries, Inc., 335 So.2d 128 (Ala.1976). Defendant theorizes that it is logical to infer that the change in the ground blocks increased the frequency of malfunctions of the shuttle welder, thereby causing the accident. It concludes that properly, judgment should have been entered in its favor.

We find defendant’s argument to be without merit. Plaintiff did establish defendant’s liability under the Alabama Extended Manufacturer’s Liability Doctrine by showing that the shuttle welder was substantially unchanged at the time plaintiff was injured. Arnold Martin, plaintiff’s expert witness, testified on direct examination that the shuttle welder was substantially unchanged at the date of plaintiff’s injury. Proximate cause is an element of a products liability action. A plaintiff must prove that his injury resulted from the defective condition of the product. Casrell v. Altec Industries, Inc., at 133. One commentator has observed:

The question of liability of a manufacturer or seller for injuries sustained by the user of an altered product involves the issue of whether the injuries were proximately caused by a defect in the product as manufactured and sold, or by a defect created by the alteration by the user or a third party.

Annot., 41 A.L.R.3d 1252 at 1253 (1972). In the instant case, we find it to be a reasonable inference that no substantial change occurred to the shuttle welder after its manufacture so as to negate a showing of proximate cause by plaintiff. It is unclear from the record what ground blocks are. Nevertheless, the reasonable inference of the testimony of plaintiff’s supervisor is that no substantial change was made to the machine. Plaintiff’s expert witness specifically denied that the shuttle welder had changed substantially. Defendant cites no other portion of the record to support its theory. Therefore, we find no error in the trial court’s denial of defendant’s request for a directed verdict.

For all of the foregoing reasons, we find no reversible error, and we affirm the judgment of the trial court.

AFFIRMED.

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

      . Louisville and Nashville Railroad Company v. Phillips, 293 Ala. 713, 310 So.2d 194 (1975), superficially appears to have bearing on this question, but closer scrutiny reveals that it does not. There, plaintiff, who was the appel-lee, secured a favorable ruling on his motion in limine, which later was violated during trial. When defendant attempted to interject subject matter encompassed by the motion, plaintiff moved for a new trial but did not secure a ruling from the trial court judge. Plaintiff’s motion for a new trial was granted after the trial concluded. Defendant, who brought the appeal, argued that the granting of a new trial was improper because plaintiff failed to secure a ruling on his motion during trial. This court disagreed, noting the trial court’s duty to keep extraneous influences from the jury, and its discretion in granting motions for a new trial. That case is also distinguishable from the instant one because there, the party (plaintiff) who secured a favorable ruling on a motion in limine was not the party taking an appeal and asserting error on a matter arising out of the trial court’s ruling on the application of the motion in ¡¡mine.

      . Defendant calls to our attention the fact that plaintiffs exhibit # 9 depicts a red barrier guard in the center of the photograph. It insists the admission of this photograph constitutes reversible error. We note that the photograph in question apparently shows the shuttle welder from a front end view. The red barrier guard is at the rear of the machine, in the background. That part of the photograph is at least partially out of focus. To the extent the barrier guard can be seen, it occupies a very small portion of the photograph even as trimmed. In our opinion, it is unclear whether the barrier guard would be recognized as such in the absence of a viewer’s being informed as to what it was. In any event, the photograph would be admissible under the rule (infra) that where an exhibit may contain some objectionable matter, it may, nevertheless, be admitted in the trial court’s discretion.


author: SHORES, Justice.

text:
    Ex parte Jerry Wayne POTTER. (In re Jerry Wayne Potter v. State of Alabama).
    82-67.
    Supreme Court of Alabama.
    Jan. 7, 1983.
    John Mark McDaniel, Huntsville, for petitioner.
    Charles A. Graddick, Atty. Gen., for respondent.
   SHORES, Justice.

The petitioner alleges that the Court of Criminal Appeals 420 So.2d 861 erred in affirming the denial of his petition for writ of error coram nobis by the trial court without a hearing. If the petition was meritorious on its face, as the petitioner asserts, the trial court should have held a hearing. Aaron v. State, 283 Ala. 52, 214 So.2d 327 (1968). However, we cannot say that it was because it is not before us. It is not made an exhibit to the petition for certiorari to the Court of Criminal Appeals, nor are its contents spelled out in the petition. For this reason, the petition for certiorari is denied.

WRIT DENIED.

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


author: TORBERT, Chief Justice.

text:
    GOLD KIST, INC. v. FARMERS AND MERCHANTS BANK.
    81-928.
    Supreme Court of Alabama.
    Jan. 14, 1983.
    John Earle Chason of Chason & Chason, Bay Minette, for appellant.
    Margaret G. Thomas of Murchison & Thomas, Foley, for appellee.
   TORBERT, Chief Justice.

The plaintiff below, Farmers and Merchants Bank (Farmers), instituted these proceedings against Harry Hedges and Gold Kist, Inc. This appeal concerns only the disposition of the case against Gold Kist.

In 1980, Gold Kist purchased soybeans from Harry Hedges. Farmers asserted that the soybeans, purchased by Gold Kist, were collateral for a loan to Hedges, that they were subject to a perfected security interest in favor of Farmers, that the sale to Gold Kist was improper, and that Gold Kist’s actions amounted to a conversion of the property. The trial court held that Gold Kist was liable to Farmers in the amount of $10,457.30 for conversion of the soybeans.

Testimony at the trial indicated that Hedges executed two notes to Farmers, one of which was secured by “two hundred fifty acres of soybeans.” The security agreement described the collateral as: “All crops grown and harvested in 1980 (specifically 250 acres of soybeans) on land rented or leased in Baldwin County, Alabama, but not limited to the above.” Farmers filed a financing statement which contained the same description. At issue here is whether the security agreement and financing statement gave Farmers a valid perfected security interest in the soybeans grown by Hedges and purchased by Gold Kist.

The UCC makes the following provisions for the creation of a security interest in crops:

“Subject to the provisions of section 7-4-208 on the security interest of a collecting bank and section 7-9-113 on a security interest arising under the article on sales, a security interest is not enforceable against the debtor or third parties unless:
(a) The collateral is in the possession of the secured party; or
(b) The debtor has signed a security agreement which contains a description of the collateral and in addition, when the security interest covers crops or oil, gas or minerals to be extracted or timber, a description of the land concerned. In describing collateral, the word ‘proceeds’ is sufficient without further description to cover proceeds of any character.”

Code 1975, § 7-9-203. That security interest is perfected by filing a financing statement which includes the following information:

“A financing statement is sufficient if it is signed by the debtor and the secured party, gives an address of the secured party from which information concerning the security interest may be obtained, gives a mailing address of the debtor and contains a statement indicating the types, or describing the items, of collateral. A financing statement may be filed before a security agreement is made or a security interest otherwise attaches. When the financing statement covers crops growing or to be grown or goods which are or are to become fixtures, or timber, the statement must also contain a description of the real estate concerned and the name of the record owner thereof. A copy of the security agreement is sufficient as a financing statement if it contains the above information and is signed by both parties.”

Code 1975, § 7-9-402(1). (Emphasis added.) As can be seen from these two provisions, in the case of crops, the description of the real estate is required to create a security interest; and for perfection, both the name of the record owner and the description of the real estate is required.

In the case before us, the description is 250 acres of soybeans on land rented or leased in Baldwin County. Gold Kist asserts that this description is insufficient to create and perfect a security interest in these crops. We agree.

Farmers, relying on the following provisions of the Code, maintains that the description given suffices.

“For the purposes of this article any description of personal property or real estate is sufficient whether or not it is specific if it reasonably identifies what is described.”

Code 1975, § 7-9-110.

“A financing statement substantially complying with the requirements of this section is effective even though it contains minor errors which are not seriously misleading.”

Code 1975, § 7-9-402(5). The Alabama cases have generally rejected any requirement that a description of collateral be extremely exact and detailed. See e.g., Associates Capital Corp. v. Bank of Huntsville, 49 Ala.App. 523, 274 So.2d 80 (1973). However, in the case of farm products, greater specificity in the description of the real estate appears justified.

Virtually all courts which have considered a description such as this one have held the description to be insufficient. In Piggott State Bank v. Pollard Gin Co., 243 Ark. 159, 419 S.W.2d 120 (1976), the court held the following description to be insufficient:

“All of the following crops to be planted or growing within one year from the date hereof on the lands hereinafter described: 7 acres of cotton and 53 acres of soybeans to be produced on the lands of S.E. Karnes ... all of the above crops to be produced in Clay County, Arkansas during the year 1965.”

419 S.W.2d at 121.

The same result was also reached in Chanute Production Credit Ass'n v. Weir Grain and Supply, Inc., 210 Kan. 181, 499 P.2d 517 (1972). In that case, the following description had been used:

“Crops: Annual and perennial crops of whatever kind and description which are now growing or are hereafter planted, grown and produced on land owned or leased by debtor in Cherokee County, Kansas.”

499 P.2d at 518.

The appellee has not called to our attention any case concerning crops in any jurisdiction which has held that a description of this nature suffices to either create a valid security interest, or to perfect it. Sections 7-9-110 and 7-9-402(5), while calling for a liberal reading, do not allow the secured party this kind of latitude with the description. Further it is clear that for perfection, in addition to the description, the name of the record owner is required. The documents completely fail to name the record owner of the real estate.

Thus, we hold that the trial court was in error in holding that Farmers had a perfected security interest and that Gold Kist was liable in the amount of $10,457.30. This case is due to be reversed and remanded.

REVERSED AND REMANDED.

MADDOX, JONES, SHORES and ADAMS, JJ., concur.


author: WRIGHT, Presiding Judge.

text:
    REYNOLDS METALS CO., et al. v. Ernest JEFFREYS and Albert Beavers.
    Civ. 2681, Civ. 2682.
    Court of Civil Appeals of Alabama.
    Sept. 16, 1981.
    Rehearing Denied Oct. 14, 1981.

      Vincent McAlister of Almon, McAlister, Ashe, Baccus & Smith, Sheffield, for appellants.
    Charles D. Rosser of Rosser & Munsey, Tuscumbia, for appellees.
   WRIGHT, Presiding Judge.

This is a workmen’s compensation case, and a case of first impression. The case arose under Title 26, § 312, Code of Alabama (1940) (Recomp.1958) as amended in 1961. The statute provides for contribution of attorney’s fees by an employer following the employee’s recovery from a negligent third party.

The controlling issues in the ease are under what statutory provision does the one year statute of limitations arise and when does the limitation period begin to run?

The injuries occurred on February 3, 1970, when Reynolds Metals Company employees Jeffreys and Beavers were involved in an automobile collision on a private road owned by Reynolds Metals. William Thomas Fish was the driver of the other vehicle in the accident.

Jeffreys and Beavers thereafter brought suits in the Colbert County Circuit Court against William Thomas Fish and Reynolds Metals Company for personal injury based on negligence. The claim was filed on February 2, 1971.

Fish was dismissed from that suit on November 2, 1971. Then on November 18, 1971, he settled with the plaintiffs, Jeffreys receiving $25,000 and Beavers receiving $5,500. Reynolds Metals Company promptly removed the negligence action to the United States District Court, Northern District of Alabama, Northwestern Division.

In the federal court, Reynolds Metals filed a motion for summary judgment contending that its employees’ only action against it was an action for workmen’s compensation. The court agreed and granted the motion dismissing the case, on February 28, 1972.

Jeffreys and Beavers then sued Reynolds Metals in Colbert County Circuit Court for contribution for attorney’s fees incurred in the 1971 settlement with Fish. The claim was filed February 2, 1973, some three years after the injuries occurred and more than two years after the plaintiffs’ settlement with Fish. In the interim however, Jeffreys and Beavers received sickness and accident benefits under a policy Reynolds Metals had with Metropolitan Life Insurance Company. These payments were not dependent, however, on occupational injury and would have been paid regardless of whether the employees had a workmen’s compensation claim.

Reynolds Metals defended the claim for contribution for attorney’s fees on the ground that the one year statute of limitations had run. The circuit court disagreed, finding that the limitation period ran from the date of the federal court’s grant of summary judgment in the original negligence action. The trial court also found that the appropriate limitation statute was Title 7, § 26(1), Code of Alabama (1940) (Recomp.1958). Judgment was entered for plaintiff-employees under Title 26, § 312, Code of Alabama (1940) (Recomp.1958) as amended in 1961. From this judgment Reynolds Metals Company timely appealed.

Title 7, § 26(1), as relied on by the trial court, has no pertinence to workmen’s compensation. That section governs an action “for the recovery of wages, overtime, damages, fees and penalties.” Thus the section has no application here, and was erroneously applied.

There is no question but that Title 26, § 296 Code of Alabama (1940) (Recomp. 1958) specifically applies to Title 26, § 312, as amended, for third party negligence actions under the Workmen’s Compensation Law. However, the limitations set out in Title 26, § 296 were already in effect when the 1961 amendment providing for contribution of attorney’s fees was enacted. No cases have arisen determining when the one year statute of limitations under § 296 begins to run for purposes of the 1961 attorney’s fee amendment.

Appellant Reynolds Metals contends that the claim for contribution for attorney’s fees runs from the date of the injuries. This court cannot agree to that proposition. Since the claim for contribution for attorney’s fees cannot accrue until the final determination of the third party action, the limitation period should not begin to run until that time. It is inconceivable that the legislature would amend the law to increase the employee’s compensation by providing for this contribution and then allow the claim to be cut off before the third party action had determined the employer’s liability.

This finding, however, does not save the case for the appellee-employees. We find that in this case, the third party suit was finally determined on November 18, 1971, when the employees settled with third party defendant Fish. Title 26, § 312, as amended, itself excludes the employer from the category of third parties. Jef-freys and Beavers had no common-law negligence action against Reynolds Metals as the Workmen’s Compensation Law is in the nature of a substitute for tort actions at common-law. Title 26, § 253, Code of Alabama (1940) (Recomp.1958). See, Harris v. Louisville & Nashville R. Co., 237 Ala. 366, 186 So. 771 (1939); Gentry v. Swann Chemical Co., 234 Ala. 313, 174 So. 530 (1937).

Due to the statutory nature of the exclusive remedy for employees under the Workmen’s Compensation Law, the trial court was in error to find that the February 28, 1972 ruling by the federal court was a “judicial determination of plaintiffs’ remedy.” Plaintiffs were statutorily informed of their remedy against Reynolds Metals Company prior to the 1972 federal court ruling. Appellee-employees’ arguments that the employer was notified of a compensation claim by the 1971 action are of no avail. A proper claim or agreement with Reynolds Metals as to workmen’s compensation benefits was never made.

Jeffreys’ and Beavers’ contention that the statute of limitations should run from the date of last payment under the sickness and accident policy held by Reynolds Metals Company is also unpersuasive. These benefits were not tied in any way to occupational injury and would have been paid whether or not the employees had a claim for workmen’s compensation. Additionally, these benefits were provided by a policy written by Metropolitan Life Insurance Company and totally separate from the workmen’s compensation insurer, Liberty Mutual Insurance Company.

The case of Baggett v. Webb, 46 Ala.App. 666, 248 So.2d 275 (1971), though heavily relied on by both parties and the trial court, has little or no application here. No statute of limitations question arose in that case.

The judgment of the court below is due to be reversed.

REVERSED AND REMANDED.

BRADLEY and HOLMES, JJ., concur.


author: ADAMS, Justice. TORBERT, Chief Justice

text:
    Ex parte Ernest JEFFREYS and Albert Beavers. (Re REYNOLDS METALS COMPANY, et al. v. Ernest JEFFREYS and Albert Beavers).
    81-103.
    Supreme Court of Alabama.
    Jan. 7, 1983.
    Charles D. Rosser, Rosser & Munsey, Tus-cumbia, for petitioners.
    Vincent McAlister of Almon, McAlister, Ashe, Baccus & Smith, Sheffield, for respondents.
   ADAMS, Justice.

We granted a writ of certiorari to the Court of Civil Appeals to review its decision in these workmen’s compensation cases. The Court of Civil Appeals held that the one-year statute of limitations provided in Code 1940 (Recomp.1958), Tit. 26, § 296 , for an employer’s contribution of attorney’s fees under Code 1940 (Recomp.1958), Tit. 26, § 312, where an employee has recovered from a third party, runs from the final determination of the third-party action. Ernest Jeffreys and Albert Beavers (plaintiffs) claimed Reynolds Metals Company (defendant), their employer, was obligated to provide a contribution for attorney’s fees because they secured a recovery from a third-party defendant for their injuries. Plaintiffs brought actions against defendant for contribution of attorney’s fees more than one year after the final determination of their third-party action. The Circuit Court for Colbert County found plaintiffs’ claims to be within the statute of limitations provided in Code 1940 (Recomp.1958) Tit. 7, § 26(1). The Court of Civil Appeals reversed, applying Tit. 26, § 296, and held that the statute had already run. Both statutes provide one-year periods of limitations. The facts pertinent to this appeal are set out in the preceding opinion of the Court of Civil Appeals.

Although the Court of Civil Appeals reached the correct result, it did so for the wrong reason. We find the dispositive issue to be: Did plaintiffs invoke the operation of § 312 and thereby provide a basis for their claims seeking contribution for attorney’s fees? We hold that they did not, and, therefore, we affirm.

Our resolution of this appeal allows us to pretermit determination of the appropriate statute of limitations applicable to plaintiffs’ claims. However, our failure to reach the statute of limitations issue should not be construed as approving the resolution of that issue as arrived at by the Court of Civil Appeals or the circuit court.

At the outset, we observe that plaintiffs’ claims for attorney’s fees must arise from the operation of § 312. Prior to 1961, § 312 recognized an employee’s right to pursue a third-party action for his work-related injury:

Where the injury or death for which compensation is payable under Article 2 of this Chapter was caused under circumstances also creating a legal liability for damages on the part of any party other than the employer whether or not such party be subject to the provisions of Article 2 of this Chapter the employee, or his dependents in case of his death, may proceed against the employer to recover compensation under Article 2 of this Chapter, or may agree with the employer upon the compensation payable under Article 2 of this Chapter, and at the same time may bring an action against such other party to recover damages for such injury or death, and the amount of such damages shall be ascertained and determined without regard to Article 2 of this Chapter.

Acts 1947, No. 635, p. 484, § 1.

Subsequently, the following amendment was added to § 312 in 1961:

In any settlement made under this Section with a negligent third-party by the employee, or in case of his death, by his dependents, the employer shall be liable for that part of the attorneys fees incurred in the settlement with the third-party, either with or without suit, in the same proportion that the amount of the reduction in the employers liability to pay compensation bears to the total recovery from such third-party.

Acts 1961, Ex.Sess., No. 272, p. 2289, § 4.

The 1961 amendment effectively increased the employee’s compensation by making the employer contribute to the employee’s attorney’s fee in a third-party claim, with or without suit, which reduced the employer’s liability for compensation.

Applying these statutory provisions, we conclude that the Court of Civil Appeals and the circuit court went astray in their reasoning by accepting an unfounded premise: defendant had an obligation to plaintiffs under workmen’s compensation. None, in fact, existed. Although the federal district court dismissed plaintiffs’ common law suits against defendant, holding that plaintiffs’ exclusive remedy was workmen’s compensation, that did not create an obligation on defendant’s part under workmen’s compensation. At the time of the federal district court’s judgment, plaintiffs had never invoked the provisions of the workmen’s compensation act. Instead, they had pursued a common law suit against defendant, contending all the while that defendant was liable at common law, and not liable under workmen’s compensation. Plaintiffs neither filed an action for workmen’s compensation, nor reached an agreement with defendant as to the amount of compensation payable. Both means are specifically mentioned in § 312, and a plaintiff must utilize one of those means if he is to preserve his right to contribution for attorney’s fees. Because plaintiffs did neither, defendant has no liability under workmen’s compensation.

Stated another way, we hold simply that plaintiffs’ election to pursue only their common law action against defendant, rather than their remedy for workmen’s compensation, or their alternative remedies at common law and for workmen’s compensation, resulted in neither an agreement, nor an adjudication as to workmen’s compensation liability. Thus, there being no liability of the employer under workmen’s compensation, the statutory mandate of employer contribution to any attorney’s fee for a third party recovery was never invoked.

Indeed, the only statute of limitations applicable to this ease, as here postured, is § 296; and this application is restricted to plaintiffs’ causes of action against their employer for workmen’s compensation. That period of limitations expired long before plaintiffs filed their instant claim. Ultimately, therefore, defendant cannot incur a proportionate liability for attorney’s fees under § 312.

One further comment may be helpful in conceptualizing the principle upon which we base our holding. The Court of Civil Appeals, the circuit court, and counsel for the parties have consistently referred to the original two defendants (Reynolds and Fish) respectively as employer and third-party. In the context of this case, those references are inappropriate. These two defendants were sued as joint tort feasors. The fact that defendant Reynolds was plaintiffs’ employer was purely coincidental. Because plaintiffs made no claim against defendant Reynolds for workmen’s compensation, the suit against Fish, the driver of the other vehicle, was not a third-party suit as contemplated by § 312. We make this comment because it is obvious this error contributed to the erroneous rationale of the trial and appellate courts.

Although judicial restraint compels us to await a more appropriate adversary setting for determination of the statute of limitations applicable to a claim for an employer’s contribution for attorney’s fees, we will comment on the less controversial point regarding when the statute begins to run. The applicable statute of limitations would commence running, of course, from the accrual date of the cause of action, that is, from the date of the occurrence of all the contingencies prerequisite to fulfilling the third-party attorney’s fee contract, and the contingencies of the statutory mandate for employer contribution. For example, if the employer’s liability to pay compensation had been fixed, either by agreement or by adjudication, as of the time of the third-party recovery, the running of the limitations period on a claim for contribution would have commenced on the date of the final disposition of the third-party claim. If, on the other hand, the fixing of the workmen’s compensation liability occurs after the third-party recovery, the statute would run from the date of the determination of the employer’s liability to pay compensation.

For all of the foregoing reasons, we affirm the result arrived at by the Court of Civil Appeals.

AFFIRMED.

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

TORBERT, C.J., and ALMON, SHORES and EMBRY, JJ., concur specially.

TORBERT, Chief Justice

(concurring specially).

I concur with the majority, except that I would not write to the question of when the statutory period of limitations might begin to run.

ALMON, SHORES and EMBRY, JJ., concur.

      . The predecessor of Code 1975, § 25-5-80.

      . The predecessor of Code 1975, § 25-5-11.

      . The predecessor to Code 1975, § 6-2-39.

        .Reynolds Metals Company v. Jeffreys, [MS. Sept. 16, 1981] 425 So.2d 454 (Ala.Civ.App.1981).