author: WALKER, Presiding Justice, DAN M. LEE, Justice,

text:
    FIRST NATIONAL BANK OF VICKSBURG, Vicksburg, MS and D.W. Ellis, Trustee, v. Michael B. CARUTHERS and Rebecca R. Caruthers.
    No. 53801.
    Supreme Court of Mississippi.
    Dec. 14, 1983.
    Rehearing Denied Jan. 25, 1984.

      David W. Ellis, A.J. (Buddy) Dees, Jr., Ellis, Braddock & Bost, Vicksburg, for appellant.
    Wren C. Way, Way & Field, Vicksburg, for appellees.
    John Land McDavid, Richard M. Edmon-son, McDavid, Edmonson & Noblin, E.L. Brunini, Sr., Walter S. Weems, Brunini, Grantham, Grower & Hewes, Jackson, for amicus curiae.
    Before WALKER, P.J., and BOWLING and PRATHER, JJ.
   WALKER, Presiding Justice,

for the Court.

This is an appeal from the Chancery Court of Warren County wherein the court permanently enjoined the appellant, First National Bank of Vicksburg and D.W. Ellis (hereinafter the Bank), from exercising the power of sale as contained within a deed of trust securing certain property owned by the appellee. Aggrieved with this decision, the appellants have perfected their appeal to this Court. We reverse.

This case involves the enforceability of what the parties characterize as a “due-on-sale” clause contained within a deed of trust executed by the original mortgagors, Mr. and Mrs. Peoples, to First National Bank of Vicksburg. The original owners and mortgagors sold the secured property to a second purchaser, Mr. and Mrs. Wilcox, who, with the Bank’s permission, assumed the balance due on the original indebtedness secured by the promissory note and deed of trust in question. Thereafter, Mr. and Mrs. Wilcox sold the subject property to the appellees, the Caruthers, who attempted to assume the outstanding indebtedness under the original promissory note and deed of trust. The Caruthers had full knowledge that the deed of trust contained the following provision, which they now challenge, as being unenforceable:

14. The indebtedness secured hereby may not be assumed, nor may the property described herein be sold or conveyed in whole or in part, without Beneficiary’s prior written consent, and a breach of either of said conditions shall, at Beneficiary’s option, cause the entire indebtedness secured hereby to become due and payable.

At the outset we emphasize the relationship of the parties to one another. The Caruthers were not a party to the original transaction between the Bank and the original mortgagors and the original mortgagors made no complaint about the contract entered into between themselves and the Bank. It is the Caruthers’ contention that enforcement of the due-on-sale clause is contrary to public policy, and that it can only be enforced to protect a legitimate security interest of the Bank in the property. They further contend that enforcement by the Bank of the provision for the purpose of increasing the interest rate and thereby increasing the Bank’s yield on its loan portfolio is not the type of interest that may be protected by the clause.

A majority of the states, approximately 22, now hold that this type of provision is enforceable as a valid and binding contractual provision voluntarily entered into by the original parties to the contract (deed of trust).

The propriety of upholding similar clauses is summed up in Dunham v. Ware Savings Bank, 384 Mass. 63, 423 N.E.2d 998 (1981) where it is stated:

At the outset, we note that the historic purpose of the due-on-sale clause was to protect the lender’s security interest (Holiday Acres No. 3 v. Midwest Fed. Sav. & Loan Ass’n, 308 N.W.2d 471, 480 [Minn.1981]), but with the advent of inflationary increases in the cost of borrowing money the clause has been used to protect the lender against other risks involved in the long-term loans associated with home finance. “The interest rate fluctuation is evidently a, indeed the, principal underlying characteristic of home lending activities which leads lenders to insist on due-on-sale clauses” (emphasis in original). Williams v. First Fed. Sav. & Loan Ass’n, supra [651 F.2d 910] at 927. Also it is important to note that although mortgage loans are generally written for terms of twenty-five to thirty-five years, the average homeowner does not remain in one residence until his mortgage is repaid. In fact, figures submitted by amici curiae tend to establish that mortgages originating in the 1960’s remained outstanding on the average from 6.5 to 9.8 years, depending on the year of origination. In 1980 the Federal National Mortgage Association bought thirty year mortgages at a yield based on a payoff within a twelve year period.
Whatever the precise numbers, it is clear that lenders negotiate home loans with the realistic expectation that they will not be held to maturity, and interest rates are adjusted accordingly. The device used to activate the “early” (actually anticipated) payoff before maturity is the due-on-sale clause, which reduces interest rate risk by reducing the average time over which a mortgage loan is outstanding. Invalidating the due-on-sale clause would in effect extend the life of the average mortgage loan perhaps two or three times longer than the lender had originally anticipated, intensifying the lender’s risk of interest rate loss. It is fair to conclude that because of the reduced risk, use of an acceleration device lowers the interest rate at which the bank is willing to loan money. Viewed from this perspective, it can be argued that the mortgagors have already had the benefit of the clause which they now seek to invalidate.
Within the above context we turn to the policies which, on balance, make the clause reasonable and thus enforceable. They are: (1) the clause represents an equitable adjustment of rights between borrower and lender, (2) it may prevent State-chartered banks from operating at a competitive disadvantage with federally-chartered banks, and (3) it is a substantial benefit to the bank’s depositors and to the future borrowers from the bank.

423 N.E.2d at 1001-1002.

In the present economic circumstances, the visibility of large institutional lenders often makes such institutions the focal point for community concern. The right of the lender to accelerate a mortgage debt in order to renegotiate the loan at market interest rates will only be utilized by lenders when interest rates have risen. However, this coincidence should not obscure the fact that inflation has many causes, and the right to enforce a due-on-sale clause no more causes rising interest rates than the exercise of a borrower’s right to prepay his loan causes declining interest rates, or the carrying of an umbrella causes inclement weather. Both the right to prepay and the right to accelerate upon sale are protective devices relied upon by the community to moderate gains and losses in an uncertain economy. Because the due-on-sale clause is counterbalanced by the borrower’s statutory right to prepay; because federally chartered institutions might continue to enforce it as a matter of Federal regulation irrespective of State court holdings; and because the clause offers substantial benefits to depositors and future borrowers, we conclude that if the clause does restrain alienation it does not do so unreasonably.

Id. at 1005.

Several jurisdictions, approximately 6, prohibit the enforcement of due-on-sale clauses, especially when used as a means to increase the rate of interest.

The confusion resulting from the lack of uniformity among the states has prompted the Federal government, through the Congress, to preempt state due-on-sale restrictions and, with certain exceptions which are not present in this case, to declare such provisions enforceable according to the language of the contract. In its legislative history, the Congress noted that for lenders the due-on-sale restrictions extend the lives of older low-interest mortgages, preventing the lender from increasing the yields on those loans at the time the property is transferred. A recent study done by the Federal Home Loan Bank Board concluded that the imposition of such restrictions nationwide would create within a two-year period annual losses of $600 to $800 million for Federal savings and loans and $1 to $1.3 billion for all Federal and State savings and loan associations.

The committee stated that for the borrowers, the due-on-sale restrictions provided an advantage for the existing home buyers at the expense of new home buyers. It noted that new home buyers pay for due-on-sale restrictions in one of two ways: either they pay an inflated price for an existing home with a lower interest rate assumable loan; or they pay a premium for a new loan for a new home, or an existing home without an assumable loan. In the first case, the home sellers inflate the price of a home with an assumable loan to recover losses which result when they take back a second mortgage at a lower market interest rate; or the price increases to reflect the value of the assumable loan. In the second case, the lenders charge a premium for new loans in states which restrict due-on-sale clauses because the earnings from the new loan must offset older loans and originating an assumable loan rather than a loan with an enforceable due-on-sale clause posed a greater risk to the lender requiring a higher price for the mortgage. The committee also noted that these restrictions adversely affect secondary mortgage markets which rely on uniform homogeneous mortgage documents to efficiently operate and provide mortgage money for lenders and home buyers. It also pointed out that the United States Supreme Court upheld the right of federal savings and loan associations to enforce due-on-sale clauses and that this significantly disadvantaged state chartered and other lenders and created uncertainty among the home buyers and sellers regarding the enforcement of the due-on-sale. In its preemption of state due-on-sale restrictions, the Congress placed all lenders on a more competitive footing and eliminated the confusion which surrounded the enforceability of due-on-sale.

This Act, enacted October 1, 1982, as Public Law 97-320, which has been entitled the Garn-St. Germain Depository Institutions Act of 1982 also provides for a “window period” under section 341(c)(1) for a period of three years permitting restrictions on enforcement of the clause where there has been state action, either by judicial decision, legislation or constitutional amendments which restrict the enforcement of the due-on-sale clause. Mississippi has not placed restrictions on the use of the clause by constitutional or legislative action.

The appellees rely on the case of Sanders v. Hicks, 317 So.2d 61 (Miss.1975) in support of their contention that the clause is unenforceable and that they came within the “window period” of the Garn-St. Ger-main Act.

We have carefully considered the opinion in Sanders v. Hicks, and have reached the conclusion that the case was erroneously decided. Therefore, insofar as Sanders holds that the clause in the deed of trust which prohibited the fee owner from selling the real property without the written consent of the mortgagee was invalid and unenforceable and is hereby overruled. The right of persons to contract is fundamental to our jurisprudence and absent mutual mistake, fraud and/or illegality, the courts do not have the authority to modify, add to, or subtract from the terms of a contract validly executed between two parties. Weatherford v. Martin, 418 So.2d 777 (Miss.1982); United States Fidelity & Guaranty Co. v. Gough, 289 So.2d 925 (Miss.1974); Citizens National Bank of Meridian v. L.L. Glascock, Inc., 243 So.2d 67 (Miss.1971); Travelers Indemnity Co. v. Chappell, 246 So.2d 498 (Miss. 1971); Employers Mutual Casualty Co. v. Nosser, 250 Miss. 542, 164 So.2d 426 (1964); Phenix Ins. Co. v. Dorsey, 102 Miss. 81, 58 So. 778 (1912).

The contract in question was entered into by the Bank and Mr. and Mrs. Peoples, the original mortgagors, who were satisfied with its terms, and we are not constrained to permit the Caruthers to invalidate and nullify that provision in their attempt to assume an undue advantage not enjoyed by other mortgagors by enjoying a much more favorable interest rate than that prevailing in the market when they purchased the property. When they purchased this property, they were fully aware of the due-on-sale provision as they had been advised of it by their attorney and by their real estate agent, and are now in no position to complain.

The remaining contentions of appellees are without merit.

The judgment of the Chancery Court of Warren County enjoining the Bank from foreclosing its deed of trust is dissolved and this cause is rendered here.

Our holding today overruling Sanders v. Hicks is prospective only except as it applies to this case.

JUDGMENT ENJOINING THE BANK FROM FORECLOSING ITS DEED OF TRUST IS DISSOLVED AND THIS CAUSE IS RENDERED HERE.

PATTERSON, C.J., BROOM, P.J., and ROY NOBLE LEE, PRATHER and ROBERTSON, JJ., concur.

BOWLING, HAWKINS and DAN M. LEE, JJ., dissent.

APPENDIX “A”

Part C—Preemption of Due on Sale Prohibitions

Due-on Sale Clauses

Sec. 341.(a) For the purpose of this section—

(1) the term “due-on-sale clause” means a contract provision which authorizes a lender, at its option, to declare due and payable sums secured by the lender’s security instrument if all or any part of the property, or an interest therein, securing the real property loan is sold or transferred without the lender’s prior written consent;
(2) the term “lender” means a person or government agency making a real property loan or any assignee or transferee, in whole or in part, of such a person or agency;
(3) the term “real property loan” means a loan, mortgage, advance, or credit sale secured by a lien on real property, the stock allocated to a dwelling unit in a cooperative housing corporation, or a residential manufactured home, whether real or personal property; and
(4) the term “residential manufactured home” means a manufactured home as defined in section 603(6) of the National Manufactured Home Construction and Safety Standards Act of 1974 which is used as a residence; and
(5) the term “State” means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, American Samoa, and the Trust Territory of the Pacific Islands.

(b)(1) Notwithstanding any provision of the constitution or laws (including the judicial decisions) of any State to the contrary, a lender may, subject to subsection (c), enter into or enforce a contract containing a due-on-sale clause with respect to a real property loan.

(2) Except as otherwise provided in subsection (d), the exercise by the lender of its option pursuant to such a clause shall be exclusively governed by the terms of the loan contract, and all rights and remedies of the lender and the borrower shall be fixed and governed by the contract.

(3) In the exercise of its option under a due-on-sale clause, a lender is encouraged to permit an assumption of a real property loan at the existing contract rate or at a rate which is at or below the average between the contract and market rates, and nothing in this section shall be interpreted to prohibit any such assumption.

(c)(1) In the case of a contract involving a real property loan which was made or assumed, including a transfer of the liened property subject to the real property loan, during the period beginning on the date a State adopted a constitutional provision or statute prohibiting the exercise of due-on-sale clauses, or the date on which the highest court of such State has rendered a decision (or if the highest court has not so decided, the date on which the next highest appellate court has rendered a decision resulting in a final judgment if such decision applies State-wide) prohibiting such exercise, and ending on the date of enactment of this section, the provisions of subsection (b) shall apply only in the case of a transfer which occurs on or after the expiration of 3 years after the date of enactment of this Act, except that—

(A) a State, by a State law enacted by the State legislature prior to the close of such 3-year period, with respect to real property loans originated in the State by lenders other than national banks, Federal savings and loan associations, Federal savings banks, and Federal credit unions, mqy otherwise regulate such contracts, in which case subsection (b) shall apply only if such State law so provides; and
(B) the Comptroller of the Currency with respect to real property loans originated by national banks or the National Credit Union Administration Board with respect to real property loans originated by Federal credit unions may, by regulation prescribed prior to the close of such period, otherwise regulate such contracts, in which case subsection (b) shall apply only if such regulation so provides.

(2)(A) For any contract to which subsection (b) does not apply pursuant to this subsection, a lender may require any successor or transferee of the borrower to meet customary credit standards applied to loans secured by similar property, and the lender may declare the loan due and payable pursuant to the terms of the contract upon transfer to any successor or transferee of the borrower who fails to meet such customary credit standards.

(B) A lender may not exercise its option pursuant to a due-on-sale clause in the case of a transfer of a real property loan which is subject to this subsection where the transfer occurred prior to the date of enactment of this Act.

(C) This subsection does not apply to a loan which was originated by a Federal savings and loan association or Federal savings bank.

(d) A lender may not exercise its option pursuant to a due-on-sale clause upon—

(1) the creation of a lien or other encumbrance subordinate to the lender’s security instrument which does not relate to a transfer of rights of occupancy in the property;
(2) the creation of a purchase money security interest for household appliances;
(3) a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety;
(4) the granting of a leasehold interest of three years or less not containing an option to purchase;
(5) a transfer to a relative resulting from the death of a borrower;
(6) a transfer where the spouse or children of the borrower become an owner of the property;
(7) a transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property;
(8) a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property; or
(9) any other transfer or disposition described in regulations prescribed by the Federal Home Loan Bank Board.

(e)(1) The Federal Home Loan Bank Board, in consultation with the Comptroller of the Currency and the National Credit Union Administration Board, is authorized to issue rules and regulations and to publish interpretations governing the implementation of this section.

(2) Notwithstanding the provisions of subsection (d), the rules and regulations prescribed under this section may permit a lender to exercise its option pursuant to a due-on-sale clause with respect to a real property loan and any related agreement pursuant to which a borrower obtains the right to receive future income.

(f) The Federal Home Loan Mortgage Corporation (hereinafter referred to as the “Corporation”) shall not, prior to July 1, 1983, implement the change in its policy announced on July 2, 1982, with respect to enforcement of due-on-sale clauses in real property loans which are owned in whole or in part by the Corporation.

(g) Federal Home Loan Bank Board regulations restricting the use of a balloon payment shall not apply to a loan, mortgage, advance, or credit sale to which this section applies.

DAN M. LEE, Justice,

dissenting.

I respectfully disagree with the majority’s opinion in two areas. First, in my view, it is an incorrect analysis of the law. Second, I believe the majority is too willing to surrender the legitimate interest of state government in governing property rights within our state to the federal government.

The majority cites Fidelity Federal Savings and Loan Ass’n v. Reginald D. de la Cuesta, 458 U.S. 141, 102 S.Ct. 3014, 73 L.Ed.2d 664 (1982), wherein the U.S. Supreme Court held a regulation of the Homeowners’ Loan Board had the effect of pre-empting a state statute. We should take advantage of the invitation extended the states in the Garn-St. Germain Act, passed by the United States Congress after the unfortunate decision in Fidelity Federal, supra, and allow our decision in Sanders v. Hicks, 317 So.2d 61 (Miss.1975), to stand in order to provide time for our state legislature to enact statutes suggested by the Garn-St. Germain Act. The pertinent parts of the Garn-St. Germain Act read as follows:

(b)(1) Notwithstanding any provision of the constitution or laws (including the judicial decisions) of any State to the contrary, a lender may, subject to subsection (c) enter into or enforce a contract containing a due-on-sale clause with respect to a real property loan.
(2) Except as otherwise provided in subsection (d), the exercise by the lender of its option pursuant to such a clause shall be exclusively governed by the terms of the loan contract, and all rights and remedies of the lender and the borrower shall be fixed and governed by the contract.
(3) In the exercise of its option under a due-on-sale clause, a lender is encouraged to permit an assumption of a real property loan at the existing contract rate or at a rate which is at or below the average between the contract and market rates, and nothing in this section shall be interpreted to prohibit any such assumption.
(c)(1) In the case of a contract involving a real property loan which was made or assumed, including a transfer of the liened property subject to the real property loan, during the period beginning on the date a State adopted a constitutional provision or statute prohibiting the exercise of due-on-sale clauses, or the date on which the highest court of such State has rendered a decision (or if the highest court has not so decided, the date on which the next highest appellate court has rendered a decision resulting in a final judgment if such decision applies state-wide) prohibiting such exercise, and ending on the date of enactment of this section, the provisions of subsection (b) shall apply only in the case of a transfer which occurs on or after the expira tion of 3 years after the date of enactment of this Act, except that
(A) a State, by a State law enacted by the State legislature prior to the close of such 3-year period, with respect to real property loans, originated in the State by lenders other than national banks, Federal savings and loan associations, Federal savings banks, and Federal credit unions, may otherwise regulate such contracts, in which case subsection (b) shall apply only if such State law so provides; and
(B) the Comptroller of the Currency with respect to real property loans originated by national banks or the National Credit Union Administration Board with respect to real property loans originated by Federal credit unions may, by regulation prescribed prior to the close of such period, otherwise regulate such contracts, in which ease subsection (b) shall apply only if such regulation so provides.
(2)(A) For any contract to which subsection (b) does not apply pursuant to this subsection, a lender may require any successor or transferee of the borrower to meet customary credit standards applied to loans secured by similar property, and the lender may declare the loan due and payable pursuant to the terms of the contract upon transfer to any successor or transferee of the borrower who fails to meet such customary credit standards.
(B) A lender may not exercise its option pursuant to a due-on-sale clause in the case of a transfer of a real property loan which is subject to this subsection where the transfer occurred prior to the date of enactment of this Act. [Emphasis added]

Through the Garn-St. Germain Act Congress has expressly provided a three year “window” in which the various states may enforce prohibitions against due-on-sale clauses. It also allows states three years’ time within which to pass legislation to fill the vacuum and thereby prevent further federal encroachment on legitimate state interests. While the majority's opinion correctly recognizes that these prohibitions may be either in the form of “judicial decision, legislation or constitutional amendments;” that opinion fails to correctly address the decisions of this Court which do in fact place limitations on the enforceability of due-on-sale clauses.

The three year window period of the Garn-St. Germain Act has application to our state because of this Court’s decision in Sanders v. Hicks, 317 So.2d 61 (Miss.1975). In Sanders, this Court expressly held that a restraint on alienation such as a due-on-sale clause must have some relation to a threat to the legitimate interests of the mortgagee. The majority’s opinion seems to indicate that economic profiteering is such a legitimate interest under Sanders, supra. I must disagree. In my opinion, it is only those threats which are capable of causing loss to an already existing interest of a mortgagee which were intended to be prevented by the holding in Sanders. The mere possibility of future loss by a financial institution because it cannot sell new mortgages at a higher interest rate is certainly not the type of threat contemplated by the Sanders decision. Again, in order to be a threat to the legitimate interests of a mortgagee, those interests must be in existence. In other words, a mortgagee would be within its rights in prohibiting the assumption of a mortgage by one obviously incapable of meeting the obligations of the mortgage. Such an assumption would be a threat to an existing interest. The inability to inflate interest rates previously negotiated and contracted for is no such threat.

I see no reason for this Court to make excuses for inflationary banking practices through the guise of preventing threats to legitimate interests. That is a matter of particular interest for the legislatures of this nation, whether Congress or the state legislatures. Because Congress has addressed this issue and provided the states with a three-year window period under the Garn-St. Germain Act, I feel we should abide by the wisdom of our decision in Sanders until that window is closed, locked and nailed shut.

The past several years have seen a continued erosion by the federal government of the states’ legitimate interest over matters which properly are best handled by the various states. Today’s decision, an act of Super Legislation, does disservice to the homeowners and potential buyers of this state, by surrendering the three-year window period in which we are free to govern our state in this regard.

BOWLING and HAWKINS, JJ., join in this opinion.

      . See Fidelity Federal Savings & Loan Ass’n, et at v. Reginald D. de la Cuesta, et al., 458 U.S. 141, 102 S.Ct. 3014, 73 L.Ed.2d 664 (1982).

      . See Appendix “A” for relevant portions of the Act.

      . It should go without saying, however, that provisions in contracts contrary to public policy [Smith v. Simon, 224 So.2d 565 (Miss. 1969); Jackson v. Sam Finley, Inc., 366 F.2d 148 (5th Cir.1966); Smith v. Maryland Cas. Co., 252 Miss. 81, 172 So.2d 574, 575 (1965) ] or where obtained by overreaching [Bunch v. Shannon, 46 Miss. 525 (1872) ] duress [Duckworth v. Allis-Chalmers Mfg. Co., 247 Miss. 198, 150 So.2d 163 (1963) ] or undue influence [Wherry v. Latimer, 103 Miss. 524, 60 So. 563 (1913) ] are unenforceable.


source: Caselaw Access Project

author: WALKER, Presiding Justice,

license: Public Domain

text:
    Terry STINSON v. STATE of Mississippi.
    No. 53953.
    Supreme Court of Mississippi.
    Dec. 14, 1983.
    W.C. Trotter, III, Montgomery, Varnado, Garrard & Trotter, Belzoni, for appellant.
    Bill Allain, Atty. Gen. by Amy D. Whit-ten, Sp. Asst. Atty. Gen., Jackson, for ap-pellee.
    Before WALKER, BOWLING and PRATHER, JJ.
   WALKER, Presiding Justice,

for the Court:

This is an appeal from the Circuit Court of Humphreys County wherein appellant who was serving a term of less than life in the penitentiary was indicted for (1) aggravated assault upon a law enforcement officer; (2) kidnapping and (3) attempted escape from the Department of Corrections by violence. Following trial by jury, he was found guilty of simple assault on Count I; guilty on Count III; and not guilty on Count II. He was sentenced on Count I to serve a term of five years in the custody of the Mississippi Department of Corrections and a term of ten years on Count III to run consecutively to that in Count I and to the time he was presently serving. Aggrieved with this decision, he has perfected his appeal to this Court, assigning the following as error:

(1) The trial court erred in allowing the State to proceed upon a multicount indictment when such indictment is neither provided for nor allowed under Mississippi Law, and thus placing appellant three times in jeopardy by the state’s proceeding to try all three charges against appellant at one time, to-wit: Aggravated assault, kidnapping and attempting to escape by force or violence;

(2) The trial court erred in overruling appellant’s demurrer to indictment and motion for directed verdict as to Count III (the attempted escape charge). The statute under which appellant was indicted, Mississippi Code Annotated section 97-9-47 (1972), refers to attempted escape from “the penitentiary” by force or violence to any person. The indictment and proof in this cause indisputably showed that the attempted escape was committed at a place other than “the penitentiary”, and therefore, appellant’s actions violate no Mississippi statutes; and

(3) The trial court erred in sentencing the defendant to ten years in the custody of the Mississippi Department of Corrections on the charge of attempted escape by force or violence. This sentence is excessive and cruel and unusual punishment since the same escape charge, when committed from a county jail, carries a maximum sentence of only one year.

The appellant did not take the witness stand nor offer any witnesses in his own behalf. According to the state’s witnesses on August 13, 1981, the appellant, after having been transported to the University Medical Center in Jackson and while being returned to Parchman penitentiary, held a zip-gun on Officer Williams, the driver of the Parchman -van, forcing Williams to drive off the normal route to the penitentiary-

The van was occupied by four officers, two in the front and two unarmed in the rear of the van and five other inmates. Appellant told the officers he was serving a thirty-five-year sentence without parole and wanted his freedom. During the incident the officers were able to overcome appellant and transport him back to the penitentiary.

The appellant initially asserts a multi-count indictment under which he was indicted is neither provided for nor allowed under Mississippi Law. His demurrer to the indictment was overruled and he was tried in one proceeding for the three charges arising out of the August 13, 1981 incident. Following trial he was found guilty under Count I of simple assault upon a law enforcement officer and sentenced to a term of five years and under Count III was found guilty of attempted escape by force or violence and received a ten-year sentence. He was found not guilty under Count II of kidnapping.

As early as 1854 in Sarah (a slave) v. State, 28 Miss. 267, this Court addressed the propriety of a two-count indictment. The appellant asserted in part it was error to overrule her motion to quash the indictment which charged two distinct, separate and independent felonies: (1) Preparation by a slave of arsenic with intent to kill; and (2) the administering by a slave of the arsenic with intent to kill.

In upholding the lower court’s overruling the motion to quash, the court noted that the felonies charged differed neither in character nor in the punishments and they referred to the same transaction, depending necessarily to some extent on the same evidence. The granting or denial of a motion to quash in this regard was a matter resting within the discretion of the court. The case was reversed on other grounds.

In 1897 in State v. Rees, 76 Miss. 435, 22 So. 829, the lower court sustained appel-lee’s demurrer to an indictment containing two separate felonies, the first punishable by a twenty-year sentence, the second punishable by not more than a ten-year sentence. The Court stated:

The [circuit] court exercised the discretion, given it in such cases, correctly, that the prisoner might not be embarrassed in his defense, and relieve itself of the embarrassment which might have arisen as to what judgment to render on a general verdict of guilty.

76 Miss. 437, 22 So. 829.

The Court went on to say:

The settled rule in this state is that it is bad practice to join in the same indictment counts for distinct felonies of differing degrees, differently punished; and that, if that be done, the court may, in its discretion, on timely and proper objection, quash the indictment. The court here has exercised its discretion in that way by sustaining the demurrer. To hold that it erred would be now to declare that good practice which has always been condemned as bad, and to declare that the trial court has no discretion, in such cases, to quash such an indictment.

76 Miss. 438, 22 So. 829.

As noted the case presented a different question from one which arises where the trial court in the exercise of its discretion overrules such a demurrer and this Court looking backward over a completed trial can see that no injustice was done and therefore refuses to reverse as was the case in Hill v. State, 72 Miss. 527, 534, 17 So. 375 and also Gates v. State, 71 Miss. 874, 16 So. 342 where the offenses had the same punishment.

Following the guidelines set forth in Rees in 1923, this Court in McEwen v. State, 132 Miss. 338, 96 So. 690 (1923) reversed and remanded because appellant was charged with two felonies differing in their elements and punishment saying:

The two felonies charged in the indictment differ materially, both in their elements and their punishments, and consequently the court below should either have sustained the demurrer to the indictment in whole or to one count, or have compelled the state to elect on which count the appellant should be tried. State v. Rees, 76 Miss. 435, 22 So. 829.

132 Miss. 344, 96 So. 690.

In 1946 in Woods v. State, 200 Miss. 527, 27 So.2d 895 (1946) appellant was charged in three separate affidavits of (1) exhibiting a deadly weapon; (2) carrying a concealed weapon; and (3) assault and battery with fists. On motion of the state, objected' to by appellant, the cases were consolidated for trial on the basis the three crimes grew out of one and the same transaction. In citing 23 C.J.S. Criminal Law § 931, p. 210 with reference to those jurisdictions permitting consolidation under statutes (unlike Mississippi), the court said:

“Under such statutes consolidation is authorized only when the offenses charged therein might have been joined in one indictment under separate counts and should be allowed only where the court is satisfied that the ends of justice require it in order to avoid unnecessary delay and expense, and where accused is not thereby confounded in his defense or otherwise prejudiced, and the court is under a duty to protect with care the substantial rights of accused when subjected to á consolidated prosecution.”

200 Miss. 532, 27 So.2d 895.

The penalty for all three crimes was different as well as the elements constituting each crime. In summarizing, the Court said: “All of this means that the court had no power or authority to consolidate these charges and try the consolidated case as one crime. Such procedure is foreign to the jurisprudence of this State under the facts of this ease.”

The state argues the sole authority for the Woods decision was McGraw v. State, 157 Miss. 675, 128 So. 875 (1930) which dealt with duplicity rather than a multi-count indictment. In McGraw we stated:

In this state it is not permitted to charge a person with two unrelated crimes, imposing different punishments, in the same count of an indictment, and most surely it cannot be said to be in accord with that simplicity, certainty, and want of ambiguity which is required in criminal procedure.

157 Miss. 679, 128 So. 875.

This is a distinguishable point; however, the same principle applies that one may not be tried for two distinct crimes charged in separate counts and receive two separate sentences at one and the same time.

The State further cites Criddle v. State, 250 Miss. 328, 165 So.2d 339 (1964) and Feranda v. State, 267 So.2d 305 (Miss. 1972) for the theory that this State is again beginning to allow some leniency with regard to multicount indictments where the counts arise from the same transaction. In Criddle the appellant was convicted of forgery and sentenced to serve a term in the penitentiary. He was indicted for forgery and also charged with feloniously uttering the forged document. We held:

We hold that when the crime of forgery and uttering are joined in one indictment, it is not demurrable if the two charges are based on the same transaction or series of connected transactions. Wharton’s Criminal Law and Procedure, Anderson, Sec. 1935; Cannon v. State, 75 Miss. 364, 22 So. 827; Brady v. State, 128 Miss. 575, 91 So. 277; Jimerson v. State, 93 Miss. 685, 46 So. 948; cf. Osby v. State, 229 Miss. 660, 91 So.2d 748.
An indictment charging burglary and larceny, two separate and distinct Crimes, is good and the jury may acquit of burglary and convict of larceny; but if the verdict is a general one it will be regarded as a conviction of burglary alone. Clanton v. State, 211 Miss. 568, 52 So.2d 349. By the same reasoning we hold that where one is charged with forgery and uttering, he may be acquitted of forgery and convicted of uttering, but if the verdict is a general one, it will be regarded as a conviction of forgery. In any event, the accused may not receive but one punishment. (Emphasis added).

250 Miss. 332-33, 165 So.2d 339.

In Feranda the appellant alleged it was error to indict him for burglary, grand larceny, conspiracy to commit a crime, and acting as an accessory before the fact in the charge of burglary and larceny. Finding this to be an exception to the general rule that two crimes cannot ordinarily be charged in the same count we stated:

It should be noted that the crimes charged in the indictment in this case all arose out of the same transaction; that is, the alleged theft of certain kitchen cabinets. Furthermore, proof of a crime is necessary to bring the accessory before the fact statute into operation, and the crimes of conspiracy and accessory before the fact involve so many of the same elements of proof that one tends to demonstrate the other. We are, therefore, of the opinion that the indictment properly charged the crime of burglary because the lesser crimes of conspiracy and larceny served to demonstrate the greater crime of accessory before the fact of burglary.

267 So.2d at 306.

In both Criddle and Feranda the appellant received one sentence.

In Bradshaw v. State, 192 So.2d 387 (Miss.1966), cert. den. 389 U.S. 941, 88 S.Ct. 299, 19 L.Ed.2d 293 where the appellant was charged with the crime of larceny and of burglary, we said:

“The larceny, therefore, is charged, not as a substantive offense, but as demonstrating the burglarious intent. The jury may, indeed, acquit of the burglary and convict of the larceny, but a general ver-diet of guilty will be regarded, not as a conviction of two offenses, but of the burglary alone; and the larceny charged will be deemed indicative of, and intended to demonstrate, the animo furandi which goes to make up the higher crime.”

192 So.2d 388. See also Clue v. State, 78 Miss. 661, 29 So. 516 (1900).

The state urges this Court to approve multicount indictments as implemented by the Federal court systems under Rule 8(a) of the Federal Rules of Criminal Procedure which provides for the charging of two or more offenses in the same indictment where they are of the same or similar character or based on the same act or transaction or on two or more acts connected together or constituting parts of a common scheme or plan. However, we have no such provision in this State as noted in Fondren, Mississippi Criminal Trial Practice § 26-11 (1980), “Unlike the practice in the federal courts and many state courts, Mississippi law does not provide for multiple counts or charges in one indictment.”

In the case now before us, the appellant was indicted for three separate offenses, each carrying different penalties and having different elements constituting the crimes.

Although it was error for the state to charge the appellant in three separate counts for separate and distinct offenses and for the court to try the appellant thereon, we are of the opinion that appellant was not prejudiced with respect to the charge of aggravated assault and on which he was found guilty of simple assault. All the evidence introduced was admissible on that charge alone. Therefore, the judgment of the circuit court sentencing appellant to five years in the custody of the Mississippi Department of Corrections on his conviction of simple assault should be and is hereby affirmed.

We note that appellant was acquitted of the charge of kidnapping and therefore he may not be tried again on that count although it was improperly charged on this multiple count indictment.

Secondly, appellant contends it was error to overrule his demurrer to the attempted escape charge alleging that the indictment as drawn failed to charge an offense against the State of Mississippi. We agree.

In Count III of the indictment it was charged that “the said Terry Stinson did unlawfully, wilfully and feloniously attempt by force or violence to J.B. Williams, a correctional officer of the Mississippi Department of Corrections, to escape from the Mississippi Department of Corrections at a time when the said Terry Stin-son was sentenced to the Mississippi Department of Corrections for a term less than life.” (Emphasis added).

We find no statute nor does the state cite any which was in effect at the time of this incident which makes it unlawful to escape from the Department of Corrections. It is true Mississippi Code Annotated section 97-9-47 (1972) makes it unlawful for convicts imprisoned in the penitentiary for any term less than life to attempt by force or violence to escape from such prison, whether such escape be effected or not. That statute reads:

Every person lawfully imprisoned in the penitentiary for any term less than life, who shall attempt, by force or violence to any person, to escape from such prison, whether such escape be effected or not, shall upon conviction, be adjudged to imprisonment in the penitentiary for a term not less than five years, to commence after the termination of the imprisonment to which such person shall have been sentenced at the time of such attempt. (Emphasis added).

The only other statute dealing with escape by force or violence and which was in effect at the time of the alleged incidents is Mississippi Code Annotated section 97-9-51 (1972) which covers those persons attempting escape from a county jail.

Therefore, since the indictment did not charge appellant with attempting to escape from the penitentiary, it failed to charge a crime and the demurrer to that count of the indictment should have been sustained. A defendant has a right to be informed of the charge made against him and all essential elements of the crime must be expressly set forth in the indictment as we held in Love v. State, 211 Miss. 606, 52 So.2d 470 (1951) where we stated:

The established rule is stated in 27 A'm. Jur., Indictments and Informations, Sec. 54, as follows: “It is the constitutional right of the accused, under the organic law of the nation and of the several states, ‘to be informed of the nature and cause of the accusation’ against him, and under these provisions, the accused is entitled to a plain statement of the charge against him. It is fundamental, of course, that an indictment, to be effective as such, must set forth the constituent elements of a criminal offense; if the facts alleged do not constitute such an offense within the terms and meaning of the law or laws on which the accusation is based, or if the facts alleged may all be true and yet constitute no offense, the indictment is insufficient. * * * Every material fact and essential ingredient of the offense — every essential element of the offense — must be alleged with precision and certainty, or, as has been stated, every fact which is an element in a prima facie case of guilt must be stated in the indictment.” See ibid, secs. 51-63, 79; 42 C.J.S., Indictments and Informations, §§ 130-137-138. (Emphasis added).

52 So.2d 471-72.

The indictment in the case sub judice, with respect to attempted escape, wholly failed to charge a crime against the State of Mississippi.

For the reasons set forth above, the judgment of the circuit court sentencing appellant to a term of ten years in the custody of the Mississippi Department of Corrections for the crime of attempted escape by force or violence is reversed and the sentence vacated.

The conviction and sentence of appellant on a charge of simple assault is hereby affirmed; the judgment and sentence of appellant on a charge of attempted escape by force or violence is hereby reversed and sentence vacated.

We find no merit to appellant’s remaining assignment of error.

AFFIRMED IN PART; REVERSED IN PART AND SENTENCE VACATED.

PATTERSON, C.J., BROOM, P.J., and ROY NOBLE LEE, BOWLING, HAWKINS, DAN M. LEE, PRATHER and ROBERTSON, JJ., concur.

      . Repealed by Laws 1983, Chap. 387, Sec. 2 effective from and after July 1, 1983. Section 97-9-49 (Supp.1983) is the statute which replaces 97-9-51.


text:
    Gene PETIT v. John N. HOLIFIELD, et ux.
    No. 54049.
    Supreme Court of Mississippi.
    Jan. 4, 1984.

      William F. Vick, Vick & Diaz, Thomas J. Lowe, Jr., Jackson, for appellant.
    Donald G. Barlow, Clinton, for appellee.
    Before WALKER, P.J., and BOWLING and PRATHER, JJ.
   WALKER, Presiding Justice,

for the Court:

This is an appeal from the Chancery Court of the First Judicial District of Hinds County, Mississippi, wherein the chancellor sustained appellee’s amended petition for adoption of the minor children, Kristen Eve Petit and Dustin Patrick Petit, over objection of the natural father, Gene Petit. Aggrieved with the lower court’s ruling, appellant has perfected his appeal to this Court assigning the following as error:

(1) The trial court erred in finding that the respondent had abandoned and deserted his minor children; and

(2) The trial court erred in finding that the respondent was unfit to properly rear and train his children.

Addie Lee Petit, the appellee and the natural mother of Kristen and Dustin, was granted a divorce on the grounds of adultery in February of 1980 after* a seven-year marriage to Gene Petit. Mrs. Petit married John Holifield on August 31, 1980. The testimony did not bring forth his income or present employment although Mrs. Petit (Holifield) stated John Holifield is an ordained minister. On September 10, 1981, John filed his petition for the adoption of the minor children, Kristen and Dustin, which was joined in by Addie Holifield. An amended petition was filed January 19, 1982, alleging that Mr. Petit had abandoned or deserted his children and was otherwise unfit to rear or train them.

At the time of trial Mr. Petit’s support payments were over $7,000.00 in arrears. Under the divorce decree he was required to pay $500.00 per month. His last payment was received October 15, 1980. According to Mr. Petit he has not had the funds to pay child support. In 1980 he grossed $22,000.00 and after expenses had a taxable income of $1,500.00. In 1981 he grossed $24,603.00 with a taxable income of $299.00. He testified he has had a comfortable living but this meant he could only provide for his own food and lodging.

Mr. Petit, who has a Bachelor of Arts degree in business administration, has been employed as a professional wrestler for approximately ten years. His profession requires him to travel extensively. His earnings can range from $500.00 to $3,000.00 or $4,000.00 a week depending on the time and place of a wrestling match.

Testimony was adduced without objection that Mr. Petit left his wife and daughter at a time when Mrs. Petit (Holifield) was pregnant with their second child. He allegedly left with a woman named Pam Savelle who Mr. Petit acknowledged living with at the time of his divorce. He and Pam married December 20, 1980.

During the approximately one and one-half years since the divorce and the filing of the adoption petition, there have been few visits between the children and Mr. Petit. According to Mrs. Holifield it has been no more than five times that he has visited with the children. He was not granted visitation rights under the divorce decree and any visits were with Mrs. Holi-field’s consent. She testified that she only refused to allow him to see the children on one occasion. Mr. Petit was allowed to keep Kristen for one overnight visit and she was allowed to attend his wedding in Mississippi. The last time he saw the children before the filing of the petition was July of 1981. The petition was filed in September 1981. Mr. Petit has sent Kristen a birthday gift and has sent the children Christmas presents and has called their home on numerous occasions.

Mr. Petit testified that since July of 1981 he has lived in Liberty, Missouri. Prior to that he resided in Charlotte, North Carolina for a thirteen-month period. He claimed to have sent a package on August 19, 1981 with his return address to the children. When questioned whether or not she knew the children received the package in August, Mrs. Holifield said, “No, sir; I don’t.” Mr. Petit also testified he mailed two self-addressed envelopes to Kristen for her to send him some pictures which she had made. Mrs. Holifield did not recall Kristen receiving these envelopes.

Mr. Holifield testified that he desired to and was willing to raise Dustin and Kristen as his own. Mrs. Holifield, who suffers from Hodgkin’s disease, wants to provide a stable home environment for the children. Should something happen to her she didn’t want Mr. Petit “to come in and jerk them away when Dustin doesn’t even know him.”

Mr. Petit is desirous of building a relationship between himself and his children. He would like to acquire visiting rights with the children and felt he could care for them should something happen to Mrs. Hol-ifield. The question of visitation rights was not raised on this appeal.

With regard to the adoption petition, the court held that Mr. Petit had abandoned and deserted the children to the extent that they should be adopted by Mr. Holifield; that their best interest would be served by granting the adoption; and that Mr. Petit was not a fit and suitable person to be a father to these children. He found him to be unfit on the basis that he was living in open adultery with his present wife for a long period of time. In granting the adoption the court also took into consideration Mrs. Holifield’s illness and the fact that Mr. Holifield was willing to take the responsibility of raising the two children if something happened to her.

On appeal from the decree granting Mr. Holifield the right to adopt Kristen and Dustin, Mr. Petit asserts the chancellor erred in finding that he had abandoned or deserted the children and also that he was unfit to properly raise them. We agree.

In order to sever the rights of a natural parent, the burden is upon the petitioner to show by clear and convincing evidence [see De La Oliva v. Lowndes County Dept. of Pub. Wel., 423 So.2d 1328 (Miss. 1983) ] that the objecting parent has either abandoned or deserted the child or is mentally or morally or otherwise unfit to rear or train the child. Once that has been established, the best interest of the child is to be considered. See Ford v. Litton, 211 So.2d 871 (Miss.1968).

The criterion for determination of unfit parent’s rights are stated in Mississippi Code Annotated section 93-17-7 (Supp. 1983) as follows:

No infant shall be adopted to any person if either parent, after having been summoned to sign the petition for adoption, shall appear and object thereto before the making of a decree for adoption, unless it shall be made to appear to the court from evidence touching such matters that the parent so objecting had abandoned or deserted such infant or is mentally, or morally, or otherwise unfit to rear and train it, including, but not limited to, being within any of the grounds requiring termination of parental rights as set forth in subsections (2) and 3(a), (b), (d) or (e) of section 93-15-103 in either of which cases the adoption may be decreed notwithstanding the objection of such parent, first considering the welfare of the child, or children, sought to be adopted. Provided, however, the parents shall not be summoned in the adoption proceedings nor have the right to object thereto if the parental rights of the parent or parents have been terminated by the procedure set forth in sections 93-15-101 through 93-15-111, and such termination shall be res judica-ta on the question of parental abandonment or unfitness in the adoption proceedings.

Several grounds which may be considered for termination of parental rights are set forth in pertinent part in Mississippi Code Annotated section 93-15-103(3) (Supp. 1983) as follows:

(3) Grounds for termination of parental rights shall be based on one or more of the following factors:
(a) A parent has deserted without means of identification or abandoned and make no contact with a child under the age of three (3) for six (6) months or a child three (3) years of age or older for a period of one (1) year; or
(b) A parent has been responsible for a series of abusive incidents concerning one or more children; or
(c) When the child has been in the care and custody of a of a licensed child caring agency for at least one (1) year, that agency had made diligent efforts to develop and implement a plan for return of the child to its parents, and:
(i) The parent has failed to exercise reasonable available visitation with the child; or
(ii) The parent, having agreed to a plan to effect placement of the child with the parent, fails to implement the plan so that the child caring agency is unable to return the child to said parent; or
(d) The parent exhibits ongoing behavior which would make it impossible to return the child to the parent’s care and custody:
(i) Because the parent has a diagnosable condition unlikely to change within a reasonable time such as alcohol or drug addiction, severe mental deficiencies or mental illness, or extreme physical incapacitation, which condition makes the parent unable to assume minimally, acceptable care of the child; or
(ii) Because the parent fails to eliminate behavior, identified by the child caring agency or the court, which prevents placement of said child with the parent in spite of diligent efforts of the child caring agency to assist the parent; or
(e) When there is an extreme and deep-seated antipathy by the child toward the parent or when there is some other substantial erosion of the relationship between the parent and child which was caused at least in part by the parent’s serious neglect, abuse, prolonged and unreasonable absence, unreasonable failure to visit or communicate, or prolonged imprisonment.

We do not find the facts of this case support the conclusion that Mr. Petit abandoned or deserted his children.

In Ainsworth v. Natural Father, 414 So.2d 417 (Miss.1982), we reiterated the definition of “abandonment” as importing any conduct on the part of the parent which evinces a settled purpose to forego all duties and relinquish all parental claims to the child. We further went on to define the verb “desert” as foresaking one’s duty as well as a breaking away from or breaking off associations with some matter involving a legal or moral obligation or some object of loyalty. We noted that abandonment has to do with the relinquishment of a right or claim whereas desertion involves an avoidance of a duty or obligation.

Mr. Petit was not allowed visitation rights under his divorce decree. Although his visits with the children are very infrequent, he has not so totally shown that he wishes to “relinquish all parental claims to the children” constituting an abandonment of said children. It is true as noted by the chancellor that the phone calls made to the children’s residence could have been to speak to Mr. or Mrs. Holifield and not to the children; however, in the same light the calls could have just as easily been made for the purpose of checking on the children’s welfare. Because of the young age of these children and these infrequent visits Mr. Petit most likely does not have a close or father-like relationship with either child especially Dustin who was a small infant at the time of the divorce. Even though his attempts, feeble as they are, will not produce the relationship Mr. Petit seems to desire as the natural father, we cannot say that this alone is sufficient to constitute abandonment under our statutory and case law.

In applying the definition of desertion as found in Ainsworth, supra, Mr. Petit has clearly not fulfilled his obligation of paying child support. However, In Re Adoption of a Female Child, 412 So.2d 1175 (Miss.1982), we found that failure alone to pay child support is insufficient to constitute abandonment. The natural father in that case was able to offer proof as to his inability to make the child support payments. As in the matter now before us, Mr. Petit, although able to support himself and his present wife, offered sufficient evidence to the court as to his inability to purge himself of the contempt charges against him. Based on this finding by the chancellor, we do not find either desertion or abandonment as a result of Mr. Petit’s failure to pay his child support.

The chancellor found Mr. Petit unfit because of his adulterous relationship. In custody cases we have held that the fact that a custodial parent has cohabitated with a person who later became that parent’s spouse to be insufficient to constitute a material change in circumstances requiring a change in custody. See Kavanaugh v. Carraway, 435 So.2d 697 (Miss. 1983). This same rule applies with equal force in adoption cases. The mere fact that a natural parent has had a prior adulterous relationship is insufficient to warrant a finding that the parent is unfit under our statutes whereby his parental rights may be severed. Mr. Petit did marry Pam Savelle and there was no evidence of continuing promiscuity.

Viewing the evidence before us in light of the above authorities, we are of the opinion that the conduct of Mr. Petit does not evince a settled purpose to forego all parental rights and relinquish all parental claim to these children. He does, however, come close and is “teetering” on the brink insofar as his duty to support the children is concerned. In fact, if the totality of the circumstances continue without improvement over a substantial period of time in the future, a court would be justified in decreeing an adoption over his protest. We are unable to say that the chancellor was manifestly wrong in holding that Mr. Petit was unable to support these children at the time of the hearing, although we find that question to be extremely close. Mr. Petit needs to “tighten his belt” and live a little less comfortably and begin contributing the court-ordered child support for these children. He is hardly an ideal parent and perhaps not even the best parent for these children as between himself and Mr. Holifield, but under the evidence that we have before us, we are unable to say that the Holifields have proven by clear and convincing evidence that Mr. Petit has abandoned or deserted the children or that he is unfit within the meaning of the law.

For the above reasons, the judgment of the chancery court decreeing the adoption is reversed, the decree of adoption set aside and this cause rendered without prejudice.

JUDGMENT DECREEING THE ADOPTION IS REVERSED; THE ADOPTION SET ASIDE AND THIS CAUSE RENDERED WITHOUT PREJUDICE.

PATTERSON, C.J., BROOM, P.J., and ROY NOBLE LEE, BOWLING, HAWKINS, DAN M. LEE, PRATHER and ROBERTSON, JJ., concur.


author: PER CURIAM.

text:
    R. Appleton OWEN v. Burnell HARRIS.
    No. 55203.
    Supreme Court of Mississippi.
    Jan. 11, 1984.
    M. Rush O’Keefe, Jr., Conner & O’Keefe, Port Gibson, for appellant.
    Patricia F. Dunmore, Sanders, Blackmon & Dunmore, Natchez, Kennie E. Middleton, Fayette, for appellee.
   PER CURIAM.

AFFIRMED.


author: ADAMS, Justice. TORBERT, Chief Justice

text:
    Ex parte: VOLKSWAGENWERK AKTIENGESELLSCHAFT, a Corporation. (In re David Kenneth BROWN, Father of Richard Paul Brown and Administrator of the Estate of Richard Paul Brown v. VOLKSWAGEN OF AMERICA, INC., a corporation; Volkswagenwerk Aktiengesellschaft, a corporation; David Frank Burns, et al.)
    82-202.
    Supreme Court of Alabama.
    Sept. 16, 1983.
    Rehearing Denied Dec. 22, 1983.

      Bibb Allen of London, Yancey, Clark & Allen, Birmingham, for petitioner.
    Steven D. Tipler, Birmingham, for respondents.
   ADAMS, Justice.

This is an original petition to this Court for a writ of mandamus directed to Honorable Fred W. Ñicol, Circuit Judge of the Sixth Judicial Circuit, to review a ruling made by him that overruled a prior motion to quash service of process and to order him to re-enter his original order granting the motion of petitioner, Yolkswagenwerk Aktiengesellsehaft (VWAG), to quash service.

VWAG, a German corporation, contends that the purported service of process is invalid for two reasons: (1) service of the summons and complaint by certified mail on VWAG pursuant to Rule 4.4(b) of the Alabama Rules of Civil Procedure is illegal, since the provisions of the “Service Abroad of Judicial and Extrajudicial Documents” (the Hague Convention), opened for signature November 15, 1965, 20 U.S.T. 361, T.I.A.S. No. 6638, 658 U.N.T.S. 163, govern the service of process on corporations located in countries which are signatories of the convention, and (2) service of process on Volkswagen of America (VWoA) as the agent of VWAG is improper because VWoA is merely a subsidiary of VWAG and has no authority to accept service of process on behalf of VWAG.

We need not address the first issue. The respondents, Judge Fred Nicol and David K. Brown, have admitted, in their brief in support of their answer to the petition for writ of mandamus, that the provisions of the Hague Convention must be complied with if service of process is attempted directly on VWAG in West Germany. These provisions were not complied with here. Nevertheless, they contend that the Hague Convention’s provisions are inapplicable in this case, since VWoA is the alter ego, and therefore the agent, of VWAG in the United States for the purpose of service of process.

Our inquiry, then, is limited to the issue of whether VWoA can be considered the agent of VWAG for the purpose of service of process; if so, then the summons and complaint served on VWoA on the behalf of VWAG is good and sufficient service on VWAG. After careful consideration of the salient facts involved, we conclude that the trial court was correct in overruling its prior grant of the motion to quash and we, therefore, deny the writ of mandamus.

Prior to a review of the facts and arguments in this case, it is necessary to address the issue of whether it is proper for this court to review the record below on a writ of mandamus.

In Ex parte Helveston, 267 Ala. 94, 100 So.2d 7 (1957), this court stated that the writ of mandamus is not the proper vehicle for the review of a denial of a motion to quash service, since the dispute over proper service can be settled on appeal. Again, in Orkin Exterminating Co. of North Ala. v. Krawcheck, 271 Ala. 305, 312, 123 So.2d 149, 156 (1960), it was stated on rehearing that “[w]e do not review the action of the trial court in refusing to quash the summons in such a case by extraordinary writs. The error, if any, must be raised on appeal from the final judgment.” However, we have allowed review by extraordinary writ, even in the face of a clear prohibition of its usage, where the issue or issues presented also raised matters of substantial importance. In Ex parte Taylor Coal Co., Inc., 401 So.2d 1 (Ala.1981), this court was presented with a petition for a writ of mandamus to direct a trial judge to disqualify attorneys representing the defendants. Even though we noted several cases stating that mandamus does not lie to review a judge’s acts of discretion, this court proceeded to review the facts of the case, since serious charges of ethical violations were leveled at the attorneys involved. Id. at 3.

Although the matter before the trial court in the instant case was solely within the discretion of the trial judge, we find this case to present a matter of importance beyond the basic issues in dispute. As stated by both parties, if service of process on VWoA as the alter ego of VWAG is not good and sufficient service on VWAG, then requiring VWAG to submit to the trial court’s jurisdiction would be in disregard of the provisions of the Hague Convention and, therefore, in violation of the Supremacy Clause of the United States Constitution, Article VI, clause 2. This is so because a convention, such as the Hague Convention, “has the status of a treaty and consequently is the supreme law of the land_” American Trust Company v. Smyth, 247 F.2d 149, 153 (9th Cir.1957).

If the writ of mandamus is denied, the only other method of attack open to the petitioner is to defend itself at trial, obtain a final judgment, and then appeal. To deny the writ, then, without consideration of VWoA’s agency, would be to force VWAG to defend itself in a court that possibly lacks jurisdiction over it; this would be a denial of the German corporation’s right to due process in American courts. As the writ of mandamus lies when no other adequate remedy is available, Martin v. Loeb & Co., Inc., 349 So.2d 9 (Ala.1977), and believing that to require VWAG to continue to final judgment could be in derogation of a treaty of the United States, we proceed to a review of the facts and arguments of the case.

Respondent, David K. Brown, the father of the deceased Richard Paul Brown and the administrator of his estate, filed an action for personal injuries against VWoA, VWAG, Haun Motors, Inc., Frank D. Burns, and numerous fictitious defendants on May 5, 1981. The event which gave rise to the complaint was an automobile accident which occurred on or about May 6, 1979. Richard Brown, a passenger in a Volkswagen van, was fatally injured when the van was hit from the rear by a motor vehicle operated by Frank Burns.

Respondent’s first service of process on VWAG, sent by registered mail to the corporation’s headquarters in Wolfsburg, West Germany, was refused. Service was then attempted on VWAG by ordinary mail on or about July 10, 1981. On September 8, 1981, service was attempted by certified mail, return receipt requested, on VWoA as the agent for VWAG in the United States, pursuant to the Alabama long-arm statute, ARCP 4.2.

After three hearings regarding VWAG’s motion to quash service, the trial court found that service on VWoA constituted good and sufficient service on VWAG.

Petitioner VWAG alleges that the trial court has not acquired personal jurisdiction over it by its service of VWoA as agent for VWAG since VWoA is a separate entity and has no authority to accept service on behalf of VWAG. Respondent claims that VWoA is completely controlled by VWAG and is therefore its alter ego. If the latter assertion is found to be true, then service on VWoA is good and sufficient service on VWAG.

The facts as reflected in the record below, and as set out in this opinion, amply justify the conclusion reached by the trial court. We hold that service upon VWoA as agent of VWAG was good and sufficient service on VWAG.

VWAG is a corporation organized and existing under the laws of the Federal Republic of Germany. It manufactures Volkswagen automobiles, as well as individual VW parts and accessories, which it sells to importers from over 100 countries. The transactions take place in West Germany; that is, payment for the products and the subsequent title transfers occur in VWAG’s country of incorporation. VWoA, a New Jersey corporation, is a wholly-owned subsidiary of VWAG; in other words, VWAG owns all of the issued and outstanding shares of VWoA.

As support for their respective positions, both parties utilize the written “Importer Agreement,” which governs the relationship between VWAG and VWoA. The language relied on by petitioner provides:

Importer (VWoA) will transact all business pursuant to this agreement on its own behalf and for its own account; it has no power or authority whatsoever to act as agent or otherwise for or on account or on behalf of Volkswagenwerk A.G. (VWAG).

Although this language is persuasive, the agreement considered in its entirety clearly indicates VWAG’s control over the operations of VWoA. The agreement further provides:

[VWoA] will appoint at locations to be approved by VW[AG] such number of dealers as may correspond to the request of VW[AG]_
[VWoA] shall furnish to VW[AG] its orders ... for the periods and at the time or times determined by VW[AG] and shall use therefor the forms prescribed by VW[AG]. All such orders may be accepted or rejected by VW[AG] in writing.
VW[AG] shall not be under any liability whatsoever toward [VWoA] for failure to deliver under, or for delay in making delivery pursuant to, orders of [VWoA] accepted by VW[AG]....
At and around its premises [VWoA] shall conspicuously display a sufficient number of Volkswagen Signs in accordance with the directives of VW[AG],
... [VWoA] shall use for its Volkswagen business only stationery and business forms printed in accordance with the requests of VW[AG].
VW[AG] will employ a number of competent office employees and business field-men sufficient in the opinion of VW[AG] to secure supervision of solicitation by dealers appointed by it of all potential customers for VW[AG] Products....
[VWoA] will employ such number of competent office employees and technical fieldmen as, in the opinion of VW[AG], may be required to assure prompt and satisfactory customer’s service....
VW[AG] shall sell VW[AG] Products to [VWoA] at such prices and upon such terms as may from time to time be established by VW[AG].... In the event of any increase of the prices established by VW[AG], [VWoA] agrees to pay such increased prices for all VW[AG] Products delivered after the effective date of such increase, even if its orders may have contained lower prices.
Each VW Automobile sold by VW[AG] to [VWoA] ... will be warranted by [VWoA] to the ultimate consumer in accordance with ... [warranties prescribed by VW(AG) ] ... as the same may from time to time be amended by [VWoA] with the consent of VW[AG].
... VW[AG] shall have the right ... to inspect [VWoA]’s records and accounts....
[VWoA] will report to VW[AG], in accordance with VW[AG] requests, for instance, about market conditions, sales performance, inventories and estimates of requirements, and will submit to VW[AG] its yearly and interim financial statements.
VW[AG] ... [is] the beneficial owner of [VWoA] in the following proportion[s]: ... One hundred percent_ [VWoA] agrees that there shall be no voluntary change in such beneficial ownership without prior written consent of VW[AG].

In addition, the Board of Directors of VWoA, of which many of the directors are also on the Board of Directors of VWAG, holds almost all of its meetings in Wolfs-burg, West Germany, the situs of VWAG’s corporate headquarters.

The existence of personal jurisdiction depends on the presence of (1) perfected service of process giving notice to defendant of the suit being brought, Mullane v. Hanover Trust Co., 339 U.S. 306, 313-314, 70 S.Ct. 652, 656-657, 94 L.Ed. 865 (1950), and (2) sufficient minimum contacts between the forum state and the defendant so as to render it just and reasonable to force the defendant to come to the forum state to defend the suit. Kulko v. California Superior Court, 436 U.S. 84, 91, 98 S.Ct. 1690, 1696, 56 L.Ed.2d 132 (1977). There being no dispute concerning the requisite minimum contacts of VWAG with Alabama, the only issue before us is whether the first prong of the test for personal jurisdiction has been satisfied in this case. Has VWAG been given notice of the suit against it by perfected service of process?

When the service of process on the defendant is contested as being improper or invalid, the burden of proof is on the plaintiff to prove that service of process was performed correctly and legally. In the present case, since the disputed issue is whether VWoA is the agent or alter ego of VWAG, the respondent must establish the alleged agency of VWoA. Amen v. City of Dearborn, 532 F.2d 554, 557 (6th Cir.1976).

In Cannon Mfg. Co. v. Cudahy Packing Co., 267 U.S. 333, 45 S.Ct. 250, 69 L.Ed. 634 (1925), the Supreme Court held that service of process on a proper agent of a subsidiary corporation may constitute sufficient service on the parent corporation. However, the parent-subsidiary relationship alone is not ordinarily enough to establish agency for the purpose of service of process. Jones v. Volkswagen of Amer-ica, Inc., 82 F.R.D. 334, 335 (E.D.Tenn. 1978).

The party seeking to prove proper service must at least show that the parent corporation “exercises such control and domination over the subsidiary that it no longer has a will, mind or existence of its own, and operates merely as a department of the parent corporation.” Professional Investors Life Ins. Co., Inc. v. Roussel, 445 F.Supp. 687, 698 (D.Kan.1978). Alternatively, the party seeking to have service on the subsidiary and the parent may show that

[T]he parent corporation has complete control over the subsidiary, conducting its business and creating its policies ... (or the subsidiary) is a mere adjunct and instrumentality of the parent ... (or the) subsidiary corporation is merely a “dummy” by means of which the parent corporation does business in the state....

Fletcher’s Cyclopedia of the Law of Private Corporations, § 8773 at 527-528, cited in, Stoehr v. American Honda Motor Co., Inc., 429 F.Supp. 763, 766 (D.Neb. 1977). Hence, as the court in Stoehr, supra, noted, inquiry regarding the agency of a subsidiary is essentially a factual one. Id. at 766.

Three recent cases cited by petitioner, Utsey v. Volkswagenwerk, A.G., Nos. 80-1620-9, 80-1621-9 (D.S.C. Sept. 18, 1981); Hamilton v. Volkswagenwerk, A.G., Nos. 81-01-L, 80-594-D (D.N.H. June 10, 1981); and Richardson v. Volkswagenwerk, A. G., 552 F.Supp. 73 (W.D.Mo.1982), as standing for the proposition that VWAG and VWoA are separate and distinct entities, and that VWAG cannot be served through VWoA, are distinguishable. The court in each case established that the controlling issue was whether the plaintiff had submitted sufficient proof of a high degree of control over VWoA by VWAG. In each case the plaintiff failed to present evidence to counter the affidavit submitted by the defendant in support of the contention that VWoA and VWAG were separate corporations with no intertwining of operations. This is not true in the instant case.

Respondent has submitted overwhelming evidence of the high degree of control had by VWAG over the internal affairs of VWoA. Numerous requirements in the “Importer Agreement” show that VWAG determines how VWoA operates on a daily basis. Although petitioner has demonstrated that VWoA hires and fires its own employees, is adequately capitalized, maintains its own bank accounts, and purchases products from other manufacturers, these factors merely indicate that the parent and subsidiary are formally structured as two separate corporations.

For all of the above reasons, we conclude that service performed on VWoA as the agent in fact of VWAG was good and sufficient service on VWAG. We, therefore, find that the trial judge did not abuse his discretion in deciding not to quash the summons. As the writ of mandamus may not issue to compel the exercise of judicial discretion in a particular manner, East v. Todd, 284 Ala. 495, 226 So.2d 153 (1969), we accordingly deny the writ and we affirm the judgment of the trial court.

WRIT DENIED.

MADDOX, FAULKNER, JONES, AL-MON, SHORES, EMBRY and BEATTY, JJ., concur.

TORBERT, C.J., concurs specially.

TORBERT, Chief Justice

(concurring specially).

I concur in the hope of delineating the standard by which we should examine parent-subsidiary relations in the context of service of process. The issue in this case is whether service of process on the wholly-owned subsidiary corporation, Volkswagen of America, Inc. (VWoA), gives adequate notice to the parent corporation, Volks-wagenwerk Aktiengesellschaft (VWAG), of the suit. Due process requires that notice must be “reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 657, 94 L.Ed. 865 (1950). The party seeking to prove proper service must, at a minimum, demonstrate that the parent corporation “exercises such control and domination over the subsidiary that it no longer has a will, mind or existence of its own, and operates merely as a department of the parent corporation.” Professional Investors Life Ins. Co. v. Roussel, 445 F.Supp. 687, 698 (D.Kan.1978). Establishing that the subsidiary has “such a responsible representative status in relationship” to the parent makes it reasonably certain that the. subsidiary will turn over the process to the defendant parent. Crose v. Volkswagenwerk Aktiengesellschaft, 88 Wash.2d 50, 58, 558 P.2d 764, 769 (1977).

Fulfillment of these requirements of perfected service of process does not require resort to such phrases as “agent” or “alter ego.” In general,

“[t]he statement that the insulation will be broken down when the subsidiary is an ‘agency,’ ‘adjunct,’ ‘instrumentality,’ ‘alter ego,’ ‘tool,’ ‘corporate double,’ or ‘dummy’ of the parent is not helpful. These concepts themselves need defining. At best they merely state results. And the results are significant only in light of the facts.”

Douglas and Shanks, “Insulation from Liability through Subsidiary Corporations,” 39 Yale L.J. 193, 195 (1929). In the context of perfected service of process, the inquiry must focus on whether the subsidiary man-datorily pursues the parent’s interests in the manner determined by the parent. Observance of separate corporate form is not fatal to service of process on the subsidiary. The issue focuses on the subsidiary’s independence of corporate purpose and its independence in making substantive business decisions. Mere accounting procedures, the adequacy of capitalization, segregation of property, and other corporate formalities do not establish whether service of process on the subsidiary is reasonably calculated to inform the parent. See Tokyo Boeki (U.S.A.), Inc. v. SS Navarino, 324 P.Supp. 361, 366 (S.D.N.Y.1971). The policy rationale of due process and perfected service of process is not supported by treating the corporations as separate entities when the subsidiary and parent only comply with the mere formalities of corporate form. See generally Comment, “The Alter Ego Doctrine: Challenges to the Corporate Form,” 30 U.C.L.A.L.Rev. 129, 142-43 (1982).

In the present case, plaintiff succeeded in proving that VWAG exercised dominion over the corporate purpose and substantive business decisions of VWoA. The “Importer Agreement” clearly grants VWAG control over marketing strategy, product availability, advertising, dealer supervision, staffing, price, and warranty policy. VWAG retained the necessary inspection rights to ensure compliance. VWoA retains no independence in carrying out its substantive business. Only this degree of control is sufficient to prove that VWoA is the instrumentality of VWAG for the purpose of perfected service of process.

In this age of multinational corporations, the corporate form should not serve to shield the reality of underlying relationships. This recognition is necessary to prevent injustice. In his opinion, Justice Adams cites Cannon Manufacturing Co. v. Cudahy Packing Co., 267 U.S. 333, 45 S.Ct. 250, 69 L.Ed. 634 (1925). Cannon did not allow the parent to be served through its subsidiary even though the subsidiary was wholly owned and was dominated “immediately and completely” by the parent. 267 U.S. at 335, 45 S.Ct. at 251. Cannon’s, blind obedience to corporate form is no longer compelling. At the same time, however, I am mindful of the need to establish some line by which businesses may determine the consequences of their conduct and such a statement is the basis for this concurrence.

      . The Hague Convention requires that the document be sent to the designated Central Authority of the foreign country where the foreign corporation is located. The Central Authority serves it, or arranges to have it served, on the party in question. Germany, as a signatory of the Convention, also requires that the document be translated into the German language. In this case, the service of process, written in English, was mailed directly to VWAG at its corporate headquarters.

      . The Supremacy Clause states that "... all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land....”


author: ADAMS, Justice. BEATTY, Justice ADAMS, Justice.

text:
    Gary A. GREENOUGH, Lambert C. Mims and Robert B. Doyle v. James K. HUFFSTUTLER, et al.
    82-160.
    Supreme Court of Alabama.
    Sept. 30, 1983.
    As Corrected on Denial of Rehearing Dec. 22, 1983.

      James B. Rossler and Roderick P. Stout of Stout & Roebuck, Mobile, for appellants.
    Mylan R. Engel of Engel & Smith, Mobile, for appellees.
   ADAMS, Justice.

This is an appeal from an order granting a writ of mandamus directed to the three city commissioners of the City of Mobile (the Commissioners), directing them to pay certain requisitions submitted for payment by the Personnel Board (the Board) of the City of Mobile. The petition was filed by the members and director of the Board when it was anticipated that the requisitions would not be paid. During the course of the litigation, the Commissioners did deny payment and the trial court caused its writ of mandamus to issue.

The focal point of this litigation concerns the eligibility of. two newly appointed Board members, Conrad Freeman and Ernest A. Rouse, to serve on that Board. On June 17, 1982, Dan Wiley, one of the Mobile Commissioners, filed a quo warranto action against all of the members of the Board, challenging the eligibility of Freeman and Rouse to serve as members, and sought to enjoin the Board from holding meetings or acting unless and until the Supervisory Committee appointed replacements for Freeman and Rouse. This suit was dismissed on procedural grounds and on July 6, 1982, two separate quo warranto actions were filed in Mobile Circuit Court, challenging the right of Freeman and Rouse to serve. One suit was against Rouse in his individual capacity only and the other suit was against Freeman in his individual capacity only. That same day, the Board unanimously adopted a resolution instructing and authorizing Milan R. Engel, attorney for the Board, and M.A. Marsal, an independent Mobile attorney, to undertake the defense of Freeman and Rouse in these quo warranto proceedings. The suits, in essence, claimed that under Section VII(a) of the Laws and Rules of the Personnel Board for Mobile County, 1939 Ala. Acts 470, the Mobile County Personnel Board shall consist of 5 (five) members, and that “each member must be a resident of his respective district, as hereinafter provided, at the time of his appointment and for the duration of his term ...” and that Freeman and Rouse did not live in the districts they were appointed to serve.

These actions were tried before a jury, and the jury found that Freeman and Rouse did not reside in the Mobile districts which they were appointed to represent. As a result thereof, they were removed from the Personnel Board.

The Board, using the proper procedures, submitted a requisition to the City of Mobile for the payment of expenses incurred in defending Freeman and Rouse; the following requisitions were refused payment by the City:

1. Requisition No. 9895, $2,766.50 for legal services rendered in defending Freeman and Rouse in the first quo warranto action. This case was dismissed on July 6, 1982.

2. Requisition No. 9925, $410.40 for deposition transcripts in the July 6, 1982 actions.

3. Requisition No. 9926, $10,543.00 for legal services rendered by Engel.

4. Requisition No. 9928, $1,357.45 for transcripts of pre-trial depositions.

5. Requisition No. 9941, $209.31 for several business lunches.

6. Requisition No. 9942, $420.00 for process services.

7. Requisition No. 9962, $500.00 for the estimated cost of preparing the transcripts for the appeal by Freeman and Rouse to this court.

8. Requisition No. 9963, $50.00 for the cost of preparing the transcripts for appeal.

9. Requisition No. 9964, $11,775.00 for legal services rendered by Marsal.

The Board contends that this was the first time one of its requisitions had been refused payment by the City since the Board’s beginning in 1939. They further state that the refusal is merely a retaliatory measure designed to punish the Board because of its refusal to adopt a massive reorganization program offered and proposed by the City. The chairman of the Board at a meeting of the Board stated that the organizational plan was politically inspired and would have the effect of weakening the civil merit system to the extent that the ground work for introduction of a “spoils” system would have been laid.

Although the parties have argued three issues which they say are framed by the pleadings and evidence in this case, there really is only one dispositive issue, with one sub-issue, to be resolved. That issue is:

Does § XXX establish a mandatory duty upon the City of Mobile to pay all expenses submitted by the Personnel Board?

The sub-issue is:

Did the City, in bad faith, refuse to pay the Board’s requisitions with the purpose and intent of undermining the integrity and viability of the Civil Merit System in Mobile, Alabama?

We believe the answer to both of these questions is “no,” and we reverse the order of the trial court granting the writ of mandamus to the extent that it orders payment of requisitions where only the question of the eligibility of Freeman and Rouse to their* appointments was an issue.

Our attention must first be directed to the Laws and Rules of the Personnel Board for Mobile County, authorizing the payment of salaries and expenses. This authority is found in Section XXX of these laws and rules, which provides:

The salaries and expenses of suitable regular office quarters, and all other expenses of the Personnel Board, the Personnel Director, and all other expenses arising under the provisions hereof, unless otherwise herein provided, shall be paid by warrants or requisitions drawn by the Personnel Board and signed by at least two members thereof and drawn upon the same officer and payable in the same manner out of the same fund or funds as the salaries of the members of the governing body of Mobile City are paid.

Laws and Rules of the Personnel Board for Mobile County, Alabama, § XXX, 1939 Ala. Acts 470. The Board contends that the use of the word “shall” in the above-quoted section places a mandatory duty on the part of the City to pay any and all expenses submitted by the Board. The City, on the other hand, contends that it has discretion in the payment of expenses and its failure to object to any expenses in the past is not an abrogation of its power or responsibility-

In order to determine what are proper legal expenses, we must also examine Section XXXII of the Laws and Rules of the Personnel Board of Mobile County, 1939 Ala.Acts 470. In order to arrive at the true intent of the legislature, these two sections, obviously, must be read in pari materia. Section XXXII is as follows:

LEGAL SERVICES: If this act or its enforcement by the Director or the Board shall be called into question in any judicial proceedings or if any person shall fail or refuse to comply with the lawful orders or directions of the Board, such Board may call upon the proper County or City Attorney or may employ independent counsel to represent it in sustaining this act and its enforcement. This independent counsel, if the Board by resolution so prescribes, shall be in the Unclassified Service.

Laws and Rules of the Personnel Board for Mobile County, § XXXII, 1939 Ala.Acts 470. A fair reading of Section XXXII leads us to conclude that independent counsel can be employed only in three circumstances:

1. When the act itself is called into question in any judicial proceeding;

2. When the enforcement of the act by the director or by the Board is questioned in any judicial proceeding; or

3. When any person shall fail or refuse to comply with the lawful orders and directions of the Board.

We must, of necessity, therefore, conclude that counsel fees incurred in defending Freeman and Rouse individually were beyond the power of the Board to authorize. None of the above, criteria have been met in this case. Indeed, our Constitution at Article IV, § 94, prohibits the grant of public funds for any individual purpose. Brown v. Longiotti, 420 So.2d 71 (Ala.1982); State v. Homan, 38 Ala.App. 642, 92 So.2d 51 (1957); Stone v. State, 220 Ala. 437, 125 So. 653 (1929).

This court made an exception to the general rule in City of Montgomery v. Collins, 355 So.2d 1111 (Ala.1978). In Collins, the expenditure of public funds of the City of Montgomery was allowed in the defense of Montgomery police officers who had been charged with the offense of perjury in the testimony they gave the grand jury. The court said that it was in the “proper corporate interest” of the City of Montgomery to defend against these prosecutions, since they created “a risk of litigation against the City itself should the perjury prosecutions have proved successful.” Collins held:

Because a conspiracy might provide a basis for a civil cause of action, and because a municipality may be made a party defendant in such an action, it would be within the reasonable scope of “proper corporate interest” for the municipality to attempt to protect itself and its officers against future civil litigation brought under agency principles by defending their agents against criminal charges arising out of the same general circumstances with the view of obtaining their acquittal.

City of Montgomery v, Collins, supra, at 1114, 1115 (citations omitted).

Our conclusion that the requisitions in this case are due not to be honored is not inconsistent with the general body of law in. this field. McQuillin, in his treatise on Corporations, said:

In order to bind the municipal corporation to pay for legal services it must appear that such services were rendered in a matter in which the corporation was interested. It is well settled that a municipality cannot provide funds for the defense of an official in a criminal action or even in a civil action where no benefit inures to the municipality. Thus, a municipal corporation has no such interest in a suit exclusively directed against its officers, charging lack of legal qualifications to hold office ..., as will authorize it to retain counsel to defend such suit, although the bill may seek to enjoin the officers from performing the functions of their offices....

10 McQuillin, Law of Municipal Corporations, § 29.14 (3rd ed. 1981).

In summary, we hold that it is the mandatory duty of the city to pay all “legal” expenses of the Board, but they are not required to pay expenses which are clearly ultra vires. Here, to pay the requisitions tendered in these suits against the individuals would clearly offend the Constitution of the state and would not serve the “corporate interests” of the Board.

The Board makes an appealing argument that the actions of the city threaten the integrity and viability of the Board itself and, therefore, that it has the inherent authorization to protect the continued existence of the civil merit system. It cites McWhorter v. Board of Registration for Professional Engineers, 359 So.2d 769 (Ala.1978); Waggoner v. Whatley, 282 Ala. 84, 209 So.2d 370 (1968); Jordan v. City of Mobile, 260 Ala. 393, 71 So.2d 513 (1954), and Heck v. Hall, 238 Ala. 274, 190 So. 280 (1939), as authority for that proposition. Buttressing this argument is the conclusion of the trial judge:

“By allowing the City to determine what requisitions should or should not be paid would, in effect, destroy the independence of the Merit System, and make the Board members puppets on a string to do the will of the members of the City Commission. If the Board did not have the right to defend a challenge of its composition, it would be at the mercy of the City Commission.”
5}C * * * * *
... Should the City be able to arbitrarily determine what expenditures of the Personnel Board should be paid, the Personnel Board would become subservient to the will of the Commissioners. Little imagination is needed to realize that such an approach would destroy the Merit System and give rebirth to the spoils system.”

These are strong arguments. The problem with them is that they have little, if any, factual support in the record. Their strongest factual support seems to come from the fact that the City did not pay the requisition arising out of the first quo war-ranto action, which not only included the individual appointees, but also sought an injunction against all of the members of the Board requiring that they not hold meetings until Rouse and Freeman were excluded. The Board attaches no little significance to the fact that this was the first time a requisition had been turned down since the beginning of the Board in 1939. This, they say, coupled with the fact that all of this occurred on the heels of the Board's rejection of the massive reorgani-zational plan of the City, can lead to but one conclusion, and that is that the City acted in bad faith.

We are well aware that there could be sufficient circumstantial evidence to reach the conclusion that the Board would like us to reach in this case. However, it is our opinion that the evidence presented in this record falls far short of reaching that mark. If the City, in the future, should pursue a systematic and persistent pattern of activity calculated to destroy the civil merit system in Mobile County, then our courts would be open to redress such a claim. That claim has not been made out here.

For the foregoing reasons, the order granting the writ of mandamus directing the City to pay requisitions is hereby reversed in all respects except as to requisition number 9895 for $2,766.50 for defending Freeman and Rouse, as well as the Board, in the quo warranto proceeding that was dismissed on July 6, 1982.

REVERSED AND REMANDED WITH DIRECTIONS.

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

BEATTY, J., dissents.

BEATTY, Justice

(dissenting):

I respectfully dissent. See, City of Montgomery v. Collins, 355 So.2d 1111 (Ala.1978); City of Birmingham v. Wilkinson, 239 Ala. 199, 194 So. 548 (1940).

On Application for Rehearing

ADAMS, Justice.

Opinion corrected; application for rehearing overruled.

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

BEATTY, J., dissents.

      . Art. IV, § 94
      The legislature shall not have power to authorize any county, city, town, or other subdivision of this state to lend its credit, or to grant public money or thing of value in aid of, or to any individual, association, or corporation whatsoever, or to become a stockholder in any such corporation, association, or company, by issuing bonds or otherwise.