text:
    Paul CRIGLER v. Thomas E. SALAC and Fred Salac d/b/a Salac Brothers, et al.
    81-822.
    Supreme Court of Alabama.
    Sept. 23, 1983.

      J. Don Foster and Thack H. Dyson of Foster, Brackin & Bolton, Foley, for appellant.
    W. Boyd Reeves and Christopher I. Grue-newald of Armbrecht, Jackson, DeMouy, Crowe, Holmes & Reeves, Mobile, and Nor-borne C. Stone, Jr. of Stone, Partin, Gra-nade & Crosby, and Taylor D. Wilkins, Jr. and Bayless E. Biles of Wilkins, Bankester & Biles, Bay Minette, for appellees.
   PER CURIAM.

Defendant Paul Crigler appeals from both the judgment of the trial court on the jury verdict in favor of the plaintiffs’ against him, and the trial court’s judgment notwithstanding the verdict in favor of defendant Collateral Control on its cross-claim against him.

Plaintiffs, farmers who reside in Baldwin County, sued Collateral Control Corp. (Collateral Control), Paul Crigler, the principal owner of Modern Mix, Inc. (Modern Mix), and Birmingham Trust National Bank (BTNB), seeking compensatory and punitive damages for alleged conversion, fraud, conspiracy, negligence of a warehouseman, and wantonness of a warehouseman in committing fraud and converting personal property. Collateral Control cross-claimed against Crigler for indemnity based on a written indemnity agreement. The jury returned a verdict in the amount of $715,176 against Collateral Control and Paul Crigler and a verdict for Paul Crigler on Collateral Control’s cross-claim against him. The trial court granted Collateral Control’s motion for judgment notwithstanding the verdict on the cross-claim against Crigler.

Plaintiffs stored grain in bins owned by Modem Mix. Plaintiffs testified that they stored their grain on a “stored unpriced” basis and received weight tickets to that effect. According to plaintiffs, when they designated that they wished to have their grain “stored unpriced,” they retained an option either to sell the grain to Modern Mix in the future, at a price offered by Modern Mix, or to obtain a return of their grain, or grain of similar grade or quality, when they desired. Plaintiffs paid a storage fee up until the time that they told Modern Mix to sell the grain.

BTNB extended a line of credit to Modern Mix, which was to be secured by Modern Mix inventory. Collateral Control provides services to lending institutions which lend against inventory or stock in trade. Collateral Control established an inventory certification control system and, under its agreements with Modern Mix and BTNB, was obligated to monitor the flow of inventory at Modern Mix and to report regularly to BTNB. The amount of company-owned inventory certified by Collateral Control to BTNB, at least theoretically, determined the amounts BTNB loaned to Modern Mix. Modern Mix transferred two employees to Collateral Control’s payroll to act as “bonded agents” at the Modern Mix premises to monitor the flow of inventory. Modern Mix also leased its grain storage bins to Collateral Control.

Modern Mix suffered business setbacks in the fall of 1979. Paul Crigler testified that Modern Mix sold the grain and put the proceeds into its checking account. BTNB appropriated the proceeds of Modern Mix’s accounts receivable for the repayment of loans which it had made to Modern Mix. Modem Mix repaid BTNB approximately $575,000 in the period from August 13,1979, to November 13, 1979. By letter dated June 23, 1980, Modern Mix informed plaintiffs that there were no funds to pay them for their grain. Thereafter, Modem Mix filed a petition in bankruptcy in the fall of 1980.

We must initially consider the nature of the transaction in question. If the transactions were sales with passage of title, then there could be no recovery against Crigler under the theories of conversion, fraud, negligence, or wantonness of a warehouseman. This Court considered a similar arrangement in NYTCO Services, Inc., v. Wilson, 351 So.2d 875 (Ala.1977). In that case, the weight tickets received by plaintiffs indicated that their grain was being stored. In addition, plaintiffs had the option to require a return of the grain or to sell the grain. The Court in that case concluded that the transaction was a bailment. 351 So.2d at 879. We likewise find the transaction in the present case to be a bailment. It follows that the sale of the grain by Modern Mix was an unlawful conversion thereof to its own use, for which an action will lie. The question we must address relates to the individual responsibility of Crigler.

Defendant Crigler first claims that the trial court erred in denying his motion for directed verdict on the ground that his individual liability was not established. He later asserts that the trial court erred in granting a judgment notwithstanding the verdict on the cross-claim for indemnity. We address the lack of individual liability claim first because of its relationship to the issue of whether the trial court erred in granting the judgment notwithstanding the verdict on the cross-claim.

In deciding if Crigler’s motion for directed verdict on the issue of individual liability was due to be granted, the trial court must view the evidence most favorably to the non-moving party, and if by any reasonable interpretation, it can support an inference of individual liability the non-moving party seeks to prove, the motion must be denied. Wadsworth v. Yancey Bros. Co., 423 So.2d 1343, 1345 (Ala.1982). There is evidence that would support the inference of personal liability of Crigler as to each count in the complaint.

It is well-established that a director of a corporation “may not participate in a tort perpetrated through the agency of a corporation, or in a fraudulent injury to another, without being civilly responsible.” Rudisill Soil Pipe Co. v. Eastham Soil Pipe & Foundry Co., 210 Ala. 145, 150, 97 So. 219 (1923). See, Alabama Music Co. v. Nelson, 282 Ala. 517, 213 So.2d 250 (1968); Roan v. McCaleb, 264 Ala. 31, 84 So.2d 358 (1956); Finnell v. Pitts, 222 Ala. 290, 132 So. 2 (1930); Chandler v. Hunter, 340 So.2d 818 (Ala.Civ.App.1976). Fletcher’s Cyclopedia of Corporations, § 1135, at 202-203 (1975), explains the rule as follows:

“It is thoroughly well settled that a man is personally liable for all torts committed by him, consisting in misfeasance — as fraud, conversion, acts done negligently, etc. — notwithstanding he may have acted as the agent or under directions of another. And this is true to the full extent as to torts committed by the officers or agents of a corporation in the management of its affairs. The fact that the circumstances are such as to render the corporation liable is altogether immaterial .... Corporate officers are liable for their torts, although committed when acting officially. In other words, corporate officers, charged in law with affirmative official responsibility in the management and control of corporate business, cannot avoid personal liability for wrongs committed by claiming that they did not authorize and direct that which was done in the regular course of that business, with their knowledge and with their consent or approval, or such acquiescence on their part as warrants inferring such consent or approval.”

This rule does not depend on the same grounds as “piercing the corporate veil,” that is, inadequate capitalization, use of the corporate form for fraudulent purposes, or failure to comply with the formalities of corporate organization. See L.C.L. Theatres v. Columbia Pictures Indus., 619 F.2d 455 (5th Cir.1980).

In order to hold an officer of a corporation liable for the negligent or wrongful acts of the corporation, “there must have been upon his part such a breach of duty as contributed to, or helped bring about, the injury; that is to say, he must be a participant in the wrongful act.” Fletcher’s Cyclopedia of Corporations, § 1137 at 208. It is the opinion of this Court that the evidence in this case is sufficient to connect Crigler with the conversion of plaintiffs’ grain.

Defendant Crigler testified that the controlling interest in Modern Mix was owned by him and his father, that his father retired in 1976 or 1977, and that Cri-gler himself was president of Modern Mix and managed the business. The evidence indicates that Crigler made the decisions regarding acceptance of grain and sales of grain for Modern Mix. Both Crigler and a number of the plaintiffs testified that Cri-gler occasionally unloaded plaintiffs’ grain. Crigler testified that he signed some of the collateral certificates prepared by Collateral Control. Crigler admitted that farmer-owned grain was certified to BTNB. The record also reveals that Modern Mix accepted plaintiffs’ grain but never paid plaintiffs for it and that Modern Mix sold the grain and deposited the proceeds in its account. Furthermore, the evidence indicates that Crigler acquiesced in BTNB’s takeover of the financial aspect of the business for the reduction of the loan balance. The evidence is sufficient to show that Crigler, in managing Modern Mix, authorized, directed, or actively participated in the wrongful conduct, i.e. the conversion of plaintiffs’ grain.

Plaintiffs’ complaint, as amended, alleges that defendant Crigler is liable to them under § 6-5-102, Code 1975, which provides:

“Suppression of a material fact which the party is under an obligation to communicate constitutes fraud. The obligation to communicate may arise from the confidential relationship of the parties or from the particular circumstances of the case.”

Under § 6-5-102, an obligation to communicate material facts may arise from a confidential relationship or from the particular facts of the case. Harrell v. Dodson, 398 So.2d 272 (Ala.1981). A bailment has been defined as:

“[T]he delivery of personal property by one person to another in trust for a specific purpose, with a contract, express or implied, that the trust shall be faithfully executed, and the property returned or duly accounted for when the special purpose is accomplished or kept until the bailor reclaims it.”

Farmer v. Machine Craft, Inc., 406 So.2d 981 (Ala.Civ.App.1981), quoting 8 Am. Jur.2d Bailments § 2 (1980). See 8 C.J.S. Bailments § 1 (1962). We believe that a bailor/bailee relationship gives rise to a duty to disclose under § 6-5-102.

A “material fact” under § 6-5-102 is a fact of such a nature as to induce action on the part of the complaining party. Cooper v. Rowe, 208 Ala. 494, 94 So. 725 (1922). The material fact suppressed by Crigler, according to plaintiffs’ amended complaint, is that Crigler accepted plaintiffs’ grain at a time when he knew that Modern Mix was in financial trouble and would be unable to pay for the grain or return grain of a like quality and quantity.

In Harrell v. Dodson, 398 So.2d 272 (Ala.1981), we stated that as a matter of law one can only be liable for concealing facts of which one has knowledge. In the present case, one plaintiff testified that he delivered grain to Modern Mix in the fall of 1978 and 1979, while the remaining plaintiffs testified that they delivered grain to Modern Mix in the fall of 1979. Plaintiffs were subsequently informed by Modern Mix that it would not pay for or return the grain. The issue becomes whether Crigler had knowledge of Modern Mix’s financial situation at the time he accepted plaintiffs’ grain.

Crigler testified that he first learned that things were not going well for Modem Mix when he received a financial statement from his accountant in August 1979. A 1979 financial statement showed current assets at $554,449.12 and current liabilities at $961,254.72. The report showed retained earnings at a negative $238,718.26 and current year earnings at a negative $69,035.35. The report also listed liability for stored grain at $430,466.55. A Dunn and Bradstreet Report on Modern Mix dated August 15, 1978, stated:

“In a communication received April 17, 1978, signed by Paul Crigler, President, it was indicated this business lost money for the past six (6) months.”

Crigler testified that poor farming conditions in 1976-77, rising interest rates during the period in question, and damage from Hurricane Frederic in September of 1979 contributed to Modern Mix’s problems. Crigler also testified that BTNB took control over Modern Mix’s checking account after the hurricane.

The collateral certificates signed by Cri-gler on the following dates provide the following figures for the loan balance and value of total certified inventory:

TOTAL
CERTIFIED LOAN
DATE INVENTORY BALANCE
08-20-79 $377,161.39 $625,000
09-17-79 252,280.80 550,000
10-01-79 263,563.40 425,000
10-15-79 320,693.59 425,000
10-22-79 323,418.43 275,000
10-29-79 325,502.46 75,000
11-19-79 172,507.42 50,000

These figures indicate that $575,000 was repaid to BTNB in a period from August 20, 1979, to November 19, 1979. There is evidence in the record that, during the time that plaintiffs delivered their grain to Modern Mix, Modern Mix significantly reduced its debt to BTNB, although Modern Mix owned no appreciable amount of grain inventory. Although Crigler testified that Modern Mix owned grain in 1979, two witnesses testified that Modern Mix owned no grain in 1979. Crigler admitted that farmer-owned grain was being certified to BTNB. This evidence implies that Crigler knew about Modern Mix’s poor financial situation, since he was apparently selling farmer-owned grain to pay Modern Mix’s debt.

Viewed collectively, these facts could reasonably lead to the inference that Crigler knew of Modera Mix’s financial instability and of its inability to pay for the grain at the time when the grain was received for storage, and therefore that he actively participated in the fraud.

We believe that the facts mentioned previously are sufficient to indicate Crigler’s participation in the misapplication of the plaintiffs’ grain or the proceeds from the sale of that grain and thus to support the jury verdict on the warehouseman count. It is undisputed that Modern Mix is a warehouseman under Code 1975, § 7-7-102(l)(h). Section 7-7-204, Code 1975, provides that a warehouseman is liable for damages “caused by his failure to exercise such care ... as a reasonably careful man would exercise under like circumstances.” Crigler, in managing Modern Mix, made the decisions to sell plaintiffs’ grain and to place the proceeds in an account controlled by BTNB. In addition, our Court of Civil Appeals has stated:

“[W]here a bailee of goods for hire, upon demand made, fails to redeliver [the goods] or does not account for a failure to make delivery ..., prima facie negligence will be imputed to him, and the burden of proving a loss without want of ordinary care is devolved upon him.”

Anniston Lincoln-Mercury v. Mayse, 341 So.2d 949, 950 (Ala.Civ.App.1977). Crigler did not meet this burden.

After reviewing the evidence, we are of the opinion that the trial court did not err in refusing to grant Crigler’s motion for directed verdict on the basis that his individual liability had not been established. We conclude that there was sufficient evidence that Crigler directed or participated in the actions causing injuries to the plaintiffs, so that he can be held individually liable.

Crigler next asserts error in the trial court’s refusal to grant his motion for a new trial, the alleged error being that the court failed to inform him of its proposed action on requested written instructions pri- or to arguments to the jury. At the end of the second day at trial, the court requested that counsel for the parties provide it with their requested charges. Counsel for plaintiffs had previously submitted jury charges. A colloquy between the court and counsel for Collateral Control and Crigler followed in response to the court’s request for jury charges:

“MR. REEVES; I’ll redo some [jury charges] tomorrow.
“THE COURT: Okay. In the morning. And give it to me in the morning.”

At the end of the testimony on the second day of trial, the judge informed the jury that they were to return at 9:00 a.m. on the following morning. Counsel for Collateral Control submitted 35 charges and counsel for Crigler submitted seven charges at 9:00 on that next morning. Subsequent to the submission of charges, the court allowed plaintiffs to proceed with closing arguments. Counsel for Crigler supposedly interposed an objection to the giving of closing arguments before the court had announced its action on the requested charges.

Rule 51, Ala.R.Civ.P., provides, in pertinent part:

“At the close of the evidence or at such earlier time during the trial as the court reasonably directs, any party may file and, in such event, shall serve on all opposing parties written requests that the court instruct the jury on the law as set forth in the requests. The court shall inform counsel of its proposed action upon the requests prior to their arguments to the jury, but the court shall instruct the jury after the arguments are completed.”

We note initially that Rule 51, Fed.R. Civ.P., is identical to the relevant portion of Rule 51, Ala.R.Civ.P. The Fifth Circuit Court of Appeals noted, in construing Rule 51, Fed.R.Civ.P., that “[a]n essential purpose of Rule 51 is to permit counsel to argue effectively upon the evidence and to know in advance the guiding principles under which the argument should be made.” Ebanks v. Southern Railway Co., 640 F.2d 675, 678 (5th Cir.1981). See 5A Moore’s Federal Practice ¶ 51.03 at 51-8.

In construing the relevant portion of Rule 51, this Court in Trimble v. Bramco Products, Inc., 351 So.2d 1357 (Ala.1977), stated:

“Rule 51, ARCP, does require the court to inform counsel before argument of its action with respect to requested charges and the rule should be observed. However, its failure to do so does not mandate reversal unless the court refuses to follow the rule after its attention has been called to it or prejudice results therefrom.”

351 So.2d at 1360.

In Trimble, the complaining party did not ask the court to inform him of the charges which it intended to give, nor did he show that any prejudice resulted from the court’s failure to do so. In the present case, however, counsel for defendants Cri-gler and Collateral Control in their briefs maintain that they called the court’s attention to its failure to inform the parties of its proposed action on jury charges at the beginning of oral argument. The record, however, does not disclose an objection. All that appears on the record is the trial court’s refusal to take a recess so that the judge could read and rule on the requested charges. This Court will not reverse for the trial court’s failure to rule on the charges unless a proper objection was made at that time. Trimble, 351 So.2d at 1360. Even if we considered that there had been a proper objection, we would, for other reasons, find no error in the trial court’s action.

The requirements of Rule 51 are both plain and mandatory. Its purpose as an aid in the administration of justice is equally plain. We believe, that, under the circumstances of this case, reversing the trial court for its failure to inform the parties of its action on the jury charges prior to closing arguments would be contrary to the goal of promoting efficient trial practice. Counsel for defendants were aware, at the close of the second day of trial, that the court had scheduled closing argument at 9:00 a.m. The trial judge could reasonably have waited until the requested jury charges were in from both sides before ruling on either side’s charges. In addition, it would be unfair to give the defendants the benefit of a ruling on the plaintiffs’ proposed charges without giving the plaintiffs the benefit of a ruling on the defendants’ charges. We are of the opinion in this case that counsel for defendants, in delaying submission of requested jury charges, effectively waived the right to be informed of the court’s proposed action on plaintiffs’ and defendants’ charges prior to the time scheduled for oral argument. See, Burch v. Reading Co., 140 F.Supp. 136 (E.D.Pa.1956).

Crigler also asserts error in the giving of certain charges, on the basis that the charges were abstract statements of law and not related to the evidence in this case.

Without addressing the issue of whether such an objection stated sufficient grounds under Rule 51, Ala.R.Civ.P., we find that any such “abstractness” was remedied by the court’s oral charge. Murray v. Alabama Power Co., 413 So.2d 1109 (Ala.1982).

Crigler also objects to a number of charges on the grounds that they contain incorrect statements of law and are not supported by the evidence. Rule 51, Ala.R. Civ.P., provides, in part:

“No party may assign as error the giving or failing to give a written instruction, or the giving of an erroneous, misleading, incomplete, or otherwise improper oral charge unless he objects thereto before the jury retires to consider its verdict, stating the matter to which he objects and the grounds of his objection. Submission of additional explanatory instructions shall not be required unless requested by the court.”

Ala.R.Civ.P., Rule 51.

This Court has stated that the purpose of stating grounds for objection is to give the trial court the opportunity to correct the instructions and to avoid the waste of time from reversals that result from technical omissions or oversights. Gardner v. Dorsey, 331 So.2d 634 (Ala.1976). After examining the record in this case, we find that Crigler did not assign grounds specifying wherein the complained of charges were erroneous or misstatements of the law. Crigler’s objection that numerous charges contained incorrect statements of law, without more, did not adequately inform the trial judge of any potential error or afford him an opportunity to correct any such error. Nor does this case come within the exception to this requirement that is applicable where a party makes a specific objection to a charge which misstates substantive law. Louisville & Nashville Railroad Co. v. Garrett, 378 So.2d 668 (Ala.1979).

Crigler also argues that the trial court erred in allowing plaintiffs’ sixth amended complaint, which was served on him on the first morning of the trial. The sixth amended complaint added, as a cause of action, negligence and wantonness of a warehouseman. Crigler acknowledges that the provisions of Rule 15, Ala.R.Civ.P., regarding amended and supplemental pleadings, are to be liberally construed. He argues, however, that he was unduly prejudiced by the allowance of that amended complaint, which added a new theory of recovery, on the day of trial. He submits that, because the complaint was served on the morning of the trial, he was precluded from presenting an adequate defense.

This Court has frequently recognized the permissive approach to the right to amend provided by Rule 15, and the broad discretion of the trial court in determining what “the interests of justice” require. Bracy v. Sippial Electric Co., 379 So.2d 582 (Ala.1980); McElrath v. Consolidated Pipe and Supply Co., 351 So.2d 560 (Ala.1977). See Hughes v. Wallace, 429 So.2d 981 (Ala.1983) (Torbert, C.J., concurring in result). The Committee Comments to Rule 15 state:

“Under the rule it will be entirely irrelevant that a proposed amendment changes the cause of action or the theory of the case or that it states a claim arising out of a transaction different from that originally sued on or that it caused a change in parties .... Normally, an amendment should be denied only if the amendment would cause actual prejudice to the adverse party.”

In Bracy v. Sippial Electric Co., 379 So.2d 582, 584 (Ala.1980), we stated:

“Where an amendment merely changes the legal theory of a case or adds an additional theory, but the new or additional theory is based upon the same set of facts and those facts have been brought to the attention of the other party by a previous pleading, no prejudice is worked upon the other party.”

Although the sixth amended complaint adds issues not raised in the original complaint, the causes of action in the sixth amended complaint are based on the same set of facts that were pleaded in the original complaint and the prior amendments filed thereto. Plaintiffs alleged that Cri-gler and Collateral Control had taken control of the grain, were storing the grain, and had failed to pay plaintiffs for their grain. Plaintiffs also alleged in the original complaint that defendants were charging a storage fee.

We note that one remedy available to defendants would have been a request for a continuance. There is no evidence in the record that defendants made such a request. In conclusion, we cannot say that Crigler suffered actual prejudice; . therefore, the trial court did not abuse its discretion in allowing the amended complaint.

We have carefully considered all the issues raised by Crigler in his appeal from the judgment of the trial court on the jury verdict for plaintiffs against him. We do not find any prejudicial error which would require reversal of the trial court’s judgment. Accordingly, the plaintiffs’ judgment against defendant Crigler is affirmed.

Next, we address Crigler’s claim that the trial court erred in granting Collateral Control’s motion for judgment notwithstanding the verdict on the cross-claim for indemnity. The basis for Collateral Control’s judgment notwithstanding the verdict on its cross-claim against Crigler is the “Inventory Certification Control Service Agreement” between Modern Mix and Collateral Control, which contained an agreement captioned “Supplemental Agreement.” This agreement, in pertinent part, provides:

“In consideration of the execution by COLLATERAL CONTROL CORPORATION (COLLATERAL CONTROL) of the Inventory Certification Control Agreements and Leases and such other related agreements with MODERN MIX, INC. (COMPANY) we, the undersigned, as officers, agents, directors, or shareholders, or partners, or as a person or persons otherwise interested in COMPANY obtaining the benefits of COLLATERAL CONTROL’S Inventory Certification Control Services, hereby unconditionally agree jointly and severally, personally and individually, to defend, indemnify and hold COLLATERAL CONTROL harmless from and against any and all financial loss or any other loss, damage, claim, legal liability or other expense including, but without limitation, attorneys fees and interest expense resulting directly or indirectly from any of the acts or omissions of COMPANY, its officers, agents or employees whether such acts shall be consummated directly or in connivance with others.
“It is agreed by the undersigned that this Supplemental Agreement shall remain in full force and effect notwithstanding any changes, amendments or modifications to said Agreements and Leases and the undersigned hereby waives the right to have notice of any such changes, amendments or modifications.
“It being further understood that the said Agreements will be executed by COLLATERAL CONTROL only on the condition that this Agreement will be executed by the undersigned.”

It is undisputed that Crigler signed the agreement in question.

We initially note the proper standard of review:

“A motion for judgment notwithstanding the verdict tests the sufficiency of the evidence in the same way as does the motion for directed verdict at the close of all the evidence. Ala.R.Civ.P. 50, Committee Comments. Granting the motion for judgment notwithstanding the verdict says, without weighing the credibility of the evidence, there can be but one reasonable conclusion from the evidence as to the proper judgment ....
“When reviewing the propriety of a trial court’s order granting a motion for judgment notwithstanding the verdict, the evidence must be viewed in the light most favorable to the party who secured the jury verdict .... Such motion should be denied if there is any conflict in the evidence for the jury to resolve and the existence of such conflict is to be determined by the scintilla rule.”

Hanson v. Couch, 360 So.2d 942, 944 (Ala.1978). Guided by the above-stated principles, we are of the view that the trial court erred in granting the motion for judgment notwithstanding the verdict.

The trial court did not find that the jury verdict in favor of Crigler on Collateral Control’s cross-claim was inconsistent. The general rule in Alabama, subject to exceptions, is that joint tortfeasors are not entitled to indemnity or contribution. Parker v. Mauldin, 353 So.2d 1375 (Ala.1977). The judgment notwithstanding the verdict entered by the trial court must mean that it found either that some exception to the rule barring indemnity among joint tortfeasors applied so that Collateral Control would be entitled to be indemnified for the full amount of the judgment, or that the parties intended by the agreement to indemnify Collateral Control against loss caused by its own negligence.

Some exceptions to the rule that indemnity will not be allowed among joint wrongdoers are that a joint wrongdoer may claim indemnity where he has not been guilty of any fault, except technically or constructively, or where both parties are at fault, but the fault of the party from whom indemnity is claimed was the proximate or primary cause of the injury. Mallory S.S. Co. v. Druhan, 17 Ala.App. 365, 84 So. 874 (1920). See 42 C.J.S. Indemnity § 27 (1944). The trial court instructed the jury that if they found from the evidence that Collateral Control unlawfully “intermed-dled” grain that belonged to the plaintiff then they could find Collateral Control liable for conversion.

Collateral Control leased space from Modern Mix on the company’s premises. Modern Mix agreed to provide personnel to conduct Collateral Control’s operations, and to make available to Collateral Control all of its business records. Collateral Control had the right to restrict all deliveries from Modern Mix’s inventory by any means deemed necessary, upon the occurrence of certain conditions. Modern Mix further agreed not to remove inventory from the premises except under the instruction given by BTNB to Collateral Control. Lease agreements between Modern Mix and Collateral Control also provided that the parties agreed that Collateral Control had the right to enter and leave the leased premises at all times during the lease and to use the equipment of Modern Mix for the “handling, storing, weighing, receiving, packing, shipping, or delivery of property deposited.” Plaintiffs also point out that Collateral Control had its locks on all the grain bins, that Collateral Control had exclusive control of those locks, and that Cri-gler testified that he had to get the permission of the bonded agents to remove any inventory. There is also evidence that Collateral Control’s bonded agents certified farmer-owned grain as being company owned. This evidence is sufficient to find that Collateral Control participated with Modern Mix in converting plaintiffs’ grain.

Viewing the evidence most favorably to Crigler, we are unable to say that there was no conflict in the evidence for the jury with respect to the nature of Collateral Control’s liability. We believe that the jury could find that Collateral Control was a joint tortfeasor, and as none of the exceptions to the rule of non-indemnity apply, Collateral Control should not be entitled to indemnity from Crigler.

This Court has held that indemnity agreements that clearly indicate an intention to indemnify against the consequences of the indemnitee’s negligence are enforceable. Industrial Tile, Inc. v. Stewart, 388 So.2d 171 (Ala.1980); Mitchell v. Moore, 406 So.2d 347 (Ala.1981). In construing indemnity contracts between private parties, this Court has required that “the intention to indemnify the negligence of the indemnitee must clearly appear from the wording of the instrument.” Eley v. Brunner-Lay Southern Corp., Inc., 289 Ala. 120, 266 So.2d 276 (1972).

In Industrial Tile, the agreement at issue indemnified the “active, passive, affirmative, sole or concurrent negligence or breach of any statutory duty, whether non-delegable or otherwise on the part of the owner [indemnitee] or its agents, servants or employees, or liability therefor imputed as a matter of law to the owner .... ” 388 So.2d at 175. This Court held that the contract did not, as a matter of law, fail to meet the clear indication test. The agreement here indemnifies Collateral Control from losses etc. “resulting directly or indirectly from any of the acts or omissions of Company [Modern Mix, Inc.], its officers, agents, or employees .... ” We find that this agreement does not clearly indicate an intention to indemnify against the negligence of the indemnitee, Collateral Control. Collateral Control, therefore, would not be entitled to indemnity from Crigler for losses resulting from its own negligence.

For the reasons stated above, we do not think the evidence in Collateral Control’s cross-claim for indemnity was so conclusive as to allow the trial court to set aside the jury verdict and substitute its own judgment in lieu thereof. Accordingly, the judgment in favor of Collateral Control on the cross-claim entered pursuant to the order granting its motion for judgment notwithstanding the verdict is reversed and the case remanded.

AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.

All Justices concur.

       certificate signed by someone other than Crigler.


source: Caselaw Access Project

author: FAULKNER, Justice.

license: Public Domain

text:
    STRINGFELLOW MATERIALS, INC. and Joy Schrum v. Amelia LEE, et al.
    82-299.
    Supreme Court of Alabama.
    Sept. 30, 1983.

      Joyce E. May and Raymond C. Winston of Winston, Winston & May, Birmingham, for appellant.
    Houston L. Brown and Robin L. Burrell, Birmingham, for appellees.
   FAULKNER, Justice.

This is an appeal from the judgment and various rulings of the Circuit Court of Jefferson County, in a case alleging breach of contract and fraudulent concealment in the sale of a home. We affirm.

The facts of this case are that in the early part of 1967 Mrs. Amelia Lee entered into an oral contract with Mr. E.M. String-fellow, as agent for Stringfellow Materials, Inc., to buy a house located at 1665 Pine Avenue, S.W., Birmingham, Alabama. Under the terms of the contract, Mr. String-fellow agreed to sell the house to Mrs. Lee, and, in exchange, Mrs. Lee agreed to convey to Mr. Stringfellow title to her home at 964 Second Street North, Smithfield, Alabama, as down payment and to pay a balance of $12,938.26 in monthly installments of $148.41, at 6% interest per annum. Mr. Stringfellow was to give Mrs. Lee a warranty deed to the property upon receipt of the final monthly installment.

In 1967, title to the property was held by Stringfellow Materials, Inc. At that time, Mrs. M.L. Stringfellow was president of the corporation and her son, Mr. E.M. String-fellow was vice-president. Mrs. M.L. Stringfellow died shortly thereafter and Mr. E.M. Stringfellow became sole officer, director, and stockholder in the corporation.

Mrs. Lee made her first payment under the agreement in May of 1967 and continued paying until December of 1980, when she made a final payment of $154.31. Mrs. Lee sent her payments addressed to the corporation, along with a payment book provided to her by Mr. Stringfellow. Upon receipt of each payment, Mr. Stringfellow would enter the amount paid by Mrs. Lee in the book, divided into the amount of each payment attributable to principal and to interest. He would also subtract the amount paid from a previous balance and enter a new balance. He would then send the book back to Mrs. Lee as her receipt.

Mr. Stringfellow died in 1976, leaving his entire interest in Stringfellow Materials, Inc., to his daughter, Joy Schrum. In March 1977, Ms. Schrum dissolved the corporation and sold most of its assets. Following Mr. Stringfellow’s death, Ms. Schrum continued to accept payments from Mrs. Lee in the same manner as had her father, and she acknowledged receipt of Mrs. Lee’s final payment in December 1980.

In April 1967, Mrs. M.L. Stringfellow, as president of Stringfellow Materials, Inc., and Mr. E.M. Stringfellow as guarantor, executed a mortgage on the Pine Avenue property to City Federal Savings and Loan Association (City Federal). Mr. String-fellow, and after his death, Ms. Sehrum, used the money received from Mrs. Lee each month to pay the monthly mortgage payments to City Federal. Ms. Sehrum stopped making payments on the mortgage after Mrs. Lee sent in her final payment in December 1980. The mortgage became in default in January 1981 and City Federal scheduled foreclosure proceedings for June 1981.

The record indicates that neither Mr. Stringfellow nor Ms. Sehrum informed Mrs. Lee of the outstanding mortgage on the property, at any time, although Mrs. Lee spoke to Ms. Sehrum on several occasions about the property. In November 1977, Ms. Sehrum asked Amelia Lee and Bernice Finley, Mrs. Lee’s daughter, to accompany her to Ms. Schrum’s attorney’s office in order to clear title in Ms. Sehrum to the Second Street down payment property as agreed in the contract. At the attorney’s office, Mrs. Lee specifically asked Ms. Sehrum if there would be any problem with Mrs. Lee’s receiving a deed to the Pine Avenue property when she had made her final payment. In response, Ms. Sehrum was evasive and failed to inform Mrs. Lee of the mortgage.

Mrs. Lee testified that she became aware of the mortgage on the property about three months before she made her final payment, and that, after she made her final payment, agents of City Federal came to the house and informed her that City Federal was going to foreclose on the property and that she would have to vacate.

On July 13, 1981, Amelia Lee, Bernice Finley, and Amelia Finley, who is Amelia Lee’s granddaughter, filed suit against Stringfellow Materials, Inc., City Federal Savings and Loan Association, First National Bank of Birmingham, as executor of the estate of E.M. Stringfellow, and Joy Sehrum, individually, and in her representative capacity as sole stockholder in String-fellow Materials, Inc. Plaintiffs based their action on breach of contract for the failure of defendants to execute a warranty deed to the Pine Avenue property. Plaintiffs also claimed fraud based upon defendants’ actions in executing a mortgage on the property and failing to inform plaintiffs of said mortgage.

In their prayer for relief, plaintiffs asked the court to enjoin City Federal from foreclosing on the property; to order String-fellow Materials, Inc. and Joy Sehrum to pay off the City Federal mortgage; to execute a warranty deed to plaintiffs for the property; to specifically perform the contract; and to pay compensatory and punitive damages to the plaintiffs based on fraud. On July 13, 1981, the court issued a temporary restraining order against City Federal to prevent foreclosure of the property at the scheduled time.

Each named defendant answered the complaint. Following various motions and amendments by the parties, Bernice Finley and Amelia Finley were dismissed as party plaintiffs, and First National Bank of Birmingham, as executor of the Estate of E.M. Stringfellow, was dismissed as a defendant.

The case was heard before Judge William A. Thompson without a jury. Following presentation of all the evidence, Judge Thompson entered a judgment ordering the defendants, Stringfellow Materials, Inc., a dissolved corporation, and Joy Sehrum, as the sole stockholder, director and president of said corporation, to convey and deliver a deed to the Pine Avenue property to Mrs. Lee and to cause to be recorded in the Probate Office an instrument attesting the payment and satisfaction of the mortgage to City Federal.

The court further ordered that in the event the defendants failed to perform, that upon written application of the plaintiff, Amelia Lee, to the court, the court would direct the Register to execute and deliver his deed giving title to Amelia Lee and enter a judgment based on fraudulent concealment and suppression of material facts in the sum of $8,894.55 or such other sums as the court found necessary to pay off City Federal.

The defendants appeal to this court from the trial court’s judgment in favor of the plaintiff and assert that certain erroneous rulings were made by the court below.

Appellants’ first contention, on appeal, is that the trial court abused its discretion in granting specific performance to Mrs. Lee. We do not agree. It is settled that the remedy of specific performance may be ordered where the contract is just, fair, and reasonable, and reasonably certain in respect to the subject matter and terms, and is founded on a valuable consideration. See Montgomery v. Peddy, 355 So.2d 698 (Ala.1978); Alabama Central Railroad Co. v. Long, 158 Ala. 301, 48 So. 363 (1909); Carlisle v. Carlisle, 77 Ala. 339 (1884). The decision to grant specific performance rests largely in the discretion of the trial judge, see Edwards v. Thornburgh, 396 So.2d 678 (Ala.1981); Wray v. Harris, 350 So.2d 409 (Ala.1977), appeal after remand, 370 So.2d 974 (Ala.1979), and whether relief shall be granted depends upon an equitable consideration of the particular circumstances of each case. See Dendy v. Anchor Construction Co., Inc., 294 Ala. 120, 313 So.2d 164 (1975); Carlisle v. Carlisle, supra.

Furthermore, the decision of the trial judge will be overturned, on appeal, only if shown to be palpably erroneous. Edwards v. Thornburgh, supra; Wray v. Harris, supra. It should also be noted that the findings of a trial court hearing a case without a jury and on evidence presented ore tenus, as in the present case, will not be overturned on appeal unless they are unsupported by the evidence or are plainly and palpably erroneous. Smith v. McNaughton, 378 So.2d 703 (Ala.1979).

In the present case, the evidence presented by Mrs. Lee sufficiently establishes the existence and terms of a reasonable contract founded on valuable consideration. The evidence further shows that appellants breached said contract, and that Mrs. Lee has no adequate remedy at law to redress the breach. When tested by the criteria set out above, we cannot find that the trial court abused its discretion in ordering specific performance in this case.

Appellants also contend that the trial court erred in granting damages for fraud for concealment of the outstanding mortgage and, at the same time, granting specific performance of the contractual agreement. Appellants, in their brief, rely on Gulf Oil Corp. v. Spriggs Enterprises, 388 So.2d 518 (Ala.1980), for the proposition that the court may not award damages for the tort of fraud and misrepresentation, and, in addition, grant specific performance of the agreement. While, ordinarily, this is a correct statement of the law, (see, however, Midstate Homes, Inc. v. Johnson, 294 Ala. 59, 311 So.2d 312 (1975)), it is inapplicable to the present case.

The order of the trial judge does not award damages for fraud in addition to granting specific performance. Rather, the order is phrased in the alternative. The effect is to award to Mrs. Lee either specific performance of the contract or, damages such as will fully compensate her foi; appellants’ actions, in the event that appellants fail to specifically perform as ordered. Mrs. Lee either gets one type of recovery or the other, but not both. We find no error in the trial court’s order.

Appellants further contend that the trial court erred in awarding damages to Mrs. Lee on the finding that Stringfellow Materials, Inc., a dissolved corporation, and Joy Schrum, as trustee of the assets of said corporation,- and individually, were guilty of fraudulent concealment and suppression of material facts. We find that the trial judge was correct in awarding said damages based on appellants’ actions in breaching a contract with Mrs. Lee. The trial judge, in this instance, came to the correct conclusion that damages should be awarded, but merely based this conclusion on the wrong theory of law. We uphold the award of damages to Mrs. Lee, such as will cause the contract to be fully and specifically performed, based on appellants’ breach of contract.

Appellants further contend on appeal that the trial court erred in denying their motion to exclude the testimony of plaintiffs’ witnesses Bernice Finley and Amelia Finley concerning transactions with and statements by the deceased Mr. E.M. Stringfellow. Appellants argue that to allow said testimony is a violation of Code of Alabama 1975, § 12-21-163 (commonly known as the “dead man’s statute”), which states in pertinent part:

“... no person having a pecuniary interest in the result of the action or proceeding shall be allowed to testify against the party to whom his interest is opposed as to any transaction with, or statements by, the deceased person whose estate is interested in the result of the action or proceeding .... ”

In order for the dead man’s statute to disqualify a witness from testifying about his dealings with a deceased individual, three criteria must be met: (1) the estate of the deceased must be interested in the outcome of the suit; (2) the witness must have a pecuniary interest in the result of the proceedings; and (3) the testimony of the witness must relate to a personal transaction with the decedent. Bank of the Southeast v. Koslin, 380 So.2d 826 (Ala.1980); Taylor v. First National Bank of Tuskaloosa, 279 Ala. 624, 189 So.2d 141 (1966). Under the facts of this case, it is clear that all three criteria have not been met. First, the estate of the deceased will not be affected by the outcome of this action, since the deceased’s estate is not a party to the action. Plaintiff’s claims against the defendant First National Bank of Birmingham as executor of the decedent’s estate were dismissed by the court prior to trial. The judgment rendered is against Stringfellow Materials, Inc., a corporation, and against Joy Schrum, individually and as sole stockholder and director of the corporation. Likewise, although appellants debate this point, the evidence clearly reveals that neither Bernice Finley nor Amelia Finley has a pecuniary interest in the outcome of the action. Consequently, the dead man’s statute does not render Bernice Finley or Amelia Finley incompetent to testify to transactions with or statements by the deceased, M.L. Stringfellow.

Appellants’ final contention is that the trial court committed reversible error in admitting into evidence, over objection, two payment books evidencing the amounts paid by Amelia Lee under the contract. Appellants argue that the appellee failed to lay a proper predicate for introducing the payment books in order to bring them within the “business records exception” of the hearsay rule. See Code of Alabama 1975, § 12-21-43. We do not agree. Suffice it to say that our examination of the record reveals that the payment books were properly admitted under the business records exception.

We have carefully reviewed the record and briefs of counsel in this case. Finding no error by the trial court on the issues raised by appellants, we affirm.

AFFIRMED.

TORBERT, C.J., and JONES, ALMON and ADAMS, JJ., concur.


author: PER CURIAM.

text:
    C.B. PENDLEY v. W.C. PENDLEY.
    81-1000.
    Supreme Court of Alabama.
    April 29, 1983.
    As Corrected on Denial of Rehearing July 1, 1983.
    Rehearing Denied Sept. 30, 1983.
    Jerry K. Selman of Selman, Beaird & Selman, Jasper, for appellant.
    Gerald D. Colvin, Sr., Jasper, for appellee.
   PER CURIAM.

W.C. Pendley (appellee herein) brought an action for ejectment seeking to recover possession of certain land from an adjoining landowner, C.B. Pendley (appellant herein). This suit concerns the possession by appellant of land which was also the subject matter of a prior suit in which appellee sought a sale for division of the property. Pendley v. Pendley, 338 So.2d 405 (Ala.1976). We hold that the prior suit is determinative of the claim brought in this action, and, therefore, the judgment in this case is due to be reversed.

The land involved in the instant suit lies in Walker County and is owned by two brothers, appellant and appellee. Jessie Arnold Pendley, the parties’ father, conveyed to appellant by deed 10 acres of land lying in the East ½ of the SW ¾4 of the NW ¼ of Section 19, Township 15, Range 9, in Walker County. About the same time, appellant went into possession of 80 acres which adjoined the land conveyed by the deed and commenced cultivating the land, cutting timber on it, and using it for pasture. In 1953, upon the death of his father, the appellant moved into the house which was on the 80 acres of land which was not covered by the deed from Jessie Arnold Pendley to the appellant. The entire 90 acres, the 10 conveyed by deed and the additional 80 acres which appellant took possession of, was assessed for taxes in appellant’s name from 1948 until the present. All of the parties were under the impression that the deed from Jessie Arnold Pendley to his son C.B. Pendley, the appellant, described the entire 90-acre tract rather than only 10 acres. After it was discovered that the deed did not convey the 90-acre tract, all of the brothers and sisters except W.C. Pend-ley, the appellee, conveyed their interests in the 80 acres to the appellant. The appellee, in March of 1973, brought suit seeking a sale for division of the tract. Appellant counterclaimed for reformation of the deed or for a declaration that he had title to the 80 acres by adverse possession or prescription. The trial court entered the following judgment:

“1. That the petition to have said land sold for division and partitioned among the joint owners is hereby denied.
“2. That the Respondent, C.B. Pend-ley’s petition to have said deed as set out in the counterclaim reformed is hereby denied.
“3. That C.B. Pendley’s counterclaim and cross claim for any rights under a deed by color of title to said land is hereby denied.
“It is the further order, judgment and decree of this Court that the said C.B. Pendley has been in peaceful, open, hostile, notorious, exclusive, continuous, and adverse possession of said 80 acres of land described hereinabove for a period of 24 years prior to the time of the filing of this Bill of complaint in this cause and has used said 80 acres of land in a manner consistent with its nature and in- a manner for which the land was reasonably adapted thereto during said 24 years and by reason of same has acquired title to said land by adverse possession and the Court decrees that he, by said adverse possession, has acquired title to said land, and that said land now belongs to him.”

This Court affirmed that judgment of the trial court in Pendley, supra, in 1976.

In March of 1977 appellee filed a second suit, seeking ejectment of appellant from the house and curtilage. Appellee maintained that the house and curtilage lay in the NW ⅛ of the SW ¼ of Section 19, which is owned in fee simple by appellee.

Appellant raised the defense of res judi-cata, which was rejected by the trial court, and filed a counterclaim stating that this case involved a boundary dispute and that the fence which enclosed the house and yard was the true dividing line between the parties. The case was tried before a jury, and on April 17, 1979, a mistrial was declared when the jury was unable to reach a unanimous verdict.

The trial court reset the case for trial and bifurcated the issues, so that the boundary line dispute would be tried by the court and the other issues by a jury. On August 20, 1980, the trial court issued the following order:

“This cause coming on for a final hearing upon the Defendant’s counterclaim as last amended and with all parties being present before the Court and being represented by their respective attorneys, the Court proceeded to hear the oral testimony; at the conclusion of which, the photographs, surveys, exhibits, and other evidence including a personal view and inspection of the disputed area by the Court, and after a thorough consideration of the same, the Court is of the opinion that the parties to this cause are Coterminous owners of the lands in dispute, and the Court finds that there was in fact, a dispute over the location of the true dividing line between the lands owned by the parties.
“The Court further finds that the Defendant, C.B. Pendley, [Brack] is the owner of the SW ¼ of the NW ¼ of Section 19, Township 15 South, Range 9 West, and that the Plaintiff, W.C. Pend-ley, [Curt] is the owner of the North one-half of the NW ¼ of the SW ¼ of Section 19, Township 15 South, Range 9 West, as described in his deed.
“The Court further finds that the Defendant, C.B. Pendley, has failed to establish title by adverse possession to any of the disputed lands outside the lands called for in the Defendant’s deed.
“The Court further finds that the location of the true dividing line between the lands in dispute is as follows:
“Begin at the NW Corner of Section 19, Township 15 South, Range 9 West. Thence run South Io and 57' East for a distance of 2698.50' to the NW Corner of the NW ¼ of the SW ¼, which is marked by a steel post or a hub. Thence run East on an angle of 89° 51' 15" for a distance of 5606.34' to the East Line of 19, Township 15 South, Range 9 West.” [Emphasis added.]

Subsequently, on May 14, 1982, the court issued an additional order:

“This cause coming on to be heard upon the plaintiffs motion filed March 1,1982, to strike the defendant’s motions of June 20,1981, and July 21,1981, with reference to the defendant’s demands for an abstract and also the defendant’s motion for recusal. The Court proceeded to hear testimony on said motions and after hearing the witnesses and after a careful consideration of the same, the Court overruled the defendant’s motion for recusal and granted the plaintiff’s motion to strike. Upon the court’s rulings on said motions, the plaintiff then in open Court withdrew his claim for damages in his complaint for ejectment and the Court being of the opinion that the issues in the above-styled cause became moot except that the plaintiff is entitled to possession of the lands in dispute.
“IT IS, THEREFORE, THE ORDER, JUDGMENT AND DECREE OF THE COURT AS FOLLOWS:
“1. That the plaintiff, W.C. Pendley, is entitled to the immediate possession of all that property lying South of the land line established by Decree of this Court on August 20,1980; and further, that the defendants shall deliver possession of said property to the plaintiff immediately.
“2. It is the further order of this Court that the defendants shall have the right to remove any buildings or other improvements presently located on said property, and that all buildings and other improvements which the defendants claim shall be removed from such premises beginning immediately and shall be completely removed not later than January 1, 1983; and any other buildings remaining on said property after that date shall become property of the plaintiff.”

In effect the trial court held that appellant had failed to establish title by adverse possession, and appellant was therefore ordered to move the house from the boundary line established by the court. That line was based upon a court ordered survey which indicated that the forty line, in fact, ran through appellant’s homeplace and curti-lage.

After reviewing the record in this case and the briefs of the parties, we are convinced that the trial court erred in disallowing the defense of res judicata. We find that the homeplace and curtilage were part of the contested property in the prior suit. In that case, the trial court held that appellant herein had gained title to the home-place and curtilage by adverse possession. That determination is controlling in the present suit.

The elements of res judicata were set out by this Court in Wheeler v. First Alabama Bank of Birmingham, 364 So.2d 1190 (Ala.1978):

“The elements of res judicata are as follows: (1) prior judgment rendered by court of competent jurisdiction; (2) prior judgment rendered on the merits; (3) parties to both suits substantially identical; and (4) same cause of action present in both suits. Stevenson v. International Paper Co., 516 F.2d 103 (5th Cir.1975). If these elements are present, then the former judgment is an absolute bar to any subsequent suit on the same cause of action, including any issue which was or could have been litigated in the prior action. McGruder v. B & L Construction Co., 331 So.2d 257 (Ala.1976).”

364 So.2d at 1199. It is virtually undisputed that the first three elements are met in the case before us. The fourth element presents some question since the former case involved a sale for division and the current case involves a boundary line dispute.

We have, however, in considering this fourth element, stated:

“The presence of the fourth element of res judicata, that each suit is based on the same cause of action, depends upon whether substantially the same evidence supports both actions.”

364 So.2d at 1200. The evidence before the trial court in this boundary line dispute was the same evidence of adverse possession offered in the prior case. Thus, we find that appellee was barred from relitigating title to the homeplace and curtilage which had been determined in the prior suit. For this reason, this judgment is due to be reversed and the case remanded.

REVERSED AND REMANDED.

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


author: EMBRY, Justice. TORBERT, Chief Justice

text:
    Carol S. HINES, et al. v. Charles C. HEISLER, et al.
    81-867.
    Supreme Court of Alabama.
    July 15, 1983.
    Rehearing Denied Sept. 30, 1983.

      John Earle Chason of Chason & Chason, Bay Minette, for appellants.
    J. Don Foster and Thack H. Dyson of Foster, Brackin & Bolton, Foley, Charles C. Partin of Stone, Partin, Granade & Crosby, Bay Minette, for appellees Ruth Stone and John Dale, Jr.
    David P. Vaughn, Spanish Fort, guardian ad litem on behalf of Jason Mims, a minor, Rachel Mims, a minor and Ashley A. Robinson, a minor.
   EMBRY, Justice.

Plaintiffs, appellants herein, filed a bill for declaratory judgment to construe restrictive covenants contained in instruments a part of the chain of title to their lot at Romar Beach in Baldwin County. Based on the pleadings, testimony taken ore terns, exhibits and briefs of the parties, the trial court entered a declaratory judgment finding that the plaintiffs’ anticipated use of the property would violate applicable restrictive covenants in that “such use of said property by the Plaintiffs is not solely for private residential purposes.” We affirm.

The only question of law presented by the record in this case involves our interpretation of the restrictive covenant contained in the deed to the real property here involved.

The factual background of this case is, essentially, not in dispute. The plaintiffs, Carol S. Hines, Harold R. Walker and Frances J. Walker, are the recent purchasers of a 100-foot lot on the Gulf of Mexico at Romar Beach in Baldwin County. The plaintiffs formed a partnership and purchased the property in 1981 for developmental purposes. Specifically, the plaintiffs proposed to construct upon the realty a multifamily townhouse development consisting of eight living units housed in five separate buildings. Each unit and the land thereunder is to be sold in fee to the purchaser; the entire complex is to be served by one drive and that portion of the property not sold is to be retained as common areas for the owners of all the separate units.

The plaintiffs’ property is part of a 1320-foot tract originally acquired in 1944 by Noel M. Turner and Thomas E. Twitty as tenants in common. Both Turner and Twitty eventually erected private single family residences upon separate parts of the property. Later, in the early 1950’s, the remainder of the tract (after being partitioned equally between the co-owners) was conveyed to other persons in lots generally measuring 100-foot widths. In the various deeds to each lot there were incorporated restrictive covenants which specified that the property “be used solely for private residential purposes.”

In this appeal, plaintiffs contend the trial court failed to correctly apply the established rules of construction in its interpretation of the restrictive covenants.

We are not unmindful of the well settled rule that in construing restrictive covenants, all doubts must be resolved against the restriction and in favor of free and unrestricted use of property. However, effect will be given to the manifest intent of the parties when that intent is clear and the restrictions are confined to a lawful purpose within reasonable bounds, and rights created by the covenant have not been relinquished or otherwise lost. Wisneiwski v. Starr, 393 So.2d 488 (Ala.1980). Furthermore, restrictive covenants are to be construed according to the intent of the parties in the light of the terms of the restriction and surrounding circumstances known to the parties. Kennedy v. Henley, 293 Ala. 657, 309 So.2d 435 (1975). Assuming, arguendo, that the intent of the parties is unclear, subsequent acts of the parties showing the construction they put on the instrument are entitled to great weight in determining what the parties intended. Brashier v. Burkett, 350 So.2d 309 (Ala.1977); Kennedy, supra.

The restrictive language incorporated in the deed to the plaintiffs’ property provides in part:

“The Grantee, by the acceptance hereof, agrees that the property herein conveyed will be used solely for private residential purposes.... ”

That restrictive covenant imposes an enforceable obligation on every grantee in the chain of title to use the property only for “private residential purposes.” Problems kindred to the one here presented have been decided by various other jurisdictions; however, we are not referred to any Alabama case involving a restriction of the exact wording of the one here questioned. See, Flaks v. Wickman, 128 Colo. 45, 260 P.2d 737 (1953) (restrictive covenant in deed providing that no building should be constructed upon the premises conveyed other than for “private residence” purposes, prohibited construction of a duplex on such premises); Fox v. Sumerson, 338 Pa. 545, 13 A.2d 1 (1940) (a building occupied by two or more - families is not a private residence); Pehlert v. Neff, 152 Pa.Super. 84, 31 A.2d 446 (1943) (a three-family apartment was not a “private residence”). See also, Koch v. Gorruflo, 77 N.J.Eq. 172, 75 A. 767 (1910); Ward v. Prospect Manor Corp., 188 Wis. 534, 206 N.W. 856 (1926). In accord with the above-mentioned jurisdictions, this court opines that the use of the word “private” entirely negates any implication that this property in question could be used for any type of commercial residential purpose such as the multifamily type units sought to be constructed by plaintiffs.

Notwithstanding the aforementioned interpretation, the trial court correctly interpreted the restrictive provision in light of the subsequent acts of the parties and surrounding circumstances.

The intent of the grantors was reinforced by evidence of the following from the record:

(1) The grantors themselves built private residences.

(2) No structure (except for servant’s quarters and garages) other than private residences has ever been built upon the property in this neighborhood.

(3) The present owners of the property (defendants) purchased their lots in reliance upon the restrictive covenants barring commercial use.

This court is of the opinion that the restrictive covenant contained in the plaintiffs’ deed prevents the construction of any type of multifamily unit. We conclude that when the word “private” is used in connection with the word “residence,” it means single family residence. The evidence of the intent of the grantors and parties in interest is in accord.

Findings by a trial court sitting without a jury and hearing evidence presented ore tenus are entitled to a presumption of correctness unless it is demonstrated that such findings are plainly and palpably wrong or manifestly unjust. Silverman v. Charmac, Inc., 414 So.2d 892 (Ala.1982). We find the trial court’s judgment was amply supported by the evidence.

The judgment is therefore due to be and is hereby affirmed.

AFFIRMED.

FAULKNER, ALMON and ADAMS, JJ., concur.

TORBERT, C.J., concurs specially.

TORBERT, Chief Justice

(concurring specially).

I agree that “private residence” means single family residence, and I further agree that the trial court was correct in finding that the plaintiffs’ anticipated use of the property would violate the restrictive covenant prohibiting a use of the property for something other than private residential purposes. This result had to be reached because the plaintiffs admitted that they intended to build one duplex unit and one triplex unit on the lot. Such units are not considered to be for private residential purposes under Flaks v. Wichman, 128 Colo. 45, 260 P.2d 737 (1953); Fox v. Sumerson, 338 Pa. 545, 13 A.2d 1 (1940); and Koch v. Gorruflo, 77 N.J.Eq. 172, 75 A. 767 (1910). The court in Fox cited Taylor v. Lambert, 279 Pa. 514, 124 A. 169, 170 (1924), when it said,

“ ‘The distinction between a private dwelling house or a private residence on the one hand and a house built or occupied as a residence for two or more families is quite obvious. In the one case it is single, private, and personal; in the other it is a sort of a tenement affair. While the families occupy separate apartments distinct from each other, they are not private residences as the term is ordinarily understood.’ ”

13 A.2d at 2.

Although I agree with the majority in affirming the trial court, I do not propose that this result eliminates all future development of the lot by the plaintiffs. The deed does not contain a restrictive covenant prohibiting resubdivision. The restrictive covenant prohibiting use of the land for other than private residential purposes prohibits only the building of the duplex and triplex units planned by the plaintiffs. The single units do not violate any restrictive covenant as long as they are sold to serve as the residence of a single family.


author: BEATTY, Justice.

text:
    SOUTHERN GUARANTY INSURANCE COMPANY v. James F. PITTMAN, Jr.
    81-1068.
    Supreme Court of Alabama.
    July 22, 1983.
    Rehearing Denied Sept. 23, 1983.

      David E. Allred of Hill, Hill, Carter, Franco, Cole & Black, Montgomery, for appellant.
    N.T. Braswell, III of Rushton, Stakely, Johnston & Garrett, Montgomery, for ap-pellee.
   BEATTY, Justice.

Appeal by defendant, Southern Guaranty Insurance Company (Southern Guaranty) from a judgment for plaintiff, James F. Pittman, Jr., in a declaratory judgment action. We reverse and remand.

Southern Guaranty issued a general liability protection policy of insurance to a corporate business enterprise, Auto Spring and Brake Service, Inc. Contained within the policy terms was this language:

“IV. PERSONS INSURED
“Each of the following is an insured under this insurance to the extent set forth below:
“A. Under the Garage Bodily Injury and Property Damage Liability Coverages:
“(1) the named insured;
“(2) with respect to garage operations other than the automobile hazard:
“(a) any employees, director or stockholder of the named insured while acting with the scope of his duties as such,
“(d) any person or organization having a financial interest in the garage operations of the named insured;
“None of the following is an insured:
“(i) any person while engaged in the business of his employer with respect to bodily injury to any fellow employee of such person injured in the course of his employment.”

Auto Spring and Brake Service, Inc., was incorporated in 1955. Plaintiff, Pittman, has worked there since 1957, and at all times pertinent was vice president, a stockholder owning one-third of the corporation’s outstanding shares, a director, and day-today manager of the business. Pittman obtained the policy in question for his employer as well as a separate workmen’s compensation policy issued by another underwriter through a Montgomery agency, Colonial Insurance Agency.

One George Johnson, while an employee of the business, apparently sustained an injury while in the course of his employment. He filed a claim and was awarded benefits which were paid by the workmen’s compensation carrier for Auto Spring and Brake Service. Thereafter he filed a complaint against Pittman and others to recover damages for injuries which were due, he alleged, to the negligence of Pittman, who had failed to provide him with safe working conditions. Southern Guaranty denied coverage to Pittman on the ground that he, Pittman, was within the “fellow employee” exclusion of the insurance policy.

The case was tried to the trial judge, who entered judgment for plaintiff. Defendant’s motions for a new trial and reconsideration were denied.

Defendant presents several issues for our review, the principal issue being whether or not the trial court erred in failing to find, as a matter of law, that plaintiff was a fellow employee of the injured workman, Johnson, and hence within the policy’s “fellow employee” exclusion. From a review of the record and of the authorities, we have concluded that the trial court did err in this regard.

Southern Guaranty does not dispute the fact that Pittman was a stockholder, a director, and “a person having a financial interest in the garage operations of the named insured.” Pittman claims policy coverage under that policy language. The undisputed evidence, however, also shows that Pittman was an employee of the insured company. Not only did he “run the business” on a day-to-day basis, but “would actually get down at times and rub shoulders with the other employees there in the shop in helping them do things.” It is also clear from the evidence that the other two stockholders were not active in the management or operation of the business. Thus, under the explicit terms of the exclusionary language of the policy, Pittman was not an “insured” because he was a person “engaged in the business of his employer with respect to [injury to Johnson, a fellow employee who was] injured in the course of his employment.”. By way of comparison, the same exclusion would not have applied to the other two stockholders, Pittman’s cousin and his cousin’s wife.

The contrary holding of the trial court was based upon its finding that the policy was ambiguous because the exclusion applied to fellow employees but not to other defined insureds. With respect, we hold that such a selective choice does not make the otherwise clear terms of the policy ambiguous, and, accordingly, the policy must be enforced as written. Kinnon v. Universal Underwriters Ins. Co., 418 So.2d 887 (Ala.1982).

Our conclusion on the effectiveness of this exclusion finds support in the case of Home Indemnity Co. v. Reed Equipment Co., Inc., 381 So.2d 45 (Ala.1980). One of the issues in that case concerned a policy provision exactly like the one before us. This Court applied that provision as written, having no difficulty with its terms, observing:

“The language of this definition, by its plain wording, excludes as an insured an employee who is sued by a co-employee as a result of bodily injuries sustained in the course of employment. We find no ambiguity in this-” (Emphasis added.)

With regard to the issue of whether or not a supervisory employee of a corporate employer, such as Pittman was clearly shown to be, is a fellow employee under such an exclusion, the Home Indemnity Co. opinion is also decisive:

“A supervisory employee of a corporate employer, whatever his function, is not the employer — and, necessarily, falls on the ‘employee’ side of the employer/employee classification line. Indeed, were this not true, the third-party suit itself would fail....
“... We hold merely that a definition which is expressed in terms of ‘fellow employee,’ in the context of a corporate employment structure, refers to those company personnel other than the employer.”

Appellant has raised one other issue pertaining to the admission of certain evidence in the trial below. We have reviewed that issue but, in view of our conclusions above, it is unnecessary to amplify it in this opinion.

For the reasons stated, the trial court erred in failing to apply the subject exclusion in favor of defendant. The judgment of that court, therefore, must be, and it hereby is, reversed, and this cause is remanded to that court for an order not inconsistent with this opinion.

REVERSED AND REMANDED.

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


author: SHORES, Justice.

text:
    George RUSH v. JACKSONVILLE STATE UNIVERSITY.
    82-398.
    Supreme Court of Alabama.
    July 22, 1983.
    Rehearing Denied Sept. 23, 1983.

      Thomas J. Knight, Anniston, for appellant.
    Walter J. Merrill, Anniston, for appellee.
   SHORES, Justice.

George Rush, d/b/a Rush Engineers (Rush), appeals from summary judgment entered against him in this declaratory judgment action. This case was before us previously on a writ of mandamus. Ex parte Rush, 419 So.2d 1388 (Ala.1982).

Jacksonville State University (JSU) filed this action requesting the court to determine the ownership rights to money represented by a certificate of deposit issued by The First National Bank of Anniston (First National).

The following facts are undisputed: The parties entered into a contract on August 16, 1977, for the construction of a building at the University. Rush agreed to construct the building for the fixed sum of $865,740.53. Under the express terms of the contract and § 39-2-12, Ala.Code (1975), as it existed prior to amendment effective May 4, 1978, JSU withheld a ten percent retainage from payments due Rush for work completed and materials furnished until the value of the in-place construction reached fifty percent of the contract value. The total amount of retainage withheld was $36,042.73.

On June 2, 1978, JSU issued a check to Rush in the amount of $36,042.73, at his request. This money represented the re-tainage. That same day, First National issued a certificate of deposit in the same amount, made payable to JSU and Rush. This is the certificate in question. Thereafter, Rush allegedly defaulted on the contract and left the job. JSU made a claim against The Home Insurance Company (Home) as the surety of Rush’s performance bond. The claim was ultimately settled for $50,762.84. A clause of the settlement agreement between JSU and Home states:

“3. Except as otherwise expressly provided herein, the University and the Surety, for themselves, their agents, assigns and successors, hereby release and forever discharge the other from any and all claims, demands and causes of action arising out of the aforesaid Construction Contract, and Bonds, or otherwise, and whether arising- before or after the execution of this Agreement.”

Prior to the Home-JSU settlement, a petition of involuntary bankruptcy was filed against Rush by a number of his creditors. Home agreed to settle the claims made against Rush by his creditors. Rush agreed to the following assignment to Home as part of the consideration:

“10. ASSIGNMENT AND TRANSFER OF CONTRACT FUNDS TO HOME “The parties agree to Rash’s assignment and transfer of contract funds to Home in the following manner:
“A. Subject to the provisions of this paragraph 10, Rush hereby assigns, transfers and conveys to Home the following:
“(1) Any and all right, title and interest, other than matured claims against subcontractors and suppliers which Rush may have in any contract bonded by Home and in which Rush was principal and Home was surety; and
“(4) Any and all right, title and interest which Rush may have in and to any and all sums due or arising out of any such contracts, subcontracts or purchase orders for materials and suppliers.”

Because the certificate represents the re-tainage withheld from the contract, JSU contends that Rush’s assignment to Home of all rights in and to “sums due or arising out of” the building contract as a matter of law included the retainage. Home, thereafter, relinquished to JSU any claim it had to the certificate of deposit by the JSU-Home settlement. Furthermore, it is undisputed that the fixed price of $865,740.53 has been paid to Rush for the building. Therefore, Rush has been paid all he was due on the contract. If Rush were to receive the certificate in addition, he would be overpaid according to the contract.

In opposition to these facts, Rush simply says that on June 2, 1978, he purchased the certificate with his own money. He does not deny that he received a check from JSU in the same amount, representing the re-tainage. Rush states in his affidavit that he agreed to maintain the funds for security for the completion of the construction. He contends that he completed the project in all material respects and that there remained only minor cleanup when he left, for which JSU was more than adequately compensated by Home. Furthermore, because the money came out of his own pocket, Rush argues that the certificate did not contract and was not included in the assignment to Home. He argues that JSU is, therefore, entitled to the certificate only if it can prove default and that default is a factual determination within the province of the jury. Therefore, his argument is that summary judgment was improper because the question of whether he defaulted or not presents a genuine issue of material fact. arise out of the

The trial court found on the undisputed facts that JSU had paid Rush, exclusive of the certificate, all that he was entitled to receive under the contract and that JSU had fulfilled its obligations and was the sole owner of the certificate.

We affirm.

JSU’s argument that the rights of the parties have been determined by the agreements and assignments contained therein is correct. The central issue is to determine what was included in Rush’s assignment to Home of “sums due and arising out of the contract.”

Absent evidence to the contrary, “the words of agreement will be given their ordinary meaning.” Flowers v. Flowers, 334 So.2d 856, 857 (Ala.1976). We look to our sister court in New Mexico for a general definition of “arising out of.”

“The words ‘arising out of’ are very broad, general and comprehensive terms, ordinarily understood to mean ‘originating from,’ ‘having its origin in,’ ‘growing out of’ or ‘flowing from.’ ”

Baca v. New Mexico State Highway Dept., 82 N.M. 689, 486 P.2d 625, 628 (1971).

Rush argues that “sums arising out of a contract” are synonymous with “proceeds” as defined by Article 9 of the Uniform Commercial Code. He suggests that proceeds are essentially accounts and contract rights. We agree that the broader definition offered by the Supreme Court of New Mexico is closer to the meaning most people would attribute to the phrase.

It is undisputed that the money evidenced by the certificate of deposit was the retainage provided for in the contract as security for the completion of the building. The certifícate was given in direct exchange for the original retainage.

It makes no difference whether the certificate represents the original retainage or Rush’s own money as he claims. If it is the original retainage, it is by its very definition a “sum arising out of the contract.” Section 39-2-12, Ala.Code 1975 (amended May 4, 1978), defines retainage as:

“(3) RETAINAGE. That money belonging to the contractor which has been retained by the awarding authority conditioned on final completion and acceptance of all work in connection with a project or projects by the contractor.”

If the money was in fact from Rush’s own account, it was put up to replace the retain-age. Rush himself said that he obtained the certificate as security. It is obvious that if JSU had kept the retainage Rush would not have had to put up his own money. The money was to substitute for the retainage, and for all practical purposes was the retainage. We hold that the funds represented by the certificate are funds arising out of the building contract, and were assigned by Rush to JSU.

Rush does no more than deny in his affidavit an intention to include the certificate of deposit in the assignment set out in paragraph 10 of the Rush-Home settlement set out above. He states in his affidavit:

“[The assignment] was not intended by the parties to include any money that was in a bank account or certificate of deposit with a bank. These were not contract rights against project owners, these were contract rights against a bank. They were funds earned by affiant and belonging to affiant. They were not assigned to The Home Insurance Company.”

We have determined that the certificate of deposit arises out of the contract, and Rush’s subjective intent to not assign any contract rights he had against a bank is, therefore, irrelevant.

In order to defeat a motion for summary judgment, after the movant has carried the burden of showing that no genuine issue of material fact exists, the opponent must do more than show that a fact is disputed. He must show that a fact material to the resolution of the litigation is disputed. It is not enough to show that a fact which is immaterial to the cause is disputed. That is all Rush has done here.

In the Home-JSU settlement, Home released all' right and title it might have acquired to the certificate of deposit. That this is so is apparent from a letter, offered by JSU as evidence in support of its motion for summary judgment, in which Home explicitly stated it had no claim to the certificate. We affirm the trial court’s holding that JSU’s title to the certificate of deposit was cleared through the assignments in that Rush and Home released all right and title they may have had to it.

Accordingly, there is no fact issue to be tried, and the summary judgment was proper.

AFFIRMED.

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