Ballenger v. Liberty Nat. Life Ins. Co., 6 Div. 73

• Decision Date: 20 June 1957
• Docket Number: 6 Div. 73
• Parties: G. E. BALLENGER v. LIBERTY NATIONAL LIFE INSURANCE COMPANY.
• Court: Alabama Supreme Court

Page 728

96 So.2d 728

266 Ala. 407

G. E. BALLENGER v. LIBERTY NATIONAL LIFE INSURANCE COMPANY.

6 Div. 73.

Supreme Court of Alabama.

June 20, 1957.

Rehearing Denied Aug. 22, 1957.

Francis Hare and Sirote, Permutt, Friend & Friedman, Birmingham, for appellant.

Frank E. Spain, Ira L. Burleson, Ralph B. Tate and Spain, Gillon & Young, Birmingham, for appellee.

SIMPSON, Justice.

G. E. Ballenger, on February 4, 1955, sued Liberty National Life Insurance Company for the conversion by it of certain shares of stock allegedly owned by the plaintiff, claiming $250,000 as damages. The complaint alleged that plaintiff was one of the incorporators of J. N. Brown Burial Benefit Association, Inc. (incorporated in 1925 or 1926) owning one share of stock, which company through successive name changes and transfers, became Brown Service Insurance Company, Inc., which latter named company merged with Liberty National Life Insurance Company in 1944. The complaint alleged that in 1954 plaintiff made a demand upon the defendant as the consolidated corporation for the issuance to him of a certificate evidencing his ownership of the share of stock in the defendant organization resulting from increased value of the corporation, stock splits, and the merger of the said corporations. The complaint also alleged that in january, 1955, plaintiff made a demand upon the defendant for the payment to him of any dividends which had accumulated to his credit, and that the defendant refused to comply with these demands. Hence this suit.

This, of course, is an action at law on a purely legal claim and the defendant as its initial pleading interposed demurrers to the complaint.

Thereafter, the defendant filed a motion to transfer the cause to the equity side of the docket pursuant to the provisions of § 153, Title 13, Code of 1940, alleging that it had equitable defenses to the action which could not be disposed of on the law side of the court and which would dispose of the case if transferred to equity. The court granted the motion. The defendant then filed its bill in equity alleging certain defenses to the action including the defense of laches. The plaintiff (respondent in equity) demurred to the bill of complaint alleging, among other things, that it contained no equity, that there was an adequate defense at law, and that no equitable defenses were properly interposed. The trial court overruled this demurrer and the plaintiff brings this appeal.

The bill in equity claimed that it had several defenses which could not be interposed at law which would dispose of the case. The pleadings indicate that the several defenses to be interposed by the defendant are the general issue, the statute of limitations of 1, 3, 6 and 10 years, prescription, negligence in failing to assert his claim and demand a certificate until the rights of third parties intervened, equitable estoppel and laches.

It is the contention of the plaintiff-appellant (respondent in equity) that all of these defenses except laches could have been properly pleaded in the action at law, and that laches is no proper defense to such a claim, viz.: That the bill of complaint was not sufficient to give the equity court jurisdiction to consider the defense of laches. We agree with the contention of the appellant.

It needs but little comment or citation of authority to demonstrate that all of the defenses (not now considering laches) could have been interposed to the action at law. The plea of the general issue to an action of trover puts in issue every matter, except release, which might show the plaintiff never had a cause of action or that he ought not to recover. Kelley v. Cassels, 226 Ala. 410, 147 So. 597; First National Bank of Gadsden v. Burnett, 213 Ala. 89, 104 So. 17; Bryant v. De Kalb Warehouse Company, 260 Ala. 443, 71 So.2d 51.

Prescription may be properly pleaded to an action at law as well as in equity. Oxford v. Estes, 229 Ala. 606(6), 158 So. 534.

And the defendant may also take full advantage of the statutes of limitation in law as well as in equity. § 31, Title 7, Code of 1940; § 18, Title 7, Code of 1940.

Equitable estoppel may also be pleaded at law to this purely legal claim. As was observed in State ex rel. Martin v. City of Gadsden, 216 Ala. 243, 247, 113 So. 6, 9:

'it is suggested that equitable estoppel--that is, estoppel in pais--may not be allowed to operate in this proceeding at law; but that estoppels in pais are, in general, available as well at law as in equity, is the established doctrine of this court, the only estoppels available in equity, but not at law, being such as grow out of titles to land, which are required to be in writing, or depend upon peculiar relations cognizable in equity only. Wefel v. Stillman, 151 Ala. 249, 44 So. 203; 5 Mich.Dig. 711.'

See also Watt v. Lee, 238 Ala. 451, 191 So. 628; Kelley v. Cassels, supra; Bigelow on Estoppel, 5th Ed. 557; 15 Words and Phrases, Equitable Estoppel p. 59, Estoppel in Pais, p. 738.

Appellee cites Garrett v. Moody, 234 Ala. 113, 173 So. 504, to sustain his contention that estoppel in pais can only be pleaded in equity. There the court was merely considering the principle of estoppel and the rescission of a transaction by which mortgages were surrendered because of failure of consideration, matters of which equity of course can take cognizance (syl. 2). The propriety vel non of the order of transfer from law to equity was not considered on that appeal. (syl. 1, p. 114 and 505 respectively).

Clearly, therefore, the bill was without equity unless the defendant at law is permitted to have the cause transferred to equity under the statute in order that it may plead laches. On a careful study of the governing authorities, we have concluded that the bill was without equity on this ground also.

Laches is an equitable principle and is a defense only to suits in equity. City of Anniston v. Dempsey, 253 Ala. 597, 45 So.2d 773; Hamilton v. Watson, 215 Ala. 550, 112 So. 115; Courson v. Tollison, 226 Ala. 530, 147 So. 635; Oxford v. Estes, 229 Ala. 606, 158 So. 534; Meeks v. Meeks, 245 Ala. 559, 18 So.2d 260; or to those proceedings at law which are controlled by equitable principles such as mandamus. City of Anniston v. Dempsey, supra. It is a creature of equity and is not controlled by statute. Moss v. Davitt, 255 Ala. 513, 52 So.2d 515.

There is competent authority elsewhere based on unassailable rationale holding that where the issue involved is a legal one and does not lie within the breast or conscience of the chancellor the statute of limitation is the applicable rule and the defense of laches may not properly be interposed. Gover's Adm'r v. Dunagan, 299 Ky. 38, 184 S.W.2d 225; Crawford's Adm'r v. Ross, 299 Ky. 664, 186 S.W.2d 797. In the Gover's Adm'r v. Dunagan Case, the administratix sued to recover under a claim evidenced by a written promissory note. The basis of the suit was a new promise to pay the note made fifteen years after the notes had become due. The answer plead payment and a fifteen year statute of limitation and by amendment the answer further plead laches. The suit was originally begun in equity and a demurrer was sustained to the plea of laches and the case transferred to law to determine the validity of the debt. The appellant assigned as error, among other things, the sustaining of the demurrer to the plea of laches. The appellee contended that since laches was of strictly equitable cognizance the demurrer was properly sustained. The court held that where the issue involved is a legal one and does not lie peculiarly within the cognizance of equity, statutes of limitation rather than laches apply. We quote from that case [299 Ky. 38, 184 S.W.2d 226]:

'The doctrine of laches has been defined to be such neglect or omission to assert a right as, taken in conjunction with the lapse of time, more or less extensive, and other circumstances causing the adverse party to be prejudiced, operates as a bar to the petitioner's right to recover in a court of equity. In respect to issues of which courts of equity have exclusive jurisdiction, where the enforcement of the claim depends upon the conscience of the chancellor, equity may refuse relief by applying the doctrine of laches, even though the claim be not barred by the statute of limitations. * * * But where the issue involved is a legal one and does not lie within the breast or on the conscience of the chancellor, the statute fixing the limitation establishes the rule to be applied, and the defense of laches may not be interposed. * * *

'On issues of which courts of equity and courts of law have concurrent jurisdiction, the statute of limitations will be applied by the court of equity precisely as it operates at law. Lexington Life, Fire & Marine Ins. Co., etc. v. Page, 56 Ky. 412, 453, 17 B.Mon. 412, 453, 66 Am.Dec. 165; Vansant's Ex'x v. Gardner's Ex'x, 240 Ky. 318, 42 S.W.2d 300. The rule in respect to issues of which the courts of law and courts of equity have concurrent jurisdiction is clearly and succinctly stated in Pomeroy's Equity Jurisprudence, 5th Ed., vol. 2, § 419e, pp. 180 and 181, which reads: 'It is frequently held that where a legal right is involved, and, upon ground of equity jurisdiction, the courts have been called upon to sustain the legal right, the mere laches of a party, unaccompanied by circumstances amounting to an estoppel, constitutes no defense. As has been expressed, 'if a legal right gets into equity, the statute governs.' Accordingly, it is held that if the statute might be pleaded by the defendant, the equity court will hold the suit to be barred. On the other hand, if the statutory period has not run, the suit will not be barred; the statute of limitations rather than the doctrine of laches is applicable. If, however, the cause is one of which courts of chancery take exclusive cognizance, the statute will not necessarily be applied.''

In the later case of Crawford's Adm'r v. Ross, supra,...