Barber v. Stephenson

• Decision Date: 29 October 1953
• Docket Number: 6 Div. 383
• Citation: 69 So.2d 251,260 Ala. 151
• Parties: BARBER et al. v. STEPHENSON et al.
• Court: Alabama Supreme Court

Page 251

69 So.2d 251

260 Ala. 151

BARBER et al. v. STEPHENSON et al.

6 Div. 383.

Supreme Court of Alabama.

Oct. 29, 1953.

Rehearing Denied Jan. 14, 1954.

Sadler & Sadler, Birmingham, and Ross, Ross & Ross, Bessemer, for appellants Barber, White Dairy and Barber Pure Milk Co.

Robt. W. Smith, Birmingham, for appellant Wood.

Huey, Welch & Stone and Lipscomb & Brobston, Bessemer, and D. G. Ewing, Birmingham, for appellees. Amended Count 2 of the complaint is in material substance as follows:

For many years prior to October 3, 1947, plaintiffs were sole owners and operators of a milk and dairy business known as, and operated under the trade name of, Hollywood Dairy, in Bessemer, Alabama, selling milk and dairy products in the surrounding and adjacent territory. The business consisted of collecting or purchasing milk from producers and then pasteurizing and distributing it for sale to customers over or along routes built up or acquired by plaintiffs over a long period of time. As a part of their business plaintiffs operated a large pasteurizing plant in Bessemer. For a long time the business had been a going and profitable business, one of its valuable and highly profitable assets being the names, addresses and patronage of its customers.

Prior to October 3, 1947, defendants Barber, White Dairy and Barber Pure Milk Company were desirous of acquiring the names and patronage of plaintiffs' customers and on, or within some period prior to said date, defendants fraudulently entered into a fraudulent and unlawful conspiracy to obtain and acquire the names, addresses and good will of plaintiffs' customers, without any intention of paying the price at which plaintiffs were willing to sell; and in furtherance of said conspiracy formulated the scheme of having defendant Wood to negotiate for a purported purchase of plaintiffs' business, including the names and addresses of their customers and good will, at and for the lowest possible cash payment and under the best terms possible, and without any intention of paying the greater portion of the balance of the purchase price. In keeping with and in pursuance of said conspiracy with the other defendants, defendant Wood fraudulently induced plaintiffs to sell said business to him for the sum of $48,000, $10,000 payable in cash, assumption of an indebtedness due or to become due on certain machinery and equipment, and the balance in installments of $500 per month, with interest, beginning April 10, 1948, secured by chattel mortgage on machinery and equipment used in the business.

It is averred that defendants, in obtaining or inducing the sale of plaintiffs' business to Wood, did not act in good faith, but their intention was to deceive plaintiffs, and neither of the defendants had any intention of paying, and have not paid the balance of the purchase price; their intention being to pay, and they have paid, only part thereof and until they had obtained the names, addresses and favor of plaintiffs' customers and information pertaining to the various routes used by plaintiffs. That when Wood was negotiating with plaintiffs he represented to them that he was leaving or had left the employ of the other defendants, that neither of the other defendants would have any interest, directly or indirectly, with the business and that he would be able to make payments on the purchase price as they matured. That said representations were false and were made with intent to deceive plaintiffs, who relied thereon and were deceived thereby and executed the bill of sale to Wood. That Wood was, and for a long time prior thereto had been, a regularly paid employee of one or both of the corporate defendants, and that it was agreed between the defendants that when the names, addresses and good will of plaintiffs' customers had been obtained by Wood, for the use and benefit of the other defendants, no further payments would be made upon the purchase price, and that Wood would be reemployed by one or both of the corporate defendants. That payments were made for only a short time, the last being in January, 1949, at about which time the other defendant practically took over the operation of plaintiffs' former business. Employees of the corporate defendants were placed on Hollywood Dairy trucks with regular Hollywood drivers, until names and addresses of Hollywood customers and information with respect to routes had been acquired, at which time regular Hollywood employees left their employment or were released by defendants. Customers of Hollywood were then notified that they had been taken over and would thereafter be furnished dairy products by the corporate defendants.

It is averred that shortly thereafter Hollywood Dairy trucks were left at the Hollywood pasteurizing plant, and plaintiffs notified that no further payments would be made on the unpaid balance due them, and the place of business, machinery and equipment of Hollywood Dairy was abandoned and possession returned to plaintiffs. That shortly thereafter defendant Wood was, on voluntary petition, adjudged a bankrupt, thereby destroying or terminating his personal liability to plaintiffs. That plaintiffs thereafter foreclosed their chattel mortgage and became purchasers of the abandoned property, at a price much less than the balance due. That plaintiffs had no knowledge of said conspiracy or the acts done in furtherance thereof until January 22, 1949. That as a proximate consequence of the formation and carrying out of said conspiracy plaintiffs were damaged, as alleged in the complaint, by loss of business and customers and inability to resume operation of Hollywood Dairy on a profitable basis, said business, to all practical purposes, being destroyed.

SIMPSON, Justice.

Plaintiffs Carl and J. P. Stephenson sued George W. Barber, White Dairy Company, a corporation, Barber Milk Company, a corporation, and Leland O. Wood for damages alleged to have resulted from a fraudulent and unlawful conspiracy of defendants to acquire plaintiffs' milk and dairy business, including customers and good will, without any intention of paying for it. Barber was president and the alter ego of the two corporate defendants, owning most of the stock, with members of his family owning the rest, and Wood was plant superintendent of White Dairy before the events averred. Plaintiffs' business was located in Bessemer and was known as Hollywood Dairies and the Barber businesses were in Birmingham.

From a judgment on verdict all defendants have appealed. The rulings of the trial court challenged separately as error are: (1) overruling demurrers to the complaint; (2) refusal of the affirmative charge and other special charges requested by the defendants; and (3) overruling the motion for a new trial. We will discuss these propositions in order.

The case went to the jury on Count 2 of the complaint as last amended, the material allegations of which will be reported with the case. The demurrers pertinent to consider took the point that the complaint failed to state a cause of action. Stripped of its prolixity, its essential allegations charged the defendants with fraudulently conspiring to obtain the plaintiffs' business and the good will of its customers without paying for it and with no intention to pay for it and the execution to full and final accomplishment of that unlawful scheme. Such conduct was actionable and if proven would warrant a verdict for the plaintiffs.

A civil conspiracy is a combination between two or more persons to accomplish by concert an unlawful purpose or to accomplish a purpose not in itself unlawful by unlawful means. Bankers Fire & Marine Ins. Co. v. Sloss, 229 Ala. 26, 155 So. 371, and cases cited; National Park Bank v. Louisville & N. R., 199 Ala. 192, 74 So. 69.

Following also is an approved definition: A conspiracy is defined as the combination of two or more persons to do (a) something that is unlawful, oppressive, or immoral; or (b) something that is not unlawful, oppressive, or immoral, by unlawful, oppressive, or immoral means; or (c) something that is unlawful, oppressive, or immoral, by unlawful, oppressive, or immoral means. 1 Eddy on Combinations, § 171; Horton v. Johnson, 192 Ga. 338, 346, 15 S.E.2d 605; Peoples Loan Co. v. Allen, 199 Ga. 537, 34 S.E.2d 811.

It is clear the complaint was brought within the terms of these definitions and therefore was not subject to the asserted demurrers.

Appelants argue that the fraud counted on related not to any false representation of a past or existing fact, but to future occurrences and therefore came within the general rule that such representations are regarded as merely promissory and are not actionable. 37 C.J.S., Fraud, § 11, p. 231; Hawkins v. People's Trust & Sav. Bank, 215 Ala. 598, 111 So. 641; Zuckerman v. Cochran, 229 Ala. 484, 158 So. 324. The general rule is conceded but there are exceptions. One of the exceptions is noted at 51 A.L.R. 63 as follows: 'The weight of authority holds that fraud may be predicated on promises made with an intent not to perform the same, or, as the rule is frequently expressed, on promises made without an intention of performance.' Many Alabama cases are cited to this text.

Of like import is the statement of the pertinent rule by our late Chief Justice Gardner on the kindred doctrine of rescission in Snell National Bank v. Janney, 219 Ala. 396, 398, 122 So. 362, 363:

'It is well established in this jurisdiction that while a failure to fulfil a mere promise or undertaking--something to be done in the future--alone will not authorize a rescission on the ground of fraud, yet if the promise is made with no intention at the time to perform it, that constitutes fraud justifying a rescission.'

Many other Alabama cases have approved the principle. Following are some: Shepherd v. Kendrick, 236 Ala. 289, 181 So. 782, citing 51 A.L.R. 63; Zuckerman v. Cochran, supra; Nelson v. Shelby Mfg. & Imp. Co., 96 Ala. 515, 11 So. 695; Greil Bros....