Bass v. SouthTrust Bank of Baldwin County
Decision Date | 13 January 1989 |
Citation | 538 So.2d 794 |
Parties | Robert O. BASS v. SOUTHTRUST BANK OF BALDWIN COUNTY. 87-706. |
Court | Alabama Supreme Court |
John W. Parker, Mobile, for appellant.
D. Charles Holtz of Wilkins, Druhan, Ollinger & Holtz, Mobile, for appellee.
The central question presented by this appeal is whether summary judgment was appropriate. In determining that question, we must apply the "substantial evidence" rule. Ala.Code 1975 § 12-21-12.
The dispute involved is whether SouthTrust Bank, which had made a business loan to the debtor and other partners, properly took money from a deposit made by the debtor and applied it to pay the balance due on the note. Two basic questions are presented:
1) Did the debtor present substantial evidence to show that the bank was equitably estopped to make the set off?
2) Was the deposit of the debtor a "special" deposit and, therefore, not subject to set off?
Plaintiff-appellant, Robert O. Bass, filed a complaint against SouthTrust Bank in which he claimed that the bank's taking of over $100,000 out of his checking account and applying it to a note he had executed was illegal. In separate counts, he claimed that the bank was equitably estopped; was guilty of fraud, breach of fiduciary duty, conversion, and breach of a covenant of good faith; and that the bank violated his constitutional rights of due process by failing to give advance notice that it was making the set off.
The bank answered the complaint and filed a motion for summary judgment, supported by evidence it claimed showed that it was entitled to a judgment as a matter of law. There is no substantial dispute between the parties on the basic facts; the main question is whether, as already stated, the doctrine of equitable estoppel should apply, and whether the deposit made by the debtor was a "special" deposit.
On October 15, 1982, Bass and several other persons borrowed $200,000 from SouthTrust to finance a restaurant in Mobile called Bob's Sea Ranch. The restaurant failed and, from time to time, SouthTrust agreed to refinance the balance of the loan. The outstanding indebtedness was reduced to the point that on October 29, 1985, the principal balance was $108,621.95, when Bass, Bobby J. Gilbert, and Billy G. Nippert executed the note that is the subject of this controversy. The bank, at that time, had in its files continuing personal guaranties of Virgil E. Morris, Gene Mills, and Louis Griffith. The aforenamed individuals and one or two others are or were members of a partnership behind the restaurant venture. The terms of the note evidencing the contract between Bass and the other two makers and SouthTrust show that the makers were jointly and severally liable.
Paragraph 2.B. of the note states:
(Emphasis indicates typed matter; remainder in printed form.)
Payments were received by the bank as follows:
10/29/85 " Note executed--$108,621.95 11/27/85 " $890.91 received 12/15/85 " FIRST INSTALLMENT DUE 12/17/85 " $1,339.27 received (k $890.91 = receipt of First installment) 1/15/86 " SECOND INSTALLMENT DUE 1/16/86 " $2,230.18 received (= Second installment) 1/24/86 " $380.91 received 2/15/86 " THIRD INSTALLMENT DUE 2/20/86 " $1,849.27 received (k $380.91 = Third installment) 3/4/86 " $380.91 received 3/15/86 " FOURTH INSTALLMENT DUE 4/4/86 " $1,305.47 received 4/15/86 " FIFTH INSTALLMENT DUE 5/1/86 " $543.72 received (k $380.91 k $1,305.47 = Fourth installment) 5/15/86 " SIXTH INSTALLMENT DUE 5/16/86 " $761.82 received 5/20/86 " $1,090.91 received 5/29/86 " $543.72 received (k $761.82 k $1,090.91 = Fifth installment and $166.19 toward Sixth installment) 6/15/86 " SEVENTH INSTALLMENT DUE 6/26/86 " $1,090.91 received 7/2/86 " $973.00 received (k $166.19 k $1,090.91 = Sixth installment) 7/15/86 " EIGHTH INSTALLMENT DUE 8/15/86 " NINTH INSTALLMENT DUE 9/5/86 " $4,095.35 received (= Seventh installment and $1,865.09 toward Eighth installment) 9/15/86 " TENTH INSTALLMENT DUE 10/15/86 " ELEVENTH INSTALLMENT DUE 11/15/86 " TWELFTH (BALLOON) PAYMENT DUE 12/24/86 " Loan charged off by bank 1/2/87 " $2,595.19 received (k $1,865.09 = Eighth and Ninth installments)
After the loan was charged off on the bank's books on December 24, 1986, the bank received two checks from persons other than Bass that would have equalled the balance of the eighth, and all of the ninth installments, if additional interest resulting from late payments was ignored. The bank argues that if one calculates the additional interest that accrued during the times when payments were substantially late, the per diem amount generally being around $32.00, and with payments being applied first to interest as specified in paragraph 2.B of the note, the total amount received prior to the charge-off was the amount necessary to cover only the first six installments and part of the seventh. There is no evidence that there was any effort made by Bass or any of the other obligors to have the balance of the note renewed.
Bass does not dispute the basic facts, but in an affidavit filed in opposition to the bank's motion for summary judgment, stated inter alia:
When Bass, on January 5, 1987, made a $206,057.16 deposit to his personal account at SouthTrust, the deposit was noted on a computer printout, and a bank official noted it and determined that the deposit was made by Bass and that the bank had just previously charged off a loan made to him.
After discovering that the depositor and the obligor were one and the same, the bank made a decision to set off the Bass account for the balance of principal and interest due on the note, to-wit: $102,841.14. Bass was then notified by mail.
The note contained these provisions:
* * * *
* * * *
(Emphasis added except as to headings).
The bank summarizes its argument as follows:
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