Brown v. Bateh

• Decision Date: 30 April 1976
• Parties: Richard Hail BROWN v. Joseph A. BATEH. Richard Hail BROWN v. FIRST NATIONAL BANK OF BIRMINGHAM. SC 1058, SC 1058--A and SC 1058--B.
• Court: Alabama Supreme Court

Page 671

331 So.2d 671

Richard Hail BROWN v. Joseph A. BATEH.

Richard Hail BROWN v. FIRST NATIONAL BANK OF BIRMINGHAM.

SC 1058, SC 1058--A and SC 1058--B.

Supreme Court of Alabama.

April 30, 1976.

Rehearing Denied May 28, 1976.

McMillan & Spratling, Birmingham, for appellant.

William M. Acker, Jr., Ferris, S. Ritchey, Jr., Birmingham, for appellee, Joseph A. Bateh.

Cabaniss, Johnston, Gardner, Dumas & O'Neal and L. Vastine Stabler, Jr., Birmingham, for appellee, First National Bank of Birmingham.

FAULKNER, Justice.

These cases are a continuation of the series of lawsuits that Justice Merrill termed 'long and vexatious' litigation in 1972. See Bateh v. Brown, 289 Ala. 695, 271 So.2d 830 (1972); Bateh v. Brown, 289 Ala. 699, 271 So.2d 833 (1972); and Cole v. Brown, 289 Ala. 712, 271 So.2d 846 (1972).

The instant litigation, like the aforementioned cases, is directed at the dissolution and liquidation of the various business entities owned or controlled by Brown and Bateh, the B--D Development Company in S.C. 1058, and the BBC Investment Company, Inc. in S.C. 1058--A. S.C. 1058--B involves the First National Bank's foreclosure on certain realty mortgaged by Brown and Bateh.

Justice Merrill's three opinions cited above reversed and remanded a final judgment by Judge William C. Barber in the Circuit Court of Jefferson County, sitting in equity. Judge Barber's final decree, dated August 31, 1971, had dissolved the business entities and divided the property 'in-kind.'

Justice Merrill wrote that the cases had been improperly consolidated and that there was insufficient evidence in the record to support an 'in-kind' distribution of the assets and liabilities of the partnership and the corporation. Consequently, we reversed Judge Barber's decree, ordered a new trial set, and suggested that the business entities be dissolved according to statute, unless the parties could settle the case. We indicated that an 'in-kind' distribution would be acceptable if both parties agreed, the creditors were fully protected, and the court approved the division.

On February 7, 1973, Brown filed a motion for multiple relief, seeking to determine which issues would be litigated in light of the remand, to ascertain how to restore the status quo, and to set an early oral hearing. Bateh responded with a motion to strike, and a motion for compliance with the Supreme Court's opinion. Cross-bills of complaint, answers and demurrers were filed by the appropriate parties. To sort things out and to determine the course of further proceedings, the trial court scheduled a hearing. By June 12, 1973, claims against the partnership had been filed by Dun and Bradstreet, Inc. and by H. L. Raburn & Co. The court then ordered the consolidation of the various cases. On January 31, 1974, an interim decree was issued, ordering money owed to the various entities controlled by Bateh and Brown paid to the acting register of the court. A final decree was issued on June 14, 1974, again dissolving the partnership and the corporation and providing for an 'in-kind' distribution of the assets. The decree also disposed of the Bank's foreclosure action. Brown petitioned for a rehearing which was denied. Bateh filed reports alleging his compliance with the decree. He then by letter and affidavit requested the institution of collection processes against Brown, for money owed pursuant to the decree. Brown filed a supersedeas bond and took the instant appeal. The bond required was raised from $25,000 to $250,000 in response to Bateh's motion to strike the bond or increase its size. The larger bond Brown was unable to post. He did, however, take the instant appeal. The case was orally argued and submitted on October 22, 1975.

Justice Merrill should have added 'complex' to his list of adjectives describing this litigation. Even though the cases were consolidated on appeal, clarity demands that the contentions of the parties be dealt with on a step-by-step basis. The facts and legal maneuverings are generally applicable to all three cases; any differences will be noted Infra.

S.C. 1058--The B--D Partnership

This court feels that the proper starting point is the partnership dissolution. We are well aware that Brown has petitioned for writs of mandamus and that Bateh, and other appellees, have filed motions to dismiss. Why we have postponed discussion of these will become apparent. Let us first examine the positions of the parties and their contentions as to the dissolution of the partnership and the distribution of the assets and liabilities.

This case began on March 7, 1968, when Brown filed a petition to dissolve the partnership. He desired that the lands be sold and all proper charges paid, and the balance distributed to the partners. Bateh, in his answer, agreed with this. On May 18, 1971, Brown amended his complaint to change the prayer from a sale for division of the partnership real property to a partition or division 'in-kind.' His prayer still requested that only the lands 'in excess of those needed to pay the debts of B--D' be partitioned. This amendment came after a strong suggestion by the trial judge that there be an 'in-kind' division. Bateh v. Brown at 711, 271 So.2d at 837.

Brown's initial assignment of error is that the trial judge failed to conduct a new trial after Justice Merrill's reversal and remand. Brown's position is that this court reversed the decree In toto and ordered a new trial if the case were not settled. At the first trial there was insufficient evidence in the record to support the decree and the trial judge failed to follow the dictates of Title 43, § 31.

Bateh's answer is that a trial judge's failure to rule is not reviewable. Judge Barber did not respond to Brown's motion requesting that the litigation be set for trial promptly. Since the judge did not rule adversely to him, Brown has no ruling from which to appeal.

Brown's replication to this is that the trial judge did not merely fail to rule on a motion; he failed to obey the explicit mandate of this court. Failure to set a case for trial is always reviewable. Justice Merrill felt a new trial was necessary to develop the evidence needed to effect a fair distribution of the partnership assets. The only evidence subsequent to remand was Brown's statement given on a 'Petition to Order Collection of National Filtronics, Inc., Promissory Notes.' This statement has little relevance to the value of the partnership assets.

Bateh asserts that in the context of the present appeal by Brown, as opposed to the prior appeal by Bateh, there are admissions, pleadings and waivers of objection which are competent against Brown, and which are legally sufficient to sustain the decree. Brown, it is argued, did not object to the scheme of partition in the former decree. Consequently he waived any objection to such scheme. The prior scheme of distribution differs only in two details, the handling of certain parcels of land and the treatment of National Filtronics stock. Bateh claims that Brown has sworn in an affidavit and implied in open court that the parcels of land are interchangeable in value. The change in the National Filtronics stock distribution was made to settle an imbalance in capital accounts. Brown has not objected to this since he has gotten more than his share; he wants only to postpone collection. Bateh notes that he, Bateh, has waived his claim to more of the National Filtronics stock award in the interest of reaching a speedy settlement.

At first glance we would agree with Brown that Judge Barber should have set the cause down for trial when no compromise was reached after remand. According to Justice Merrill a new trial should have been held for the taking of evidence as to the value of the partnership assets to be sold or distributed. Any failure by a trial judge to follow an order of this court is, without question, open to review. A complete trial De novo need not have been held, we believe, if Judge Barber satisfied the evidentiary requirements, or if the parties bound themselves to certain valuations by their pleadings and actions.

Brown's second assignment of error is that Judge Barber erred once again in ordering an 'in-kind' distribution of the partnership assets, and in dividing the partnership debts between the individual partners.

First, it is to be noted that the Alabama Partnership Act, Title 43, § 5(38) and (40), is inapplicable, as litigation began prior to the Act's effective date of January 1, 1972. The controlling section of Alabama law, thus, is Title 43, § 31, which reads as follows:

'Each member of a partnership may require its property to be applied to the discharge of its debts, and has a lien upon the shares of the other partners for this purpose, and for the payment of the general balance if any due to him.'

How is this section to be interpreted? To simplify the positions of the antagonists, Brown believes that this section requires that the partnership assets be sold or distributed 'in-kind' to the creditors. After the creditors have been provided for, then the remaining assets can be distributed to the individual partners, either 'in-kind,' or sold and the proceeds divided.

Bateh takes the opposing view. Title 43, § 31 allows an 'in-kind' distribution of the partnership assets and liabilities as long as the creditors are protected. If the 'in-kind' partition is fair and supported by the evidence, if it is approved by the creditors, and if it is accepted by the chancellor in equity, then it is to be upheld by this court.

Bateh argues the proposition that upon dissolution of a partnership and payment of creditors, the former partners become tenants in common with respect to the partnership property. Partition is a matter of right, and property cannot be sold for division except upon averment and proof that the property is incapable of equitable partition 'in-kind.' Howard v. Harrell, 275 Ala. 422, 155 So.2d 525 (1963). The burden of...