Butler v. Aetna Finance Co.

• Decision Date: 30 August 1991
• Parties: Allan BUTLER and Joan Butler v. AETNA FINANCE COMPANY, d/b/a ITT Financial Services. 1900408.
• Court: Alabama Supreme Court

Page 308

587 So.2d 308

Allan BUTLER and Joan Butler v. AETNA FINANCE COMPANY, d/b/a ITT Financial Services.

1900408.

Supreme Court of Alabama.

Aug. 30, 1991.

Randall W. Nichols of Burns & Mackey and Stephen C. Olen, George W. Finkbohner III and Royce Ray III of Finkbohner, Lawler & Olen, Mobile, for appellants.

Lawrence B. Voit, Robert E. Clute, Jr. and Barry L. Thompson of Silver & Voit, Mobile, for appellee.

INGRAM, Justice.

Allan and Joan Butler, husband and wife, appeal from a summary judgment for Aetna Financial Company, doing business as ITT Financial Services ("ITT"), on the Butlers' claims of fraudulent misrepresentation, deceit, fraudulent concealment, wantonness, and outrageous conduct. The Butlers' claims stem from ITT's alleged conduct regarding a consumer credit contract that the Butlers entered when they purchased a television from Rex Radio and Television, Inc. ("Rex").

The record reveals that on October 24, 1988, the Butlers purchased a television from Rex by way of a consumer credit contract. Rex subsequently assigned the contract to ITT. At the time of the purchase, the Butlers completed a credit application. After the application was approved, Allan Butler executed ¹ the contract. The contract provided that the balance owed on the television was to be paid in full within 90 days and that no interest would be charged. The contract indicated that, at the time of purchase, the balance owed on the television was $285.39 and that payment in full of the unpaid balance was required on or before January 24, 1989. The face of the contract also indicated that the contract did not extend financing beyond the due date and that if the debt was not paid in full by the due date, the buyer would be in default.

After the contract was assigned to ITT, the Butlers received from ITT a written confirmation of the transaction. ITT also telephoned to verify that the Butlers had the television. The written confirmation reflected, among other things, the final due date of January 24, 1989, for the $285.39 balance. After receiving the confirmation notice and the telephone call from ITT shortly after the purchase, the Butlers' next contact with ITT occurred when an ITT employee contacted the Butlers on January 30, 1989, which was six days after the contract had gone into default for nonpayment. On that date, an ITT employee telephoned the Butlers and informed them that they were in default on the contract and that the matter needed to be resolved that day. ITT informed the Butlers that if they wished to finance the balance owed on the contract with ITT, the annual interest rate would be 27 percent.

The Butlers testified that salespersons at Rex had informed them when they purchased the television that if they paid the balance owed on the contract within 90 days, no interest charges would be incurred. The Butlers further testified that they were informed by Rex personnel that if they did not pay off the account within 90 days, then ITT would automatically set up payments on the account and send them a payment book without their having to complete any additional forms.

When questioned about what Rex employees had said about the interest rate that ITT would charge if the account was set up on payments at the end of 90 days, Joan Butler testified in her deposition that Allan asked a salesperson, "[W]ell, about what interest rate do they [ITT] charge?" She testified that the salesperson replied, "I'm not sure, but it is somewhere between 10 and 15 percent." When questioned again during the same deposition about exactly what statements the Rex salesperson had made, Joan testified: "I know he said it is between 10 and 15 percent. He might have said 'I think' or 'I'm not sure.' I don't remember his exact wording."

It is undisputed that the Butlers failed to pay the balance owed on the contract by the due date and that they never contacted ITT or another lender about refinancing the account prior to the due date. After ITT contacted the Butlers about the default, Allan checked with at least one other lender about making a loan to pay off the ITT account. He found the other lender's interest rate of 23 or 24 percent to be comparable to the rate quoted to him by ITT. The Butlers refinanced the debt with ITT on January 31, 1989, and then sued Rex and ITT in April 1989.

The primary issue raised in this appeal is whether the Butlers presented substantial evidence as to each of their causes of action so as to make summary judgment for ITT improper. However, before addressing the propriety of the summary judgment for ITT, we must examine the issue whether the salespersons at Rex were acting as agents of ITT when they allegedly related to the Butlers information as to interest rates offered by ITT in the event of the refinancing of the contract.

First, it is axiomatic that for an agency relationship to exist, there must be a right of control by the principal over the agent. National Sec. Fire & Cas. Co. v. Bowen, 447 So.2d 133 (Ala.1983). Furthermore, agency is to be determined by the facts and not by how the parties characterize the relationship. Id.

Here, the Butlers argue that Rex salespersons were acting as agents of ITT when they made the statements that the Butlers say they made concerning the interest rate that would be applicable if the balance owed on the contract was not paid in 90 days and when, according to the Butlers, they represented to them that if the account was not paid off in 90 days the balance would automatically be set up on monthly payments. However, under the evidence that was before the trial court when it entered the summary judgment for ITT, we find nothing to support a finding that an agency relationship existed between Rex and ITT.

In Kimbrel v. Mercedes-Benz Credit Corp., 476 So.2d 94 (Ala.1985), this Court addressed the issue whether an agency relationship existed under...