Caron v. Teagle

• Decision Date: 29 April 1977
• Citation: Caron v. Teagle, 345 So.2d 1331 (Ala. 1977)
• Parties: Dorothy H. CARON and Central Insurance Agency of Mobile, Inc. v. Ruth K. TEAGLE and Charles D. Teagle. SC 2115.
• Court: Alabama Supreme Court

Page 1331

345 So.2d 1331

Dorothy H. CARON and Central Insurance Agency of Mobile, Inc. v. Ruth K. TEAGLE and Charles D. Teagle.

SC 2115.

Supreme Court of Alabama.

April 29, 1977.

Daniel G. Sayers, Marr & Friedlander, Mobile, for appellants.

Charles C. Partin, III, Bay Minette, for appellees.

JONES, Justice.

This case involves a dispute over title to property. Ruth and Charles Teagle, plaintiffs below, contracted to purchase from Central Insurance Agency and Dorothy Caron four lots which we will refer to as lots 11, 13, 16, and 18. Deeds to these lots were conveyed pursuant to separate agreements. There was one deed per lot, each of which recites a sales price of $14,200 and acknowledges receipt of $1400 as paid, leaving a balance of $12,800. The balance of the purchase price on all four lots was to be paid in monthly installments of $723.84. The Teagles made all of these payments, commencing in September of 1973 and continuing through January, 1975. In addition to the down payment, the total amount expended by the Teagles was $12,305.26, including interest.

At trial, the Teagles testified that during August of 1973, September, November, and December of 1974, and January and February of 1975, oral agreements were entered into by the Teagles and Caron. The effect of these agreements was that either the Carons (Dorothy and husband, Frank) would refund all of the principal and interest to the Teagles or the Carons would allow the Teagles to apply the money paid to one lot of the Teagles' choice. Caron denies that any meetings occurred except the meeting of February, 1975, at which the Teagles executed and delivered deeds conveying each of the four lots back to the original grantors.

The Teagles further testified that during the November, 1974, meeting, Frank Caron told them that they could apply all the money paid to date on one lot of their choice and the Teagles chose lot 11. In February, according to the Teagles, Frank Caron told them to meet him and bring their vendor's lien deeds. Caron was to bring a deed to lot 11. At this meeting, Caron told the Teagles that it was necessary for them to give him their deeds and convey to him their equity in the four lots before he could release the lien on lot 11.

The Teagles testified that, notwithstanding their full compliance with this oral agreement reached between the parties, Caron refused to vest them with a fee simple title in lot 11.

Caron, as previously stated, denies that any such agreement existed. He testified that the only option offered the Teagles was the 'payment of interest only during a certain period of time.' This, according to Caron, the Teagles refused and, instead, returned the lots. Furthermore, Caron testified that he only allowed the Teagles to return the lots so that he would not have to institute foreclosure proceedings against the Teagles.

This declaratory judgment action was tried Ore tenus before the trial Judge. In their complaint, the Teagles asked the trial Judge to (1) declare the deed, transferring their interest to Caron, void because it was not acknowledged before an officer authorized to take acknowledgments; or, in the alternative, declare it void for lack of consideration, and (2) declare that the Teagles are possessed of an equity in lot 11 and are entitled to receive a deed upon payment of the balance due under the contract of purchase. Finally, the Teagles had a request for general equitable relief.

Caron's answer denied that any oral agreement had been made, and, alternatively, that any oral agreement would be void because of the Statute of Frauds.

Upon completion of the trial, the Teagles were allowed to amend their complaint to include an action for fraud. The Carons duly objected. The trial Judge ordered the Carons and Central Insurance Agency to convey title in lot 11 to the Teagles upon the payment of $1,367.33--the balance due on lot 11 if the Teagles applied the money previously paid on the four lots. ¹ The trial Judge further ordered the Teagles to convey their equitable interests in the rest of the lots back to the Carons and Central Insurance. In essence, the trial Judge ordered that the February, 1976, agreement be specifically performed.

The issue is twofold: (1) Whether the trial Judge was correct in allowing the Teagles to amend their complaint at the close of the evidence, and (2) if not, are there any other grounds supported by the evidence which would allow us to affirm the trial Judge? ² We answer 'No' to both questions.

I.

Rule 9(b), ARCP, states the rule for pleading fraud as follows:

'In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be plead with particularity.'

An examination of the Committee Comments to Rule 9(b) reveals that the purpose of this rule is to give fair notice to the opposing party. There seems to be little doubt that the Teagles' original complaint, prior to amendment, did not satisfy this notice requirement. Counsel for the Teagles contend that the trial Judge was empowered to permit the amendment pursuant to Rule 15(b), ARCP. Under this rule, if the party opposing the amendment objects, but fails to persuade the court that he will be prejudiced in maintaining his claim or defense, the Court must then grant leave to amend the pleadings to conform to the evidence. See 6 Wright & Miller, Federal Practice & Procedure, Civil, § 1495 (1973). ³

It is obvious that the Carons failed to persuade the trial Judge that prejudice would result from the amendment. We think, however, that, under the circumstances of this case, prejudice necessarily resulted. The two rules must be considered together. The purpose of Rule 9(b) is to provide adequate notice to the opposing party of any claim for fraud so that he may properly prepare his case, and 15(b) recites that an amendment may be allowed over the objection of the opposing party only when the trial judge is satisfied that no prejudice results.

Thus, when these rules are read together--in harmony--and applied to the facts of this case, it becomes apparent that the defendants were indeed prejudiced. The Teagles' complaint--to which an answer was filed and on which issue was joined--contains no reference to an allegation for fraud. To allow the Teagles to amend their complaint under Rule 15(b) to include a claim for fraud at the close of the evidence would subvert the purpose and intent of Rule 9(b).

This is not to say that, under all circumstances, Rule...