Dardess v. SouthTrust Bank of the Quad Cities

• Decision Date: 15 December 1989
• Parties: James A. DARDESS v. SOUTHTRUST BANK OF THE QUAD CITIES. 88-736.
• Court: Alabama Supreme Court

Page 746

555 So.2d 746

James A. DARDESS v. SOUTHTRUST BANK OF THE QUAD CITIES.

88-736.

Supreme Court of Alabama.

Dec. 15, 1989.

James Marks of Hewlett, Black & Marks, Tuscumbia, for appellant.

Ernest N. Blasingame, Jr., Florence, for appellee.

HOUSTON, Justice.

This is a suit on a promissory note brought by SouthTrust Bank of the Quad Cities against James A. Dardess. Dardess filed an answer alleging fraud in the procurement of the promissory note, failure of consideration, and breach of contract. Dardess also counterclaimed, alleging fraud and breach of contract. At the close of all the evidence, SouthTrust moved for a directed verdict, which the trial court granted but only as to Dardess's counterclaim for fraud. All other issues were submitted to a jury, which returned the following verdict: "We, the jury, find in favor of the Plaintiff SouthTrust, and against the Defendant, Dardess, and assess the Plaintiff's damages at $52,423.31. We further find in favor of the Plaintiff and against the Defendant on the counterclaim." Dardess appeals and presents these issues for review:

"I. Whether or not defendant Dardess had adduced sufficient evidence to allow the issue of fraud to go to the jury on his counterclaim.

"II. Whether or not the Court erred in allowing the admission of a copy of [Canon 5, Code of Professional Responsibility of the Alabama State Bar] into evidence in support of plaintiff's defense of defendant's counterclaims against it.

"III. Whether or not the court erred in prescribing a verdict form which would not allow the jury in this cause to find for plaintiff on its claim, but also find for defendant on his claims against plaintiff."

Beginning in 1981, Dardess borrowed from SouthTrust various sums of money secured by promissory notes. These notes were consolidated and renewed several times, so that on January 17, 1986, Dardess executed a renewal note for $44,923.31, plus interest. The note was due on May 17, 1986. Dardess, an attorney, had closed loans for residential real estate for SouthTrust prior to 1984, when he filed a $500,000 counterclaim for a client against SouthTrust. From the record, it appears that Dardess closed no loans for residential real estate for SouthTrust from 1984 until January 17, 1986.

Six days after Dardess signed the January 17, 1986, promissory note, Dardess signed an agreement in which he assigned to SouthTrust all his future income for legal services performed for third parties who obtained real estate loans from SouthTrust. After January 17, 1986, and before the promissory note matured, Dardess closed approximately one-third (six of 19) of SouthTrust's residential real estate loans that required the services of an attorney.

Pursuant to the assignment agreement, he transferred all of his fees from the loan closings to SouthTrust. This amounted to $1,285, and was less than the interest that accrued on the note. Dardess made no other loan payments.

After the note matured on May 17, 1986, and was not paid, SouthTrust sued Dardess on the note, demanding judgment against him in the amount of $54,417.57, consisting of the principal note of $44,923.31, unpaid interest of $2,396.32, and attorney's fees of $7,097.94, and costs.

I.

Dardess contends that the trial court erred in directing a verdict for SouthTrust on his counterclaim for fraud. He argues that there was sufficient evidence to submit this issue to the jury. We disagree.

Dardess testified that a representative of SouthTrust orally promised that SouthTrust "would send [Dardess] some business like [it] used to so [that Dardess would] have some income to pay [SouthTrust]." SouthTrust objected to the admission of this testimony, arguing that it should be excluded under the parol evidence rule. The trial court overruled the objection. Dardess also testified that, between January 17, 1986, and May 17, 1986, he closed six loans, collecting fees totaling $1,285; and that, had SouthTrust fulfilled its promise, he would have closed many more than the six loans that he closed during this period. A representative of SouthTrust testified that SouthTrust's policy was to refer a customer to a particular attorney only if that customer had no preference.

Dardess's counterclaim was pending on June 11, 1987; therefore, in order to have it submitted to the jury, Dardess had only to present a scintilla of evidence tending to prove each element of promissory fraud. See Code 1975, § 12-21-12. One of the elements of promissory fraud is a false representation. P & S Business, Inc. v. South Central Bell Telephone Co., 466 So.2d 928, 930 (Ala.1985). See, also, Russellville Production Credit Association v. Frost, 484 So.2d 1084, 1085-86 (Ala.1986); Watters v. Lawrence County, 551 So.2d 1011 (Ala.1989). Viewing the evidence in a light most favorable to Dardess, we conclude that the jury could have reasonably inferred that a representative of SouthTrust promised Dardess that SouthTrust would refer legal business to him so that he could use the income generated therefrom to retire his indebtedness. The jury could have also found from the evidence that in Colbert County, between January 17, 1986, and May 17, 1986, SouthTrust made 19 residential loans, generating legal fees of approximately $10,000, and that Dardess closed six of those loans during this period, for which he was paid $1,285 in legal fees. Dardess offered no evidence tending to show that SouthTrust had an opportunity to send him any more of its residential loan business than it did. The representative of SouthTrust promised Dardess that SouthTrust would send him "some business." By Dardess's own admission, SouthTrust did send him some business. The jury could not reasonably infer from the evidence that SouthTrust withheld any business from Dardess that it could have sent to him, in the absence of some evidence that the customers for the 13 residential real estate loans that Dardess did not close during this period did not have preferences for other attorneys to close their loans. Dardess contended that all of the income that he received from closing such loans, with the possible exception of $200, came from clients of his who expressed a preference for him as their attorney in closing loans. Because there is no evidence of a false representation on the part of SouthTrust, the trial court did not err in directing a verdict for SouthTrust on Dardess's fraud claim.

II.

At trial, counsel for Dardess asked Goodloe Pride, a...