Faith, Hope and Love, Inc. v. First Alabama Bank of Talladega County, N.A.

• Decision Date: 03 October 1986
• Citation: 496 So.2d 708
• Parties: FAITH, HOPE AND LOVE, INC., Mittie Williams and Richard Williams v. FIRST ALABAMA BANK OF TALLADEGA COUNTY, N.A., and Curtis C. Lackey. 84-572.
• Court: Alabama Supreme Court

Page 708

496 So.2d 708

FAITH, HOPE AND LOVE, INC., Mittie Williams and Richard Williams v. FIRST ALABAMA BANK OF TALLADEGA COUNTY, N.A., and Curtis C. Lackey.

84-572.

Supreme Court of Alabama.

Oct. 3, 1986.

Charles M. Thompson of Thompson & Griffis, Birmingham, for appellants.

R. Blake Lazenby and O. Stanley Thornton of Wooten, Boyett, Thornton, Carpenter & O'Brien, Talladega, for appellees.

STEAGALL, Justice.

Plaintiffs, Faith, Hope and Love, Inc., and Mittie Williams and Richard Williams, filed an amended complaint against defendants, First Alabama Bank of Talladega County and one of its officers, Curtis C. Lackey, alleging in count one, breach of contract; count two, fraud; counts three, four, and five, alleged conversion, breach of fiduciary duty, and wrongful foreclosure, respectively. The trial court granted the defendants' motions for directed verdict at the close of the plaintiffs' evidence on all counts except count one. This count, for breach of contract, was submitted to the jury, and it returned a verdict for the defendants, evidently believing defendants' version of the facts. Plaintiffs' post-judgment motions were denied by operation of law pursuant to Rule 59.1, A.R.Civ.P., and plaintiffs appealed. We affirm.

I. FACTS

Faith, Hope and Love, Inc. (the "corporation") was engaged in the business of imprinting such clothing items as T-shirts and sweat suits. Mittie Williams ("Mittie") owned 98% of the stock of the corporation and was the president and chairman of the board. Her husband, Richard Williams ("Richard"), was the vice-president of the corporation.

During the fall of 1978, the Williamses began to pursue plans to move their business from Birmingham to Talladega. Seeking capital for their new venture, the Williamses initiated meetings with Curtis C. Lackey, an officer, director, and shareholder of Talladega National Bank (now known as "First Alabama Bank of Talladega County," and hereinafter referred to as "the bank").

Mittie testified that Lackey promised to extend $100,000 in credit. Richard testified that Lackey further promised that no repayment would be required for at least one year. The Williamses also testified that they trusted Lackey and signed blank note and mortgage forms. Mittie claimed that Lackey assured her that the only collateral the bank would require was "the farm" property near Embry Crossroads.

Lackey testified that he only agreed to lend $50,000. Further, he said he told the Williamses the bank would require for collateral not only "the farm" property, but also parcels at Kewanee Shores and Point Aquarius. Documents introduced into evidence by defendants (which bear plaintiffs' signatures) support Lackey's version of the agreement.

From December 18, 1978, to April 16, 1979, the bank advanced to the plaintiffs sums exceeding $50,000. In the early summer of 1979, the bank refused to extend additional credit to plaintiffs, and the bank demanded that plaintiffs begin to repay the loans. In 1980 the bank initiated foreclosure proceedings, and on June 10, 1980, the bank purchased the Williamses' three parcels of real estate at public auction for a total price of $60,000. Suit was filed on June 6, 1980, after foreclosure proceedings had begun.

II. BREACH OF CONTRACT

Plaintiffs argue in their brief four points for reversing the trial court's denial of their motion for new trial on the contract count. The gist of their claim for breach of contract is that the defendants orally promised to lend $100,000, take only "the farm" as collateral, and not require repayments to begin sooner than one year from the date of the loan.

A. Plaintiffs assert they are due a new trial on the ground of juror misconduct. Plaintiffs' counsel attached his personal affidavit to the post-judgment motions. He stated that he asked prospective jurors on voir dire examination whether they knew defendants' counsel. No affirmative response was given by any of the persons who were selected as jurors. During a break in the trial, he alleged, one of defendants' attorneys told him there were a "couple of ringers" on the jury, and, after the verdict was returned, a juror called one of defendants' attorneys by his first name. No affidavits of any juror or any other evidence on this point was presented. Also, we note that the voir dire proceedings do not appear in the record on appeal. We cannot say that the trial judge abused his discretion in deciding this affidavit failed to prove there were "improper or non-existent responses to voir dire questions [which] resulted in 'probable prejudice' to the movant." Wallace v. Campbell, 475 So.2d 521, 522 (Ala.1985).

B. Plaintiffs argue that the judge erred in sustaining defendants' objection to reading into evidence portions of Lackey's deposition which would indicate that the Williamses' property, after foreclosure, was listed as an asset of Talladega National Bank at the time it was bought by First Alabama. Plaintiffs evidently intended to argue the existence of a scheme whereby the bank would get possession of plaintiffs' property through foreclosure at less than fair market value and thereby increase the net worth of the bank prior to its sale. Such a scheme would personally benefit Lackey, too, since he was a stockholder in the bank. Plaintiffs' counsel argued to the judge, "It is not inadmissible. It shows motive for this or for what this man did." The evidence was objected to as irrelevant and immaterial, or, alternatively, as being prejudicial without having any real probative value.

Though perhaps technically admissible to show a motive for the bank and Lackey to lie to the Williamses, induce them into a contract, and breach that contract to "trick" the Williamses out of their land through foreclosure, we cannot say the trial judge erred in sustaining the objection. As to whether there was an oral contract such as the Williamses argued, the probative value of this evidence is slight. The prejudicial possibilities are obvious--plaintiffs could directly show to the jury the wealth of the defendants. "Evidence, although logically relevant, may be excluded where it would serve comparatively little or no purpose except to arouse the passion, prejudices or sympathy of the jury. 31A C.J.S. Evidence § 159, p. 436." American Pamcor, Inc. v. Evans, 288 Ala. 416, 420, 261 So.2d 739, 743 (1972).

C. Plaintiffs assert that the trial judge erred in sustaining defendants' objections to the introduction of evidence tending to prove that Mittie suffered mental anguish as a direct result of the alleged breach of contract. Generally, mental anguish is not a recoverable element of damages in an action for breach of contract unless the contractual duty is coupled with matters of mental concern so that a breach will necessarily or reasonably result in mental anguish. Taylor v. Baptist Medical Center, Inc., 400 So.2d 369, 374 (Ala.1981). The trial judge did not err in determining that this was a business arrangement in which no special circumstances were apparent to the bank to make it aware that a breach would necessarily, or reasonably be expected to, result in mental anguish.

If the trial court was in error, the harmless error rule would apply. Rule 61, A.R.Civ.P.; Rule 45, A.R.A.P. This issue relates only to damages. Since the jury determined there was no liability, any error as to admissibility of evidence relating to damages would be harmless.

D. Plaintiffs' counsel asked Mittie, "What is the financial worth of Faith, Hope and Love now, please, ma'am?" Defendants' objection on the ground of relevancy was sustained. Plaintiffs' brief says, "there is no specific, scientific way to prove loss of earnings or loss of profits to a business. The plaintiffs attempted to show the financial condition of the corporation prior to dealing with the defendant bank ... and then ... the present worth of the corporation after foreclosure." We agree with defendants that plaintiffs' attempted testimony was mere conjecture and an attempt to circumvent the rule that damages for lost profits are not recoverable if speculative. See Mall, Inc. v. Robbins, 412 So.2d 1197 (Ala.1982). Moreover, since this testimony goes to the issue of damages, the harmless error rule is applicable, since we affirm the finding of no liability.

III. CONVERSION

The plaintiffs' brief discusses the directed verdicts on three counts in a single section of the brief. Though we find no specific argument as to count three of the amended complaint--for conversion--we reaffirm the rule that an action for conversion will not lie for the taking of real property. See Hatfield v. Spears, 380 So.2d 262 (Ala.1980).

IV. BREACH OF FIDUCIARY DUTY

"Courts have traditionally viewed the relationship between a bank and its customer as a creditor-debtor relationship which does not impose a fiduciary duty of disclosure on the bank. A fiduciary duty may arise when the customer reposes trust in a bank and relies on the bank for financial advice, or in other special circumstances." Baylor v. Jordan, 445 So.2d 254, 256 (Ala.1984).

The only authority cited by plaintiffs is Brasher v. First National Bank of Birmingham, 232 Ala. 340, 168 So. 42 (1936). In Brasher, the trial court granted the defendant bank's demurrer to an action on the case which alleged that the bank had advised plaintiff about her legal interests in proceeds of her deceased husband's insurance, about probate of the will, and about management and investment of the property of the estate. The Court said that, assuming the allegations to be true, the bank "undertook to advise the plaintiff in respect to her interest, and did advise her to enter into said consent decree, it was under duty to disclose to her its contents...." 232 Ala. at 345, 168 So. at 47.

During the cross-examination of Mittie, a portion of her deposition was used to impeach or clarify her testimony. At deposition, Mittie said Lackey did not provide her with business counseling. When asked on...