Federal Land Bank of New Orleans v. Jones

• Decision Date: 06 April 1984
• Citation: 456 So.2d 1
• Parties: The FEDERAL LAND BANK OF NEW ORLEANS v. Glenn E. JONES, et al. Glenn E. JONES, et al. v. The FEDERAL LAND BANK OF NEW ORLEANS. 82-60, 82-65.
• Court: Alabama Supreme Court

Page 1

456 So.2d 1

The FEDERAL LAND BANK OF NEW ORLEANS v. Glenn E. JONES, et al.

Glenn E. JONES, et al. v. The FEDERAL LAND BANK OF NEW ORLEANS.

82-60, 82-65.

Supreme Court of Alabama.

April 6, 1984.

Rehearing Denied Aug. 24, 1984.

J. Garrison Thompson of Pitts, Pitts & Thompson, Selma, for appellant/cross-appellee.

John E. Pilcher of Pilcher & Pilcher, Selma, for Glenn E. Jones and Lynne L. Jones.

Charles H. Sims, III and Cartledge W. Blackwell, Jr., Selma, for Rawls Machine and Supply Co., Inc.

Archie T. Reeves, Jr. of Reeves & Stewart, Selma, for Henry Brick Co., Inc.

James B. McNeill, Jr. of Bryant, Edwards, McNeill & Poole, Selma, for J.M. Brown, individually and t/d/b/a Johnny Brown Plumbing Co.

William J. Gamble of Gamble, Gamble & Calame, Selma, for Don Tillery and James M. Tillery, Jr., individually and trading and doing business as Tillery House of Carpets.

BEATTY, Justice.

This is an appeal by Federal Land Bank of New Orleans (Bank) and a cross-appeal by Glenn E. and Lynn L. Jones (the Joneses) from judgments entered against them in favor of multiple claimants. The actions arose from a loan made by the Bank to the Joneses and the Land Bank Association of Selma (Association) for long-term financing to cover the construction costs of a new residence. The construction contract provided for three monetary disbursements to the original contractor, Webb A. Hargrove d/b/a Azalea Construction Company (Hargrove or Azalea), upon certain stages of completion of the residence.

The Association made two disbursements to Hargrove, and he failed to pay the subcontractors and materialmen who were working on and supplying materials for the Jones residence. Consequently, a subcontractor, Central Alabama Sheet Metal Company (Central), commenced an action in the district court asserting claims against Glenn Jones on open account and for work and labor done. The action proceeded to judgment, and Jones appealed to the circuit court. Tillery House of Carpets (Tillery), another subcontractor, also commenced an action against Glenn Jones in the district court to enforce a materialmen's lien upon the Joneses' home and sought money damages for work and labor done.

Subsequently, the Bank instituted an interpleader action in the circuit court, naming the following defendants: the Joneses, Central, Tillery, Hargrove, Rawls Machine and Supply Company (Rawls), Johnny Brown Plumbing Company (Brown), Henry Brick Company, Inc. (Henry), Dallas Concrete Pipe Company, Inc., Johnny Lee Gilmore, Warrior Concrete Company, and Prince Electric Company.

Brown, Rawls, and Henry filed cross-claims against the Joneses. The Tillery action and the appeal from the judgment in the Central action were later consolidated with the Bank's interpleader action, and Central and Tillery cross-claimed against the Joneses.

The Bank sought to interplead into court the sum of $6,078.50, which remained undisbursed under the construction loan to the Joneses. The complaint requested the court to determine how the money should be disbursed between the Joneses and the other defendants who were materialmen and subcontractors.

The Joneses answered and counterclaimed against the Bank, alleging, among other things, the following:

"15. Plaintiff assumed the obligations of a Trustee with respect to the supervision of the construction and disbursement of the loan proceeds. Plaintiff also assumed the obligation to use reasonable and ordinary care in the supervision of the work and the disbursement of the loan proceeds. Plaintiff breached those duties owed by it to Jones [the Joneses], and by reason thereof and as the proximate result and consequence thereof Jones has suffered loss and damages as follows: They were required to expend considerable sums to complete the house; they have been subjected to litigation and claims for unpaid bills and materials; their title to said real estate has been impaired by the liens and claims filed against it by the Defendants herein; they have incurred substantial expenses for attorneys fees and other costs in the completion of the property, and the defense of the claims and litigation against them; they were required to pay $6,255.00 to Klinner to complete the work; they were required to pay $2,400.00 to complete the fireplace; they suffered loss and damages of $1,500.00 by reason of the failure to install the sink and two windows as aforesaid, and the further sum of $2,000.00 by reason of the failure to build the house according to the required inside and outside measurements; they suffered mental anguish; they were required to pay monthly rentals for a substantial period of time, during which time they were also required to pay interest to Plaintiff on the full amount of the original construction loan; they have been required to pay Plaintiff interest on the full amount of the construction loan, although they were deprived by Plaintiff of the use of $12,333.50 for a substantial period of time; and they were required by Plaintiff to pay interest on funds which have been retained by or under the control of Plaintiff.

"16. Plaintiff has also abused the process of this Court by filing this Interpleader action, and by naming and joining therein those Defendants who did not have or assert any lien or claim against the real estate of Jones or any unpaid balance due by Jones to Azalea. Plaintiff took such action to protect its own interest, because of claims asserted directly against Plaintiff by Henry and certain other of the Defendants herein. Plaintiff is not a mere stakeholder with respect to those funds, but is instead a direct party in interest and seeks to use Jones' funds to pay or protect against claims asserted by the Defendants herein directly against Plaintiff. Such action by Plaintiff is wrongful and tortious, and constitutes an abuse of the processes of this court, and by reason thereof Jones have been damaged in the manner and as averred in the preceeding Paragraph 15."

The Joneses also cross-claimed against Tillery, Brown, Rawls, Central, and Henry and asked for a declaratory judgment, declaring:

"a. That Jones [the Joneses] is not indebted to any of the Defendants herein.

"b. That Jones has paid or is entitled to credits in the total sum of $44,721.50 under [their] original contract with Azalea or Hargrove; that Azalea and Hargrove are obligated to refund said overpayment to Jones; and that Jones has no funds in their possession or under their control due to Hargrove and Azalea under said construction contract.

"c. That none of the Defendants herein have any right, claim, or interest in or to any of the proceeds on deposit with this Court, and that all of said deposits, including interest thereon, is the property of Jones and should be disbursed directly to Jones.

"d. That Plaintiff assumed the obligations of a Trustee to Jones with respect to the supervision of the construction and the disbursements of the loan proceeds; that Plaintiff breached said duties; that Jones was damaged as herein averred; and that Jones is entitled to a judgment against Plaintiff in the sum of $50,000.00, actual and punitive damages, and costs.

"e. That Plaintiff owed a duty to Jones to use reasonable care and diligence in supervising the construction and in disbursing the loan proceeds; that Plaintiff breached said duties; that Jones was damaged as herein averred; and that Jones is entitled to a judgment against Plaintiff in the sum of $50,000.00, actual and punitive damages, and costs.

"f. That Plaintiff has abused the processes of this Court by filing this Interpleader proceeding; that Plaintiff is not a mere stakeholder, but is a direct party in interest and has attempted to use funds belonging to Jones in order to pay, satisfy, or delay claims asserted directly against Plaintiff by Henry and other creditors herein; that by reason of such tortious conduct Plaintiff is obligated to Jones in the amount of $50,000.00, actual and punitive damages, and costs."

During the trial, the Joneses amended their counterclaim against the Bank to allege that the Bank wantonly controlled and disbursed the loan proceeds, misrepresented to the Joneses that the Bank would pay materialmen and subcontractors, required the Joneses to execute false lien waivers, and committed the tort of outrageous conduct which resulted in additional damages to the Joneses' reputation, and caused humiliation, mental anguish, emotional pain, and stress.

The Bank in its answer denied the allegation of abuse of process and filed a motion to dismiss the counterclaim, based upon the absence of a fiduciary relationship and the absence of a duty owed to the Joneses. The trial court overruled the motion. In addition, the Bank's answer to the Joneses' counterclaim affirmatively set up the defense of statute of limitations, and by amendment affirmatively pleaded contributory negligence by the Joneses and estoppel on the abuse of process claim.

Rawls also counterclaimed against the Bank, averring that the Bank had guaranteed payment for all building materials furnished by Rawls on the Jones job. Rawls initially sought damages in the amount of $11,509.22, but he later amended the counterclaim, alleging false representations by the Bank and claiming punitive damages for $100,000.00.

Brown filed a counterclaim on similar grounds, seeking judgment for $1,208.68. He later amended the counterclaim to ask for $5,000.00 punitive damages for alleged false representations.

Henry counterclaimed for $1,393.25 on open account for brick sold to the Bank. Henry, Rawls, Tillery, and Central filed a joint amended counterclaim against the Bank seeking attorney's fees.

The Bank moved to dismiss all counterclaims and that motion was overruled by the trial court. The Bank's answer denied all allegations of the counterclaims and affirmatively pleaded the defenses of Statute of Frauds, statute of limitations, and contributory negligence.

Evidence was presented before the circuit...