General Elec. Credit Corp. v. Alford & Associates, Inc.

• Decision Date: 06 April 1979
• Citation: 374 So.2d 1316
• Parties: 27 UCC Rep.Serv. 543 GENERAL ELECTRIC CREDIT CORPORATION, a corporation, v. ALFORD & ASSOCIATES, INC., a corporation, and Fred B. Alford. 77-272.
• Court: Alabama Supreme Court

Page 1316

374 So.2d 1316

27 UCC Rep.Serv. 543

GENERAL ELECTRIC CREDIT CORPORATION, a corporation, v. ALFORD & ASSOCIATES, INC., a corporation, and Fred B. Alford.

77-272.

Supreme Court of Alabama.

April 6, 1979.

As Modified On Rehearing Sept. 7, 1979.

John B. Givhan of Albrittons & Givhan, Andalusia, Albert E. Ritchey of Ritchey & Ritchey, Birmingham, Euel A. Screws, Jr. of Hobbs, Copeland, Franco & Screws, Montgomery, for appellant.

Earl V. Johnson, Andalusia, Jack Crenshaw, Joe T. Booth III, Montgomery, for appellees.

PER CURIAM.

General Electric Credit Corporation, Appellant, initiated this lawsuit by filing a three-count complaint against Alford & Associates, Inc., and Fred B. Alford, Appellees. On the first count for detinue, claiming nine mobile homes, the jury returned a verdict for G.E.C.C., assessing a total of $19,400 as the alternate value of the mobile homes and awarding damages of $6,570 for wrongful detention. On the second and third counts for $17,889.47 under a wholesale financing agreement and for $50,537.11 under a retail financing agreement the jury returned a verdict in favor of Appellees.

Appellees filed their answer and counterclaimed for loss of business, libel, and for money had and received. The jury found for Appellees on all three counterclaim counts, assessing damages against G.E.C.C. as follows: 1) $1.00 for loss of business; 2) $1.00 nominal damages and $65,000 punitive damages for libel; and 3) $23,569.91 on the claim for money had and received, which the trial Court, on order of remittitur, reduced to $12,006.80.

I. The Facts

In 1971, Alford started a mobile home sales business. G.E.C.C. contacted Mr. Alford and separate agreements were reached whereby G.E.C.C. would provide both wholesale and retail financing. The financing plans operate as follows:

Wholesale Plan : Alford would purchase a mobile home from the manufacturer and G.E.C.C. would lend money to cover both the purchase of the unit and the floor planning until Appellees sold the unit. The "wholesale financing agreement" was accompanied by a revolving credit promissory note. The wholesale agreement provides that G.E.C.C. is granted a security interest in all of Appellees' inventory now owned or hereafter acquired, together with all proceeds thereof, to secure payment of the Revolving Credit Promissory Note, or any other indebtedness or liabilities of Appellees, whether now existing or arising hereafter. G.E.C.C. contends that, at the time of this lawsuit, Alford owed $17,889.47 under the wholesale financing agreement.

Retail Plan : Because most mobile homes are sold on a time-payment basis, an agreement was reached between Appellees and G.E.C.C. whereby G.E.C.C. would purchase valid retail sales contracts from Appellees. The retail financing agreement provides for the establishment of reserves by G.E.C.C.

The agreement gives G.E.C.C. the right to establish "a time sales security reserve or such other reserve or reserves as (G.E.C.C.) deems necessary." These reserves are explicitly stated to be held as security for, and not in lieu of performance by Alford. Although the details of the reserve plan are not readily apparent from the record, it is clear that G.E.C.C. established two types of reserves: 1) a participating reserve and 2) deferred certificates.

In March, 1975, Alford made a demand, pursuant to the terms of the retail financing agreement, for an accounting of amounts charged to the participating reserve, and for an accounting (as well as demanding payment) of past-due deferred certificates. This statement, received May 1, 1975, showed a balance, but contained no breakdown of charges and credits and no payment of deferred certificates.

On June 1, 1975, Appellees received a monthly billing from G.E.C.C., showing the amount owed under the inventory financing account as of May 30, 1975. This statement, as later corrected, showed no previous unpaid installments due. It showed that $2,067.67 was currently due, and that the total amount owed by Appellees under the wholesale financing agreement was over $30,000. At this point, Appellees informed G.E.C.C. they were not going to pay G.E.C.C. on the wholesale agreement unless Appellees received an accounting and payment of any amounts due under the reserve provisions of the retail financing agreement.

On June 23, 1975, Alford received notice that the wholesale agreement was cancelled. Alford also received notice that several manufacturers would be notified to repurchase certain mobile homes that were financed under the wholesale financing agreement. At this point in time, G.E.C.C. mailed to Alford's suppliers, Champion Mobile Homes and Fair-Moore Mobile Homes, notices to repurchase the mobile homes held by Alford. In these notices, it was stated:

"Dealer continually fails to meet financial obligations to G.E.C.C."

Two of these notices contained a statement that merchandise had been repossessed. This, admittedly, was not true.

At the time the notices were sent, Alford claims that only $2,067.67 was owed by them to G.E.C.C. and that G.E.C.C. held $3,000 in matured deferred certificates under the retail plan; and, therefore, statements contained in these notices were false and libelous. G.E.C.C. asserts that Alford owed $17,889.47 and that nothing was owed by G.E.C.C. on the deferred certificates, because these were merely one form of reserves authorized by the retail financing agreement, payable at G.E.C.C.'s sole discretion.

Alford further contends that the amounts of $2,735.85 and $2,739 proceeds from the sale of the "Hilton" and "Patrix" retail sales contracts were wrongfully withheld. ¹ G.E.C.C. contends that these amounts, representing proceeds from the sale of inventory, were properly applied under the wholesale plan in reduction of Appellees' indebtedness to G.E.C.C. In other words, G.E.C.C. says that the amount of $17,889.47, the alleged debt of Appellees under the wholesale financing agreement, had already taken into account the proceeds of the "Hilton" and "Patrix" sales.

II. The Libel Claim

G.E.C.C. raises numerous issues concerning Appellees' right to recover under their claim of libel. There can be little doubt that, if untrue, the statement, "(d)ealer continually fails to meet financial obligations . . . .", and a statement to the effect that merchandise has been repossessed, are defamatory, and thus actionable, when published to Alford's suppliers. See, e. g., Harrison v. Burger, 212 Ala. 670, 103 So. 842 (1925) ("In many of the cases it is said that words charging nonpayment of debts or insolvency are actionable without special damage being shown, when they refer to merchants, tradesmen, or others in occupations where credit is essential.").

The initial inquiry, then, is whether the statements made by G.E.C.C. were, in fact, untrue. Mr. Bob Williamson testified as follows:

"Q. You made a false statement in there? All right. Now, typewritten in there, you put it in, 'dealer continually fails to meet financial obligations to G.E.C.C.'. Now, this was at a time, wasn't it, when he owed you two thousand dollars ($2,000.00) and you owed him three thousand dollars ($3,000.00)?

"A. Right.

"Q. What obligation was it that you told his manufacturer he had continually failed to meet?

"A. Well, he was slow usually each month on paying the billing. Never really past due.

"Q. Mr. Williamson, your exhibit here or rather this exhibit, a statement of May twentieth, shows previous unpaid charges zero, doesn't it?

"A. Right.

"Q. This was the only statement he had at the date that you sent that, showed he had paid everything up to that May twentieth statement?

"A. Right.

"Q. All right. 'The dealer continually fails to pay his obligations'. The only obligation he hadn't paid was this one of May the twentieth, wasn't it?

"A. At that time, yes, sir.

"Q. At that time? And at that time, you had in your possession at least three thousand dollars ($3,000.00) of his money on deferred certificates?

"A. Right.

"Q. That's got nothing to do with the fifteen thousand dollars on reserve. You had three thousand dollars ($3,000.00) of his money that you ought to have paid him on this same date and you never have paid him?

"A. Right."

This testimony unequivocally shows that at the time G.E.C.C. made the statements in question Alford had not Continually failed to make its monthly payment, but had only failed to pay one monthly installment of $2,000 (the May billing), under the Wholesale financing plan. The testimony further shows that its failure to pay was at a time when G.E.C.C.'s indebtedness to Alford, under the Retail financing plan, was in an amount of $3,000, this debt accruing in the form of "matured deferred certificates."

Although arguments can be made as to G.E.C.C.'s duty Vel non to offset its indebtedness to Alford (under the retail plan against Alford's indebtedness to G.E.C.C. (under the wholesale plan) before Alford could be declared in default, we find that the undisputed evidentiary support for the alleged falsity of other matters that "dealer continually fails to meet financial obligations" and that merchandise had been repossessed renders unnecessary our further consideration of the offset issue. ²

G.E.C.C. contends that, as a matter of law, it had a qualified privilege to make the communications to Champion and Fair-Moore because the statements were sent in the discharge of a legal right to protect their private interest and in furtherance of a legal duty owed to the manufacturers because they were required to repurchase their respective homes. G.E.C.C. asserts that the trial Judge erred in instructing the jury that they were to determine whether a qualified or conditional privilege existed in favor of G.E.C.C.

G.E.C.C. informed the trial Judge, in a conference prior to giving of the Court's instructions, that in its opinion the existence of a privilege should be determined as a matter of law. G.E.C.C. admits, however, that no...