Gurley v. Bank of Huntsville
| Decision Date | 26 August 1977 |
| Citation | 349 So.2d 43 |
| Parties | J. GURLEY and Helen Gurley v. The BANK OF HUNTSVILLE et al. SC 2219. |
| Court | Alabama Supreme Court |
Phillip A. Geddes, Huntsville, for appellants.
Michael C. Moore, Huntsville, for appellees.
This is an appeal from a summary judgment granted against J. and Helen Gurley, plaintiffs, and in favor of the Bank of Huntsville and its president, individually, defendants.
The Gurleys entered into an agreement with one David Dishman for the sale by the Gurleys to Dishman of stock in Cathedral Caverns, Inc. As a part of the agreement, Dishman, as purchaser, deposited $20,000 in an escrow account with the Bank of Huntsville on February 23, 1974. The escrow agreement between Dishman, the Gurleys and the Bank directed the Bank to hold the funds until the stock transfer was consummated and a promissory note tendered by Dishman to the Gurleys in the amount of $180,000, the balance of the purchase price. If Dishman failed to make such tender by May 20, 1974, the Bank was to pay the $20,000 to the Gurleys as liquidated damages. On May 2, 1974, Dishman tendered the promissory note and the Bank released the escrow fund to appellants as directed by the agreement.
During the period in which the Bank was acting as escrow agent, Dishman submitted a loan application to the Bank stating his purpose for the request as the improvement and development of the Caverns. The application included an assignment of certain of Dishman's personal assets as collateral for the loan and the proposal that the money expended on the corporate assets would be in return for a promissory note by the corporation to Dishman which he would assign to the Bank as further collateral. Dishman's loan was approved by the Bank on May 2, 1974, the same day the Bank, as escrow agent, delivered the $20,000 to the Gurleys, and the stock was delivered to Dishman in exchange for the $180,000 note. The Gurleys did not retain any security interest in the stock, but simply delivered it to Dishman in consideration of the $20,000 cash and his note for $180,000.
On October 24, 1974, the Bank entered into a further agreement with Dishman releasing his personal assets as collateral for the loan of May 2, 1974, and substituting as collateral for that loan the stock transferred to him by the Gurleys. Dishman became delinquent in his payments to the Bank on the May 2, 1974, loan and on August 7, 1975, the Bank foreclosed on the stock. On March 24, 1976, this action was filed by the Gurleys against the Bank, claiming damages and alleging a breach of the Bank's fiduciary duty under the escrow agreement to make a full disclosure to them of all transactions between Dishman and the Bank. The complaint further alleged fraud in the Bank's acquisition of the stock. The Bank filed a motion for summary judgment supported by an affidavit of the president of the Bank, the individual defendant; the agreement between the Gurleys and Dishman; the promissory note of Dishman to the Gurleys; the escrow agreement between the Gurleys, as sellers, Dishman, as purchaser, and the bank as escrow agent; and an affidavit by Dishman's attorney stating that he represented him in a suit brought by the Gurleys on the note; and further stating that the Gurleys claimed no security interest in the stock in that suit, which was still pending. A copy of the suit itself was also attached.
Documents in support of the defendants' motion for summary judgment established that the Bank's role in the Gurley-Dishman transaction was merely the acceptance from Dishman of the $20,000 earnest money to be held until Gurley and Dishman directed the Bank to pay that sum over as down payment on the purchase price of the stock. The Gurleys acknowledged that they received that sum from the Bank on May 2, 1974.
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