Hamrick v. First Nat. Bank of Stevenson, 86-626

• Decision Date: 11 December 1987
• Docket Number: No. 86-626,86-626
• Citation: 518 So.2d 1242
• Parties: H.E. HAMRICK v. FIRST NATIONAL BANK OF STEVENSON.
• Court: Alabama Supreme Court

Page 1242

518 So.2d 1242

H.E. HAMRICK v. FIRST NATIONAL BANK OF STEVENSON.

No. 86-626.

Supreme Court of Alabama.

Dec. 11, 1987.

Charles A. McGee, Fort Payne, for appellant.

Gerald R. Paulk of Livingston, Porter & Paulk, Scottsboro, for appellee.

STEAGALL, Justice.

H.E. Hamrick appeals from the judgment of the Jackson County Circuit Court in favor of the plaintiff, First National Bank of Stevenson ("Bank"). We affirm.

The Bank's complaint alleged that Hamrick had executed a promissory note on behalf of Hamrick Construction Corporation in the principal amount of $110,000, and that the note was in default. The Bank further claimed that Hamrick Construction Corporation was the alter ego of Hamrick, the sole stockholder of the corporation, and on that basis sought judgment against Hamrick individually. A default judgment was entered against Hamrick Construction Corporation, H.E. Hamrick d/b/a Hamrick Construction Company, and H.E. Hamrick individually. The default judgment against H.E. Hamrick individually was set aside, and the cause proceeded to trial. The trial court, after hearing the evidence, rendered judgment against Hamrick. The court determined that "H.E. Hamrick grossly abused the privilege of a separate corporate existence ... from the time these transactions were entered into by these parties, and that the separate corporate existence should be disregarded." On appeal, Hamrick contends that the evidence does not support the trial court's judgment.

Where a trial court hears ore tenus testimony, its findings of fact based upon that testimony are presumed correct if supported by competent evidence. Collins v. Windsor, 505 So.2d 1205 (Ala.1987); Dennis v. Dobbs, 474 So.2d 77 (Ala.1985). Those findings, if supported by the evidence or any reasonable inference therefrom, will not be disturbed on appeal unless they are plainly and palpably erroneous and manifestly unjust. Robinson v. Hamilton, 496 So.2d 8 (Ala.1986); First Alabama Bank of Montgomery, N.A. v. Coker, 408 So.2d 510 (Ala.1982). The trial court in this case found that a combination of factors justified disregarding the separate corporate existence. The court stated its findings with regard to those factors as follows:

"There is evidence that [Hamrick] used the corporation for his personal benefit during the time [of], and shortly after, these transactions.

"There is substantial evidence that the corporation was inadequately capitalized, at least at the time of the last advancement made.

"The courts have held that the draining of corporate assets to render a corporation judgment-proof would constitute fraud, and this certainly was accomplished in this case."

We find that the evidence in this case supports the judgment of the trial court.

The promissory note on which the Bank bases its claim was executed by Hamrick, as president of Hamrick Construction Corporation, on May 27, 1983. This note, in the principal amount of $110,000, was a consolidation of four notes of the corporation. The last of the four notes had been executed on March 29, 1987, at which time the Bank made a $50,000 cash advance to Hamrick Construction Corporation.

Prior to the making of the consolidation note, the Bank requested a current financial statement. On April 21, 1983, Hamrick forwarded to the Bank a copy of his corporate financial statement as of June 30, 1982. The president of the Bank testified that he reviewed that financial statement and that he relied on it in deciding to renew the corporation's credit. The corporate financial statement listed as an asset a parcel of land in Rainsville, Alabama, valued at $200,000. Hamrick did not disclose to the Bank that this parcel had been conveyed to his wife for her assumption of the $35,000 mortgage on the property.

The record also discloses that on April 1, 1983, the title to a number of vehicles and items of equipment was transferred from Hamrick Construction Corporation to Hamrick individually. Hamrick subsequently transferred title to those items to his wife or to other family members. The transfer of those assets was...