Home Bank of Guntersville v. Perpetual Federal Sav. and Loan Ass'n

• Decision Date: 05 May 1989
• Parties: 10 UCC Rep.Serv.2d 879 HOME BANK OF GUNTERSVILLE v. PERPETUAL FEDERAL SAVINGS AND LOAN ASSOCIATION. 87-1325.
• Court: Alabama Supreme Court

Page 840

547 So.2d 840

10 UCC Rep.Serv.2d 879

HOME BANK OF GUNTERSVILLE v. PERPETUAL FEDERAL SAVINGS AND LOAN ASSOCIATION.

87-1325.

Supreme Court of Alabama.

May 5, 1989.

Rehearing Denied June 23, 1989.

Ralph Smith, Jr., Guntersville, for appellant.

John P. Burbach of Butler & Royer, Huntsville, for appellee.

KENNEDY, Justice.

The defendant, Home Bank of Guntersville, appeals from a summary judgment for the plaintiff, Perpetual Savings and Loan Association. We affirm.

The issues we address on appeal are whether the defendant's counsel was competent to testify by affidavit in behalf of his client; whether there was substantial evidence supporting any issue of fact that would permit submission to the trier of fact; whether a "bank money order" is subject to countermand; and whether the defendant is a "holder in due course" under Code 1975, § 7-3-302(1).

The evidence shows that on July 20, 1987, the Home Bank of Guntersville ("Home Bank") issued a bank money order payable to Floyd Ramsey in exchange for cash or other valuable consideration from Ramsey. The bank money order was deposited at Perpetual Federal Savings and Loan Association ("Perpetual") in South Carolina on July 28, 1987. Between July 20, 1987, and August 5, 1987, when Ramsey presumably placed a stop payment order on the bank money order, withdrawals were made from the bank money order deposit, depleting the entire $17,000.00. Perpetual received notice of Ramsey's stop payment order on August 6, 1987. Home Bank refused to accept and pay the bank money order upon presentment by Perpetual.

On September 30, 1987, Perpetual brought suit in the Circuit Court of Marshall County, alleging that Home Bank had failed or refused to accept and pay Home Bank's bank money order that was negotiated to Perpetual. Perpetual filed a motion for summary judgment based upon the pleadings, facts deemed admitted, an affidavit, and a brief. Home Bank opposed the motion by filing an affidavit of its general counsel, who was also representing it in the action.

The affidavit of Home Bank's attorney stated:

"I am general counsel for the Home Bank and as such have full knowledge of the facts in this matter. Payment on the bank money order was stopped by our customer in as much as the money order was stolen and contained a forged endorsement....

"The bank money order made the basis of this law suit contains the following language on its face 'Payable at par anywhere through Federal Reserve System' ... which restricts the negotiability to those institutions under the Uniform Commercial Code and of which the Plaintiff in this case is not such a member."

The trial court entered summary judgment for Perpetual and stated in its order, inter alia:

"[I]t is noted that the defendant's atty's [sic] affidavit is insufficient under the law in that the affiant, the defendant's atty [sic] would not be entitled to testify as such and that his knowledge, even if accurate, would have come to him only through hearsay testimony; it is therefore Adjudged that the motion for summary judgment is hereby granted...."

Home Bank argues that, although it may be ethically improper for counsel of a party in a case to testify as a witness without withdrawing from the litigation, a lawyer is a competent witness to testify in behalf of his client.

It is apparent from the facts of this case that Home Bank's lawyer should not have testified in behalf of his client. We find no exceptions in this case to the prohibitions of Disciplinary Rule 5-101(B)(1), (2), (3), and (4), Code of Professional Responsibility of the Alabama State Bar, that would permit Home Bank's lawyer to testify in behalf of his client. Clearly, the matters to which the affidavit relates could have been attested to by representatives of Home Bank and its customer, Ramsey.

Notwithstanding the application of the Code of Professional Responsibility to this matter, the affidavit testimony of Home Bank's lawyer is inadmissible hearsay. "Where it appears from the face of an affidavit that the affiant had no personal knowledge of the matters to which he deposed and that he must have secured his information concerning those matters from others, then the affidavit is based on hearsay and should not be admitted." Williams v. Dan River Mills, Inc., 286 Ala. 703, 246 So.2d 431 (1971). We are not convinced by arguments of counsel and the record that Home Bank's lawyer had personal knowledge of the matters to which he testified in his affidavit. It appears from the face of the affidavit that his information concerning these matters must have come to him from his client or from others. See First Federal Sav. & Loan Ass'n of New Bern v. Branch Banking & Trust Co., 282 N.C. 44, 191 S.E.2d 683 (1972).

Therefore, the trial court did not err in its treatment of the affidavit filed in opposition to Perpetual's motion for summary judgment. Rule 56(c) and (e), A.R.Civ.P.

The standard of review of rulings on motions for summary judgment has been defined as follows:

"On appeal from a trial court's grant of summary judgment, this court must apply the same standard used by the trial court when ruling on the motion. Alabama Power Co. v. Blount Brothers Corp., 445 So.2d 250 (Ala.1983). In Jehle-Slauson Construction Co. v. Hood-Rich, Architects and Consulting Engineers, 435 So.2d 716 (Ala.1983), we summarized the standard as follows:

" 'Summary judgment is properly granted when there is no genuine issue of material fact and the moving party is entitled to a judgment as a a matter of law.' Whatley v. Cardinal Pest Control, 388 So.2d 529 (Ala.1980); Wheeler v. First Alabama Bank of Birmingham, 364 So.2d 1190 (Ala.1978); Rule 56, ARCP. 'If there is a scintilla of evidence supporting the position of the party against whom the motion for summary judgment is made, so that at trial he would be entitled to go to the jury, a summary judgment may not be granted.' Campbell v. Alabama Power Co., 378 So.2d 718, 721 (Ala.1979); Chiniche v. Smith, 374 So.2d 872 (Ala.1979). 'Once a motion for summary judgment has been made, the adverse party ordinarily should not rest on his pleadings, but should respond by setting forth specific facts which show that a material issue of fact does exist.' Whatley v. Cardinal Pest Control, 388 So.2d 529 (Ala.1980); Real Coal, Inc. v. Thompson Tractor Co., 379 So.2d 1249 (Ala.1980). Id. at 718."

Wright v. Robinson, 468 So.2d 94, 97 (Ala.1985); see also Kemp Motor Sales, Inc. v. Lawrenz, 505 So.2d 377 (Ala.1987).

We held in Day v. Merchants Nat'l Bank of Mobile, 431 So.2d 1254, 1256 (Ala.1983), quoting from Butler v. Michigan Mutual Ins. Co., 402 So.2d 949 (Ala.1981):

" 'It is the rule that when a motion for summary judgment is made and is supported as provided in Rule 56, Alabama Rules of Civil Procedure, a party adverse to such a motion may not rest upon the mere allegations or denials of the pleading and must submit facts controverting those facts presented by the moving party. Imperial Group, Ltd. v. Lamar Corp., 347 So.2d 988 (Ala.1977); Ray v. Midfield Park, Inc., 293 Ala. 609, 308 So.2d 686 (1975); Glover v. Merchants Adjustment Service, 57 Ala.App. 62, 326 So.2d 129 (1976). Likewise, the affidavits must be made on personal knowledge and must set forth facts to show that the evidence would be admissible as testimony to contradict the movant's evidence. Arrington v. Working Woman's Home, 368 So.2d 851 (Ala.1979); Oliver v. Brock, 342 So.2d 1 (Ala.1977). The scintilla rule cannot be satisfied by speculation and the evidence presented must be supported by at least a reasonable inference. Arrington v. Working Woman's Home, 368 So.2d 851 (Ala.1979); Oliver v. Brock, 342 So.2d 1 (Ala. [1977] ).' "

The "scintilla rule" was abolished by the Legislature in civil actions brought in any court of the State of Alabama after June 11, 1987. In cases filed after that date "[p]roof by substantial evidence shall be required for purposes of testing the sufficiency of the evidence to support an issue of fact in rulings by the court, including without limitation, motions for summary judgment." Code 1975, § 12-21-12(a) (Cum.Supp.1988).

The Legislature has defined "substantial evidence" to mean "evidence of such quality and weight that reasonable and fair-minded persons in the exercise of impartial judgment might reach different conclusions as to the existence of the fact sought to be proven." Further, "[a] scintilla of evidence is insufficient to permit submission of an issue of fact to the trier of facts." § 12-21-12(d) (Cum.Supp.1988).

Home Bank's affidavit fails to set forth specific facts showing that a material issue of fact exists. The affidavit fails to controvert those facts presented by Perpetual. Home Bank's affidavit is not made on personal knowledge and is not admissible as testimony to contradict Perpetual's evidence. Therefore, applying the "substantial evidence" requirement, we hold that Home Bank has not supported any issue of fact with substantial evidence that would permit submission to the trier of fact. We would reach the same result in this case under the scintilla rule.

The trial court was correct in ruling that Perpetual is entitled to a judgment as a matter of law.

A "bank money order," where the drawer and drawee are the same, is essentially the same as a "cashier's check" and is accepted when issued and is not subject to countermand by either the purchaser or the issuing bank, except for fraud or failure of consideration, or where payment is stopped by injunctive proceedings. See ...