In re Cornner
| Decision Date | 18 August 1995 |
| Docket Number | Bankruptcy No. 94-00111-BGC-7. Adv. No. 94-00111. |
| Citation | 191 BR 199 |
| Parties | In re Wilbur L. CORNNER, Debtor. Joseph M. DORIAN, Plaintiff, v. Wilbur L. CORNNER, Defendant. |
| Court | U.S. Bankruptcy Court — Northern District of Alabama |
COPYRIGHT MATERIAL OMITTED
COPYRIGHT MATERIAL OMITTED
COPYRIGHT MATERIAL OMITTED
Haran Lowe, Jr., Birmingham, Alabama, for plaintiff.
Rodger Smitherman, Birmingham, Alabama, for defendant-debtor.
James G. Henderson, Trustee.
This matter came before the Court for trial on the Complaint to Determine Dischargeability of Debt filed by Mr. Joseph M. Dorian. Mr. Joseph M. Dorian, the plaintiff; Mr. Wilbur L. Cornner, the defendant; Mr. J. Haran Lowe, Jr. and Mr. David L. Rawls, attorneys for the plaintiff; and Mr. Rodger M. Smitherman, attorney for the defendant, appeared. The matter was submitted on the testimony offered, the exhibits admitted into evidence, the record in the case and the arguments of counsel.
Mr. Dorian ("Dorian") owned an automobile dealership named Hoover Imports. In 1991 he sought extra operating capital which he believed could improve the profitability of Hoover Imports by making it more flexible. Dorian testified that although Hoover Imports was not having financial problems, he needed from $200,000 to $300,000 to operate at the level of profitability he desired. At that time, Dorian had lines of credit at Central Bank and South Trust Bank and his credit history and rating were excellent, but he could not convince either SouthTrust or Central to increase his credit lines.
Five or six months after Dorian began his search, in July or August 1991, Mr. Cornner ("Cornner") came to visit him at Hoover Imports. Cornner was an acquaintance of Dorian's. They had become acquainted many years before when both were car salesmen for separate automobile dealerships. Cornner represented to Dorian that he was the executive vice president of Cornner Armstrong Phinancial Services, Inc. ("CAPS") and was in the business of finding loans for persons who were unable to find loans through conventional means. This first meeting was apparently coincidental and not planned.1
Several days later Cornner returned to Dorian's place of business. On that occasion, he and Dorian discussed a transaction where Cornner would, in return for a fee, procure a business loan for Dorian. According to Dorian's testimony, Cornner told Dorian that Cornner could obtain a $1,000,000 line of credit for Dorian that would be unsecured by any of Dorian's then existing assets. According to Cornner's testimony, Dorian told Cornner that he wanted to explore the possibility of obtaining a loan for his business and asked Cornner if he thought that he could help him, and Cornner told Dorian that he believed that he knew some sources from which he could arrange a loan for Dorian. After that, Dorian met with Cornner five or six times at Hoover Imports, and had numerous telephone conversations with Cornner. According to Cornner, during one of those conversations, Cornner informed Dorian that "it would require a lot of phone calls and stuff like that to get it done and there would be a retainer charge to do it." Dorian called several references given to him by Cornner.
On August 6, 1991, Cornner gave a commitment letter to Dorian. Pla.Ex. 2. The commitment letter specified that in the event Dorian gave CAPS a "retainer" by August 7 at 2:00 p.m., Cornner "personally guaranteed" that he would refund the retainer in full, if he had not procured a loan for Mr. Dorian within 20 days after receipt of the retainer. Dorian testified that Cornner gave him the commitment letter so that Dorian would give him the $5,000. Cornner testified that he gave Dorian the letter to let Dorian know that he was "not trying to hook or crook anyone."
Initially, Cornner asked for a retainer of $10,000 but Dorian was only willing to give him $5,000.2 Dorian gave the initial $5,000 retainer to Cornner shortly after August 7, 1991. Cornner then ostensibly began to find a loan for Dorian. Cornner testified that he spoke to several companies in an effort to obtain a line of credit for Dorian, and that on 15 to 20 occasions he worked on Dorian's loan application by meeting with Dorian or making long distance phone calls to prospective lenders.
Dorian never received any money from CAPS or Cornner in the form of a loan or otherwise, nor did he receive a loan as a result of any efforts on the part of Cornner or CAPS. Dorian asked Cornner to return his $5,000.00 but Cornner would not. After the time limit specified in the commitment passed, and Dorian had not received a loan or his retainer back, Dorian met with Cornner five to eight times at Hoover Imports and had 30 to 50 phone conversations with Cornner, in an attempt to find out why the promised loan had not been made and why his retainer had not been returned. Dorian even visited Cornner's house on two or three occasions. During this time, Cornner continuously reassured Dorian that he was still trying to fund a loan, however, Dorian contends that Cornner never intended to provide him a loan within 20 days of his receipt of the retainer, and never intended to refund the retainer if the loan was not made within 20 days.
In December 1991, a meeting took place at Dorian's place of business. According to Dorian, he did not request the meeting. Present at the meeting were Mr. Claude Noel, Mr. Isaacs Armstrong, Cornner and Dorian. Noel was introduced to Dorian as a representative of a company named Group Marchant. Before the meeting, Dorian had not spoken with anyone from Group Marchant, and did not know anything about the organization. Cornner testified that he did not work for Noel, but that he and Armstrong were referring Dorian's loan through Noel's company.
Armstrong and Noel came to the meeting first and were there for 30 to 40 minutes before Cornner arrived. Before Cornner arrived, Dorian, Noel, and Armstrong had a conversation in which Noel or Armstrong apparently outlined a proposition whereby Group Marchant would arrange an "offshore loan" for Hoover Imports. As part of the deal, Dorian would first have to wire transfer $25,000 to a representative of Group Marchant in Chicago. As part of the transaction, Noel brought a document with him entitled "International Certificate of Deposit." Pla. Ex. 4. The certificate has a maturity date of June 1, 1992. The depositor shown on the certificate is a Mr. Leon Gabriel. Dorian testified that he did not know Gabriel, but that printed on the back of the certificate is language which purports to be an endorsement of the certificate by Gabriel to the bearer of the instrument. The certificate was discussed among Dorian, Armstrong and Noel before Cornner arrived.
When Cornner arrived, Noel gave the certificate to Cornner. Cornner, in turn, gave the document to Dorian. Dorian did not testify that Cornner made a representation to him at that time regarding the reason he was being given the "certificate." According to Dorian, Cornner later told him that the certificate was a legitimate document and that it could be cashed on the maturity date and that it was further security for the retainer. Dorian testified that the reason he was given the certificate was as security for the additional $25,000 he was to wire to Chicago. It was a "peace of mind security" given to Dorian so that he would send the money to Chicago.
On the occasion of the meeting between Dorian and Noel, Armstrong and Cornner, according to Cornner's testimony, Cornner actually believed that funding was in place for Dorian to receive his loan. Cornner also testified that he did not know where Noel obtained the certificate of deposit, but that the certificate of deposit was collateral for the $25,000 to be wired by Dorian "to set up the account for Hoover Imports." On cross examination, Cornner admitted that, in an earlier deposition, he stated that the $25,000 was "considered a retainer to get stuff done." Pla.Ex. 1, page 33. Cornner emphasized, however, that the retainer, was for Noel. Cornner acknowledged that he told Dorian that the certificate of deposit was, to the best of his knowledge, "good," but admitted that he never attempted to verify the authenticity of the certificate of deposit. He stated that he did not attempt to verify the authenticity of the certificate before the meeting because he had not seen the document and because the document had already been presented to Dorian when he arrived at the meeting. He stated that he did not attempt to verify the authenticity of the certificate following the meeting because he did not have possession of the document.
Dorian did not immediately wire the money. Sometime between three and seven days following the meeting, Cornner contacted Dorian and came to Dorian's office. He told Dorian that the loan was in place and that he needed to wire the money to Chicago. Cornner told Dorian that the money needed to be wired to a person named Gene Menard in Chicago and gave Dorian the account number and "wiring coordinates" to accomplish that task. He told Dorian that the $25,000 was a retainer.
Cornner testified that Dorian was supposed to have given the $25,000 to him to wire, rather than making the wire transfer personally; but that Dorian told him that he wanted to handle the wire transfer and asked Cornner for the wiring coordinates. According to Dorian, Cornner accompanied him to a local bank. According to Cornner, Dorian wired the funds and then came to Cornner's house with a receipt showing that the money had been wired. Both agree that while at the local bank, Dorian personally wire transferred $25,000 to the bank account in Chicago specified by Cornner.
Dorian made no independent investigation regarding Noel or Group Marchant. He did not, independently of the representations made to him at the meeting, verify that Group Marchant actually...
To continue reading
Request your trial