Moody v. State ex rel. Payne

• Decision Date: 11 February 1977
• Citation: 344 So.2d 160
• Parties: Shearn MOODY, Jr. v. STATE of Alabama ex rel. Charles H. PAYNE, Commissioner of Insurance and Receiver of Empire Life Insurance Co. of America. SC 931, 1268 and 1270.
• Court: Alabama Supreme Court

Page 160

344 So.2d 160

Shearn MOODY, Jr. v. STATE of Alabama ex rel. Charles H. PAYNE, Commissioner of Insurance and Receiver of Empire Life Insurance Co. of America.

SC 931, 1268 and 1270.

Supreme Court of Alabama.

Feb. 11, 1977.

Rehearing Denied April 22, 1977.

Frank G. Newman, for Newman, Shook and Newman, Dallas, Tex., Drayton N. James, for Clark & James, Birmingham, Martin Paul Solomon, New York City, for appellant Moody.

Rogers, Howard, Redden & Mills, Birmingham, for intervenors, W. B. Sanford and G. L. Myers, appellants.

James W. Webb and Edwin K. Livingston, Montgomery, for Charles H. Payne, Receiver of Empire Life Insurance Co.

Drayton Nabers, Jr. Birmingham, for Protective Life Ins. Co.

BEATTY, Justice.

This is an appeal from an adjudication of insolvency, an order of liquidation and approval of a reinsurance agreement as ordered by the Circuit Court of Jefferson County. We affirm.

The material facts of this case are reported in Moody v. State ex rel. Payne, Commissioner, 295 Ala. 299, 329 So.2d 73 (1976), thus only a brief factual review is necessary here.

On April 13, 1972 the Commissioner of Insurance of the State of Alabama instituted a receivership proceeding in the Circuit Court of Jefferson County against Empire Life Insurance Company, an Alabama corporation. The trial court placed Empire in receivership on June 29, 1972, appointed the Commissioner as receiver, and on September 12, 1973 entered an order authorizing him to solicit offers from other insurance companies for the reinsurance of Empire. Later, in January, 1974 the receiver petitioned the Court for an order of liquidation of Empire and for approval of a reinsurance agreement presented by Protective Life Insurance Company, which later intervened. Shearn Moody, chairman of the board and the largest single stockholder of Empire, intervened. After a hearing on the receiver's petition, the relief requested was granted on June 14, 1974.

On October 15, 1974, Moody filed a motion, later amended, under Rule 60(b), ARCP, to introduce new evidence establishing the solvency of Empire as of the date of the liquidation decree. This motion was overruled on November 22, 1974. Subsequently, the receiver petitioned for approval of an amendment to the reinsurance agreement. This petition was granted over Moody's objections, and on April 10, 1975, the trial court by decree authorized the receiver to execute the amendment.

Essentially, Moody raises three issues: (1) that the trial court erred in denying Moody's 60(b) motion; (2) that policyholders of Empire were discriminated against as a result of the trial judge's reinsurance order; and (3) that the trial court abused its discretion in ordering liquidation and reinsurance. We shall take up the issues presented Seriatim.

Moody contends that the trial court erred in denying his Rule 60(b) motion for relief from the decree of June 14, 1974. Evidence he obtained from a post-judgment appraisal of one of Empire's assets, an interest in the Libbie Shearn Moody Trust, establishing an asset value of approximately $14,000,000 instead of the $4,250,000 value given it by the Commissioner, he asserts, justified a new hearing. The appraisal referred to in his motion was made by Mr. Harold Crandall, who had testified as an expert witness for Moody at the April, 1974 hearing. Although the Crandall appraisal was referred to in the motion as Exhibit B, it was neither attached to the motion nor submitted to the Court. Indeed, on November 15, 1974 when Moody's attorneys argued the motion, they submitted a different appraisal, one made by Dr. Joseph Trosper. Trosper's appraisal expressly recited that its author had not been contacted by Moody until October 18, 1974, three days after Moody's Rule 60(b) motion was filed. Moody did not explain why this appraisal could not have been either the subject of his motion or procured prior to the April hearing.

Rule 60(b)(2), ARCP, authorizes relief from a final judgment for:

. . . Newly discovered evidence which by due diligence Could not have been discovered in time to move for a new trial. . . . (Emphasis supplied.)

Was appellant's evidence 'new' or 'newly discovered?' There can be no Rule 60(b)(2) relief for evidence which has come into existence after the trial is over simply because such a procedure would allow all trials perpetual life. 'Newly discovered evidence' means evidence in existence at the time of trial of which the movant was unaware. Prostrollo v. Univ. of S. Dak., 63 F.R.D. 9 (D.C.S.D.1974). And for a litigant to obtain a new trial on the ground of newly discovered evidence, it must appear that his reasonable diligence before trial would not have revealed this evidence which he failed to discover. Plisco v. Union Ry. Co., 379 F.2d 15, 16 (CCA3rd 1967). Hence, the trial court did not abuse its discretion in denying Moody's motion since this evidence was not even created until after October 18, 1974, over four months after the decree ordering liquidation and approving the reinsurance treaty. Any attempt by Moody to explain away his unawareness would have been inapt in those circumstances.

Appellee contends that Moody's assertion of discrimination against the policyholders fails because Moody did not raise this issue properly in the trial court, that is, that discrimination was raised for the first time in Moody's objections to the trial court's decree authorizing execution of the agreement to effectuate the reinsurance treaty, issued on April 10, 1975, almost a year after the trial court had approved the reinsurance agreement. This position overlooks the fact that the trial court, trying the case under equity rules, expressly gave the parties a standing objection to 'every bit of evidence' and 'to every ruling.' In this posture we consider that the objection was timely made. Next, the appellee maintains that the trial court was not required to allow the objection of discriminationg because Moody himself was found by the trial court to be in open contempt for violating the injunction referred to in 295 Ala. 299, 329 So.2d 73, 10 ABR 543, 546--554 (1976). While it may be true as a general proposition that '(a) party in contempt is not entitled to insist upon a hearing or trial of the case out of which the contempt arose until he first purges himself of the contempt,' Wilkinson v. McCall, 247 Ala. 225, 23 So.2d 577 (1945), nevertheless for due process reasons '(t)he power to deny a hearing to a person in contempt does not include the power to refuse to such person in contempt the right to defend in the main case on the merits.' McCollum v. Birmingham Post Co., 259 Ala. 88, 65 So.2d 689 (1953). By objecting to discrimination against policyholders, Moody appears to have been doing just that, defending such interest as he claims in the main case on the merits of the reinsurance agreement.

Appellees assert further that Moody has no standing to complain of the trial court's approval of the reinsurance agreement. On the other hand, Moody contends that his position as the largest single stockholder of Empire, and as a creditor of Empire, gave him the standing to challenge the agreement which, he contends, 'deprives stockholders of their entire equity without providing them with any benefits in return . . . and which deprives creditors of their contractual rights with Empire.'

Of course Moody must have some direct interest in the wrongs he alleges, otherwise he has no standing to complain. Cf. Peterson v. Hamilton, 286 Ala. 49, 237 So.2d 100 (1970); U.S. v. 936.71 Acres of Land, 418 F.2d 551 (CCA5th 1969). The record does not reveal that prior to this appeal Moody has ever claimed to be a policyholder of Empire. His claim to be a creditor is based upon a debenture bond which, he asserts, he received from Empire and which is alluded to as part of an exhibit introduced at the 1972 hearing, and a guaranty of an indebtedness of Credit Factoring, Inc. made by Empire to W. L. Moody...