Nettles v. First Nat. Bank of Birmingham

• Decision Date: 26 September 1980
• Citation: 388 So.2d 916
• Parties: Charles N. NETTLES et al. v. The FIRST NATIONAL BANK OF BIRMINGHAM et al. 78-592.
• Court: Alabama Supreme Court

Page 916

388 So.2d 916

Charles N. NETTLES et al. v.The FIRST NATIONAL BANK OF BIRMINGHAM et al.

78-592.

Supreme Court of Alabama.

Sept. 26, 1980.

William Roberts Wilson, Jr., Pascagoula, Miss., for appellants.

L. Murray Alley of Cabaniss, Johnston, Gardner, Dumas & O'Neal, Birmingham, for appellee The First Nat. Bank of Birmingham.

Bert S. Nettles, Mobile, and Clarence M. Small, Jr., Birmingham, for appelleesPeterman State Bank and J. R. Harper, J. F. Nettles, A. A. Nettles Sr., A. A. Nettles, Jr., W. W. Eddins, R. A. Wible and Plato G. Britton.

PER CURIAM.

This appeal arises from a suit brought by appellantCharles N. Nettles, as an individual, and appellantPeterman Lumber Company(Company), the corporation of which Mr. Nettles is the principal owner.The defendant-appellees are the Peterman State Bank(PSB), seven directors and officers of PSB, and the First National Bank of Birmingham ^B. FNB is involved in the suit because one of its officers, Plato G. Britton, served on the board of directors of PSB.

Appellants brought suit against appellees seeking $2,500,000 compensatory and $5,000,000 punitive damages as a result of a series of events leading to the PSB's foreclosure of mortgages it held on both the Company's assets and Mr. Nettles's personal assets.The complaint claimed relief on the following grounds: fraud, economic coercion, breach of fiduciary relationship, breach of contract, misrepresentation, deceit, embezzlement, and negligence.

The case was tried before the judge without a jury.Appellants presented testimony for some five or six days.At the close of appellants' case, all appellees filed motions to dismiss under Rule 41(b), ARCP.The trial court took the matter under advisement, and the parties filed extensive briefs.Subsequently, the trial court issued an order granting the motion dismissing the action.This appeal followed.

The facts in the case are somewhat involved.AppellantCharles Nettles was a successful businessman for many years and a prominent member of his community.The Company, which he practically wholly owned, was the principal industry and employer in the general area.PSB was the only bank in the area and was the Company's principal creditor.

For many years the Company enjoyed great financial success, and Mr. Nettles amassed considerable individual wealth.However, in 1963 a portion of the mill was destroyed by fire.It was rebuilt in 1964, but without adequate financing, and was never again profitable.Appellant Nettles's son, Bill Nettles, who had previously come to work for the Company, left active employment with the Company in 1968 due partly to the Company's adverse financial condition.

The financial condition of the Company became acute in 1970.Appellant Nettles was in poor health and advancing in years.The Small Business Administration (SBA) held a first mortgage against the Company and was applying pressure for a sale of the business, or in the alternative foreclosure.Bill Nettles consulted an attorney in regard to bankruptcy, but was advised against such a course of action.

Bill Nettles also conferred with appelleeRobinson Harper, President of PSB, informing Mr. Harper that bankruptcy was being considered.As a result of this conversation and the concern it generated, Mr. Nettles, his son Bill, and various representatives of PSB met to determine what could be done to avoid bankruptcy and all agreed that a sale of the business was the only viable solution-to sell the Company as a going concern.An assignment for the benefit of creditors had been contemplated; however, PSB refused to consummate the assignment on the advice of its attorney.The trial court expressly found that there was a mutuality of interests as to both appellants and appellees in preventing foreclosure and liquidation of the business.The trial court further found that appellant Nettles considered his courses of action and elected to attempt to continue the operation of the Company in order to sell it as a going concern.

Subsequently, Bill Nettles, after much difficulty in finding a purchaser, negotiated a sale of the business to Darrell Kelsoe.Bill Nettles handled the negotiations between Mr. Kelsoe and himself, but PSB was kept informed of the progress of the negotiations.Mr. Kelsoe was the only potential purchaser and was acceptable as such to PSB.A buy-sell agreement was prepared by PSB's attorney and was signed by Charles Nettles and Darrell Kelsoe on September 21, 1970.Appellant Nettles relinquished control, and Mr. Kelsoe began running the Company immediately thereafter.

For reasons that are not clear, but apparently due to intervention by the SBA, the sale itself was never consummated, although Mr. Kelsoe continued to operate the Company.Accordingly, an agency agreement, prepared by PSB's attorney, was executed by Charles Nettles, as President of the Company, in October 1970(backdated to September 23, 1970), authorizing Mr. Kelsoe to operate the Company "for the benefit of its creditors until such time as some orderly disposition of the assets of said Corporation can be made."The next day, at the request of Charles Nettles, the agency agreement was modified to provide that Mr. Kelsoe could be dismissed upon seven days notice by the Company.

The Company continued to have financial difficulties.It had difficulty in meeting its payroll and had several bad checks outstanding.In a further effort to save the Company, Charles Nettles executed additional notes to PSB secured by mortgages on his personal assets, including his home and certain tracts of land.

In the early part of 1971, the SBA continued to threaten foreclosure unless the Company's financial condition improved.In order to forestall that eventuality, PSB acquired the SBA's interest in the first mortgage.However, the situation did not improve, and in June 1971, PSB foreclosed on the property of the Company and appellant Nettles, with the exception of Mr. Nettles's home, which was foreclosed on in March 1972.PSB's bid on certain properties was the highest received at the foreclosure sales, and it became the purchaser of such properties.Subsequently, in order to clear title to the properties so that a greater amount could be realized upon resale, Charles Nettles and his wife executed a waiver of redemption rights in the foreclosed properties.Thereafter, a sale was held in which several bids were made.Certain of the properties were sold to various directors of PSB, their bids being the highest.

The amounts realized from the resales were credited to the obligations of Charles Nettles and the Company, reducing the total indebtedness from $435,890.05 to $107,175.34 plus interest and additional expenses.PSB rendered Mr. Nettles's attorney an accounting in June 1972.

The issue we are called upon to review is whether the trial court erred in granting the Rule 41(b) motion.Rule 41(b), ARCP, provides in pertinent part as follows After the plaintiff, in an action tried by the court without a jury, has completed the presentation of his evidence, the defendant, without waiving his right to offer evidence in the event the motion is not granted, may move for a dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief.The court as trier of the facts may then determine them and render judgment against the plaintiff or may decline to render any judgment until the close of all the evidence....

The Committee Comments to Rule 41(b) reveal the following:

In a jury case, Rule 50 applies and the court is limited to a question of law (thereby preserving jury trial right) as to the sufficiency of plaintiff's prima facie case.In a non-jury case, the court, under Rule 41(b), as ultimate trier of fact, is free to weigh the evidence and the credibility of the witnesses....

Moreover, as to our review of the trial court's finding of fact, Rule 52(a) of the ARCP provides, "Findings of fact shall not be set aside unless clearly erroneous ...."The Committee Comments to Rule 52(a) state, "The scope of review under present Alabama practice prevents reversal of the trial court's findings where the evidence was taken in open court, or partly so, and the trial court has had the advantage of seeing the witnesses, unless the trial court's conclusion is plainly and palpably contrary to the weight of the evidence."

Accordingly, the standard for review on appeal of a trial court's disposition under a Rule 41(b) motion is whether the trial court's action is supported by the evidence.Strickland v. National Gypsum Co., 348 So.2d 497, 498(Ala.Civ.App.1977).

Appellants contend, however, that the ore tenus rule is inapplicable in this case because only a portion of the evidence was heard orally by the trial court and the facts of the case were indisputably established.In support of this proposition, appellants cite Hendrix, Mohr & Yardley, Inc. v. City of Daphne, 359 So.2d 792(Ala.1978);Taylor v. Godsey, 357 So.2d 979(Ala.1978);andCity Stores v. Williams, 287 Ala. 385, 252 So.2d 45(1971).Thus, appellants argue that this court is not bound by the trial court's findings.However, the Comments to Rule 52(a), as set out above, state that the presumption in favor of the trial court's findings applies even when the evidence only partly consists of oral testimony before the trial court.Moreover, as will appear below, the factual premises underlying appellants' theories for relief are not immutably established by the evidence.Therefore, the question becomes whether there was sufficient evidence to support the trial court's findings.

The trial court ruled: "(T)he majority of the plaintiff's (appellants') claims are barred by the statute of limitation.The Court is further satisfied that the evidence is insufficient to create a trust relationship."We agree that the majority of appellants' claims are barred by the applicable statutes of limitations.The events leading to foreclosure...