Opelika Production Credit Ass'n, Inc. v. Lamb

• Court: Alabama Supreme Court
• Writing for the Court: SHORES; TORBERT
• Citation: Opelika Production Credit Ass'n, Inc. v. Lamb, 361 So.2d 95 (Ala. 1978)
• Decision Date: 28 July 1978
• Parties: OPELIKA PRODUCTION CREDIT ASSOCIATION, INC. v. Samuel LAMB. 77-229.

Page 95

361 So.2d 95

OPELIKA PRODUCTION CREDIT ASSOCIATION, INC. v. Samuel LAMB.

77-229.

Supreme Court of Alabama.

July 28, 1978.

Guy F. Gunter, III, for Maye, Melton, Kent & Gunter, Opelika, for appellant.

Bob Faulk, for Faulk & Johnson, Phenix City, for appellee.

SHORES, Justice.

Samuel R. Lamb filed suit against Reckie R. Barela seeking possession of 68 cows, 2 angus bulls, the increase thereof, and damages for the conversion of these animals. Opelika Production Credit Association (Opelika Credit) intervened in the action claiming all of the cattle in Barela's care under a security agreement executed by Barela. The intervenor also claimed $74,582.28 due by open account from Lamb and Barela, jointly and severally, as well as money owed them by Barela separately on two promissory notes. All parties to the action agreed to sell all of the cattle in Barela's possession and to deposit the proceeds with the court for allocation between the parties following a final determination by the court.

The trial court, at the close of Opelika Credit's case, directed a verdict in favor of Lamb and his wife. Barela failed to appear to defend the action, and the trial court gave the affirmative charge in favor of Opelika Credit and against Barela. The jury returned a verdict of $69,422.40 against Barela. The court ordered a division of the proceeds of the cattle sale, totaling $8,400, awarding two-thirds to Lamb. Opelika Credit's motion for new trial against Lamb was denied and it appealed. It urges that the trial court erred in directing a verdict on its claim against Lamb and in denying its motion for new trial. We affirm.

Lamb, a practicing physician from Jacksonville, Florida, and Barela, his son-in-law at the time, entered into a written contract for the operation of a cattle ranch on August 8, 1973, which provided:

"CONTRACT AGREEMENT

"THIS AGREEMENT made the 8th day of August, 1973, by and between SAMUEL R. LAMB, M. D. and HELEN E. LAMB, hereinafter called 'Lamb,' and RECKIE R. BARELA, hereinafter called 'Barela.'

"The parties agree and contract as follows:

"1. Lamb has purchased from Barela 68 brood cows and 2 Angus bulls together with winter feed and pasture leases for said animals through January 5, 1974, for the sum of $17,000.00.

"2. Barela agrees to keep said animals together with other cows as may be placed in his care by Lamb, pastured and fed through January 5, 1974. After January 5, 1974, pasturing and feeding will be renegotiated by both parties together and will be paid for from calf crop sales as common herd expense or such other way as may be expedient, equitable and mutually agreed to by both parties in writing and to be added to this agreement as an addendum.

"3. Barela further agrees to take care of all of said animals placed in his care by Lamb from the date of this agreement until their first full crop of calves come in. Barela's compensation for his services in tending said animals for the first year of this contract will be one-half of the first calf crop or the proceeds therefrom. Barela's compensation after the first year will be one-half of each year's ensuing calf crop or proceeds therefrom from the herd as it enlarges from year to year. Barela will not receive any other compensation from Lamb for his services.

"4. In the event of the dissolving of this contract agreement all cows paid for by Lamb's personal monies and/or all cows paid for by Barela personal monies shall belong entirely to each party thereto with the remaining purchase of the herd or proceeds therefrom being divided equally.

"5. It is further agreed that this contract shall be binding as stated above on both parties for three (3) years and that any and all proceeds are to be spent solely for maintenance, care and enlarging the herd brood cows as rapidly as possible. After the third year, this contract agreement will be renegotiated by both parties.

"IN WITNESS WHEREOF the parties have signed this agreement the day and year above stated.

/s/ Samuel R. Lamb

SAMUEL R. LAMB, M. D.

/s/ Helen E. Lamb

HELEN E. LAMB

/s/ Reckie R. Barela

RECKIE R. BARELA"

Lamb named the operation "Lambarela Ranch" and established a checking account in which he deposited $500 each month for its operation. Barela was authorized to write checks on this account.

In late 1973, Barela began the acquisition of a substantial number of additional cattle. Lamb testified that Barela informed him of the acquisition, stating that he was being sponsored by the Alabama Cattlemen's Association which loaned him money at 6% Interest to purchase the cattle, to be repaid from the proceeds obtained through a sale of the calf crop. Lamb denied any further knowledge of the source of the purchase money for the cattle. He and Barela agreed orally that Lamb would depreciate the newly acquired cattle, as well as the original herd purchased by Lamb, on his Income Tax Returns. In 1973, 1974 and 1975, Lamb took a total depreciation deduction on all of the cattle amounting to $34,347.25.

Barela had actually borrowed the purchase money for the cattle from Opelika Credit. In his deposition, which was admitted into evidence at the trial because of his absence, Barela said that Lamb was aware of his dealings with Opelika Credit and, in fact, instigated the loan negotiations in order to increase the cattle herd without increasing his original capital investment. Barela never informed Opelika Credit of his business relationship with Lamb, and executed each of the documents required by Opelika Credit in his personal name. Opelika Credit was unaware of the arrangement between Lamb and Barela.

Between September 17, 1973, and April 15, 1974, Barela borrowed $54,040 from Opelika Credit with which he purchased 187 head of cattle, three bulls, three horses, one pick-up truck, and 1300 shares of participating stock in Opelika Credit. To secure the loans, he executed a security agreement and several promissory notes. On December 2, 1974, he borrowed an additional $5,560 to recover cattle which had escaped from a pasture leased by Barela, and executed another note in that amount. In 1975, Barela executed a renewal note for $59,755 covering the original indebtedness, plus interest accrued, service charges, and agreed to purchase 114 additional shares in Opelika Credit. The jury's award of damages to Opelika Credit reflected the sum of these notes less the value of the shares which Opelika Credit retained.

Lamb had directed Barela not to sell any cattle or any part of the calf crop without his knowledge. Lamb demanded records of all transactions for tax purchases. Lamb filed suit in 1975 because Barela sold off a number of cattle without Lamb's permission. There is no evidence in the record that Lamb received any part of the proceeds of these sales. The only return received by Lamb or his investment was $3,000 from the sale of 10 head of cattle.

Opelika Credit maintains that Lamb is liable to it for the debts incurred by Barela under three alternative theories: (1) That Barela served as Lamb's agent; (2) that Lamb and Barela were partners and the debts incurred by Barela were partnership debts for which Lamb is jointly and severally liable; and (3) that even if Barela was not authorized to borrow money on Lamb's behalf, his actions were subsequently ratified by Lamb. Opelika Credit argues that it presented at least a scintilla of evidence to support each of these theories.

The debts incurred by...