Parker v. McGaha

• Citation: 294 Ala. 702,321 So.2d 182
• Parties: W. Fred PARKER v. John T. McGAHA. SC 648.
• Decision Date: 18 September 1975
• Court: Supreme Court of Alabama

Page 182

321 So.2d 182

294 Ala. 702

W. Fred PARKER v. John T. McGAHA.

SC 648.

Supreme Court of Alabama.

Sept. 18, 1975.

As Corrected on Denial of Rehearing Oct. 30, 1975.

Walker, Hill, Gullage, Adams & Umbach, Opelika, for appellant.

Alvin T. Prestwood, Montgomery, for appellee.

ALMON, Justice. ^*

This is the second appeal in this litigation between John T. McGaha, plaintiff-appellee, and W. Fred Parker, defendant-appellant. The opinion of this court in the first appeal was rendered on July 12, 1973, and now appears in 291 Ala. 339, 280 So.2d 769.

McGaha brought an action against Parker to recover payment on a note for $100,000 held by McGaha as payee. The makers of the note were the defendant-appellant Parker and two other men, Edward D. Mixon and Wilbur Ramsey, both of whom were originally named as defendants but who were dismissed because of the inability to obtain service upon them. Parker admitted signing the note and its default statuts. After a jury verdict for Parker was rendered, the trial court granted McGaha's motion for new trial.

Prior to the transactions leading to this litigation, McGaha had voting control of a corporation called Southern Factors, Inc., by owning stock directly and by owning all the stock of another corporation, Colonial Securities Company, which in turn owned stock in Southern Factors, Inc.

In 1969 Ramsey and one Joe B. King purchased all of McGaha's stock and gave to McGaha a note for $196,500 as payment. As security for the note, the stock certificates were placed in escrow by Ramsey and King subject to the terms of an escrow agreement. Payment default quickly occurred on this original note. Thereafter Parker, Mixon and Ramsey began negotiations with McGaha which led to the execution in May, 1970, of the note here sued upon by which Parker, Mixon and Ramsey promised to pay McGaha $100,000. In return McGaha assigned all of his rights, title and interest in the original $196,500 note to Parker, Mixon and Ramsey (Ramsey being a maker of this note along with Joe King). The original $196,500 note refers to an escrow agreement and purports to incorporate it by reference. Both documents refer to a buy-sell agreement between McGaha and Ramsey and King, but this instrument was never put in evidence.

After making three separate payments of $2,500 on the $100,000 note in accordance with an agreed schedule of payments, the makers, including Parker, defaulted. The default occurred after Parker learned that Southern Factors, Inc., was 'defunct.' The stock certificates remained in escrow.

The first trial resulted in a jury verdict in favor of the defendant, which was set aside by the trial court on motion for new trial filed on behalf of Mr. McGaha. Mr. Parker appealed to this court, and the action of the trial court in setting aside the first verdict was affirmed.

When the case came for retrial, the attorneys representing Mr. Parker, some of whom had been added since the first trial, moved the court on August 23, 1973, that the second trial be conducted under the new Alabama Rules of Civil Procedure. The trial court denied this motion on the ground that the application of the new Rules of Civil Procedure to this case would not be feasible and would work injustice. Again, at a more formal conference with the judge and all attorneys held on September 6, 1973, a written motion to conduct the second trial under the new Alabama Rules of Civil Procedure was filed and again overruled. Appellant-defendant alleges that this was error.

Rule 86 of the Alabama Rules of Civil Procedure states that these rules

'. . . govern all proceedings in actions brought after they take effect and also all further proceedings in actions then pending, except to the extent that in the opinion of the court their application in a particular action pending when the rules take effect would not be feasible or would work injustice, in which event the former procedure applies.'

This is the first case considered by this court in which there has been a controversy as to whether the former rules or the new rules should be applied to a pending action. Since Rule 86 of the Alabama Rules of Civil Procedure contains language almost identical to the federal Rule 86, we look to federal cases for guidance.

A study of the federal cases which have considered this question does not reveal any definitive answers. In Doyle v. Loring, 107 F.2d 337 (6th Cir. 1939) the court dealt with the question rather summarily:

'. . . We are not required to enter into a detailed discussion of the rules. The Rules of Civil Procedure became effective while the suit was pending and whether they should have been applied was in the discretion of the court (Rule 86).' 107 F.2d at 340.

However, in John R. Alley & Co. v. Federal National Bank, 124 F.2d 995 (10th Cir. 1942), the court refused to give the trial judge such unfettered discretion:

'. . . The purpose is evident in the new rules to extend their application, unless for good cause shown, to all proceedings, whether brought prior to their effective date or thereafter. It has been held that the trial court must specifically find that the application of the new rules would be unjust in order for one complaining of their application to raise the question on appeal. Automobile Ins. Co. v. Springfield Dyeing Co., 3 Cir., 109 F.2d 533. No good reason appears why the new rules should not have been applied in passing on the motion to dismiss the counterclaim, and it was error for the court to sustain the motion.' 124 F.2d at 999.

Although Rule 86 leaves it to the opinion of the trial judge as to whether the application of the new rules to a pending action would be feasible or would work injustice, the application of the former rules should be the exception rather than the rule. When it is concluded by a trial judge that the application of the new rules would not be feasible or would work injustice, his reasons for so concluding should be set forth in the record.

We have encountered nothing in the record before us which would indicate that the application of the new rules would not be feasible or would work an injustice. As was previously indicated the trial judge has not favored us with his reason for denying the motion. Since this case must be remanded for new trial, for reasons hereinafter indicated, we suggest that the new rules be employed unless the trial court makes a contrary finding adequately...