Russellville Production Credit Ass'n v. Frost

• Decision Date: 14 February 1986
• Citation: 484 So.2d 1084
• Parties: RUSSELLVILLE PRODUCTION CREDIT ASSOCIATION and Braxton Craig v. C.F. FROST. 84-660.
• Court: Alabama Supreme Court

Page 1084

484 So.2d 1084

RUSSELLVILLE PRODUCTION CREDIT ASSOCIATION and Braxton Craig v. C.F. FROST.

84-660.

Supreme Court of Alabama.

Feb. 14, 1986.

W.H. Rogers, Moulton, for appellants.

Sherman Powell, Jr., Decatur, for appellee.

HOUSTON, Justice.

This is an appeal from a judgment in favor of the plaintiff, C.F. Frost, and against the defendants, Russellville Production Credit Association (hereinafter R.P.C.A.) and Braxton Craig. We reverse.

Frost is a 69-year-old farmer with a fourth-grade education. He has farmed all of his life except for a period of ten years when he operated a store. He does not own his own farmland, but rents land for that purpose.

On November 22, 1983, Frost went to the Lawrence County office of the R.P.C.A. and met with Craig, who was then manager of that R.P.C.A. branch. Frost had been doing business with the R.P.C.A. for about fifteen years. At the time of this meeting with Craig, Frost was indebted to R.P.C.A. on a three-year equipment note and on a crop loan he had taken out for 1983, which included unpaid portions of crop loans for preceding years. At the meeting, Frost paid $2,373.36 from proceeds of his meager soybean crop (worst in the county) to R.P.C.A. to reduce that indebtedness. R.P.C.A. returned $1,975 of this money to Frost for him to pay the balance of his 1983 crop rent. Frost testified that he had the following conversation with Craig during this meeting:

"And I showed him the receipt and I told him, I said 'Braxton, I know I ain't made what I was supposed to,' but I says 'I need to know whether I can make a crop another year or not, whether I can get furnished where I can rent my land.' And he says, 'Yeah, Mr. Frost, we will go along with you.' He says, 'we are all in the same boat'...."

Frost then told Craig that he intended to rent some farmland for 1984, and he did so.

Some weeks later, Craig asked Frost to consider selling some of his equipment, since Frost and his son-in-law were farming together and had more equipment than was needed, and applying the proceeds from that sale to his existing R.P.C.A. debt. Craig did not order Frost to sell any equipment, nor did he tell him the equipment had to be sold within a particular time or for a particular sum. Frost testified that he had already been considering a sale of this equipment before this meeting with Craig. Soon after, Frost sold some of his equipment at prices he agreed to and applied the proceeds from the sales to the three-year equipment note. The equipment sold was security for the equipment note.

When Frost went to the R.P.C.A. on January 30, 1984, Ken Baggett, acting office manager, told him that in order to secure a 1984 crop loan, Frost would have to give R.P.C.A. a mortgage on his house and the land surrounding it as additional security. The house and land were free and clear of all indebtedness. Frost refused to give R.P.C.A. a mortgage and attempted to obtain a loan elsewhere from the Farmers Home Administration (FHA), and several banks; however, none of these other institutions would make Frost a crop loan unless he secured this with a mortgage on his house and land. Frost did not obtain a crop loan for 1984, and he did not farm that year. Frost sublet the land he had leased for 1984 to his son-in-law, who then became obligated to pay the rents.

Frost brought suit against the R.P.C.A. and Craig by a two-count complaint alleging breach of contract in count one and alleging fraud in count two. At the close of Frost's evidence, R.P.C.A. and Craig moved for directed verdict as to count two. This motion was renewed at the close of all the evidence. Both motions were denied. The jury returned a general verdict against the R.P.C.A. and Craig in the amount of $13,500. R.P.C.A. and Craig moved for judgment notwithstanding the verdict (J.N.O.V.), or in the alternative, for new trial. This motion was overruled.

We must answer this question: Did the trial court err when it denied R.P.C.A.'s and Craig's motion for J.N.O.V., or in the alternative, for new trial? We hold that it did; therefore, we pretermit discussion of the other issues presented.

A motion for J.N.O.V. requires the trial court to review its earlier ruling on a motion for directed verdict, since both motions test the sufficiency of the evidence. Wright v. Fountain, 454 So.2d 520 (Ala.1984). The sufficiency of the evidence standard applied in this state is the scintilla rule. Carnival Cruise Lines v. Snoddy, 457 So.2d 379 (Ala.1984). The question thus becomes whether there was a scintilla of evidence of fraud for that claim to go to the jury.

In P & S Business, Inc. v. South Central Bell Telephone Co., 466 So.2d 928 (Ala.1985), this Court wrote:

"The elements of fraud are (1) a false representation (2) of a material existing fact (3) relied upon by the plaintiff (4) who was damaged as a proximate result of the alleged misrepresentation. Earnest v. Pritchett-More, Inc., 401 So.2d 752 (Ala.1981). If the fraud is based upon a promise to perform or abstain from performing in the future, two additional elements must be proved: (1) the defendant's intention, at the time of the alleged misrepresentation, not to do the act promised, coupled with (2) an intent to deceive. Clanton v. Bains Oil Co., 417 So.2d 149 (Ala.1982)."

466 So.2d, at 930.

Examining the evidence most favorably to the plaintiff in this case, we cannot find a scintilla of evidence that R.P.C.A. or Craig intended not to do the act promised, at the time they agreed "to go along with [Frost]" for the 1984 crop loan. Frost argues that in reliance upon R.P.C.A.'s representation that he would be given a crop loan for 1984, he entered into lease agreements, for which he continues to be obligated, and he sold some of his farm equipment to reduce his existing debt. But the promise to give Frost a crop loan for 1984 was a promise to perform in the future. No terms were discussed; no loan application was completed. Therefore, in order for Frost to prove the fraud as alleged, Frost was required to show that the R.P.C.A. and Craig had no intention of making him a loan when, on November 22, 1983, Craig said, "Yeah, Mr. Frost, we will go along with you." However, Frost did not introduce any evidence, either direct or circumstantial, tending to show this. R.P.C.A. and Craig never said they would not lend Frost the money needed for a 1984 crop. In fact, the evidence shows that R.P.C.A. would readily have lent Frost the money for his 1984 crop, if he had agreed to secure this loan with a mortgage on his house and land.

The failure to perform a promised act is not in itself evidence of intent to deceive at the time a promise is made. P & S Business, Inc. v. South Central Bell Telephone Co., supra. If it were, the mere breach of a contract would be tantamount to fraud. Id.

A plaintiff may meet this burden of proving a present intent not to perform a future act as promised by circumstantial evidence, but the circumstances shown by the evidence of record must be such that the jury, as reasonable persons, may fairly and reasonably infer the ultimate fact sought to be proved from the evidence presented. Clanton v. Bains Oil Co., 417 So.2d 149 (Ala.1982). Frost argues that two circumstances surrounding Craig's representation provided a scintilla of evidence that R.P.C.A. did not intend to perform its promise when Craig made it. Frost contends that one such circumstance was that Craig knew before the promise was made that...