Ryan v. Acuff

• Decision Date: 22 July 1983
• Citation: 435 So.2d 1244
• Parties: Clyde H. RYAN v. John D. ACUFF. 82-90.
• Court: Alabama Supreme Court

Page 1244

435 So.2d 1244

Clyde H. RYAN v. John D. ACUFF.

82-90.

Supreme Court of Alabama.

July 22, 1983.

Aubrey O. Lammons of Lammons, Bell & Sneed, Huntsville, for appellant.

E. Cutter Hughes, Jr. and M.H. Lanier of Lanier, Shaver & Herring, Huntsville, for appellee.

MADDOX, Justice.

The only issues on this appeal involve evidentiary rulings made by the trial judge in a suit for breach of an oral agreement to form a joint venture to develop land.

Around the first part of 1980, the plaintiff/appellant Clyde Ryan, a building contractor, and the defendant/appellee John Acuff, began discussions about the possibility of forming a joint venture to develop parcels of land owned by the parties. Acuff owned approximately seventy-seven acres and Ryan approximately four acres of land. The property was contiguous and had no mortgages or other encumbrances.

Ryan testified that he had built over one hundred residential buildings and one commercial building in Huntsville, and that these projects had been financed through Towne Realty, Inc., which was principally owned by him. Acuff was a retired banker who had also previously developed property.

An engineering firm was hired to do preliminary work on the proposed subdivision; the parties contributed equally to all expenses incurred in these engineering studies. Ryan met with the chairman of the City Planning Commission on several occasions to discuss the possibility of the development, and also met with a local banker to discuss financing. There were at least three meetings between the parties to discuss the possible joint venture, but there was conflict in the testimony as to who had made the initial offers to form the joint venture. Ryan had his attorney draft at least three written proposals for the joint venture, and although Ryan signed one of the proposed agreements, Acuff refused to sign any. At a meeting between Ryan and Acuff attended by attorneys for the parties, Acuff's attorney recommended that Acuff not enter into the venture because of financing problems, Acuff's antipathy to mortgaging his property, and the disparity of assets each party was to convey to the venture.

The written proposal signed by Ryan would have required each party to convey his property to a corporation owned by Ryan. In return each party would receive an equal number of shares of corporate stock and a mortgage from the corporation. No decision had been reached as to how the venture was to be financed, how approval would be gained from the appropriate city agencies, nor how access would be obtained, as the property was landlocked. Ryan had orally made the agreement contingent on access. No deeds or mortgages were ever drawn on the property, nor were descriptions attached to the proposal which was signed by Ryan only.

During this same period the joint venture was being discussed, Acuff was rebuilding a commercial building, which had burned, on a lot not connected with the property described above. The building was to be rented by the previous tenant, Firestone, Inc., which had provided plans for the building. Ryan unquestionably aided in the construction of this building, but there was conflict in the testimony regarding Ryan's participation in this project, and its connection with the alleged joint venture. Ryan claimed he had agreed to act as contractor for a "consulting fee" and expenses. The fee was for $2,000 which Ryan claimed was far below what his services were worth. No testimony was admitted as to the actual worth of these services. According to Ryan, this work was completed as a part of the overall joint venture agreement, but Acuff disputed this and testified there was no connection between the two developments, that Ryan was only a "helper" and the $2,000 paid Ryan was payment in full for his services. Acuff introduced two checks endorsed by Ryan which totaled $2,000 with a notation "paid in full" for services on Firestone building on the second check. Acuff also introduced a building permit on the building which had been obtained by another contractor. Acuff also offered depositional testimony of Ryan's attorney that the construction of the commercial building was not contingent on the joint venture.

Ryan originally sued for specific performance of a joint venture agreement and breach of a joint venture agreement and claimed damages for "loss of prospective profits." He repeatedly amended his complaint and at one time it contained seven separate counts. At trial, however, the case was tried before a jury on three counts; one for fraud and deceit, one for work and labor done, and one for breach of a joint venture agreement with damages sought for "loss of prospective profits." The joint venture count did not include Ryan's work on the commercial building. At the close of the evidence, Ryan amended his breach of contract claim and prayed for $35,000 in damages for work and labor done in furtherance of an oral joint venture agreement. The trial court, on motion, directed verdicts for Acuff on the fraud and deceit count and on the work and labor done count. On appeal, Ryan does not raise any of these issues regarding those rulings.

The plaintiff's case was submitted to the jury on the question of whether there had existed an oral contract between the parties to form a joint venture to develop land. The jury found for the defendant Acuff.

On appeal, Ryan claims the trial judge erroneously admitted evidence which was prejudicial to his case; we address these evidentiary issues only.

I

We first address the question of the admissibility of the income tax returns of Towne Realty, Inc., which was not a party to the suit. On direct examination, Ryan introduced evidence of the cost of developing the property, and on cross-examination, testified the cost of development would be $1,300,000. He was then asked whether he personally could contribute a similar amount to the venture and answered in the negative. He was then asked if the money was available through his corporation and he answered: "I don't know, I don't have my tax records." No objection was made to these questions by counsel for Ryan. Later in the cross-examination of Ryan, Acuff's counsel offered the previous three years' tax returns of Towne Realty, Inc. into evidence. Counsel for Ryan objected to the admission of the income tax returns on the ground that the evidence was irrelevant because Towne Realty, Inc. was not a party. The trial judge overruled the objection. Acuff also offered into evidence the personal tax returns of Ryan for the same years, and they were admitted without objection.

On appeal, Ryan argues that admission of the tax returns for Towne Realty, Inc. was error. On the one hand, he argues that Towne Realty, Inc. was not a party to the litigation or even remotely involved; he claims that the evidence was inadmissible on this ground. On the other hand, he argues the admission of the evidence was error because the financial condition of the parties is not material, and the admission of Towne Realty's income tax return constituted an admission of his financial condition.

Acuff argues the records were material because his primary reason for not entering into an agreement with Ryan was Ryan's financial condition, and that Ryan had made his financial condition material on the question of whether there was an oral agreement to form a joint venture; therefore, argues Acuff, Ryan's financial condition was probative of whether there was even a possibility of an agreement. We find no prejudicial error in the admission of these returns. Trial judges have wide discretion to exclude or admit evidence even of minor probative value on issues litigated in the cases. The test is that the evidence must only shed light on the main inquiry, and not withdraw attention from the main inquiry. Cherry v. Hill, 283 Ala. 74, 214 So.2d 427 (1968); see also, C. Gamble, McElroy's Alabama Evidence § 21.01(6) (3rd Ed.1977).

Here, there was evidence that Ryan was the alter ego of the corporation, Towne Realty, Inc., and that Ryan's career as a builder in Huntsville had been conducted through the corporation, and it would have been through the corporation that financing would have been obtained for the development. Ryan's capability to perform the proposed joint venture was an issue at trial, particularly his ability to get financial backing.

We also note that a number of communications made between Ryan and Acuff involved Towne Realty. The cost estimate was prepared in the name of Towne Realty; two expense checks for "preliminary" work were drawn on Towne Realty's account, and the letter written by Ryan to Acuff terminating their business relationship was done in the name of Towne Realty. There was also evidence that the last joint venture engaged in by Ryan was carried out in the name of Towne Realty. As w...