Shoals Ford, Inc. v. Clardy

• Decision Date: 18 October 1991
• Citation: 588 So.2d 879
• Parties: SHOALS FORD, INC. v. Maxine CLARDY, as conservator for Bobby Joe Clardy, non compos mentis. 1900828.
• Court: Alabama Supreme Court

Page 879

588 So.2d 879

SHOALS FORD, INC. v. Maxine CLARDY, as conservator for Bobby Joe Clardy, non compos mentis.

1900828.

Supreme Court of Alabama.

Oct. 18, 1991.

Lindsey Mussleman Davis of Holt, McKenzie, Holt & Mussleman, Florence, for appellant.

Daniel E. Boone of Hill, Young & Boone, Florence, for appellee.

ON APPLICATION FOR REHEARING

HOUSTON, Justice.

This Court's original opinion dated August 23, 1991, is withdrawn, and the following is substituted therefor:

Shoals Ford, Inc., appeals from a judgment based on a jury verdict in favor of Maxine Clardy, as conservator for Bobby Joe Clardy. We affirm.

Ms. Clardy sued Shoals Ford, seeking to have a transaction entered into between Shoals Ford and her husband Bobby Joe for the purchase of a 1989 Ford pickup truck set aside and to recover the monies paid by Bobby Joe to Shoals Ford, alleging that Bobby Joe suffered from a manic-depressive disorder ¹ and was in a manic state when he transacted with Shoals Ford to purchase the truck and also alleging that Shoals Ford was negligent, ² wanton, and willful in dealing with Bobby Joe. She sought compensatory damages, punitive damages, and rescission of the contract. Shoals Ford answered, asserting that it had acted without notice of Bobby Joe's incompetency, that the conservatorship proceeding was not instituted until nearly a month after Bobby Joe had purchased the truck, that the family members had been contributorily negligent in assisting Bobby Joe in purchasing the truck, and that there had been an accord and satisfaction. It amended its answer, adding the affirmative defense of estoppel and pleading "that there was no failure of consideration or undue influence taken of" Bobby Joe in his purchase of the truck and that Ms. Clardy failed to mitigate damages. Both Shoals Ford and Ms. Clardy filed motions for summary judgment, which the trial court denied. Both Shoals Ford and Ms. Clardy moved for a directed verdict, which the trial court denied. The jury returned a verdict in favor of Ms. Clardy in the amount of $6,715.02 in compensatory damages and $18,000 in punitive damages. Shoals Ford filed a motion for new trial or, in the alternative, for judgment notwithstanding the verdict, which the trial court denied. Shoals Ford appeals.

Shoals Ford contends that the evidence was insufficient to sustain the jury's verdict, because, it argues, Ms. Clardy failed to establish the elements necessary for recovery in this case, specifically those elements relating to the incapacity of Bobby Joe at the time he consummated the transaction and took possession of the truck. It contends that the contract was completed, that the truck was delivered, and that Bobby Joe took possession of the truck, all on April 3, 1989, when all of the paperwork was finalized, and that, on that date, Bobby Joe was not incompetent.

Ms. Clardy contends that the evidence establishes that Bobby Joe completed the transaction on April 5, 1989, when he took actual possession of the truck, i.e., when he drove the truck off the lot, and that, on that date, he was incompetent to handle his affairs.

The well-settled law in Alabama is that contracts of insane persons are wholly and completely void. See, Williamson v. Matthews, 379 So.2d 1245 (Ala.1980); Ala.Code 1975, § 8-1-170. In McAlister v. Deatherage, 523 So.2d 387, 388 (Ala.1988), quoting from Weaver v. Carothers, 228 Ala. 157, 160, 153 So. 201, 202 (1934), this Court explained the cognitive (understanding) test that Alabama adopted in order to determine whether a contract can be avoided because of insanity:

" '[To] avoid a contract on the ground of insanity, it must be satisfactorily shown that the party was incapable of transacting the particular business in question. It is not enough that he was the subject of delusions not affecting the subject-matter of the transaction, nor that he was, in other respects, mentally weak. A party cannot avoid a contract, free from fraud or undue influence, on the ground of mental incapacity, unless it can be shown that his insanity ... was of such character that he had no reasonable perception or understanding of the nature and terms of the contract.' "

Viewing the tendencies of the evidence most favorably to the prevailing party and indulging all reasonable inferences that the jury was free to draw, as required under our applicable standard of review, see Warren v. Ousley, 440 So.2d 1034 (Ala.1983), we find the following:

On April 1, 1989, Bobby Joe talked to Kelly Cole of Shoals Ford concerning the purchase of a truck; on that day he filled out the initial papers. By April 3, 1989, all the necessary paperwork had been completed and Bobby Joe had signed the necessary documents, but when he went to pick up the truck, he was advised that because of his poor credit rating, Shoals Ford would require a $10,500 down payment instead of the $5,000 down payment previously discussed. On April 5, 1989, Bobby Joe returned to Shoals Ford with the down payment and, at that time, picked up the truck. ³

According to Ms. Clardy, Bobby Joe had suffered from a manic-depressive disorder for 15 years and was taking lithium to control his condition. She said that she observed in mid-March 1989 that Bobby Joe was becoming manic, but she said that because he was not violent and had not endangered himself or anyone else at that time, she could not involuntarily commit him for treatment. On April 5, 1989, Ms. Clardy received a telephone call from Leslie Clardy Daniel, Ms. Clardy and Bobby Joe's daughter ("the daughter"), concerning Bobby Joe's condition. The daughter told Ms. Clardy that Bobby Joe had threatened her and had obtained $500 from her to make the down payment on a truck he was going to buy from Shoals Ford. Subsequently, Ms. Clardy drove to Shoals Ford and noticed that the truck Bobby Joe had previously looked at, in her presence, was still on the lot. At that time she spoke with a salesperson, and she later telephoned a sales representative with Shoals Ford, concerning Bobby Joe's incompetency and asked that they not allow Bobby Joe to take the truck--that is, she told them that Bobby Joe was not working, that he was ill and would be committed, and that the truck could not be insured. Thereafter, on April 5, 1989, Shoals Ford gave Bobby Joe possession of the truck after he gave it $10,000 as the down payment. ⁴ Ford Motor Credit Company eventually repossessed and sold the truck and mailed Ms. Clardy a check for $3,284.98, which left a balance of $6,715.02 of the $10,000 down payment unrecovered by Ms. Clardy.

According to the daughter, when Bobby Joe visited her around April 1, 1989, she tried to get him to resume taking his medicine. He became agitated and went out of control, threw his medicine into a burning pile of leaves, and then left. Around 5 A.M. on April 5, 1989, Bobby Joe returned to the daughter's house, banged on the doors and windows until he awakened the household, threatened their lives, and forced the daughter to write him a check for $500. When he left, the daughter telephoned 911 to report the incident and, as soon as the probate office opened, she telephoned the probate judge to inform him of the situation. She then went to her attorney's office, explained the situation to him, and asked that he prepare a petition to have Bobby Joe involuntarily committed for treatment. While in her attorney's office, she notified the bank to stop payment on the $500 check she had written to Bobby Joe and then called to notify Shoals Ford of Bobby Joe's mental condition, telling a representative that Bobby Joe would be coming in to purchase a truck, specifically describing the particular truck; telling the representative that Bobby Joe was not healthy; and telling the representative that she had filed a petition to have Bobby Joe involuntarily committed. She also asked Shoals Ford to call the Lauderdale County sheriff, a family member, her attorney, Riverbend Center for Mental Health, or the probate office for verification in the event Bobby Joe did appear at the dealership. She further explained to the representative that "buying sprees" was a symptom of Bobby Joe's illness, that he would not be able to make the payments, and that he was not insurable. When she notified Shoals Ford of the situation, it merely stated that if Bobby Joe had the money to purchase the truck, it was "none of her concern." Around 10 A.M. on April 5, 1989, she drove by Shoals Ford and, noticing that the truck was still there, she once again telephoned "to plead" with Shoals Ford to notify her when Bobby Joe arrived. At this time, the representative told her that "it was really not of concern to Shoals Ford."

According to Dr. Joseph W. Glaister, a local psychiatrist who had treated Bobby Joe since 1984, Bobby Joe suffered from a manic depressive illness, manic type, recurrent. Dr. Glaister testified that Bobby Joe's illness was episodic, that his competency could come and go, and that there were stages of the illness when, on mere observation, one might think that Bobby Joe was a slightly excessive, overly friendly individual. He further testified that Bobby Joe had been admitted to the hospital after regular working hours on April 5, 1989, and that when he saw Bobby Joe on April 6, 1989, Bobby Joe was incompetent. Furthermore, according to the testimony of Dr. Glaister, he could not visualize Bobby Joe being otherwise on April 5, 1989.

The daughter's attorney testified that he remembered the events of April 5, 1989, when the daughter contacted him, when he obtained a history of the events of the day, and when he prepared the commitment petition and other documents that were filed with the probate court on that morning. He stated that he did not prepare and file the petition to appoint Ms. Clardy as conservator and limited guardian for ...