Smith v. Combustion Resources Engineering, Inc.

• Decision Date: 20 May 1983
• Citation: 431 So.2d 1249
• Parties: Charles R. SMITH v. COMBUSTION RESOURCES ENGINEERING, INC. 81-1062.
• Court: Alabama Supreme Court

Page 1249

431 So.2d 1249

Charles R. SMITH v. COMBUSTION RESOURCES ENGINEERING, INC.

81-1062.

Supreme Court of Alabama.

May 20, 1983.

William J. Trussell of Church, Trussell & Robinson, Pell City, for appellant.

William D. Scruggs, Jr., and Michael L. Brownfield, Fort Payne, for appellee.

MADDOX, Justice.

We are asked to review several issues here. They are: whether the failure to plead an affirmative defense precludes the party from raising it at the trial; whether it is necessary for a party to produce evidence of the amount of attorney's fees incurred in collecting a promissory note when the note contains a provision specifying the amount of attorney's fees to be paid in the event of a default; and whether a Rule 60(a), ARCP, motion is the appropriate means for correcting a mistake in the name of a party after the trial court has rendered its judgment. We affirm conditionally, because the attorney's fees allowed were excessive.

This action commenced in May 1980, when Combustion Resources Energy, Inc., appellee here, filed a complaint against Charles R. Smith and Mineral Land & Mining Consultants, Inc. (Mineral Land & Mining), on a promissory note in the amount of $50,000 allegedly executed by Smith and guaranteed by Mineral Land & Mining. Both Smith, appellant here, and Mineral Land & Mining, which upon the conclusion of the case was struck as a party, filed a motion to dismiss on June 4, 1980, asserting as grounds that the complaint failed to state a claim upon which relief could be granted. The trial court overruled the motion on July 3, 1980, and allowed Smith and Mineral Land & Mining ten days in which to answer or file further pleadings.

After several continuances, the case was set for trial, and heard ore tenus, on March 29, 1982. At the trial, prior to hearing the evidence, the trial judge asked the defendant's attorney whether a written answer to the complaint had been filed and counsel responded that no answer had been filed. The defendant's attorney requested permission to orally plead the general issue and lack of consideration as defenses to the action, but only the plea of general issue was allowed by the trial court.

On April 2, 1982, the trial court entered a judgment in favor of Combustion Resources and against Smith in the amount of $69,062.50. Smith filed a motion for a new trial on April 30, 1982, which was subsequently amended and set for hearing on July 22, 1982, and thereafter denied on August 3, 1982. Combustion Resources filed a motion under Rule 60(a), ARCP, requesting that the trial court change the name of the plaintiff from Combustion Resources Energy, Inc., to Combustion Resources Engineering, Inc., on the grounds that the abbreviation of "Eng." had been misinterpreted by Combustion Resources' attorney. The Rule 60(a) motion was granted by the trial court on September 10, 1982, and the plaintiff's name was subsequently changed. Smith appeals from the trial court's final decree, the denial of his post trial motion, and the granting of Combustion Resources' Rule 60(a) motion.

I

As to the first issue, appellant argues that the order of the trial court refusing to allow appellant to plead an affirmative defense of lack of consideration at the time of the trial, when no original answer had been filed and no default had been entered, cannot be sustained. Rule 8(c), ARCP, reads as follows:

"In pleading to a preceding pleading, a party shall set forth affirmatively accord and satisfaction, arbitration and award, assumption of risk, contributory negligence, discharge in bankruptcy, duress, estoppel, failure of consideration, fraud, illegality, injury by fellow servant, laches, license, payment, release, res judicata, statute of frauds, statute of limitations, waiver, and any other matter constituting an avoidance or affirmative defense. When a party has mistakenly designated a defense as a counterclaim or a counterclaim as a defense, the court on terms, if justice so requires, shall treat the pleading as if there had been a proper designation."

A lack of consideration is clearly denominated as an affirmative defense; consequently it is required to be specially pleaded under Rule 8(c). See Nash v. Vann, 390 So.2d 301, 303 (Ala.Civ.App.1980). Under the Federal Rules of Civil Procedure, after which our rules are modeled, the consequences of a party's failure to plead an affirmative defense have been explained as follows:

"If an affirmative defense is not pleaded it is waived to the extent that the party who should have pleaded the affirmative defense may not introduce evidence in support thereof, unless the adverse party makes no objection in which case the issues are enlarged, or unless an amendment to set forth the affirmative defense is properly made."

2A J. Moore, Federal Practice § 8.27 at 8-251 (2d Ed.1948). See Funding Systems Leasing Corporation v. Pugh, 530 F.2d 91 (5th Cir.1976). The record shows that during the examination of the first witness, the following occurred:

"Q This note is made to ... well, let me offer it first. I'll offer it as Plaintiff's Exhibit A.

"THE COURT: Mr. Brooks, have you filed an answer in this case?

"MR. SCRUGGS: Just a general issue is all I know of.

"THE COURT: Have you filed an answer in writing?

"MR. BROOKS: No, sir.

"THE COURT: Let the record reflect that no written answer has been filed in the case. The defendant's attorney advises the Court his only answer and defense is the general issue.

"MR. BROOKS: And lack of consideration.

"MR. SCRUGGS: Lack of consideration would be a special defense. We object to any additional plea other than the general issue.

"THE COURT: Normally, a plea of lack of consideration would be a special plea.

"MR. BROOKS: I thought an answer had been filed.

"THE COURT: Mr. Scruggs is entitled to know the defense. Have you offered this into evidence?

"MR. SCRUGGS: I'm now offering Plaintiff's Exhibit A into evidence.

"THE COURT: Mr. Scruggs, are you going to raise any objection to any special defense?

"MR. SCRUGGS: Yes, sir. The only thing I was aware of--by lack of answer--was the general issue.

"THE COURT: All right, I'll sustain it."

The appellant made no attempt to raise the affirmative defense by amendment. His only reference to "lack of consideration" was stated during the colloquy quoted above. The case proceeded to trial on the general issue. We note that counsel for appellee did not object to going to trial on the general issue, even though no formal answer had been filed by the appellant. We would further note that when the trial court dismissed the appellant's Rule 12(b)(6) motion, the court allowed the appellant, as provided under Rule 12(a), ARCP, ten days to file a responsive pleading. The appellant did not do so. The appellant filed no responsive pleading until the day the case was set for trial, when appellant orally asked to be allowed to plead the general issue and lack of consideration. We hold that the trial court did not abuse its discretion in refusing to allow "lack of consideration" to be pleaded as a defense.

II

The appellant next asserts that the appellee is not entitled to collect an attorney's fee as a part of the judgment awarded by the trial court because no evidence was adduced to show the amount of the attorney's fee or that an attorney's fee was ever incurred by the appellee. The law in Alabama, however, is clearly to the contrary in cases in which a specified amount is to be paid as attorney's fees in the event of default and collection. In Vinyard v. Republic Iron & Steel Co., 205 Ala. 269, 87 So. 552 (1921), this Court opined:

" 'And so, too, it is competent for the contracting parties not only to stipulate for a reasonable attorney's fee to be paid by the maker of a note in the event of the collection after default by an attorney, but to fix the amount of the reasonableness of such fee. This proposition is clearly recognized in the cases of Wood & Bros. v. Winship Mach. Co., 83 Ala. 424 [3 So. 757], and Ledbetter v. Vinton, 108 Ala. 644 [18 So. 692].' Stephenson v. Allison, 123 Ala. 439, 450, 26 South. 290, 293.

"The clear holding of those cases is that, where the parties themselves fix the amount of the fee to be paid, it will be presumed, at least prima facie, that it is reasonable in amount, and that the appearance of counsel of record for the obligee establishes the liability of the obligor to pay the fee as a matter of law, without proof thereof. The trial court properly included in the judgment the amounts claimed as attorney's fees, as ascertained and shown by the contract of lease."

205 Ala. at 273, 87 So. at 555.

The promissory note made the basis of this suit contains, as set forth in appellee's brief, the following provision regarding attorney's fees and costs:

"They agree to pay all costs of collection or securing, or attempting to collect or secure, this note, including reasonable attorney's fees of 15 percent of the unpaid debt where the original amount loaned exceeded $300.00."

The note, as previously stated, was in the amount of $50,000, but provided for no interest; however, it did provide for a late charge of 5% in addition to...