Southtrust Bank v. Donely

• Decision Date: 15 July 2005
• Docket Number: No. 1031736.,1031736.
• Citation: 925 So.2d 934
• Parties: SOUTHTRUST BANK v. Lisa Y. DONELY.
• Court: Alabama Supreme Court

Page 934

925 So.2d 934

SOUTHTRUST BANK v. Lisa Y. DONELY.

No. 1031736.

Supreme Court of Alabama.

July 15, 2005.

Rehearing Denied November 10, 2005.

W. Davis Malone III of Farmer, Farmer & Malone, P.A., Dothan, for appellant.

Benjamin M. Bowden of Albrittons, Clifton, Alverson, Moody & Bowden, P.C., Andalusia, for appellee.

SEE, Justice.

SouthTrust Bank appeals from a judgment entered on a jury verdict in favor of Lisa Y. Donely. We affirm in part and reverse and render judgment in part.

Facts¹ and Procedural History

This case involves five certificates of deposit ("CDs") issued by The Bank of Florala between June 1973 and June 1978. The CDs were made payable to "[Herman] Lurie as guardian for Mrs. [Jennie Lurie] Young." The Probate Court of Covington County had declared Young incompetent on September 15, 1970, and the following day issued letters of guardianship to Herman Lurie, her brother. Donely is Young's daughter. Through a series of mergers and name changes, SouthTrust acquired The Bank of Florala. The parties have stipulated that SouthTrust assumed The Bank of Florala's deposit liabilities.

On October 8, 1978, Young died, and on October 12, 1978, her will was admitted to probate. Donely was the only heir under Young's will. On December 14, 1978, seven CDs were delivered to the executor of Young's estate. During the administration of the estate, one of the CDs was collected by the executor. On June 29, 1979, the executor delivered the six remaining CDs to Donely, who signed a document acknowledging her receipt of the CDs. On July 26, 1979, the estate was settled and closed.

Donely kept the six CDs locked in a filing cabinet at her home from June 29, 1979, the date she received them from the estate, until February 1999. During this time, one of the CDs disappeared.

Sometime around the first of March 1999, Donely sent the five remaining CDs to Lurie and asked him to cash them and to put the money in her savings account at SouthTrust. Lurie told Donely that SouthTrust had refused to cash the CDs; however, Lurie later testified that he did not want to get involved in the matter and that he never presented the CDs to SouthTrust for payment.

On October 20, 1999, Donely wrote Wallace Malone, then chief executive officer of SouthTrust, and demanded that SouthTrust redeem the CDs; Donely enclosed photocopies of the CDs with her letter. She explained in her letter that SouthTrust had told Lurie, and that Lurie had in turn informed her, that someone must have cashed the CDs in the 1970s. In response, on October 26, 1999, John D. Buchanan, then SouthTrust's chief legal officer, wrote Donely a letter indicating that SouthTrust was looking into the matter. On December 1, 1999, Donely wrote Buchanan another letter, stating that her husband had contacted someone with the customer assistance group at the office of the Comptroller of the Currency, who advised her husband that Donely should allow the bank 45 days to research a request for redemption before making an official complaint to the customer assistance group and seeking their intervention, and that she therefore expected a response by December 10. On December 10, 1999, John Stack, then the market chief executive officer of the Covington County Area of SouthTrust, wrote Donely and notified her that because SouthTrust had no record of the CDs being current liabilities of the Bank, SouthTrust would not be able to redeem the CDs. Donely made an official complaint to the customer assistance group, which confirmed the information in Stack's letter.

On March 13, 2001, Donely sued SouthTrust, alleging conversion, breach of contract, open account, and a violation of § 7-3-412, Ala.Code 1975.² On May 2, 2001, SouthTrust answered. On August 15, 2002, SouthTrust moved to amend its answer and on November 26, 2002, the trial court granted that motion. On January 13, 2003, SouthTrust moved for a summary judgment, which the trial court denied.

On April 9, 2003, Donely moved to amend her complaint to add a claim seeking the imposition of a constructive trust. SouthTrust opposed that motion. The trial court, on May 9, 2003, allowed Donely to amend her complaint, and SouthTrust answered the amended complaint on May 22, 2003.

On January 26-29, 2004, this case was tried before a jury. At the close of Donely's case-in-chief and again after the presentation of all of the evidence, SouthTrust moved for a judgment as a matter of law ("JML"). The trial court entered a JML in favor of SouthTrust on Donely's open-account claim and her claim that SouthTrust had violated Ala.Code 1975, § 7-3-412. The trial court instructed the jury on the conversion and the breach-of-contract claims and on SouthTrust's affirmative defenses.³ On January 29, 2004, the jury returned a verdict in favor of Donely on her claims of conversion and breach of contract and awarded damages in the amount of $176,090.20: $51,090.20⁴ in compensatory damages on both the conversion and the breach-of-contract claims, $25,000 in damages for mental anguish, and $100,000 in punitive damages on the conversion claim.⁵ The trial court entered a judgment on that verdict. On February 2, 2004, the trial court entered an order dismissing as moot Donely's claim seeking imposition of a constructive trust.

On March 1, 2004, SouthTrust moved for a JML or, in the alternative, a new trial. The trial court, after a hearing, denied SouthTrust's motions. SouthTrust appeals.

Issues

SouthTrust argues that the trial court erred in (1) allowing Donely's conversion claim to go to the jury, and (2) entering a judgment on the jury's verdict awarding compensatory damages calculated by using compound interest.

Standard of Review

In determining whether the trial court erred in denying a motion for a JML, this Court applies the same standard the trial court used initially in granting or denying the motion. See Ex parte Alfa Mut. Fire Ins. Co., 742 So.2d 1237 (Ala. 1999).

"Regarding questions of fact, the ultimate issue is whether the nonmovant has presented sufficient evidence to allow the case or issue to be submitted to the jury for a factual resolution. In an action filed after June 11, 1987, the nonmovant must present substantial evidence to withstand a motion for JML. A reviewing court must determine whether the party who bears the burden of proof has produced substantial evidence creating a factual dispute requiring resolution by the jury. In reviewing a ruling on a motion for a JML, this Court views the evidence in the light most favorable to the nonmovant and entertains such reasonable inferences as the jury would have been free to draw. If the question is one of law, this Court indulges no presumption of correctness as to the trial court's ruling."

742 So.2d at 1240 (citations omitted).

"Additionally, this Court reviews the grant or denial of a motion for new trial under the standard set out in Alpine Bay Resorts, Inc. v. Wyatt, 539 So.2d 160, 162-63 (Ala. 1988):

"`[W]hen the evidence meets the "sufficiency" test, jury verdicts are presumed correct, and this presumption is strengthened by the trial court's denial of a motion for a new trial. Therefore, a judgment based upon a jury verdict and sustained by the denial of a post-judgment motion for a new trial, will not be reversed on a weight-of-the-evidence ground unless it is "plainly and palpably" wrong.'"

Thompson Props. 119 AA 370, Ltd. v. Birmingham Hide & Tallow Co., 897 So.2d 248, 261 (Ala.2004). Analysis

SouthTrust argues that "[a] certificate of deposit is a contract between the bank and its customer where the customer makes a general deposit with the bank and, in return, receives a certificate wherein the bank promises to repay the funds deposited at a particular interest rate and at a specified time." (SouthTrust's brief, p. 19.) Therefore, SouthTrust argues, a debtor-creditor relationship forms when a bank issues a certificate of deposit to a customer. See Montgomery v. Smith, 226 Ala. 91, 145 So. 822 (1933). SouthTrust further argues that a certificate of deposit evidences a loan from the depositor to the bank, vesting title to the deposited money in the bank. Clark v. Young, 246 Ala. 529, 21 So.2d 331 (1945). Therefore, SouthTrust argues, "[a]n obligation to pay or a debt is ordinarily enforceable by assumpsit or a contract action, but such will not support an action for conversion." McCain v. P.A. Partner's Ltd., 445 So.2d 271, 273 (Ala.1984)(stating that plaintiff had no immediate property right in her payroll check at the time her employer withheld it because there had been no delivery). SouthTrust also cites Green Tree Acceptance, Inc. v. Tunstall, 645 So.2d 1384, 1387 (Ala.1994)("a conversion will not lie when there is merely a relationship of debtor and creditor"), and Knox v. Moskins Stores, Inc., 241 Ala. 346, 348, 2 So.2d 449, 450 (1941)(stating that there is no conversion when an employer allegedly erroneously assigns an employee's wages).

Finally, SouthTrust argues that, even if this Court finds that the conversion claim was properly submitted to the jury, Donely did not prove conversion. SouthTrust argues that in order for there to be a conversion, SouthTrust must have converted the actual CDs, not the funds deposited in the bank and represented by the CDs. SouthTrust argues that, in order for Donely to sustain her conversion claim, she must produce substantial evidence that she is entitled to "specific money capable of identification." See Covington v. Exxon Co., U.S.A., 551 So.2d 935, 938 (Ala.1989). A SouthTrust branch administrator, Danny Bess, testified that when the CDs were issued, the money received by the bank was not segregated or placed in a special account but was commingled in a "kitty" or pool with all other deposits. Therefore, SouthTrust argues, Donely cannot prove her conversion claim because the funds she deposited were commingled with other funds and were not placed in a special account. See Green Tree Acceptance, Inc. v....