St. Clair Federal Sav. Bank v. Rozelle

• Decision Date: 10 February 1995
• Citation: 653 So.2d 986
• Parties: ST. CLAIR FEDERAL SAVINGS BANK v. Charles Edward ROZELLE and Montine D. Rozelle. 1930893.
• Court: Alabama Supreme Court

Page 986

653 So.2d 986

ST. CLAIR FEDERAL SAVINGS BANK v. Charles Edward ROZELLE and Montine D. Rozelle.

1930893.

Supreme Court of Alabama.

Feb. 10, 1995.

Rehearing Denied March 24, 1995.

F.A. Flowers III and James A. Taylor, Jr. of Burr & Forman, Birmingham, Walter W. Kennedy III of Church, Kennedy & Seay, P.C., Pell City, for appellant.

William W. Lawrence of Wooten, Thornton, Carpenter, O'Brien, Lazenby & Lawrence, Marcus D. Owsley of Robbins, Owsley & Wilkins, Talladega, for appellees.

BUTTS, Justice.

Charles Edward Rozelle and his wife Montine D. Rozelle sued St. Clair Federal Savings Bank (hereinafter referred to as "the Bank"), alleging breach of contract, promissory fraud, ordinary fraud, and violations of the Alabama Uniform Commercial Code ("UCC"). At the close of the Rozelles' case, and again at the close of all the evidence, the Bank moved for a directed verdict on the promissory fraud claim and also moved to dismiss the breach of contract and UCC claims. The trial court denied the directed verdict motion, but granted the motion to dismiss, and then charged the jury on promissory fraud and ordinary fraud. The jury returned the following verdict in favor of the Rozelles: "We, the jury, find the issues in favor of the Plaintiffs and against the Defendant and assess their damages as follows: Compensatory or Actual Damages $125,000; Punitive Damages $0; Total Damages $125,000." The trial court entered a judgment on the verdict and then denied the Bank's subsequent motion for a judgment notwithstanding the verdict and its motion to alter, amend, or vacate the judgment. The Bank appeals.

The Bank argues that the trial court erred in refusing to direct a verdict in its favor on the fraud claim and in denying its motion for a J.N.O.V.

"The standard of review for the denial of motions for a directed verdict and a judgment notwithstanding the verdict is whether the party with the burden of proof has produced sufficient evidence to require a jury determination." Macon County Comm'n v. Sanders, 555 So.2d 1054, 1056 (Ala.1990). For actions filed after June 11, 1987, the standard of review applicable to a motion for a directed verdict or a J.N.O.V. is the "substantial evidence rule" set out at Ala.Code 1975, § 12-21-12(d). "[S]ubstantial evidence is evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co., 547 So.2d 870, 871 (Ala.1989). This Court must view all the evidence in a light most favorable to the nonmovant and must entertain such reasonable inferences as the jury would be free to draw from the evidence. Williams v. Allstate Ins. Co., 591 So.2d 38 (Ala.1991).

The Rozelles' promissory fraud claim was predicated on an alleged promise to perform a future act. In First Bank of Boaz v. Fielder, 590 So.2d 893 (Ala.1991), this Court addressed the nature of such a fraud claim:

" ' "The only basis upon which one may recover for fraud, where the alleged fraud is predicated on a promise to perform or abstain from some act in the future ... is when the evidence shows that, at the time ... the promises of future action or abstention were made, the promisor had no intention of carrying out the promises, but rather had a present intent to deceive. Robinson v. Allstate Insurance Company, 399 So.2d 288 (Ala.1981). If such intent is not substantiated by the evidence, the fraud claim should not be submitted to the jury. The failure to perform, alone, is not evidence of intent not to perform at the time the promise was made. If it were, a mere breach of contract would be tantamount to fraud. Old Southern Life Insurance Co. v. Woodall, 295 Ala. 235, 326 So.2d 726 (1976)." ' "

590 So.2d at 897, quoting earlier cases. See, also, Hearing Systems, Inc. v. Chandler, 512 So.2d 84 (Ala.1987), and Purcell Co. v. Spriggs Enterprises, Inc., 431 So.2d 515 (Ala.1983).

The evidence, viewed most favorably to the Rozelles, shows that the Rozelles and their son Mark Rozelle borrowed $150,000 from the Bank to purchase restaurant equipment and gave the Bank a promissory note in that amount. To secure the note, the Rozelles executed a mortgage on their residence and certain real estate and executed a UCC-1 financing statement on the equipment. Ray Miller, the president of the Bank, represented that the equipment was to be the primary collateral on the loan and that, in the event of default, it would be repossessed and sold, with the proceeds applied to the debt before the mortgage would be subject to foreclosure. Miller made...