Wallace v. Marr

• Court: Alabama Supreme Court
• Writing for the Court: PER CURIAM; HORNSBY; MADDOX; MADDOX
• Citation: Wallace v. Marr, 561 So.2d 1104 (Ala. 1990)
• Decision Date: 12 April 1990
• Parties: Gerald Oscar WALLACE v. Thomas Marshall MARR. 88-1648.

Page 1104

561 So.2d 1104

Gerald Oscar WALLACE v. Thomas Marshall MARR.

88-1648.

Supreme Court of Alabama.

April 12, 1990.

Ted Taylor and Leah O. Taylor, Prattville, for appellant.

Richard Jordan and Randy Myers, Montgomery, for appellee.

PER CURIAM.

This case concerns the ownership of certain stock in the Macon County Greyhound Park, Inc. Plaintiff Wallace alleges that he and defendant Marr had an agreement, and that as a result of that agreement the defendant holds that stock as his nominee.

The issue before us is whether the trial court erred in entering summary judgment for the defendant. Summary judgment is proper only if there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Rule 56, A.R.Civ.P. We must determine whether the alleged agreement to hold stock as a nominee is in violation of the public policy of Alabama and the disclosure provisions in Act No. 575, Ala. Acts 1983, and is, therefore, void and unenforceable.

We have carefully examined the record in this case and the applicable statute. We are compelled to affirm the summary judgment on the authority of Act No. 575, Ala. Acts 1983, Derico v. Duncan, 410 So.2d 27 (Ala.1982), and Colston v. Gulf States Paper Corp., 291 Ala. 423, 282 So.2d 251 (1973).

AFFIRMED. ¹

HORNSBY, C.J., and JONES, SHORES and ADAMS, JJ., concur.

MADDOX, J., dissents.

STEAGALL and KENNEDY, JJ., recused.

MADDOX, Justice (dissenting).

This suit concerns the validity of an alleged agreement Gerald Wallace claimed he had with Milton McGregor involving the ownership of certain stock in Macon County Greyhound Park, Inc.

The specific legal question presented on this appeal from a summary judgment is whether the trial court erred in concluding that, as a matter of law, the alleged agreement was void and unenforceable because it violated the public policy of this State as reflected in the legislative act that permitted the operation of the greyhound dog track in the first instance.

This action began on January 17, 1989, when Gerald Wallace filed a complaint against Thomas Marshall Marr, in which Wallace alleged that Marr was holding certain Macon County Greyhound Park stock as the nominee of Wallace, and that by failing to transfer the stock to Wallace and to pay him the dividends earned on the stock, Marr was guilty of conversion, breach of fiduciary duty, and fraud. Marr denied these allegations and contended that the stock belongs to him, Marr's contention being that he paid $500 and guaranteed a $10,000,000 construction loan to build the track, in exchange for the stock.

On January 17, 1989, Marr filed a motion to dismiss, in which he asserted that the alleged agreement upon which Wallace sued never occurred, and that if it did, it was illegal and against the Constitution, laws, and public policy of the State of Alabama and was void as a matter of law. Marr also filed a motion for summary judgment on all counts of Wallace's complaint, in which he asserted that the alleged agreement, if it existed, which he denied, was illegal, void, and unenforceable, since, he said, it was in violation of both the public policy of Alabama and Act No. 83-575, Ala. Acts 1983, which authorized the operation of the dog track.

Wallace filed a motion in opposition to Marr's motion for summary judgment on April 9, 1989, in which he asserted, among other things, that the agreement between him and Marr that resulted in Marr's holding stock as his nominee was a common business practice. He denied that there was a violation of Act No. 83-575, Ala. Acts 1983.

The trial judge held a hearing and issued a "Memorandum Opinion and Order," which entered summary judgment for Marr as to all claims filed by Wallace; the judge held that the alleged agreements upon which Wallace premised his claims were illegal and void and violated the purposes of Act 83-575 and the public policy of Alabama. Wallace filed a motion to alter, amend, or vacate the judgment and the memorandum opinion and order and to reconsider the legally admissible evidence. The trial judge held a hearing on this motion and issued an order slightly amending his previous memorandum opinion, but did not vacate the summary judgment. Wallace appealed.

The trial court's "Memorandum Opinion and Order" states:

"Gerald Wallace (Wallace) has sued Thomas Marr (Marr) for claims arising out of an alleged agreement between Wallace and Marr in which Marr would hold, as nominee for Wallace, stock in Macon Greyhound Park, Inc. (Park). Wallace alleges that Marr has refused to transfer him the stock and pay over dividends which have been declared from time to time by Park. Marr has filed a motion for summary judgment.

"McGregor and Marr vigorously deny Wallace's allegations; however, for the purposes of this opinion only, the Court accepts as true the allegations of the amended complaint. The amended complaint and the undisputed facts gleaned from the materials submitted in support of and in opposition to Marr's motion for summary judgment disclose that some time prior to September 1983, Milton E. McGregor (McGregor) contacted Wallace for the purpose of securing Wallace's services in obtaining the right to operate a dog track in Alabama. ¹ At or near September 1983, in consideration of Wallace's services, McGregor agreed to provide Wallace with 5% of the outstanding ownership of Park.

"1983 Ala. Acts 575 became law, without approval of the Governor, on July 22, 1983, and permits parimutuel betting in Macon County, Alabama. The act also created the Macon County Racing Commission (Commission) and granted it broad regulatory powers over the granting and suspension of the track operator's license as well as the power to regulate all other activities in connection with the operation of the track and corresponding pari-mutuel betting.

"After Act 575 became law, Wallace advised McGregor that he desired his 5% interest in Park (corporate stock) to be placed in the name of his nominee, Marr. McGregor complied with Wallace's request, and the common stock was placed on the corporate books of Park in Marr's name and the stock certificates were issued to Marr.

"Marr has refused to deliver the stock certificates to Wallace or pay over to Wallace any of the cash dividends which have from time to time been delivered by Park and paid to its stockholders, including Marr.

"Wallace contends that (1) neither his agreement with McGregor nor his agreement with Marr is illegal because they do not violate Act 575 and they are not contrary to public policy; and (2) genuine issues of material fact exist which prohibit the entry of summary judgment. Marr contends, among other things, that the agreements are illegal because they violate the disclosure requirements of Act 575 and they are contrary to public policy and therefore void. Because the Court concludes that the agreements, if they were made, violate Act 575 and contravene public policy, this case is decided on a question of law and there is no need to address the other issues raised on Marr's motion for summary judgment.

"Pari-mutuel wagering is gambling. Opinion of the Justices, 287 Ala. 334, 335, 251 So.2d 751 (1971). 'Gaming as a calling or business is in the same class as the selling of intoxicating liquors in respect to deleterious tendency.' State v. Rosenthal, 559 P.2d 830, 833 (Nev.1977). 'A [contract] may be declared to be illegal by a court for either of two reasons: (1) because it is prohibited by statute; or (2) because it is contrary to public policy.' J. Murray, Jr., Murray on Contracts § 334 (2d rev'd ed. 1974). See, Matthews v. Matthews, 292 Ala. 1, 10, 288 So.2d 110 (Ala.1973) (equitable relief denied in a suit to establish a resulting trust where the complainant had misrepresented facts on a Veterans' Administration loan application in order to secure a low interest loan to which he was not entitled). '[W]henever regulation and protection are the goal of a statute, contracts made in derogation of that statute are null, void, and unenforceable.' See, Derico v. Duncan, 410 So.2d 27, 31 (Ala.1982) (consumer loan made pursuant to the Mini-code was void because the lender was not licensed). 'The true test to determine whether a contract is unenforceable because of public policy is "whether the public interest is injuriously affected in such substantial manner that private rights and interests should yield to those of the public." ' Colston v. Gulf States Paper Corp., 291 Ala. 423, 427, 282 So.2d 251 (1973) (quoting Maddox v. Fuller, 233 Ala. 662, 173 So. 12 (1937), and Lowery v. Zorn, 243 Ala. 285, 9 So.2d 872 (1942)). The public policy of a state is contained in its constitution and statutes, and in its common law as found in the opinions of its court of last resort. Couch v. Hutchinson, 2 Ala.App. 444, 57 So. 75 (1911). The principle that contracts in contravention of public policy are not enforceable should be applied with caution and only in cases plainly within the reason on which the doctrine rests. Taylor v. Martin, 466 So.2d 977 (Ala.Civ.App.1985). Dog racing, with attendant legalized gambling, is strongly affected by public interest and a highly appropriate subject for close regulatory supervision. See, In Re: Boardwalk Regency Casino License Application, 180 N.J. Super. 324, 434 A.2d 1111, 1120 (App.Div.1981) (review of administrative order by Casino Control Commission requiring divestiture by casino employees of any interest in a casino or its related activities). 'The State has a substantial interest in assuring, to the extent possible, that gambling activities are conducted in a corrupt free environment.' Fendrich v. Van DeKamp, 227 Cal.Rptr. 262, 270, 182 Cal.App.3d 246 (1986)....

"Act 575 required Park to file an application for the license to operate the race track, and further required certain detailed information regarding the Park, its incorporators, stockholders, directors and officers. Section 6(3)(c)(ii)...