Case Title: Byrd v. Bentley

Citation: 850 So. 2d 232

Docket Number: 1010528

State: alabama

Court: Alabama Supreme Court

Date: 2002-08-23T00:00:00Z

Document:
850 So. 2d 232 (2002)
Wood BYRD, and Bacadam, Inc.
v.
Mark BENTLEY.
1010528.

Supreme Court of Alabama.
August 23, 2002.
Rehearing Denied November 8, 2002.
*233 Robert Hayes of Hayes & Swinford, Birmingham; and Sterling L. DeRamus, Birmingham, for appellants.
Charles A. Dauphin of Baxley, Dillard, Dauphin & McKnight, Birmingham, for appellee.
HARWOOD, Justice.
Wood Byrd, and Bacadam, Inc. (hereinafter jointly referred to as "the defendants"), appeal from the trial court's judgment on a $1,350,000 jury verdict in favor of Mark Bentley. We affirm.
On March 9, 1999, Bentley sued the defendants seeking to recover damages on claims of fraud and breach of contract. Bentley, who had been employed as manager of Bacadam, which was owned by Byrd, alleged that an oral contract of employment existed between him and the defendants in which he was to receive an 8 percent commission from his sales[1] and a 30 percent ownership interest in Bacadam in the event that he met certain goals in increasing Bacadam's business. He also asserted that the parties had agreed that, in order to expand Bacadam's business, he would receive a 50 percent ownership interest in any company he located for Bacadam *234 to purchase, and that he had arranged for the purchase by Bacadam of another company, Reach Advertising. Bentley further alleged that Byrd sold all the assets of Bacadam and purchased Reach Advertising, but that Bentley never received an ownership interest in Bacadam or Reach Advertising.
On December 30, 1999, the defendants filed an answer denying Bentley's claims and asserting counterclaims alleging breach of contract, fraud, and violations of the Alabama Trade Secrets Act, § 8-27-1 et seq., Ala.Code 1975, based upon their allegations that Bentley had not devoted his full attention to Bacadam as agreed and that he had engaged in business in competition with Bacadam. After the completion of discovery, a jury trial began on August 6, 2001. On August 7, 2001, at the close of Bentley's case-in-chief, the defendants filed a motion for a judgment as a matter of law, with a supporting memorandum. The trial court took the defendants' motion under advisement and allowed the defendants to present their case. At the close of the defendants' case, Bentley filed a motion for a judgment as a matter of law in regard to the defendants' counterclaims; the trial court granted that motion. The defendants also renewed their motion for a judgment as a matter of law, and the trial court denied it as to Bentley's breach-of-contract claim but reserved ruling on it as to Bentley's fraud claim. Following Bentley's presentation of rebuttal testimony, he voluntarily dismissed his fraud claim. Thus, the only claim presented to the jury was Bentley's breach-of-contract claim. On August 9, 2001, the jury returned the following verdict:
On that same day, the trial court entered a judgment on the jury's verdict.
On September 5, 2001, the defendants renewed their motion for a judgment as a matter of law, and also filed, in the alternative, a motion for a new trial; Bentley filed a response in opposition on September 24, 2001. On September 28, 2001, the defendants filed a memorandum in support of their postjudgment motion; Bentley filed a supplemental response on October 10, 2001. On October 22, 2001, the trial court entered an order that stated, in pertinent part:
"THIS CAUSE was heard on the Defendants['] Motion for Judgment [as a matter of law] and/or Motion for New Trial. On August 9, 2001, the jury in this cause returned a verdict in favor of [Bentley] and against the Defendant[s] in the sum of One Million Three Hundred Fifty Thousand and 00/100 Dollars ($1,350,000.00). The evidence submitted by [Bentley] is that the parties entered into an agreement whereby [Bentley] would leave his job in Huntsville and manage Bacadam, Inc., which was owned by [Byrd]. The consideration for [Bentley's] employment would be a salary and in addition the transfer of a thirty (30%) percent interest in the company conditioned upon [Bentley's] meeting certain financial and growth goals. [Bentley's] evidence was that although he met those goals, the Defendant refused to transfer a thirty (30%) percent interest in the company to [Bentley] and, in fact, sold the company to another corporation for the approximate sum of Six Million Dollars ($6,000,000.00), without the knowledge or consent of [Bentley]. [Byrd] emphatically denies that he ever agreed to transfer an interest in Bacadam, Inc., to [Bentley] and further, that such an agreement for the transfer *235 of stock would be unenforceable under the Statute of Frauds because it is undisputed that the alleged agreement was never reduced to writing. At the conclusion of [Bentley's] evidence and at [the] conclusion of all of the evidence, the Defendant[s] made an appropriate motion for a judgment as a matter of law which motion was overruled.
On November 28, 2001, the defendants filed a notice of appeal.
The record shows that at trial, Bentley testified that the agreement between him *236 and the defendants was that, in exchange for his increasing Bacadam's profits, he would receive a 30 percent ownership interest in the company, the value of which was to be determined as of the date he began work for Bacadam and was to be paid for by the increased profits he generated. He further testified that when he began work, Bacadam was receiving monthly revenues of $35,000-$36,000 and that Byrd set a goal for Bentley to increase that amount to $70,000 per month. Bentley stated that the $70,000 goal was reached, and in some months even surpassed.
Bentley's testimony regarding his employment agreement with the defendants was supported by the testimony of Dwight Jennings. Jennings was Bentley's former employer and an acquaintance of Byrd's. Jennings testified that Byrd had telephoned him in an effort to find someone to hire as manager of Bacadam. Jennings recommended Bentley and arranged a meeting between them, but told Byrd that Bentley would most likely require an ownership interest as part of his compensation for employment. Jennings further testified as follows:
Jennings also testified that after subsequent conversations with Bentley relating to Byrd's failure to offer him an ownership interest, he spoke to Byrd. Jennings testified that Byrd confirmed the agreement, saying that he was close to giving Bentley his ownership interest. It is undisputed that Bentley never received an ownership interest in Bacadam although he worked for that company continuously from the time of his employment in early 1994 until the company was sold in November 1998.
After Bentley learned of Byrd's sale of Bacadam in 1998, he tape-recorded a conversation between him and Byrd on a microcassette recorder. A copy of that microcassette recording was transferred to a larger cassette so that, as Bentley's attorney stated at trial, it could be more fully amplified for the jury; the copy was played for the jury and admitted into evidence. A transcript of that recording was also presented to the jury. The defendants objected to the admission of the copy of the tape recording, and prior to its being played to the jury, the trial court and attorneys listened to the tape recording and compared it to the transcript, outside the presence of the jury. The defendants' attorney questioned certain portions of the tape recording in which he thought some conversation was missing, and the trial court allowed the defendants the opportunity to have an expert witness testify concerning alleged "discontinuities" on the tape recording. That expert witness testified that he and an assistant marked 12 places on the recording at which they believed a discontinuity existed. During the expert's testimony, a compact disc or "CD" recording the expert had made from the *237 tape recording was also played for the jury and admitted into evidence.
On appeal, the defendants argue (1) that an oral contract for the sale of securities pursuant to an employment contract violates the Statute of Frauds; (2) that Bentley failed to present sufficient evidence to establish that a contract existed between him and the defendants; and (3) that the duplicate tape recording should not have been admitted into evidence when the original was available. No issue concerning the amount of the verdict is raised by the defendants in their brief, except for the single statement that, "Assuming [Bentley's] version of the contract [is] correct, then he would only be entitled to $519,000, or 30% of the difference between the cost of the company in 1993 and the sales price of [$]5.6 million." However, the defendants' postjudgment motion asserted only that Bentley was not entitled to recover at all and raised no issue of excessive or unproven damages.
The defendants first argue that an oral contract for the sale of securities pursuant to an employment contract violates the Statute of Frauds. As was the case with their presentation to the trial court, they have not cited any Alabama case on point in their brief to this Court. They state in that brief that "[t]he only real issue is whether in fact the transaction described by [Bentley] can be properly described as a `sale' of securities." The defendants assert that if we were to consider the alleged agreement to employ Bentley solely as a "sale of securities," Bentley's breach-of-contract claim would be barred by the Statute of Frauds.
In 1994, when the alleged agreement took place, § 7-8-319, Ala.Code 1975, read as follows:
Section 7-8-319 was repealed on January 1, 1997, and was replaced by § 7-8-113, Ala.Code 1975, which states:
However, the Alabama Comment to § 7-8-113 explains that this section is applicable only to transactions in the organized securities market, e.g., the sale or purchase *238 of securities through a stock exchange or the over-the-counter securities market, and that all other agreements are subject to Alabama's general Statute of Frauds, § 8-9-2, Ala.Code 1975. Section 8-9-2 was also amended January 1, 1997, to provide, in pertinent part:
The evidence supports an inference that part of Bentley's employment contract with the defendants was that, in consideration of Bentley's acceptance of employment and upon his increasing Bacadam's monthly revenues as its manager, Byrd would transfer an ownership interest in Bacadam to Bentley. Whether this type of arrangement constitutes a "sale of securities" under the Statute of Frauds has not been addressed in this State; we therefore consider how other jurisdictions have answered it.
In Hiller v. Franklin Mint, Inc., 485 F.2d 48 (3d Cir.1973), the United States Court of Appeals for the Third Circuit, relying on Baldassarre v. Singer, 444 Pa. 100, 282 A.2d 262 (1971), held that a similar agreement was a contract of employment and not a contract for the sale of securities in violation of New York's or Pennsylvania's Statute of Frauds. In Hiller, as is the case here, if the agreement had been considered a "sale of securities," it would have been in violation of those Statutes of Frauds. In Baldassarre, pursuant to an oral contract, two chemists agreed to accept employment with a company, each receiving an annual salary of $13,000 and an equal division of 10 percent of the stock of the company, i.e., each would receive 5 percent of the stock. The company and its owner appealed from a lower court's order requiring the ownership interest to be transferred to the chemists, arguing, in part, that the agreement was a "sale of securities," and was in violation of the Statute of Frauds. The Supreme Court of Pennsylvania stated:
In Bowers Steel, Inc. v. DeBrooke, 557 S.W.2d 369 (Tex.Civ.App.1977), an employee sued his employing corporation alleging *239 that it had breached an oral contract of employment by failing to transfer 20 percent of the stock in the corporation to him. A jury returned a verdict in favor of the employee. On appeal, the Texas Court of Civil Appeals stated, in pertinent part:
In Jones v. Cecil Sand & Gravel, Inc., 97 Md.App. 87, 627 A.2d 60 (1993), the Maryland Court of Special Appeals also addressed this issue, and after setting out the same language quoted earlier from Baldassarre, stated further:
97 Md.App. at 92-93, 627 A.2d  at 62. See also Thompson v. Kohl, 216 Ga.App. 148, 151, 453 S.E.2d 485, 488 (1994)("Although the question is debatable, we hold that an oral agreement by an employer to transfer corporate stock to an employee for a non-monetary consideration is not a `sale' within the meaning of UCC § 8-319.").
The Bowers Steel court distinguished two cases cited by the defendants, Mildfelt v. Lair, 221 Kan. 557, 561 P.2d 805 (1977), and Scarpinato v. National Patent Development Corp., 75 Misc.2d 94, 347 N.Y.S.2d 623 (Sup.Ct.1973), by stating that in those two cases "the oral promise was an option to purchase in the future for a price." 557 S.W.2d  at 374. As was the case in Bowers Steel, the evidence here supports an inference, which was accepted by the jury, that in consideration for his acceptance of employment and increasing Bacadam's monthly revenues, Bentley would receive a 30 percent ownership in the company. Accordingly, this case also is distinguishable from those situations in which an employee is offered an "option to purchase [stock] in the future for a price."
The Jones court discussed Burns v. Gould, 172 Conn. 210, 374 A.2d 193 (1977), a case also cited by the defendants to this Court, stating as follows:
"In Burns v. Gould, ... the Supreme Court of Connecticut found the Baldassarre *240 court's rationale regarding the price term to be unpersuasive. The Connecticut court treated `price' as `something which one ordinarily accepts voluntarily in exchange for something else ... the consideration given for the purchase of a thing,' quoting Black's Law Dictionary (Rev. 4th Ed.), and concluded that the plaintiff's action met the requirements of this definition. In Burns, the plaintiff, who had joined with the defendant in developing a convalescent home and forming a corporation for it, received 25% of the stock of the corporation with an option to buy an additional 24% of the stock for $12,000. The defendant later formed another corporation to develop a nursing home, but none of its stock was issued to the plaintiff. The plaintiff alleged that the parties had an oral agreement concerning the second corporation, in which plaintiff was to receive for his services in developing the project the same percentage of stock ownership25% immediately with an option to purchase 24% of the stock for $12,000. The Connecticut appellate court, reversing the trial court, held that the statute of frauds section of the UCC was applicable to the transaction. The court apportioned plaintiff's recovery based on the amount of stock actually paid for by plaintiff through his services.
97 Md.App. at 93-94, 627 A.2d  at 63. Other cases cited by the defendants to support their argument that the agreement between Bentley and the defendants was a "sale of securities" are Bentley v. ASM Communications, Inc., No. 91 CIV. 0086 (S.D.N.Y., June 11, 1991) (not published in F.Supp.), and Cooling Tower Erectors, Inc. v. Williams, No. 81 C 6678 (N.D.Ill., October 1, 1984)(not published in F.Supp.).
While Bentley and Cooling Tower Erectors, both unpublished opinions by federal district courts, do support the defendants' argument, we are most persuaded by those jurisdictions that view similar agreements not as "sales of securities," but as employment contracts, and we conclude that the agreement between Bentley and the defendants was an employment contract and was not subject to § 8-9-2, Ala.Code 1975, Alabama's Statute of Frauds.
The defendants further argue that there was not sufficient evidence to prove that a contract existed between Bentley and the defendants. The jury's verdict and the trial court's denial of the defendants' postjudgment motion creates a strong inference that there was sufficient evidence to establish the existence of a contract. This Court has stated:
"A jury verdict carries a strong presumption of correctness, and no ground for a motion for new trial will be more carefully scrutinized or more rigidly limited than an assertion that the verdict is contrary to the weight of the evidence. The presumption in favor of the verdict is strengthened when the circuit court denies a motion for a new trial. On appeal, this Court will not reverse the denial of a motion for a new trial unless, after allowing all reasonable inferences in favor of the verdict, it concludes that the weight and preponderance of the evidence is so decidedly against the verdict as to convince the Court that the verdict is plainly and palpably wrong and unjust. Delchamps, Inc. v. Larry, *241 613 So. 2d 1235, 1239 (Ala.1992); S.S. Kresge Co. v. Ruby, 348 So. 2d 484, 488-89 (Ala.1977); Merchants Bank v. Cotton, 289 Ala. 606, 609, 269 So. 2d 875, 878 (1972)."
Reed v. Boyd, 642 So. 2d 448, 450 (Ala. 1994).
As previously discussed, testimony was presented at trial by Bentley and Jennings from which the jury could have reasonably inferred that a contract existed between Bentley and the defendants. Accordingly, we conclude that there was sufficient evidence to support the jury's verdict and the trial court's denial of the defendants' postjudgment motion.
The defendants' last argument is that a duplicate tape recording should not be admissible when the original recording is available. As subissues of their argument, the defendants argue that the admission of the duplicate tape recording violated the best evidence rule and that the recording was not properly authenticated. In their brief to this Court, the defendants state that the original tape recording was not admitted into evidence. However, our review of the record reveals that the original tape recording was admitted into evidence. The record contains the following dialogue between the trial court and Bentley's attorney:
The defendants also offered a CD made by their expert witness from the duplicate tape; the offering of the CD into evidence appears in the record as follows:
The record also shows that the trial court delivered all exhibits to the jury for its deliberation, and among the exhibits included in that record is the original microcassette tape recording, marked as "Plaintiff's Exhibit 1." Also, the defendants acknowledge in their brief to this Court that a portion of the original recording was played for the jury; they state, however, that "[o]nly a portion was played, and that was at least one day after there was an objection by [Defendants'] Counsel concerning certain discontinuities on the tape." Obviously, once the original microcassette recording was admitted into evidence as plaintiff's exhibit *242 1, and played partially for the jury, there was nothing to prevent the defendants during trial, or the jury during its deliberations, from playing it in its entirety. The jury had before it as trial exhibits three different recordingsthe original microcassette recording, the larger cassette that had been copied from the microcassette recording, and the CD made by the defendants' expert witness and a transcription of the contents of the larger cassette recording that it could compare to any of the recordings for inconsistencies and "discontinuities" and from which it could assign the appropriate weight to give the recordings, as it saw fit. See, e.g., Avery v. State, 589 So. 2d 1313, 1315 (Ala.Crim.App.1991)("The fact that parts of a tape recording were inaudible would not affect the admissibility of the recording but the weight which the jury places on the evidence."). Thus, we conclude that there is no basis for the defendants' argument that the original recording was not admitted into evidence.
The defendants argue that the admission of the duplicate recording violates the best evidence rule. However, our review of the record shows that the defendants failed to object to the admissibility of the duplicate recording on that ground. The only mention of an objection based on the best evidence rule was to the admissibility of the transcript of the recording. Moreover, Alabama's best evidence rule, Rule 1002, Ala. R. Evid., is not applicable to tape recordings. The Advisory Committee's notes to Rule 1001(1), Ala. R. Evid., which defines "writings," state, in pertinent part:
See also Ex parte O'Daniel, 515 So. 2d 1250 (Ala.1987), and Withee v. State, 728 So. 2d 684 (Ala.Crim.App.1998).
The defendants further contend that Bentley failed to properly authenticate the recording. Before the recording was played to the jury, Bentley testified as to the identification of the voices on the tape. The trial court then further questioned Bentley as follows:
Counsel for the defendants then renewed a previous objection to the admission of the tape recording into evidence. Bentley further testified, in response to questions from his attorney, as follows:
Rule 901, Ala. R. Evid., deals with the "Requirement of Authentication or Identification." Rule 901(a) states that "[t]he requirement of authentication or identification as a condition precedent to admissibility is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims." The Advisory Committee's notes further state, in pertinent part:
Under the circumstances of this case, we conclude that the required foundational showing was made to allow for the proper admission of the recording. Any weakness in that showing was subject to the jury's determination of the evidentiary weight to give the recording. Tidwell v. State, 496 So. 2d 109 (Ala.Crim.App.1986).
For the foregoing reasons, we affirm the trial court's judgment.
AFFIRMED.
MOORE, C.J., and SEE, BROWN, and STUART, JJ., concur.
[1]  Apparently Bentley was paid the eight percent commission. He makes no argument on appeal relating to that part of the agreement.