Title: Central Bank of Alabama, NA v. Ambrose
Citation: 435 So. 2d 1203
Docket Number: N/A
State: Alabama
Issuer: Alabama Supreme Court
Date: May 20, 1983

435 So. 2d 1203 (1983)
CENTRAL BANK OF ALABAMA, N.A., a national banking association
v.
Alfred Paul AMBROSE and Paulette Ambrose.
82-110.

Supreme Court of Alabama.
May 20, 1983.
Rehearing Denied July 22, 1983.
Charles R. Hare, Jr., Gullahorn &amp; Hare, Albertville, for appellant.
James B. Morton, Topazi, Morton &amp; McNamee, Birmingham, for appellees.
MADDOX, Justice.
The issues here are: (1) whether the trial court erred under the terms of Rule 54(c), ARCP, by granting relief to the defendants not requested by their pleadings; and (2) whether a conveyance found to be fraudulent as to a creditor, nevertheless could stand as security for the value actually paid by a grantee found to have had no knowledge of the fraud. We answer (1) no, and (2) yes, and affirm.
The parties in this case are Central Bank of Alabama, N.A., plaintiff-appellant, Alfred Paul Ambrose and his daughter Paulette, defendants-appellees. Central Bank sought to have a conveyance by Alfred Paul Ambrose and his now deceased wife, Osteen B. Ambrose, to their daughter, Paulette, declared void and set aside as fraudulent under Code 1975, § 8-9-6.
The facts indicate that on March 8, 1972, Mr. and Mrs. Ambrose purchased the house and property in issue and conveyed it on July 13, 1978, to their daughter, Paulette. *1204 At the trial on April 19, 1981, it was stipulated between Central Bank, Mr. Ambrose, and Paulette Ambrose, that at the time of the conveyance in 1978, Mr. and Mrs. Ambrose were indebted to Central Bank and the indebtedness was subsequently reduced to a judgment by the circuit court of DeKalb County on February 22, 1980, in the amount of $21,426.65. Further, it was stipulated that at the time of the 1978 conveyance, the value of the property was approximately $23,000 and the approximate pay-off of the existing mortgage was $8,500. Mrs. Ambrose died following the conveyance to Paulette, but prior to the filing of this suit.
Mr. Ambrose and Paulette Ambrose denied that the conveyance was made with intent to hinder, delay or defraud Central Bank. Mr. Ambrose testified, over Central Bank's objection, that by agreement with his minor daughter in 1972, he withdrew $1,079 from her guardianship account which was used as a portion of the down payment on the real estate in issue. Mr. Ambrose also testified that he paid for improvements totaling $4,000 which were made to the house in 1974 and 1975. Sometime around January 20, 1978, when Paulette was twenty years of age, her guardianship account was closed, and Mr. Ambrose testified that Paulette endorsed and delivered to him the funds in the account to reimburse him for the improvements made to the property. The savings account passbook, which was admitted over the bank's objection, indicated a withdrawal of $1,079 on March 30, 1972, twenty-two days after the property was originally purchased by Mr. and Mrs. Ambrose. The passbook likewise indicated a withdrawal of $3,884.57 on January 20, 1978, seventeen months after Paulette attained the age of majority. The evidence showed that Mr. and Mrs. Ambrose and Paulette lived in the house from the time it was purchased until Mrs. Ambrose's death and that Mr. Ambrose and Paulette were both still occupying the house at the time of the trial. Paulette testified that she made four or five mortgage payments prior to the conveyance to her and that she assumed the mortgage, and made all the payments on the mortgage debt following the conveyance to her. Both Mr. Ambrose and Paulette testified that at the time of the conveyance it was agreed between Paulette and Mr. and Mrs. Ambrose that Mr. and Mrs. Ambrose could live in the house for the rest of their lives.
The case was tried without a jury and a judgment was rendered on January 15, 1982. Among the trial court's findings were the following: that at the time of the conveyance the grantors were badly in debt; that at least a portion of the motivation for conveying the property was to save the home of the parties from debts then owed and anticipated; that the grantors did have a fraudulent intent to hinder or delay existing creditors; and that the consideration for the conveyance was substantially inadequate. The trial court further found that there was no fraudulent intent on the part of Paulette and that she had no knowledge of facts which, upon inquiry, would have led her to discover a fraudulent intent with regard to the conveyance.
The trial court, in setting aside the conveyance, ordered that the mortgagee had paramount claim to the property to satisfy its mortgage and that the property would stand as security for the following debts, obligations and claims of Paulette Ambrose:
*1205 The trial court likewise ruled that Mr. Ambrose had the right to claim a homestead exemption of $2,000, the amount of the homestead exemption at the time Mr. Ambrose originally conveyed his homestead right to her. The trial court finally ordered that Central Bank was entitled to enforce its judgment against the remaining interest of Mr. Ambrose after all the above claims had been satisfied. Central Bank appealed.
The issue, as raised by Central Bank, is whether the trial court erred in granting relief to Paulette Ambrose when that relief was never requested by the pleadings and when the granting of such relief is, as Central Bank alleges, highly prejudicial. In its brief, Central Bank makes the following assertions:
Rule 54(c), ARCP, provides in pertinent portion that "..., every final judgment shall grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in his pleadings." We are of the opinion that the following analysis of Rule 54(c) by the Alabama Court of Civil Appeals in Carden v. Penney, 362 So. 2d 266 (Ala.Civ.App.1978), is applicable to the facts under review here:
362 So. 2d  at 268-269.
The case of Williams v. Schaeffer, 260 Ala. 16, 68 So. 2d 551 (1953), is cited by the appellees for the proposition that a cross-claim was unnecessary under the facts of this case because they were nonetheless entitled to the same relief under their answer. In their answer, defendants averred, among other things, the following:
The appellees further averred that the $21,426.65 judgment obtained by Central Bank was void and illegal, and denied Central Bank's allegation that the conveyance of the house and property was consummated to delay, hinder or defraud creditors. We cannot hold that the answer was sufficient to support the relief the trial court gave. In Carden v. Penney, supra, the Court of Civil Appeals quotes from the case of Sylvan Beach, Inc. v. Koch, 140 F.2d 852 (8th Cir.1944), regarding the philosophy and scope of Rule 54(c), and we think it instructive to use the same quote here:
140 F.2d  at 861, 862.
We have examined the record to determine if the relief given by the trial court is based upon claims voluntarily litigated by the parties, even though the relief given was not demanded by any pleading.
The only reference to the relief granted was made by the trial judge after the parties had rested:
Neither party, insofar as the record shows, made any statement regarding the trial judge's comment: "So you have the questions of homestead and preference of debts in the case, in addition to the question of the result of the alleged trust." Central Bank raised no objection that the questions mentioned by the trial judge were not in the case. On the other hand, the defendants did not request an opportunity to amend their pleadings to demand the relief which the trial judge mentioned. Consequently, we hold that the issues which the trial judge stated were in the case, and upon which he requested memorandums of the law, were sufficiently presented so as to authorize an entry of a judgment, pursuant to Rule 54(c), ARCP.
The bank argues that, even assuming the trial court could grant Paulette Ambrose relief, and even though the trial court found that Paulette Ambrose was not guilty of any fraudulent intent in the transaction, the trial court erred in granting her relief, because she was guilty of constructive fraud, as a matter of law. The bank cites J.C. Jacobs Banking Co. v. Campbell, 406 So. 2d 834 (Ala.1981), wherein this Court did hold that "[a] valuable but substantially inadequate consideration, however, is also part of constructive fraud; the mutual fraudulent intent of the parties is inferred by law from the great disparity between the real value and the consideration given."
The trial court stated that "[a]s to defendant-daughter-grantee, the Court does not find any fraudulent intent on her part." In view of this finding, we hold the following principle of the J.C. Jacobs Banking Co. case to be applicable:
This is an equitable principle which the trial court was authorized to apply in this case in view of the evidence presented.
Based on the foregoing, the judgment of the trial court is due to be affirmed.
AFFIRMED.
TORBERT, C.J., and JONES, SHORES and BEATTY, JJ., concur.