Title: National Dist. & Chem. v. American Laubscher Corp.
Citation: 338 So. 2d 1269
Docket Number: N/A
State: Alabama
Issuer: Alabama Supreme Court
Date: November 19, 1976

338 So. 2d 1269 (1976)
NATIONAL DISTILLERS AND CHEMICAL CORPORATION, a corporation
v.
AMERICAN LAUBSCHER CORPORATION, a corporation.
SC 1482.

Supreme Court of Alabama.
October 1, 1976.
As Corrected On Denial of Rehearing November 19, 1976.
*1271 Robert McD. Smith and Joseph W. Mathews, Jr., Birmingham, for appellant.
Shores &amp; McKerall, Foley, and Johnston &amp; Shores, Birmingham, for appellee.
ALMON, Justice.
Appellant, National Distillers and Chemical Corporation, appeals from a judgment in favor of appellee, American Laubscher Corporation in the amount of $78,911.47 plus interest.
Appellee was a trade creditor of Brad's Machine Products, Inc., of Gadsden, Alabama, when Brad's failed financially in December of 1970. Brad's operated a machine shop in Gadsden. The principal product manufactured by Brad's was an M-125 booster fuse produced under direct contract with the United States Government. The body of the fuse was machined from brass rods. Brad's bought the brass rods from the appellant. Appellee sold certain Swiss screw machine parts to Brad's from 1967 until December, 1970. This suit arose from Brad's inability to pay appellee for these parts.
Appellee filed suit asserting multiple claims against appellant (which itself was Brad's creditor). After numerous amendments, the case was submitted to the jury on a claim asserting that appellant and Brad's had fraudulently conspired to induce appellee to sell goods to Brad's at a time when Brad's was insolvent or in failing circumstances and unable to meet its obligations within a reasonable time after they became due. The claim further asserts that the co-conspirators did not disclose the fact of Brad's insolvency or failing circumstances. The jury found in favor of appellee and assessed damages of $78,911.47 with interest from January 1, 1971, for a total of $99,231.17.
Appellant alleges first that the evidence failed to establish a prima facie case of *1272 conspiracy and that the jury verdict was contrary to the weight of the evidence. We disagree.
As appellant acknowledges in brief, a conspiracy may be established by circumstantial evidence. As this court stated in Barber v. Stephenson, 260 Ala. 151, 156, 69 So. 2d 251, 255 (1954):
Roy Compton was Brad's plant comptroller when Brad arrived in Gadsden. Leon Rudd, an internal auditor for National Distillers, came to Gadsden to provide cash control assistance to Brad's.
We think the following testimony was pertinent on the question of conspiracy:
The record was replete with financial data which tended to show Brad's failing financial condition. There was also ample evidence showing appellant's complicity in the operation of Brad's. This was a proper case for a jury.
Appellant claims the fraud counts that were submitted to the jury were barred by the Statute of Limitations, Tit. 7, § 26, Code of Alabama 1940, Recompiled 1958. Appellee submits that the claims asserted in the amended complaint arose out of the same conduct, transaction or occurrence set forth or attempted to be set forth in the original complaint and therefore related back under the provision of Rule 15(c) A.R.C.P.
Rule 15(c), in pertinent part, reads as follows:
A review of the pleading is necessary to understand appellant's contention.
The original complaint filed in April, 1971, alleged in Court 1 that during the years 1969 and 1970 the appellant was engaged in a joint enterprise with Brad's in the operation of Brad's business and that the appellant owed the appellee for work *1273 and labor done. Count 2 was a common count and Count 3 alleged fraud in that the appellant misrepresented to appellee that Brad's was solvent and its credit was good.
Count 4 was added by amendment in March, 1972, alleging an instrumentality theory.
In October and November, 1972, appellee struck the first four counts and added Counts 5, 6, 7 and 8. The theory of the amended complaint so far as we are here concerned was that Brad's was so organized and controlled by the employees of appellant as to make Brad's merely an instrumentality and alter ego of appellant.
In February, 1973, appellee added Counts 9, 10, 11 and 12.[1] The theory of these counts was that appellant conspired with Brad's to conceal from the United States Government the true financial condition of Brad's and that by virtue of that conspiracy to conceal the plaintiff was induced to extend further credit to Brad's.
In December, 1974, appellee amended the complaint by striking Counts 5, 6 and 8 and adding Counts 13, 14, 15 and 16. These counts were similar to Counts 9 through 12 except they added allegations that the appellant and Brad's conspired to wrongfully conceal from the appellee and the government the true financial condition of Brad's.
During trial, at the close of appellee's evidence, the court allowed appellee to amend the complaint by adding Counts 17 and 18 over appellant's objection. The essence of these two counts is that the defendant and Brad's fraudulently conspired to induce the plaintiff to sell goods on credit to Brad's at a time when Brad's was insolvent or in failing circumstances.
While several counts remained in the complaint, it was the theory of recovery asserted in Counts 17 and 18 that formed the basis of the trial court's charge to the jury.
Specifically, appellant argues that the amended fraud counts were barred by the Statute of Limitations because they departed from the facts and duty set forth in the original complaint and appellee failed to allege and prove late discovery. Tit. 7, § 42, Code of Alabama 1940, Recompiled 1958.
For this argument to be valid the amended counts must have arisen out of conduct, transactions or occurrences other than those attempted to be set forth in the original complaint. We do not think this was the case.
It is clear that Brad's was indebted to appellee and that appellant, through its agent, was involved in the everyday management of Brad's. For the appellee to recover that debt from the appellant, it was necessary to frame a complaint setting forth liability on the part of the appellant. We are of the opinion that the various amendments to the complaint was an effort on the part of the appellee to allege a theory which would allow recovery. In other words, the various amendments were merely changes in theory rather than declarations upon different conduct. Our conclusion is that the amendments related back to the time of the original filing of the complaint.
Furthermore, the fact that a significant amount of time transpired between the original complaint and the various amendments does not in itself affect our conclusion. In Green v. Wolf Corporation, 50 F.R.D. 220 (N.Y.1970), the amendments were offered almost four years after the initial complaint. The only explanation given by the attorney was that the laws involved were complex and that the new theory advanced simply did not occur to him previously.
On the other hand, delay as a predicate for a finding of bad faith would be sufficient reason to deny leave to amend. Id.
Appellant next maintains that the trial court improperly allowed appellee to amend the complaint during trial, after a pre-trial order had been issued, and at the close of appellee's case. Appellant argues that at least it was entitled to a continuance.
Rule 15(b) of the A.R.C.P. provides in pertinent part as follows:
In discussing Rule 15 this court in Stead v. Blue Cross-Blue Shield of Alabama, 294 Ala. 3, 6, 310 So. 2d 469, 471 (1975), stated as follows:
*1275 In the present case we do not believe that the appellant was unduly prejudiced by the allowance of the amendments at the close of appellee's case. Counts 9 through 12 had previously charged appellant with Fraud on the government which injured appellee and counts 13 through 16 had previously charged appellant with fraud on the government and the appellee, with the two joined in the conjunctive. Basically, all the last amendments (Counts 17 and 18) did was to charge fraud on the appellant, alone and apart from fraud on the government. Since appellant was already defending double charges of fraud on the appellee and fraud on the government, it worked no prejudice to add two counts charging fraud on the appellee alone.
As to whether the entry of a pretrial order should prevent further amendment of pleadings, we discussed this subject in Huskey v. W. B. Goodwyn Company, Inc., 295 Ala. 1, 321 So. 2d 645, 648 (1975):
Although the amendments in Huskey were offered before the beginning of trial, we are convinced that the same criteria should be followed where amendments are offered to conform the pleadings to the evidence if, as here, there is no unfair surprise.
Appellant alleges the trial court improperly charged the jury as to the circumstances raising a duty of disclosure of financial condition by the buyer of goods on credit.
Appellee's requested jury charge number four which was given read as follows:
The rule which the appellee attempted to set forth in its requested charge is found in Maxwell v. Brown Shoe Co., 114 Ala. 304, 308, 21 So. 1009, 1010 (1897):
Appellant's argument that Charge 4 omitted any reference to the phrase, "or have had no reasonable expectation of being able to pay for it," is correct.
However, in another part of the oral charge the court charged as follows:
*1276 We consider for a credit purchaser to come within the rule in Maxwell, supra, he must (1) be either' insolvent or in failing circumstances and (2) have a design not to pay or have no reasonable expectation of being able to pay and (3) fraudulently misrepresent or conceal the elements in 1 and 2 above.
Thus, we consider the infirmity of Charge 4 to have been supplied later in the oral charge. Rule 51, A.R.C.P., Alabama Power Co. v. Tatum, 293 Ala. 500, 306 So. 2d 251 (1975).
Appellant claims error because the trial court gave to the jury two different definitions of insolvency. One defined insolvency as the inability of assets to cover liabilities and the second as the inability to pay debts as they become due in the ordinary course of business. Clearly the two are not the same. However, we fail to see any prejudicial error as the evidence showed Brad's to be insolvent under both definitions.
Appellant further argues that the trial court improperly read to the jury statutes inapplicable to the issues. Appellant contends that the action was framed under Tit. 7, § 109, Code of Alabama 1940, Recompiled 1958 (dealing with suppression of truth) and that it was error to instruct the jury on § 108, Code, supra (dealing with misrepresentations) and § 110, Code, supra (dealing with deceit). The authorities have noted much confusion in the relationship of these sections. Clayton v. Glasscock, 221 Ala. 3, 127 So. 538 (1930); Cartwright v. Braly, 218 Ala. 49, 117 So. 477 (1928).
We see no need at this time to explore the intricacies of these statutes as we regard any error in relation to reading them to the jury, under the circumstances of this case, to be harmless.
The judgment is affirmed.
AFFIRMED.
All the Justices concur except SHORES, J., who recuses herself.
[1]  Tit. 7, § 239, Code of Alabama 1940, Recompiled 1958, is sufficiently broad to allow the amendments prior to July 3, 1973, the effective date of the Rules of Civil Procedure. There being no determination that the new rules would work a hardship, all further amendments were controlled by the new rules. Rule 86, ARCP.