Title: E. Ted Taylor v. Larry D. Striplin
Citation: N/A
Docket Number: 1050313
State: Alabama
Issuer: Alabama Supreme Court
Date: April 13, 2007

REL: 04/13/2007 Taylor v. Striplin
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334)
242-4621), of any typographical or other errors, in order that corrections may be made
before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
 OCTOBER TERM, 2006-2007
_________________________
1050313
_________________________
E. Ted Taylor
v.
Larry D. Striplin
Appeal from Jefferson Circuit Court
(CV-01-6512)
PER CURIAM.
E. Ted Taylor ("Taylor") appeals from a summary judgment
in favor of Larry D. Striplin ("Striplin"), holding as a
matter of law that Striplin was entitled to the proceeds of a
certificate of deposit interpleaded by The Bank, a state-
1050313
The Bank has filed a brief in this case as amicus curiae.
1
We note that the following individuals are also limited
2
guarantors of the loans but are not parties to this action:
Terry DeWitt, Gary Andridge, Leon Ashford, Ron Ezell, William
Fitzpatrick, Frank Lee, Jan Noojin, Scott Powell, Alan
Pizzitola, Kirk Wood, Jr., Lloyd Wood, and Leah O. Taylor.
Although these limited guarantors are not named parties in
this action, Taylor, in his motion for a summary judgment,
claims to be representing the interests of Ashford, Powell,
Noojin, Fitzpatrick, Lee, and Leah Taylor, as the "paying
guarantors."
2
chartered bank in Birmingham (hereinafter referred to as "The
Bank").   We affirm. 
1
Undisputed Facts
Regional Sports Network, LLC ("RSN"), is a limited
liability company formed in 1998.  Pursuant to two promissory
notes, one dated September 4, 1998, and the other dated
October 14, 1998, The Bank loaned RSN  a total of $3.5 million
(hereinafter referred to as "the RSN loans").  The RSN loans
were guaranteed by multiple shareholders of RSN, one of whom
was Taylor.   Taylor, through unlimited personal guaranties,
2
guaranteed the entire indebtedness of the RSN loans.
Additional collateral pledged as security for the RSN loans
included a Kentucky horse farm owned by Taylor, as to which
The Bank held a mortgage; real property owned by Taylor in
Greene County, Alabama; investment accounts owned by Kirk
1050313
In November 2000, Striplin redeemed certificate of
3
deposit no. 31369 in the amount of $1 million and used the
proceeds to obtain another certificate of deposit, no. 32392,
in the amount of $815,821.48. 
3
Wood, Jr.; real property owned by Kirk Wood, Jr.; and the
assets of RSN. In September 2000, Taylor sold the Kentucky
horse farm and placed $2.7 million of the proceeds into a
money-market account at The Bank; those proceeds were also
pledged as collateral for the RSN loans.
On October 25, 2000,  Striplin, a director and a
shareholder of The Bank, executed a "Pledge and Assignment of
Certificate of Deposit and Account" (hereinafter referred to
as "the Striplin pledge agreement"), pledging as additional
security for the RSN loans a certificate of deposit (no.
31369) in the amount of $1 million.   Striplin at the time was
3
interested in investing in RSN.    Jimmy Taylor, Sr., who was
the chairman and chief executive officer of The Bank and
Taylor’s 
brother, 
suggested 
to 
Striplin 
that, 
as 
an
alternative to becoming an investor in RSN, he pledge a
certificate of deposit as additional collateral for the RSN
loans.  Jimmy Taylor, Sr., knew that bank examiners  had
expressed concern to The Bank about the RSN loans because of
the amount of money RSN appeared to be losing.  The Striplin
1050313
4
pledge agreement helped The Bank achieve an upgraded "pass
rating" on the RSN loans.  At the time Striplin pledged the
certificate of deposit, he had no interest in RSN.  Further,
the Striplin pledge agreement was executed over two years
after The Bank had loaned RSN a total of $3.5 million, and
over two years after the RSN loans had been guaranteed by
other guarantors.
The 
Striplin 
pledge 
agreement 
contained 
certain
conditions that had to occur  before The Bank could charge
against the certificate of deposit in the event of a default
of the RSN loans.  The operative language of the Striplin
pledge agreement states:
"Upon the failure of [RSN] to pay any Obligations
according to its terms, or upon a default in the
Obligations 
as 
defined 
in 
the 
agreements 
as
evidencing such Obligations, and upon the expiration
of one hundred and eighty (180) days following the
foreclosure of all of the real estate pledged as
collateral for [RSN's] obligations to [The Bank] (or
if none, then upon the expiration of one year from
the date of the default), then the liability of the
undersigned hereunder to [The Bank] shall become
immediately due and payable, ... and [The Bank] may
... charge against the hereinabove [certificate of
deposit] any balance of [RSN's] Obligations to [The
Bank], which are currently due and payable in
accordance with the agreements evidencing such
Obligations."
(Emphasis added.)
1050313
5
On August 22, 2001, Taylor learned that Striplin had
pledged the certificate of deposit as security for the RSN
loans.  On August 31, 2001, following several extensions of
payment deadlines by The Bank, RSN defaulted on the RSN loans.
Several limited guarantors made payments to The Bank under the
terms of their obligations.  On September 28, 2001, Taylor, as
an unlimited guarantor of the RSN loans, tendered to The Bank
$2,685,309.14, which represented the remaining amount of
principal and interest due on the RSN loans.  The Bank did not
at any time following the default of the RSN loans attempt to
collect against any of the collateral pledged for the loans.
Thereafter, The Bank executed in Taylor's favor a written
assignment of numerous documents, including all guaranties,
pledge agreements, and mortgages, that it had received in
regard to RSN's debt; among these documents was the Striplin
pledge agreement.
Striplin and Taylor each claimed ownership of the
certificate 
of 
deposit, 
and 
The 
Bank 
then 
filed 
an
interpleader action against them and deposited the certificate
of deposit with the clerk of the court.  Both Striplin and
Taylor filed motions for a summary judgment, each claiming
1050313
6
ownership of the certificate of deposit.  Following a hearing,
the trial court concluded as a matter of law that Striplin was
entitled to a summary judgment.  Specifically, the trial court
determined that the Striplin pledge was not supported by
consideration and, alternatively, that Striplin's liability
under the Striplin pledge agreement was extinguished once
RSN's obligations to The Bank had been paid in full.  The
trial court certified the summary judgment as final pursuant
to Rule 54, Ala. R. Civ. P.  Taylor appeals.
Standard of Review
In reviewing a summary judgment, we use the same standard
the trial court used in determining whether the evidence
before it presented a genuine issue of material fact and
whether the movant was entitled to a judgment as a matter of
law.  Bussey v. John Deere Co., 531 So. 2d 860, 862 (Ala.
1988); Rule 56(c), Ala. R. Civ. P.  When the movant makes a
prima facie showing that no genuine issue of material fact
exists, the burden then shifts to the nonmovant to present
substantial evidence creating such an issue.  Bass v.
SouthTrust Bank of Baldwin  County, 538 So. 2d 794 (Ala.
1989).  Evidence is "substantial" if it is of "such weight and
1050313
7
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. of
Florida, 547 So. 2d 870, 871 (Ala. 1989).  In reviewing a
summary judgment, this Court must review the record in a light
most favorable to the nonmovant and must resolve all
reasonable doubts against the movant.  Hanners v. Balfour
Guthrie, Inc., 564 So. 2d 412 (Ala. 1990).  Furthermore, "[i]f
the terms within a contract are plain and unambiguous, the
construction of the contract and its legal effect become
questions of law for the court and, when appropriate, may be
decided by a summary judgment."  McDonald v. U.S. Die Casting
& Dev. Co., 585 So. 2d 853, 855 (Ala. 1991).
Analysis and Conclusion
Taylor contends, among other things, that the trial
court's holding--that Striplin's liability under the Striplin
pledge agreement was extinguished once RSN’s obligations to
The Bank were paid in full--is in direct conflict with the
clear language of § 8-3-2, Ala. Code 1975.  Section 8-3-2,
Ala. Code 1975, provides:
"A surety who has paid his principal's debt is
entitled 
to 
a 
transfer 
of 
the 
original 
and
1050313
8
collateral security which the creditor holds; he has
all the rights to realize thereon and to reimburse
himself to the same extent as the creditor might
have done before the surety paid him, whether paid
before 
or 
after 
judgment; 
and 
he 
shall 
be
substituted for the creditor and subrogated to all
his rights and remedies; in effect, he shall be a
purchaser of the debt and all its incidents."
There is no question that Taylor, as surety for the RSN
loans, was subrogated to all the rights and remedies of The
Bank in relation to the RSN loans.  However, it is clear that,
under the law in Alabama regarding subrogation, Taylor, as
subrogee, "can acquire no greater rights than those possessed
by the principal whose rights he asserts." Home Ins. Co. v.
Stuart-McCorkle, Inc., 291 Ala. 601, 607, 285 So. 2d 468, 472
(1973).  In Crutchfield v. Johnson & Latimer, 243 Ala. 73, 75,
8 So. 2d 412, 414 (1942), this Court stated:
"A person entitled to subrogation must work
through the creditor whose rights he claims.  He
stands in the shoes of the creditor and is entitled
to the benefit of all the remedies of the creditor
and may use all means which the creditor could to
enforce payment.  But he can only enforce such
rights as the creditor could enforce, and must
exercise such rights under the same conditions and
limitations as were binding on the creditor, and
hence, can be subrogated to no greater rights than
the one in whose place he is substituted."
(Emphasis added; citations omitted.)
1050313
9
Taylor further contends that Striplin's liability is
unconditionally triggered by the passage of one year from the
date of default without any foreclosures having occurred.  He
relies on that portion of the Striplin pledge agreement
describing the event triggering Striplin's liability as
follows:
"[U]pon the expiration of one hundred and eighty
(180) days following the foreclosure of all of the
real estate pledged as collateral for [RSN's]
obligations to [The Bank] (or if none, then upon the
expiration of one year from the date of the
default)."
(Emphasis added.)  
According to Taylor, "none" refers to foreclosures, and
there were no foreclosures.  Striplin, on the other hand,
contends that "none" refers to the absence of real estate
pledged as collateral at the time of default.  Because we
conclude that, in all events, The Bank, and anyone standing in
its shoes, could charge against Striplin's certificate of
deposit only if RSN's indebtedness remained due and payable at
the end of the one-year period following default, and it is
undisputed that no indebtedness remained at that time, we need
not address these conflicting contentions as to the meaning of
the word "none" in the Striplin pledge agreement.
1050313
10
We must give the language of the Striplin pledge
agreement its plain and ordinary meaning and determine the
intent of the parties, if possible, from the provisions of the
Striplin pledge agreement.  The Striplin pledge agreement
cites specific conditions that must occur before The Bank can
charge against Striplin's certificate of deposit.   The pledge
states that The Bank can, 180 days following the foreclosure
of all of the real estate pledged as collateral on the RSN
loans, charge against the certificate of deposit any balance
due and payable to The Bank.  It is undisputed that The Bank,
following default of the RSN loans, never attempted to
foreclose on any of the real estate pledged as collateral for
the RSN loans.  Taylor's tender of the remaining balance due
on the RSN loans rendered foreclosure by The Bank unnecessary.
In the event there is no foreclosure of real estate pledged as
collateral, the pledge states that The Bank, after the
expiration of one year from the date of default, can charge
against the certificate of deposit "any balance ... currently
due and payable" to The Bank under the RSN loans.  It is
undisputed that RSN defaulted on its loans on August 31, 2001,
and that on September 28, 2001, Taylor, as an unlimited
1050313
11
guarantor, paid the remaining principal and interest due on
the RSN loans, thereby resulting in no balance being
"currently due" and "payable" to The Bank.   
It is clear according to the plain language of the
Striplin pledge agreement that Striplin’s liability under the
agreement could arise no sooner than one year after the date
of RSN’s default, i.e., September 31, 2002.  Striplin’s
liability under the pledge agreement was extinguished on
September 28, 2001, the date Taylor tendered to The Bank the
remaining balance due and payable on the RSN loans.
Furthermore, the language of the Striplin pledge agreement
specifically dictates that Striplin owned the certificate of
deposit because it provided that The Bank could "charge
against" the certificate of deposit only any balance
"currently" remaining.  Thus, Taylor's reading of the
condition of Striplin's liability under the Striplin pledge
agreement so narrowly as to ignore the necessity for a balance
due and payable on the loans after the expiration of the one-
year period following RSN's default is inconsistent with the
unambiguous terms of the pledge agreement.
1050313
12
The intent of the parties corroborates our reading of the
Striplin pledge agreement, even if we were to conclude that it
was ambiguous.  Both The Bank and Striplin confirmed that the
pledge of the certificate of deposit was intended as a "last-
out" pledge.   Striplin testified as follows:
"Q. [Attorney for Taylor:] ... It’s your
position that this pledge was a last-out pledge; is
that correct?
"A.  Absolutely.  That’s the way Jimmy [Taylor,
Sr.,] had offered it, and that’s the way I accepted
it."
Jimmy Taylor, Sr., the chairman and chief executive
officer of The Bank, testified as follows:
"Q. [Attorney for Striplin:]  Let me ask you
this way.  Just tell me what your understanding was
about the pledge that Mr. Striplin was going to
execute?
"A.  He was going to pledge that on the note,
and that the other collateral was going to come
before his note.  And if the other collateral did
not 
cover 
all 
the 
indebtedness, 
[Striplin’s]
[certificate of deposit] could come into play.  But
if it did, his [certificate of deposit] would be
released.
"Q.  Is that what you mean by last out?
"A.  Yes.
"....
1050313
13
"Q.  I think you’ve already testified it was
your understanding when the loan was paid off, that
released Mr. Striplin from his pledge?
"A.  That was my understanding.  That once it
was paid off, [Striplin] would be released.  Same as
last out.  If that’s last out, he would be released.
"Q.  Because as last out, he would only be
called on if the collateral and the guarantors
failed to pay the loan off?
"A.  Yes sir."
(Emphasis added.)
   
As noted previously, Taylor was legally subrogated to all
the rights and remedies accorded The Bank under § 8-3-2, Ala.
Code 1975.  However, once Striplin’s liability to The Bank
under the Striplin pledge agreement was extinguished, The Bank
had no further right to enforce any charges against the
certificate of deposit.  Accordingly, Taylor, as subrogee, has
no right to charge any amount against the certificate of
deposit.
Because 
our 
decision 
in 
this 
case 
turns 
on 
the
construction of the Striplin pledge agreement itself, we do
not reach the trial court's alternative holding as to lack of
consideration. 
Accordingly, the judgment of the trial
court is affirmed.
1050313
14
AFFIRMED.
See, Lyons, Stuart, Bolin, and Murdock, JJ., concur.
Cobb, C.J., recuses herself.