Opinion ID: 1886501
Heading Depth: 1
Heading Rank: 3

Heading: directed verdict motions on the fraudulent concealment and conspiracy claims

Text: The bank next contends that the trial court erred in failing to grant its motion for directed verdict on Spigener's claims of fraudulent concealment and civil conspiracy.
Ala.Code 1975, § 6-5-102, provides: Suppression of a material fact which the party is under an obligation to communicate constitutes fraud. The obligation to communicate may arise from the confidential relations of the parties or from the particular circumstances of the case. AmSouth argues that the claim for fraud must fail on two grounds: (1) Citizens was under no duty to communicate to Spigener the existence of the $25,000 check before paying it; and (2) Citizens lacked the necessary intent to injure Spigener. Courts have traditionally viewed the relationship between a bank and its customer as a creditor-debtor relationship which does not impose a fiduciary duty of disclosure on the bank. Baylor v. Jordan, 445 So.2d 254, 256 (Ala.1984). However, § 6-5-102 also provides that the obligation to communicate may arise from the particular circumstances of the case. Spigener's evidence before the jury included the following suspicious circumstances which surrounded the presentation of the $25,000 check: (1) The check was on a form that was at least thirteen years old. (2) The check was a counter check. (3) The check had no account number. (4) The check had an out-of-date bank routing number. (5) The check had an out-of-date FDIC symbol. (6) The check was payable to an ex-wife by the name of `Ferguson' and not `Spigener.' (7) The check was payable to an ex-wife of thirteen years. (8) The check's payee's name was typed. The rest of the check was handwritten. (9) The signature was in a different color ink from the rest of the handwritten parts of the check. (10) The handwriting of the signature is different from the other handwritten parts of the check. (11) The check was for a large amount not customarily written. (12) The check was dated for February 1, 1983, an obvious misstatement since the check had been issued for some thirteen years. (13) The check was completed by the ex-wife of the drawer. There are other circumstances surrounding this transaction that drew the check into question. It is significant that attorney Reneau who represented the bank and advised it to cash the $25,000 check also represented Spigener in his divorce from Ferguson. Reneau testified that a full and final property settlement had been entered between Spigener and Ferguson 13 years earlier and that he had never been told by Spigener that part of the divorce settlement included signed blank checks to be completed by Ferguson at a later time. It is also significant that Ferguson personally appeared before high ranking bank officials on presentment of the check. As previously mentioned, the UCC imposes upon the bank the duty to exercise ordinary care, see § 7-4-103(5) and comment 4 to § 7-4-103, and to act in accordance with commercially reasonable banking practices. See § 7-3-406. Both sides presented expert testimony on the issue of whether the bank exercised ordinary care and paid the check in accordance with reasonable commercial standards of the banking business. The bank's own expert, Kenneth R. McCartha, testified that [i]f you have reason to believe that there is concern or suspicion, certainly, it is a practice to call the customer. There was evidence before the jury which indicated that the bank officials had suspicion and concern about the check, and yet, Spigener was not contacted. McCartha also testified that if the bank in fact had knowledge on February 1, 1983, that the check had been issued and outstanding for 13 years and was incomplete until completed on that same day, then the bank should have called Spigener. Vice President Joe Graham testified that while Ferguson was in his office on February 1, 1983, she told him that she had personally filled the check out for $25,000, and that she had gotten the check from Spigener prior to her divorce from him. Graham also knew that both Spigener and Ferguson had married different people since their divorce. Spigener's two experts opined that Citizens did not follow commercially reasonable banking practices of the banking industry. One expert stated that he thought there were enough discrepancies with regard to the instrument itself that Citizens should have investigated further, as opposed to paying the check. Both testified that in their opinion, the bank should have contacted Spigener before paying the check to Ferguson. Thus, the jury had before it evidence to support the conclusion that the bank failed to exercise ordinary care and did not act in accordance with reasonable banking practices as mandated by the UCC. Likewise, for purposes of § 6-5-102, the particular and very unusual circumstances of this case could give rise to an obligation of the bank to communicate with Spigener about the presentment of the check by his ex-wife. Ordinarily, there is no duty of disclosure on a bank with its customer. Baylor v. Jordan, supra. But this is no ordinary banking case. This is not a case where a bank receives a check, either in the regular course of business or through the mail, or even over the bank's counter by a bank teller. Rather, it is a case where a large check is brought in person by a woman known to be the ex-wife of the bank's customer. Furthermore, it is brought directly to one of the highest ranking officials at the bank. The official was aware that the drawer and payee had been divorced and that each had since remarried. He was also aware that the check was completed by the ex-wife on the day of presentment. The bank's attorney, who was consulted about the check, not only knew that the payee and drawer were divorced, but he had represented the drawer in the divorce 13 years prior. AmSouth vigorously argues that if a drawee bank owed its depositor a duty to call each time it received a check bearing his genuine signature, but completed in handwriting other than the depositor's, an unprecedented and paralyzing burden would be placed on commercial transactions. If this were the only irregularity involved in this case, we would agree with AmSouth. But this case involved much more. The particular circumstances of this case would rarely, if ever, reappear again. Our holding that under the facts of this case the bank had a duty to contact its customer will not result in a paralyzing burden upon commercial transactions. AmSouth's second contention with regard to the fraud claim is that the bank lacked the requisite scienter to support a claim for fraudulent concealment. In Marshall v. Crocker, 387 So.2d 176 (Ala.1980), this Court discussed the elements of concealment: Concealment implies design, or purpose.... The concealment must be for the purpose of continuing a false impression or delusion under which the purchaser has fallen, or of suppressing inquiry, and thereby effecting a salewith the intention to conceal or suppressand it must operate an inducement to the contract. 387 So.2d at 179, quoting from Jordan & Sons v. Pickett, 78 Ala. 331 (1884). AmSouth points out that the testimony was undisputed that Spigener was one of the bank's largest depositors and best customers; that he had transacted business at the bank since the day it first opened; that Bill Reneau, the bank's counsel of many years, was a close personal friend of Spigener's and that Watt Jones and Joe Graham had always enjoyed good business relations with him. On the other hand, Ferguson had done very little business with the bank. Furthermore, her loan was small and secured by property of much greater value. Thus, the bank and its officers had everything to lose and nothing to gain by intentionally harming Spigener. There was, however, also evidence from which the jury could have inferred that the bank acted with the requisite scienter. Intent may be established by circumstantial evidence. Old Southern Life Ins. Co. v. Woodall, 326 So.2d 726 (Ala. 1976). Attorney Reneau testified that he assumed that if Spigener had been contacted prior to the cashing of the check, Spigener would have put a stop order on the check. There was evidence that at least one bank official knew that Ferguson was experiencing financial difficulties on February 1, 1983, and that she intended to pay off her loan with the bank with the proceeds of the $25,000 check. The jury apparently believed that the bank elected not to contact its customer so as to assure itself that one of its loans would be paid off. A directed verdict motion may not be granted if reasonable inferences may be drawn from the evidence presented in support of the claim against which the motion is made. O'Donohue v. Citizens Bank, 350 So.2d 1049 (Ala.Civ.App.1977). A motion for directed verdict or JNOV cannot be granted if there is any conflict in the evidence for the jury to resolve. Baker v. Chastain, 389 So.2d 932 (Ala.1980). Garrett v. Key Ford, Inc., 456 So.2d 77 (Ala. Civ.App.1984). Although this case presents a close question, we find that there was evidence to submit to the jury Spigener's claim of fraudulent concealment. The trial court did not err in denying AmSouth's motion for directed verdict on this claim.
AmSouth finally contends that Spigener's claim for civil conspiracy to defraud fails for three reasons, namely, (1) absence of duty, (2) absence of scienter, and (3) lack of evidence that Citizens Bank entered into any combination or agreement to defraud Spigener. In Snyder v. Faget, 295 Ala. 197, 326 So.2d 113, 119 (1976), in quoting from Jolowicz & Lewis, Winfield on Torts, Conspiracy 557, 559, 560 (8th ed. 1967), we summarized the necessary elements of civil conspiracy as follows: `(a) Purpose. The most important feature of a tortious conspiracy where unlawful means are not used is that the object or purpose of the combination must be to cause damage to the plaintiff. It is not a matter of intention as that word is normally used in the law, for intention signifies not what a person is aiming at but what may reasonably be expected to flow from what he does, while for conspiracy the test is what is in truth the object in the minds of the combiners when they acted as they did. Malice in the sense of malevolence, spite or ill-will is not an essential for liability; what is required is that the combiners should have acted in order that (not so that ) the plaintiff should suffer damage. If they did not act in order that the plaintiff should suffer damage they are not liable, however selfish their attitude and however inevitable the plaintiff's damage may have been. `... `(b) Combination. There must, of course, be concerted action between two or more persons.... `(c) Overt act causing damage.... [A]n overt act causing damage is an essential of liability in tort....' AmSouth's first two reasons, absence of duty and absence of scienter, which AmSouth contends defeat Spigener's claim of civil conspiracy, have already been addressed in the discussion on fraudulent concealment. As for the third ground, we find that there was evidence from which the jury could have found an agreement between the bank and Ferguson to defraud Spigener. The trial court did not err in denying the motion for directed verdict on the claim of civil conspiracy. Joe Graham testified that he received a phone call from Ferguson on or about January 27, 1983, and that Ferguson stated that she intended to pay off her loan with Citizens Bank with the proceeds of a large check that she intended to cash at Citizens. Graham told her to bring the check in. Graham also denied taking any action on the check until the day that Ferguson presented it, February 1, 1983. Watt Jones, on the other hand, testified that Graham contacted him after Ferguson's call, but prior to February 1, 1983, and Graham told him that Ferguson would be bringing in a large check that she intended to fill out when she arrived at the bank. Attorney Reneau stated that he thought he had spoken to Graham one or two times prior to February 1, 1983, about Ferguson's presenting a check which was apparently 13 years old and drawn on Spigener's account. There was a question about whether its age would make any difference, regardless of what the date on the check showed. On February 1, 1983, Ferguson went to the bank and completed the check for $25,000, dating it February 1, 1983. Graham was aware that she completed the check. Graham again discussed the check with Jones and Reneau. They decided to cash the check without contacting Spigener. Graham knew that Ferguson was going to pay off the loan with the bank with the proceeds of the check. On February 9, 1983, Spigener learned about the check and contacted the bank. No one at the bank informed him that a portion of the proceeds from the check was used to pay off Ferguson's loan. There was evidence before the jury from which they could find an agreement between the bank and Ferguson. The purpose of punitive damages is to punish and deter the wrongdoer. AmSouth argues that since it had no involvement with the transaction at issue, it cannot be held liable for punitive damages. Under the terms of the merger, AmSouth assumed both the assets and liabilities of Citizens. But be that as it may, this issue was not presented to the trial court and cannot, therefore, be raised for the first time on appeal as grounds for reversal. Smiths Water Authority v. City of Phenix City, 436 So.2d 827 (Ala.1983); Chatman v. City of Prichard, 431 So.2d 532 (Ala. 1983).