Connie Hughes, as personal representative of the estate of Charles J. Hughes, deceased v. The Mitchell Company, Inc.

Annotate this Case

Download PDF

Rel 04/09/2010 Notice: T h i s o p i n i o n i s s u b j e c t t o f o r m a l r e v i s i o n b e f o r e p u b l i c a t i o n i n t h e advance s h e e t s o f Southern R e p o r t e r . R e a d e r s a r e r e q u e s t e d t o n o t i f y t h e R e p o r t e r o f D e c i s i o n s , Alabama A p p e l l a t e C o u r t s , 300 D e x t e r A v e n u e , M o n t g o m e r y , Alabama 36104-3741 ((334) 2 2 9 - 0 6 4 9 ) , o f a n y t y p o g r a p h i c a l o r o t h e r e r r o r s , i n o r d e r t h a t c o r r e c t i o n s may b e made b e f o r e t h e o p i n i o n i s p r i n t e d i n Southern R e p o r t e r . SUPREME COURT OF ALABAMA OCTOBER TERM, 2009-2010 1060109 C o n n i e Hughes, as p e r s o n a l r e p r e s e n t a t i v e o f t h e e s t a t e o f -e ^ C,h a r l. s _J . r . Hughes, d e c e a s e d v. The M i t c h e l l Company, I n c . 1060201 The M i t c h e l l Company, I n c . v. C o n n i e Hughes, as p e r s o n a l r e p r e s e n t a t i v e o f t h e e s t a t e o f C h a r l e s J . Hughes, d e c e a s e d Appeals PER from M o b i l e C i r c u i t (CV-03-4241) CURIAM. On December representative ("Hughes"), Circuit 17, 2003, of the estate sued Court seeking a summary j u d g m e n t entered Mitchell Company personal deceased I n c . ,i n the of past-due Mobile monthly Both p a r t i e s f i l e d and i n f a v o r amounts motions The t r i a l o f The M i t c h e l l sought. cross-appeals. Hughes In case i n part, court On or about January Graddick purchased Realty, I n c . ("PIR"), -management consideration purchase paid 1060109, from t h e summary j u d g m e n t . stock and of Pleasure Julian Island real-estate-sales, -leasing, Charles price we i t i n p a r t , and 25, 1996, Ken C h r i s t i a n a The History a l l the existing business, total and P r o c e d u r a l Company appeals; no. reverse I n c a s e n o . 1 0 6 0 2 0 1 , we a f f i r m Facts a note. t h e summary j u d g m e n t remand. for Company, recovery as J . Hughes, as t o a l l c l a i m s . interest t o any a d d i t i o n a l affirm Hughes, a summary j u d g m e n t i n f a v o r o f Hughes i n t h e amount o f $1,677.01 p l u s as Connie of Charles The M i t c h e l l i n s t a l l m e n t s on a p r o m i s s o r y for Court Hughes o f $650,000. t o t h e Hugheses, and Connie As Christian part and and Hughes of the Graddick 1060109, agreed 1060201 to referred and execute to as payable a "the written Hughes i n monthly promissory note n o t e " ) i n the installments, (hereinafter amount with of interest $233,000 a t 8% annum, o f $ 1 , 9 4 8 . 9 1 f o r 20 y e a r s b e g i n n i n g on F e b r u a r y 1, (hereinafter referred H u g h e s n o t e was located, has and never March not produced Connie seen 1996 t o as " t h e H u g h e s Hughes i t . The Hugheses 1996 indebtedness"). i n evidence. stated per I t has i n her never affidavit received The been she February the that and p a y m e n t s on t h e H u g h e s i n d e b t e d n e s s p u r s u a n t t o t h e Hughes note. On March 20, 1996, The Mitchell " p u r c h a s e and s a l e a g r e e m e n t " of certain purchase property-management and $682,500, with to sale be agreement made up Company PIR, p r o v i d i n g contracts specified of a cash held a preexisting f o r the by PIR. purchase component, p r o m i s s o r y n o t e , a n d t h e a s s u m p t i o n b y The some o f P I R ' s entered into price a a sale The of $100,000 M i t c h e l l Company o f indebtednesses. Specifically, the p u r c h a s e a n d s a l e a g r e e m e n t p r o v i d e d t h a t The M i t c h e l l C o m p a n y "shall assume and pay in accordance with i t s terms that c e r t a i n p r o m i s s o r y n o t e i n t h e o r i g i n a l amount o f $ 2 3 3 , 1 3 3 . 0 0 , by [ P I R ] , a copy of as maker, which i n favor was of [ C h a r l e s ] referenced 3 in the Hughes, purchase as payee," and sale 1060109, 1060201 agreement The purchase Company PIR as to attached, although the and also sale execute and agreement deliver 31, 1996, to be accrued interest on September $75,000 and accrued (hereinafter purchase adjustment and in to to as required attached. The of 1996, be paid with on purchase included a Mitchell payable a t 7% payment "the agreement not interest a 9, interest referred sale paid was a p r o m i s s o r y note i n t h e amount o f $ 1 0 0 , 0 0 0 , w i t h March note commencing $25,000 the with balance March 31, note"). of 1997 The purchase-price- clause: " T h e P u r c h a s e P r i c e s h a l l be i n c r e a s e d o r d e c r e a s e d on a n d as o f M a r c h 3 1 , 1997 i n a c c o r d a n c e w i t h t h i s P a r a g r a p h 3 ( c ) ( t h e ' P u r c h a s e P r i c e A d j u s t m e n t ' ) and the r e m a i n i n g p r i n c i p a l b a l a n c e of the Purchase Note on t h a t d a t e s h a l l be i n c r e a s e d o r d e c r e a s e d t o r e f l e c t the Purchase P r i c e Adjustment. I f , d u r i n g the p e r i o d commencing March 3 1 , 1996 and ending March 31, 1997 ( t h e 'Adjustment Period'), gross r e n t a l commission income ( b u t e x c l u d i n g h o u s e k e e p i n g and m a i n t e n a n c e fee income) a c t u a l l y received by [ T h e M i t c h e l l Company] f r o m t h e C o n t r a c t s and F u t u r e C o n t r a c t s i s l e s s ( o r more) than $289,098.00, the P u r c h a s e P r i c e s h a l l be r e d u c e d ( o r i n c r e a s e d ) $ 2 . 3 6 f o r e a c h $1.00 o f s h o r t f a l l ( o r o v e r a g e ) and t h e a m o u n t t h e n due on t h e P u r c h a s e N o t e , including b e g i n n i n g p r i n c i p a l a n d i n t e r e s t f r o m M a r c h 3 1 , 1996 on s u c h new p r i n c i p a l a m o u n t , s h a l l be r e c a l c u l a t e d a n d p a i d . The P u r c h a s e P r i c e A d j u s t m e n t r e d u c t i o n o r i n c r e a s e , i f a n y , s h a l l n o t be l i m i t e d i n a m o u n t . Any P u r c h a s e P r i c e A d j u s t m e n t d e c r e a s e i n e x c e s s o f t h e amount o f p r i n c i p a l r e m a i n i n g u n p a i d u n d e r t h e P u r c h a s e N o t e s h a l l be p a i d i n c a s h b y [ P I R ] t o [ T h e M i t c h e l l C o m p a n y ] on o r b e f o r e A p r i l 1 5 , 1 9 9 7 , and 4 to 1060109, 1060201 Ken Christian hereby payment t h e r e o f . " The M i t c h e l l 24, 1996, Company p a i d personally the purchase f o r a d i s c o u n t e d payment of guarantees note the off early on J u n e $50,000. A f t e r M a r c h 3 1 , 1997, The M i t c h e l l Company c a l c u l a t e d t h e purchase-price Christian, adjustment determined of $171,549.13. t h e n sued PIR and C h r i s t i a n Court, entered and The Co. v . P l e a s u r e I s l a n d R e a l t y , CV-97-1109. judgment On April against been s a t i s f i e d . Mitchell i n the Baldwin C i r c u i t PIR 7, and The M i t c h e l l the i n favor That against Christian personally 20, July and 9, 1997, f o r a payment Circuit circuit The court Mitchell judgment has not agreed to Company's c l a i m s o f $20,000 made on filed Charles Hughes filed a Chapter 11 i n the United S t a t e s Bankruptcy Court f o r Southern D i s t r i c t schedules of See 1999. bankruptcy p e t i t i o n the Court. Company a n d C h r i s t i a n a s e t t l e m e n t and t o a r e l e a s e o f The M i t c h e l l On and Company Inc., Baldwin 1998, Company i n t h e amount o f $ 1 7 1 , 5 4 9 . 1 3 . December PIR PIR and C h r i s t i a n r e f u s e d t o the purchase-price adjustment, Mitchell that a s g u a r a n t o r , owed T h e M i t c h e l l C o m p a n y a p u r c h a s e - p r i c e adjustment pay and of Alabama. under oath 5 In the d i s c l o s u r e i n that statement proceeding, Charles 1060109, Hughes 1060201 represented creditors to the bankruptcy court Mitchell owns ^ i n t . " Co., full balance $222,277.00 and of judgment accrued died December The By be had no closed i n note - Debtor c o u r t on May on the unpaid 18, 1998. on adjustment, $187,000, o f 12%. 2000, The the including with In accordance indebtedness 12, 22, balance Company h a d t i m e l y of January July ongoing with the paid scheduled through December Mitchell Company Hughes t h a t e f f e c t i v e J a n u a r y 2000 i t w o u l d PIR's Company's further obligation position obligation 11 1999. approximately Mitchell servicing The M i t c h e l l it was letter informed Connie 7, 1999, p a y m e n t s on t h e H u g h e s 1999. longer 15, accruing at the rate note, was the purchase-price interest, monthly case on D e c e m b e r awarding interest Hughes the bankruptcy Hughes As his An o r d e r c o n f i r m i n g C h a r l e s H u g h e s ' s C h a p t e r b a n k r u p t c y p l a n was e n t e r e d b y t h e b a n k r u p t c y Charles to t h a t he o w n e d o n l y an " U n d i v i d e d ^ i n t e r e s t receivable, 1 998, and was under based under the t h e Hughes note. on i t s b e l i e f purchase a g r e e m e n t w i t h P I R t o make p a y m e n t s on t h e H u g h e s no and that sale indebtedness because the unpaid balance owed b y P I R on t h e j u d g m e n t , a f t e r applying both s e t t l e m e n t payment and accrual the t h e $20,000 of the statutory 6 12% rate from of Christian interest on 1060109, 1060201 unpaid j u d g m e n t , more t h a n due the on On to sale as 10, agreement the deceased, thus, of the The Hughes estate I"). was installments the a d d e d as a party as asserting payee condition within of a judgment motions. was The Mitchell the purchase be referred Hughes no circuit an that days. and circuit filed Charles had a court was indebtedness and, court held to pay that the party motion Company's and to Hughes's e s t a t e estate sides of C h a r l e s filed determined be Hughes summary- that " C o n n i e H u g h e s , as p e r s o n a l representative of the E s t a t e o f C h a r l e s H u g h e s , S r . i s e n t i t l e d t o summary j u d g m e n t i n h e r f a v o r as a m a t t e r o f l a w against [T]he Mitchell Company, Inc. for $60,416.21 principal, representing monthly payments through J u l y 31, 2002, i n t e r e s t of $1912.66, representing i n t e r e s t on t h e p r i n c i p a l p o r t i o n o f s a i d m o n t h l y payments through July 31, 2002, and interest hereafter accruing," 7 to who obligation Charles both motion Hughes, indispensable The The of hereinafter Mitchell being plaintiff, The the The The 30 that due. under PIR will Company Hughes granted to fell i n d i v i d u a l l y sued M i t c h e l l Company individually. dismiss, added action The sole Charles Hughes obligations Mitchell conditionally was Connie (that action, that Connie remaining a third-party beneficiary contractual "Hughes dismiss 20 00 , C o m p a n y as Company's and the H u g h e s i n d e b t e d n e s s as t h o s e i n s t a l l m e n t s July Mitchell offset 1060109, and 1060201 that "The M i t c h e l l Company, I n c . i s e n t i t l e d t o summary j u d g m e n t as m a t t e r o f l a w i n i t s f a v o r d i s m i s s i n g t h e c l a i m o f C o n n i e W. H u g h e s , i n d i v i d u a l l y . " The Mitchell Company without an Co. Hughes v. opinion, appealed, the (No. circuit and this 1020023), 88 6 disposition of So. affirmed, judgment. court's Court Mitchell 2d 904 (Ala. 2003) (table). Following the Company s a t i s f i e d to make 2002. for On any the further D e c e m b e r 17, recovery from August of 1, the judgment Hughes entered payments that I, against came due 2 0 0 3 , H u g h e s s u e d The past-due monthly summary-judgment m o t i o n s . final judgment disposing of The after 2003. as failed July Mitchell circuit a l l claims, Mitchell i t but installments 2 0 0 2 , t h r o u g h D e c e m b e r 17, filed The Company accruing Both p a r t i e s court entered follows: "In considering de novo the arguments and a u t h o r i t i e s a d v a n c e d by t h e p a r t i e s i n t h i s case upon the f a c t s p r e s e n t e d , t h i s Court concludes (a) t h a t [The] M i t c h e l l [ C o m p a n y ' s ] p o s i t i o n t h a t i t i s l e g a l l y e n t i t l e d to o f f s e t the unpaid b a l a n c e of i t s judgment a g a i n s t [PIR], with i n t e r e s t accrued and accruing at the judgment rate of 12%, against installments on the Hughes i n d e b t e d n e s s as they mature i s w e l l taken; (b) t h a t , c o n s i s t e n t w i t h t h e O r d e r and J u d g m e n t i n [ H u g h e s I ] , [The] Mitchell [Company's] c o m p u t a t i o n of the a p p l i c a t i o n of t h a t o f f s e t i s s u b j e c t t o a d j u s t m e n t b a s e d on a p a r t i a l waiver of $77,625.00 of the offset amount as 8 31, a 1060109, 1060201 contended by [Hughes]; and (c) t h a t under the p r i n c i p l e s o f j u d i c i a l e s t o p p e l [Hughes] i s b a r r e d f r o m c l a i m i n g e n t i t l e m e n t t o more t h a n h a l f o f t h e b a l a n c e o f t h e Hughes i n d e b t e d n e s s . " 1 5 . The p a r t i e s are i n agreement t h a t the principal balance owed on the entire Hughes i n d e b t e d n e s s a f t e r payment o f t h e December, 1999 i n s t a l l m e n t was $ 2 1 1 , 2 4 9 . 8 7 , o f w h i c h [ H u g h e s ] i s j u d i c i a l l y e s t o p p e d t o c l a i m t o h a v e b e e n owed m o r e t h a n $ 1 0 5 , 6 2 4 . 9 4 w i t h i n t e r e s t a t 8%. H a l f o f t h e $93,498.39 total offset balance to which [The M i t c h e l l C o m p a n y ] was e n t i t l e d a s o f J a n u a r y 1, 2 0 0 0 ($46,749.20), w i t h subsequently a c c r u i n g i n t e r e s t at the judgment r a t e would have been u s a b l e t o o f f s e t [Hughes's] h a l f of the i n d e b t e d n e s s 'on t h e b a c k e n d . ' The i n s t a l l m e n t s r e c o v e r e d b y [ H u g h e s ] u n d e r the O r d e r and Judgment in [Hughes I] were 31 i n s t a l l m e n t s o f $ 1 9 4 8 . 9 1 . A f t e r a p p l y i n g 31 m o n t h l y payments o f $1948.91 e a c h t o t h e a m o r t i z a t i o n o f $ 1 0 5 , 6 2 4 . 9 3 a t 8%, t h e r e m a i n i n g p r i n c i p a l b a l a n c e c l a i m a b l e b y [ H u g h e s ] w o u l d be $ 6 2 , 9 1 8 . 4 6 . A f t e r 31 months, t h e $46,749.20 o f f s e t judgment b a l a n c e w i t h accrued interest a t 12% w o u l d have amounted to $61,241.45 [Hughes] i s j u d i c i a l l y e s t o p p e d t o c l a i m t h a t t h e p a y m e n t s made u n d e r t h e O r d e r a n d Judgment i n [Hughes I ] d i d n o t s a t i s f y i t s e n t i r e c l a i m a g a i n s t [The M i t c h e l l C o m p a n y ] f o r s e r v i c i n g o f t h e Hughes i n d e b t e d n e s s e x c e p t t o t h e e x t e n t o f t h e $ 1 , 6 7 7 . 0 1 d i f f e r e n t i a l , w i t h i n t e r e s t a t 8% f r o m J u l y 3 1 , 2002 u n t i l p a i d . "16. [ H u g h e s ' s ] m o t i o n f o r summary j u d g m e n t i s hereby granted to the extent of the entry of j u d g m e n t a g a i n s t [The M i t c h e l l C o m p a n y ] i n f a v o r o f C o n n i e W. H u g h e s a s P e r s o n a l R e p r e s e n t a t i v e o f t h e Estate of Charles Hughes, Sr. i n the sum of $1677.01, p l u s i n t e r e s t a t e i g h t p e r c e n t (8%) p e r annum f r o m J u l y 3 1 , 2002 u n t i l paid. [Hughes's] m o t i o n f o r summary j u d g m e n t i s o t h e r w i s e d e n i e d . 9 1060109, 1060201 " 1 7 . The [ M i t c h e l l C o m p a n y ' s ] m o t i o n f o r summary judgment i s h e r e b y g r a n t e d i n s o f a r as i t s e e k s a determination that Connie W. Hughes as P e r s o n a l R e p r e s e n t a t i v e o f t h e E s t a t e o f C h a r l e s Hughes, S r . i s j u d i c i a l l y e s t o p p e d t o c l a i m o r c o l l e c t f r o m [The M i t c h e l l Company] a n y f u r t h e r a m o u n t i n e x c e s s o f t h e sum o f $ 1 6 7 7 . 0 1 , p l u s i n t e r e s t a t e i g h t p e r c e n t ( 8 % ) p e r annum f r o m July 3 1 , 2002 u n t i l paid. [ H u g h e s ' s ] m o t i o n f o r summary j u d g m e n t i s o t h e r w i s e denied." Hughes appealed, a n d The M i t c h e l l Standard of Company c r o s s - a p p e a l e d . Review T h i s Court has p r e v i o u s l y s t a t e d t h e s t a n d a r d by which i t reviews the c i r c u i t court's disposition o f a summary-judgment motion: "'In reviewing the d i s p o s i t i o n of a motion f o r summary j u d g m e n t , we u t i l i z e t h e same s t a n d a r d a s that of the t r i a l court i n d e t e r m i n i n g whether the e v i d e n c e b e f o r e t h e c o u r t made o u t a g e n u i n e i s s u e of material fact' and whether t h e movant was e n t i t l e d t o a judgment as a m a t t e r o f l a w . Bussey v . J o h n D e e r e C o . , 5 3 1 S o . 2 d 8 6 0 , 862 ( A l a . 1 9 8 8 ) ; R u l e 5 6 ( c ) , A l a . R. C i v . P. When t h e m o v a n t m a k e s a p r i m a f a c i e s h o w i n g t h a t t h e r e i s no g e n u i n e i s s u e of m a t e r i a l f a c t , the burden then s h i f t s to the nonmovant t o p r e s e n t s u b s t a n t i a l e v i d e n c e c r e a t i n g s u c h an i s s u e . Bass v. S o u t h T r u s t Bank o f B a l d w i n County, 538 So. 2d 794, 797-98 ( A l a . 1989). E v i d e n c e i s ' s u b s t a n t i a l ' i f i t i s o f 'such w e i g h t and q u a l i t y t h a t f a i r - m i n d e d p e r s o n s i n t h e e x e r c i s e of impartial judgment can reasonably i n f e r the e x i s t e n c e o f t h e f a c t s o u g h t t o be p r o v e d . ' West v . F o u n d e r s L i f e A s s u r a n c e C o . o f F l o r i d a , 547 S o . 2 d 8 7 0 , 871 ( A l a . 1 9 8 9 ) . " 10 1060109, 1060201 Ex General parte 1999). 233 this to against Alabama, "Our r e v i e w Court favorable doubts Corp., 769 So. See a l s o B r o w n v . S t . V i n c e n t ' s (Ala. 2004). that Motors must the and t h e movant." I n c . , 613 903, record must in resolve Wilma Corp. S o . 2 d 3 5 9 , 362 90 6 ( A l a . H o s p . , 899 S o . 2 d 2 2 7 , i s further subject review t h e nonmovant 2d to the caveat a light most a l l reasonable v. F l e m i n g Foods o f ( A l a . 1993). Discussion Hughes The argues Mitchell judgment Mitchell Company against indebtedness. that PIR the c i r c u i t to as In e n t e r i n g court apply the an offset erred unpaid by allowing balance against of i t s the a summary j u d g m e n t i n f a v o r Company, t h e c i r c u i t court held, i n pertinent Hughes o f The part: "The S u p r e m e C o u r t o f A l a b a m a s t i l l f o l l o w s t h e general l a w o f c o n t r a c t s t h a t when a t h i r d party b e n e f i c i a r y of a contract i s e n t i t l e d to maintain a d i r e c t a c t i o n on a c o n t r a c t t h a t r i g h t o f a c t i o n i s s u b j e c t t o a l l l i m i t a t i o n s i n t h e c o n t r a c t and 'to supervening defenses arising by virtue of i t s terms.' Restatement Contracts 2 d , §309(c) (2000 Supp.). "'It i s a well-established principle of A l a b a m a l a w t h a t a c o n t r a c t made f o r t h e benefit of a t h i r d p e r s o n may, at h i s e l e c t i o n , be a c c e p t e d a n d e n f o r c e d b y h i m . M i c h i e v . B r a d s h a w , 227 A l a . 3 0 2 , 149 S o . 809 ( 1 9 3 3 ) . H o w e v e r , " [ i ] f he c l a i m s t h e b e n e f i t s [ o f t h e c o n t r a c t ] , he a l s o a s s u m e s t h e b u r d e n s . " M i c h i e , 227 A l a . a t 3 0 8 , 149 11 1060109, 1060201 So. a t 814. See a l s o , Ex p a r t e D y e s s , 709 So. 2d 447 (Ala. 1997) (nonsignatory plaintiff claiming the benefit of a contract as a t h i r d - p a r t y b e n e f i c i a r y i s subject to a r b i t r a t i o n agreement within t h a t c o n t r a c t ) . "The law i s c l e a r t h a t a third party beneficiary i s b o u n d by the t e r m s and c o n d i t i o n s o f t h e c o n t r a c t that it attempts to invoke. 'The beneficiary c a n n o t a c c e p t t h e b e n e f i t s and a v o i d the burdens of l i m i t a t i o n s of a contract.'" I n t e r p o o l L t d . v. T h r o u g h T r a n s p o r t Mut. I n s . A s s ' n L t d . , 635 F. S u p p . 1 5 0 3 , 1505 (S.D. Fla. 1985), quoting TransBav E n g i n e e r s & B u i l d e r s , I n c . v . H i l l s , 5 51 F.2d 370, 378 (D.C. C i r . 1 9 7 6 ) . See Dunn Constr. Co. v. Sugar Beach Condominium A s s ' n , I n c . , 760 F. S u p p . 1479 (S.D. Ala. 19 9 1 ) ; Lee v. Grandcor Medical Systems, I n c . , 702 F. S u p p . 2 5 2 , 255 (D. C o l o . 1988) ("A t h i r d p a r t y b e n e f i c i a r y m u s t a c c e p t a contract's burdens along with its benefits"). It is thus clear that a t h i r d - p a r t y b e n e f i c i a r y cannot accept the b e n e f i t of a c o n t r a c t , w h i l e a v o i d i n g the burdens or l i m i t a t i o n s of t h a t contract.' " G e o r g i a P o w e r Co. v . P a r t i n , 727 So. 2d 2, 5 ( A l a . 1 9 9 8 ) . C o n s e q u e n t l y , any c l a i m b r o u g h t a g a i n s t [The Mitchell Company] by a holder of the Hughes i n d e b t e d n e s s as a t h i r d p a r t y b e n e f i c i a r y o f the c o n t r a c t u a l o b l i g a t i o n s o f [The M i t c h e l l C o m p a n y ] t o [PIR] t o pay t h e Hughes i n d e b t e d n e s s i s s u b j e c t to t h e same r i g h t s , d e f e n s e s , a n d o f f s e t s [The M i t c h e l l Company] w o u l d h a v e a g a i n s t [PIR] i f i t b r o u g h t an action based on such obligations. While the conclusion might be different i f the facts d e m o n s t r a t e d a n o v a t i o n by a g r e e m e n t o f t h e p a r t i e s where the o b l i g a t i o n to pay the Hughes i n d e b t e d n e s s h a d b e e n f o r m a l l y a s s u m e d b y [The M i t c h e l l C o m p a n y ] upon release of the existing obligors on such i n d e b t e d n e s s , w i t h the s u b s t i t u t i o n i n f u l l of [The Mitchell Company] for such obligors, no such 12 1060109, 1060201 novation i s demonstrated facts here." Hughes alleges general that principles the of beneficiaries to t h i s & S t o r a g e Co. v. "'[w]here the under which provided a f f e c t e d by any the promisee, 44) (quoting In the defenses the pertinent in Hughes r e l i e s on U.S. the 364 or e s t a b l i s h that of the that the applying third-party Schneider ( 1 9 8 4 ) , and contract, the the argues that circumstances the beneficiary Moving parties is not p r o m i s o r might have have to the 466 U.S. United at States at 371). Supreme Court held, part: "[The promisors] argue that as third-party beneficiaries of the collective-bargaining agreements, the trustees are bound by the a r b i t r a t i o n clauses provided t h e r e i n to the same e x t e n t the [ p r o m i s e e ] w o u l d be i f i t w e r e seeking judicial enforcement of those agreements. [The promisors] rely on the general rule that the p r o m i s o r may assert against the beneficiary any d e f e n s e t h a t he c o u l d a s s e r t a g a i n s t t h e p r o m i s e e i f the promisee were suing on the contract. See R e s t a t e m e n t (Second) of C o n t r a c t s § 3 0 9 , Comment b ( 1 9 8 1 ) ; S. W i l l i s t o n , C o n t r a c t s § 395 (3d e d . 1 9 5 9 ) ; 4 A. Corbin, Contracts § 819 (1951). That r u l e , however, i s m e r e l y a r u l e of c o n s t r u c t i o n u s e f u l i n determining contractual i n t e n t . I t should not be a p p l i e d so i n f l e x i b l y as t o d e f e a t t h e i n t e n t i o n o f 13 be against r u l e i s i n a p p l i c a b l e . ' " (Hughes's b r i e f , Schneider, Schneider, erred concerning executed, right court under law R o b b i n s , 466 i t was that contract of have o c c u r r e d circuit case. language to in 1060109, 1060201 t h e p a r t i e s . Where t h e l a n g u a g e o f t h e c o n t r a c t , o r the c i r c u m s t a n c e s under which i t was executed, e s t a b l i s h t h a t t h e p a r t i e s have p r o v i d e d t h a t t h e r i g h t o f t h e b e n e f i c i a r y i s n o t t o be a f f e c t e d b y any d e f e n s e s t h a t t h e p r o m i s o r m i g h t have a g a i n s t the promisee, the r u l e i s i n a p p l i c a b l e . Restatement ( S e c o n d ) o f C o n t r a c t s § 3 0 9 , Comment b ( 1 9 8 1 ) . S e e a l s o 4 A. C o r b i n , C o n t r a c t s §§ 8 1 8 , 819 ( 1 9 5 1 ) . " Schneider, 466 Schneider Court protect the general rule Hughes U.S. at 370-71 determined third-party would argues that omitted). i f such beneficiary an was The intention found, then to the not apply. that the Schneider exception should apply because, she s a y s , the following and agreement evidences sale (footnote language The M i t c h e l l from the purchase Company and PIR's i n t e n t t o i n s u l a t e t h e H u g h e s e s f r o m a n y d e f e n s e s The M i t c h e l l C o m p a n y may have purchase-price asserted adjustment have been e n t i t l e d against to which was t o come from PIR by r e q u i r i n g The M i t c h e l l PIR and/or that any Company may Christian: "Any P u r c h a s e P r i c e A d j u s t m e n t d e c r e a s e i n e x c e s s o f t h e amount o f p r i n c i p a l r e m a i n i n g u n p a i d u n d e r t h e P u r c h a s e N o t e s h a l l be p a i d i n c a s h b y [ P I R ] t o [The M i t c h e l l C o m p a n y ] on o r b e f o r e A p r i l 1 5 , 1 9 9 7 , a n d Ken Christian hereby personally guarantees the payment t h e r e o f . " Hughes recognizes that explicitly the above-quoted show a n i n t e n t i o n language b y The M i t c h e l l does Company a n d P I R t o i n s u l a t e t h e H u g h e s e s f r o m a n y d e f e n s e The M i t c h e l l 14 not Company 1060109, 1060201 may asserted have failure of The against of the p a r t i e s Mitchell PIR, but Hughes to s p e c i f i c a l l y argues provide Company t o r e c o v e r any that f o r the p a y m e n t due the cite Hughes any indebtedness legal Hughes authority has failed p u r c h a s e and s a l e Mitchell party may beneficiaries, asserted and intention to i n s u l a t e available t o The the to PIR from sale of the purchase intention of the parties The Mitchell argues Company] factors that "the the Hugheses, There i s no in the and appears sale may the have i s e n t i t l e d t o r e c o v e r an r e l a t i n g t o t h e amount p a i d 15 of i n the parties' from defenses to argue against that indicates Hugheses whether overpayment by third- the from PIR, of the Schneider e x c e p t i o n . determination The PIR. agreement insulate of Company language beneficiaries also as Mitchell establishes Company a g a i n s t to not language PIR. Company t r i g g e r i n g the a p p l i c a t i o n any The Hughes to pay contention. defenses that the does e v i d e n c e s an i n t e n t i o n third-party Mitchell same v e i n , to Hughes any agreement structure defense point to i n s u l a t e against purchase In to support her agreement that Company and have is sufficient. right under p u r c h a s e - p r i c e - a d j u s t m e n t c l a u s e f r o m t h e a m o u n t i t was on the [The an any thereby Hughes Mitchell i s based [The M i t c h e l l the upon Company] 1060109, to PIR 1060201 and Christian, Mitchell Company]"; contractual overpayment has obligation occurred independent [The (and/or that because the does not purchase price of indebtedness) then Company and defense The fails to Therefore, claim ... has to any recover Hughes a p p e a r s t o argue adjusted purchase price (which of entire the included the Hughes M i t c h e l l Company d i r e c t l y paid PIR from intended Mitchell to other than that we affirm brought asserted against an and intention o f The Hugheses from asserted against the against the The assumptions, Schneider circuit court's PIR Company and, should judgment Company sale defenses exception Mitchell 16 Mitchell any any PIR. l a n g u a g e i n t h e p u r c h a s e and have may show Hugheses the insulate Company have the mere a l l e g a t i o n s t o p o i n t t o any to insulate C o m p a n y may agreement t h a t evidences Mitchell Hughes Mitchell Hughes f a i l s PIR an t h e r e i s an i n h e r e n t a s s u m p t i o n t h a t The Once a g a i n , and "[t]he overpayment consideration $682,500 b u t o n l y w h a t The an [The whether the Company] of the a by argues, that Christian)." include paid determining whether Mitchell determination allegedly in of amount Hughes assumes [is] amount f r o m PIR total considered entitling occurred PIR, the therefore, factors to not by The thus, apply. that Hughes any as a 1060109, 1060201 third-party b e n e f i c i a r y of the Company and PIR i s subject to Company w o u l d h a v e a g a i n s t PIR such contract The Mitchell same d e f e n s e s the between The Mitchell i f i t brought a claim based on obligations. Hughes apply the defense next argues Schneider is equitable "barred that even exception, in estoppel." whole i f this The or Court declines M i t c h e l l Company's in part (Hughes's b r i e f , by at the to offset doctrine of 52.) "'"An e s t o p p e l ... h a s t h r e e i m p o r t a n t e l e m e n t s . The a c t o r , who u s u a l l y must have k n o w l e d g e of t h e true f a c t s , communicates something i n a m i s l e a d i n g way, either by words, conduct or s i l e n c e . The other r e l i e s upon t h a t c o m m u n i c a t i o n . And t h e o t h e r w o u l d be h a r m e d m a t e r i a l l y i f t h e a c t o r i s l a t e r permitted t o a s s e r t any claim inconsistent with his earlier conduct."'" P i e r c e v. 2d 340 765, Hand, A r e n d a l l , B e d s o l e , G r e a v e s & J o h n s t o n , 768 So. ( A l a . 1996) 2d Remedies § Company had 770, 2.3 773 (quoting (Ala. (1973)). M a z e r v. 1 97 6 ) , Hughes knowledge of the Jackson Ins. quoting argues in that Hugheses' i n t e r e s t i n the matter of The M i t c h e l l Company's action against shares of the stock pleged as Hughes indebtedness. Company's f a i l u r e of PIR were Hughes argues PIR security that The to n o t i f y the Hugheses of i t s a c t i o n 17 So. Agency, turn The 678 Dobbs, Mitchell subject in for that the Mitchell against 1060109, PIR 1060201 was misleading because their and that i t d i d not allow "right [Company] i t caused t h e Hugheses to the the a b i l i t y to receive future t h e Hughes on harm payments from indebtedness." Hugheses to protect [the] M i t c h e l l (Hughes's b r i e f , at 54.) Hughes she points reasonably notify t o no e v i d e n c e relied t h e Hugheses on of The i n the record Mitchell i t s action Company's against PIR Hughes that failure and how to that reasonable reliance Undisputedly, The M i t c h e l l C o m p a n y s e n t n o t i c e t o t h e H u g h e s e s that caused t o show i t h a d t a k e n o v e r t h e management o f P I R and t h a t be s e r v i c i n g t h e Hughes i n d e b t e d n e s s . M i t c h e l l Company's l e t t e r n o t i f y i n g in management released indicated that on and G r a d d i c k liability Christian and Graddick Hugheses. The M i t c h e l l C o m p a n y ' s a b i l i t y remain i n d e b t e d n e s s b y t h e amount not affect and circuit properly to court causes i n The Hughes had been indebtedness, personally liable to offset to no right to material recover harm g r a n t e d The M i t c h e l l offset. 18 to and the t h e Hughes of i t s u n p a i d judgment a g a i n s t Hughes's indebtedness i t would the Hugheses of t h e change Christian the harm. However, n o t h i n g from does material the PIR Hughes Hughes. The Company t h e right 1060109, As circuit the 1060201 cross-appellant, court circuit right court of Mitchell in finding purchase note r e s u l t e d Company's The erred The offset held, that Company a r g u e s i t s prepayment i n a p a r t i a l w a i v e r o f The against in pertinent the Hughes part, as that the t o PIR of Mitchell indebtedness. follows: "[Hughes's] argument under i t s ' p a r t i a l w a i v e r ' t h e o r y i s t h a t t h e c o n t e m p l a t i o n o f t h e P u r c h a s e and S a l e A g r e e m e n t was that at the time the Purchase P r i c e A d j u s t m e n t was t o be c a l c u l a t e d , a b a l a n c e o f $ 7 5 , 0 0 0 p l u s i n t e r e s t a c c r u i n g a t 7% f r o m S e p t e m b e r 9, 1996 w o u l d t h e n s t i l l be owed b y [The M i t c h e l l Company] u n d e r the Purchase Note, and that any P u r c h a s e P r i c e A d j u s t m e n t due [The M i t c h e l l C o m p a n y ] w o u l d f i r s t be s e t o f f a g a i n s t t h a t u n p a i d b a l a n c e b e f o r e b e i n g a s s e r t e d as a s e t o f f a g a i n s t p a y m e n t s on t h e H u g h e s i n d e b t e d n e s s . [ H u g h e s ] argues that when [The M i t c h e l l C o m p a n y ] e l e c t e d t o p r e p a y t h e P u r c h a s e Note a t a d i s c o u n t p r i c e o f $50,000 i n J u n e , 1 9 9 6 , b e f o r e a n y p a y m e n t on t h e P u r c h a s e N o t e came d u e , [The M i t c h e l l Company] f r u s t r a t e d the p u r p o s e f o r w h i c h t h e P u r c h a s e N o t e was i n t e n d e d , which was to p r o v i d e the primary vehicle for e f f e c t i n g a r e d u c t i o n i n the purchase p r i c e . [The M i t c h e l l Company] has a t a l l t i m e s c o n c e d e d t h a t b u t for the r i g h t to o f f s e t a g a i n s t payment of the Hughes i n d e b t e d n e s s i n o r d e r t o r e a l i z e upon t h e Purchase P r i c e A d j u s t m e n t , i t would have c o n t i n u e d to pay t h e i n s t a l l m e n t s o f t h e Hughes i n d e b t e d n e s s a s t h e y f e l l d u e . The r e c o r d a l s o e s t a b l i s h e s t h a t [The M i t c h e l l C o m p a n y ] u n d e r s t o o d a t t h e t i m e i t a g r e e d to pay o f f the P u r c h a s e Note e a r l y at a d i s c o u n t t h a t i t was i n e f f e c t g i v i n g up security f o r e f f e c t i n g any P u r c h a s e P r i c e A d j u s t m e n t i t m i g h t l a t e r be d e t e r m i n e d t o be e n t i t l e d t o . A s a r g u e d b y [ H u g h e s ] , w a i v e r o c c u r s when a p a r t y i n p o s s e s s i o n of a right, whether arising out of law or a c o n t r a c t , w i t h f u l l knowledge of the m a t e r i a l f a c t s , performs acts which are i n c o n s i s t e n t w i t h the r i g h t 19 1060109, 1060201 o r i t s i n t e n t i o n t o r e l y on t h a t r i g h t . Dominex, I n c . v . K e y , 456 S o . 2 d 1047 ( A l a . 1 9 8 4 ) ; B a s s e t t v . N e w t o n , 658 S o . 2 d 398 ( A l a . 1 9 9 5 ) . " The Mitchell Company a r g u e s record supporting the c i r c u i t that t h e r e i s no e v i d e n c e court's finding that, the remaining balance of the purchase note e a r l y , Company w a i v e d the purchase there i t s right note. i s ample waived to offset i t s right showing by p a y i n g The M i t c h e l l the remaining balance of C o n t r a r y t o The M i t c h e l l evidence i n the that The Company's Mitchell claim, Company to offset. " ' W a i v e r i s d e f i n e d as t h e v o l u n t a r y s u r r e n d e r o r r e l i n q u i s h m e n t o f some k n o w n r i g h t , b e n e f i t , o r a d v a n t a g e . C i t y o f M o n t g o m e r y v . W e l d o n , 280 A l a . 4 6 3 , 1 95 S o . 2 d 110 (1 967 ) . H o w e v e r , i t i s w e l l established that a party's intention t o waive a r i g h t i s t o be a s c e r t a i n e d f r o m t h e e x t e r n a l a c t s m a n i f e s t i n g t h e w a i v e r . G i v e n s v. G e n e r a l Motors A c c e p t a n c e C o r p . , 56 A l a . A p p . 5 6 1 , 324 S o . 2 d 277 ( 1 9 7 5 ) . T h i s i n t e n t i o n t o w a i v e a r i g h t may b e f o u n d w h e r e o n e ' s c o u r s e o f c o n d u c t i n d i c a t e s t h e same o r i s i n c o n s i s t e n t w i t h any o t h e r i n t e n t i o n . ' " Stewart v . B r a d l e y , 15 S o . 3 d 5 3 3 , 543 (quoting Waters v. T a y l o r , ( A l a . C i v . App. 2008) 527 S o . 2 d 1 3 9 , 141 ( A l a . C i v . A p p . 1988)). It i s clear agreement general from and from counsel the face the deposition f o r The Mitchell of the purchase testimony Company, and of Paul that sale Wesch, the balance r e m a i n i n g on t h e p u r c h a s e n o t e a s o f M a r c h 3 1 , 1 9 9 7 , was t o b e 20 1060109, 1060201 recalculated, taking adjustment. "[a]ll shall purchase remaining p r i n c i p a l be due Adjustment clause The into on M a r c h described 31, account and sale and 1997 the agreement interest (subject below)." purchase-price on states that the Purchase Note to the Purchase Price The p u r c h a s e - p r i c e - a d j u s t m e n t states: "The P u r c h a s e P r i c e s h a l l be i n c r e a s e d o r d e c r e a s e d on a n d as o f M a r c h 3 1 , 1997 i n a c c o r d a n c e w i t h t h i s P a r a g r a p h 3 ( c ) ( t h e ' P u r c h a s e P r i c e A d j u s t m e n t ' ) and the r e m a i n i n g p r i n c i p a l b a l a n c e of the Purchase Note on t h a t d a t e s h a l l be i n c r e a s e d o r d e c r e a s e d t o r e f l e c t the Purchase P r i c e Adjustment. I f , d u r i n g the p e r i o d commencing March 3 1 , 1996 and ending March 31, 1997 (the 'Adjustment Period'), gross r e n t a l commission income (but e x c l u d i n g h o u s e k e e p i n g and m a i n t e n a n c e f e e income) a c t u a l l y r e c e i v e d by [The M i t c h e l l C o m p a n y ] f r o m t h e C o n t r a c t s a n d F u t u r e Contracts i s less ( o r more) t h a n $ 2 8 9 , 0 9 8 . 0 0 , t h e P u r c h a s e P r i c e s h a l l be r e d u c e d ( o r i n c r e a s e d ) $ 2 . 3 6 f o r e a c h $1.00 of s h o r t f a l l (or o v e r a g e ) and t h e a m o u n t t h e n due on t h e P u r c h a s e N o t e , including b e g i n n i n g p r i n c i p a l a n d i n t e r e s t f r o m M a r c h 3 1 , 1996 on s u c h new p r i n c i p a l a m o u n t , s h a l l be r e c a l c u l a t e d a n d p a i d . The P u r c h a s e P r i c e A d j u s t m e n t r e d u c t i o n o r i n c r e a s e , i f a n y , s h a l l n o t be l i m i t e d i n a m o u n t . Any P u r c h a s e P r i c e A d j u s t m e n t d e c r e a s e i n e x c e s s o f t h e amount o f p r i n c i p a l r e m a i n i n g u n p a i d u n d e r t h e P u r c h a s e N o t e s h a l l be p a i d i n c a s h b y [ P I R ] t o [The M i t c h e l l C o m p a n y ] on o r b e f o r e A p r i l 1 5 , 1 9 9 7 , and Ken Christian hereby personally guarantees the payment t h e r e o f . " As e v i d e n c e d by t h e a b o v e - q u o t e d s a l e agreement, recalculated, t h e b a l a n c e due applying the language of the purchase on t h e p u r c h a s e n o t e was and t o be purchase-price-adjustment, which 21 1060109, 1060201 calculation was to occur on M a r c h 31, 1997. As e v i d e n c e o f The M i t c h e l l C o m p a n y ' s k n o w l e d g e o f t h a t f a c t , W e s c h as testified follows: "Well, the purchase p r i c e adjustment i s r e f e r r e d t o i n t h i s p a r a g r a p h . A n d , i n summary, i t s a y s you offset or decrease the p r i c e first against the purchase note, the hundred thousand d o l l a r note that we w e r e t a l k i n g a b o u t . fl "And t h e n i t s a y s t h e p u r c h a s e p r i c e a d j u s t m e n t reduction or increase shall n o t be limited i n amount." The Mitchell Company entered into the agreement w i t h the understanding that purchase as offset note of March to a possible increase purchase-price-adjustment Mitchell Company, voluntarily the purchase when the right a t o be With the that circuit Company had court purchase as an possible waived increase i t s right judgment. 22 note The early, to o f f s e t the balance of d i d not e r r i n f i n d i n g that partially used knowledge, p r i c e under the p u r c h a s e - p r i c e - a d j u s t m e n t c l a u s e . the sale of the purchase p r i c e under the clause. against and t h e b a l a n c e d u e on t h e 1 9 9 7 , was i t paid relinquished note 31, purchase to in purchase Therefore, The Mitchell offset the PIR 1060109, 1060201 Having that The determined Mitchell balance of waived, as that Company has i t s judgment an offset indebtedness, we the the against against now circuit right PIR, consider judicial estoppel the "'protect[] litigants.'" 1236, 1243 Inc., 291 Alabama, (Ala. F.3d this the Ex under Court First (quoting 1286 (11th of the Cir. v. circuit court the doctrine estoppel judicial Pemco 2002)). of interest system, 883 So. 2d Aeroplex, In held: "The United States Supreme Court in New H a m p s h i r e v . M a i n e , 532 U.S. 742, 121 S. C t . 1808, 149 L. E d . 2d 968 (2001 ) , r e c e n t l y o b s e r v e d that '"[t]he circumstances under which j u d i c i a l estoppel may appropriately be invoked are probably not r e d u c i b l e t o any g e n e r a l f o r m u l a t i o n of p r i n c i p l e " ' a n d t h e n i d e n t i f i e d s e v e r a l f a c t o r s as informative i n d e t e r m i n i n g the a p p l i c a b i l i t y of the d o c t r i n e of j u d i c i a l estoppel. 532 U.S. a t 7 5 0 - 5 1 , 121 S.Ct. 1 80 8 ( q u o t i n g A l l e n v . Z u r i c h I n s . Co., 667 F.2d 1 1 6 2 , 1166 ( 4 t h C i r . 1 9 8 2 ) ) . The C o u r t h e l d t h a t f o r judicial estoppel to apply (1) 'a p a r t y ' s later p o s i t i o n m u s t be "clearly inconsistent" with i t s earlier position'; (2) the p a r t y must have been s u c c e s s f u l i n t h e p r i o r p r o c e e d i n g so t h a t ' j u d i c i a l a c c e p t a n c e o f an i n c o n s i s t e n t p o s i t i o n i n a l a t e r proceeding would c r e a t e "the p e r c e p t i o n t h a t e i t h e r 23 i t Hughes Alabama Bank, Burnes unpaid the d o c t r i n e of j u d i c i a l integrity parte 2003) 1282, The held portion f r o m c l a i m i n g more t h a n a o n e - h a l f i n t h e Hughes i n d e b t e d n e s s . not by the the the barred properly apply minus whether d e t e r m i n e d t h a t H u g h e s was to to i t s obligation properly exists court First 1060109, 1060201 the first o r s e c o n d c o u r t was m i s l e d " ' (quoting E d w a r d s v . A e t n a L i f e I n s . C o . , 690 F . 2 d 5 9 5 , 599 (6th C i r . 1982)); and (3) t h e p a r t y seeking to assert an i n c o n s i s t e n t p o s i t i o n must 'derive an u n f a i r a d v a n t a g e o r i m p o s e an u n f a i r d e t r i m e n t on t h e o p p o s i n g p a r t y i f n o t e s t o p p e d . ' 532 U.S. a t 750-51, 121 S . C t . 1 8 0 8 . " 883 S o . 2 d a t 1 2 4 4 - 4 5 . In Hughes the present was barred case, by the c i r c u i t the doctrine c l a i m i n g more t h a n o n e - h a l f Charles Hughes The circuit court interest would be Hughes i n t h e Hughes in that a one-half bankruptcy allowing indebtedness inconsistent" with the 1997 "the perception misled." i n h i s 1997 The court held because proceedings. to claim i n the present position proceeding, that e i t h e r the f i r s t circuit from interest i n Hughes the bankruptcy that estoppel o f t h e Hughes i n d e b t e d n e s s reasoned "clearly took creating was indebtedness determined of j u d i c i a l Hughes h a d s u c c e s s f u l l y c l a i m e d the full court that case Charles thereby or second Hughes a court gained an u n f a i r advantage from the i n c o n s i s t e n t p o s i t i o n s and, t h u s , i s now b a r r e d more than As a one-half observed principle applies; by t h e d o c t r i n e o f j u d i c i a l above, dictating such interest. when a decision there We estoppel general the doctrine 24 claiming disagree. i s no is left from of formulation judicial to the court's of estoppel discretion, 1060109, 1060201 enlightened by several informative factors p r e c e d e n t o f t h i s C o u r t and t h e U n i t e d the landmark (2001). it case o f New Hampshire States v. Hughes i n order position that has to gain not from Supreme C o u r t i n Maine, Given the s p e c i f i c circumstances i s clear gleaned 532 U.S. of the present asserted an 742 case, inconsistent an u n f a i r a d v a n t a g e ; she i s m e r e l y a s s e r t i n g a p o s i t i o n c o n s i s t e n t w i t h t h e j u d g m e n t i n Hughes I . Instead, i t appears attempting to gain that The an Mitchell unfair I , The positions. I n Hughes successfully argued Connie Hughes indebtedness, of t h e Hughes in Hughes I indebtedness, that, the Hughes Now, was The M i t c h e l l circuit court decided sole the Hughes inconsistent Allowing estoppel and asserted the c i r c u i t court's asserting to the payee on to gain entirety i s barred positions an unfair Hughes and argues that occurred judgment t o stand 25 to the the course I , Hughes Such Company claim f r o m c l a i m i n g more t h a n indebtedness. party s u c c e s s f u l l y argued Company r e v e r s e s Hughes no entitled having the by Mitchell had because of a bankruptcy proceeding doctrine of j u d i c i a l of Hughes l e a v i n g Hughes indebtedness. that i s the advantage inconsistent that Company are before by t h e one-half clearly advantage. would create a 1060109, 1060201 windfall f o r The M i t c h e l l due installments Further, The M i t c h e l l any we o f t h e Hughes hold that Company interest Company less from than amounting the past- note. the doctrine arguing that the to half entire of res j u d i c a t a Hughes bars i s entitled interest i n the to Hughes indebtedness. In Ala. John Hancock Mutual Life 6 2 1 , 6 2 4 , 162 S o . 2 7 7 , 2 7 9 Insurance (1935), Co. v . L a r g e , this Court 230 held: "The g e n e r a l r u l e t h a t s u i t c a n b e b r o u g h t t o r e c o v e r o n l y demands a l r e a d y a c c r u e d i s n o t t o be questioned. " I n a s u i t u p o n p a s t - d u e i n s t a l l m e n t s , due u n d e r one a n d t h e same c o n t r a c t , t h e g e n e r a l well-known r u l e at law i s that present recovery i s l i m i t e d to past-due i n s t a l l m e n t s at the time of s u i t f i l e d , but t h e j u d g m e n t i s p l e a d a b l e as r e s a d j u d i c a t a o f t h e original obligation, and in suits for later installments defenses are l i m i t e d to subsequent matters going to the continued e x i s t e n c e of the o b l i g a t i o n to pay the i n s t a l l m e n t s then i n s u i t . " In Charles that Hughes Connie Hughes's p o s i t i o n she h e l d Hughes. claim I, t h e Hughes from indebtedness M i t c h e l l Company argued indebtedness the case. argued, consistent i n h i s 1997 b a n k r u p t c y The M i t c h e l l Company t o t h e Hughes dismissed Hughes The jointly that Connie and thus circuit court and o r d e r e d t h a t t h e f u l l 26 moved with proceeding, with Charles H u g h e s h a d no t o have h e r agreed with The amount o f t h e p a s t - 1060109, due 1060201 installments alone. be paid In the present Hughes I, Hughes to the estate of Charles Hughes a c t i o n , c o n s i s t e n t w i t h the judgment i n claims the entirety of the Hughes indebtedness. Under J o h n Hancock, t h e j u d g m e n t i n Hughes I i s p l e a d a b l e in the present action as obligation. The M i t c h e l l matters" a as defense bankruptcy proceeding not be bars pleaded The to to paying of raise the only Company i t s obligation. judgment The from of original "subsequent i s not a subsequent matter; the e n t i r e t y court's judicata C o m p a n y may a defense. Mitchell entitled circuit as res doctrine arguing regarding this thus, 1997 i t may of res j u d i c a t a that t h e Hughes The Hughes i s not indebtedness. issue The i s reversed. Conclusion Based on the foregoing, reverses i n part 1060109, a n d we with this the Company i s e n t i t l e d minus t h e amount summary remand opinion. As Court judgment the case to apply i t waived, However, holding, i s not affirms 27 by to no. consistent The Mitchell judgment a g a i n s t a s an o f f s e t contrary held, and i n case entered court i t sunpaid barred i n part f o r proceedings the c i r c u i t indebtedness. Hughes this against the t h e Hughes circuit the doctrine PIR, of court's judicial 1060109, 1060201 estoppel from Hughes claiming indebtedness. establishes Hughes that, i s judgment to Further, -- a one-half Instead, the doctrine e n t e r e d i n case 1060109 than consistent entitled indebtedness. more AFFIRMED with claim no. entirety Court i n the of res judicata the judgment the this interest i n Hughes I , of affirms the the Hughes summary 1060201. IN PART; REVERSED IN PART; AND REMANDED. 1060201 Cobb, Parker, -- A F F I R M E D . C . J . , and a n d Shaw, Murdock, Lyons, Woodall, Stuart, J J . , concur. J . , concurs i n the r e s u l t . 28 Smith, Bolin,

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.