Holman v. Childersburg Bancorporation, Inc.

Danita and D. Mark Holman (plaintiffs) entered into a loan and mortgage agreement with the First Bank of Childersburg (the bank) (defendant) for $275,000 for the purchase of 16 acres of land. The land was subsequently divided into three tracts. The Holmans and an officer of the bank verbally agreed that upon the Holmans’ sale of one tract, they would pay $175,000 of the sales proceeds to the bank in consideration for a release of the mortgage on both the first and second tracts. The Holmans paid $175,000 to the bank, and the bank executed a release on the first tract. The Holmans later discovered that the bank did not file a release on the second tract, and the bank denied knowledge of an agreement with regard to the release of the second tract. The Holmans filed suit on a number of grounds, including breach of contract, partial performance, negligence, and fraud. The bank asserted the affirmative defense that the claims were barred by the statute of frauds. At trial, the Holmans presented an affidavit from their former legal counsel confirming the bank’s repeated oral acknowledgments that it would release the second tract as part of the consideration for the $175,000 payment. The Holmans contended that Alabama law allowed secondary evidence in the case of a missing writing. The trial court entered summary judgment in favor of the bank on the basis of the statute of frauds, and the Holmans appealed.