Preston C. Clayton

This case concerns the calculation of the cost basis of real property (the "Hood Corner") acquired by First National Bank of Birmingham in a 1926-1927 exchange, for purposes of determining the bank's net income and resulting Alabama excise tax liability for financial institutions in 1944. The State Department of Revenue assessed the property's cost at $299,872.50, leading to a claimed profit on its 1943 sale, while the bank argued for a higher basis reflecting additional consideration given in the exchange. The court held that the substance of the transaction showed the bank provided extra value beyond cash and assumed mortgages—specifically by transferring another building below its market value—so the total cost basis was $899,872.50. It therefore reversed the lower court's decree affirming the assessment and remanded for entry of judgment in the bank's favor for the resulting tax overpayment. The decision turned on construing the overall contracts and deeds to determine the true economic cost, without regard to the form of the exchanges or the absence of an excise tax statute in 1926-1927.

taxesbusiness & regulatoryproperty

This case involved buyers of a house and lot suing the sellers for damages based on alleged misrepresentations by the sellers' agent about the house being well-built with good materials, the septic tank functioning properly to handle all sewage, and a ditch on the property containing only rainwater except during heavy rains. The jury returned a verdict for the plaintiffs awarding $2,500, which included both compensatory and punitive damages. The Alabama Supreme Court held that the evidence did not support an award of punitive damages due to lack of proof of intent to deceive or reckless knowledge of falsity by the agent, but found the evidence sufficient to uphold compensatory damages for the misrepresentations, and thus conditioned affirmance of the judgment on a remittitur reducing it to $1,500.

propertytorts & liability

This case involved an Alabama corporation operating in both Alabama and Mississippi that claimed a credit against its Alabama corporate income tax for taxes paid to Mississippi on out-of-state income, pursuant to Section 390 of Title 51 of the Alabama Code. The State Department of Revenue used a formula limiting the credit to a proportion of the total Alabama tax based on the ratio of Mississippi gross income to total gross income, resulting in an assessment of additional tax. The taxpayer challenged the assessment, and the trial court overruled the state's demurrer. The Alabama Supreme Court affirmed, holding that the statute provides a credit up to the amount of Alabama tax that would be due on the out-of-state income at Alabama rates without the additional gross-income proportion limitation imposed by the Department, and that the Department lacks authority to add such a restriction by administrative rule.

taxesbusiness & regulatory

In Montgomery City Lines, Inc. v. Davis, the plaintiff sought damages for personal injuries to her back, knee, and neck sustained when the defendant's bus rear-ended her stopped car, with the defendant's liability admitted so that only the amount of damages remained at issue. The trial court entered a $8,000 judgment for the plaintiff, which the defendant appealed on grounds that the verdict was excessive due to jury passion or prejudice, constituted an improper quotient verdict, and resulted from the erroneous refusal of certain jury charges. The Alabama Supreme Court affirmed, reasoning that conflicting expert testimony on the extent and permanence of the neck injuries created a jury question, the verdict was not shown to be a gambling or quotient verdict under applicable precedents, and the refused charges were either covered by the oral charge or properly denied.

torts & liability

The case involved Mittie Harrison appealing a decree disallowing her $5,000 claim against the estate of her deceased mother-in-law for groceries, cooking, maid service, utilities, and personal care provided over the last six years of the decedent's life. The Supreme Court of Alabama affirmed the lower court's decision to reject the claim after it was contested by other heirs in the administration proceedings transferred to equity. The court reasoned that testimony was conflicting on the decedent's health needs and financial support from others, the claimant's evidence was limited by the dead man's statute, and the delay in asserting the claim created a strong presumption against its validity, with the trial court's ore tenus findings presumed correct on appeal.

family lawpropertyprocedure

This case involved a dispute between a husband and wife over the division of real and personal property, including land, cattle, and farm equipment in Mobile County, Alabama. The wife sought an accounting and division based on 1944 contracts and a prior equity decree, while the husband claimed the contracts were abrogated by the couple's remarriage and resumption of cohabitation, asserted sole ownership of certain assets, and sought a resulting trust or half-interest in property titled in the wife's name based on his contributions. The circuit court awarded the disputed property to the wife, and the Alabama Supreme Court affirmed. The court reasoned that the 1944 contracts and decree remained in effect, that no resulting trust arose in favor of the husband because a gift to the wife is presumed when he furnishes funds for property titled in her name, and that the trial court's findings after ore tenus testimony were entitled to deference given conflicting evidence. The husband could not relitigate issues that should have been raised by appeal from the 1944 decree.

family lawproperty