Alabama Case Law
EDWARDS v. ALLIED HOME MORTGAGE CAPITAL CORP., 1050343 (Ala. 1-12-2007) Vicki Edwards v. Allied Home Mortgage Capital Corporation. No. 1050343. Supreme Court of Alabama. Decided January 12, 2007.
Appeal from Jefferson Circuit Court (CV-03-5644).
NABERS, Chief Justice.
Vicki Edwards appeals from judgments for Allied Home
Mortgage Capital Corporation on its claims against Edwards
and on her counterclaims against Allied. All those claims
arose from Edwards’s employment with Allied between 1997
and 2003. For the reasons discussed below, we affirm in
part and reverse in part.
Facts and Procedural History
Allied, which is based in Houston, Texas, is a
mortgage-brokerage company engaged in procuring,
facilitating, and funding home-mortgage loans. In 1997
Allied employed Edwards as the manager of its branch office
in Huntsville. As branch manager, Edwards’s principal duties
were the marketing of Allied’s services in the Huntsville
area, the operation of the branch, the procurement of
customers, the generation of loan applications, the
prequalification of borrowers, and other support services
to borrowers and lenders related to the closing of loans
secured by home mortgages.[fn1]
Edwards’s employment was terminable at will either by her
or by Allied. The terms of Edwards’s employment and her
responsibilities as branch manager were detailed in a
branch operating/employment agreement executed on October
3, 1997 (“the agreement”). The agreement specified that
Edwards was solely responsible for the profitability of the
branch. Accordingly, Edwards had the responsibility for
paying for utilities, rent, payroll, equipment, furniture,
office supplies, federal employment taxes, and all other
operating expenses related to the branch (collectively
hereinafter “the branch-operating expenses”).
Revenues for the services Allied provided were generated
upon the closing of loans that originated through the
Huntsville branch. The lender who funded the loan
designated the closing attorney. That attorney was
authorized to remit part of the loan proceeds to Allied as
compensation for the loan origination or other services the
Huntsville branch office provided for a closing. Following
a closing originated through the Huntsville branch office,
the closing attorney would send the branch a check payable
to Allied for the sum of all fees owed for Allied’s
services (including amounts owed to any third-party
vendor).[fn2]
The agreement specified the responsibilities of Edwards and
Allied for handling, accounting, and distributing revenues
generated from loans closed through the branch. Paragraph
2.8 of the agreement stated:
“2.8 All monies received by [Edwards] for [Allied] or to
be held for others shall be made payable to [Allied] and
received in trust by [Edwards] for [Allied] and delivered
immediately to [Allied]. [Edwards] shall open no bank
accounts in [Allied’s] name.”
Along with the closing checks payable to Allied, Edwards
also sent Allied’s corporate office copies of the
settlement statements that detailed the disbursement of
funds at closings and income-distribution reports she
prepared to facilitate the accounting of revenues between
Allied and the Huntsville branch office.
After Edwards sent the closing checks to Allied, the
corporate office was authorized to remove two types of
charges from those revenues. First, pursuant to Allied’s
policies and procedures, Allied’s corporate office paid all
branch-operating expenses. This obligation was reflected in
paragraph 2.3 of the agreement, which stated Allied was to
“promptly pay all bills for [the branch-operating expenses]
previously approved by [Edwards] up to the total cash
available to the Branch . . . subject to the billings for
such being promptly submitted to [Allied].” Second, Allied
was authorized in paragraph 3.2 of the agreement to deduct
and pay itself .30% of the amount of each loan closed by
the Huntsville branch office (“the corporate fee”). The
corporate fee was Allied’s compensation for its support of
the Huntsville branch office.
After Allied paid the branch-operating expenses and
deducted its corporate fee, the remaining funds were
retained in an account for the benefit of the Huntsville
branch office (“the branch account”). Allied did not pay
Edwards a salary or guarantee her form of compensation.
Edwards could, however, request draws from her branch
account for any purpose. When Edwards withdrew funds from
the branch account, Allied sent her a check and generated a
W-2 statement for federal income tax purposes. Moneys
remaining in the branch account after Allied made the
authorized deductions were profits or commissions to Edwards
for her services.[fn3]
Edwards testified at trial that she maintained independent
personal records in the Huntsville branch office that
reflected what she considered to be the proper balance in
the branch account. During the early years of the
agreement, the Huntsville branch office and Allied’s
corporate office had a minimal number of accounting issues
concerning the administration of the branch. According to
Edwards, however, she noticed accounting discrepancies
beginning around 1999, and Allied began failing to pay (or
to pay timely) the branch-operating expenses, failing to
properly debit payroll taxes and other charges, failing to
pay draws from the branch account upon Edwards’s request,
and failing to properly calculate the corporate fee on
transactions. Around that time, Edwards testified, she made
dozens of oral inquiries and complaints to Allied’s
officials and members of its staff about Allied’s handling
of the branch account. Also, Edwards testified that Allied,
which was then experiencing a period of high growth and
high employee turnover, was not responsive to her
complaints about Allied’s failure to perform certain of its
duties under the agreement. Edwards did not send Allied any
written documents (correspondence, e-mail messages,
facsimiles, etc.) reflecting her complaints concerning the
corporate office’s administration of the agreement.
Beginning in 1998, Edwards began retaining checks that were
payable to Allied. Between February 1998 and August 1999,
Edwards deposited into one of her personal accounts checks
totaling $346 payable to Allied. In December 2000 Edwards
opened an account at SouthTrust Bank in the name of “Vicki
W. Edwards D/B/A Allied Mortgage Capital Corporation” (“the
d/b/a account”). Between December 2000 and August 2003,
Edwards received, endorsed, and deposited into the d/b/a
account checks payable to Allied totaling approximately
$381,000. Between the late 1990s and 2002, Edwards
deposited checks payable to Allied totaling approximately
$44,000 into other bank accounts controlled by Edwards or
her husband. The total face value of checks payable to
Allied that Edwards deposited into her personal accounts
between 1998 and August 2003 was approximately $425,309.
Most of those funds were generated from checks issued to
Allied on closed loans originated by the Huntsville branch
office. Edwards did not advise Allied or obtain its consent
before depositing those checks into her personal accounts.
According to Edwards, she retained and deposited those
checks out of her frustration in dealing with Allied on
accounting questions related to the branch account.
Morever, on those closed loans that Edwards did not
disclose to Allied and for which she retained checks
payable to Allied, Edwards did not (1) calculate and send
Allied its corporate fee or (2) send Allied the settlement
statements or income-distribution reports Edwards furnished
on the closings she did report to the corporate office.
During the same period in which Edwards did not report
certain closings, on many other loans originated through
the Huntsville branch office she did send Allied checks and
closing documents. Both parties used the accounting
practices contemplated by the agreement on those loan
closings Edwards reported to Allied.
Further, after Edwards opened the d/b/a account in 2000,
she began directly paying many branch-operating expenses
through the d/b/a account without submitting those expenses
to Allied for payment by the corporate office. According to
the trial testimony of Edwards’s accountant, Edwards
directly paid approximately $155,000 of such expenses
through the d/b/a account. During the same period in which
Edwards did not report all closings, she submitted, and
Allied continued to pay, certain branch-operating expenses
in the manner contemplated by the agreement.
Allied performed an audit of the Huntsville branch office
in 2002. At that time, Allied did not discover, and Edwards
did not disclose, that she had retained checks payable to
Allied and had not reported all loan closings. Further,
Allied was unaware at that time that Edwards had directly
paid branch-operating expenses from the d/b/a/ account in
violation of the procedures in the agreement. Edwards
testified that at the time of the 2002 audit she considered
the agreement still effective.
By 2003, Allied began to question the capability of
Edwards’s branch to interface with its corporate computer
network. Further, an Allied auditor reported to the
corporate office that, during an August 11, 2003, visit to
the branch, the auditor was not treated in a businesslike
manner. Immediately after that visit, Allied terminated its
agreement with Edwards and closed the Huntsville branch
office effective August 13, 2003.
Allied owned all the records at the Huntsville branch
office that related its mortgage-loan business.[fn4] In
connection with terminating the agreement, representatives
of Allied appeared at the Huntsville branch office on
August 13, 2003, without advance notice to Edwards, stated
their intention to secure all files related to Allied’s
business, and removed 45 boxes of documents from the
premises. Upon inspecting those records, Allied discovered
a notice from SouthTrust concerning the d/b/a account.
After learning that Edwards had opened the d/b/a account
without its permission and had not reported certain loan
closings, Allied sued Edwards on September 3, 2003, seeking
damages for violation of the agreement. On Allied’s motion,
the trial court entered a temporary restraining order
directing Edwards to deliver to Allied any closing checks
payable to Allied that were then in Edwards’s possession
(“the checks on hand”). Edwards complied with that order
and delivered to Allied a total of approximately $141,000
of checks on hand, generated from closings that occurred
between May 2003 and August 2003.
On October 9, 2003, the trial court entered a preliminary
injunction ordering an accounting of all loans closed by
the branch, directing Edwards to return to Allied any
personal property in her possession that was owned by
Allied that Allied did not take on August 13, and freezing
certain of Edwards’s assets pending the accounting. After
Allied deposited the checks on hand and deducted its
corporate fee and other charges from the branch account,
the balance in that account in June 2004 was $125,300 (“the
branch-account closing balance”).
Allied asserted multiple claims in its action against
Edwards. In its breach-of-contract claim, Allied alleged
that Edwards (a) violated paragraph 2.8 of the agreement
when she did not deliver closing checks payable to Allied
and opened bank accounts in both her and Allied’s names,
and (b) used Allied’s name in violation of paragraph 2.16.
Additionally, Allied claimed that Edwards fraudulently
suppressed the existence of loan closings and checks
payable to Allied; converted those checks by endorsing and
depositing them into her personal accounts; and breached a
fiduciary duty owed to Allied to report loan closings and
forward related checks and documents to Allied.[fn5]
Edwards filed several counterclaims. In her
breach-of-contract counterclaim, Edwards alleged that
Allied failed to perform its obligations under the
agreement by not paying (or by paying late) the
branch-operating expenses; failing to pay Edwards
commissions that she had earned; improperly diverting, or
incorrectly accounting for, moneys in the branch account;
and not paying the branch-account closing balance to
Edwards. Additionally, Edwards claimed that, on August 13,
2003, Allied (a) trespassed when its representatives
refused to leave the Huntsville branch office when
requested,[fn6] and (b) converted items of personal
property (i.e., her personal financial records and family
memorabilia) that were in the boxes of records that Allied
removed from the Huntsville branch office that day.
On November 11, 2004, Allied moved for partial summary
judgment on its conversion, breach-of-fiduciary-duty, and
fraudulent-suppression claims against Edwards. The trial
court partially granted that motion with respect to
liability on Allied’s conversion and fraudulent-suppression
claims, but withheld ruling on damages for those tort
claims.
The case proceeded to a trial before a jury on September
12, 2006. At trial, Allied’s evidentiary presentation
centered on proof of the agreement, an explanation of the
branch-accounting procedures contemplated by the agreement,
Edwards’s retention of checks payable to Allied, the face
amounts of those checks, and proof of the attorney fees and
other litigation expenses Allied had incurred.[fn7] Edwards
offered testimony about the following topics, among others,
at trial: the accounting discrepancies she orally reported
to Allied; Allied’s failure over the term of the agreement
to pay her approximately $215,000 (excluding interest) on
transactions she had reported to Allied and that were
processed using the accounting procedures contemplated by
the agreement; Edwards’s direct payment of approximately
$155,000 in branch-operating expenses through the d/b/a
account without requesting that Allied pay those expenses;
Allied’s retention of the branch-account closing balance
(i.e., $125,300) when the agreement was terminated; and the
events of August 13, 2003, when Allied’s representatives
removed boxes, which purportedly included Edwards’s
personal property, from the Huntsville branch office.
After more than nine days of trial, the trial court entered
a judgment as a matter of law (“JML”) in favor of Allied on
its breach-of-contract and breach-of-fiduciary-duty claims
against Edwards. The trial court also entered a JML for
Allied on Edwards’s breach-of-contract counterclaim.[fn8]
Following those rulings, the only questions remaining for
the jury were (a) the amount of compensatory damages to be
awarded to Allied on its claims against Edwards of
conversion, fraudulent suppression, breach of fiduciary
duty, and breach of contract, and (b) the determination of
liability and damages, if Allied was found liable, on
Edwards’s conversion and trespass claims against Allied that
arose from the events of August 13, 2003.
On September 25, 2005, the jury awarded damages of $513,972
to Allied on its conversion, fraudulent-suppression, and
breach-of-fiduciary-duty claims. On Allied’s
breach-of-contract claim, the jury awarded an additional
$308,369 as compensatory damages for the litigation
expenses it had incurred.[fn9] The jury returned a verdict
in favor of Allied on Edwards’s conversion and trespass
claims. On October 31, 2005, the trial court denied
Edwards’s motion to alter, amend, or vacate the judgment
that it had entered in favor of Allied in accordance with
the jury verdict. Thereafter, Edwards timely filed this
appeal; she contests multiple rulings by the trial court on
liability and damages issues, seeks reversal of the
judgment entered for Allied, and requests a new trial of
all claims and counterclaims that were adjudicated below.
Issues Presented for Review
The following four questions are raised on appeal: (1) Did
the trial court err in its rulings related to the jury’s
award of $513,972 as compensatory damages on Allied’s tort
claims? (2) Was the JML for Allied on its
breach-of-contract and breach-of-fiduciary-duty claims
proper? (3) Was the JML for Allied on Edwards’s
breach-of-contract counterclaim proper? and (4) Did the
trial court commit reversible error when it (a) allowed
Allied to cross-examine Edwards concerning (and
subsequently introduce into evidence) her amended federal
income tax returns, and (b) sustained Allied’s objection
to, and allegedly chastised Edwards’s counsel concerning,
Edwards’s argument about Allied’s failure to call one of
its executives as a witness?
1. Compensatory Damages for Allied’s Tort Claims
The jury awarded $513,972 as compensatory damages on
Allied’s conversion, breach-of-fiduciary-duty, and
fraudulent-suppression claims. That award consists of
$425,309 in actual compensatory damages (i.e., the face
value of the checks payable to Allied that Edwards retained
and deposited into her personal accounts) and approximately
$89,000 in prejudgment interest. Before closing argument,
the trial court ruled that Edwards’s counsel was prohibited
from arguing to the jury (a) that Allied’s damages related
to the checks retained by Edwards and deposited into her
accounts were less than the face value of those instruments
or (b), alternatively, if Allied’s interest in those checks
was the face value of the checks, that the amount of
damages should be mitigated by (i) $155,000 (the amount of
branch-operating expenses Edwards paid directly from the
d/b/a account) and (ii) the branch-account closing balance
($125,300) retained by Allied.[fn10] We apply a de novo
standard in reviewing the conclusions of law on which the
trial court based those rulings. BT Sec. Corp. v. W.R. Huff
Asset Mgmt. Co., 891 So. 2d 310, 312 (Ala. 2004).
Paragraph 2.8 of the agreement provided: “All monies
received by [Edwards] for [Allied] or to be held for others
shall be made payable to [Allied] and received in trust by
[Edwards] for [Allied] and delivered immediately to
[Allied].” Edwards does not dispute that, during the term
of the agreement, she deposited into her personal accounts
checks totaling $425,309 that were payable to Allied.
Further, it is undisputed that Edwards did not disclose to
Allied the existence of those checks and the related loan
closings that generated those funds. Based largely on those
facts, the trial court found Edwards liable on Allied’s
conversion and fraudulent-suppression claims when Allied
moved for a partial summary judgment.[fn11] Edwards’s
challenge concerning the judgment entered on Allied’s tort
claims is limited to the amount of compensatory damages.
Edwards argues that the jury’s award on the tort claims
(i.e., the principal sum of $425,309) exceeded Allied’s
actual loss. Under the agreement, Allied retained a
corporate fee of 0.30% of the amount of each closed loan
that originated through the branch. Edwards’s accountant
testified at trial that, if Edwards had sent Allied the
$425,309 in checks she had retained and deposited into her
personal accounts, the corporate fee earned by Allied on
the related closings would have totaled $64,467. Jeannie
Seach, Allied’s representative at trial, testified that
Allied would have retained between $67,000-$80,000 in
additional corporate fees if Edwards had forwarded all
closing checks to Allied. Accordingly, Edwards argues that
Allied’s actual economic loss on the checks Edwards
retained could not have been $425,309, but was $64,467.
Allied contends that the trial court did not err when it
prohibited Edwards from arguing to the jury that Allied’s
interest in the checks retained by Edwards was less than
the aggregate face value of the checks or that the $425,309
damages amount should be mitigated. According to Allied,
Edwards had no interest in the converted checks under the
agreement, and she forfeited any right to argue mitigation
by concealing loan closings and retaining checks associated
with those closings that were payable to Allied.
Counsel for Allied waived its claim for punitive damages in
his opening statement. Further, the only damages that
Allied proved at trial concerning its tort claims were
Edwards’s retention of checks payable to Allied totaling
$425,309.[fn12]
Both parties reference § 7-3-420, Ala. Code 1975, in
support of their respective arguments. That section, which
addresses the conversion of checks and other negotiable
instruments, states:
“(a) An instrument is converted under circumstances which
would constitute the conversion under personal property
law. . . .
“(b) In an action under subsection (a), the measure of
liability is presumed to be the amount payable on the
instrument, but recovery may not exceed the amount of the
plaintiff’s interest in the instrument.”
(Emphasis supplied.) The Official Comment to §
7-3-420(b) states:
“The `but’ clause in subsection (b) addresses the problem
of conversion actions in multiple payee checks. Section
3-110(d) states that an instrument cannot be enforced
unless all payees join in the action. But an action for
conversion might be brought by a payee having no interest
or a limited interest in the proceeds of the check. This
clause prevents such a plaintiff from receiving a
windfall. An example is a check payable to a building
contractor and a supplier of building material. The check
is not payable to the payees alternatively. . . . The
check is delivered to the contractor by the owner of the
building. Suppose the contractor forges supplier’s
signature as an indorsement of the check and receives the
entire proceeds of the check. The supplier should not,
without qualification, be entitled to recover the entire
amount of the check from the bank that converted the
check. Depending upon the contract between the contractor
and supplier, the amount of the check may be due entirely
to the contractor . . ., entirely to the supplier . . .,
or part may be due one and the rest to the other. . . .”
(Emphasis supplied.)
Edwards argues that the qualifying clause in §
7-3-420(b) limits Allied’s compensatory damages for the
conversion of the checks to the amount of the corporate fee
Allied would have earned had Edwards forwarded those
instruments to Allied. Allied does not contest that the
face value of the checks retained by Edwards exceeds the
aggregate corporate fee it would have earned from the
related closings. On the other hand, Allied argues that the
Official Comment to § 7-3-420(b) restricts the
qualifying language in subsection (b) to circumstances
involving multiple-payee checks. Because the checks
converted by Edwards were payable to Allied exclusively,
Allied argues, the “measure of liability” and Allied’s
interest in those checks is their face value. Further,
Allied asserts that Edwards’s right to compensation or to
receive credit for expenses she paid from the checks she
converted are contract, not tort, considerations that are
not germane to the interpretation of § 7-3-420(b).
Allied’s arguments on the compensatory-damages issue are
not well-founded. The trial court should not have
prohibited Edwards from arguing to the jury that Allied’s
interest in the converted checks was less than their face
value. This Court is bound by rules of statutory
construction “to interpret the language of [a statute] to
mean exactly what it says and to give effect to the
apparent intent of the legislature.” IMED Corp. v. Systems
Eng’g, Assocs. Corp., 602 So. 2d 344, 349 (Ala. 1992). The
first clause in § 7-3-420(b) states that the measure
of liability is presumed to be the amount payable on the
instrument. Although the statute creates that presumption,
the plain language in the clause that immediately follows
the first clause indicates that the measure of liability is
not equal to the face amount if the “recovery . . .
exceed[s] the amount of the plaintiff’s interest in the
instrument.” The Official Comment to § 7-3-420(b)
states that the purpose of that qualifying clause is to
“prevent . . . a plaintiff [with no interest or little
interest in the proceeds of the check] from receiving a
windfall.” That Comment concludes that the amount of
recovery for conversion of a check could be “depend[ent]
upon [a] contract” between the parties.
Section 7-3-420(b), Ala. Code 1975, creates a rebuttable
presumption that the amount of compensatory damages for
conversion of a negotiable instrument is the face value of
the instrument.[fn13] Here, Allied presumptively
established that Edwards’s liability for her conversion of
checks payable to Allied was $425,309 (i.e., the face value
of the converted checks). Edwards rebutted that
presumption, however, when she presented testimony that,
considering the rights of the parties in the agreement,
Allied’s “interest” in those checks was $64,467 —
the aggregate corporate fee Allied would have earned had
Edwards delivered the closing checks she had retained to
Allied. Compensatory damages are intended to reimburse a
claimant only for the loss suffered by reason of its
injury. Torsch v. McLeod, 665 So. 2d 934, 940 (Ala. 1995).
The jury’s award of $425,309 (excluding prejudgment
interest) in compensatory damages on Allied’s tort claims
when it incurred an actual loss ranging from $64,467
(according to the testimony of Edwards’s accountant) to
$80,000 (according to the testimony of Allied’s
representative) was a windfall to Allied that is unsupported
by the evidence of economic loss or the law.
In summary, the trial court erred when it prohibited
Edwards’s counsel from arguing to the jury that Allied’s
interest in the converted checks was less than the face
amount of those checks. Because of that ruling, the jury’s
award of $513,972 ($425,309 plus prejudgment interest) was
in error. We reverse the judgment on Allied’s tort claims
insofar as it awarded $513,972 in damages and order a new
trial on the issue of compensatory damages for those
claims.[fn14]
2. Allied’s Breach-of-Contract and Fiduciary-Duty Claims
The trial court entered a JML for Allied on its claims of
breach of contract and breach of fiduciary duty. Edwards
requests a new trial on both of those claims. This Court
reviews de novo the grant or denial of a motion for a JML,
determining whether there was substantial evidence, when
viewed in the light most favorable to the nonmoving party,
to produce a factual conflict warranting jury
consideration. Alfa Life Ins. Corp. v. Jackson, 906 So. 2d
143, 149 (Ala. 2005) (citing Ex parte Helms, 873 So. 2d
1139, 1143-44 (Ala. 2003)). “[S]ubstantial evidence is
evidence of such weight and 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).
The evidence supporting the JML for Allied on its
breach-of-contract and breach-of-fiduciary-duty claims is
largely uncontested.[fn15] Edwards was obligated under
paragraph 2.8 of the agreement to send the corporate office
all checks payable to Allied that were generated from
closings and to hold all such moneys “in trust” for Allied.
Her retention of checks, failure to report loan closings,
direct payment of branch-operating expenses, and opening of
a bank account in Allied’s name were clear violations of
the agreement.
Edwards’s defense to Allied’s breach-of-contract and
breach-of-fiduciary-duty claims was that Allied breached
first, and it therefore could not afterwards enforce the
agreement against Edwards.[fn16] See Gray v. Reynolds, 553
So. 2d 79, 82 (Ala. 1989) (a court should not enforce a
contract when the party seeking enforcement failed to
perform his part of the agreement). Stated differently,
Edwards argues that Allied’s breach excused her own
nonperformance. See Nationwide Mut. Life Ins. Co. v. Clay,
525 So. 2d 1339, 1343 (Ala. 1987)(“a substantial breach by
one party [to a contract] excuses further performance by
the other”).
The trial court rejected Edwards’s defense. Even assuming
that Allied breached the agreement beginning in the late
1990s, the trial court concluded that, at that time,
Edwards must have either (a) repudiated the agreement and
sued for Allied’s breach, or (b) continued the agreement
but waived any claim against Allied for its purported
breach. Edwards did not repudiate the agreement when Allied
purportedly breached. Ruling that Edwards had waived her
right to sue Allied for its breach by not repudiating the
agreement, the trial court determined that Edwards had no
defense to Allied’s claims alleging breach of contract and
breach of fiduciary duty. Absent that defense, the trial
court entered a JML on Allied’s breach-of-contract claim
and submitted the related question of compensatory damages
to the jury. As damages for Allied’s breach-of-contract
claim, the jury awarded $308,369 for litigation expenses
incurred by Allied.[fn17]
The Restatement (Second) of Contracts discusses two
separate questions that arise if one party breaches its
obligations under a contract in which the parties have
promised to exchange performances. The first is whether the
injured party is excused from performing his duties
following the breach. If the defaulting party materially
breaches its duties, the injured party may repudiate the
agreement and not perform prospectively. See Restatement
(Second) of Contracts, Ch. 10, intro. n. (1981) (the
injured party is justified in not performing his own
obligations if the other party materially fails to perform);
Smith v. Clark, 341 So. 2d 720, 721 (Ala. 1977) (court did
not enforce boundary-line agreement against the plaintiff
where the defendant failed to honor his part of that
agreement to move a structure off the disputed area). In
lieu of repudiation following a material breach by the
other party, the injured party may elect to continue the
contract and retain its economic benefits. See Restatement
§ 246, cmt. c, illus. 3.
The second question is whether the injured party may claim
damages for the breach. Contrary to the trial court’s
ruling, the injured party is not required to repudiate the
contract in order to preserve its right to sue the other
for breach of the contract. See Restatement, Ch. 10, intro.
n. (parties ordinarily desire and bargain for performance by
the defaulting party rather than a lawsuit). After a breach
the injured party may elect to continue the agreement and
claim damages from the defaulting party for his
nonperformance. See Restatement § 246, cmt. b
(injured party’s acceptance of defective performance from
the defaulting party does not preclude recovery of damages
for the breach). When the parties have exchanged promises
of performances, however, the injured party is not excused
from performing his remaining duties if he continues the
agreement with knowledge of the default by the breaching
party. “‘A plaintiff cannot simultaneously claim the
benefits of a contract and repudiate its burdens and
conditions.'” Southern Energy Homes, Inc. v. Gregor, 777
So. 2d 79, 82 (Ala. 2000) (quoting Southern Energy Homes,
Inc. v. Ard, 772 So. 2d 1131, 1134 (Ala. 2000)). As stated
in § 246 of the Restatement, “an obligor’s acceptance
or his retention for an unreasonable time of the obligor’s
performance, with knowledge or reason to know of the
[obligee’s failure to perform], operates as a promise to
perform in spite of that non-occurrence. . . .”
Edwards continued the agreement and received its financial
benefits for approximately four years after she learned of
Allied’s purported nonperformance. Having made that
election, Edwards was not excused from performing her own
obligations under the agreement. See Restatement §
246. The evidence is undisputed that, following Allied’s
purported breach, Edwards did not send all closing checks
to Allied, failed to hold Allied’s funds “in trust,” opened
a bank account in Allied’s name, and directly paid
branch-operating expenses from her d/b/a account. Edwards’s
argument that Allied “breached first” did not excuse her
nonperformance where, as here, she accepted the benefits of
the agreement with knowledge of Allied’s alleged
breach.[fn18] Accordingly, the trial court did not err when
it entered a JML in favor of Allied on its
breach-of-contract and breach-of-fiduciary-duty claims.
Further, the judgment awarding Allied $308,369 in
compensatory damages on its breach-of-contract claim is
affirmed.
3. Edwards’s Breach-of-Contract Counterclaim
Edwards presented testimony concerning two categories of
revenues she alleged Allied owed her. First, Edwards’s
accountant testified that, over the life of the agreement,
Allied underpaid Edwards approximately $215,000 (excluding
interest) on transactions that were reported, processed,
and accounting entries made using Allied’s administrative
procedures for the agreement (“the accounting errors”).
Edwards’s accountant calculated this $215,000 by comparing
settlement statements and other records related to loan
closings that Edwards reported with records of payments she
received from Allied.
Second, Edwards also proffered evidence indicating that
Allied retained the branch-account closing balance (i.e.,
$125,300). Immediately after Allied sued Edwards, the trial
court issued a temporary restraining order directing
Edwards to deliver to Allied all the checks on hand.
Edwards complied with that directive and surrendered checks
totaling approximately $141,000. After Allied deposited
those checks and made entries in the branch account, the
closing balance in that account was $125,300.[fn19]
Allied argues that we should affirm the trial court’s
judgment against Edwards on her breach-of-contract
counterclaim for two reasons. First, Allied contends,
Edwards failed to present substantial evidence indicating
that she did not waive Allied’s purported breach.[fn20]
Waiver is the intentional relinquishment of a known right.
O’Neal v. O’Neal, 284 Ala. 661, 663, 227 So.2d 430, 431
(1969). “[I]ntentional relinquishment must be shown in an
unequivocable manner.” Putnam Constr. & Realty Co. v. Byrd,
632 So. 2d 961, 965 (Ala. 1992). A party’s intent to waive
a right may be found from conduct that is inconsistent with
the assertion of that right. General Motors Acceptance Co.
v. Givens, 324 So. 2d 277, 279 (Ala.Civ.App. 1975).
Allied argues that Edwards waived her breach-of-contract
counterclaim by accepting the benefits of the agreement
after she learned of Allied’s purported breach. Allied
notes that, as late as 2002, Edwards acknowledged that the
agreement was still effective. Allied also proved that
Edwards did not possess any documents (whether in paper or
electronic form) concerning her complaints about Allied’s
alleged nonperformance under the agreement. Based on these
facts, Allied posits that a reasonable juror could only
find from Edwards’s conduct that she waived her
breach-of-contract counterclaim against Allied.
Whether a party has intentionally waived a known right is
normally a jury question. See Putnam Construction, 632 So.
2d at 965. Although Allied presented considerable evidence
on its waiver defense, we view the evidence in the light
most favorable to Edwards when reviewing the JML entered
against her. Edwards testified that, during the term of the
agreement, she orally complained on dozens of occasions to
different representatives of Allied about its mismanagement
of the branch account. According to Edwards, those
complaints concerned delays in paying (or failure to pay)
branch-operating expenses, erroneous accounting entries,
failure to remit commissions, and failure to furnish a
written accounting after she made multiple requests.
Although Allied proved the absence of documentary evidence
concerning these oral complaints, it did not present any
witness to rebut Edwards’s testimony that she had indeed
made them.
Under these facts, Edwards presented substantial evidence
to rebut Allied’s defense that she had waived Allied’s
breach of the agreement. Because a jury question existed as
to whether Edwards intentionally relinquished her
breach-of-contract counterclaim, Allied was not entitled to
a JML on the basis of its waiver defense.
In the alternative, Allied argues that the
faithless-servant doctrine should bar Edwards’s claim for
additional compensation from Allied under the agreement.
After Edwards rested her case, the trial court invoked that
doctrine and ruled that Edwards had forfeited any right to
recover the $141,000 in checks on hand that funded the
branch-account closing balance. We apply a de novo standard
in reviewing that conclusion of law. BT Sec. Corp., 891 So.
2d at 312.
The faithless-servant doctrine precludes an employee from
receiving compensation for conduct that is disloyal to the
employer or in violation of the employee’s employment
contract. The Restatement (Second) of the Law of Agency
§ 469 (1958) describes the doctrine:
“An agent is entitled to no compensation for conduct
which is disobedient or which is a breach of his duty of
loyalty; if such conduct constitutes a wilful and
deliberate breach of his contract of service, he is not
entitled to compensation even for properly performed
services for which no compensation is apportioned.”
(Emphasis supplied.)
This longstanding doctrine remains effective today. It was
first recognized in McGar v. Adams, 65 Ala. 106 (1880). In
that case, an agent had been employed to find a purchaser
for property belonging to his principal. The agent, who was
to receive a commission upon the sale of that property,
located a purchaser to whom the principal transferred the
property. Before that transaction closed and unbeknownst to
the principal, however, the purchaser asked the agent
— a banker — for a loan to fund the purchase.
In lieu of making that loan, the agent and purchaser
entered into an agreement pursuant to which the agent could
buy a one-half interest in the property. The purchaser
conveyed that one-half interest to the agent and split the
sales commission the principal had paid the agent. After
learning of the agent’s actions, the principal sued the
agent to recover the commission. Considering these facts,
the McGar Court stated:
“An agent who, for a reward, is employed in the
transaction of business, will justly forfeit all right to
compensation if he is guilty of bad faith to the
principal. . . .”
65 Ala. at 109.
The “bad faith” principle in McGar was reaffirmed in Dudley
v. Colonial Lumber Co., 223 Ala. 533, 137 So. 429 (1931):
“It is unquestionably the law that it is the duty of an
agent to act in matters touching the agency, with due
regard to the interest of the principal. In accepting the
agency he impliedly undertakes to give his principal his
best care and judgment, and to use the powers conferred
upon him for the sole benefit of his principal consistent
with the purposes of the agency. . . .
“And `an agent who, for a reward, is employed in the
transaction of business, will justly forfeit all right to
compensation, if he is guilty of bad faith to the
principal.’. . .”
223 Ala. at 536, 137 So. at 431.[fn21]
As noted above, the trial court applied the
faithless-servant doctrine when it ruled that Edwards could
not claim the $141,000 in checks on hand she delivered to
Allied after the agreement was terminated. Allied argues
that Edwards’s conduct in concealing many loan closings and
retaining closing checks is the “bad faith toward the
principal” on which the doctrine is based. Because of that
deceitful conduct, Allied argues, Edwards should forfeit
all rights to the $141,000 of checks on hand or any other
compensation from Allied.
The facts support the application of the faithless-servant
doctrine in this case. In the late 1990s, Edwards began
depositing checks payable to Allied into her personal
accounts. Even though Allied had an interest in those
funds, Edwards did not calculate, deduct from the funds, and
send Allied its corporate fee from the associated loan
closings that generated those checks. Further, she did not
disclose numerous loan closings that she helped close
through the Huntsville branch office and did not forward to
Allied records of those transactions. Edwards defends her
conduct on the basis that that Allied did not perform its
obligations under the agreement. Edwards’s self-help
accounting practices were unjustified, however, because she
had a duty as an employee to disclose loan closings, the
checks, and the related transactions to Allied. Moreover,
even if Allied’s management of the branch account was
deficient, Edwards was not justified in concealing those
transactions. The inefficient conduct of business by an
employer does not excuse an employee’s breach of its duties
of loyalty and fidelity to his employer.[fn22]
Despite the soundness of the faithless-servant doctrine and
the substantial evidence of Edwards’s unfaithful conduct,
that doctrine does not preclude all of Edwards’s claims for
compensation in this case. Allied agreed to pay commissions
to Edwards if she was terminated “for any reason.”
Paragraph 3.4 of the agreement states:
“3.4 Upon termination of employment, for any reason,
Employee shall be paid, less any repayable advances or
other monies owed to Employer, for all loans actively
solicited, originated, and processed by Employee which
are approved prior to the Employee’s termination date if
and only if actually funded within thirty (30) days of
termination. With regard to such loans at time of
termination, Employee will be paid a commission of
one-half (0.50%) percent of the loan amount only if the
loan is actually funded within thirty (30) days. Said
payment to Employee [is] to be paid only after any funds
that may be owed by Employee to Employer are paid by
Employee to Employer or at Employer’s option, after the
deduction by Employer of any such amounts still due the
Employer by Employee. Employer may deduct such amounts
from any payment due to Employee which payments shall be
made as soon as Employer can reasonably reconcile the
accounts of Employer and Employee.”
(Emphasis supplied.)
Only in limited circumstances will this Court not enforce
an agreement willingly entered into by contracting parties.
This Court discusssed this principle in Ex parte Thicklin,
824 So. 2d 723, 732 (Ala. 2002):
“This Court has limited authority to deal with the
enforceability of contract terms. It can nullify or reform
a contract on the basis of fraud; it can also nullify or
reform a contract to eliminate any unconscionable
provisions or terms that violate public policy. As
previously noted, a contract provision that violates
public policy can be subsumed under the theory of
substantive unconscionability. . . . However, § 43
of the Constitution of Alabama of 1901 mandates the
separation of judicial power from legislative power and
condemns the usurpation of the power of one branch of
government by the other. The authority to declare public
policy is reserved to the Legislature, subject to limits
imposed by the Constitution. . . .”
(Footnote omitted.)
The agreement here, which was bargained for at arm’s length
between persons who were experienced in the mortgage-loan
business, is not unconscionable. Allied certainly was free
not to insert language in its agreement that allowed the
payment of commissions to Edwards even in the event of her
faithless service. Instead, Allied agreed to pay Edwards
commissions upon her being terminated “for any reason”
(which includes faithless service), and we are duty bound
to enforce the plain meaning of paragraph 3.4.
Because Allied agreed to pay Edwards commissions if she was
terminated for any reason, and in light of our discussion
above on Allied’s waiver defense, we reverse the JML
entered against Edwards on her breach-of-contract
counterclaim and order that a new trial be held on her
breach-of-contract counterclaim. Subject to the jury’s
resolution of Allied’s waiver defense and its other
defenses, on retrial Edwards may assert any claims for
commissions that are covered under paragraph 3.4 of the
agreement.[fn23]
4. Other Alleged Errors by Trial Court
The jury returned a verdict for Allied on Edwards’s claims
of conversion and trespass that arose from the events that
occurred on August 13, 2003. On that date, Allied’s
representatives entered the Huntsville branch office,
retrieved Allied’s business records, and allegedly
converted items of personal property owned by Edwards.
Edwards argues that the trial court committed two errors
that warrant a new trial on these claims.
a. Evidentiary Rulings on Amended Tax Returns
The commissions Allied paid Edwards from the branch
account constituted income to her for federal income tax
purposes. Also, branch-operating expenses were deductible
as ordinary business expenses on Edwards’s tax returns.
Edwards did not, however, initially report income or claim
expense deductions on her tax returns with respect to the
transactions she did not disclose to Allied. After Allied
sued in 2003, Edwards amended her tax returns for the prior
years to recognize those transactions.
For impeachment purposes, the trial court allowed Allied
to cross-examine Edwards concerning the timing and filing
of her amended returns. Those returns were also admitted
into evidence. Edwards objected to those evidentiary
rulings on the basis that they allowed Allied to impugn
Edwards’s credibility in violation of Rule 608(b), Ala. R.
Evid. Rule 608(b) provides:
“Specific instances of the conduct of a witness, for the
purpose of attacking or supporting the witness’s
credibility, other than conviction of crime as provided in
Rule 609, may not be inquired into on cross-examination of
the witness nor proved by extrinsic evidence.”
Edwards argues that Rule 608(b) proscribes cross-examination
concerning “‘specific acts of misconduct by [a witness]
which have no relevancy except as tending to show that [the
witness] is a person of bad character as a whole or with
respect to truth and veracity.'” J.B. Hunt Transport, Inc.
v. Credeur, 681 So. 2d 1355, 1361 (Ala. 1996) (quoting C.
Gamble, McElroy’s Alabama Evidence, § 140(10) (4th
ed. 1991)). Edwards contends that the inquiry into her
amended tax returns was error because, she argues, those
returns were immaterial to the issues in the case. Allied
argues that the impeachment of Edwards concerning her
amended returns and tax-reporting practices was valid after
she testified that Allied’s nonperformance of its
obligations under the agreement had prevented Edwards from
“making a living.”
A trial court has “wide discretion in matters of
cross-examination.” Hyche v. Medical Ctr. East, Inc., 711
So. 2d 1017, 1019 (Ala.Civ.App. 1997). Rulings on those
matters “will not be reversed absent a showing of gross
abuse of that discretion that caused substantial injury to
the objecting party.” 711 So. 2d at 1019. Furthermore, a
judgment will not be reversed for the “improper admission
or rejection of evidence . . . unless in the opinion of the
court to which the appeal is taken . . . after an
examination of the entire cause, it [appears] that the
error complained of has probably injuriously affected
substantial rights of the parties.” Rule 45, Ala. R. App.
P. Without deciding whether the trial court exceeded its
discretion in allowing cross-examination based on the
amended tax returns, Edwards has not demonstrated the
requisite substantial injury required for a reversal of the
trial court’s judgment based on Rule 45.
b. Closing Argument About Witness not Called by Allied
Without advance notice to Edwards, representatives of
Allied came to the Huntsville branch office on August 13,
2003 — the date the agreement was terminated
— to retrieve Allied’s records. Cheryl Camp, an
employee of the Huntsville branch office, testified that
Jim Hodge, Allied’s president, who was based in Houston,
Texas, threatened in a telephone conversation held on that
day “to tie her up in litigation for life” if she did not
cooperate with Allied’s representatives. During closing
argument, Edwards’s counsel attempted to argue to the jury
the significance of Allied’s failure to call Hodge as a
witness. Allied objected to that argument on the grounds
that Edwards could have deposed Hodge before trial and that
he was “equally accessible” to either party. The trial
court sustained that objection, prohibited Edwards’s
argument, and stated the following to Edwards’s counsel in
the presence of the jury:
“The Court: You can subpoena [Mr. Hodge] or take his
deposition, Mr. Ogle. That is improper argument and the
Court hereby instructs you not to make that argument, and
the jury will ignore it.”
Edwards moved for a mistrial following that exchange. The
trial court denied that motion. On appeal, Edwards argues
that the trial court erred when it prohibited her argument
about Hodge’s failure to testify. Further, Edwards argues
that the trial court’s “castigation” of her counsel in the
presence of the jury caused her such substantial injury
that a new trial is warranted on her tort claims.
The standard of review is whether the trial court exceeded
its discretion in prohibiting part of Edwards’s closing
argument and denying her related motion for a mistrial.
Super Valu Stores, Inc. v. Peterson, 506 So. 2d 317, 325
(Ala. 1987). A court exceeds its discretion when its ruling
is based on an erroneous conclusion of law or when it has
acted arbitrarily without employing conscientious judgment,
has exceeded the bounds of reason in view of all
circumstances, or has so far ignored recognized principles
of law or practice as to cause substantial injustice. Hall
v. Larry Latham Auctioneers, Inc., 607 So. 2d 154, 155
(Ala. 1992); Dowdy v. Gilbert Eng’g Co., 372 So. 2d 11, 13,
(Ala. 1979).
A party may not comment on the failure of his opponent to
call a witness if that witness is “equally accessible” to
both parties. Donaldson v. Buck, 333 So. 2d 786, 787 (Ala.
1976). The fact that either party can subpoena a potential
witness does not automatically make that witness equally
accessible. 333 So. 2d at 788. When the testimony of the
witness would favor one party over the other, the witness is
not “equally accessible.” See, e.g., Harrison v. Woodley
Square Apartments, Ltd., 421 So. 2d 101, 103 (Ala. 1982)
(testimony of friend of plaintiff’s likely would favor
plaintiff); Drs. Lane, Bryant, Eubanks & Dulaney v. Otts,
412 So. 2d 254 (Ala. 1982) (potential witness who was a
physician was not equally accessible when his testimony
likely would favor the defendant physicians).
Here, Hodge — Allied’s president — was not
equally accessible to Edwards. Notwithstanding, Allied
argues that the trial court did not commit error when it
precluded Edwards’s argument unless the “noncalled person
had knowledge of a material matter and is hostile to or
biased against the party offering the comment.” C. Gamble,
McElroy’s Alabama Evidence § 191.04(b) (5th ed.
1995).
According to Edwards’s testimony, she had numerous
telephone conversations with, and left multiple messages
for, Hodge about administrative problems related to the
agreement that she had experienced during its term.
However, the breach-of-contract claims were not in dispute
at the time of Edwards’s closing argument, and the scope of
that argument was limited to rebuttal comments concerning
her claims of trespass and conversion, which were then
pending. Although Hodge was not equally accessible to
Edwards, she has not demonstrated that Hodge had knowledge
of matters that were material to those tort claims. Absent
that showing, Edwards’s closing argument regarding Hodge’s
failure to testify was unwarranted.[fn24]
In summary, the trial court did not cause substantial
injury to Edwards in its evidentiary rulings related to her
amended tax returns. Additionally, the trial court did not
commit error when it prohibited Edwards’s counsel from
referring in closing argument to Hodge’s failure to testify
or when it discussed that ruling with Edwards’s counsel
before the jury. Accordingly, the judgment for Allied on
Edwards’s tort claims is affirmed.
Conclusion
We affirm the judgment in favor of Allied to the extent
that it found Edwards liable on Allied’s claims of breach
of contract and breach of fiduciary duty. We also affirm
that portion of the judgment for Allied that awarded it
$308,369 as compensatory damages on its breach-of-contract
claim.
We reverse the judgment in favor of Allied insofar as it
awarded $513,972 in damages on its claims against Edwards
alleging conversion, fraudulent suppression, and breach of
fiduciary duty; we remand the case for the trial court to
conduct a new trial to reconsider the amount of
compensatory damages recoverable by Allied on those tort
claims.
We affirm the judgment entered against Edwards on her
claims alleging trespass and conversion. We reverse the
trial court’s judgment on Edwards’s counterclaim alleging
breach of contract and remand the case for the trial court
to conduct a new trial on that counterclaim.
AFFIRMED IN PART; REVERSED IN PART; AND REMANDED WITH
INSTRUCTIONS.
See, Harwood, Stuart, and Bolin, JJ., concur.
[fn1] Loans were funded either by Allied or by lenders it
approved. During the period pertinent to these disputes,
most loans that closed with assistance from Allied’s branch
in Huntsville were funded by lenders other than Allied.
[fn2] If Edwards retained a third party (e.g., an appraiser
or credit-report agency) to perform any closing services,
the closing attorney would deduct from the loan proceeds
and remit to the branch the amount Edwards owed that third
party. In the ordinary course of business, Allied, not
Edwards, was responsible to remit payment to the
third-party vendors.
[fn3] Allied did not maintain separate accounts for
Edwards’s Huntsville branch office or for any of its other
branches. Beginning in 1999, Allied accounted for branch
revenues, payments of branch-operating expenses, and
deductions of corporate fees in Moneylink, an on-line
software program.
[fn4] In pertinent part, paragraph 4.1 of the agreement
stated: “All files, records, documents, drawings,. . .
proprietary information, and similar items relating to the
business of [Allied], whether prepared by [Edwards] or
otherwise coming into [Edwards’s] possession, shall remain
the exclusive property of [Allied] and shall not be copied
or removed from the premises of [Allied] under any
circumstances whatsoever without the prior written consent
of [Allied].”
[fn5] Allied also asserted claims against Edwards alleging
negligence, wantonness, money had and received, and unjust
enrichment. Those claims were dismissed before the jury was
charged at trial.
[fn6] On August 13, 2003, Edwards was renting the branch
office space from a third party under an oral,
month-to-month lease.
[fn7] Paragraph 2.13 of the agreement stated that “[Edwards]
shall indemnify and hold [Allied]. . . harmless from and
against any and all claims, losses, damages, fines,
penalties, causes of action, suits, and liability of every
kind, including all expenses of litigation, court costs and
attorney fees arising on account of . . . (2) any violation
of this Agreement. . . .” The agreement did not state that
Edwards could recover her attorney fees or other litigation
costs if Allied breached its obligations thereunder.
[fn8] As discussed below, the evidence presented by Edwards
at trial on her counterclaim related to Allied’s alleged
underpayment of the principal sum of $215,000 and its
retention of the branch-account closing balance (i.e.,
$125,300).
[fn9] Allied’s proof of damage on its breach-of-contract
claim was limited to attorney fees and litigation expenses.
[fn10] The trial court told Edwards’s counsel that, if he
argued that Allied’s interests in the checks retained by
Edwards was less than their face value or that Edwards had
paid branch-operating expenses from the funds she
converted, it would give a correcting instruction and
affirmatively charge the jury that Allied was entitled to
the face amount of the checks.
[fn11] Edwards did not attempt to appeal the trial court’s
finding of liability on Allied’s claims of conversion and
fraudulent suppression, and that finding is not an issue on
appeal.
[fn12] The damages flowing from Edwards’s conversion of
checks were common to all of Allied’s tort claims. The
trial court instructed the jury that Allied did not claim
any damages for fraudulent suppression and breach of
fiduciary duty over those claimed for conversion.
[fn13] Black’s Law Dictionary 1224 (8th ed. 2004) defines a
“rebuttable presumption” as “[a]n inference drawn from
certain facts that establish a prima facie case, which may
be overcome by the introduction of contrary evidence.”
[fn14] In view of our holding, we need not consider
Edwards’s alternative argument that she should have been
allowed to argue to the jury that the damages of $425,309
should be mitigated by the sum of branch-operating expenses
she paid directly and by the branch-account closing
balance.
[fn15] It was undisputed that Allied had an interest in the
vast preponderance of checks that Edwards converted.
Edwards contended that Allied did not own several checks
that totaled $346. The jury disagreed and included those
checks in the amount it awarded as compensatory damages on
the tort claims.
[fn16] Edwards primarily claims that Allied breached by
making accounting errors in managing the branch account.
[fn17] Edwards does not contest the jury’s calculation of
those damages, but instead contends that a new trial should
be awarded on Allied’s underlying contract theory.
[fn18] If parties promise to exchange performances, the
determination as to which party first committed a material
breach is critical in deciding whether, upon the defaulting
party’s failure to cure its breach, the other party is
excused from performing his remaining obligations. See
Restatement § 237, cmt. b.
[fn19] There was approximately $17,000 in the branch account
when Allied terminated the agreement. After Allied
deposited the $141,000, it apparently removed its corporate
fee or debited other sums from the branch account.
[fn20] Even though the trial court incorrectly ruled that
Edwards waived her breach-of-contract claim by not
repudiating the agreement, we could affirm the judgment for
Allied on that claim for any valid ground. See Bannan v.
Smith, 784 So. 2d 293, 297 (Ala. 2001).
[fn21] Another case in which the doctrine was thoroughly
considered is Bessman v. Bessman, 214 Kan. 510, 520 P.2d
1210 (1974). The employee in Bessman received a weekly
salary to manage a hotel-renovation project. The employee
kept payments from contractors who were working on the
project and failed to report those transactions to his
employer. The employee defended his retention of the
undisclosed payments “as a form of self-help, justified by
the employer’s slow pay of his salary.” 214 Kan. at 513,
520 P.2d at 1213. The Bessman Court applied the
faithless-servant doctrine and held that the employee was
not entitled to his salary during the 48-week “period of
his unfaithlessness.” 214 Kan. at 513, 520 P.2d. at 1220.
[fn22] In Dudley v. Colonial Lumber Co., supra, this Court
rejected the agent’s argument that because of the
principal’s errors in filling orders the agent was
justified in keeping certain sales commissions that were
otherwise payable to the principal. The Dudley Court stated
that it was the agent’s duty to advise the principal of its
errors. 223 Ala. at 536, 137 So. at 431.
[fn23] The trial’s court’s rulings on Edwards’s counterclaim
precluded full development of her breach-of-contract
theories. Paragraph 3.4 states that Edwards was to receive
a .50% commission on certain loans funded within 30 days of
her termination. It is not clear from the record how that
or other provisions in 3.4 apply to the categories of
moneys in dispute. Provided Edwards can prove that, pursuant
to paragraph 3.4, the parties intended she would be paid
the branch-account closing balance of $125,300 and the
approximate $215,000 in purported accounting errors upon
her termination, she may claim those moneys as damages on
retrial.
[fn24] We also disagree with Edwards’s contention that the
manner in which the trial court prohibited Edwards’s
closing argument regarding Hodge’s failure to testify
brought her counsel “into contempt before the jury,” caused
her prejudicial injury, and warrants reversal. Gwin v.
State, 425 So. 2d 500, 507 (1982) (a trial judge should not
express any opinion, use language, or engage in other
conduct that brings an attorney into contempt). When the
trial court prohibited that argument, the above-noted
exchange ensued in which counsel debated the propriety of
that ruling in the presence of the jury. That exchange would
not have occurred had Edwards’s counsel approached the
bench and requested a sidebar conference. Even if the trial
court erred when it limited closing argument, which it did
not, Edwards’s counsel invited any error that arose from
the exchange before the jury. See, e.g., Phillips v.
Anesthesia Servs., P.C., 565 So. 2d 127, 129 (Ala. 1990) (a
party may not avail himself of an error into which he led
the trial court). The manner in which the trial court
limited Edwards’s closing argument cannot be said to be
reversible error.