Facts
- In 1995, Danita and Mark Holman borrowed $275,000 from First Bank of Childersburg, secured by a mortgage on an approximately 16-acre tract.
- The property was later subdivided into tracts I, II, and III.
- The Holmans alleged that in 1997 a bank officer, Byron Louie Henry, orally agreed that if they sold tract I and paid $175,000 to the Bank, the Bank would release tract I and would also release tract II from the mortgage lien so the Holmans could later obtain a construction loan on tract II.
- In May 1997, tract I was sold and the Holmans paid the Bank $175,000.
- On May 7, 1997, the Bank executed a written “Partial Release” that, by its terms, released only tract I from the mortgage lien and did not reference tract II.
- Subsequent title searches (1998, 1998, and 2000) showed no recorded release of tract II.
- The Holmans filed suit asserting contract, fraud, negligence/wantonness, slander of title, civil conspiracy, and negligent hiring/training/supervision claims, all tied to the alleged promise to release tract II.
- Defendants asserted the Statute of Frauds, and the trial court entered summary judgment for all defendants on all claims.
Issues
- Whether an alleged oral agreement to release tract II from a mortgage lien is unenforceable under Alabama’s Statute of Frauds as a contract involving an interest in land.
- Whether payment of $175,000, assertions of a missing written memorialization, or fraud-based and related tort theories can avoid the Statute of Frauds and support liability.
Decision
- The Alabama Supreme Court affirmed summary judgment for the Bank, the holding company, and the officer.
- The alleged promise to release tract II concerned an interest in land and required a writing signed by the party to be charged; no writing covered tract II.
- The “Partial Release” satisfied a release of tract I only and could not be expanded by oral terms to include tract II.
- Secondary evidence of a “lost writing” was unavailable because the Holmans failed to show that a written instrument covering tract II ever existed.
- Payment of $175,000 was not “unequivocal” part performance removing the agreement from the Statute of Frauds because it was fully consistent with the written release of tract I alone.
- Fraud, suppression, negligence/wantonness, and conspiracy claims failed because they rested on the same unenforceable oral promise and could not be used to obtain the benefit of a contract barred by the Statute of Frauds.
- The slander of title claim failed because the Bank’s mortgage lien on tract II remained valid; maintaining a valid recorded interest was not a wrongful cloud on title.
- Negligent hiring/training/supervision failed for lack of actionable underlying wrongdoing.
Legal Principles
- An agreement to release a parcel from an existing mortgage lien is an agreement affecting an interest in land and falls within the Statute of Frauds, requiring a signed writing.
- A writing that addresses one parcel and is silent as to another does not satisfy the Statute of Frauds for an alleged promise concerning the additional parcel.
- Secondary evidence may prove the contents of a lost writing only upon proof that a signed writing once existed; testimony about oral acknowledgments is insufficient.
- In Alabama, payment of money alone generally does not constitute part performance sufficient to remove a land-related agreement from the Statute of Frauds, particularly when the payment is consistent with an existing written instrument.
- A plaintiff may not avoid the Statute of Frauds by reframing a barred contract claim as fraud, negligence, or conspiracy when the tort theories depend on the unenforceable oral agreement.
- Slander of title requires a false or wrongful claim against title; asserting a valid recorded mortgage interest is not actionable.
Conclusion
Because the claimed obligation to release tract II rested on an oral agreement subject to the Statute of Frauds and no applicable exception was shown, the contract claim and all related tort and derivative claims were properly resolved by summary judgment for the defendants.