SouthTrust Bank v. Donely

Summary

The Supreme Court of Alabama held that SouthTrust Bank could not be liable for conversion merely because it refused to redeem certificates of deposit, distinguishing conversion of the certificates themselves from failure to pay the underlying contractual debt. The court reversed and rendered judgment for SouthTrust on the conversion claim while affirming the breach-of-contract judgment, including the compensatory damages calculated with compound interest. The case arose from certificates of deposit issued to a guardian for an incompetent account holder and later delivered to the account holder’s heir.

Holdings

1. A certificate of deposit itself may be subject to conversion, but a bank's refusal to pay the debt represented by a certificate of deposit supports a breach-of-contract action, not an action for conversion, when the bank did not take or cash the certificate. The trial court therefore erred in submitting Donely's conversion claim to the jury.
2. The compensatory damages awarded on the breach-of-contract claim, including the interest calculation, were supported by the evidence and would not be disturbed.

Questions Presented

1. Whether the trial court erred by submitting Donely's conversion claim to the jury when SouthTrust allegedly refused to pay the debt represented by certificates of deposit rather than taking or converting the certificates themselves.
2. Whether the compensatory damages awarded on Donely's breach-of-contract claim were improperly calculated using compound interest.

Disposition

other