Appeal from Jefferson Circuit Court. (CV-91-1131). William A. Jackson, Trial Judge.
Released for Publication December 7, 1994.
Shores, Maddox, Steagall, Kennedy, and Ingram, JJ., concur.
The opinion of the court was delivered by: Shores
Albert J. Jackson appeals from a judgment for the defendant Secor Bank. The judgment was based on a directed verdict on his tort claims and a jury verdict on his breach of contract claim. We affirm.
This case arises out of a mistake allegedly made by Secor Bank when Jackson asked it to open a qualified individual retirement account (IRA) for him. Jackson changed jobs in September 1987, and in early November received a $23,251.41 check from his former employer representing the proceeds from his retirement account ($24,475.17 less $1223.76 federal income tax withheld). Jackson was informed that to avoid income tax liability he must "roll over" this sum into a qualified tax deferred account such as an IRA within 60 days. On November 9, 1987, Jackson went to the Brookwood branch of Alabama Federal Savings and Loan Association (now known as Secor Bank and referred to hereinafter as "Secor" or "the Bank") and told Deborah Eubank, a Bank employee, that he needed to roll this money over into a qualified plan. Jackson had seen the Bank's advertisements for its "Performance Fund account"; he asked Eubank if this account would be the best one to put his money into. Eubank advised Jackson to open a Performance Fund account. According to Jackson and according to affidavits signed by Deborah Eubank, she mistakenly told Jackson that the Performance Fund account was an IRA-type account.
Jackson opened a Performance Fund account with the Bank in November 1987. He received a Form 1099 from the Bank in January 1988 indicating that interest of $281 on the account would be reported to the Internal Revenue Service (IRS) as taxable income for 1987. After meeting with his accountant in early April 1988, Jackson wrote to Renda Grauel, manager of the Brookwood branch, stating:
"Recently, in my annual tax preparation meeting, Russell Stone, CPA, examined the 1099 form you sent me and said it looked like the wrong type of account had been set up and if so, severe tax penalties could result."
In May 1988, after the 60-day roll-over period had expired, he placed his money in a qualified account. His accountant listed the Performance Fund account as a qualified (tax deferred) account on Jackson's 1987 federal income tax return, and Johnson did not report the $281 in interest as taxable income.
The IRS first informed Jackson on January 9, 1990, that his adjusted gross income for 1987 was $25,251 ($23,251 plus interest accrued) more than he had indicated on his 1987 tax return, because the account at the Bank was not a qualified IRA. Jackson's accountant contacted the Bank to help with his Discussions with the IRS concerning the discrepancy in Jackson's 1987 tax return. A vice president at the Bank wrote to the IRS, stating in part:
"Mr. Jackson was at that time [when he opened the account] erroneously informed by branch personnel that the account could be used as an IRA investment when, in fact, our computer system could not handle the reporting requirements for that particular type of investment. Our system has since been modified to accommodate the reporting."
The IRS asked for an affidavit, and Debbie Eubank, the teller who had opened the Performance Fund account for Jackson, signed an affidavit in November 1990, stating in part:
"Mr. Jackson opened the account with the check made payable to him from a profit sharing plan. In the course of our Discussion, prior to opening the account, there was a miscommunication between Mr. Jackson and me, which resulted in Mr. Jackson understanding that this particular account qualified as an IRA account when in fact this was not the case."
The IRS indicated that this affidavit was not sufficient, and Eubank signed a second affidavit prepared by the Bank's ...