IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
February 12, 2003 Session
WANDA SHADWICK, INDIVIDUALLY, AND AS EXECUTRIX OF THE
ESTATE OF KENNETH LEE PHILLIPS v. F. H. SHOEMAKER
DISTRIBUTORS, INC., ET AL.
Appeal from the Chancery Court for Scott County
No. 8282 Billy Joe White, Chancellor
FILED MAY 30, 2003
No. E2002-01525-COA-R3-CV
Wanda Shadwick, individually, and as Executrix of the Estate of her common-law husband,1
Kenneth Lee Phillips, sued F. H. Shoemaker Distributors, Inc., and Floyd H. Shoemaker, II. The
theory of the lawsuit is that the Defendants were guilty of abuse of process in connection with the
sale of certain real estate and personal property owned by Kenneth Lee Phillips at the time of his
death to pay a claim of the Corporation against his Estate. This claim, in the amount of $25,079.54,
had been sustained by the Probate Judge. We find that neither the Corporation nor Mr. Shoemaker
are liable for the misdeeds of Max Huff, the first attorney employed by them. Having so found, we
reverse the judgment both as to compensatory damages in the amount of $156,000 which,
incidentally, was higher than Ms. Shadwick’s testimony as to the wholesale value of the personal
property, and of punitive damages in the amount of $250,000, which was the amount of the ad
damnum clause in the complaint. Mr. Shoemaker filed a counter-complaint seeking to recover the
amount paid in delinquent taxes as to a house and lot he purchased at the purported sale, as well as
delinquent taxes owed thereon. On this issue the jury found in favor of Ms. Shadwick and we affirm
this determination.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Reversed in Part;
Affirmed in Part; Cause Remanded
HOUSTON M. GODDARD , P.J., delivered the opinion of the court, in which HERSCHEL P. FRANKS and
CHARLES D. SUSANO, JR., JJ., joined.
1
Ms. Shad wick was declared to be Mr. Phillips’ common -law wife by decree of the Chancery Court
pursuant to a suit filed by Ms. Shadwick after his death.
Stephen A. Marcum, Huntsville, Tennessee, for the Appellants, F. H. Shoemaker Distributors, Inc.,
and Floyd H. Shoemaker, II
Johnny V. Dunaway, LaFollette, Tennessee, for the Appellee, Wanda Shadwick, individually, and
as Executrix of the Estate of Kenneth Lee Phillips
OPINION
The Corporation and Mr. Shoemaker appeal the awards, raising several issues. However, the
determinative one contends that the Trial Court was in error in not sustaining their motion for
judgment notwithstanding the verdict in accordance with their motion for a directed verdict made
at the close of all the proof. Mr. Shoemaker raises an issue insisting that he is entitled to a judgment
against the Estate because he had paid an indebtedness secured by a deed of trust on a house and lot
which he purportedly purchased at the sale. Mr. Shoemaker also contends he is entitled to a
judgment for delinquent taxes as to this property, which he also paid.
The standard of review for determining the propriety of a directed verdict is well settled in
this State and is set out in Wharton Transport Corp. v. Bridges, 606 S.W.2d 521, 525 (Tenn. 1980),
as follows:
"On review of the grant of a directed verdict on motion of a defendant, it
is not the office of an appellate court to weigh the evidence. Rather, it must take
the strongest legitimate view of the evidence in favor of the plaintiff, indulging
in all reasonable inferences in his favor, and disregarding any evidence to the
contrary. The trial judge's action may be sustained only if there is no material
evidence in the record that would support a verdict for the plaintiff, under any of
the theories that he has advanced." Cecil v. Hardin, 575 S.W.2d 268, 271 (Tenn.
1978).
Following this rule, our task is to determine whether there is any material evidence to support
the verdict. Tenn. R. App. P. 13(d). In doing so, we accept as true the statement of facts necessary
for determination of this appeal set out in the Plaintiffs’ brief, which we have edited slightly,
principally to conform with the proof:
Kenneth Phillips owned and operated the “Three Way Garage” at the
intersection of Highways 27 and 52 in Elgin, Scott County, Tennessee for forty-
six years. The business sold, in addition to automobile parts, gasoline, which
Decedent purchased from Appellant F. H. Shoemaker Distributors, Inc. Appellant
corporation is a family-owned oil distributorship which is operated by its
president Appellant F. H. Shoemaker II. Appellant had been Decedent’s primary
fuel supplier for twelve years, selling him petroleum products, gasoline, diesel
fuel, and kerosene. During these twelve years, Mr. Shoemaker maintained a
“running account” for Decedent and his payments were attributed to the oldest
-2-
portion of his account. At the time of his death on July 10, 1997, Appellants
claimed Decedent was indebted to the Appellant corporation for a sum of
$25,079.54.
Defendant’s Estate was opened by the Scott County Probate Court on July
24, 1997, and Letters of Administration were issued to his common law wife,
Appellee Wanda Shadwick. Decedent and the Appellee had been romantically
involved and had lived together since 1977 in a house Decedent built and owned
in Elgin. Under the terms of Decedent’s Will, Appellee, in addition to being
designated Executrix of the Estate, was also named as primary beneficiary.
Following Decedent’s death and the opening of his Estate for probate,
Appellee continued to operate the Three Way Garage, purchasing her gasoline, as
Decedent had done, from the Appellant corporation. Appellee made regular
payments to Appellants during this time. Mr. Shoemaker, however, deviated from
his customary course of dealing and standard practice with running accounts and
credited only a portion of Appellee’s payments to Decedent’s outstanding debts.
Appellee kept the garage open until November, 1998, when it was shut down as
a result of Appellants’ Execution Sale.
In August, 1997, Appellants’ local attorney, Max Huff, filed a claim
against the Estate for $25,079.54. Claims were also filed by the Mutual Loan and
Thrift Company and by Methodist Medical Center. Appellee retained a local
attorney, Philip Kazee, to assist her with administration of the Estate.
In May and June, 1998, well before the Court considered entering a
Judgment with regard to Appellants’ claim, Mr. Huff filed Notices of intent to sell
off Decedent’s realty and personalty. The realty consisted of the aforementioned
home in Elgin as well as the building and lot on which Three Way Garage was
located. In his Notice, Huff listed the value of the tracts as being $41,300.00 and
$49,500.00, respectively. The personalty in question was comprised entirely of
Decedent’s inventory of automobile parts he had kept for sale in the three rooms
of the garage. Huff scheduled a hearing for July, 1998 to adjudicate the Estate’s
alleged debt, but Appellee’s counsel, Mr. Kazee, neglected to inform her of the
hearing and raised no objection to Appellants’ claim.
Following this hearing, the Probate Court issued, on July 22, 1998, an
Order granting Appellant corporation Judgment against Decedent’s Estate in the
amount of $25,079.54, but specifically forbade Appellants’ request for an
immediate sale of any of the Estate property to satisfy the obligation. Mr.
Shoemaker verbally approved Mr. Huff seeking issuance of executions . . . which
were dated September 21 and October 9, 1998. While executions and
garnishments are normally handled by the Sheriff’s Department, in this instance
-3-
the executions were served on Appellee by Constable David Day and Attorney
Huff. On the day the execution was served, October 12, Mr. Huff accompanied
Constable Day to Decedent’s business, although Mr. Day did not request him to
do so. Upon their arrival, Huff took charge of the situation and told Appellee they
were going to sell all the inventory and personal property of Three Way Garage
and, if necessary, Decedent’s house and garage. This encounter represented the
first time Appellee had ever heard of the July 22, 1998 hearing or the ensuing
Judgment. When she asked Mr. Huff if he planned simply to put her out into the
street, he merely shrugged and walked away.
Constable Day and Mr. Huff then returned the served copies of the
Executions to the Probate Clerk’s Office. The Executions, while signed by Mr.
Day, had been filled out beforehand . . . by Mr. Huff. The executions contained
no inventory or identification of items levied upon. In dereliction of the statutory
requirement that a debtor’s personalty must be taken under the personal control
of the officer and inventoried, neither Day nor Huff took steps to seize the
automobile parts or catalog them. Huff subsequently placed an advertisement in
a local newspaper announcing that a “Sheriff’s Sale” of Decedent’s realty and
personalty would be held on November 20, 1998.
Mr. Huff conducted the sale of Decedent’s real and personal property on
the date provided in the notice. Although the auction had been advertised as a
“Sheriff’s Sale”, the Scott County Sheriff in fact played no role in the matter - the
entire affair was stage-managed by Mr. Huff. Between fifty and seventy people
attended the auction that day, including Mr. Shoemaker. Huff sold the personalty
(auto parts inventory of Three Way Garage) without having assessed the value of
the proffered items. The inventory was purchased in its entirely by one person,
Randy Corder (“Mr. Corder”), an auto parts dealer from Parker’s Lake, Kentucky,
for $2,275.00. While Constable Day was present and, pursuant to Huff’s
instructions, colleted the proceeds obtained from the sale of the personalty, neither
he nor Mr. Huff made a list of the items sold to Corder. Huff then proceeded to
sell the Three-Way Garage building to the Appellant corporation, for $5,000.00.
Mr. Shoemaker then personally purchased Decedent’s house for $35,000.00.
Mr. Day delivered the $2,275.00 he had collected from the sale of
personalty to the Scott County Probate Court Clerk, Ms. Jan Burress (“Ms.
Burress.”). Huff took Appellant corporation’s $5,000.00 check, representing
payment for the purchase of Decedent’s garage, to the Clerk’s Office on
December 11, 1998. Huff also brought with him the $35,000.00 check issued by
Mr. Shoemaker for the purchase of Decedent’s home and informed Ms. Burress
that he wished to have the money placed in his private trust account to pay the
costs of the sale. The clerk then indorsed the check over to Huff.
Notwithstanding the fact that no Court Order had been entered authorizing the sale
-4-
nor disbursement of the sale proceeds and notwithstanding that the other creditors’
claims had yet to be satisfied, Huff placed the $35,000.00 in his trust account and
then without Court authorization used the funds to pay off the mortgage and back
taxes owed on the property, which his clients/Appellants had purchased. He also
deducted his own fee from the deposited funds.
On December 14, 1998, a “Sheriff’s Report of Sale and Breakdown of
Proceeds” was filed with the Probate Court. It had ostensibly been signed by Mr.
Day, but Mr. Day’s signature had in fact been signed by Huff without Day’s
permission.. These documents stated that $2,275.00 in proceeds had been
obtained from the sale of Decedent’s personalty. However, the Report did not
specify the actual items sold. Also listed on the Breakdown was the $5,000.00
payment made on Decedent’s garage. Following the payouts for back taxes and
mortgage payoff, a total of $12,067.10 remained from the $35,000.00 Huff had
placed in his trust account and this was paid back into the Court by a check issued
by him on the day of the Report’s filing.
On December 16, 1998, Ms. Burress issued, from the above tendered
funds, a check to Mr. Day in the amount of $1,510.78, which represented his
officer’s commission on the Execution Sale. On the same day, she also issued
checks to Appellants totaling $764.22 and $17,067.00, respectively. No Court
Order authorized these payouts.
Following a meeting with Mr. Huff in which he gave Appellee until the
beginning of the new year 1999 to either start paying Appellant Mr. Shoemaker as
the new owner (of what had been her personal residence) monthly rent in the
amount of $375.00 or vacate Decedent’s house. Appellee then retained the
undersigned counsel to contest the Sheriff’s Sale of the Estate’s assets. Appellee
immediately filed a Petition with the Scott County Probate Court informing it of
Mr. Huff’s disregard of its July, 1998 Order and seeking to void the November 20,
1998 Sheriff’s Sale.” Appellee obtained from the Court an injunction forbidding
Appellant to oust Appellee from her home pending the resolution of the action.
Although Appellant contested Appellee’s Petition, the Probate Court ultimately
entered Orders voiding the Sale of Decedent’s realty and personalty2 on October
4, 1999 and December 20, 1999, respectively. Decedent’s inventory had been
purchased and moved out of State by a Kentucky resident.
....
2
Although the Pro bate C ourt found the sale of personalty void, it nevertheless surprisingly found that
the buyer was a bona fide purchaser. Mo reover, it found that, notwithstanding its ord er pro hibiting sale o f the Estate
property, M r. Huff was not guilty of contemp t of court.
-5-
Appellee filed, simultaneously with the Probate Petition to Void the Sale,
the Complaint in this case in Chancery Court seeking compensatory and punitive
damages from Appellants for wrongful execution and abuse of process. A jury
trial on this Petition was conducted on February 13 and 14, 2002. The evidence
produced at trial demonstrated that Mr. Huff had unlawfully executed on
Appellee’s real and personal property, committing egregious errors in the
preparation and service of the Executions, had sold off Decedent’s realty and
personalty at prices far below their true market value, and had failed to inventory
the auto parts and personal property sold, causing damage to Appellee. When
questioned on the discrepancy of the signatures on the Sheriff’s Report of Sale”
and the “Disbursement or Distribution of Proceeds,” Mr. Huff claimed that he had
been given signature authority by Mr. Day and had signed the Reports in his name
and at his behest. At trial, however, Constable Day denied having given such
authority to Huff and acknowledged the signatures were not his. Although he
subsequently attempted to retract this statement upon redirect examination by
Appellant’s counsel, he was nevertheless forced to acknowledge, after further
questioning by Appellee’s counsel, that he had not in fact consented to Huff’s
signing his name on the documents.
Mr. Day also testified that, at the time he had served the Execution upon
her, Appellee had told him the Estate had no personalty upon which to levy.
However, when asked on redirect examination why he nonetheless completed and
signed an Execution on Personalty without indicating an absence of personal
property to attach, he was unable to provide a satisfactory answer.
In addition to the procedural irregularities surrounding the Executions and
the disbursement of the proceeds, witness testimony also revealed that the sale of
Decedent’s personalty at a shockingly low price had resulted in a pointless
depletion of the Estate’s assets. Appellee testified that she had inventoried and
priced the items of inventory and personal property at Decedent’s business with
the help of various supplier catalogs and that the garage inventory sold to Mr.
Corder for $2,275.00 actually had a value of $125,000.00.
Her assessment was corroborated by Mr. Corder himself, who testified on
Appellee’s behalf at the hearing. Mr. Corder, the owner of “Randy’s Auto Parts”
in Parker’s Lake, Kentucky operates a business selling new and used automobile
parts, and he was recognized as an expert in his field by the Trial Court. He stated
that he had purchased almost all Decedent’s inventory and that there were a lot of
parts. It had taken him at least three or four days to remove all of the parts with
the help of several trucks and a U-Haul trailer. Mr. Corder further indicated that
he thought he “got a real good deal” from the sale, as he had paid under $2,300.00
for the parts. He estimated that, had the parts been offered for sale under ordinary
circumstances, they could have sold for well over $100,000.00.
-6-
Further proof of the garage inventory’s value was provided by a local
attorney, Harold Jeffers (“Mr. Jeffers”), who had prepared Decedent’s tax returns
for him from 1968 until his death in 1997. As the Three Way Garage had been a
sole proprietorship, Mr. Jeffers had prepared 1040 form tax returns for Decedent,
as well as a Schedule C form with attachments to set out the income and expenses
for the business.
These forms revealed that Decedent had reported his gross receipts of his
garage in 1995 as having been $249,782.00. The beginning value of his inventory
for that year had been $240,558.00. At the year’s end it was $197,620.00.
Decedent’s 1996 gross receipts equaled $243,109.00. His beginning inventory for
that year had had a value of $197,620.00, his end inventory was valued at
$196,850.00. Decedent’s gross receipts for the final year of his life had equaled
$181,653.00. His final inventory value was listed as $158,950.00.
Mr. Shoemaker attempted to downplay his personal culpability at trial by
contending that Mr. Huff had been the agent only of Appellant corporation and
that he had not been an active participant in Huff’s actions against Appellee. He
was nonetheless compelled to admit that, as president of Appellant corporation,
he had failed to credit Appellee’s current payments to it against the older debts
incurred by Decedent and had only moved against her because he had heard
rumors she was planning to liquidate the Estate. Shoemaker had also personally
approved of Huff procuring Executions on Decedent’s property and preparing a
deed to the Appellee’s residence. He had attended the execution sale arranged by
Huff and had there purchased, for himself and Appellant corporation, the only
realty that had belonged to Decedent, at prices well below even the value Huff
himself had placed on the realty in his Notice of Intent to Sell. Finally, Shoemaker
had ordered Huff to prepare, for himself and Appellant corporation, deeds to the
property acquired from the Estate at the void sale
Certain other undisputed facts should be considered in addition to those hereinbefore stated
from the Plaintiff’s brief.
The Plaintiff sold one tract of land, as well as certain personal property before the claim of
Shoemaker, Inc., was filed. It should also be noted that although the order of the Probate Judge
entered on July 24, 1998, did provide that there would be no sale. It also stated that judgment was
granted in favor of Shoemaker “for which execution will issue.” A number of people attended the
sale of personal property when it was purchased for the sum of $2,274.00, although there was
considerable proof in the record to show it was worth in excess of $100,000. As to the garage
property which was bought by the Corporation, there was only one other bid in the amount of $500,
that the bidding as to the house and lot sold to Mr. Shoemaker for $35,000. Mr. Shoemaker did not
know of any problem with the process. He did answer in the affirmative when asked by the
Plaintiff’s counsel whether “Max Huff was your attorney and your agent?” A few questions
-7-
thereafter, when the question was put in another context, Mr. Shoemaker stated that Mr. Huff was
not his agent.3
The principal fallacy in the trial of this case was the assumption by counsel for the Plaintiff
that Mr. Huff was an agent of the Defendants, and as a result, they are vicariously liable for his
misdeeds.
A number of issues were raised by the Defendants. However, we believe that issue number
one is dispositive of this case. In Givens v. Mullikin, 75 S.W.3d 383 (Tenn. 2002),4 our Supreme
Court clearly states that the general rule an attorney is not an agent, but rather an independent
contractor, although under certain circumstances the client may be vicariously liable for the acts of
the attorney. Before, however, the client can be held liable vicariously, the tortuous acts complained
of must have been “directed, commanded or knowingly authorized by the client.”
In reaching this conclusion, our Supreme Court quoted with approval from a case decided
by the Texas Court of Appeals, as follows:
Unless a client is implicated in some way other than merely being
represented by the attorney alleged to have committed the [tortious] conduct, the
client cannot be liable for the attorney’s conduct. A contrary holding would in
effect obligate clients to monitor the actions taken by their attorneys when their
attorneys are representing them, and require the clients to seize the helm of their
representation at the slightest hint of [tortious] conduct. Most clients cannot
possible monitor their attorneys to the degree that would be required to meet such
an obligation, and most, clearly, are not qualified for such monitoring, anyway.
Bradt v. West, 892 S.W.2d 56, 76-77 (Tex. App. 1994).
We have searched the record in this case and find no proof that would justify a finding that
Mr. Shoemaker directed, commanded or knowingly authorized the misdeeds committed by his
attorney. The only proof touching on the question is as follows:
“Q Did you have any personal participation in the issuance of Execution and
Garnishment?
3
Mr. Shoemaker’s characterization of his and Mr. Huff’s relationship is really of no consequence.
W hether a person is an agent of another is a question of law and the law is clear that in this case the attorney was an
indep endent contracto r. Givens v. Mullikin, infra.
4
In fairness to the Trial Judge, it should be noted that the opinion in Givens was filed after the trial had
conclude d. It had , howe ver, been filed prior to disposition of the Court of post-trial motions by the Defendants, but it
does not appear it was ever called to the Trial Court’s attention.
-8-
A Only verbal.
Q Tell me about the verbal.
A I just approved it.”
We emphasize, as already noted, that issuance of an execution was authorized by the Probate
Judge.
Notwithstanding Givens, counsel for the Plaintiff contends that the traditional respondeat
superior doctrine should apply, which would render the Defendants liable for the acts of their
attorney. We cannot agree. Suppose, for instance, a client directs his attorney to interview a witness
and the attorney, while on this mission, speeds through a 15 mile per hour school speed zone at 75
miles per hour, injuring students who were leaving school after classes had been dismissed. Would
the client be liable for damages resulting from injuries to the students? We think not.
We conclude in light of Givens and the proof introduced, that neither Mr. Shoemaker nor the
Corporation is liable to the Plaintiff for the tortious acts committed in connection with the sale of
the real and personal property.
Finally as to this point, we are somewhat puzzled that apparently no suit was ever brought
against Mr. Huff or Mr. Day, who under the record were perpetrators of the acts complained of.
Also, it does not appear that a suit was filed against Ms. Shadwick’s first attorney who allowed a
judgment to be entered in the Probate Court in favor of the Corporation without–according to Ms.
Shadwick’s testimony–consulting her, or even advising her such a judgment had been rendered.
Because the award of compensatory damages is reversed, the award of punitive damages
must also be reversed. Liberty Mutual Insurance Company v. Stevenson, 368 S.W.2d 760 (Tenn.
1963); Roy v. Diamond, 16 S.W.3d 783 (Tenn. Ct. App. 1999).
As to the issue contending Mr. Shoemaker was entitled to recoup his payment of the
outstanding mortgage and the delinquent taxes on the house and lot he purported to purchase, we
first observe that his attorney made these payments and that Mr. Shoemaker never obtained a deed
to the property. While it might be argued that the Estate was unjustly enriched and, consequently,
Mr. Shoemaker is entitled to recover under the theory of quantum meruit, we first observe that this
theory appears only to be applicable upon the furnishing of goods and services, neither of which
occurred in the case at bar. We also note the requirements relative to application of the doctrine
found in the recent case of Doe v. HCA Health Services of Tennessee, 46 S.W.3d 191, 197 (Tenn.
2001), which quotes with approval from Swafford v. Harris, 967 S.W.2d 319 (Tenn. 1998), as
follows:
-9-
A quantum meruit action is an equitable substitute for a contract claim
pursuant to which a party may recover the reasonable value of goods and services
provided to another if the following circumstances are shown:
(1) There is no existing, enforceable contract between the parties covering
the same subject matter;
(2) The party seeking recovery proves that it provided valuable goods or
services;
(3) The party to be charged received the goods or services;
(4) The circumstances indicate that the parties to the transaction should
have reasonably understood that the person providing the goods or services
expected to be compensated; and
(5) The circumstances demonstrate that it would be unjust for a party to
retain the goods or services without payment.
We do not believe the factors justifying such a recovery have been met in this case.
We also note that the counter-complaint was mentioned only fleetingly in the opening
statement of counsel for the Defendants and not at all in his argument at the conclusion of the trial.
Further, it appears that although counsel for the parties submitted their contentions as to the jury
charge, no mention was made of the counter-claim and the jury was not charged in anywise with
respect thereto.
Given the foregoing circumstances, we are disinclined to disturb the jury verdict which was
approved by the Trial Court finding in favor of the Counter-Defendant, Ms. Shadwick.
For the foregoing reasons the judgment of the Trial Court is reversed in part, affirmed in part
and the cause remanded for collection of costs below. Costs both below and on appeal are adjudged
one-half to Wanda Shadwick, Individually, and as Executrix of the Estate of Kenneth Lee Phillips,
and one-half to F. H. Shoemaker Distributors, Inc., and Floyd H. Shoemaker, II.
_________________________________________
HOUSTON M. GODDARD, PRESIDING JUDGE
-10-