Mierzejewski v. BS

IN THE COURT OF APPEALS

AT KNOXVILLE FILED
October 20, 1998

MIKE MIERZEJEWSKI and ) C/A NO. 03A01-9802-CH-00044
Cecil Crowson, Jr.
FURNITURE PARTNERS, INC., ) Appellate C ourt Clerk
)
Plaintiffs-Appellants, )
)
)
v. )
) APPEAL AS OF RIGHT FROM THE
) HAMILTON COUNTY CHANCERY COURT
)
)
BS ENTERPRISES, INC., and )
BELINDA SHATZER d/b/a T. J. )
BAKER’S FURNITURE, )
) HONORABLE R. VANN OWENS,
Defendants-Appellees. ) CHANCELLOR

For Appellants For Appellees

FRED T. HANZELIK ELIZABETH G. ALT
BRENT JAMES WILLIAM T. ALT
Hanzelik & James William T. Alt, P.C.
Chattanooga, Tennessee Chattanooga, Tennessee

O P I N IO N

AFFIRMED AND REMANDED Susano, J.

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 This suit in chancery was filed by Furniture Partners,

Inc., against T. J. Baker’s Furniture.1 It arises out of a

failed business relationship. The complaint asked the trial

court to issue a “writ of replevy” for items of furniture and a

temporary restraining order (TRO). After granting the TRO, the

Chancellor referred the issues made by the pleadings to a master.

Following the trial court’s receipt of the master’s report, the

plaintiff filed an answer to the defendant’s counterclaim, in

which answer the plaintiff requested a trial by jury. The court

denied the plaintiff’s request for a jury trial; confirmed the

master’s report; and entered a judgment for $39,916.36 on the

defendant’s counterclaim. The plaintiff appealed, contending, in

its sole issue, that it is entitled to a jury trial pursuant to

the authority of Article I, Section 6, of the Tennessee

Constitution2 and T.C.A. § 21-1-103.3

1
The style of the various pleadings and orders below reflects multiple
individuals/entities as the parties to this litigation; however, since this is
essentially a contest between two companies -- Furniture Partners, Inc. and T.
J. Baker’s Furniture -- we will refer to the parties as plaintiff and
defendant.
2
Article I, Section 6, of the Tennessee Constitution provides, in
pertinent part, “[t]hat the right of trial by jury shall remain inviolate.”
3
T.C.A. § 21-1-103 provides as follows:

Either party to a suit in chancery is entitled, upon
application, to a jury to try and determine any
material fact in dispute, save in cases involving
complicated accounting, as to such accounting, and
those elsewhere excepted by law or by provisions of
this Code, and all the issues of fact in any proper
cases shall be submitted to one (1) jury.

2
 I. Facts

The defendant planned to conduct a going-out-of-

business furniture sale.4 It engaged the services of the

plaintiff to “manage and oversee” the sale. The plaintiff

apparently held itself out as possessing expertise in such sales.

While each of the parties placed furniture in the sale, the

plaintiff was primarily responsible for securing the furniture to

be sold. According to the original terms of the parties’

agreement, as furniture was sold, the defendant was to pay the

vendor’s invoice price and expenses of the sale, plus a sales

commission to the plaintiff. The defendant would be entitled to

the balance of the sales proceeds. The defendant would also be

entitled to the revenues from the sales of its own furniture,

less the same percentage sales commission to the plaintiff and

expenses of the sale.

The terms of the contract were altered during the

course of the business relationship. The record indicates that

the plaintiff requested that the defendant pay for the furniture

in advance, rather than upon receipt of the sales proceeds as

originally agreed to. This is reflected in the testimony of the

owner of the defendant business:

Q: As a result of the selling of furniture,
were their arrangements made as to how you
would compensate Furniture Partners for the
furniture?

A: Yes.

4
While it is clear that the defendant was conducting a going-out-of-
business sale, it is less clear that the defendant was in fact going out of
business.

3
 Q: How was that done?

A: The arrangements were, as the money came
in and the invoices became due, we would
settle up in that manner, was what the
original understanding was.

Q: And did that understanding -- is that how
you operated the sales during the period of
time that this contract was in existence?

A: That was not what was done.

Q: What was done?

A: It was supposed to be that way, but we
ended up -- he was demanding the money and
having my manager write checks for the
invoices up front in many cases, of which we
have several falling-outs there as he was
doing that. So therefore, we weren’t being
able to sell it on a consignment basis as we
agreed.

Q: When you say you were paying the money up
front, what do you mean by that?

A: Well, there were several invoices. When
they first opened up the sale, I was in New
York. He had my manager write checks to
these vendors [sic] just right off the bat.
If I could have done that I would not have
needed to hire him and his company to bring
it in and sell it on consignment.

* * *

Relations between the parties deteriorated after the

parties further modified their contract to decrease the

plaintiff’s sales commission percentage and provide for a joint

checking account.5 Dealings between the parties further soured

when the City of Chattanooga notified the defendant that the

going-out-of-business sale had to be completed earlier than

originally scheduled. The plaintiff was upset about the change

5
The original contract provided for a checking account with plaintiff as
the sole signatory. The contract was then modified in writing to require the
signatures of both parties on all checks.

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in the ending date of the sale, and became concerned that the

defendant would sell the plaintiff’s furniture without paying for

it. For this reason, the plaintiff obtained a TRO against

further sales.

The plaintiff also sought damages based on an alleged

breach of contract and, as previously indicated, demanded a jury

trial. The defendant counterclaimed for damages arising from the

restraining order as well as from breach of contract. In

essence, this litigation required multiple determinations:

whether various unsold pieces of furniture belonged to the

plaintiff or to the defendant; whether the plaintiff had been

overpaid or, conversely, was due additional sums for furniture

sold; the proper amount of commissions due the plaintiff; whether

expenses of the sale had been properly accounted for and paid;

and whether the defendant was damaged, and, if so, to what

extent, as a result of the plaintiff improperly obtaining the

TRO.

II. Standard of Review

In this non-jury case, our review is de novo upon the

record of the proceedings below. Rule 13(d), T.R.A.P. Since the

sole issue before us -- whether, on the undisputed facts, the

plaintiff is entitled to a jury trial -- is one of law, there is

no presumption of correctness as to the trial court’s judgment on

this issue. Campbell V. Florida Steel Corp., 919 S.W.2d 26, 35

(Tenn. 1996); Presley v. Bennett, 860 S.W.2d 857, 859 (Tenn.

1993).

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 III. Substantive Law

“Article 1, Section 6, of the Tennessee Constitution

preserves the right to a jury trial ‘as it existed at common

law.’” Smith County Education Association v. Anderson, 676 S.W.2d

328, 336 (Tenn. 1984)(quoting from Marler v. Wear, 96 S.W. 447,

448 (Tenn. 1906)). Since common law did not countenance a jury

trial for inherently equitable matters, the above-referenced

constitutional provision includes no such right, see Moore v.

Mitchell, 329 S.W.2d 821, 823 (Tenn. 1959); however, a statutory

right to trial by jury does exist in Tennessee. The applicable

provision is found at T.C.A. § 21-1-103.6 By this provision, the

legislature intended to create a “broad statutory right to a jury

trial in equity cases...” Sasser v. Averitt Express, Inc., 839

S.W.2d 422, 434 (Tenn.App. 1992). However, the legislature

specifically exempted “cases involving complicated accounting, as

to such accounting.” See T.C.A. § 21-1-103. See also Smith

County Education Association, 676 S.W.2d at 336; Moore, 329

S.W.2d at 823; Greene County Union Bank v. Miller, 75 S.W.2d 49,

52 (Tenn.App. 1934).

IV. Analysis

It is now clear beyond any doubt that there is a right

to trial by jury for matters inherently equitable. See Smith

County Education Association, 676 S.W.2d at 336; Moore, 329

S.W.2d at 823. However, it is likewise clear that this statutory

6
For the text of this provision, see footnote 3 to this opinion.

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right does not extend to matters involving complicated

accountings. See Sasser, 839 S.W.2d at 434. In an early case,

this court addressed matters exempted from the purview of the

statute:

If it is a case for complicated accounting,
such party has no right to demand or have a
trial by jury. The foundation of
jurisdiction in equity in a case of
complicated accounts is based upon the
inadequacy of the legal remedy, as where
there is an embarrassment in making proof,
the necessity for a discovery, or the
production of books and papers, or where it
would be difficult, if not impossible, for a
jury to unravel the numerous transactions
involved, and justice could not be done
except by employing the methods of
investigation peculiar to courts of equity.
It is well settled that where the accounts
are complicated this constitutes of itself
sufficient ground for the assumption of
jurisdiction by a court of equity, and where
the account is made up of items for and
against each party, or the items are numerous
and extend over a long period of time.

Greene County Union Bank, 75 S.W.2d at 52 (emphasis added)

(quoting 1 C.J. 618, 619). See also Taylor v. Tompkins, 49 Tenn.

(2 Heisk.) 88, 89 (1870).

In the instant case, it is clear that the issues before

the trial court involved an inherently complicated accounting.

The accounting for damages arising from the competing claims for

breach of contract required analysis of many records, including

canceled checks, vendor invoices, inventory control logs, and

other documents. Apparently, neither party had a formal

accounting system. The record shows that the transactions

between the parties covered a four-month period, involved sales

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of over $300,000 in toto, and pertained to invoices from several

different vendors. There are numerous invoices and checks for

purchases of furniture. Handwritten sheets appear to be the

basis for inventory control. A number of checks are included in

the record, but do not have corresponding documentation attached.

Returns to vendors, as well as overpayments to both vendors and

the plaintiff, are at issue. All data had to be analyzed

extensively to determine the proper amount of damages. In

addition, the accounting for damages arising from the issuance of

the restraining order involved many factors. Lost profits were

calculated based on sales volume and gross profit percentages,

less expenses. The determination of these factors involved a

working knowledge of the retail industry as well as a working

knowledge of basic accounting principles.

The defendant hired an expert -- a certified public

accountant -- to sift through and unravel the many transactions

between the parties. The expert produced an accounting of the

damages under the contract and under the restraining order, which

study analyzed in detail all of the various data. Several

calculations were necessary, as well as extensive compilation of

supporting schedules for those calculations.

We find and hold that the issues made by the pleadings

involved a complicated accounting, thus placing this case outside

the broad statutory right to a jury trial set forth in T.C.A. §

21-1-103.

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 V. Conclusion

It therefore results that the judgment of the trial

court is affirmed. Costs of the appeal are taxed to the

appellant. This case is remanded to the trial court for

enforcement of the judgment and collection of costs assessed

there, all pursuant to applicable law.

__________________________
Charles D. Susano, Jr., J.

CONCUR:

_____________________________
Houston M. Goddard, P.J.

_____________________________
William H. Inman, Sr.J.

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