Squibb v. Smith

I N THE COURT OF APPEALS

FILED
February 3, 1997

Cecil Crowson, Jr.
Appellate C ourt Clerk
J OHN P. SQUI BB a nd wi f e , ) WASHI NGTON CHANCERY
M ARTHA J O SQUI BB a nd J AM ES ) C. A. NO. 03A01- 9609- CH- 0029 1
H. W DENER,
I )
)
Pl a i nt i f f s - Appe l l e e s )
)
)
)
)
)
vs . ) HON. THOMAS J . SEELEY
) CHANCELLOR
)
)
)
)
)
TED C. SM TH a nd wi f e , ROSE E.
I ) AFFI RMED AND REMANDED
SM TH,
I )
)
De f e nda nt s - Appe l l a nt s )

MARK S. DESSAUER, Hunt e r , Smi t h & Da vi s , Ki ngs por t , f or Appe l l a n t
Te d C. Smi t h.

J AM E. BRADI NG, He r ndon, Col e ma n, Br a di ng & M Ke e , J ohns on Ci t y ,
ES c
f o r a pp e l l e e s .

O P I N I O N

M M r a y, J .
c ur
 Thi s a c t i on wa s i ns t i t ut e d by t he pl a i nt i f f s t o r e c ove r a pr o -

r at a s ha r e of moni e s t he y we r e r e qui r e d t o pa y on a gua r a n t y

a gr e e me nt whe r e i n t he de f e nda nt s we r e c o- gua r a nt or s . The t r i a l

c o u r t f o und t ha t t he r e we r e t hr e e c o- gua r a nt or s , M . Squi bb, J a me s
r

H. W d e n e r a nd Te d C. Smi t h ( de f e nda nt ) .
i He a ppor t i one d l i a bi l i t y

e qua l l y a mong t he t hr e e . The c our t f ound t ha t t he pur por t e d

s i gna t ur e of M.
s Smi t h on t he gua r a nt y a gr e e me nt wa s not he r

s i gna t ur e . The c a s e wa s d i s mi s s e d a s t o t he de f e nda nt , Ros e E.

Smi t h. No a ppe a l wa s t a ke n f r om t he a c t i on of t he c our t di s mi s s i n g

t he c a s e a s t o M .
s Smi t h. J udgme nt wa s e nt e r e d i n f a vor of t h e

p l a i nt i f f s , J ohn P. Squi bb a nd wi f e M r t ha J o Squi bb, i n t he a mo u n t
a

of $ 4 5 , 402. 04 pl us pr e j udgme nt i nt e r e s t at t he r a t e of 10% p e r

a n n u m f r om Apr i l 10, 1991 t o Apr i l 9, 1996, i n t he a mount of

$ 2 2 , 7 0 1 . 02 f or a t ot a l j udgme nt of $68, 103. 06. A l i ke j udgme nt wa s

e nt e r e d i n f a vor of t he pl a i nt i f f , W de ne r .
i Fr om t he s e j udgme n t s ,

t he d e f e nda nt a ppe a l s . W a f f i r m t he j udgme nt of t he t r i a l c ou r t .
e

Th e de f e nda nt pr e s e nt s t he f ol l owi ng i s s ue s f or our r e vi e w:

1. Di d t he t r i a l c our t e r r i n f a i l i ng t o c r e di t Smi t h
f or hi s pr o- r a t a s ha r e o f t h e c ol l a t e r a l , whi c h
s e c ur e d t he t o t a l out s t a ndi ng i nde bt e dne s s of
Ac t i on t o t he Ba nk, a s e vi de nc e d by t he not e , whe n
s uc h c ol l a t e r a l wa s s ur r e nde r e d t o t he pl a i nt i f f
whe n t he y pur c ha s e d t he not e f r om t he Ba nk.

2. Di d t he t r i a l c our t e r r i n f i ndi ng t he r e we r e t hr e e
r a t he r t ha n f our gua r a nt or s i n de t e r mi ni ng Smi t h' s
pr o- r a t a s ha r e of t he c ommon l i a bi l i t y?

2
 3. Di d t he t r i a l c our t e r r or a l t e r na t i ve l y a bus e i t s
di s c r e t i on i n a wa r di ng pr e j udgme nt i nt e r e s t on t he
ba s i s t ha t a wa r di ng t he pl a i nt i f f s ' i nt e r e s t r e -
s ul t e d i n t he m r e c e i vi ng a j udgme nt i n e xc e s s of
t he a mount t he y pa i d i n e xc e s s of t he i r pr o- r a t a
s ha r e of t he c ommon l i a bi l i t y?

Thi s c a s e wa s t r i e d b e f or e t he c our t a t a be nc h t r i a l . Ou r

s t a n d a r d of r e vi e w, t he r e f or e , i s de novo upon t he r e c or d, wi t h a

p r e s u mp t i on of c or r e c t ne s s of t he f i ndi ngs of f a c t by t he t r i a l

c our t . Unl e s s t he e vi de nc e ot he r wi s e pr e ponde r a t e s a ga i ns t t he

f i n d i n g s , we mus t a f f i r m, a bs e nt a n e r r or of l a w. Se e Rul e 13( d ) ,

Te nn e s s e e Rul e s of Appe l l a t e Pr oc e dur e . If t he pl a i nt i f f is

e n t i t l e d t o a j udgme nt , a ppe l l a t e c our t s ha ve a dut y t o r e n d e r

j u d g me n t s whi c h t he l owe r c our t s h o ul d ha ve r e nde r e d. Se e e . g . ,

To o me y v. At yoe , et al , 3 2 S. W. 254 ( Te nn. 1895) , a nd Pe r r y v .

Ca r t e r , 219 S. W 2d
. 905 ( Te nn. 1949) . Se e al s o Rul e 36( a ) ,

Te nn e s s e e Rul e s o f Appe l l a t e Pr oc e dur e .

M . Squi bb, M . W de ne r a nd t he de f e nda nt , M . Smi t h, we r e t h e
r r i r

o wn e r s of a l l t he out s t a ndi ng s t oc k i n Ac t i on M t g a g e Compa n y .
or

Ac t i on e xe c ut e d a not e pa ya bl e t o Fi r s t Te nne s s e e Na t i ona l Ba nk

As s o c i a t i on i n t he pr i nc i p a l a mount o f $ 2 , 000, 000. 00. The y e a c h

e xe c ut e d a pe r s ona l gua r a nt y a gr e e me nt . The Ba n k r e qui r e d s o me

a d d i t i ona l c ol l a t e r a l whe n i t be c a me di s s a t i s f i e d wi t h t he a mo u n t

o f c o l l a t e r a l pl e dge d t o t he ba nk. As a r e s ul t , M . & M . Squ i b b
r s

e xe c ut e d a de e d of t r us t o n pr ope r t y owne d by t he m a s t e na nt s b y

t he e n t i r e t y. M.
r W de ne r
i al s o e xe c ut e d a de e d of t r us t on

3
p r o p e r t y whi c h he owne d i n hi s own na me . M . Smi t h di d not pr ov i d e
r

a n y a d d i t i ona l c ol l a t e r a l .

W n M.
he r Squi bb a nd M .
r W de ne r we r e c a l l e d upon t o pa y t h e
i

n o t e a s gua r a nt or s , t he y t ook a n a s s i gnme nt of t he not e a nd t h e i r

c ol l a t e r a l wa s r e l e a s e d. W l e t he r e i s
hi no di s put e a s t o t he

a mo u n t o f i nde bt e dne s s whi c h M . Squi bb a nd M . W de ne r pa i d t o t he
r r i

b a n k , M . Smi t h c l a i ms t ha t he i s e nt i t l e d t o a c r e di t a ga i ns t hi s
r

p r o- r a t a s ha r e of t he i nde bt e dne s s f or t he va l ue of t he c ol l a t e r a l

t he Sq u i bbs a nd M . W de ne r ga ve t o t he ba nk.
r i I t i s c onc e de d t h a t

t he p l a i nt i f f s di d not t a ke a n a s s i gnme nt of t he not e a t a di s c o u n t

b u t p a i d t he e nt i r e a mount t he n due t he r e on. De f e nda nt a r gue s t h a t

t h e t r a ns a c t i on i s t a nt a mount t o a di s c ount , howe ve r , be c a us e t h e

p l a i nt i f f s r e c e i ve d a r e l e a s e of t he de e ds of t r us t a n d t ha t t he

v a l u e o f t he pr ope r t y upon whi c h t he de e ds of t r us t we r e e xe c u t e d

wa s $ 2 2 5, 000. 00 whi c h c oul d ha ve be e n us e d t o s a t i s f y t he not e .

W f i nd t he a r gume nt a dva nc e d by t he de f e nda nt t o be i nt e l l e c -
e

t ua l l y c r e a t i ve but l ess t ha n pa l a t a bl e to a r e a s ona bl e mi n d

s e e ki n g e qui t y. He a r gue s t ha t t he pr ope r t y pl e dge d t o s e c ur e t he

Ac t i on de bt be c a me c or por a t e c ol l a t e r a l a nd " wa s e s s e nt i a l l y a

c o n t r i b ut i on t o c a pi t a l by t wo of i t s s ha r e hol de r s , M . Squi bb a n d
r

M.
r W d e ne r . "
i Appe l l a nt c i t e s us t o no a ut ho r i t y e i t he r i n t hi s

j ur i s d i c t i on or a ny ot he r j ur i s di c t i on a nd we ha ve f ound none whi c h

4
s u p p o r t s hi s a r gume nt t ha t s uppl yi ng pe r s ona l c ol l a t e r a l t o s e c ur e

a c o r p o r a t e l oa n c ons t i t ut e s a c ont r i but i on of c a pi t a l .

Smi t h s e e ks r e l i e f ba s e d upon t he t he or y t ha t c ont r i but i on i s

p u r e l y a n e qui t a bl e pr i nc i pl e . I n s uppor t , he a s s e r t s t ha t t he

p r i n c i p l e of c o n t r i but i on a ppl i e s onl y i n s i t ua t i ons whe r e t h e

e q u i t i e s o f t he pa r t i e s a r e e qua l a nd s ha r e a c ommon obl i ga t i o n o r

l i a b i l i t y, c i t i ng TRW Ti t l e I ns . v . St e wa r t Ti t l e Gua r . , 8 32 S. W 2d
.

3 4 4 ( Te n n. App. 1991) . W do not di s a gr e e wi t h t he r ul e put f o r t h
e

b y t h e a ppe l l a nt but hi s a r gume nt mi s a ppl i e s t he r ul e . Unde r t h e

f a c t s i n t hi s c a s e , M . Sq ui bb, M . W de ne r a nd M . Smi t h s ha r e d a
r r i r

c o mmon l i a bi l i t y unde r t he i r gua r a nt y a gr e e me nt t o t he ba nk t o p a y

t h e b a l a nc e of t he l oa n. Ha d t he ba nk c hos e n t o f or e c l os e on t h e

pr ope r t i e s of Squi bb a nd W de ne r
i i n s a t i s f a c t i on or i n pa r t i a l

s a t i s f a c t i on of t he l oa n, a ny moni e s de r i ve d f r om f or e c l os ur e wo u l d

h a v e i n ur e d t o t he be ne f i t of Smi t h a t t he e xpe ns e of hi s c o-

g u a r a n t or s . Equi t y woul d de ma nd t ha t t he pr oc e e ds f r om t h e

f o r e c l o s ur e be c r e di t e d t o Squi bb a nd W de ne r a s a ga i ns t t he c o -
i

g u a r a n t or , M . Smi t h.
r

W a gr e e wi t h t he obs e r va t i ons of t he t r i a l c our t :
e

M . Smi t h i s n ot e nt i t l e d t o a c r e di t f or t he c ol l a t -
r
e r a l t ha t wa s t ur ne d ba c k t o M . W de ne r a nd M . Squi bb.
r i r
Th os e we r e t he i r own pr ope r t i e s . The y we r e not a s s i gne d
a nd gi ve n pos s e s s i on of t hi s not e on a di s c ount e d ba s i s ;
t h e y di d not r e c e i ve a ny pr ope r t y f r om t he pr i nc i p a l
o b l i gor , Ac t i on M t ga ge , whi c h woul d r e duc e t he f ul l
or

5
 a mount of moni e s t ha t t he y ha d t o pa y. To me i t ' s
d i s i nge nuous t o a r gue t ha t M . Smi t h i s e nt i t l e d t o a
r
c r e di t whe n bot h M . W de ne r a nd M . Squi bb pa i d t he f ul l
r i r
a mount of t he l oa n a nd s i mpl y r e c e i ve d t he i r own pr ope r t y
b a c k wi t hout a l i e n t he r e on. The r e i s no doubl e r e c ove r y
b y vi r t ue of r e c e i vi n g ba c k t he i r pr ope r t i e s wi t hout a
l i e n. The r e ' s no di s c ount t o t he m, a nd c e r t a i nl y t o gi ve
M . Smi t h a c r e di t f or t he va l ue of t he i r own pr ope r t i e s
r
p u t up a s c ol l a t e r a l woul d, i n my mi nd, b e t ot a l l y
i n e qui t a bl e .

Gi b s o n ' s Sui t s i n Cha nc e r y ( I nma n, 7t h e d. 1988) , Se c t i o n 3 4

s t a t e s , a mong ot he r t hi ngs , t he f ol l owi ng:

§ 34. Equi t y Enf or c e s What Good Re as on and Good Con-
s c i e nc e Re qui r e . —

* * * *

I n t he a dmi ni s t r a t i on of j us t i c e , c ons c i e nc e mus t be
c o nf or me d t o r e a s on a nd t hus be c ome good c ons c i e nc e , a nd
r e a s on mus t be c onf or me d t o c o ns c i e nc e a nd t hus be c ome
g o od r e a s on; a nd wha t e ve r good c ons c i e nc e a nd good r e a s on
u n i t e i n a ppr ovi ng i s t he ne a r e s t a ppr oa c h t o pe r f e c t
j us t i c e ma n i s a bl e t o a t t a i n. Thi s uni on of good r e a s on
a nd good c ons c i e nc e i s wha t i n a ge ne r a l wa y i s me a nt by
t he t e r m Equi t y i n t he a dmi ni s t r a t i on of j us t i c e .

* * * *

We a c c e pt t he f or e go i ng as be f i t t i ngl y a ppl i c a bl e to t he

que s t i on unde r c ons i de r a t i on. Good c ons c i e nc e a nd r e a s on ar e

u n i t e d i n t he c onc l us i on r e a c he d by t he t r i a l c our t . W c on c u r
e

wi t h h i s c onc l us i on. The r e i s no me r i t i n a ppe l l a nt ' s f i r s t i s s u e .

The s e c ond i s s ue c ha l l e nge s t he pr opr i e t y of t he t r i a l c our t ' s

f i n d i n g t ha t t he r e we r e t hr e e r a t he r t ha n f our gua r a nt or s wh o

6
s h o u l d s ha r e i n t he bur de n of t he i nde bt e dne s s . Appe l l a nt a r g u e s

t ha t M.
s Squi bb s houl d be c ons i de r e d a f o r t h s ur e t y. The t r i a l

c our t f ound t ha t s he wa s not . The ge ne r a l r ul e r e l a t i ng t o t h e

o b l i g a t i ons of gua r a nt or s i s a s f ol l ows :

Gua r a nt ys on a c omme r c i a l c ont r a c t a r e s pe c i a l
c o n t r a c t s i n Te nne s s e e l a w. I n or de r t o f a c i l i t a t e t he
e x t e ns i on of c r e di t , Te nne s s e e doe s not f a vor gua r a nt or s
a nd wi l l c ons t r ue a gua r a nt y a ga i ns t t he gua r a nt or a s
s t r ongl y a s t he l a ng ua ge wi l l pe r mi t . Fa r me r s - Pe opl e s
Ba nk v . Cl e mme r , 51 9 S. W 2d 801, 80 5 ( Te nn. 1975) ;
.
Ha s s e l l - Hughe s Lumbe r Co. v. J a c ks on , 33 Te nn. App.
4 7 7, 486, 232 S. W 2d 325, 329 ( 1949) . Thi s pr i nc i pl e of l a w
.
wa s s e t t l e d i n t hi s s t a t e by t he c a s e of Br i ght v.
M Kni ght , 33 Te nn. 158 ( 1853) whe r e i n our Supr e me Cour t
c
h e l d t ha t " a gua r a nt or s ha l l be he l d bound t o t he f ul l
e xt e nt of wha t a ppe a r s t o be hi s e nga ge me nt s , a nd t he
r u l e i n e xpoundi ng t he s e unde r t a ki ngs i s t ha t t he wor ds
o f t he gua r a nt y a r e t o be t a ke n a s s t r ongl y a ga i ns t t he
g u a r a nt or a s t he s e ns e wi l l a dmi t . " I d. a t 168.

Ku b o t a Tr a c t or Cor p. v. Fug a t e I mpl e me nt Co. , a n unr e por t e d opi ni o n
o f t hi s c our t f i l e d a t Kno xvi l l e , J une 2 , 1 9 89. ( 1989 Te nn. Ap p .
LEXI S 3 98) .

W a r e of
e t he opi ni on t ha t t he a bove r ul e r e l a t e s t o t he

r e l a t i ons hi p be t we e n t he gua r a nt or a nd t he be ne f i c i a r y of t he

g u a r a n t y r a t he r t ha n be t we e n c o- gua r a nt or s . The r e f or e , a s be t we e n

t he Ba n k a nd M .
s Squi bb, it woul d be di f f i c ul t t o s uc c e s s f u l l y

a r g u e t ha t M . Squi bb wa s not a gua r a nt or of t he i nde bt e dne s s o we d
s

t o t h e b a nk s i nc e s he di d , i n f act , s i gn t he i ns t r ume nt s . Th e

i s s ue u n de r c ons i de r a t i on he r e , howe ve r , i s not a n i s s ue be t we e n

t he g u a r a nt or a nd t he c r e di t or , but is an i s s ue be t we e n t he

g u a r a n t or s .

7
 The c our t f ound t ha t t he r e we r e t hr e e pr i nc i pa l s i nvol v e d .

M.
r Sq u i bb, M.
r W de ne r a nd M .
i r Smi t h . Th e c our t f ur t he r f ou n d

t ha t t h e r e wa s a n a gr e e me nt a mong t he t hr e e pr i nc i pa l s t ha t e a c h

wo u l d b e a r a n e qua l s ha r e of t he l i a bi l i t y of Ac t i on M t ga g e
or

Co mp a n y t o Fi r s t Te nne s s e e Ba nk. The c our t s pe c i f i c a l l y f ound t h a t

t he mut u a l p r omi s e s of t he t hr e e pa r t i e s we r e s uf f i c i e nt c on -

s i de r a t i on t o s a t i s f y t he l a w wi t h r e ga r d t o c ons i de r a t i on a s a

r e qu i r e me nt f or a n e nf or c e a bl e a gr e e me nt . W a gr e e .
e The mut u a l

p r o mi s e s of t he pa r t i e s to t he c ont r a c t pr ovi de s s uf f i c i e n t

c ons i de r a t i on. Pe a r s on v . Ga r r e t t Fi na nc i a l Se r vi c e s , 849 S. W 2 d
.

7 7 6 ( Te nn. App. 1992) ; Bi l l W l ke r & As s oc i a t e s v.
a Pa r r i s h , 770

S. W 2 d 764 ( Te nn.
. App. 1989) . Se e a l s o Ca l l owa y v. O' Ne a l , 12

S. W 2 d 364 ( Te nn. 1928) .
. The a ppe l l a nt a r gue s , howe ve r , t ha t t h e

mu t u a l p r omi s e s r e s ul t e d i n no be ne f i t f l owi ng t o h i m b ut on t h e

c o n t r a r y, hi s l i a bi l i t y wa s i nc r e a s e d. We mus t r e s pe c t f u l l y

d i s a gr e e . W le
hi t he a gr e e me nt ma y ha ve i nc r e a s e d M .
r Smi t h ' s

l i a b i l i t y a s c o- gua r a nt or , he di d r e c e i ve a va l ue f r om t he mut u a l

p r o mi s e s . A b e ne f i t di r e c t l y f l owi ng t o M . Smi t h wa s a n e f f e c t i v e
r

r e l e a s e f r om c i vi l l i a bi l i t y f or a ny a c t i on whi c h t he ot he r pa r t i e s

t o t h e or a l a gr e e me nt ma y ha ve ha d a s a r e s ul t of Smi t h' s f or g i n g

o f h i s wi f e ' s na me t o t he gua r a nt y doc ume nt s f ur ni s he d t o t he Ba n k .

Th e c our t ' s f i ndi ngs r e ga r di ng a n or a l a gr e e me nt be t we e n t h e

t h r e e p r i nc i pa l s i s we l l s uppor t e d by t he e vi de nc e , e s pe c i a l l y i n

v i e w o f t he a c t i on of M . Smi t h i n f or gi ng M . Smi t h' s na me on t h e
r s

8
d o c u me n t s t hus a l l owi ng he r t o e s c a pe l i a bi l i t y a s a gua r a nt or . As

a pp e l l a nt p o i nt s out , t he c our t di d f i nd t ha t , a s t o t he ba n k ,

t he r e we r e f our gua r a nt or s , one of whom wa s M.
s Squi bb. Th i s

f i ndi ng, howe ve r , i s not c onc l us i ve a s be t we e n t he t hr e e pr i n c i -

pa l s . The y we r e s t i l l at l i be r t y t o a gr e e t o a di vi s i on of t h e

g u a r a n t y l i a bi l i t y a mong t he ms e l ve s a s t he y c hos e . The c our t f ou n d

t ha t t h e t e s t i mony of M .
r Squi bb a nd M .
r W de ne r wa s unr e f ut e d .
i

M . Smi t h di d not t e s t i f y.
r W f i nd t ha t t he r e i s no me r i t i n t hi s
e

a r g u me n t .

The a ppe l l a nt f ur t he r a s s e r t s t ha t t he o r a l a gr e e me nt a s f o u n d

b y t he c our t i s i n vi ol a t i on o f t he St a t ut e o f Fr a uds , T. C. A. §

2 9 - 2 - 1 0 1 whi c h pr ovi de s , a mong ot he r t hi ngs , t ha t no a c t i on s h a l l

b e b r o u ght whe r e by t o c ha r ge t he de f e nda nt upon a ny s pe c i a l pr omi s e

t o a n s we r f or t he de bt , de f a ul t , or mi s c a r r i a ge of a not he r pe r s o n

u n l e s s t he pr omi s e or a gr e e me nt i s i n wr i t i ng a nd s i gne d by t h e

p a r t y t o be c ha r ge d. I n Ca l l owa y , s upr a , t he c our t quot e d a n d

a p p r o v e d t he f ol l owi ng r ul e :

The ove r whe l mi n g we i ght of a ut hor i t y i s t o t he
e f f e c t t ha t a pr omi s e by a s ur e t y t o i nde mni f y a c os ur e t y
o r a n a gr e e me nt t ha t a c os ur e t y, or a n a gr e e me nt t ha t a
c o s ur e t y s ha l l be r e s pons i bl e onl y f or a c e r t a i n pr o-
p o r t i on of a ny l os s s us t a i ne d, i s not a pr omi s e t o a ns we r
f or t he de bt or d e f a u l t of a not he r , a nd t he r e f or e ne e d
n o t be i n wr i t i ng . . . .

Ca l l owa y, pa ge 365.

9
 W f i nd no r e a s on why t hi s s houl d not be a ppl i e d t o t he f a c t s
e

of t hi s c a s e . W hol d t ha t
e a n or a l a gr e e me nt a mong or be t we e n

c os u r e t i e s or c ogua r a nt or s whe r e by t he pa r t i e s a gr e e to an

a p p o r t i onme nt of l i a bi l i t y a s be t we e n or a mong t he ms e l ve s , doe s n o t

f al l wi t hi ng t he pur vi e w of t he s t a t ut e of f r a uds . W f i nd n o
e

me r i t in t he de f e nda nt ' s a r gume nt t ha t t he a gr e e me nt is in

v i o l a t i on of t he St a t ut e of Fr a uds .

The de f e nda nt a l s o c ha l l e nge s t he t e s t i mony of M . Squi bb a n d
r

M . W d e ne r r e l a t i ng t o t he or a l a gr e e me nt a s be i ng i n vi ol a t i on o f
r i

t he r ul e a ga i ns t t he r e c e pt i on of pa r ol e vi de nc e . The pa r o l

e vi d e nc e r ul e ha s b e e n s t a t e d i n va r i ous wa ys . Ge ne r a l l y s t a t e d,

t he r u l e , i n s um a nd s ub s t a n c e , i s t ha t pa r ol e vi de nc e i s i n a d -

mi s s i bl e t o c ont r a di c t , al t er , or va r y t he t e r ms of a wr i t t e n ,

u n a mb i g uous doc ume nt . Se e St a mp v. Hone s t Abe Log Home s , I nc . , 8 0 4

S. W 2 d 455 ( Te nn. App. 1990) .
. I t ha s no a ppl i c a t i on, howe ve r , t o

a gr e e me nt s s e pa r a t e a nd a pa r t f r om a n e a r l i e r a gr e e me nt .

Th e p a r o l e v i d e n c e r u l e d o e s n o t p r o h i b i t t h e
e s t a bl i s hme n t by pa r ol e vi de nc e of a n a gr e e me nt ma de
s u bs e que nt t o t he e xe c ut i on of t he wr i t i ng. Al t hough s uc h
s u bs e que nt a gr e e me nt ma y ha ve t he e f f e c t of a ddi ng t o,
c h a ngi ng, modi f yi ng or e ve n a l t oge t he r a br oga t i ng t he
c ont r a c t of t he pa r t i e s a s e vi de nc e d by t he wr i t i ng; t he
p a r ol e vi de nc e doe s not i n a ny wa y de ny t ha t t he or i gi na l
a gr e e me nt of t he pa r t i e s wa s t ha t whi c h t he wr i t i ng
p u r por t s t o e xpr e s s , but me r e l y goe s t o s how t ha t t he
p a r t i e s h a ve e xe r c i s e d t he r i ght t o c h a nge or a br oga t e
t h e s a me , or t o ma ke a ne w a nd i nde pe nde nt c ont r a c t .

Tr i c e v. He wgl e y , 53 Te nn. App. 259, 381 S. W 2d 589 ( 1964)
.

10
 W f i nd t ha t unde r t he a ut hor i t y of Tr i c e t he pa r ol e vi de n c e
e

r ul e h a s no a pp l i c a t i on t o t hi s c a s e . W f i nd n o me r i t
e i n t hi s

i s s ue .

Ap pe l l a nt ' s f i na l i s s ue c ha r ge s t he t r i a l c our t wi t h e r r o r o r

a bus e of di s c r e t i on in a wa r di ng pr e j udgme nt i nt e r e s t to t he

p l a i nt i f f s . I t i s we l l - s e t t l e d t ha t t he a l l owa nc e of pr e j udgme n t

i n t e r e s t l i e s wi t hi n t he s ound di s c r e t i on of t he c our t .

T. C. A. 47- 14- 123 pr ovi de s t ha t pr e j udgme nt i nt e r e s t
ma y b e a wa r de d a s a n e l e me nt of da ma g e s " i n a c c or da nc e
wi t h t he pr i nc i pl e s of e qui t y a t a ny r a t e not i n e xc e s s
o f t h e ma xi mum e f f e c t i ve r a t e of t e n pe r c e nt ( 10% pe r)
a n num. " Se e Sc hoe n v. J . C. Br a df or d & Co. , 667 S. W 2d 97 .
( Te nn. App. 1984. Th e a wa r d of pr e j udgme nt i nt e r e s t i s
wi t hi n t he s ound di s c r e t i on o f t he t r i a l c our t a nd t he
d e c i s i on wi l l not be di s t ur be d upon a p p e l l a t e r e vi e w
u n l e s s t he r e c or d r e ve a l s a ma ni f e s t a nd pa l pa bl e a bus e
o f di s c r e t i on. Se e Enge r t v. Pe e r l e s s I ns ur a nc e Co . , 5 3
Te nn. App. 310, 382 S. W 2d 541 ( 1964) ; B. F. M r s & Son
. ye
o f Goodl e t t s vi l l e , I n c . v . Eva ns , 612 S. W 2d 912 ( Te nn.
.
Ap p. 1980) ; I n r e Es t a t e of Coope r , 689 S. W 2d 870 ( Te nn.
.
Ap p. 1985) ; Te a gue Br ot he r s , I nc . v. M r t i n & Ba yl e y,
a
I nc . , 750 S. W 2d 152 ( Te nn. App. 1987) . The a wa r d of
.
p r e j udgme nt i nt e r e s t a s a n e l e me nt o f d a ma ge s i s n ot
c o ns i de r e d a pe na l t y i mpos e d upon t he de f e nda nt , but i s

11
 a l l owe d i n a c c or da nc e wi t h t he pr i nc i pl e s of e qui t y. I n
r e Es t a t e of Da vi s , 719 S. W 2d 526 ( Te nn. App. 1986) .
.

Ot i s v . Ca mbr i dge M . Fi r e I ns . Co. , 850 S. W 2d 439 ( Te nn. 199 2 ) .
ut .

I n t hi s c a s e , we f i nd no a bus e of di s c r e t i on on t he pa r t o f

t h e t r i a l c our t . W a l s o c onc ur wi t h t he c onc l us i on of t he t r i a l
e

c our t t ha t t hi s is a case whe r e i n e qui t y de ma nds a n a wa r d of

i nt e r e s t .

W a f f i r m t he j udgme nt
e of t he t r i a l c our t i n al l r e s pe c t s .

Cos t s o f t hi s a ppe a l a r e a s s e s s e d t o t he a ppe l l a nt a nd t hi s c a s e i s

r e ma n d e d t o t he t r i a l c our t .

___________________________ _ _ _
Don T. M M r a y, J udge
c ur

CONCUR:

_ _ _ _ _ _ _ ____________________________
Ch a r l e s D. Sus a no, J r . , J udge

_ _ _ _ _ _ _ ____________________________
W l l i a m H. I nma n, Spe c i a l J udge
i

12
 I N THE COURT OF APPEALS

J OHN P. SQUI BB a nd wi f e , ) WASHI NGTON CHANCERY
M ARTHA J O SQUI BB a nd J AM ES ) C. A. NO. 03A01- 9609- CH- 0029 1
H. W DENER,
I )
)
Pl a i nt i f f s - Appe l l e e s )
)
)
)
)
)
vs . ) HON. THOMAS J . SEELEY
) CHANCELLOR
)
)
)
)
)
TED C. SM TH a nd wi f e , ROSE E.
I ) AFFI RMED AND REMANDED
SM TH,
I )
)
De f e nda nt s - Appe l l a nt s )

ORDER

Thi s a ppe a l c a me o n t o b e he a r d upon t he r e c or d f r om t h e

Ch a nc e r y Cour t of W s hi n gt on
a Count y, br i e f s a nd a r gume nt of

c ouns e l . Upon c ons i de r a t i on t he r e of , t hi s Cour t i s of opi ni on t h a t

t h e r e wa s n o r e ve r s i bl e e r r or i n t he t r i a l c our t .

W a f f i r m t he j udgme nt
e of t he t r i a l c our t i n al l r e s pe c t s .

Cos t s o f t hi s a ppe a l a r e a s s e s s e d t o t he a ppe l l a nt a nd t hi s c a s e i s

r e ma n d e d t o t he t r i a l c our t .
 PER CURI AM

14