Doug Long v. T. Allen Pannell, Jr. ( 2003 )

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
April 3, 2003 Session
DOUG LONG v. T. ALLEN PANNELL, Jr., ET AL.
Appeal from the Chancery Court for Knox County
No. 147634-3 Sharon Bell, Chancellor
FILED MAY 30, 2003
No. E-2002-01792-COA-R3-CV
Doug Long (“Long”) and T. Allen Pannell (“Pannell”) began operating Volunteer Beauty Supply as
a general partnership in 1996. Pannell claims Long orally agreed to be responsible for one-half of
the partnership debts. On June 3, 1997, a Certificate of Domestic Limited Partnership was issued
by the State for Volunteer Beauty Supply, L.P. The business never made a profit and incurred rather
substantial debts. In an unsuccessful attempt to resolve a dispute over payment of these debts,
Pannell and Long deposited certain funds into a joint bank account. Long eventually filed a
declaratory judgment action seeking a determination that he was entitled to over $100,000 remaining
in this account. Pannell filed a counterclaim seeking contribution from Long for partnership debts,
but no mention was made of the alleged oral agreement. The Trial Court refused to grant Pannell
relief for an alleged breach of oral contract because that claim was not pled. The Trial Court did,
however, award a judgment against Long for $19,922.52 under general partnership contribution
principles, after first concluding Long was entitled to the funds in the joint account. Both parties
appeal. We affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of
the Chancery Court Affirmed; Case Remanded.
D. MICHAEL SWINEY, J., delivered the opinion of the court, in which HOUSTON M. GODDARD , P.J.,
and HERSCHEL P. FRANKS , J., joined.
Dan D. Rhea and Jay W. Mader, Knoxville, Tennessee, for the Appellants T. Allen Pannell, Jr., and
Volunteer Ventures, L.L.C.
George W. Morton, Jr., and J. Myers Morton, Knoxville, Tennessee, for the Appellee Doug Long.
OPINION
Background
Long and Pannell became friends in the second grade. As adults, they took a road trip
to Florida to watch the Tennessee Vols in a post-season bowl game. While in Florida, they jointly
purchased a winning lottery ticket. They then went into business together. The business eventually
failed, culminating in this lawsuit and, presumably, the end of their long friendship.
This lawsuit started as a declaratory judgment action filed by Long against Pannell
wherein Long sought a declaration that he was entitled to $101,500 then in a bank account. Long
and Pannell were joint signatories on this account. Pannell responded by denying Long was entitled
to these funds and claiming both parties had made deposits into the account. Pannell also claimed
Long was indebted to him in an amount exceeding that which was on deposit pursuant to the
“equitable remedy of contribution.”
Pannell filed a counterclaim, alleging that he and Long participated in a business
known as Volunteer Beauty Supply, L.P. (“Volunteer Supply”), a limited partnership consisting of
two general partners and three limited partners. The two general partners were Volunteer Investors,
L.L.C., (“Investors”) and Volunteer Ventures, L.L.C. (“Ventures”). The three limited partners were
Long (who was the majority owner of Investors), Pannell (who was the majority owner of Ventures),
and Jack Wetterer. According to Pannell, Volunteer Supply essentially was defunct and Long
refused to contribute adequate funds to the partnership or otherwise participate in concluding the
partnership’s affairs. Pannell claimed to have contributed and loaned money to the partnership in
an amount exceeding $400,000. Pannell sought reimbursement from Long in an amount “equal to
a pro rata share of monies loaned and/or contributed” by him to the “partnership or the partners as
well as for such amounts used to retire indebtedness of the partnership or partners.” In response to
the counterclaim, Long denied any liability and maintained he was only a limited partner in
Volunteer Supply and had no duty to the partnership, financial or otherwise.1
Pannell then filed an Amended and Restated Counter-Claim for Accounting and
Contribution. In his amended counterclaim, Pannell asserted that it was not until June 3, 1997, that
a Certificate of Limited Partnership was filed with the State and, therefore, the business operated as
a general partnership up until that date. Pannell also claimed Investors, of which Long was the
majority owner, was administratively dissolved from December 19, 1997, until September 17, 1999.
According to Pannell, Investors was grossly undercapitalized and the sole purpose of that entity was
to shield Long from any personal liability. Pannell further claimed that due to various improper
actions by Long, such as failing to observe necessary requirements as an officer or agent of Investors,
Long was liable for Investor’s obligations to Volunteer Supply. The remaining allegations and
request for relief in the amended counterclaim were the same as those contained in the original
1
Although not relevant for purposes of this appeal, Investors and Ventures eventually were added as parties
to the law suit.
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counterclaim, except Pannell also requested a determination that Investors was a sham limited
liability company and that Long was liable personally for any obligations of Investors. In both the
original counterclaim and the amended counterclaim, no mention was made of any oral contract
between Long and Pannell, or any claimed breach thereof. In response to the amended counterclaim,
Long and Investors denied any liability or wrongdoing.
The two day non-jury trial began with Long’s counsel reading a portion of Pannell’s
deposition into the record. In his deposition, Pannell identified a draft of the limited partnership
agreement and a draft of the document setting forth the capital contributions to be made by the
various partners. Pannell acknowledged capital contributions were not made in accordance with that
document. The draft limited partnership agreement was the only document created to operate the
limited partnership, and Pannell intended to operate the limited partnership in accordance with that
document. According to the limited partnership agreement, general partners could not be required
to contribute capital without unanimous consent. Pannell testified Ventures made a “capital call”
on Investors. Investors, presumably acting through Long, did not agree to contribute any additional
capital. Therefore, there was no unanimous consent.
After the above deposition testimony was read into the record, Long was called as the
first live witness. Long identified a November 20, 2001, Certificate of Existence issued by the State
of Tennessee indicating that Investors was an active limited liability company with an original
qualification date of March 6, 1996. Long also identified the Certificate of Domestic Limited
Partnership pertaining to Volunteer Supply which showed an effective date of June 3, 1997. The
general partners shown on this Certificate are Investors and Ventures.
Long then identified a purchase agreement dated June 3, 1997, wherein Volunteer
Supply purchased a beauty supply business located in Murfreesboro, Tennessee. The purchase price
was $265,885, plus the assumption of over $50,000 in accounts payable. After paying $79,000
toward the purchase price, the remaining balance was financed by the sellers with Volunteer Supply
being obligated to make monthly payments of $2,430.07 until January 15, 2003. Long and Pannell
personally guaranteed this indebtedness.
Long testified a disagreement arose when Pannell wanted him to put more money into
the partnership and he (i.e., Long) refused. In an effort to resolve their disagreement, the parties
entered into an Agreement on August 27, 1999, and a subsequent undated amendment which Long
claims settled all disputes between them. The Agreement specifically stated it was entered into “in
order to solve and remedy disagreements” related to Volunteer Supply and contained two primary
provisions.2 One of the provisions addressed the business Volunteer Supply had purchased in
Murfreesboro, with Long and Pannell each agreeing to place $100,000 into an interest bearing
account to assure the availability of funds to pay off the balance of that loan. The loan eventually
2
The Agreement was contingent on each party receiving $100,000 as an advance towards their lottery
winnings. Neither party argues this contingency did not occur.
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was paid off for $168,599.05, and the remaining $31,400.95 was divided equally between Long and
Pannell.
The second provision in the Agreement concerned Long’s potential purchase of
Volunteer Supply’s territory and assets located in Sweetwater, Tennessee. Long agreed to purchase
the Sweetwater location for $90,000 and to use these funds to pay off the liabilities associated with
that location. Long specifically reserved the option to sell and assign his right to purchase the
Sweetwater territory to Brenda McLemore (“McLemore”). The purchase of the Sweetwater territory
was conditioned upon written approval of the sale to Long “or McLemore” by State Service Systems,
the franchisor. Long placed an additional $100,000 into the joint account apparently to secure his
purchase of the Sweetwater territory for $90,000. However, neither the Agreement nor the
amendment required Long to place this additional $100,000 into the account. Likewise, neither of
these documents indicated what would happen to Long’s additional $100,000 if he did not purchase
that location. The amendment only discussed how Pannell’s $100,000 and Long’s $200,000 would
be distributed if either party died. To make a very long story a little shorter, State Service Systems
did not approve the sale to Long. The Sweetwater location then was sold to McLemore for
$100,000. Long then told Pannell he wanted his remaining $100,000 from the joint account. Pannell
refused to allow Long to withdraw these funds, resulting in Long’s filing of the declaratory judgment
action.
Long testified the Agreement conditioned the sale of the Sweetwater location upon
State Service System actually approving the sale to him, even though the words “or McLemore”
were used in the Agreement. Therefore, according to Long, this condition in the Agreement never
came to pass since State Service System did not approve his purchase of the Sweetwater location.
Long identified a May 15, 2000, letter from Pannell. In that letter, Pannell informed
Long he was in the process of dissolving Volunteer Supply, and as “you and I are the humans
representing equal shares of the General Partners, I have allocated the Assets and Liabilities to you
and me.…” Pannell then attached a balance sheet detailing the assets and outstanding liabilities as
of December 31, 1999. When this letter was written, there was an outstanding balance of $163,132
on the loan on the Murfreesboro location. The amount of loans Pannell claims to have made to
Volunteer Supply totaled $196,197. Excluding these two primary liabilities, after deducting all other
liabilities from the total assets, the remainder of the balance sheet showed net assets of $36,408.
Thus, according to this letter, the outstanding liabilities for Volunteer Supply totaled $322,921
($163,132 + $196,197 - $36,408 = $322,921). Pannell demanded payment from Long of $161,460,
which represented one-half of the outstanding liabilities. Long responded to the letter, refusing to
pay any additional funds and further objecting to Pannell’s unilaterally dissolving Volunteer Supply.
Long was cross-examined about some of the debts incurred prior to the Certificate
of Domestic Limited Partnership for Volunteer Supply being issued on June 3, 1997. After Long
was questioned about a couple of these debts, his attorney objected. The following discussion then
took place:
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[Counsel for Long]: Once again, Your honor, because
of this rule about being silent and constituting an amendment,
all these transactions are in advance of the issuance of the so-
called birth certificate by the Secretary of State and are
therefore irrelevant.
[Counsel for Pannell]: Well, I think they’re highly
relevant. I specifically stated in my amended counter-claim
that it operated as a general partnership prior to [issuance of
the Certificate] . . . .
[Counsel for Long]: I suggest what happened before
the issuance of the limited partnership came into existence is
irrelevant.
***
[Counsel for Pannell]: I disagree, Your honor. I think
partners have a right of contribution towards each other, and
general partners are jointly and severally liable for debts
chargeable to the partnership.
[Counsel for Long]: Absolutely to third parties, but
not as to each other.
The Trial Court stated it would allow Pannell’s counsel to continue with this line of
questioning and they could decide its relevance at a later time. In response, Long’s counsel stated
he was “reserving my continuing objection so that the pleadings will not be deemed [amended].”
The Trial Court then pointed out the Rules of Evidence do not provide for a “continuing” objection
and an objection would have to be made each time if opposing counsel did not agree that it could
be continuing in nature. In response, Pannell’s attorney agreed the objection could be continuing so
repeated objections did not have to be made.
Long testified he began participating in Volunteer Supply in 1995 and withdrew from
the partnership in 1996. When he rejoined the partnership later in 1996, Pannell never told him he
would have to contribute equally in order to come back into the partnership. Long stated he would
have contributed equally if, at that time, he had had the funds to do so.3 Long identified tax
documents which indicated his profit-sharing percentage in the partnership before the Certificate of
Domestic Limited Partnership became effective was 14%. His loss-sharing percentage was also
14%.
3
Several years later, in January of 2000 , Long rece ived over one million do llars from his lottery winnings.
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Pannell’s testimony was the same as Long’s with regard to the date the Certificate of
Limited Domestic Partnership was issued for Volunteer Supply. Pannell also discussed Long’s
leaving the partnership in June of 1996 and returning in late August of that same year. According
to Pannell, he and Long orally agreed that if Long was permitted to return, Long would contribute
one-half of any necessary funds and bring the money in his capital account to a level equal with
Pannell’s. Pannell claims Long agreed to these terms in an “individual” capacity. Pannell did,
however, acknowledge Long commented that if he did not have any money he could not contribute.
In response, Pannell allegedly told Long:
Well, I understand; that, you know, for instance, if we need money in
December and I have it and you don’t, I’ll put it in. But in February
when we get lottery payments, you can put it in then.…
In other words, Pannell claimed “it wasn’t an issue of whether he would never have it, but the timing
of when he might have it. And I said that was fine.”
Pannell discussed the various debts which were incurred by the general partnership
prior to its becoming a limited partnership on June 3, 1997. He also testified how he paid many of
these debts. Any debts Pannell paid after 1999 were paid personally. With regard to debts paid prior
to 1999, Pannell would loan money to the partnership, which in turn would use that money to pay
the debt. During Pannell’s testimony about debts he paid personally, the Trial Court inquired as to
whether Pannell was a party to the lawsuit in his individual capacity. Pannell’s counsel stated that
he was. The following dialogue then took place:
[Counsel for Long]: I want to make sure that I understand that
there is a – that he’s claiming that he is entitled to sue him for
contribution for debts that he paid of the limited partnership.
That ain’t the law. I object to relevance.
The Court: Okay.
[Counsel for Long]: May it be a continuing objection?
The Court: Yes. I am going to overrule it at this time, and
then we can argue that.
According to Pannell, there was a total of $91,018 in debts incurred prior to the
limited partnership becoming effective which he paid personally. There were an additional $47,000
in debts incurred prior to the effective date of the limited partnership which were paid directly from
loans made by Pannell to the partnership.
Pannell testified that when Long came back into the partnership in 1996, the oral
agreement “for moving ahead was that we would share equally in putting in money that was
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necessary … even prior to that our setup was to equally contribute.” Excluding the loans he made
to the partnership, Pannell claimed to have paid debts and/or assumed debts totaling $183,690 during
the life of the Volunteer Supply.4 When questioned about any income he received from the
partnership, Pannell stated at some point in 1996 he and Long were paid a salary or draw, but they
both put all of this money back into the partnership. When their accountant told them they were
being “silly,” this procedure stopped. After that, “[we] never did pay ourselves anything.”
When asked about the alleged settlement Agreement, Pannell testified he and Long
did attempt to settle their dispute. With regard to the Sweetwater location, Pannell claimed the
Agreement required Long to pay him $90,000 regardless of whether Long purchased that location
himself or whether he purchased McLemore’s loan if it was sold to her. However, as things turned
out the sale of the Sweetwater location to Long never was approved. When that location later was
purchased by McLemore, Long refused to purchase McLemore’s note and pay Pannell $90,000.
Pannell contends, therefore, that this part of the Agreement never was carried out by Long.
Pannell summarized his request for damages as follows:
I have put in $211,117 more in capital than he has. I have put
in $137,804 in loans more than he has; and I have paid and/or
assumed liabilities of the partnership of $183,690 that he has
not, for a total of $532,611 in excess of Mr. Long. I would
ask that he keeps his commitment and pay half of that, which
would be $266,306.
After closing arguments were completed, the Trial Court issued some preliminary
findings. The Trial Court concluded Long was entitled to the $100,000 which he placed into the
joint account. As to liability for partnership debts, the Trial Court concluded Long was a general
partner and was liable as such from the beginning of the partnership up until the Certificate of
Domestic Limited Partnership was filed on June 3, 1997. The Trial Court also determined that any
debt incurred prior to June 3, 1997, which was paid either by Pannell personally or through loans he
made to the partnership was still to be considered “partnership debt” for which Long shared
responsibility. After Long’s counsel expressed considerable but respectful disagreement over the
propriety of this ruling, the Trial Court allowed Long thirty days to file a brief explaining why this
ruling was incorrect. Thereafter, Long’s counsel suggested opposing counsel submit to him a list
of debts which Pannell claimed should be paid in accordance with the Court’s ruling, and if an
agreement could not be reached, the parties could return to court for a further ruling. The Trial Court
agreed with this suggestion.
The next issue addressed by the Trial Court was Pannell’s argument that based on the
alleged oral agreement made by Long to contribute one-half to the partnership, Long was liable for
4
This sum does not include the loan on the M urfreesboro property which the parties paid off in equal amo unts.
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a full one-half of all partnership debt, regardless of whether it was incurred before or after June 3,
1997. The following discussion then took place:
The Court: But you’re not suing upon an agreement[.]
Counsel for Pannell: Well, I sued for contribution. I didn’t
specifically put in my complaint, set forth that there was a
contribution agreement.
The Court: Yeah. And I didn’t think you had, so I didn’t
consider it in terms of is this a binding agreement, offer,
acceptance, consideration, and so forth.
Counsel for Pannell: And I think there was clearly a meeting
of the minds, if you look at … Long’s testimony as to, yeah,
I said that. But I said that if and when I got the money – he
said “if I had the money,” if I remember correctly. And he did
get the money in January, and I think there was a meeting in
… [Pannell’s] mind that they contributed equally and that
they were basically equal people in this thing despite the
setup.
For all intents and purposes, the trial ended with the above discussion. The Trial
Court issued its final judgment on July 12, 2002, approximately 7 ½ months later. The reason for
the delay was the continuing disagreement between the parties as to what should be considered as
partnership debt incurred prior to June 3, 1997, and the resulting need for an additional court hearing
to resolve the disagreement. In its final judgment, the Trial Court noted that after its initial rulings
were made at the end of the trial, it was presented with conflicting orders and there was further
consideration by the Court and additional arguments of the parties. As relevant to this appeal, the
Trial Court’s final judgment awarded Long the $100,000 in the joint account plus any accrued
interest. The Trial Court also ruled the total amount of partnership debt incurred prior to June 3,
1997, was $138,018, and Long was liable for fourteen percent (14%) of this amount, or $19,322.52.5
Finally, the Trial Court concluded that from and after June 3, 1997, the parties dealt with each other
through their respective limited liability companies and as limited partners, and Long, as a limited
partner, was not liable for any further debts.
Based on the Trial Court’s express findings, there are two other findings which are
necessarily implied. These are: 1) The Agreement and subsequent amendment thereto did not
constitute an accord and satisfaction barring Pannell’s counterclaim for contribution; and 2) Pannell
5
As set forth supra, Long presented proof that his profit and loss sharing percentage in the partnership prior
to June 3, 1997, was fourteen percent. The Trial Court accepted this proof when it concluded Long was liable for
fourtee n percent of the pre-June 3 , 199 7 debts.
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could not recover for breach of the alleged oral promise by Long to pay one-half of the partnership’s
debts and expenses because Pannell’s counterclaim and restated counterclaim could not be
interpreted as alleging a breach of contract claim.
On appeal, Pannell raises two issues, which we quote:
I. Whether the Trial Court erred by failing to enforce the
contribution agreement between the parties on the basis that
it had not been specifically pled?
II. Whether a Court should grant the prevailing party relief, not
specifically claimed in his pleadings when the basis for that
relief is specifically claimed, actually litigated, and proven at
trial?
Long also appeals, claiming the Trial Court erred in not holding there was an accord
and satisfaction between the parties. The second issue raised by Long challenges the amount of
damages awarded to Pannell.
Discussion
The factual findings of a trial court are accorded a presumption of correctness, and
we will not overturn those factual findings unless the evidence preponderates against them. See
Tenn. R. App. P. 13(d); Bogan v. Bogan, 60 S.W.3d 721, 727 (Tenn. 2001). With respect to legal
issues, our review is conducted “under a pure de novo standard of review, according no deference
to the conclusions of law made by the lower courts.” Southern Constructors, Inc. v. Loudon County
Bd. Of Educ., 58 S.W.3d 706, 710 (Tenn. 2001).
We first will discuss Pannell’s argument that the language in his counterclaim and
restated counterclaim were broad enough to encompass a cause of action for breach of contract.
Pannell bases his argument on the following portions of Tenn. R. Civ. P. 8:
Rule 8.01 Claims for Relief. – A pleading which sets forth
a claim for relief, whether an original claim, counterclaim,
cross-claim, or third-party claim, shall contain (1) a short and plain
statement of the claim showing that the pleader is entitled to relief;
and (2) a demand for judgment for the relief the pleader seeks. Relief
in the alternative or of several different types may be demanded.
****
Rule 8.05. Pleading to Be Concise and Direct – Statutes,
Ordinances and Regulations – Consistency. – (1) Each averment
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of a pleading shall be simple, concise and direct. No technical forms
of pleading or motions are required. . . .
Rule 8.06 Construction of Pleadings. – All pleadings shall
be so construed as to do substantial justice.
Relying on Paduch v. City of Johnson City, 896 S.W.2d 767 (Tenn. 1995), Pannell
argues the common-law rule that pleadings be construed against the drafter has been abolished in
this State, and “Rule 8.06 substitutes the end to be sought in place of specific rules of construction.”
Id. at 769. We agree this is the goal of Rule 8.06. However, while a complaint need not contain “in
minute detail” the facts giving rise to the claim, it nevertheless must contain allegations “from which
an inference may fairly be drawn that evidence on these material points will be introduced at trial.”
Trau-Med of America, Inc. v. Allstate Insurance Co., 71 S.W.3d 691, 704 (Tenn. 2002).
We have carefully reviewed Pannell’s counterclaim and restated counterclaim.
Nowhere in these documents is an oral agreement mentioned, much less a claim for breach of such
an agreement. It is for this reason the Trial Court specifically stated it had not evaluated the evidence
from a standpoint of whether a breach of contract claim had been proven. The Trial Court simply
could not glean a breach of contract allegation from the counterclaim and restated counterclaim.
Neither can we. In our opinion, the only reasonable interpretation of the counterclaim and restated
counterclaim is that Pannell is making a claim for contribution pursuant to applicable law governing
liability of partners for partnership debt. “[T]here is no duty on the part of the court to create a claim
that the pleader does not spell out in his complaint.” Trau-Med, 71 S.W.3d at 704 (citations
omitted). If we were to conclude the counterclaim or restated counterclaim alleged a claim for
breach of contract, we would be doing just that. We find no reversible error in the Trial Court’s
refusal to interpret the counterclaim and restated counterclaim as alleging a claim based on breach
of contract.
Pannell’s second issue is that the Trial Court erred by not concluding that a breach
of contract claim had been tried by implied consent. In McLemore v. Powell, 968 S.W.2d 799, 803
(Tenn. Ct. App. 1997) this Court explained:
Generally speaking, trial by implied consent will be found
when the party opposed to the amendment knew or reasonably should
have known of the evidence relating to the new issue, did not object
to this evidence, and was not prejudiced thereby. Id. As the
Tennessee Supreme Court stated in Zack Cheek Builders, Inc. v.
McLeod[, 597 S.W.2d 888, 891 (Tenn. 1980)]:
"Implied consent ... is much more difficult to establish (than
express consent) and seems to depend on whether the parties
recognized that an issue not presented by the pleadings
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entered the case at trial. A party who knowingly acquiesces
in the introduction of evidence relating to issues that are
beyond the pleadings is in no position to contest a motion to
conform. Thus, consent generally is found when evidence is
introduced without objection, or when the party opposing the
motion to amend himself produced evidence bearing on the
new issue."
Id. (quoting 6 Wright & Miller, Federal Practice and Procedure §
1493, at 462-63 (1971)). Trial by implied consent is not shown by
the presentation of evidence that is relevant to an unestablished issue
when that evidence is also relevant to the established issue. Hiller v.
Hailey, 915 S.W.2d 800, 805 (Tenn. App.1995) (citations omitted).
McLemore v. Powell, 968 S.W.2d 799, 803 (Tenn. Ct. App. 1997)(emphasis added). The Trial
Court’s determination with respect to the issue of implied consent “must be upheld unless there has
been an abuse of discretion.” Hobbs v. Hobbs, 987 S.W.2d 844, 847 (Tenn. Ct. App. 1998), cert.
denied, 526 U.S. 1075, reh’g denied, 526 U.S. 1167 (1999).
In our resolving this issue, Pannell’s biggest obstacle is the fact that the Trial Court
never was asked to determine whether the breach of contract claim was tried by implied consent.
It is impossible to determine that the Trial Court abused its discretion when it never had the
opportunity to exercise that discretion in the first place. The Trial Court is in a better position than
this Court to make the initial determination of whether an issue was tried by implied consent.
Because it never became an issue before the Trial Court, Long’s counsel never was given an
opportunity to argue to the Trial Court reasons why there was no trial by implied consent. It is
apparent that the Trial Court is the proper forum to raise initially this issue, and this is a perfect
example of why, as a general rule, this Court is disinclined to consider issues which are raised for
the first time on appeal. See, e.g., In re Adoption of D.P.M., 90 S.W.3d 263, 267 (Tenn. Ct. App.
2002). As the Trial Court never was asked to exercise its discretion by making a determination, with
respect to the issue of trial by implied consent, the Trial Court made no such determination. Since
the Trial Court was not asked to make such a determination, and, therefore, made no such
determination, there could be no abuse of discretion by the Trial Court as to this issue. See Hobbs,
987 S.W.2d at 847.
Even if we could find that the issue of trial by implied consent had been raised before
and denied by the Trial Court, it is important to note that Long objected to the introduction of any
evidence pertaining to debt incurred prior to June 3, 1997, and to anything which took place before
the limited partnership came into existence. Long’s counsel went so far as to request that his
objection be considered “continuing” so the pleadings would not be deemed amended. Although
these objections were overruled for the most part, we do not believe there is any way Long
legitimately could be regarded as having “knowingly acquiesce[d]” in the introduction of evidence
relating to the breach of contract issue. McLemore, 968 S.W.2d at 803. In short, we conclude
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Pannell has failed to demonstrate that his breach of contract claim was tried by implied consent, and
certainly has failed to show any abuse of discretion by the Trial Court with respect to the issue of
trial by implied consent.
As to Long’s issues, Long first contends the Trial Court erred by not dismissing
Pannell’s counterclaim since there was an accord and satisfaction arising from the Agreement and
amendment thereto. In Lindsey v. Lindsey, 930 S.W.2d 553 (Tenn. Ct. App. 1996), this Court
discussed the controlling principles of law with respect to accord and satisfaction as follows:
An accord is an agreement whereby:
One of the parties undertakes to give or perform, and the other
to accept in satisfaction of a claim, liquidated or in dispute,
and arising either from contract or from tort, something other
than or different from what he is or considers himself entitled
to; and a satisfaction is the execution of such agreement.…
To constitute a valid accord and satisfaction it is also essential
that what is given or agreed to be performed shall be offered
as a satisfaction and extinction of the original demand; that
the debtor shall intend it as a satisfaction of such obligation,
and that such intention shall be made known to the creditor in
some unmistakable manner. It is equally essential that the
creditor shall have accepted it with the intention that it should
operate as a satisfaction .... The intention of the parties, which
is of course controlling must be determined from all the
circumstances attending the transaction.
Lindsey, 930 S.W.2d at 556-557 (quoting R.J. Betterton Mgmt. Serv. v. Whittemore, 733 S.W.2d 880,
882 (Tenn. Ct. App. 1987)).
Long testified that one of the conditions in the Agreement was not met because his
purchase of the Sweetwater location never was approved by State Service Systems. Pannell testified,
based on his understanding of the Agreement, that Long was required to pay him $90,000 for the
Sweetwater location, either by purchasing that location himself or, if it was sold to McLemore,
purchasing McLemore’s note for $90,000. Pannell further testified this never happened. Pannell
claims payment of the $90,000 was a condition in the Agreement which was not met and, therefore,
there was no accord and satisfaction. Based on the testimony of both Long and Pannell, it appears
they agree that various, although different, conditions in the Agreement were not met. Therefore,
even though the Trial Court did not state why there was no accord and satisfaction, we conclude the
preponderance of the evidence certainly does not weigh against this implied finding by the Trial
Court.
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The remaining issues on appeal center around the amount of the judgment awarded
to Pannell. Specifically, Long claims the Trial Court erred when it concluded the pre-June 3, 1997
debts later paid by Pannell through loans he made to the partnership were “partnership debts.” Long
claims these debts should not be considered partnership debts because Pannell received a favorable
tax deduction when he paid them down via a loan to the partnership. Long also claims since the
partnership technically paid off $47,000 worth of debt, this amount should not be counted.
The uncontradicted trial testimony was that Pannell personally paid $91,018 in pre-
June 3, 1997 debt, and another $47,000 was paid through loans Pannell made directly to the
partnership. The fact remains that any of this pre-June 3, 1997, debt that was paid was paid by
Pannell. That some of these debts were paid via a loan to the partnership which, in turn, paid the
debt does not change this critical point. After considering all of the proof presented at trial, we
conclude the preponderance of the evidence does not weight against the Trial Court’s findings
leading to its conclusion regarding which debts, and their amounts, appropriately were classified as
pre-June 3, 1997, partnership debts for which Long shared responsibility. We find no error by the
Trial Court on this issue.
Conclusion
The judgment of the Chancery Court is affirmed, and this cause is remanded to the
Chancery Court for such further proceedings as may be required, if any, consistent with this Opinion,
and for collection of the costs below. The costs on appeal are assessed one-half against the
Appellant T. Allen Pannell, Jr., and his surety, and one-half against the Appellee Doug Long.
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D. MICHAEL SWINEY, JUDGE
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