Jean Meadows, etc. v. Tara Harrison, etc. ( 2013 )

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
Assigned on Briefs April 8, 2013
JEAN MEADOWS, ETC. V. TARA HARRISON, ETC., ET. AL.
Appeal from the Chancery Court for Loudon County
No. 11131 Hon. Frank V. Williams, III, Chancellor
No. E2012-01067-COA-R3-CV-FILED-JUNE 11, 2013
In this case, Partner and Decedent created Double J Company for the purpose of buying and
selling real estate. One month following the creation of Double J Company, Decedent
personally purchased the Property, which he thereafter deeded to Double J Company.
Following Decedent’s death, Partner filed a complaint against Heirs and the estate for
partition. Heirs objected, arguing that Partner and Decedent never formed a valid partnership
and that the Property was subject to the administration of Decedent’s estate. Following a
hearing, the trial court deemed the Property partnership property and ordered the sale of the
Property. Heirs appeal. We affirm the decision of the trial court.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
Affirmed; Case Remanded
J OHN W. M CC LARTY, J., delivered the opinion of the Court, in which C HARLES D. S USANO,
J R., P.J., and T HOMAS R. F RIERSON, II, J., joined.
Kevin W. Shepherd, Maryville, Tennessee, for the appellants, Tara Harrison, individually
and as Personal Representative of the Estate of Jerome King, and Geoff King.
R. Stephen Merritt and Cynthia C. Blair, Maryville, Tennessee, for the appellee, Jean
Meadows, individually and as a General Partner of and on behalf of Double J Company.
OPINION
I. BACKGROUND
Jean Meadows (“Partner”) and Jerome King (“Decedent”) drafted a document entitled
“General Agreement” on September 21, 2001, which provided, in pertinent part,
WITNESSETH: That in consideration of the mutual covenants and
agreements to be kept and performed on the part of said parties hereto,
respectively as herein stated, the said party of the first part does hereby
covenant and agree that it shall:
I. As of this date of this General Agreement Instrument, I agree
to form a partnership with the party of the second. This
partnership shall be called Double J Co., with the sole purpose
to engage in Real Estate business.
II. And said party of the second part covenants and agrees []:
As of this date, 21 September, 2001[,] I agree to become
partners of the first party in said Double J Co.. I agree this
company is formed to do Real Estate transactions only.
III. Other terms to be observed by and between the parties:
It is agreed and understood that neither party has the right or
power to obligate his [or her] partner without the agreed
con[s]ent in writing. All official documents as well as company
checks will require dual signatures. If either party of partnership
decides to sell, first option of purchase will be given to the other
party of partnership for a period of six (6) years from purchase
date. Also, the purchase will not exceed original purchase price.
This agreement shall be binding upon the parties, their successors, assigns and
personal representatives. Time is of the essence on all undertakings. This
agreement shall be enforced under the laws of the State of __________. This
is the entire agreement.
Partner and Decedent each signed the document, which appeared to be a form document
obtained from E-Z Legal Forms, Incorporated.
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One month later, Decedent obtained two tracts of land (“the Property”) from Shirley
A. Border and executed a trust deed for the amount of the indebtedness. One year later,
Decedent signed a quitclaim deed transferring the property to Double J Company (“the
Partnership”). Three and a half years later, on March 5, 2006, Decedent died, leaving his
children, Geoff King and Tara Harrison (collectively “Heirs”), as his only surviving heirs.
After learning that foreclosure on the Property was imminent due to the outstanding
indebtedness and outstanding fees, Partner paid the remaining balance on the mortgage and
fees. The trust deed was released on April 20, 2006. Partner filed a complaint for partition
one and a half years later against Heirs and the representative of Decedent’s estate. She
requested a declaration that the Property belonged to the Partnership. She also sought the
sale of the Property, reimbursement for expenses related to the Property, and a corresponding
division of the remaining proceeds between her and the parties. Heirs objected, denying that
a partnership ever existed and claiming that the Property belonged to the estate.
A hearing was held on the complaint at which several witnesses testified. Partner
testified that she and Decedent were merely friends that ate together, spent time together,
spoke often, and exchanged gifts for special occasions. She denied ever having a romantic
relationship with Decedent. She recalled that Decedent approached her about purchasing
property and then selling it for profit. She agreed to his proposal, and he purchased the
Property. She stated that she agreed to share the expenses with Decedent but that she
“usually ended up paying most” of the expenses. She claimed that starting in 2002, she paid
the property taxes. She recalled that before Decedent passed away, she submitted
approximately $8,180 to Decedent for expenses related to the Property. She claimed that
after Decedent passed away, she submitted approximately $26,985 to fulfill the debt on the
property, $1,388 in property taxes, and $8,609 in fees.
Partner conceded that she and Decedent never purchased any additional property for
their real estate endeavor in the Partnership and that the Property that was deeded to the
Partnership was encumbered by the trust deed. She acknowledged that they originally agreed
to form the Partnership for a period of three years but that at her request, Decedent extended
the agreement for a period of six years. She agreed that the Partnership never filed a tax
return, that she and Decedent never used the bank account they opened for the Partnership,
and that company mail was either sent to her office or to Decedent’s personal address. She
identified the quitclaim deed and acknowledged that she was listed as the party responsible
for property taxes on the Property. She identified the current property tax bill that was
addressed to “Double J Co., [in care of] Jean Meadows.”
Partner testified that after Decedent passed away, she contacted a real estate agent and
spoke to the agent about selling the property. She denied signing a contract with the agent
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or giving anyone permission to post signs advertising the property for sale. She related that
she and Ms. Harrison originally agreed to sell the property together but that she decided not
to “fool with it” because Ms. Harrison “wanted more money.”
Stephen K. Burrell, the assistant treasurer of the Foothills Owners’ Association (“the
Association”), testified that the owners of the Property had an obligation to pay dues to the
Association for various services. He denied ever personally meeting Decedent but recalled
speaking with him on the telephone. He related that he also spoke with Partner, and he
confirmed that she had submitted approximately $8,294 to the Association for maintenance
fees, late fees, and mowing fees. He claimed that he never received payments from the
Partnership but that the checks were always signed by either Decedent or Partner. He stated
that he had a lien against the Property for unpaid fees of approximately $2,136.
Ms. Harrison, the executor of the estate, testified that she and Mr. King were
Decedent’s only children. She claimed that Decedent purchased the Property for her and Mr.
King and that Decedent never mentioned the Partnership. She learned about the Partnership
after Decedent passed away. She asserted that she spoke to Partner on two occasions after
Decedent died. She recalled that Partner asked her to help pay the fees on the property and
that Partner informed her that someone was interested in purchasing the property for $30,000.
She later learned that Partner’s potential buyer was Partner’s son-in-law. She stated that she
visited the Property and found a sign on the property, advertising the sale of the property and
providing Partner’s telephone number. She conceded that she also posted a sign on the
property, advertising the sale of the property.
Following the presentation of the above evidence, the trial court ruled in favor of
Partner and ordered the sale of the property with specific instructions regarding the
distribution of the proceeds from the sale. This timely appeal followed.
II. ISSUES
We consolidate and restate the issues raised on appeal as follows:
A. Whether the trial court erred in finding that Partner and Decedent formed
a valid partnership.
B. Whether the trial court erred in finding that the Property belonged to the
Partnership.
C. Whether Partner is entitled to attorney fees on appeal.
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III. STANDARD OF REVIEW
“[W]hether a partnership exists under conflicting evidence is [a question] of fact.”
Messer Grieshiem Indus., Inc. v. Cryotech of Kingsport, Inc., 45 S.W.3d 588, 605 (Tenn. Ct.
App. 2001) (quoting Wyatt v. Brown, 281 S.W.2d 64, 68 (Tenn. Ct. App. 1955)). On appeal,
the factual findings of the trial court are accorded a presumption of correctness and will not
be overturned unless the evidence preponderates against them. See Tenn. R. App. P. 13(d).
The trial court’s conclusions of law are subject to a de novo review with no presumption of
correctness. Blackburn v. Blackburn, 270 S.W.3d 42, 47 (Tenn. 2008); Union Carbide Corp.
v. Huddleston, 854 S.W.2d 87, 91 (Tenn. 1993). Mixed questions of law and fact are
reviewed de novo with no presumption of correctness; however, appellate courts have “great
latitude to determine whether findings as to mixed questions of fact and law made by the trial
court are sustained by probative evidence on appeal.” Aaron v. Aaron, 909 S.W.2d 408, 410
(Tenn. 1995).
IV. DISCUSSION
A.
Heirs concede that Partner and Decedent executed a General Agreement to form the
Partnership but assert that without additional evidence, Partner failed to establish the
existence of a valid partnership, thereby voiding the quitclaim deed. They note that the
Partnership never filed a tax return, realized a profit, or made purchases. Partner responds
that the execution of the General Agreement evidenced the intent to establish a partnership.
She asserts that because she and Decedent “acted to combine [] money and assets and place
them into commerce with the motive to sell the property and share the profits, a partnership
was created, whether any profits were actually realized or not.”
Tennessee Code Annotated section 61-1-101 defines a partnership as “an association
of two (2) or more persons to carry on as co-owners of a business or other undertaking for
profit[.]” “A partnership can only be created pursuant to a contract of partnership, though
such an agreement may be either express or implied.” Messer Grieshiem Indus., Inc., 45
S.W.3d at 605 (citing Bass v. Bass, 814 S.W.2d 38, 41 (Tenn. 1991)). In implied partnership
cases, the party alleging the existence of the partnership “carries the burden of proof of that
fact by clear and convincing evidence.” See Montgomery v. Montgomery, 181 S.W.3d 720,
726 (Tenn. Ct. App. 2005); Story v. Lanier, 166 S.W.3d 167, 175 (Tenn. Ct. App. 2004).
“To determine whether a partnership exists, courts must ascertain the intention of the
parties.” Messer Grieshiem Indus., Inc., 45 S.W.3d at 605 (citing Bass, 814 S.W.2d at 41).
In the absence of a written agreement, the requisite intention is that which is deducible from
the parties’ actions.” Id. (citing Wyatt, 281 S.W.2d at 67). Thus, a partnership exists when
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it appears from the circumstances that the parties combined “their time, labor, skills, and
assets in a business enterprise to produce a profit.” Bass, 814 S.W.2d at 44.
In addition to drafting the General Agreement, Decedent executed a deed in which he
purported to relinquish the Property to the Partnership. While there were no profits to share,
Partner and Decedent shared the expenses related to the property for several years until
Decedent’s untimely death. Partner continued to pay these expenses after Decedent’s death
and ultimately fulfilled the debt on the Property. Given these actions and circumstances, we
conclude that Partner and Decedent formed a partnership, an admittedly unsuccessful one.
B.
Heirs contend that Decedent never validly transferred the Property to the Partnership
because the transfer was not supported by valid consideration and because Decedent did not
have the authority to transfer the Property pursuant to the trust deed. Partner responds that
the Property was a partnership asset.
Heirs never raised any issues at trial relating to the consideration of the transfer of the
Property. A party may not offer a new issue for the first time on appeal. See Lane v. Becker,
334 S.W.3d 756, 764 (Tenn. Ct. App. 2010) (citing Campbell Cnty. Bd. of Educ. v.
Brownlee-Kesterson, Inc., 677 S.W.2d 457, 466-67 (Tenn. Ct. App. 1984)). “The
jurisprudential restriction against permitting parties to raise issues on appeal that were not
first raised in the trial court is premised on the doctrine of waiver.” Fayne v. Vincent, 301
S.W.3d 162, 171 (Tenn. 2009) (citations omitted). If Heirs had raised this issue, the trial
court could have addressed the issue and provided a record for this court’s review.
Accordingly, we conclude that this issue is waived.
Relative to Decedent’s alleged lack of authority to transfer the Property,1 Heirs did not
cite any legal authority in their brief in support of their position. Failure to cite authority in
support of an argument as required by Rule 27(a) of the Tennessee Rules of Civil Procedure
constitutes a waiver of the issue. Lett v. Collis Foods, Inc., 60 S.W.3d 95, 105 (Tenn. Ct.
App. 2001) (“Failure to cite relevant authority constitutes a waiver of the issue.”).
Nevertheless, we will briefly address the issue. “Property transferred to or otherwise
acquired by a partnership is property of the partnership and not of the partners individually.”
Tenn. Code Ann. § 61-1-203 (emphasis added). The trust deed provided, in pertinent part,
In the event the Grantor or his successors shall convey the title to the property
above conveyed any interest therein without written consent of the holder of
1
This argument was vaguely referenced in the answer to the complaint and in Partner’s testimony at trial.
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the above described note; or should a creditor, receiver, or trustee in
bankruptcy obtain any interest in the property; or should any party obtain an
interest by attachment or any means other than inheritance or will, the entire
principal balance with interest and charges shall become immediately due and
payable at the option of the holder. As a condition to such consent, the holder
may require satisfactory credit information, may require an increase in interest
rates and service charges and may make such other requirements as it deems
to the best interest of the holder at the time consent is requested.
(Emphasis added). The record was silent as to whether Decedent obtained consent prior to
executing the quitclaim deed, which conveyed any interest he had at the time to the
Partnership. However, Partner continued payment on the indebtedness following Decedent’s
death and eventually secured the release of the trust deed from Ms. Border. Accordingly, we
conclude that the trial court did not err in ordering the sale of the Property and the
corresponding equitable division between Partner and Decedent’s estate.
C.
Partner asserts that she is entitled to reasonable attorney fees that she incurred in the
defense of this appeal. Tennessee Code Annotated section 27-1-122 provides for an award
of damages, including attorney fees, when an appeal is determined to be frivolous. To find
an appeal frivolous, the appeal must be wholly without merit and lacking in justiciable issues.
See Davis v. Gulf Ins. Group, 546 S.W.2d 583, 586 (Tenn. 1977); Indus. Dev. Bd. of
Tullahoma v. Hancock, 901 S.W.2d 382, 385 (Tenn. Ct. App. 1995). An appellate court’s
decision on this issue is discretionary, and this court is generally reluctant to award such
damages because we do not want to discourage legitimate appeals. Whalum v. Marshall, 224
S.W.3d 169, 180-81 (Tenn. Ct. App. 2006). Following our review, we respectfully deny
Partner’s request for attorney fees on appeal.
V. CONCLUSION
The judgment of the trial court is affirmed, and the case is remanded for such further
proceedings as may be necessary. Costs of the appeal are taxed equally to the appellants,
Tara Harrison, individually and as Personal Representative of the Estate of Jerome King, and
Geoff King.
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JOHN W. McCLARTY, JUDGE
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