Leisa Reed v. Randell Thurman

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
Assigned on Briefs January 23, 2015
LEISA REED v. RANDELL THURMAN, ET AL.
Appeal from the Chancery Court for Rhea County
No. 10540 Jeffrey F. Stewart, Chancellor
No. E2014-00769-COA-R3-CV-FILED-MARCH 10, 2015
This appeal stems from the trial court’s finding that an implied partnership existed
between Plaintiff and one of the Defendants with respect to a cattle-raising venture.
Despite finding that the parties had already entered into a complete settlement regarding
the partnership checking account and remaining partnership cattle, the trial court found
that certain partnership assets had not been settled. The trial court’s final decree directed
that Plaintiff be paid one-half of the fair market value of these assets, and stated that if no
agreement could be reached concerning their value, the items should be sold and the
proceeds divided equally. We affirm in part, reverse in part, and remand the case for
further proceedings as are necessary and consistent with this Opinion.
Tenn. R. App. P. 3 Judgment of the Chancery Court Affirmed in Part; Reversed in
Part; and Remanded
ARNOLD B. GOLDIN, J., delivered the opinion of the Court, in which BRANDON O.
GIBSON, J., and KENNY ARMSTRONG, J., joined.
J. Shannon Garrison, Dayton, Tennessee, for the appellant, Leisa Ellen Reed.
Carol Ann Barron, Dayton, Tennessee, for the appellee, Randell Thurman.
Rebecca L. Hicks, Dayton, Tennessee for appellee, Leroy Thurman.
OPINION
I. Background
Plaintiff/Appellant Leisa Reed (“Leisa”) commenced this action seeking a
declaration of her interest in a partnership she contends existed among herself,
Defendant/Appellee Randell Thurman (“Randell”), and Randell’s father,
Defendant/Appellee Leroy Thurman (“Leroy”). Although many of the pertinent facts are
undisputed, the parties disagree in several respects over the meaning that should be
attributed to the events that occurred in this case. In the mid-1990s, Leisa and Randell
began a romantic relationship. Notwithstanding the fact that the romantic aspect to their
relationship apparently subsided after a few years, their friendship continued. In fact, the
two began living together sometime around 2000 in Leisa’s home in Spring City,
Tennessee. Randell’s father Leroy lived nearby with his wife Doris.
According to Leisa, she entered into a partnership with Randell and Leroy in 2002
to buy and sell cattle. Although no written document was created to memorialize the
discussion, she claims the parties agreed to a 50/25/25 share of the business while sitting
in Leroy’s living room. Leroy, who was to supply the seed money, would get a 50
percent share of the business; Leisa and Randell would each get a 25 percent share.
Randell and Leroy dispute that such a conversation ever occurred. Although they do not
deny that a cattle raising venture was formed in the early 2000s, they dispute that it was
ever a partnership involving Leisa.
In furtherance of her participation in the alleged partnership, Leisa claims she
helped do the book work, in addition to paying bills and “keeping up with the bank
account.” She also stated that she helped care for Leroy’s wife Doris who had cancer.
When a bank account for the cattle venture was opened at SouthEast Bank & Trust on
May 22, 2004, in the name of L&R Farm1, Leisa was designated as an account owner and
authorized signatory. It is undisputed that Leisa wrote checks on that account and made
deposits into it as well. She also claims to have performed other routine tasks for the
alleged partnership such as picking up supplies, feeding cattle, allowing some of the
cattle to graze on her property, administering medicine to the cattle, and collecting hay.
Although Randell and Leroy do not deny that Leisa assisted their efforts occasionally2,
they suggest her involvement was not as significant as she suggests. For instance, they
claim that her presence on the L&R Farm bank account was only intended as a
convenience. Because Leisa lived with Randell and was at home when the bills arrived,
listing her as a signatory gave her the authority to write checks as bills became due.
Moreover, when testifying at trial as to Leisa’s involvement in the cattle business,
Randell stated that Leisa never joined him and Leroy at cattle auctions and noted that
Leisa worked full-time in a job that required her to travel out of town almost weekly.
Randell further testified that although Leisa sometimes made purchases for the cattle
1
According to Randell’s trial testimony, the L&R designation was named after Leroy and Randell.
2
During his July 17, 2013, testimony, Randell stated that Leisa would ride with him around the farm and
ride to get things for the cattle business. He also testified that Leisa helped to “bush hog” the farm on one
occasion and that she had gone to get medicine for the cattle.
2
business, she always reimbursed herself for the purchases. From Randell and Leroy’s
perspective, Leisa was simply never a partner in the cattle venture.
In 2006, Leroy withdrew from cattle farming. On August 5, 2006, he received a
check for $7,064.74. This check, which indicated that it was for “1/2 FARM,”
represented half of the balance of the L&R Farm checking account. On the same day
that this check was written, Leisa wrote a check on her personal bank account for
$5,000.00. The check indicated that it was for “7 COWS” and was made payable to
Leroy. Leisa testified that she wrote the check to purchase cattle in furtherance of the
alleged partnership; as Leroy had previously withdrawn, he owned certain cattle that he
wanted to sell. Randell also wrote a personal check for $5,000.00 on August 5, 2006.
The check was made payable to Leroy and indicated that it was for “6 COWS”.
Although Leisa points to this as evidence that she and Randell were in a partnership,
Randell disputes the notion. When asked at trial why Leisa bought seven cows from
Leroy, Randell claimed ignorance.
The parties’ interpretation of facts also differs with respect to another check
written by Leisa on her personal bank account. At trial, evidence was introduced
showing that Leisa wrote a $12,000.00 check to Randell on January 29, 2008. The
evidence shows that the day after this check was written, $12,000.00 was deposited into
the L&R Farm bank account. Leisa testified that the $12,000.00 check was written in
order to help buy equipment needed for the alleged partnership and stated that it was not
written as a gift or in repayment for a loan obligation. Randell, on the other hand, denies
that the $12,000.00 was a capital infusion in furtherance of a partnership between him
and Leisa. During his trial testimony, Randell stated that he gave Leisa $12,000.00 worth
of cash in exchange for the check she wrote out of her personal account. As he
explained it, “I had cash saved up, and I needed money in the account, and she wrote me
a check and kept the cash.”
Although Leroy had withdrawn from the cattle venture in 2006, he later got back
into the business. According to Randell’s testimony, Leroy renewed his participation in
the cattle project in 2008. Leroy’s participation was brief, however, as he exited the
cattle venture again at the beginning of 2009.3 When he exited the business, he received
over $45,000.00 out of the checking account of L&R Farm. The check was signed by
Leisa and indicated that it was for “1/2 FARM”. Randell testified that when his father
left the business in 2009, there was over $91,000.00 in the L&R Farm bank account.
3
According to the parties, Leroy exited the cattle business at various times throughout the years. His
departures in 2006 and 2009, however, are the only dates specifically chronicled by the parties.
Moreover, whereas Randell and Leroy characterize Leroy’s exits as withdrawals from a venture solely
between father and son, Leisa generally asserts that Leroy’s withdrawals were from a partnership that
existed between all parties.
3
According to Leisa, she and Randell “were going in as 50/50 partners” after Leroy
withdrew.
On February 1, 2009, Leisa wrote a check out to L&R Farm in the amount of
$35,000.00 using her own personal funds. At trial, she testified that she wrote the check
after she and Randell decided to continue the alleged partnership following Leroy’s
withdrawal. She described the money as an investment into the partnership. Randell
testified that he did not consider Leisa’s monetary contributions to be in furtherance of a
business partnership between them. Despite admitting that the two of them pooled their
money together to buy cattle, he did not acknowledge them as partners. As he stated at
trial, “We weren’t partners. We just bought a herd of cattle together.”
In January of 2010, Leisa decided that she no longer wanted to be associated with
Randell. At trial, she testified that she wanted to end the alleged partnership upon
learning of allegations that Leroy had molested her daughter. She further testified that
the friendship between she and Randell ended when Randell refused to stop speaking
with his father. When their friendship deteriorated, Randell and Leisa entered into an
agreement that settled certain rights and obligations between the two. Dated January 31,
2010, this agreement reads as follows:
1. Randell Thurman will buy the house at 1432 Ideal Valley
Road at $150,000.00. He has given Leisa Reed a
$20,000.00 deposit. Randell Thurman will supply
financing at his expense. Leisa Reed will continue to live
in this home until March 31st, 2010. All furnishings
belong to Leisa Reed. Leisa Reed has until May 31st to
remove all of her personal property from this residence.
2. Farm-Randell Thurman has given Leisa Reed $53,000.00
for her half of Beef Cattle.
3. Taxes-Leisa Reed to claim ½ of farm losses (approx.
$35,000.00) on her personal 2009 Tax Filing.
4. 2003 Chevrolet Black Dually Pickup Truck-Randell
Thurman to pay back the loan to Leisa Reed $11,270.93
for her interest in this vehicle before July 31, 2010.
5. Randell Thurman agrees to allow Leisa Reed to continue
to charge to his Gastown account until March 31st, 2010,
but not to exceed $160.00 per month.
4
Whereas Leisa argues this agreement was not a complete settlement between her and
Randell, Randell argues strongly to the contrary.
The first point of contention regarding the agreement centers on the agreement’s
failure to divide any property used incident to the cattle venture. At trial, Randell
testified that the agreement did not contain any provision pertaining to equipment
because all of the equipment belonged to him; he claimed there was nothing to settle in
this regard, and he indicated that Leisa had previously affirmed this. In contrast, Leisa
testified that the parties had discussed settling their rights with respect to the equipment.
According to Leisa, Randell had indicated that he would pay her for her share, but he
never did.
Leisa and Randell also dispute whether the agreement settled their rights with
respect to the L&R Farm bank account. The crux of their disagreement stems from their
differing interpretations as to what the second provision in their agreement represented.
According to Leisa, the $53,000.00 payment she received was solely for her share of the
value of the remaining cattle. In support of this position, she testified that she and
Randell had over $100,000.00 worth of cattle at the time the agreement was made.
Because she claims that the $53,000.00 payment did not include any portion of her
interest in the L&R Farm bank account, she asserts that Randell presently owes her half
of the amount that was remaining in the account.
With regard to the agreement’s language that the $53,000.00 payment to Leisa was
“for her half of Beef Cattle,” Randell asserts the payment represented Leisa’s share of the
remaining cattle and her interest in the L&R Farm bank account. At trial, he testified
that he and Leisa did not have over $100,000.00 worth of cattle at the time of the
agreement. Rather, he asserted that they had about $40,000.00 worth of cattle at the time.
Moreover, he testified that the L&R Farm bank account had a balance of approximately
$65,000.00 at the time of the agreement. He claimed these were the numbers used to
derive the $53,000.00 payment. As he stated, “Her half of the farm account was
32,687.05. I bought the rest of her half of the cattle, 20,312.95. It made it $53,000.”
After the trial of the matter was concluded, the trial court entered a final decree
adjudicating Leisa’s claims regarding the existence of a partnership. Although the trial
court found that she had failed to prove by clear and convincing evidence that an implied
partnership existed between all parties as early as 2002, the trial court concluded that an
implied partnership did exist between Leisa and Randell on August 5, 2006. As the trial
court noted, that was the day when each wrote separate checks to purchase cattle from
Leroy. The trial court further found that the implied partnership continued until January
31, 2010, when Leisa received the $53,000.00 check pursuant to the settlement agreement
between her and Randell. Based on its consideration of the testimony that had been
5
offered at trial, the trial court concluded that the $53,000.00 payment represented “one-
half of the checking account balance and one-half of the value of the cattle unsold on that
date[.]” Although the trial court thus rejected Leisa’s argument that the $53,000.00
payment only represented the value of the unsold cattle, it accepted her argument that the
January 31, 2010, agreement did not embrace a settlement of rights with respect to
equipment acquired during the partnership period. Upon making findings regarding
which assets constituted partnership property, the trial court directed that Randell pay
Leisa one-half of their fair market value. The trial court ruled that if the parties were
unable to agree on the fair market value of the items, the assets should be sold and the
proceeds divided equally between Leisa and Randell. This appeal followed.
II. Issues Presented
On appeal, the parties4 independently raise several issues for review. As we
perceive it, Leisa raises the following issues:
1. Whether the evidence presented at trial preponderates convincingly in favor of
a finding that Leisa was a partner in L&R Farm before August 5, 2006.
2. Whether the January 31, 2010, agreement was a settlement and satisfaction of
Leisa’s interest in the partnership checking account.
3. Whether the trial court correctly classified the partnership property.
Randell’s presented issues for review, as we perceive and reword them, are as
follows:
1. Whether the trial court erred in finding that Randell was in an implied
partnership with Leisa from 2006 to 2010.
2. Whether the trial court erred in finding that the equipment purchased out of the
funds in the L&R Farm account were assets of the implied partnership that
should be valued and divided equally between Leisa and Randell.
III. Standard of Review
In reviewing any findings of fact by the trial court, our review is de novo “upon
the record of the trial court, accompanied by a presumption of the correctness of the
4
Although Leroy’s brief lists four issues that follow a heading entitled “Statement of Law,” we do not
perceive the issues to be independently raised by Leroy. As we perceive it, the “Statement of Law”
section of Leroy’s brief operates as a response to the arguments developed in the heart of Leisa’s brief.
6
finding, unless the preponderance of the evidence is otherwise.” Tenn. R. App. P. 13(d).
We review a trial court’s conclusions on questions of law de novo, but no presumption of
correctness attaches to the trial court’s legal conclusions. Bowden v. Ward, 27 S.W.3d
913, 916 (Tenn. 2000).
IV. Discussion
Based on the issues presented by the parties’ briefs, we find that there are three
primary issues for our consideration. First, we must review the trial court’s finding that
an implied partnership existed between Leisa and Randell from 2006 to 2010. Second,
we must consider whether the trial court erred in finding that the January 31, 2010,
agreement was a settlement and satisfaction of Leisa’s interest in the partnership
checking account. Third, we must consider whether the trial court erred in determining
which assets should be divided as partnership property.
We first address whether the trial court erred in finding that an implied partnership
existed between Leisa and Randell from August 5, 2006, until they executed a settlement
agreement on January 31, 2010. The Revised Uniform Partnership Act 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 . . . .” Tenn. Code Ann. § 61-1-101(7) (2013).
“We have held that determining what constitutes a partnership is generally a matter of
law, but whether a partnership exists under conflicting evidence is a question of fact.” In
re Estate of Price, 273 S.W.3d 113, 138 (Tenn. Ct. App. 2008) (citing Wyatt v. Brown,
281 S.W.2d 64, 68 (Tenn. Ct. App. 1955)). In making a determination whether a
partnership exists, “no one fact or circumstance is the conclusive test[.]” Roberts v.
Lebanon Appliance Serv. Co., 779 S.W.2d 793, 795 (Tenn. 1989). “[E]ach case must be
decided upon a consideration of the totality of all relevant facts.” Pettes v. Yukon, 912
S.W.2d 709, 715 (Tenn. Ct. App. 1995) (citation omitted).
In Bass v. Bass, 814 S.W.2d 38 (Tenn. 1991), the Tennessee Supreme Court
considered the issue of whether an implied partnership existed. The Court stated:
[T]he existence of a partnership depends upon the intention of
the parties, and the controlling intention in this regard is that
ascertainable from the acts of the parties. Wyatt v. Brown, 39
Tenn.App. 28, 281 S.W.2d 64, 67 (1955). Although a contract
of partnership, either express or implied, is essential to the
creation of partnership status, it is not essential that the parties
actually intend to become partners. Wyatt, 281 S.W.2d at 67.
The existence of a partnership is not a question of the parties'
undisclosed intention or even the terminology they use to
describe their relationship, nor is it necessary that the parties
7
have an understanding of the legal effect of their acts.
Roberts, 779 S.W.2d at 795–96. It is the intent to do the
things which constitute a partnership that determines whether
individuals are partners, regardless if it is their purpose to
create or avoid the relationship. Wyatt, 281 S.W.2d at 67.
Stated another way, the existence of a partnership may be
implied from the circumstances where it appears that the
individuals involved have entered into a business relationship
for profit, combining their property, labor, skill, experience,
or money.
Bass, 814 S.W.2d at 41. In cases such as this one, where no written partnership
agreement exists, the party alleging the existence of a partnership bears the burden of
proving its existence by clear and convincing evidence. Tidwell v. Walden, 330 S.W.2d
317, 319 (Tenn. 1959).
Upon review of the record transmitted to us, we find no error in the trial court’s
conclusion that an implied partnership between Leisa and Randell began in August of
2006. Although Leisa urges this Court to determine that she became a partner as early as
2002, and Randell urges this Court to determine that Leisa never was a partner, we find
that the trial court’s conclusion is properly supported based on the evidence presented at
trial. Despite the lack of clear and convincing evidence regarding the existence of a
partnership prior to August of 2006, the evidence clearly supports a finding that an
implied partnership existed between Leisa and Randell after that date.
Although Leisa testified that the parties orally agreed in 2002 to be partners in a
cattle venture, Randell testified that such a conversation never occurred. Based on the
conclusions in its final decree, the trial court necessarily discredited Leisa’s testimony on
this issue. We will defer to the implicit finding of the trial court that Randell and Leroy
did not orally agree to be formal partners with Leisa.
Of course, even though the evidence does not show that all of the parties actually
intended to become partners, an implied partnership among them may still exist. Again,
“[i]t is the intent to do the things which constitute a partnership that determines whether
individuals are partners[.]” Bass, 814 S.W.2d at 41 (citation omitted). Here, the record
does not clearly indicate that Leisa was a partner before August of 2006. Despite the fact
that Leisa was a signatory to the L&R Farm bank account, we note that Leroy wife’s
Doris was also listed as an authorized signatory. No party, including Leisa, has ever
contended that Doris was a partner in the cattle venture, and Randell testified that Leisa
was put on the bank account solely as a convenience to him. Similarly, although Leisa
testified to her role in keeping books for the business as evidence of her participation in a
8
partnership, she admitted that Doris also participated in keeping books for the venture.
Moreover, based on Leisa’s identification of her own handwriting in the cattle venture’s
books during her testimony, we agree with Randell and Leroy that her role in
bookkeeping was not as significant as she suggests. Indeed, a close examination of her
testimony indicates that a significant portion of her bookkeeping efforts were devoted to
merely adding up the totals of entries already entered by Randell, and for many records,
her contribution appears to have been minimal. Per her testimony:
Q: And here, the repairs, whose handwriting is that all but one
entry?
A: It looks like Randy’s handwriting. That was in ’06.
That’s when I was traveling some, and I had taught him how
to write them down, so I wouldn’t have such a mess when I
got home.
Q: And the cattle sold, that’s all Randy’s handwriting, isn’t
it?
A: All but where they were tallied up. I added them up.
Q: So he did all the bookkeeping then on the cattle that was
sold?
A: In ’06, yes, he helped.
Q: And all the supplies, that full page of supplies that are
bought, that’s all Randy’s handwriting, isn’t it, every bit of
that?
A: I can’t see it from there. I’m sorry. Supplies. Some of it
is mine. I’ve wrote some of the checks in. I’ve tallied some
of the amounts. But, yeah, most is.
In addition, we note that Leisa testified that Leroy and Randell primarily made the
purchases for the cattle business, and she stated that she never went to the cattle auctions.
When Leisa did make purchases out of her personal account for the cattle business, she
was reimbursed. She further testified that she had no experience in the cattle business
before she became involved with Randell. Moreover, although Leisa claims that her
caretaking efforts for Randell’s mother are illustrative of her participation in the
partnership, we cannot draw such an inference. Such work is certainly commendable, but
in no way is it directly related to the furtherance of success in the cattle business5. When
considered together, the events that occurred prior to August of 2006 simply fail to
establish that Leisa was an implied partner in the cattle enterprise. Despite her
association with the business during that time, her involvement does not clearly and
convincingly evidence the contribution of a partner. See Waddell v. Rustin, No. E2010-
5
We note that although Leisa testified her caretaking efforts were part of her obligations under a
partnership agreement reached among the parties, the trial court did not find that an express partnership
agreement was established in this case.
9
02342-COA-R3-CV, 2011 WL 2650702, at *7˗8 (Tenn. Ct. App. July 7, 2011) (declining
to find an implied partnership existed when one’s efforts were “better characterized as
helping out rather than the contribution of an equal partner”). We therefore agree with
the trial court that Leisa did not satisfy her burden of proving the existence of a
partnership prior to August of 2006.
With that said, however, there is clear and convincing evidence that an implied
partnership existed between Leisa and Randell after August 5, 2006. The record
transmitted to us indicates at least three instances where Leisa made capital contributions
in furtherance of a cattle enterprise between her and Randell. The first of these instances
was on August 5, 2006, following Leroy’s withdrawal from the cattle business. On that
date, both Leisa and Randell wrote Leroy separate checks for $5,000.00 to purchase
cattle. Leisa testified that her purchase of cattle was in furtherance of a partnership
between her and Randell. Randell testified he did not know why Leisa had purchased
cattle. Leroy’s recollection was apparently clearer than his son’s. In his testimony, he
stated, “[t]hat’s when she was going in with Randy on the cattle.”
The second instance of a significant capital contribution made by Leisa occurred
approximately a year and a half later. On January 29, 2008, Leisa wrote a check to
Randell for $12,000.00; the evidence indicates that this check was deposited into the
L&R Farm bank account the next day. Leisa testified that she contributed the money in
order to help buy equipment that was needed. Although Randell denied that Leisa’s
check was written for the purposes of a capital contribution and instead testified that he
had given Leisa $12,000.00 worth of cash in exchange for the check, the trial court’s oral
ruling, which was incorporated by reference into the final decree, indicated that Randell
was unable to substantiate his position on this issue.
The third instance of a capital contribution made by Leisa occurred subsequent to
Leroy’s second withdrawal from the cattle business. On February 1, 2009, Leisa wrote a
check out to L&R Farm in the amount of $35,000.00 using her own personal funds. She
testified that the money was an investment into the partnership. Although Randell
admitted that he and Leisa pooled their money together to buy cattle, he did not
acknowledge them as partners.
Under the law, Randell’s refusal to acknowledge the existence of a partnership is
not determinative. “The existence of a partnership is not a question of the parties’
undisclosed intention or even the terminology they use to describe their relationship, nor
is it necessary that the parties have an understanding of the legal effect of their acts.”
Bass, 814 S.W.2d at 41 (citation omitted). “[T]he existence of a partnership may be
implied from the circumstances where it appears that the individuals involved have
entered into a business relationship for profit, combining their property, labor, skill,
10
experience, or money.” Id. Notwithstanding Randell’s characterization of his
relationship with Leisa, we find that Leisa’s monetary contributions, when considered
alongside the totality of the facts outlined in the record, support a finding that an implied
partnership existed subsequent to August 2006. Randell’s testimony clearly indicates that
a partnership relationship existed between him and Leisa:
Q: All right. [Leisa] pulled her money together with yours;
correct?
A: Part of it, yeah.
Q: And, of course, you were pulling your monies together to
buy cattle; correct?
A: Right.
Q: And you were going to sell the cattle?
A: Right.
Q: And you were hopefully going to make a profit on the
cattle?
A: That’s right.
Q: And then you were going to split the profits out of the
cattle?
A: That’s right.
In addition, even though Randell refused to describe Leisa as a partner during his trial
testimony, he had previously characterized her as such. At trial, a copy from the first
page6 of his last will and testament was admitted into evidence as an exhibit. Therein,
Randell affirmed as follows: “I have a longstanding life relationship with Leisa Reed who
is a partner with me in all of my endeavors, both business and personal.” Despite
Randell’s assertion that the trial court erred in finding that an implied partnership existed
between him and Leisa, we find that the evidence clearly supports its determination.
We next turn our attention to the trial court’s finding that the January 31, 2010,
agreement between Leisa and Randell was a settlement and satisfaction of Leisa’s interest
in the partnership checking account. As already noted, Randell testified that the
$53,000.00 payment to Leisa represented payment for Leisa’s share of the value of
unsold, remaining cattle and her share of the remaining balance from the L&R Farm
account at SouthEast Bank & Trust. In support of this position, he testified that there was
about $40,000.00 worth of cattle at the time of the agreement and approximately
$65,000.00 in the partnership checking account. Leisa, by contrast, testified that the
$53,000.00 payment related solely to the value of the remaining cattle and attempted to
support her position by claiming that over $100,000.00 worth of cattle existed at the time
of the agreement. Having reviewed the record, we note that the trial court’s oral ruling,
which was incorporated by reference into the final decree, accredits Randell’s testimony
6
The bottom corner of this page contains a notation dating the will to “9-10-09.”
11
on what the $53,000.00 payment represented. The trial court’s acceptance of Randell’s
testimony regarding the nature of the $53,000.00 payment is entitled to considerable
deference on appeal. See Pettes, 912 S.W.2d at 716 (“Findings of fact by the trial court
involving the credibility of witnesses are entitled to great weight on appeal.”) (citation
omitted).
Although Leisa argues in her brief that this Court should reverse the trial court due
to the fact that the settlement agreement makes no specific mention that the $53,000.00
payment included her share of the partnership account, we decline to find error in the trial
court’s adjudication of the issue. The agreement states that “Randell Thurman has given
Leisa Reed $53,000.00 for her half of Beef Cattle[,]” but what “her half of Beef Cattle”
actually represents is not readily clear. The language can reasonably be construed to
support several interpretations. For example, does it represent only her share of the
unsold, remaining cattle of the partnership, or does it represent her share of the remaining
cattle in addition to her share of the proceeds for cattle already sold? By accrediting
Randell’s testimony to give meaning to the agreement7, the trial court concluded that the
$53,000.00 payment represented Leisa’s share of the value of the remaining partnership
cattle and her share of the balance of the partnership bank account. As already noted, we
discern no error in this conclusion.
Finally, we address whether the trial court erred in determining which property
belonged to the partnership. Under Tennessee law, “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 (2013). As we explained in Finch v.
Raymer, No. W2012-00974-COA-R3-CV, 2013 WL 1896323 (Tenn. Ct. App. May 6,
2013), whether property is acquired by a partnership is governed by Tennessee Code
Annotated § 61-1-204(a). Under that statute, “property is deemed partnership property if
acquired in the name of the partnership or in the name of one or more of the partners with
an indication in the instrument transferring title to the property of the person’s capacity as
a partner or of the existence of a partnership.” Id. at *10 (citing Tenn. Code Ann. § 61-1-
204(a)). Where partners have acquired property but have failed to express their intent by
referencing a partnership in the title documents, the statute provides two rebuttable
presumptions. Id. First, “[p]roperty is presumed to be partnership property if purchased
with partnership assets, even if not acquired in the name of the partnership or of one (1)
or more partners with an indication in the instrument transferring title to the property of
the person’s capacity as a partner or of the existence of a partnership.” Tenn. Code Ann.
§ 61-1-204(c) (2013). Second, “[p]roperty acquired in the name of one (1) or more of the
partners, without an indication in the instrument transferring title to the property of the
7
See Jones v. Brooks, 696 S.W.2d 885, 886 (Tenn. 1985) (noting that “where there exists an ambiguity in
a contract, parol evidence is admissible to explain the actual agreement”) (citation omitted).
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person’s capacity as a partner or of the existence of a partnership and without use of
partnership assets, is presumed to be separate property, even if used for partnership
purposes.” Tenn. Code Ann. § 61-1-204(d) (2013).
During the course of the litigation in the trial court, the trial judge directed that
Leisa submit a list of property that she considered to be partnership property, along with
supporting evidence. Defendants were directed to respond to Leisa’s submission with a
list of property they contended was separate property. After these submissions were filed
with the trial court, the Clerk and Master prepared a report at the trial court’s direction,
wherein the Clerk outlined the disputed farm equipment based on submitted “tax returns,
cancelled checks and receipts.” The Clerk’s report,8 which was prepared with the
assistance of a Certified Public Accountant, provided specific details for each piece of
equipment, including the date of purchase, the purchaser, the bank account out of which
the item was purchased, and the purchase amount. Although Leisa filed certain
exceptions to the Clerk’s report after it was initially submitted, at trial, her counsel stated
that she no longer had any objections. Of course, notwithstanding the trial court’s
acceptance of the Clerk’s report, the task of determining which listed assets actually
constituted partnership property remained.
In its final decree, the trial court determined the issue of ownership of assets by
concluding that the following items constituted property of the implied partnership which
were subject to division: “Hay Rings,” “Gates,” “Post Hole Digger/Auger,” “Sprayer,”
“Cattle Chute,” “2-Three Ton Feeders,” “6-Ton Feeder,” and “4-Three Ton Feeders.”
As the trial court noted, the evidence showed that these items were purchased out of the
L&R Farm bank account during the period of the implied partnership. Although Leroy
takes no issue on appeal with regard to the trial court’s adjudication of property, both
Leisa and Randell assert that the trial court’s determination was in error. Whereas Leisa
argues that the trial court did not compensate her for all of the partnership property in
which she has an interest, Randell claims that Leisa is not entitled to any monies for
alleged partnership assets.
We first address Randell’s position on this issue. Importantly, we note that we
have already determined that an implied partnership existed in this case. To the extent
that there is property belonging to the partnership in which Leisa has an interest, she is
entitled to compensation. Moreover, although Randell argues that the January 2010
settlement agreement settled all property rights between him and Leisa, we find no error
in the trial court’s conclusion that it did not. Leisa testified that the parties had discussed
settling their rights with respect to the farm equipment, and despite representations from
8
We note that the Clerk filed an “Amended Master’s Report” shortly after the filing of the initial report;
this amended report was submitted in order to supply certain information that had inadvertently been
omitted from the original submission.
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Randell that he would pay her for her share, she testified that he never did. A review of
the settlement agreement confirms that it does not address the parties’ rights concerning
farm equipment, and we accordingly find that the trial court did not err in awarding Leisa
compensation for identified partnership assets.
Specifically, we affirm the trial court’s determination that Leisa had an interest in
the “Hay Rings,” “Gates,” “Post Hole Digger/Auger,” “Sprayer,” “Cattle Chute,” “2-
Three Ton Feeders,” “6-Ton Feeder,” and “4-Three Ton Feeders.” The trial court
awarded Leisa an interest in these assets upon determining that they were purchased out
of the L&R Farm bank account during the period of the implied partnership. We agree
with this conclusion of the trial court. As already noted, property is presumed to be
partnership property if purchased with partnership assets. Tenn. Code Ann. § 61-1-
204(c) (2013) (“Property is presumed to be partnership property if purchased with
partnership assets, even if not acquired in the name of the partnership or of one (1) or
more partners with an indication in the instrument transferring title to the property of the
person’s capacity as a partner or of the existence of a partnership.”). Here, Leisa was
awarded an interest in equipment purchased out of the L&R Farm bank account during
the period of the implied partnership, and upon review of the record transmitted to us, we
see no evidence that justifies rebutting the presumption that this equipment is partnership
property. Moreover, we find no error in the trial court’s decision to give Leisa a 50%
interest in this equipment. The record confirms that Leisa made significant capital
contributions during the period of the implied partnership, and she even testified that one
of these contributions was specifically made to purchase equipment for the partnership.
In addition, we note that the settlement entered into by Leisa and Randell in January 2010
generally treated the two as on equal footing, expressly giving Leisa payment for “her
half of Beef Cattle.” (emphasis added)
Notwithstanding our affirmance of the trial court’s decision to award Leisa an
interest in the “Hay Rings,” “Gates,” “Post Hole Digger/Auger,” “Sprayer,” “Cattle
Chute,” “2-Three Ton Feeders,” “6-Ton Feeder,” and “4-Three Ton Feeders,” the present
appeal requires us to consider whether the trial court’s final decree afforded Leisa
complete relief. In her brief, Leisa challenges the trial court’s award of property in three
respects. First, she contends that the trial court erred in failing to include a “Hay Bailer”
purchased on March 20, 2008, as partnership property. Second, she contends that the
trial court erred in failing to include a “Manure Spreader” purchased on April 29, 2006,
as partnership property. Leisa’s third grievance on appeal with regard to the trial court’s
adjudication of property is raised generally; she simply asserts that if this Court
determines she was a partner before August 5, 2006, various other referenced assets
should be declared partnership property.
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We will deal with the last of these raised concerns first. Although Leisa asserts
that various other assets should be considered partnership property if we determine that
she was a partner before August 5, 2006, the evidence does not clearly and convincingly
establish that she was a partner before that date. To the extent she seeks an additional
award of compensation based on such a determination, her request for relief is not
tenable.
With respect to the “Hay Bailer,” we agree with Leisa that the trial court erred in
failing to include this asset as partnership property. Under Tennessee Code Annotated §
61-1-204, property is deemed to be partnership property if acquired in the name of a
partnership. Tenn. Code Ann. § 61-1-204(a)(1) (2013). Although it is true that the “Hay
Bailer” was not purchased out of the L&R Farm bank account, the invoice listed the
name of the purchaser as “L&R Farm.” As the asset was acquired in the name of the
partnership, it constitutes partnership property under the statute. We reverse the
judgment of the trial court to the extent that it failed to compensate Leisa for her share of
the “Hay Bailer.”
We do not agree with Leisa, however, that the trial court should have considered
the “Manure Spreader” to be partnership property. Although it is true that the “Manure
Spreader” was purchased with funds out of the L&R Farm bank account, it was
purchased prior to Leisa’s inception as an implied partner. Despite her arguments to the
contrary, the evidence does not clearly and convincingly support Leisa’s position that she
was a partner when the “Manure Spreader” was purchased on April 29, 2006. As we
have already noted, an implied partnership involving Leisa was not established until
August 5, 2006 and after the previous partnership between Leroy and Randell ceased to
exist.
In holding that Leisa is not entitled to compensation for an alleged interest in the
“Manure Spreader,” we find that it is important to emphasize that she did not become a
partner by way of an express agreement. Moreover, when Randell bought out Leroy’s
interest in the partnership in 2006, the partnership ceased to exist and any remaining
assets became the separate property of the individual partners. Leisa and Randell each
subsequently made $5000 cash contributions out of their personal accounts to purchase
cattle together. Leisa made two additional cash contributions to purchase “new
equipment” and to purchase additional cattle. She did not formally buy an interest in the
Leroy and Randell partnership and there is no indication that Leisa contributed any funds
to buy a specific interest in the “Manure Spreader” or any other asset acquired by Leroy
and Randell’s business prior to August 5, 2006. Despite her entitlement to be
compensated for equipment purchased from the L&R Farm bank account during the
period of time she made capital contributions and participated in the cattle business as an
15
implied partner with Randell, Leisa has no right to be reimbursed for equipment
purchased by the previous partners prior to August 5, 2006.
V. Conclusion
We hereby affirm the trial court’s determination that an implied partnership
existed between Leisa and Randell from August 5, 2006, until January 31, 2010. We also
affirm its determination that the $53,000.00 payment discussed in the January 31, 2010,
agreement settled Leisa’s rights in the remaining partnership cattle and the L&R Farm
bank account. Although we also affirm the trial court’s decision ordering Randell to pay
Leisa one-half of the fair market value of the “Hay Rings,” “Gates,” “Post Hole
Digger/Auger,” “Sprayer,” Cattle Chute,” “2-Three Ton Feeders,” “6-Ton Feeder,” and
“4-Three Ton Feeders,” we find that it erred in not awarding Leisa any interest in the
“Hay Bailer.” We hereby amend the trial court’s final decree to require Randell to pay
Leisa one-half of the fair market value of the “Hay Bailer.” As with the other assets in
which the trial court awarded Leisa a partnership interest, if the parties are unable to
reach an agreement concerning the fair market value of the “Hay Bailer,” it is to be sold
and the proceeds divided equally between Leisa and Randell. Costs on appeal are taxed
one-half to the Plaintiff/Appellant, Leisa Reed and one-half to Defendants/Appellees,
Randell Thurman and Leroy Thurman, for which execution may issue if necessary. This
case is remanded to the trial court for further proceedings as are necessary and consistent
with this Opinion.
_________________________________
ARNOLD B. GOLDIN, JUDGE
16