The opinion
IN THE COURT OF APPEALS OF TENNESSEE FILED
AT KNOXVILLE March 27, 1998
Cecil Crowson, Jr.
Appellate C ourt Clerk
JEAN PEELE, ) C/A NO. 03A01-9707-CV-00244
)
Plaintiff-A ppellant, ) KNOX CIRCU IT
)
v. ) HON. DALE C. WORKMAN,
) JUDGE
RICH ARD M. EA RL, JR ., )
Individually and d/b/a FINANCIAL )
SERVICES COMPANY, ) AFFIRMED
) AND
Defendant-Appellee. ) REMANDED
SAMUEL W. BROWN , LOCKRIDGE, BE CKER & V ALONE, P.C., Knoxville, for
Plaintiff-A ppellant.
FARRELL A. LEVY and JAY W. MADER, MCDONALD, LEVY & TAYLOR,
Knoxville, for Defendant-Appellee.
O P I N IO N
Franks, J.
In this action for debt, the Trial Judge, after an evidentiary hearing,
dismissed the suit as to Richard M. Earl, Jr., and entered judgment against Financial
Services Company in the amount of $5,000.00. Plaintiff has appealed.
Plaintiff brought the initial action in Sessions Court, wherein her stated
cause of a ction was :
[For] $7,200.00 which represents a debt of a partnership Financial
Services C ompany inc urred by M ichael B. M etzger, a partn er in this
company, on beha lf of the partnership. M r. Earl is also a partner.
We conclude after reviewing the narrative transcript of the evidence and
exhibits, that the evidence does not preponderate against the Trial Judge’s finding that
defen dant E arl was not liabl e to the p laintiff f or the d ebt. See T.R.A .P. Rule 13(d).
The record shows that plaintiff engaged in certain business dealings
with Michael B. Metzger, who in some fashion was involved with a trust known as
Financial Services Company, wherein defendant Earl acted as the Managing Trust
Director. Metzger’s dealings with the plaintiff can be characterized as a variation on a
“Ponzi sc heme”. T he eviden ce prepon derates that M etzger wa s not autho rized to
borrow any money on behalf of Financial Services Company or otherwise bind the
compan y or Earl by signing or stampin g Earl’s nam e. In plaintiff’s relationship w ith
Metzger, she wrote a check in the amount of $5,000.00 payable to Metzger on July 5,
1994. In re turn for this c heck, M etzger wro te a check in the amou nt of $6,00 0.00 to
plaintiff on that date. The check to plaintiff was drawn on Metzger’s personal account
in his bank, and plaintiff’s $6,000.00 check was honored on July 13, 1994. After
Metzger’s check was honored, plaintiff wrote a second check to Metzger in the
amount of $6,000.00 on July 18, 1994. Metzger was about to leave town and
defendant Earl picked up the check for Metzger at plaintiff’s business. The check was
deposited in Metzger’s personal checking account the same day. In return for that
check, Metzger provided plaintiff with his personal check post-dated August 8, 1994,
in the amount of $7,200.00. When plaintiff negotiated that check, however, it was
returned not paid as the result of insufficient funds. When this occurred, Metzger
issued plaintiff and her husband a letter in the form of a promissory note for $7,200.00
at 12% interest, dated September 29, 1994. The note was signed by Michael B.
Metzger, who identified himself on the note as Trust Director/Financial Services
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Company. At this juncture, we note that defendant Earl testified that Metzger was not
authorized to represent the company in that capacity, and that any document
purporting to authorize Metzger to act was forged. The Trial Judge evidently accepted
Earl’s testimony as true on this issue. Metzger then left town and failed to make good
on the check or promissory note. Subsequently, Earl signed a check drawn on
Financial Services Company in the amount of $200.00 to plaintiff for “interest on
Metzger’s loan”. Earl also testified that neither Financial Services Company nor
himself rec eived the m oney obtaine d by Metzg er or benef itted from th e transaction in
any way, nor did Financial Serv ices guarantee the loan m ade by Metzger.
The evid ence as de monstrated by the check s and othe r docum ents, is
that the transactions were between the plaintiff and Metzger individually, and plaintiff
has esta blished no bas is to hold defen dant E arl perso nally liable for thes e transa ctions.
As best we can tell from the record, it was plaintiff’s theory below that
Earl w as a par tner of M etzger in a partne rship kn own a s Finan cial Serv ices Co mpan y.
The evidence establishes there was no partnership operating under this name or that
Metz ger and Earl w ere part ners.
Plaintiff argues that Earl is liable under T.C.A. §48-12-104 for pre-
corporation transactions. The record does not establish that this theory was advanced
below, bu t in any event, the evidence does not e stablish a bas is to hold Ea rl liable
under t his prov ision of the Co de.
Finally, plaintiff argues that she should have been awarded $7,200.00
plus interest ag ainst the rem aining def endant. W e find this issu e to be with out merit
from the evidence in the record.
Accordingly, we affirm the judgment of the Trial Court with costs of the
appeal asse ssed to app ellant.
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__________________________
Herschel P. Franks, J.
CONCUR:
___________________________
Don T. McM urray, J.
___________________________
William H. Inman, Sr.J.
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