Acme Metals, Inc. v. Weddington

• Decision Date: 14 March 1978
• Citation: Acme Metals, Inc. v. Weddington, 575 S.W.2d 15, 25 UCCRep.Serv. 1389 (Tenn. App. 1978)
• Parties: ACME METALS, INCORPORATED, v. J. D. WEDDINGTON. 575 S.W.2d 15, 25 UCC Rep.Serv. 1389
• Court: Tennessee Court of Appeals

Page 15

575 S.W.2d 15

ACME METALS, INCORPORATED, v. J. D. WEDDINGTON.

575 S.W.2d 15, 25 UCC Rep.Serv. 1389

Court of Appeals of Tennessee, Eastern Section.

March 14, 1978 Certiorari Denied by Supreme Court Aug. 7, 1978.

Joseph J. Levitt, Jr., Knoxville, for appellant.

W. Morris Kizer, of Frantz, McConnell & Seymour, Knoxville, for appellee.

OPINION

SANDERS, Judge.

The Defendant has appealed from a judgment against him on a series of notes.

The Plaintiff-Appellee, Acme Metals, Inc., filed suit against the Defendant-Appellant, J. D. Weddington, on a series of five notes in the principal amount of $5,090.54 plus interest and attorney's fees.

The Defendant, for answer, says he signed the notes but only as President of Knoxville Casket Company, a Tennessee corporation. The notes represented indebtedness of the Knoxville Casket Company to the Plaintiff. It was never understood or agreed Defendant would be personally liable on the notes. He also asked the Court to reform the notes to make them reflect the Knoxville Casket Company, Inc., as the true and correct maker of the notes.

The case was tried before the Circuit Judge who found the issues in favor of the Plaintiff and awarded judgment in the amount of $6,502.16.

The Defendant has appealed and assigned the following errors:

1. "The Knox County Circuit Court erred in failing to hold that Weddington executed the notes sued on in this cause in his capacity as President of Knoxville Casket Co., and erred in giving personal judgment against him."

2. "The Knox County Circuit Court erred in failing to reform the notes as requested by the affirmative relief sought by appellant in the pleadings to reflect that the notes were corporate notes and not personal notes."

For a number of years prior to the execution of the notes the Plaintiff had been selling the Knoxville Casket Company metal sheeting for caskets. The material was sold on open account. The account had become delinquent and at the time the notes were executed the indebtedness was something in excess of $9,000. In the latter part of 1972 General Chemical Company, by whom the Defendant was employed, purchased 50% Of the stock of Knoxville Casket Company. At the same time two individuals each purchased 25% Of the stock. The Defendant owned no interest in the casket company and was not employed by it. However, he was made president of the company in December, 1972, but remained an employee of General Chemical Company. In January, 1973, the casket company owed the Plaintiff $9,083.46. The Plaintiff was demanding its money and threatening to sue unless satisfactory arrangements were made to pay the account. On January 17, 1973, the Defendant wrote Mr. Robinson of Acme Metals the following letter:

"This is in response to your request for a plan to settle the account balance due to Acme Metals by Knoxville Casket Co.

"As new owners of this firm, we have been working diligently at the task of bringing this operation around so that all of its accounts are current.

"If you will accept the enclosed check in the amount of $500.00 and the series of notes at $500.00 quarterly with 71/2% Interest in settlement of this balance, we can assure you that they will be paid promptly as they become due.

"I trust that this arrangement is acceptable to you and will appreciate your acknowledgement."

In response to this letter Mr. Robinson wrote the Defendant the following letter dated January 22, 1973:

"I am afraid we must insist that you repay our account much faster than you outlined in your letter of January 17, 1973. I am enclosing your $500.00 check and notes. We will accept payment on the following basis:

$1,000.00   2/1/73  $1,086.12   5/1/74
                 1,151.56   5/1/73   1,068.98   8/1/74
                 1,135.66   8/1/73   1,051.53  11/1/74
                 1,119.45  11/1/73   1,033.74   2/1/74
                 1,102.94   2/1/74     849.07   5/1/74
                

"The above schedule represents the repayment of $9,083.46 on a quarterly basis of $1,000.00 on the principle (sic) plus interest at the rate of 71/2% Per annum. I want to point out that we have waived the accrued interest up to the present time. The previous owners had agreed to pay us interest at the rate of 10% Per annum and we will insist on this if we have to go to court, but we will be happy with the above payout if you will agree to it. Please send me your first payment and the notes and I will pass them along to Acme Metals.

"Let me know if you need any further information. Payments should be sent to:

"Acme Metals

P.O. Box 100

Loretto, Tenn. 38469"

In response to this letter the notes involved in this litigation were executed and sent to the Plaintiff. There appears on the face of each note the following pertinent provision: "90 days after date for value received Knoxville Casket Co. promises to pay to the order of Acme Metals" the face amount of the note. The signature of the Defendant appears on the face of each note without designating he is president or agent for Knoxville Casket Company.

The Plaintiff insists the Defendant is liable as a matter of law under T.C.A. § 47-3-403 since he signed his own name on the notes without showing he signed in a representative capacity. Plaintiff also insists Defendant agreed to give his personal note for the corporate indebtedness.

Defendant insists he never agreed to give his personal note for the corporate indebtedness and he should not be held liable under T.C.A. § 47-3-403.

As pertinent here, T.C.A. § 47-3-403 provides as follows:

"47-3-403. Signature by authorized representative. (1) A signature may be made by an agent or other representative, and his authority to make it may be established as in other cases of representation. No particular form of appointment is necessary to establish such authority.

"(2) An authorized representative who signs his own name to an instrument

"(b) except as otherwise established between the immediate parties, is personally obligated if the instrument names the person represented but does not show that the representative signed in a representative capacity, or if the instrument does not name the person represented but does show that the representative signed in a representative capacity."

Comment 3 under the above Code section makes it clear that since the note provides "Knoxville Casket Co. promises to pay" there would be no liability on the Defendant had his signature on the note been followed by the word "agent", there being no question as to his authority to sign on behalf of the casket company. We think it is also clear that parol evidence is admissible as between the parties to establish whether or not the Defendant did, in fact, sign the notes as agent of the casket company. The Defendant insists he did; the Plaintiff insists he did not. Also see 11 Am.Jur.2d, Bills and Notes § 558, page 629.

Aside from the testimony of Mr. Robinson, who testified on behalf of the Plaintiff, we think all the evidence supports the contention of the Defendant. Mr. Robinson testified as follows:

"Q OK, when did you become aware that Mr. Weddington was involved with the casket company?

"A Well, it must be when I talked to him on the telephone. I guess that's the first contact I had with Mr. Weddington.

"Q What position did Mr. Weddington have with Knoxville Casket Company?

"A President, he was President of ...