Estate of John Acuff, Sr. v O'linger, 99-00680

• Court: Court of Appeals of Tennessee
• Writing for the Court: Maynard
• Citation: 56 S.W.3d 527
• Parties: ESTATE OF JOHN E. ACUFF, SR., et al. v. BRENDA O'LINGERIN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE
• Decision Date: 11 April 2001
• Docket Number: 99-00680

ESTATE OF JOHN E. ACUFF, SR., et al.
v.
BRENDA O'LINGER

No. M1999-00680-COA-R3-CV

IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE

April 10, 2000 Session

Filed April 11, 2001

Appeal from the Chancery Court for Marion County, No. 6064

Jeffrey Stewart, Chancellor

The singular dispositive question on this appeal is whether or not two deeds, purportedly executed by the late John E. Acuff, Sr., conveying certain property to Brenda O'Linger, bear the forged signature of John E. Acuff, Sr. An advisory chancery jury, acting under "preponderance of the evidence" instructions, held that the signatures were forged thereby voiding the two deeds. The chancellor adopted, without comment, the findings of the advisory jury and entered judgment for the plaintiffs voiding the two deeds. Defendant appeals and upon consideration of the record we reverse the chancellor.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court

Reversed and Dismissed

William B. Cain, J., delivered the opinion of the court, in which BEN H. CANTRELL, P.J., M.S. and PATRICIA J. COTTRELL, J., joined.

John W. Cleveland, Sweetwater, Tennessee and Marshall A. Raines, Jr., Jasper, Tennessee, for the appellant, Brenda O'Linger.

Bob E. Lype, Chattanooga, Tennessee, for the appellees, Estate of John E. Acuff, Sr., by and through its Co-administrators, and John E. Acuff, Jr., Ella Joy Engdahl, Royce Basil Acuff, and Joyce Faye Burkhalter, Individually.

OPINION

John E. Acuff, Sr., late of Marion County, Tennessee, married Jewel Acuff by whom he had four children prior to their divorce in 1970. These children, John E. Acuff, Jr., Ella Joy Engdhal, Royce Basil Acuff and Joyce Faye Burkhalter, were appointed co-administrators of the Estate of John E. Acuff, Sr. following his death intestate on November 10, 1996. These four children, individually and as co-administrators of his estate, are the plaintiffs in this case.

In 1972, following the divorce of John E. Acuff, Sr. and Jewel Acuff, a long-term relationship started between John E. Acuff, Sr. and Doris Brown. They were never married but cohabited as mates from 1972 until Mr. Acuff died, holding themselves out in the community as husband and wife and also as business partners. Mr. Acuff and Ms. Brown were very successful business partners.

Mr. Acuff was an astute businessman and accumulated extensive real property holdings. In 1995, he began both a business and a personal relationship with Brenda O'Linger. Mr. Acuff started a mobile home sales lot in Jasper, Tennessee in 1995, but almost immediately thereafter leased this facility to Brenda O'Linger for $3500 per month. The business was quite successful and in August and September of 1996, two deeds were purportedly executed by John E. Acuff, Sr. conveying to Brenda O'Linger the mobile home sales lot, including adjacent property and property referred to as the "railroad property." Before these deeds were recorded, Mr. Acuff suffered a stroke and died on November 10, 1996. Ms. O'Linger then recorded the deeds and the plaintiffs, individually and as co-administrators of his estate, brought suit to set aside the two deeds asserting that the purported signatures of John E. Acuff thereon were forged.

It is easy enough in this case to identify the controlling issue. The two deeds are either forged or they are not forged. That having been said the complications begin. First of all we must determine whether the burden of proof to be carried by the plaintiffs on the issue is a simple "preponderance of the evidence" burden or a "clear, cogent and convincing evidence" standard.

The former statutory definition of forgery was "[F]orgery is the fraudulent making or alteration of any writing to the prejudice of another's rights." State v. James, 688 S.W.2d 463, 466 (Tenn. Crim. App. 1984) (citing T.C.A. § 39-3-802 (repealed)). A fraudulent intent is essential. Tenn. Code Ann. § 39-14-114; see also Brenner v. State, 217 Tenn. 427, 398 S.W.2d 252 (1965).

A line of cases in Tennessee assert that fraud must be established under a "clear, cogent and convincing evidence" standard. Jones v. Seal, 56 Tenn. App. 593, 409 S.W.2d 382 (Tenn. Ct. App. 1966); Pipkin v. Lentz, 49 Tenn. App. 206, 354 S.W.2d 87 (Tenn. Ct. App. 1961); Anderson v. Nichols, 39 Tenn. App. 503, 286 S.W.2d 96 (Tenn. Ct. App. 1955); Bevins v. Livesay, 32 Tenn. App. 1, 221 S.W.2d 106 (Tenn. Ct. App. 1949); Williams v. Spinks, 7 Tenn. App. 488 (Tenn. Ct. App. 1928); White v. Bettis, 56 Tenn. 645 (Tenn. 1872).

Another line of cases in Tennessee assert the rule that fraud is established under a simple "preponderance of the evidence" standard. Dale v. Thomas H. Temple Co., 186 Tenn. 69, 208 S.W.2d 344 (Tenn. 1948); James v. Joseph, 156 Tenn. 417, 1 S.W.2d 1017 (Tenn. 1928); Hendrix v. Insurance Co. of North America, 675 S.W.2d 476 (Tenn. Ct. App. 1984);

In Gentry v. Hill, (no docket no.) 1985 Tenn. App. LEXIS 3180 (Tenn. Ct. App. Sept. 25, 1985), Judge Houston Goddard for the Eastern Section of the Court of Appeals, after an exhaustive review of Tennessee case law, correctly concluded that "about the only thing that is clear is that the rule to be applied is unclear."

The burden of proof issue is clearly presented by this appeal. The Chancellor impaneled an advisory jury and on the issue of fraud charged the jury under a simple "preponderance of the evidence" standard. This charge was over the objection of the defendant/appellant who specially requested a jury instruction under the "clear, cogent and convincing evidence" standard. The special request was denied and the advisory jury returned its verdict for the plaintiffs under a "preponderance of the evidence" charge. The final judgment of the Chancellor provided in part:

The trial was bifurcated by agreement of counsel and with the court's approval, such that the issues tried from January 11-14, 1999 were limited to the validity of the two deeds at issue (as described below), with issues related to the plaintiff's claim for any back rent owing and the defendant's claims for offsets against any such back rent owing being reserved for future determination, if necessary. Following the close of the plaintiff's proof in the bifurcated proceedings, the defendant moved the court for a directed verdict dismissing all claims against her, which the court denied. After hearing the remainder of the proof, on January 14, 1999 the advisory jury returned its advisory verdict in the form of answers to special interrogatories. The advisory jury's verdict is attached hereto as exhibit one. Based upon the proof at trial and taking into account the entire record in this cause, the court adopts the advisory jury's unanimous answers to the special interrogatories as the specific findings of the court, which are adopted and incorporated herein by specific reference.

The final order declared the two deeds in issue to be void.

It is clear that by charging the advisory jury on a "preponderance of the evidence" standard and then accepting their verdict as the findings of fact by the court, the case was decided by the Chancellor under a "preponderance of the evidence" standard.

In Gentry v. Hill, the court was determining a misrepresentation and fraudulent misrepresentation case. Said the court:

When the determination of the Trial Judge turns on credibility of witnesses appellate courts recognize that he is in the best position to judge and his judgment is entitled to great weight. This is true because he alone had the opportunity to observe the appearance and demeanor of the witnesses while testifying. Royal Insurance Co. v. Alliance Ins. Co., 690 S.W.2d 541 (Tenn.Ct. App. 1985).

In light of this rule and Rule 13 of the Tennessee Rules of Appellate Procedure, which brings this case to us with the presumption that the findings of fact of the Trial Court are correct, we conclude that the evidence does not preponderate against his finding.

The Defendants insist, however, that under Tennessee law a finding of fraud must be by clear and convincing evidence. As to this point we are frank to concede that the evidence in our view does not exceed a bare preponderance, and if the rule is as insisted by the Defendants they are entitled to a judgment in their favor.

Recently in Jarmakowicz v. Suddarth, No. M1998-00920-COA-R3-CV, 2001 WL 196982 (Tenn. Ct. App. Feb. 28, 2001), an action involving a claim for damages for the tort of fraud and deceit, this Court applied a "preponderance of the evidence" standard. In doing so the Court distinguished between such actions and those actions such as are involved at bar where one seeks to set aside or reform a written instrument. Said the Court:

[W]e believe the claimant asserting the tort of fraud and deceit in an action for damages must only meet a preponderance of the evidence burden of proof. We agree with this court's holding in Gentry v. Hill, (no docket no.) 1985 Tenn. App. LEXIS 3180 at *6-11 (Tenn. Ct. App. Sept. 25, 1985) (no Tenn.R.App.P. 11 application filed), where, after reviewing various holdings on the applicable burden of proof and determining "about the only thing that is clear is that the rule to be applied is unclear," this court concluded "the preponderance of the evidence rule is the better one and will better serve the interests of justice." Id. at *8.

A number of cases finding that fraud must be proved by clear and convincing evidence involve attempts to set aside or reform a written instrument. See, e.g., Dickey v. Nichols, No. 01-A-01-9007-CH00260, 1991 WL 169618 at *5 (Tenn. Ct. App. Sept. 4, 1991) (no Tenn.R.App.P. 11 application filed) ("In order to justify reformation, the evidence of mistake or fraud must be clear and convincing"); Russell v. Zanone, 55 Tenn. App. 690, 704, 404 S.W.2d 539, 545 (Tenn. Ct. App. 1966) (In a suit seeking to set aside a promissory note and enjoin enforcement of a judgment based on that note, the court reviewed the various descriptions of the...