Reprise Capital Corp. v. Rogers Group, Inc.

• Decision Date: 06 June 1990
• Docket Number: No. 01-A-01-9001CH-00011,01-A-01-9001CH-00011
• Citation: 802 S.W.2d 608
• Court: Tennessee Court of Appeals
• Parties: REPRISE CAPITAL CORPORATION, Plaintiff-Appellant, v. ROGERS GROUP, INC., Defendant-Appellee. 802 S.W.2d 608

Page 608

802 S.W.2d 608

REPRISE CAPITAL CORPORATION, Plaintiff-Appellant, v. ROGERS GROUP, INC., Defendant-Appellee.

No. 01-A-01-9001CH-00011.

802 S.W.2d 608

Court of Appeals of Tennessee,

Middle Section.

June 6, 1990.

Permission to Appeal Denied by

Supreme Court Oct. 1, 1990.

J. William Lincoln, III, Nashville, for plaintiff-appellant.

W. Lee Corbett, Nashville, for defendant-appellee.

OPINION

TODD, Presiding Judge.

This is a suit by the plaintiff, Reprise Capital Corporation, to recover $57,614.28 from the defendant, Rogers Group, Inc. Both parties moved for summary judgment. The Trial Judge overruled plaintiff's motion, sustained defendant's motion and dismissed plaintiff's suit. Plaintiff has appealed.

An understanding of the issues requires a brief summary of the events leading to the present controversy.

Plaintiff is a lending institution which held a lien upon all of the assets of Pidgeon-Thomas Iron Company which had contracted to furnish steel girders to defendant. On October 29, 1987, defendant received word that one of the girders was ready for delivery and sent Pidgeon a check for $57,628.59, the agreed price of the girder, to induce Pidgeon to deliver.

On October 30, 1987, Pidgeon notified defendant that the girder could not be delivered because plaintiff had taken possession of the assets of Pidgeon, including the girder, pursuant to its lien rights.

On a date not shown in the record, Pidgeon endorsed the check to the U.S. Internal Revenue Service to be credited upon tax liability of Pidgeon.

On November 2, 1987, defendant notified its bank to stop payment on the check.

On or about November 18, 1987, defendant's bank honored and paid the check.

On December 3, 1987, defendant filed suit in Chancery Court at Memphis, Tennessee, against plaintiff to obtain the delivery of the girder in question, as well as other girders which Pidgeon had contracted to deliver.

On December 17, 1987, after persuading the Internal Revenue Service to refund the proceeds of the check, defendant's bank credited to defendant's account the amount of the check, thereby refunding the amount previously charged to defendant and thereby effectively, although belatedly, honoring the stop-payment request.

After negotiations between defendant and plaintiff regarding the Memphis Chancery suit, a settlement agreement was prepared and signed by plaintiff on December 18, 1989. On this date, plaintiff was aware that the check had been received by Pidgeon, endorsed to and cashed by Internal Revenue Service and honored by defendant's bank despite a stop order; but on this date, plaintiff was not aware that the amount of the check had been credited back to defendant's account.

The agreement concludes:

Entered this ____ day of December, 1987.

However, the acknowledgement of the signature of the vice president of defendant is dated January 21, 1988.

The record contains a copy of a "Consent Order of Dismissal with Prejudice" which concludes:

So ordered, this ___ day of January, 1988.

/s/ Allisandrotos

Chancellor

25 Jan. 88

The order bears a faint stamp of filing, but its date is illegible.

Pursuant to the agreement, the girder in question was delivered to defendant without further payment.

On June 28, 1988, this suit was begun in Davidson County Chancery Court by a "Complaint for Relief From Judgment" which alleged the foregoing facts and prayed:

Wherefore Plaintiff prays that the Defendant be duly served with copies of this Complaint and cited to appear and answer hereto; that after proceedings are had there be Judgment rendered correcting and reforming the compromise agreement and decree of the Chancery Court to the end that this Plaintiff be awarded the sum of Fifty Seven Thousand Six Hundred Fourteen and 28/100 ($57,614.28) Dollars, and for needful orders in full, general and equitable relief.

Although the issue was not raised in the Trial Court or in briefs to this Court, and although the disposition of this appeal will be on other grounds, it should be noted that primary jurisdiction to grant relief from a judgment under T.R.C.P. Rule 60.02 appears to rest in the court which rendered the judgment. No Tennessee authority is found to this effect; but, in Indian Head Ntl. Bank v. Burnelle, First Circuit, 1982, 689 F.2d 245, it was held that an action under Federal Rule 60(b)(1, 6) should have been brought in the Court where the judgment was rendered. The same rule (T.R.C.P. Rule 60.02) limits independent actions for relief to cases of "fraud upon the court" which does not appear from the evidence in this record. In Trice v. Moyers, Tenn.1978, 561 S.W.2d 153, the Supreme Court remanded a Rule 60.02 action for further hearing and said:

There is no question in this state of the authority of a court of equity to order a new trial, either in the law courts or in an equity court itself, when a party has, without fault on his part, been deprived of effective appellate review. See, F.D.C. Corp. v. Burgess, 225 Tenn. 546, 473 S.W.2d 186 (1971). The filing of a separate or independent suit in equity for relief from a judgment is recognized as a permissible remedy under Rule 60.02. This, however, has not been encouraged, since the adoption of the Rules of Civil Procedure. Most claims for relief from a judgment which has become final can be presented under the provisions of Rule 60. See Jerkins v. McKinney, 533 S.W.2d 275 (Tenn.1976).

561 S.W.2d at 155-156.

As previously stated, this appeal is from a summary judgment dismissing plaintiff's suit.

Appellant presents the following issues:

1. Did the Court err in holding that the Settlement and Release Agreement was binding?

2. Whether or not the compromise of a legal action is subject to impeachment if procured by fraud or false representation?

3. Whether or not Appellee had a duty to disclose to Appellant when the compromise and settlement was negotiated, that Appellee had no intention of paying the funds to the Appellant if recovered from the Bank?

Appellant first insists:

At the time the settlement was being negotiated and finally executed, Appellee had already received back the funds represented by the $57,614.28 check it had sent to Pidgeon for the steel represented by Invoice 12. Although the check was endorsed over to the IRS by Pidgeon's president and paid to the IRS over Appellee's stop payment order, the affidavit of bank employee, Robert Porter (R. pp. 72-74), establishes that the funds were returned by the IRS and that Appellee's account with the Bank was recredited the full $57,614.28 on December 17, 1987.

The fact that, prior to the consummation of the settlement, the amount of the check had been refunded to defendant is not dispositive of this controversy. The reason for this is that the rights of plaintiff do not rest upon the refund made by the bank to defendant, but whether defendant has been unjustly enriched at the expense of defendant.

The rights, if any, of plaintiff are derivative of the rights of its debtor, Pidgeon-Thomas. That is to say, if Pidgeon-Thomas received payment for the girder in question, then plaintiff has no right of recovery, whether for fraud, concealment, misrepresentation, unjust enrichment, or otherwise. On the other hand, if Pidgeon-Thomas received no benefit from the check because it was dishonored, then, by the delivery of the girder without benefit of payment therefor, either Pidgeon-Thomas or its lienholder, plaintiff, has sustained a loss for which compensation could be recovered upon proof of a recognized right of action.

In this connection, the evidence in this record leaves considerable doubt as to the status of the title to the girder, ergo the relative rights of possession by Pidgeon, Reprise and defendant. There is no explicit evidence as to the agreement of defendant and Pidgeon reflecting when title to the girder would pass to defendant. See T.C.A. Sec. 47-2-401.

To entitle a party to recover damages for fraud, he must not only establish the fraud, but also some injury or loss to him as a result of the fraud. Whitson v. Gray, 40 Tenn. (3 Head) 441 (1859); Fiddler's Inn, Inc. v. Andrews Distributing Co., Inc., Tenn.App.1980, 612 S.W.2d 166; Croft v. Gentry, 33 Tenn.App. 595, 232 S.W.2d 424 (1950).

Actions brought upon theories of unjust enrichment, quasi contract, contracts implied in law, and quantum meruit are essentially the same, and are a class of implied obligations where, on basis of justice and equity, the law will impose contractual obligations upon the parties regardless of their assent thereto. Paschall's, Inc. v....