# FILED
May 7, 1999 Cecil Crowson, Jr. Appellate Cou rt Clerk IN THE COURT OF A

PPEALS OF TENN ESSEE AT JA CKSON
QUALITY FI RST STAFFIN G ) SERVICES, ) ) Plaintiff/Appellee, ) Shelby Chancery No. 110274-1 R.D. ) VS. ) Appeal No . 02A01-9807-CH- 00205 ) CHASE-CA

VETT SERVICES, INC., ) and PERSONNEL PLUS, IN C., ) ) Defendants/Appellants. )
APPEAL FROM

THE CHANCE RY COURT O F SHELBY COUNTY AT MEMPHIS, TENNESSEE THE HONORABLE NEAL SMALL, C HANCELLOR

PAMELA Y. McFA

RLAND RENFROE, McFARLAND & ORA NGE, PLLC Memphis, Tennessee Attorney for Appellants

BRUCE C. HARRIS WALTER BA

ILEY & ASSOC IATES Memphis, Tennessee Attorney for Appellee

AFFIRMED

ALAN E. HIGHERS, J.

CONCUR: W. FRANK CR

AWFORD, P.J., W.S . HOLLY KIRBY LI LLARD, J. James Richardson (“Richar dson”) and James Taylor (“Taylor ”), officers and agents1 It is not nec essary tha t the perso n who is c harged with conte mpt b e a party to th e underly ing

proceeding. Tennessee Code Annotated §29-9- 102(3) states that a cour t can infl ict puni shments for contem pts of cou rt for “the willful di sobedience or resistance of an y officer of the said courts, party, juror, witness, or any other per son to any l

a wful writ, pro cess, o rder, rule, de cree, or c omm and of sa id courts .” (em pha sis added). It

is also not necessary

that th e proceedings out of which the contempt arose be complete. A judgment of co ntemp t fixing punis hme nt is a final judg men t from w hich app eal will lie. Hall v . Hall , 772 S.W .2d 432, (Tenn.App. 1989 ); Rules App.Proc., Rule 3(a). 2 of Personnel Plus, Inc. (“ Personn el”) appeal the ruling of the trial court holding them in contempt for failure to pay Sixty Sev en Thousand Dollars ($67,000.00) owed by Personnel to Quality First Staffing Services (“Quality”) into the Registry of the Chancery Clerk.

I. Factual and Procedur al History
Quality and Personnel provide temporary staffing and employment services. Personnel entered into an agre ement with Federal Exp ress (“FedEx”) on or about November

22, 1996. Quality and Perso nnel entered into a subcontract agreemen t on or about Fe bruary 10, 1997 fo r services in referen ce to the FedEx cont ract. Sub sequentl y, Quality and Personnel entered into a factor ing contract with C hase-Cavett Servi ces (“Chase”). Any monies received fro m FedEx towhich Quality w as entitled, Chase remitted
same to Personnel pursuant to the factor agreement.All vendor/FedEx pay ments received byPersonnel for Quality should have been remitted within fifteen da ys purs ua nt to the factor agreement. This litigation arose out of timeliness regarding payment and withholding funds.

On December 12, 1997, Quality filed a breach of contract complaint against Personnel and requested injunctiv e relief in Chancery C

ourt. Shortly th ereafter, Quality obtained a preliminary injunc tion and filed a Petition for Contempt a n d Specific Performance against Personnel alleging that Personnel withheld pay ment owing to

Quality in the amount of $77,253.00. On or about Februar y 27, 1998, Q uality

filed a motion seeking leave to amen d to join claims and add defendants. I n pertinent part, the motion soughtto add Appellants Taylor (Pr esident, agent and CEO of Personnel) and Richar dson (Vice-president

of operations, agent and officer of Personnel) as defendants. No hearing was held nor was any

order issued on the motion. 1 On M arch 1 0, 1998, Personnel filed a respons e to the petition for contempt,2 An Ame nded O rder wa s entere d on Ap ril 21, 1998, d irecting Pe rsonne l to depos it th e $67,00 0.00

into t he registr

y by June 1,1998, and conti nued the matter t o June 1, 1998 at 10:00. 3 specifically denying the allegati on that it had the ability fully to comply w

ith the provisions of the order prohibiting Personnel from with holding payments due to Quality. A hearing
was held on Quality’s first petition for contempt on March 11, 1998 and the court found that Personnel had funds that should be depos ited in the amount of $77,000.00 and ordered Personnel to depos it said funds into the registr

y of the C hancery

Clerk’ s off ice by 12:00 p.m. March 12, 1998.

On March 18, 1998, Quality filed a Petition for Scire Facias and Contempt against Personnel and Appellants, Taylor and R ichardson. Personnel filed an Answer, generally and specifically denyi ng it had t he ability to comply w ith the order prohibiting Personnel from withholding payment s due to Quality. At the c ontempt hearing on March 30, 1 998, it was acknowledged that Personnel had depo sited $1 0,000.00 into the registry of the Chancery Clerk. Per

sonnel admitted to owing Quality the sum of $77,000.00.

The Petition for

Scire Facias andContempt was continued to Ju ne 5, 1998 in order to give Personnel time to deposit the balance of the funds owed to Quality into the registry of the Chancery Clerk.An order was entered di recting Personnel, Tay lor and Richardson to deposit the funds into the registry, and requiring the presence of Taylor and Richa rdson
on June 5, 1998 to show cause why they should not be held in contemptif the balance owing Quality w

as not paid prior to that date. 2

A hearing on this matter was held on June 9, 1998. The Court found Personnel and Appellantsfailed to deposit the previously ordered amount of $67,000.00 into the registry of the Chancery Clerk. O n June 25, 1998, the court entered a Judgment of Contempt wherein the court (1) held Appell ants, Taylor and Richardson, in contempt for failure to pay the $67,000.00, (2) ordered Appellants i nto the custody of the Sheriff of Shelby County for detention in jail beg inning Jul y 9, 1998 at 9:00 am until they purged themselve s of the contempt and (3) awarded Quality a judgment in the amount of $77,000.00. The Judgment of Contempt made no mention of sa nctions to be imposed against the defendant,4

Personnel.
Taylor and Richardson employed independent counsel, who fil ed a Motion to Set Aside Judgment of Contempt, or in the Alternative a Stay of Proceeding. The basis of the motion was thefailure of Quality to allege or offer any proof to justify piercing the corporate veil of Per sonnel, and that sanctions aga inst Taylor and Richar dson in their individ ual capacity were ther

efore inappropriate.

On July9, 1998, counsel for Quality , counsel for Personnel and couns el for Taylor and Richardson addressed the court regarding the Judgment for Contempt and the Motion to Set Aside. Counsel f or Per sonnel and counsel for Taylor and Richardson argued that
no showing had been made that Personnel had the abi lity to pay the $67,000.00 balance owed to Quality. Counsel for Personnel informed the court th at Personnel and its officers promised to use their best efforts to obtain th e outstanding balance but w ere unable to do
so. Based upon the foreg oing , the court refused to enforce that por tion of the judgment of contempt r equirin g Taylor and Richards on to be incarcerated and left thi s issue for determination by the appellate court. Notice of Appeal w as filed by Taylor

and Richardson.

II. Contempt

The matter of determining and dealing with contempts is wit hin the court’s sound discretion, subject tothe absolute provisions of the law, and its determination is final unless there is a plain abuse of discretion. Robinson v. Air Dra ulics Engineering C ompany , 377 S.W.2d 908, 912 (Tenn. 1964). W hile our review of this matter is de novo upon the record of the trial court, the judg ment of the trial court wi ll not be rever sed absent a showing of abuse of discretion.

Tennessee Code Annotated §29-9-102 sets forththe scope of power of the courts regarding contempt. The statute states in relevant par t:5 §29-9-102. Scope of power. - The power of the several courts to issue attachments, andinflict punishments for contempts of court, shall not be co nstrued to extend to any ex cept the following cases: (3) The willful disobedience or resistance of any officer of the said courts, party , juror, witness, or any other person, to any lawful writ, proc

ess order, rule, decree, or command of said courts.
The court below fou nd Tayl or and R ichards on, agents and off icers o f corporate defendant, Personnel, in contempt for failing to comply with the orders of

the court directing them to deposit $67,000.00 into the reg istry of the Chancery Clerk’ s office. The contempt charge was based upon the order date d March 13, 1998 directing Pe rs onnel to pay the
sum of $77,000.00 into the registry, and the order dated April 6, 1998 specifically directing Personnel, Taylor and Richardson to deposit the $67,000.00 balance into the registry . The Apr il 6, 1998 order further ordered Tay lor and Richardson to appear before the court o n June 5, 1998 and show cause why they should not be held in contempt of court, pr ovided they did not pay $67,000.00 into the r egistry by June 5 , 1998. When the funds were not deposited by

the date of the contempt hearing on June 9, 19 98, the court found Personnel, Taylor and Richardson i n civil contempt of court.
App ellants contend that the trial court ’s judgment was err

oneous based upon th e fact that there was no show ing that Personnel, Taylor or R ichardson had the ability to pay the amount required by the or der or that they wil lfully ref used t o comply with the order. Appellantsargue that

the pleadings and testimony in this cas e contain repeated averments
on behalf of Personnel, Taylor and R ichardson that they did not have the ability to

pay the moneyordered by the trial court. Appellants assert that a trial court must make two fi ndings prior to issuing a judgment of civil contempt: (1) the existence of the ability to perform the act ordered by the court and (2) willful failur e to perform the act ordered by the court.

As to the willfulness of Appell ants failure to perform, the tria l court found Taylor and Richardson willfully dis o beyed the order of the court and so stated in its judgment of contempt. Determining whether its order has been followe d is a prerogative o

f th e tri al court and is uniquely within the trial court’s dis cretion. Hallmark v. Tidwell , 849 S.W.2d 7876

(Tenn.App. 1992). Appel lants admi tted to owing the money in question, and admittedly failed to deposit the money into the r egistry as

directed by

the order s of the c ourt. W e have
no basis to second-guess the trial court’s determination that Appellants’ f ailure to deposit the money was willful.
Appellantscontend that thejudgment of the trial court was in error because there
was no proof that Personnel or Appell ants had the ability to pa y the amountrequired by the order. It is true that in order to imprison a person for civil contempt, the contemnor must hav e the ability to perform the a ct he is ordered to perform. Gossett v. Gossett , 24 1 S.W.2d 934, 936 (Tenn.App. 1951). However, the burden of proof is on the contemnor to show his inability to pay

. Leonard v. Leonard , 341 S.W.2d 740, 743 (Tenn. 1971). When the defend ant test ifies that he is without fin ancial ability to confor m, an adjudication that he has the ability to pay must rest upon convincing evi dence so that the trier of facts may exercise sound judici al discretion thereon. Id . at 743-44.

In the judgment of contempt, the trial court states that all parties were present and represented by counsel and, importantl y, that no testimony or proof was offered to the court. The burden of proof rests with Appel lants to show the extent of their inability to perform. Mayer

v. Mayer , 532 S.W.2d 54, 59 (T enn.App. 1975). Although, in their answer to Quality’s petition for

contempt, Appellants denied that th ey had the ability to comply with the order and set forth the affirmative defense of inability to comply , Appellants presented
no testimony or proof

to support this defense at the contempt he aring. It was not i ncumbent upon Quality to prove ability to comply, a s alleged by Appellants

. It is also not fatal t hat the order does not contain a specific finding regarding Appellant’s ability t

o comp ly w ith the court’s order. A decree of contempt based upon a petition which alleges failure to pay is not void merely because the decree does not state
on its face that the contemnor is abl e to comply with decree and has wilfullyrefused to pay the amount in arrears. Leonard at 745. A s the burd en rested on Appel lants to p rove inability to make the payment as directe d and Appellants presented no evidence in support of their claim, we cannot say that the trialcourt abused its discretion in finding Appellants7

in contempt.
Appellantsnext argue that the tri al court erred in h olding A ppellants liable for the debts of Personnel, absent a hearing or other proof justifying pierc

ing the corporate

veil. Theycontend that, as no evidence was presented in the trial court to support Personnel’s ability to pay the sum of money ordered by the cour t, the only basis for holding Appellants in contempt would be if Appell ants were personally liable for the debt.
Appellantsare incorrect in their contention that App el lants were found to be personally liable for thedebts of Personnel. In its Mar ch 13, 1998 order, the court ordered Personnel to deposit the mone y into the registry by J une 1, 1998. The money to be deposited was to come from the corporation, not from the pockets of Appellants. However, it is obvious that a corpor ation can comply with

s uch an order only by a cting through its agents. When the money was not deposited by June 1 , 1998, the trial cou rt orde red Personnel and Appellants, as agents and officers of Personnel, to deposit the money owed by Personnel into the reg istry.

The case of Walling v. James V. Reuter, Inc. , 321 U.S. 671, 88 L.Ed. 1001, 64 S.C t. 826 (1944) discusses injunc tions against corporati ons which can bind not onl y the corporation, but its agents, servants, emplo yees and attorneys, and al l persons acting or claiming to act in its behalf or inter est. Id . at 672. In Walling , the Supreme Court states that “such an injuncti on is enforceable by contempt proceedin g against the corporati on, its agents and officers, and those associated with it in the conduct of its business . . .” Id . at 674. At the commencement of thecase at hand, Personnel, and consequently its officers and agents, were enjoined from dissipating or trans ferring the funds owed to Qual ity.

The trial court ordered that the funds owed by Personnel be depo sited through its agents, Taylor and Richardson. When the funds were not de posited, one option available to the court was to separatel y fine Personnel for each day it was in contempt u ntil i t performed the act ordered by the cour t. See Tenn. Code Ann. §29-9-104(b). How ever, as8

Taylor a nd Richardson were specifically ordered to deposit the funds on beha lf o f Personnel, failed to do so, and failed to set forth any proof of inability to comply , it was not improper for the trial cour t to find Taylor and Richar dson in contempt.

Forall the foregoing reasons, we hold that the trial court did not err in findin g Appellants, Taylor and Richardson, i n contempt for willfully failing to comply w

ith the orders of the trial court.

III. Conclusion

The judgment of the trial court is hereby affirmed. Costs of thi s appeal are taxed to Appella nts, for which execu tion may is sue if ne cessary.

HIGHERS, J. CONCUR:
CRAWFORD, P.J., W.S.
LILLARD, J.