T he J- B ar Co r po r at i on was i ncor po r at ed an d orga ni zed u nder t he l aws of t he St at e of

T enn es s ee. 1 

### IN THE COURT OF APP EALS OF TENNESS EE

AT NAS HVILLE N ove m be r 17, 200 5 S es sio n IN TH E MATTE R OF: J- BAR CORPORATI ON, A Tenne ss ee Co rpo ra tio n, BEN A. DIC KE, ET A L 

### . v. RONALD LE E PARRISH , ET AL 

### . Direc t Appeal from the Chancer y Court for Sumner County No. 2003C-46 TomE. Gr ay, Chancellor

No. M2004- 02279-COA-R 3-CV - F iled Janu ary 17, 2006
Ap pe llants B e n an d J a nic e Di c k ( “ theDi c ke s” ) a pp e a l th e tria l c ou rt ’s g rant o f p re -j ud g me nt i nte re st a g a ins t th e J-B ar C or

po ratio n ( “ J-B ar” ) o n a

pr omi sso ry

no te iss ue d b y J-B ar t o A pp e lle e s Ro na ld a ndJudith Pa

rrish . B e c aus e we fi ndthat th e Di c ke s la c k s ta nd ing to a pp e a l th is i ssu e , w e dis mis s. Tenn. R. App . P . 3 Appeal as of Right; Appeal Dism issed and Rem anded D AVI D R. F ARMER , J. , d e li v e r e d th e o p in io n o f th e c o u rt, inw h ic h W. F RAN K C RAW FORD , P.J ., W.S ., and A L AN E. H I G H ERS , J ., joined. Michae l V. Thompson, Nashville, Tenne ssee, f or t he appellants, Be n A. Dicke and Janice K. Dic ke Thomas E. Stewart, Madison, Tennesse e, for the appe llees, R onald L ee Parrish and Judit h Dar lene Parrish. OP IN ION

F actual Background and Proc edural History Ap pe lla nts , B e n a ndJani c e Di c ke (“ the Di c ke s” ), a ndAp pe lle e s, Ron a ld andJudith Parrish(“ theParrish e s” ) f orme d th e J-B ar C or

po ratio n ( “ J-B ar” ) in 1 99 9 w iththe int e nt t o 1 operate two businesses under the ag eis of J-Bar

and split the profits. Howeve r, the pa rties later became at odds over

routine oper ation of the businesses, ta x es, prof its, and other business re lated issues. Having rea ched an impasse, on Fe bruary 7, 2003, the Dicke s filed a “ Petition t o Dissolve C o rp o r a t i o n a n d F o r

A p p o i n t m e n to f

a R e c e i v e r ” i n t h e C h a n c e r y C o u r tf o r S u m n e r C o u n t y, Tenne ssee. The rea fter, the Parrishes f iled a complaint asking the trial court, inter alia, for a corpor ate a ccounting , equitable distribution of corpor ation assets, and dissolution. The Parrishes-2-

a lso c la ime d th a t th e y

ha d ma de a

$7 5, 00 0 lo a n to J-B ar andso ug ht r e c ou pme nt o f the un pa id b al an ce , wh i ch t o t al ed $ 6 8 , 9 0 0 att h e t i m e o f f i l i n g. The c ourt subsequently consolidated the abo ve c aus e s o f a c tio n a ndiss ue d a n o rd e r o n M a y 12 , 2 00 3, dir e c tin g J-B ar t o c on tin ue bu sin e ss du ri ng thelit ig a tio n, de sig natin g a n aud ito r o f the c or po rate bo ok s, a ndapp oin tin g c or po rate counsel for

J -B ar. On Dec ember

15, 2003, the Parrishe s filed a motion claiming that they held a pr omissory note for a loan made to J-Ba

r in the amount of $107,000. The said promissory note was dated April 16, 2000, signe d by J -B ar pr esident B en Dicke , and promised to pay the Parrishe s $107,000

“ on de ma nd .” Whil e thepr omi sso ry no te didno t se t ou t a n in te re st r a te fo r the loan, it d id s ta te that “[d] emand, notice , and prote st are e x pressly waived and if not paid in full at the time and the manner above spe cified, the n all principal a nd ac c ru e d in te re st shall, at the option of the leg al ho lde r h e re of

, b e c omea t on c e du e a ndpay able wi tho ut n oti c e .” (e mph a sis a dd e d) . In th e ir motion, the Parrishes soug ht “judg ment for and in the amount of $107,000.00, plus [prejudgme nt] interest in the amount of 10% per y ear or $10,700.00 per

y ear for the la st 3 y ear s for total interest in the amount of $32,100.00 a nd a g rand total for interest and principal of $139,100.00.” On Fe bruary

12, 2004, counsel for

J -B ar f iled a motion seeking an orde r appr oving the sale of c orporate assets. The trial court g rante d J -B ar’ s motion on Februa ry 20, 2004, and, af

ter completion of the sale , the proc eeds w ere tender ed into the Clerk and Ma ster. On June 14, 2004, theParrish e s f

ile d a motionse e kin g dis tr ibu tio n o f the fu nd s. Two day s later, the trial court en t er ed an o rd ers t at i n g:

This matter came on to be hear d on the 23 day of F ebrua

ry , 2004[,] and the rd Court ha ving hear d the testimony of Ronald Parrish and J udith Darlene Parrish and J anice K. Dicke and B en A. Dicke, the statements of c ounsel of Ronald Parish and J udith Darlene Parrish and state ments of couns el fo r Ben A. Dicke and Janice K. Dicke and statements of counse l for J-Bar Corporation and ha ving submitted exhibi ts, the Court finds that Ronald L ee Par rish and Judi th Da rl en e Parrish ar e cre dible witnesses and that Be n A. Dicke ’s testimony is n o t cr ed ible. Further the Court finds that the Parrish[es] m ade a loan to the corpor ation and that the loan has not been repaid and that the l oan shall be a priority distribution upon the s ale of J -B ar Corporation. Judgment is entere d in favor of Ronald L ee Par

rish and Judi th Darle ne Parrish for

$107,000 ag ainst J -B ar Corpor ation for which execution may issue. PreJ udg ment interest at 10% per y ear from date of loan is a war ded. The Court finds that the attorne y ’s fe es for

re p re s en t ing J-Ba

r Corporation shall be a priority payment fr om the pr oc e e ds a ndtheloan o f the Parrish [es ] pr iority pay me nt. I T I S THEREFORE ORDERED, AD J UDGED AND DE CREED: 1. J-B ar C or po ratio n’ s a sse ts s ha ll b e so ld

2.As quot ed a bov e, t h e c ou r t gr an t ed t h e Par r i s h es a $107, 000 j u dg men t a g ai n s t J

- B ar Cor por at i on a l on e. U pon 2

re v ie w o f t h e re c o rd , no thin g ind ic a te s tha t t h e D ic k e s a re in a n y w a y p e rs o n a lly liab le fo r th is d e b t. -3- Th e a tto rn e y ’s fe e s f

or re pr e se ntatio n of J-B ar Cor po ratio n s ha ll b e a

priority payment from the pr ocee ds of the sale

. 3. Judg me nt i s e nte re d infa vo r o f R o n al d Le e Parrisha ndJudith D arl e ne Parrish for $107,000 ag ainst J-Bar Corporation and Ronald L ee Par rish and Judi th L ee Parrish ar e aw arde d pre-

j udg ment interest at 10% from date of note a nd execution m a y i s s u e , i f

n e c e s s a r y. 2 4. All other matters not a ddresse d in this order ar e re serve d. (empha sis added). On Aug ust 6, 2004, counsel for J-Ba r filed a motion st ating that the Clerk and Ma ster held a total of $115,112.93 in c orporate assets a nd that, afte r ca lculating prior payments of principal de bt plus pre-judg ment interest, the Par rishes we re due a total a ba lance of $116,848.38 on their initial $107,000 loan to J -B ar. The court issued a “F inal Orde r” on A ug ust 17, 2004, ordering the Clerk and Ma ster to first pay all corpor ate de bts, ex penses, a nd costs owed, a nd then pay theba la nc e of

thec or po rate a sse ts ( tot a lin g app ro xima te ly $1 09 ,5 87 .4 3) to the Parrish e s to partially satisfy the $116,848.38 owed by J -B ar. TheDickes a

ppeal r aising the sole issue of whether the trial court erre d in awar ding the Parrishes pr e-judg ment interest on their judg ment a g a ins t J-B ar. B e c aus e we fi ndthat th e Di c ke s la c k s ta nd ing to p ur su e thi s is su e , w e dis mis s th is app e a l. Ana lys is A cor poration is a distinct leg al entity separ ate a nd apart from its shareholde rs and office rs. Ha dd

e n v . Ci ty of Gatl inb ur

g , 7 46 S.W. 2d68 7, 68 9 ( Te nn . 1 98 8) . “ Th e re sp on sib ili ty fo r m a na g ing a

c or po ratio n’ s b us ine ss anda ff a ir s f a lls on its of

fi c e rs a nddir e c tor s, no t it s share holders.” Lewis on Behalf of C itizens Savings Bank & Trust C o. v. Boy d , 838 S.W .2d 215, 2 2 0 (T en n . C t

. Ap p . 1 9 9 2 ) ( ci t i n g Boyd v . Sims , 11 S.W . 948, 949 (Tenn. 1899) ). Ge nera lly , an individual stockholder “c annot prosec ute an a ppeal or writ of er ror f rom or to a judg ment, order , or dec ree ag ainst the corpor ation by which he is only

indirectly

aff ecte d [as a share holder].” 4 C.J .S. Ap pe al a nd Er ro r § 1 78 (2 00 5) (c iti ng , a mon g oth e r c a se s, the de c isi on by thi s Co urt in Loc k ha rt v . M oo re , 1 59 S.W. 2d43 8 ( Te nn . Ct . A pp . 1 94 1) ). Te nn e sse e c ou rt s h a ve fu rthe r h e ld that e ve n w he n a

c or po ratio n h a s o ne so le sh are ho lde r, su c h s ha re ho lde r s til l may

no t bring su it to rig ht wrong s done to the cor poration. Hadden , 7 46 S.W. 2dat 68 9. Ra the r, the re sp on sib ili tyIn s o m e in sta n c e s, s h a re h o ld e rs m a y a sse rt d e riv a tive a c tio n s o n b e h a lf o f a c o rp o ra tio n . See T enn. C o d e A nn. 3 § 48

- 1 7

- 4 0 1

. A s reco gni zed by t hi s C o urt i n Lew i s on B ehal f of Ci t i z ens Savi ng s B an k & Tr ustCo

. v. B oyd , [a ] d e riv a tive a c tio n is an e x tra o rd ina ry, e q u itab le re m e d y a v a ilab le to sh a re h o ld e rs w h e n a c o rp o ra te ca use o f ac t i o n is, fo r so m e re aso n, no t p ursu ed b y t he co rp o rati o n i t self . (cit ati o ns o m i t t ed ). It i s a l i m i t ed excep t i o n t o t he usual rul e t hat t he p rop er p a rty to a ss ert a co rpo rat e cause of act i o n i s t he co rpo rat i o n i t sel f

act i ng t hrough i t s d i rect o rs or a m ajo ri t y of i t s shar eho l d ers . ( ci t at i o ns o m i t t ed ).
L e w is , 8 3 8 S .W .2 d a t 2 2 1 . In the c a se a t b a r, the re c o rd c le a rly sh o w s tha t th e p ro c e e d ing s ins tit u te d b y the D ic k e s in this m a tter w e re no t d e riv a tive in n a tur e . -4- of dete rmining w hether

a cor poration should pursue leg al ac tion lies with t he cor poration itself. Le wis , 838 S.W .2d at 220. 3

I n the ca se at ba

r, the re cord c lear ly

establishes that pre -judg ment interest wa s awa rded ag ainst J -B ar, not the D ickes. How ever , the Dicke s, and not J -B ar, ha ve appe aled the trial court’s r uling. B eca

use the rig ht to appeal the pr e-judg ment interest aw ard lies solely with J -B ar, we f ind that the Dickes la ck standing to prosecute this appeal. We there fore dismiss this appeal a ndre ma ndto the tr ia l c ou rt fo r f urthe r p ro c e e din g s c on sis te nt w iththi s o pin ion . Co sts of thi s appea l are taxed to Appellants, Ben A . Dicke and J anice K. Dicke , and their sur ety , for whic h execution may

issue if nec essary .

___________________________________ DAVID R. FARMER, J UDGE