FILED

August 6, 1998

Cecil Crowson, Jr.

Appellate C ourt Clerk

IN THE COURT OF APPEALS

AT KNOXVILLE

WANDA C. TATE, ) KNOX CIRCUIT

 ) C.A. NO. 03A01-9710-CV-00459

 )

 Plaintiff-Appellee )

 )

vs. )

 )

 ) 

 )

SALLY SEIVERS and CAROLE )

MITCHELL, ) HON. WHEELER A. ROSENBALM

 ) JUDGE

 Defendant-Appellant )

)

)

) 

) 

)

L'ARGENT, INC., )

)

Intervening Plaintiff- ) 

Appellant )

)

vs. )

) AFFIRMED AND REMANDED

)

WANDA C. TATE )

BARRY K. MAXW ELL, M ARY JANE BORDEN, Egerton, McAfee, Armistead &

Davis, P.C., for Appellants.

LINDA J. HAMILTON MOWLE S, Lewis, King, Krieg, Waldrop & Catron,

P.C., for Appellee.
2

O P I N I O N

McMurray, J.

This is an action on a promissory note. In 1993, plaintiff,

Wanda Tate, sold her women's clothing store to the defendants,

Sally Seivers and Carole Mitchell and their corporation, L'Argent,

Inc. (collectively "buyers"). Several months after the sale, the

buyers, dissatisfied with some of the inventory sold t o them,

tendered less than the full payment amount called for by the

promissory note they had signed in partial consideration for the

sale. Tate rejected the partial payment and sued for recovery of

the full amount due under the terms of the note. The buyers argued

that Tat e ha d made material misrepresentations regarding some of

the inventory, resulting in the value of the inventory they

purchased being substantially less than anticipated at the time of

sale. 

The trial court found that Tate was not guilty of misrepresentation or fraud, a nd a warded her the full amount due under the

note, plus interest and attorney's fee s. The buyers appeal,

raising the issue of whether the preponderance of the evidence

establishes that Tate made mat e r ial misrepresentations to the

buyers of her business, upon which the buyers reasonably relied to

their detriment. We affirm the trial court's judgment. 
3

Tate opened her retail women's clothing store, called

L'Argent, in December of 1989. In Decembe r of 1992, the buyers

entered the store and inquired whether Tate would be interested in

selling the store. Tate responded in the affirmative and the

parties met in January of 19 93 t o discuss the possibility of a

sale. Over th e ne xt two months, the parties engaged in rather

extensive negotiations over the terms of the sale. 

The parties' testimony regarding what was said, done and

finally agreed upon over the course of negotiations is sharply

disputed . The primary point of contention is exactly what

inventory was to be included in the sale and the sale price. The

buyers had gone to market in the fall of 1992 and had already

purchased clothing to sell for the spring. They did not want to

buy any of Tate's "old" merchandise and were interested only in the

clothing she had recently purchased for the upcoming spring season.

Tate testified that she consistently refused to sell the

business unless the buyers agreed to purchase all of her inventory,

except the clothing items that were on h er sale r acks. Buyer

Mitchell testified that the buyers constantly stressed to Tate that

they wanted only her spring merchandise. Sh e sta ted that it was

the buyers' understanding that they would not be sold any clothing

that had been subject to invoice to Tate prior to January of 1993.
4

Mitchell testified that as a compromise, they agreed to buy

accessory items, such as jewelry, purchased before 1993. Tate

testified that the buyers knew they were buying in vent ory,

including shoes and clothing, purchased by her prior to 1993. 

Tate testified that prior to closing, she sold all of the

items on her sale racks to a jobber for a significant loss. Tate

also stated that she changed the price of several accessory items

which were in a sale bin back to full price before closing, and

explained that this was irrelevant from the buyers' perspective

since they had agreed to buy all the accessories anyway, and were

buying them at wholesale cost. 

Tate testified that the buyers were in the store numerous

times before closing, that she showed them the inventory items they

would be buying, and that they could have taken a physical

inventory before clo sing i f they had so desired. Mitchell

testified that Tate would not allow them to take inventory during

business hours and would not give them access to the business

computer files. The tags on the clothing were cod ed, using a

system which provided information including what year Tate

purchased the item. Tate testified she explained the coding system

t o the buyers before closing. On the other hand, Mitchell

testified that she did not explain the system. 
5

On February 8, 1993, Tate provided the buyers' attorney with

a computer printout of the store 's invento ry then on hand. The

printout consisted of several pages of lists of items, their cost,

the amount sold, and the balance on hand. On two of the pages, the

lists are headed by a notation stating "FALL 1990." One page bears

the notation "SPRING 1991" at the top of the inventory list. The

parties agreed that since the store's inventory would be in a state

of constant fluctuation, Tate would provide a similar printout of

the inventory as of the close of busi ness February 27, 1993, the

last business day before closing. 

The closing of the sale took place on March 1, 1993. Tate

testi fied that she provided the buyers with a final invento r y

printout at closing. Mitchell testified that she could not

remember if the final inventory list was given to them at closing.

O n the final inventory list, two pages bear the heading "SEASON:

FALL 1990." One page is headed "SEASON: SPRING 1991," and another

page is h eaded "SEASON:1990." Another page bears the heading

"SEASON: NEW INVENTORY AS OF SEPT. 6, 1992."

Mitchell testified that the buyers were not given access to

the store, the business computer, or the store's invoices prior to

closing. Tate's testimony directly contradicts these assertions.

Mitchell testified that some of the invoices were missing after the

closi ng, and Tate testified that she left all of the invoices at
6

the store. It is undisputed that Mitchell came into the store on

the weekend prior to the closing, and noticed some evening wear

hanging in Tat e's office . Mitchell told Tate that they did not

want to purchase the evening wear, and Tate acceded, agreeing to

take $7,000 off the purchase price. Although the final price

reflected the agreed deduction, Tate left the evening wear in the

store after closing.

Melanie Moore, an employee of the store before and after the

sale, testified that shortly after the buyers took over, she and

Mitchell conversed about the coding system on the clothing tags and

the information it provided. Moore testified that Mitchell "became

visibly upset" when she discovered that inventory which Tate had

purchased prior to January 1993 had been included in the purchase

price. 

The final purchase price at closing was $101,154.85, reflecting a price of $15,900 for the f ixtu res and equipment, and the

remainder for the store's inventory. The buyers paid half the

purchase price at closing and signed a promissory note for the

remaining $50,577.42. The note provided for an interest rate of

7.5% per annum and two payments of one-half of the principal

balance. The note, which was drafted by the buyers' attorney,

provides t hat "[ t]he makers agree to pay all costs, including

reasonable attorney's fees, whether suit is brought or not, if
7

after maturity of this Note or upon default hereunder counsel shall

b e employed to collect this Note or any installment or principal

due hereunder." 

T h e not e provided that the first installment payment of the

unpaid principal balance would be due on September 1, 1993. Around

that time, Tate called Mitchell and said that she would come to the

store and pick up the check. Mitchell responded that the check was

already in the mail, but that Tate would not be happy with the

amount of the payment. Consequently, Tate forwarded the check to

her attorney without opening the envelope. The check was for

substantially less than the $25,288.71 plus interest called for in

the note, because Mitchell had deducted the losses she had incurred

in selling the "old" merchandise at a discount. Tate, exercising

that provision in the note w hich stated "[i]f default is made in

the payment of any payment or any part thereof, then at the option

o f the holder thereof, the entire principal sum plus acc rue d

interest shall immediately become due and payable without notice,"

declared the note in d efault and due in full. This litigation

ensued.

A t the closing on March 1, 1993, the parties executed a

document styled "Agreement to Buy and Sell" and a document styled

"Bill of Sale." The Bill of Sale states that "SELLER has agreed to

sell and BUYER has agreed to buy all of the assets of BUSINESS,
8

including goodwi ll ... ." [emphasis provided]. The Agreement to

Buy and Sell provides the following:

SELLER shall transfer to BUYER at closing all

of SELLER'S right, title, and interest in the

inventory ... of BUSINESS ...

* * * *

The inventory to be conveyed under this

a g reement is listed on Exhibit A, whic h i s

attached and made a part of this agreement.

* * * *

[Exhibit A:] This list of inventory excludes

all "fall" and "winter" merchandise that was

inv oiced to SELLER prior to January 1, 1992 .

"Fall" and "winter" merchandise is defined as

merchandise delivered to SELLER (as reflected

on the invoice) prior to December 1, 1992.

Both documents executed by the parties at c losing contain a

provision which states: "This agreement and the exhibits comprise

the e nti re transaction between the parties; and there are no

representations, warranties, or conditions except those stated in

this agreement." Neither the Bill of Sale nor the Agreement to Buy

and Sell refers to the other document. 

A s is seen from the above, the documentary evidence regarding

the parties' intent to buy and sell inventory covered by invoices

prior to 1993 is ambigu ous and contradictory. The documents

executed at closing were drafted by the buyers' attorney. Although

there is testimony that the parties negotiated the terms of the

documents, Tate was apparently not represented by an attorn ey at
9

closing. Tate testified that Exhibit A to the Agreement to Buy and

Sell is incorrect and does not reflect the parties' understanding,

but that she signed the agreement nevertheless because the buyers

knew and understood what inventory was included in the sale.

I t is uncontroverted that the cost of inventory which had been

subject to i nvoic e prior to 1993 was included in the sale price.

The buyers assert that this amounted to a material misrepresentation on Tate's part, and that they should be entitled to a price

offset in the amount of the loss they incurred in selling the

disputed inventory. Tate maintains that the buyers knew, at all

times material, that the sale included the disputed inventory, and

agreed to buy it. She argues that she w ould not ha ve sold the

business if the buyers were allowed to "cherry pick" only the

merchandise from her store that they wanted. 

The trial court, after reviewing the evidence, found the

following:

If one looks at all of these documents, examines all of these documents in this case, as I

think the Court must, to determine whether

there was any misrepresentation or fraud or

deceit, I think the Court from those documents

and th e ot her evidence presented by the parties, must conclude that the proble m in this

case is not misrepresentation or fraud or

deceit; it is simply a lack of clarity of the

parties in expressing their understanding and

perhaps a product of haste on the part of the

seller to consummate a sale in order to close

out the bus ine ss and be done with it, so to
10

speak, and by the buyer in order to find a

place to begin operation at a critical time in

buyer's plans to open and operate a women's

wear store. 

From our review of the record, we are persuaded that the

evidence does not preponderate against the trial court's rul ing.

As is clear from the recitation of facts above, the testimony was

sharply disputed and directly contradictory. Thus, determinations

o f credibility played an important role in the outcome of the case.

I t is an elementary principle that "the trial court is in the best

position to assess the credibility of witnesses; accordingly, such

credibility determinations are entitled to great weight on appeal."

Massengale v. Massengale , 915 S.W.2d 818, 819 (Tenn.App. 1995). 

The buyers wer e i n possession of documents at closing (the

final invent ory l ist) which clearly indicated that merchandise

subject to invoice prior to 1993 was included in the transaction.

Further, it strains logic somewhat to expect that Tate, who agreed

to a three-year noncompetition clause in the Agreement to Buy and

Sell, would have assented not to sell the majority of her store's

inventory, when she would have had no reasonable way to dispose of

it otherwise.

Regarding interest and attorney's fees, the terms of the note

clearly state that the buyers shall be responsible for these items,
11

and it was not error for the court to award Tate a reasonable

attorney's fee and the 7.5% interest called for by the note.

The judgment of the trial court is affirmed and the case

remanded for such further action as may b e necessar y. Costs on

appeal are assessed to the appellants.

__________________ ____ _________ _

Don T. McMurray, Judge

CONCUR

___________________________________

Houston M. Goddard, Presiding Judge

___________________________________

Herschel P. Franks, Judge
IN THE COURT OF APPEALS

AT KNOXVILLE

WANDA C. TATE, ) KNOX CIRCUIT

 ) C.A. NO. 03A01-9710-CV-00459

 )

 Plaintiff-Appellee )

 )

vs. )

 )

 ) 

 )

SALLY SEIVERS and CAROLE )

MITCHELL, ) HON. WHEELER A. ROSENBALM

 ) JUDGE

 Defendant-Appellant )

)

)

) 

) 

)

L'ARGENT, INC., )

)

Intervening Plaintiff- ) 

Appellant )

)

vs. )

) AFFIRMED AND REMANDED

)

WANDA C. TATE )

JUDGMENT

This appeal came on to be heard upon the record f rom the

Circuit Court of Knox County, briefs and argument of counsel. Upon

consideration thereof, this Court is of the opinion that there was

no reversible error in the trial court.
2

The judgment of the trial court is affirmed and the case

remanded for such further action as may be necessary. Costs on

appeal are assessed to the appellants.

 PER CURIAM