### IN THE COURT OF APPEALS OF TENNESSEE AT KNOXVILLE August 2000 Session

DIANA LYNN STINNETT v. JAC K STINNETT
Appeal from the Circuit Court for Knox County No. 69991 Hon. Bill Swann, Judge
FILED SEPTEMBER 7, 2000

No. E2000-001210-COA-R3-CV

This is an appeal in a di vorce case of th

e Trial Court’s de

nial of Wife’s Motio

n seeking postjudgment interest. The Judgment was satisfied three years and four months after it was entered. The Motion for post-judgment interest was filed three months after the Judgmen t was paid. The Trial Courtdenied post-judgment interest on two grounds. The first was the Trial Court’s finding of an accord and satisfaction resulting from Husband’s payment of t he judgment without interest. The Trial Court also held

it would be unconscionable and inequitable for Husband to pay post-judgment interest. The Trial Court the n exercised its disc

retion to deny

post-judgment int

erest. Wife argues that the Trial Court can not deny post judgment interest for equitable reaso

ns, that Husband failed to prove an accord and satisfaction, and that the accord and satisfaction affirmative defense may not be raised for the f

irst time during legal argument, cannot be established without proof, and is waived if not pleaded. We hol

d the Trial Court er

red, reverse

the Judgment of

the Trial Court, and remand the case for further

proceedings. To avoid the appearance of impropriety or lack of impartiality, the Trial Judge is to re

cuse himself from

those further pr

oceedings.

Tenn. R. App. R. 3; Judgment of the Trial Court Reversed; Case Remanded

D. M ICHAEL S WINEY , J., delivered the opinion of the court, in which H OUSTON M. G ODDARD , P.J., and H ERSCHEL P. F RANKS , J., joined.
William C. Cremins, Kno xville, Tennessee,

for the appellan

t, Diana Ly

nn Stinnett.
David L. Valone and Scarlett A. Beatty , Knoxville, Tennessee, for the appellee, Jack Stinnett.

OPINION
Background-2- Dianne Stinnett

(Wife) filed a divorce complaint against Jack Stinnett (Husband) on August 14, 1995. A Marital Dissolution Agreement (MDA) was filed on October 3, 1995 and was incorporated

into the Final Judgment of Divorce entered on November 8, 1995.

The MDA provides, in part:

The marital residence has a mortgage w hich Husband shall pay and

hold Wife harmless therefrom. That residence has a fair market value of One Hundred Forty

Thousand Dollars (

$140,000.00). As a division of marital property, Husba nd shal l pay Wife Sev enty Thousand Dollars ($70,000) at or before exec

uting this agre

ement. Wife shall quit claim any interest she hasin the marital res idence to Husband in exchange for half of said fair market value.

The ma rital residence and the contents not otherwise addressed here i n shallbe awarded to Hu

sband and Wif

e waiv es any interest she has therein. As an additional div ision of marital pr

operty, Hus

band shall pay Wife One Thousand Dollars ($1,000.00) on the first of October, 1995, and a like sum on the first of ten (10) consecutive months thereafter until Eleven Thousand Dollars ($11,000.00) is pai d to Wife.

From the Wife’s filin

g of the divorce Complaint until after the Final Judgment of Divorce was entered, Husband was not represented by counsel. He then obtained counsel and filed
a Motion, on March 21 , 1996, asking the Trial Court to set a

side the divorce Judgment. In that Motion, Husband claims that his mental state due to post-traumatic stress disorder resulting from h

is service to his country an d his Vietnam War combat-related illness was such that he did not know whether or not he signed the MDA, and that if he did sign it, he was not competent to do so.

After a hearing on Husband’s Motion on November 9t h and 10th, 1998, the Trial Courtentered an Order on November 30, 19 98 overruling Husband’s Motion. Wife then filed a mot ion sty led “Plaintiff’s Motions Per Rules 11 &/or 68, and Per numbered Paragraph V of the MDA” asking that she be awarded her attorney fees and litig ation expenses. Wife averred that her defense against Husband’s Motion to s et a side the Final Judgment of Divorce required extensive discovery and the services of a

private investigator and a psychological expert. Further , she stated tha t Hu sba nd h ad b reac hed the MDA by

among other things, failing and refusing to tender the Plaintiff Seventy Thousand Dollars ($70,000), a sum equalto half the value of the marital residence, and

failing and refusing to make the eleven (11) consecutive monthly

payments of One

Thousand Dollars ($1,000.00) due her per that ag r eement. His subsequent contention that he was-3- incompetent to contract

strikes at the very heart of the agreement, is a renunciation of the agreement, and is another breach in itself.

The Trial Court heard Wife’s Motion on January 5, 1999, and entered an Order on February 8, 1999, which state

s, in part:

The Court further noting that . . . the hearing of this cause was not for the enforcement of the Marital Dissolution Agreement but was for the determination of whether or not the MaritalD issolution Agreement was a valid one based upon the mental condition of the defendant.

The Trial Court denied Wife’s request for attorney fees and g ranted her request for discretionary costs of $2,596.35 for c

ourt reporte

r’s expense a nd private investigator. All other discretionary costs were denied.

On March 19, 1999, Husband paid Wife the $81,000 she was awarde d in the divorce Judgment. On June 14, 1999, Wife filed a Motion askin

g the Trial Court

“to hold the attached deeds until Defendant pay

s the judgment sums

he is Orde red to pay h er, with judicial in

terest. Alt erna tiv ely, he (sic) moves this Honorable Court to

allow the proper

ty to be sold to

satisf y the judgment with interest.” Th

e Trial Court hea

rd arguments of coun sel on the Motion on June 14, 1999, but did not take proof. The Trial Court then entered an Ord er on Jul y 13, 1999, which provides, in part:

The Court having heard the statements of counsel and arguments

of applic a ble case law and T.C.A. Section 47-14-121, the Court indicatedthat it

never intended

that the defendant pay any inter est on the $81, 000.00 . . . . [O]n or ab out March 19, 1999,

the Court fin

d s defendant paid s aid su m to p laint iff. In it’s (sic) discretion, pursuant to T.C.A. Section 36-4 -121, the Court indi cated that no inte

rest would be due and owing from the date of the Final Judgment of Divorce until February 8, 1999

when th e last Order was entered. The Court further indicated that although interest could accrue from February

8, 1999 until March 19, 1999 w hen the funds were paid by the defendant to the plaintiff, w

ithout interest, th

e C ourt finds that the actions of the parties wit hout b enefit of

counsel is an accord and satisfaction as plaintiff

accepted $81,000.00 without the demand for interest. As such, that waives her rights to intere st . An accord and satisfaction of said debt is found.
Based upon those findings, the Trial Court ordered:

1. That the defenda

nt will not be requir

ed to pay inte

rest o n the $81,000.00 basedupon the Court exercising it’s (sic) discretion from1 The Trial Court als o commen ted on personal fact ors involvi

ng Husband’s stat

us as a “combat wounded Vietnam W ar decor ated vetera n. . . . ”
-4-

the November 5, 1995 entry o f the Final Judgme

nt of Divorce until the last Order was entered on February 8, 1999. It was not the intent of the Court that interest be paid, based on the discretion given th e Courtpu rsuant to T.C.A. Section 36-4-121. The Court rules that interest could accumulate from Febr uar y 8, 1999 until March 19, 1999 when th e $81,000.00 was paid but finds that an accord and satisfaction occur

red solely beca

use the plaintiff h

as accepted sa

id funds without interest and thus, no interest will flow.

Wife then filed a Rule

59 Motion on August 10, 1999, correctl y asserting

that “this
was an irreconcilable differences divorce . . . premised upon a Marital Dissolution Agreement. Thus, the Court never

formed nor expressed any intent whatsoever regarding interest.” The Motion sought “an alteratio

n of the judg ment to include a determination of interest due Plaintiff,” and was accompanied

by Wife’s Af

fidavit, in which sh

e stated that Husba

nd paid her $81,000.00 on March 19, 1999, and:

there was no discussion nor understanding between us about i nterest due on said sum; The first I heard of an agreement to accept said sum withoutinterest was when my lawyer indica ted to m e that Defendant’s lawyer argued to the trial court that one had been reached when said pay

ment was made. The

re was no such ag

reement.

On September 21, 1999, the Trial Court heard Wife’s Rule 59 Motion, a nd on October 15, 1999 entered an Or der on the Mo tion amend ing its Ju ly 13, 1999 ord er and findi ng:

3. Although appella

te courtsmay require interest upon judgments per
case law and T.C.A. Se

ction 4 7-14-121, the Cour t refuses to do so due to the unique circumstances of Defendant’s condition w hic h would become utterly unconscionable if interest were required; 1 4. To correct the July

13, 1999, Order e

ntered in this action regarding why int erest is not allowed, the Court amends it to hold it did not intend to express an intent r ega r ding whether interest applied to the judgment sums awarded when the parties’ marital dissolution agreement

was incorporated

into a final decree of divorce. (An MDA is a document of the parties, not the Court.) The Court’s den ial of interest is based u

pon equita

ble consid

erations as herein exp res sed and the actions of the parties indicating accord and satisfaction.

Discussion-5- Wife appeals, and

raises the follow

ing issues:

1. At issue is whether trial courts have discretion to deny interest upon judgments beca

use of equitable c

onsiderations.

2. At issue is whether

a stipulation, that a judgment creditor accepted a judgment sum, establishes a

n accord and sa

tisfac tion waiving any interest due thereupon.

3. At issue is whether th

e affirmative de

fense of accord and satisfaction may be established by

defense counsel first raising the defense during oral arguments at

a post trial motion seeking judgment interest, and if so, whether that defense was established.

Our review is de novo upon the record, accompanied by a presumption of the correctness

of the findings of fact of the Trial Court, unless the preponderance of the eviden ce i s otherwise. Tenn. R. App. P. 13(d); Alexander v. Inman, 974 S.W.2d 689, 692 (Tenn. 1998). The Trial Court’s conclusions of law are subject to a de novo review with no pre sumption of corre

ctness. Ganzevoort v. Russell, 949 S.W.2d 293 (Tenn. 1997).

Wife’s first issue - whether tr ial courts have discretion to deny interest upon judgments

because of equitable considerations - is purely a question of law. We review the decision of the Trial Court to exercise it discretion based u pon equitable con

siderations de novo with no presumption of correctness.

Tenn. Cod e Ann. § 47-14-121 provides that “[i]nterest on judgments, including decrees, shall

be computed at an effective rate of te n percent (10%) per annum, except as may be otherwise provided or permitted by statute. . . .” (emphasis added). Tenn. Code Ann. § 47-14-122 provides that “[i]nterest shall be computed on every

judgment from the day on which the jury or the court, sitti ng without a jury, returned the verdict without regard to a motion for a ne w trial.” (emphasis

a d ded). Tenn. Code Ann. § 36-4-121, relied on by the Trial Court, provides broad discretion for a trial court in making an equi

table division and distribution of marital property

in all actions for divorce or separate support and maintenance. In this case, the T rial Court attempted to avail itself of the broad

discretion provided in Tenn. Code Ann. § 36-4-121 to disregard the statutory directives of Tenn. Code Ann. §§ 47-14-121 and 122. It is the Legislature which has deter mined that post-judgment

interest is mandatory, and neither the Trial Court nor this Court is fre

e to ignore this legitimate statutorily created mandate.

While not necessary

to our hold ing, we do note that whil e the record is no

t clear, it appears from

Wife’s appellate

brief that Husban

d had possession of

boththe marital home and the $81,000.00 for the three y ears and four mon

ths betw een the date of judgment and Husband’s payment of the $81,000.00. A party who enjoys the use of f u nd s after a judgment is rendered requiring him to pay over those funds to another should pay interest on those funds. The post--6-

judgment interest statute is mandatory. Bedwell v. Bedwel l, 774 S.W.2d 953, 956 (Tenn. Ct. App. 1989); Pertew v. Pertew, No . 03A01-9711-CH- 00505, 1999 WL 48 6917, at *10 (Tenn . Ct. App. July 13, 1999). Husband cites no authority which permits the Trial Court to disregard that statute, and
we find none. We hold the Trial Court erred in denying post-judgment interest based upon equitable considerations.

Husband next argues that, despite themandatory language of Tenn. Code Ann. § § 47-14-121, 122,

cer tainlanguage co

ntained in the cont

ract drafted by

[Wife’s] attorney could be interpre

ted to mean that the

parties waiv

ed th eir right to collect intere

st because it was no

t defined as an ob

ligation in said contract . Specifically , the Marital Disso

lution contract c

ontain e d
no language that the parties had agreed on interest to

be paid and to the contrary specifically state d that they in fa

ct had “ waived

and hereby waives his or her

rights to the extent not already pursued” and that after “honest

negotiations, the parties have reached an agreement to define the property rights and ob li gations respecting each

other.” (Emphasis added by Husband in appellate brief.)

We find this argument unpersuasive as well. The Trial Court plainly stated the basis of its

decision to deny post-judgment interest. The decision was predicated not on a ny allege

d waiver of postjudgment interest in the MDA, but rather on a judicial determination “that it is unconscionable and inequitable

for interest to be required .

. . due to the unique circumstances of Defendant’s condition

. . . .” Wife, in obtaining a judgment for $81,000.00, had “. . . already pursued . . .” her rights cre ated by the entry of that judgment, including the right to post-judgment inter est. Husband’s strained construction of the MDA is not supported by the language of the MDA itself. Nothing in the MDA creates a waiv

er by Wife of

her right to post-

judgment intere

st. Husband argues for the first time on appeal that Wife did not establish that she had fully performed her o

wn obligation unde

r the MDA to provide

Husband a quit cla

im d ee d in exchange for the payment of $70,000 to her. Since Husband did not raise this issue or defense in the Trial Court, “. . . it will not be entertainedon appeal . . . .” Lawrence v. Staffor d , 655 S.W.2d 927, 929 (Tenn. 1983).

Husband argues on the second and third issues that his payment of $81,000 to Wife
on March 19, 1 999, and Wife’s de livery to him,

at some point in time,

of the quit claim d

eed , constituted an accord and satisfaction satisfying all obligations between the parties, including any obligation on his part to pay post-judgment interest. Husband made this argument to the Trial Court on July 13, 1999, and the Trial Court found:

At the hearing [of July 1 3, 1999], counsel for Defendant announced
an accord and satisfaction had been effected by the acceptance

of the-7- cashier’s check. Couns el for Plaintiff objected, asserting that an accord and satisfaction is an affirmative defense which Defendant’s counsel could not raise

orally and without

proof. The Court held that defe nse was established by Mrs. Stinnett accepting and cashing the aforesaid check tendered by Mr. Stinnett; her negotiation of the real prope rty de ed to the husband; a

nd the conduct of t

he parties in its ent ire ty.

Whether there has been an accord and satisfaction is a question of fact to be determined by the trier of fact. Lindsey v. Lindsey, 930 S.W.2d 553, 557 (T enn. Ct. App. 1996) . As this Court has re cently explained:

Once t he existence of a c ontract has been

proven, the defe

ndant in breach who as serts the defense of accord and satisfaction bears the burden of pr oof by a preponderance of the evidence tha t the contracting plaintiff ag reed to accept lesser payment re

ndered in satisfaction of th e original performance or payment for whic h the parties contracted. * * * To constitute a valid accord and satisfaction it is also essent ial that what is given or agr

eed to be perfor

med shall

be offered

as a satisfaction and extincti on of the original demand; that the debtor
s hall inten d it as a satisfaction of such obligation, and that such intention shall be made known to the creditor in some unmistakable
manner. It is equally

essential that the

creditor shall ha

ve accepted it withthe inten tion th at it should operate as a satisfaction. Both the giving and the acceptance in satisfaction are essential elements, and if they be lacking there

can be no accord and satisfaction. The i ntention of the parties, wh ich is of course c

ontrolling, must b e determined from all the circumstances attending the transaction.

Ward v. Wilkinson, No. 01A01-9803-CH-00151, 1999 WL 221843, at *1 (Tenn. Ct. App. April 19, 1999). While here we are dealing with an alleged accord and satisfaction of a judgment rather than
a contractual debt, the reasoning in W ard still applies. Since

proof of the inten

t of the parties is requi red on the issue of accord and satisfaction, we cannot determine the merits of Husband’s argument that an accord and sa tisfaction occur

red, and neither

could the Trial Cou

rt, without a hearing to obtain evidence relevant to accord and satisfaction. Although the Trial Court stated that “the conduct of the parties i n its entirety” showed an accord and satisfaction, it appears that the purported accord and satisfaction occurred on March 19, 1999, after which no evidentiary hearing was held. The only hearing after March 19, 1999, wa s for arguments of counsel. At that hearin g, counsel for Husband

“announced” that an accord and satisfaction had occurred, but put on no proof. Without proof, the Trial Court could not find an accor

d and satisfactio

n, and neither ca

n this Court.-8- In summary, we

hold that the Trial

Court erred in de

nying statu

tory post-ju

dgme n t in ter est for equitable reasons in contravention of Tenn. Code Ann. § § 47-14-121 and 122 which mandate such interest. We find that Husband has failed to prove an accord and satisfaction of Wife’s statutory right to post-judgment interest. We further find that the Trial Court has not had the benefit of an evidentiary hearing on the issue of accord and satisfaction, and that such a hearing is required for the resolution of th

at issue. Accord

ingly, we r

emand th e case to the Trial Court to hold an evidentiary

hearing to determine whether or not an accord and satisfaction between these pa rties occurred. If the Trial Court determines after the evidentiary hearing that a valid accord and satisfaction exists between Husb and and Wife, Wife w

ill be entitled to no p

ost-judgment inte

rest. However, if

the Trial Court determines that no valid accord and satisfaction exists, the Trial Court shalldetermine the amount of post-judgment interest due Wife. The MDA provided for Husband to pay Wife

th e $70,000.00 at or before executing the MDA. The Final Judgment of Divorce adoptedand incorporated the MDA. Therefore, if no valid accord and satisfaction exists, W ife is due post-judgment int

erest on the $70,0

00.00 from the date

of the ju dgment u

p to the date of Husband’s payment of the $81,000.00. The MDA, as incorporated by the Final Judgment of Divorce, required the $11,000.00 to be paid in eleven installments of $1,0

00.00 each. Ther

efore, if
no valid accor d and satisfaction exists, Wife’s post-judgment interest on the $11,000.00 must be calculated

from the dates when Wife was to recei ve each of the $1 ,000.00 pay ments up to the date of Husband’s payment of the $81,000.00.

While we are confident that the Trial Judge would rule impartially, we have concerns about the ap pea rance of impropr iety or lac

k of impartiality

, given the Tria

l Judge’s comments

. Speci fic all y, we are concerned about the Trial Judge’s comments that, while the law may re quir e post-judgment

interest be awarded Wife, he refuses to do so “. . . due to the unique circumstances of Defendant’s condition . . . .” Wife’s rights under the post-judgment statutes cannot

be destroyed by the Trial

Judge because

of Husband’s con

dition. For these r

easons, to avoid the appearance of impropriety

or lack of im partialit y, the Trial J udge is directed to recuse himself o

n the remand of thi

s matter.

Conclusion

The Judgment of the Tri

al Court is rev ersed and this case is remanded to the Trial Courtfor further

proceedings in

accordance w

ith the Opinion of thi

s Court. To avoid

the appearance of impropriety or lack

of impartiality, the

Trial Judge is directed to recuse himself on the remand of this case. Costs of t

his appeal are ta

xed to the Appellee

, Jack Stinnett.-9- ___________________________________ D. MICHAEL SWINEY, JUDGE