FILED

March 27, 1998

Cecil Crowson, Jr.

Appellate C ourt Clerk

 IN THE COURT OF APPEALS OF TENNESSEE

AT KNOXVILLE

JEAN PEELE, ) C/A NO. 03A01-9707-CV-00244

)

Plaintiff-Appellant, ) KNOX CIRCUIT

)

v. ) HON. DALE C. WORKMAN,

) JUDGE

RICHARD M. EARL, JR., )

Individually and d/b/a FINANCIAL )

SERVICES COMPANY, ) AFFIRMED

) AND

Defendant-Appellee. ) REMANDED

SAMUEL W. BROWN, LOCKRIDGE, BECKER & VALONE, P.C., Knoxville, for

Plaintiff-Appellant.

FARRELL A. LEVY and JAY W. MADER, MCDONALD, LEVY & TAYLOR,

Knoxville, for Defendant-Appellee.

O P I N I O N

Franks, J.

In this action for debt, the Trial Judge, after an evidentiary hearing,

dismissed the suit as to Richard M. Earl, Jr., and entered judgment against Financial

Services Company in the amount of $5,000.00. Plaintiff has appealed.

Plaintiff brought the initial action in Sessions Court, wherein her stated

cause of a ction was: 
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[For] $7,200.00 which represents a debt of a partnership Financial

Services Company incurred by Michael B. Metzger, a partner in this

company, on beha lf of the partnership. Mr. Earl is also a partner.

We conclude after reviewing the narrative transcript of the evidence and

exhibits, that the evidence does not preponderate against the Trial Judge’s finding that

defendant Earl was not liable to the plaintiff for the debt. See T.R.A.P. Rule 13(d). 

The record shows that plaintiff engaged in certain business dealings

with Michael B. Metzger, who in some fashion was involved with a trust known as

Financial Services Company, wherein defendant Earl acted as the Managing Trust

Director. Metzger’s dealings with the plaintiff can be characterized as a variation on a

“Ponzi scheme”. The evidence preponderates that Metzger wa s not authorized to

borrow any money on behalf of Financial Services Company or otherwise bind the

company or Earl by signing or stamping Earl’s name. In plaintiff’s relationship with

Metzger, she wrote a check in the amount of $5,000.00 payable to Metzger on July 5,

1994. In return for this check, Metzger wrote a check in the amount of $6,000.00 to

plaintiff on that date. The check to plaintiff was drawn on Metzger’s personal account

in his bank, and plaintiff’s $6,000.00 check was honored on July 13, 1994. After

Metzger’s check was honored, plaintiff wrote a second check to Metzger in the

amount of $6,000.00 on July 18, 1994. Metzger was about to leave town and

defendant Earl picked up the check for Metzger at plaintiff’s business. The check was

deposited in Metzger’s personal checking account the same day. In return for that

check, Metzger provided plaintiff with his personal check post-dated August 8, 1994,

in the amount of $7,200.00. When plaintiff negotiated that check, however, it was

returned not paid as the result of insufficient funds. When this occurred, Metzger

issued plaintiff and her husband a letter in the form of a promissory note for $7,200.00

at 12% interest, dated September 29, 1994. The note was signed by Michael B.

Metzger, who identified himself on the note as Trust Director/Financial Services
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Company. At this juncture, we note that defendant Earl testified that Metzger was not

authorized to represent the company in that capacity, and that any document

purporting to authorize Metzger to act was forged. The Trial Judge evidently accepted

Earl’s testimony as true on this issue. Metzger then left town and failed to make good

on the check or promissory note. Subsequently, Earl signed a check drawn on

Financial Services Company in the amount of $200.00 to plaintiff for “interest on

Metzger’s loan”. Earl also testified that neither Financial Services Company nor

himself rec eived the money obtained by Metzger or benefitted from the transaction in

any way, nor did Financial Services guarantee the loan made by Metzger.

The evidence as demonstrated by the checks and other documents, is

that the transactions were between the plaintiff and Metzger individually, and plaintiff

has established no basis to hold defendant Earl personally liable for thes e transactions. 

As best we can tell from the record, it was plaintiff’s theory below that

Earl was a partner of M etzger in a partne rship known a s Financial Services Company. 

The evidence establishes there was no partnership operating under this name or that

Metzger and Earl were partners. 

Plaintiff argues that Earl is liable under T.C.A. §48-12-104 for precorporation transactions. The record does not establish that this theory was advanced

below, but in any event, the evidence does not establish a basis to hold Ea rl liable

under this provision of the Code. 

Finally, plaintiff argues that she should have been awarded $7,200.00

plus interest against the remaining def endant. We find this issue to be without merit

from the evidence in the record.

Accordingly, we affirm the judgment of the Trial Court with costs of the

appeal asse ssed to appellant.
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__________________________

Herschel P. Franks, J.

CONCUR:

___________________________

Don T. McMurray, J.

___________________________

William H. Inman, Sr.J.