# FILED
November 18, 1998 Cecil Crowson, Jr. Appellate C ourt Clerk IN THE COURT OF APPEALS OF TENNESSEE,

AT JACKSON

_______________________________________________________ ) JENKINS SUBWAY, IN C. and ) Gibson County Chancery Court ROSE JENKINS , ) No. 12925 ) Plaintiffs/Appella

nts. )

) VS. ) C.A. No. 02A01-9801-CH-00001 ) LYNN JONES , ) ) Defendant/Appellee. ) )

______________________________________________________________________________ From the Chancery Court of Gibson County at Tre nton. Honorable George R. Ellis, Chancellor
Douglas W. Wilkerson , W. Lewis Jenkins, Jr. , WILKERSON GAULDI

N & HAYES, Dyersburg, Tennessee Attorneys f

or Plaintiffs/Appe

llants. William R. O’Bryan, Jr. , C. Dale Allen , Ryan A. Kurtz , TRABUE, STURDIVANT & DEWITT, Nashville, Tennessee Attorneys for Defendant/Appellee.

OPINION FIL

ED: REVERSED AND REMAN DED FARMER, J. CRAWFORD, P.

J., W.S. : (Concurs) HIGHERS, J. : (Concurs)Plaintiffs Jen kin s Subway, Inc., and Rose Jenkins appeal the trial court’s final

judgment dismissing their claims for breach of contract an d breach of fiduc

iary duty against Defendant/Appellee

Lynn Jone

s. The trial court’s judgment in favor of Jones was based pri

marily on the court’s rul

ing that, even if

the subject contr

acts survived the

December 1993 d

eath of Rose Jenkins’ husband, Ed Jenkins, Rose Jen kin s and Jenkins Subway effectively waived or w ere estoppedfrom asserting their rights under the contracts. We conclude that this ruling was in error, and, thus, we rev

erse the trial co

urt’s judgment a

nd remand for fur

ther proceeding

s.

I. Factual and Proced

ural History

In N ovember 1991 Ed Jenkins and Lynn Jones entered into an agree ment for the acquisition and management of a Subway sandwich shop franchise located in the L ynnwood shopping center in Jackson, Tennessee. In the event their franchise application was succ essful, the agreement

required Ed Jenkin

s to finance theacquisition of the franchise’s assets and the operation of the franchise by guaranteeing a n d furn ishing the collateral for a $160,000 note. The $160,000 noterepresented the $150,000purchase price for the assets plus $10,000 in working capital for the franch ise. In e xchange, Jones agreed to attend any training sessions require d by the Subway franchisor

and to manage the franchise’s business. Following their acquisition of the franchise and assets, the agreement required the parties to transfer the

assets to a newly-formed corporation. The agreement

gave Jones the right to serve as an officer and director in the corporation. Under the terms of the agreement, all of the corporate stock initially would be owned by Ed Jenkins. On c e the $160,000 note was paid in full and Ed Jenkins was released from his guaranty, the ag reement required him to transfer twenty-five percent (25%) of the c orporation’s stock to Jones. In the event that Jones ceased to

manage the Subway franchise prior to the note being paid, Jones would forfeit any intere st in the corporat

ion’s stock and ass

ets.

In accordance

with the 1991 agreement, Ed Jenkins formed a new corporation called Jenkins Sub way, Inc. Thereafter, the Lynnwood Subway

franchise’s assets were transferred to the corporation, and Lynn Jones became the corporation’s vice president.

In 1992, Ed Jenkins and Jones acquired another Subway

franchise in Camden, Tennessee. Because Ed Jenkins contemplated the acqu isitio n of additional fra nchises, Ed Jenkins a

nd Lynn Jon

es executed a sec

ond agreement

inAugust

1993. The 1993 agreement recited that Subway had changed its requirements for franc hisees by requiring that

all namedfranchisees attend Subway’s training school. I nasmuch as Ed Jenkins didnot wish to attend the training school, and inasmuch as Jo nes had attended

and successfully completedthe training school, the parties agreed that any franchises acquired by Ed Jenkins after

the date of the agreement would be acquired in the na

me of Jones, although the fun ding for same wo

uld be provided by

Ed Jenkins. To this end

, the 1993 agree

ment provided that:

1. From

and after the ef

fective date of

th is A greement andfor so long as Subw ay require s its franchisees

to attend its training school, any

franchise s acq uired by Jenkins shall be in the name of Jones. Although the franchise will show Jones as th e franchisee, it i s the u nderstanding and agreement of the parties that Jenkins shallbe the real party in interest, and Jones shall if requested by Jenkins execute such documents as may be nec essary to ve st ownership of said

franchise in Jenki

ns. 2. If at a future time the Corporation may be the franchisee of t

he franchises a

cquired in the nam

e of Jones from and after the date of this Agreement, then Jones shall execu te such documents

as may be necessary

to transfer said fra nchises to Corporation. 3. Jones agrees to continue to manage the various Subway franchise s owned by Jenkins, inc luding those acq

uired in Jones’ name subsequent to the execution of thi

s Agr eement, under andpursuant to

that Agreement between the parties dated the [17th] day of November, 1991, under which, amon g other things,

Jones will acquire twenty-five percent (25%) of the stock of Corporation upon the repaym

ent of those oblig

ations made or gu

aranteed by

Jenkins. This Agreement shall be binding upon the parties, t

heir heirs and assigns.

In accordance with their 1993 agreement, Ed Jenkins and Lynn Jones acquired two additional Subway franchises, one in McKenzie, Tennessee, and another in Huntingdon, Tennessee. In December 1993,

however, Ed Jenkin

s died unexpectedly

. Ed Jenkins’ widow, Pl ainti ff Rose Jenkins, inherited his assets, including his Subway franchises and all of the stock of Jenkins Sub way, Inc.

In early 1994, Lynn Jone s was offered th

e opportunity

to participate in

a partnership which would own and operate a new Subway franchise locate d in the Jack son-Mad ison County General Hospital. Jones already knew the other partners, who included Mark and Nancy Bradford andCheri Childress, because they also owned Subway franchises in various cities. Initially, the other1 Apparently, the franchisor wanted the Bradfor ds and Childress to involve the franchisee of the Lynnwood Subway because the proposed hospital Subway was less than two miles from the Lynnwood location. partners merely offered Jones two percent (2%) of the new f

ranchise’s prof

its. 1 Jones responded by stating that, out of respe

ct for Ed Jenkins, he

believed he shoul

d discuss the pro posal with Rose Jenkins. When they subsequently discussed the proposal, Rose Jenkins asked Jones if they should get more than the two percent offered, and she indicated that they should “look into it” further.

After furth er negotiations, the Bradfords and Cheri Childress proposed that they for m
a partnership with Lynn Jones to own and operate the hospitalSubway franchise. The Bradfords and Childressproposed that Jones w ould own fifty

percent (50%) of the new partnership, but they made clear that they did not want Rose Jenkins to be a partner because they did not know her. After Jones discussed this proposal withRose Jenkins, she agreed that Jones should participate in the hospital Subway fran chi se as a 50 % par tne r. J one s su gges ted tha t, i f th e ho spi tal Sub way franch ise was profitable, at some future da te he might be abl

e to reduce his salary from Jenkins Subway and instead support himself with the income from the hospital Subway franchise. Jones and Rose Jenkins agreed that such an arrangement would be beneficial for Jenkins Subway.

In July 19 94 Ly nn Jo nes and the other partners signed an agreement whereby they formeda partnership ca

lled Health Ventu

res. The stated p

urpose of the partnership was to acquire, develop, and operate a Subway franchised facility in space to be leased from the Jackson-Madison County General Hospital. Paragraph 9.1 of the partnership agreement prohibited any of

the partners from assigning, selling, transferring, hypothec ating, conveying, mortgaging , or ot her wise encumbering “

his or her respec

tive interest in the

Partnership

without the prior e

xpress consent of the other Partners.”

Lynn Jones’ participation in the partnership required an initial investment of almos

t $30,000, including $1250 for the franchise fee, $1700 for the first mon th’s rent, a nd $25,000 for operational expenses. As Ed Jenkin s had done in

acquiring past S

ubway fra nchises, Rose Jenkins providedthe investment funds by obtaining a $30,000 loan from Volunteer Bank. As collateral for the loan, Rose Jenkins pledged 1500 shares of Wal-Mart stock.The hospital Subway store opened in Oc

tober 1994. The ne

w franchise quic

kly became so profitable that, by the end of M a rch 1995, Health V entures had ear

ned enough inco

me to repay most of Rose Jenkins’ $30,000 loan from Volunteer Bank. Around May 1995, Lynn Jones began reducing the salary he

receivedfrom Jenkins Subway. In lieu of his salary , Jones began receiving income from the hosp i tal Subway franchise’s profits. By 1996, Jones no longer was drawing any salar

y from Jenkins Subway.

During this time, Jon

es provided Rose Jen

kins with monthly balance sheets and income statemen ts fo r Health Ventures’ hospital Subway franchise; however, Health Ventures did not pay any income t

o Rose Jenkins other th

an the funds used t

o repay her loan with Volunteer Bank.

Al though the sequence of events is not entirely clear, the relationship between the parties quickly deteriorated in the spring of 19

96. The last

balance sheet a

nd income stateme

nt Rose Jenkins received from L

ynn Jones wer

e dated April 30, 1 996. In May 1996, Rose

Jenkins hire d Travis Davidson, a cert

ified public acc

ountant, to assume c

ontrol of Jenkins Subw

ay’s f ina ncial affairs because the corporation was losing money and she was dissatisfied with Jones’ explanation for the corporation’s losses. Rose Jenkins did not inform Jones that she had hired Travis Davidson until after the fa

ct.
During the spring of 1996, RoseJenkins also asked he r attorney, Collins Bonds, to draft a memorandum of

understanding for Lynn Jones’ signature acknowledging Jenkins Subway’s interest in the Health Ventures partnership. As drafted, the memorandum of understanding required Jones to acknowledge

(1) that Jenkins Su

bway furnished the funding for the initial capital contribution made by Jones t o the Health

Ventures partnership, (2) that Jenkins Subway was the true
owner of Jones’ 50% interest in the partnership, (3) that Jones held h is interest in the pa

rtnership in trust for the corporation, (4) that Jones’ interest in the partnership was a corporate asset, and (5) that the parties reaffirmed their previous agreements made in November 1991 and Aug ust 1993.

When Lynn Jone

s wa s presented with the me morandum o f understan ding during a June 1996 meeting in Col lins Bonds’ office, he refused to sign the document. Later that month, Jones res igne d fr om J enk ins Sub way, Inc., effective July 31, 1996. This lawsuit followed in which each party claimed ownership of the 50% interest in the Health Ventur es partnership.The complaint filed by Rose Jenkins and Jenkins Subway in November 1996 asserted

claims aga inst

Lynn Jone

s for breach of c

ontract (Counts I

and II) a nd breach of fid

uciary duty (C ountIII

). The complaint so

ught an accoun

ting from Jones of th

e benefits rece

ived from th

e hospital Subway franchise, a return of the benefits rece ived b y Jones, dam ages, and other relief. Jones filed an answer

in which he asser

ted the defense

of promissor y estoppel, a s well as a counterclaim

for the salary

that he alleged

ly deferr ed in reliance on

RoseJenkins’ agreem

ent to his participation in the Health Ventures partnership.

At trial, Rose Jenkins te

sti fied that , when she provided the initial funds for Lynn Jones to invest in the Health Ventures partnership, she understood that she was the one wh

o actually
was acquiring the 50% interest in the partnership and t

hat Jones merely

was holding his int

erest for the benefit

of her and Jenkins Subway. Jenkins explained that she borrowed $30,000 from Volunteer Bank and invested it

in the Health Ventures partnership because “I was to be the partner. Silent. I guess you would call it a silent partner.” Jenkins further explained that she never questioned the fact that her name did not ap

pear on the partn

ershi p agreement because she knew that, never having attended the Subwa

y training school, she was ineligib

le to be a franch

isee. According

to Jenkins, the first time Jones eve

r claimed owners

hip of the hospital Su

bway fran

chise was during the June 1996 meeting in her attorney’s office. Jenkins testified that, prior

to this confrontation, she did not feel the need to tell Jones that either she or Jenkins Subway owned the 50% interest in

the hospital Subway franchise because “[i]t was [her] understanding from the beginning that that was the way it was.” Jenkins believed that the 1991 and 1993 agreements gave Jenkins Subway (and her as the corporation’s sole shareholder) an ownership interest in the hospital Subway franchise. Despite this belief, in June 1996 she presented Jones with the m emorandum of understanding drafted by her attorney because she fe

lt “that [she] neede

d some protection”

and that s he “n eeded something in writing” similar to the 1991 and 1993 agreements.

Lynn Jones similarly

testified that Rose Jenkins failed to claim any ownership intere

st in the Health Ventures

partnership

or the hospital Subway franchise prior to the parties’ June 1996 meeting. In explaini ng his versi on of the transaction, Jones testified that he discussed the initial partnership

negotiations with

Jenkins because he

thought “she wa

s going to have s

ome involvement in it with me.” Jones testified that he later informed Jenkins that the other partners wanted him asa

partner but

that they did

not want to be part

ners with Jenkins or Jenkins Subway. Jones stated that Jenkins agreed to his inv

olvement in the Hea

lth Ventures part

nership after he

informed her tha

t, if the hospital Subway

franchise became profitable at

some point in the futu

re, Jones might be a

ble to reducehis salary from Jenkins Subway and i nstead draw his in

come from Health

Venture’s prof

its from the hospital Subway franchise.

Lynn Jones offered sev

eral explanations

as to why Rose

Jenkins provided the initial funding for his interest in the hospital Subway franchise and Health Ventures. Jones first testified that

Basi cal ly, it was the way we had done business in the p as t.

You know, I had optio ns; I could have went to another option. Mr. Sims [the bank

president], we talkedabout, you know, he was trying to get the Bradf

ords’ business. He wanted to see if we could get i

t all together in one loan. He said, “We also could look a t if y ou need the money, we could look at tryin

g to develop something onyour own, or we could do as we’ve done in t

he past,” is basic

ally, i f I remember, what he said. And I told him,I said, “Well, Ms. Rose is going to have some involvement

in this thing with me, so I just as soon go ahead and do it as we ’ ve done it in the past.” Been doing banking in the banking business since I was 15 years old and I really didn’twant to change. So it was just

the way we had

been doing thing

s. I felt comf

ortable with dealing with Elton [Sims] and that bank.
Jones later testified that he approached Jenkins for the Health Ventures financing

Because I fel t so bad abo ut a ll o f th e mo ney w e h ad gone through and lost over the years; and also out of respe ct for[Ed] Jenkins, because he got

me into the businesses. I wanted her to have some type involvement in this venture.

When asked why Rose Jenkins would invest over $25,000 in a partnership in which she owned no interest, Jones explained:

Because she knew she was going to be inv olved i n it, even though she couldn’t be a

partner; she was going to have involvement in it.Lynn Jones also had difficulty explaining why he provided Rose Jenkins with Health Ventures’ monthly financial statements if Jenkins owned no interest in the partnership. Jones gave the fol low ing t est imo ny:

Because I felt like she was involved. Because she needed to see how muc h mo ney t hat I would be taking out of the hospital account. I felt like she needed to be kept up to date.

. . . . Again, I go back to

the point that my salary had been reduc ed, andI wanted her

to be able to

keep up with how much I was receiving outof the Health Ventures store. And that would be the only reason I know of to do it, and let her stay abreast of wha t I was doing.

Jones was unable to explain why Jenkins would ask qu estion s about Health Ventures’ financial statements if she had no ownership interest in the hospital Subway franchise.

Although Lynn Jones

repeatedly

testified that he w

anted Rose Jenkins to

have some type of “involvement”

in the hospital Subwa

y franchis

e, his test im ony as to the nature of such involvement

was inconsistent. Jones admitted stating in a prior deposition that he d

idnot believe either he o r Je nki ns w as “e nti tle d to the who le 5 0 pe rcen t” o f th e par tne rsh ip. In hi s tr ial tes tim ony, Jones agreed that Jenkins was entitled to receive “some kind of benefits” and that she probably was “entitledto receive a percentage of t he ongoing c ash flow out of that store.” Jones later retreated from this position, howev

er, and insisted th

at Jenkins’ involvement in the hospital Subway

franchise should be limited to the ben

efit she alread

y had rece ived as a result of

Jones’ reduction in salary from Jenkins Subway.

Lynn Jone

s conceded that,

under the 1991 and

1993 agreemen

ts, if Ed Jenkins still
were alive, he would be the beneficial owner of Jones’ interest in the Health Ventures partnership. Jones believed, however, that the 1991 and 1993 agr

eementsterminated upon the December 1993 death of EdJenkins and, thus, did not apply to the acquisition of his interest in the hospital Subway franchise. Jones admitted stating in his prior deposition that he believed the agreement was binding
on the parties’ heir

s and assigns, but

at trial Jones in sisted that he believed the agreements boundonly

him and Ed Jenkins and, further, that the agreements applied only to existing franchises and not to franchises acquired in the future.

At the trial’s conclusion, the trial court entered a judgment in favor of Lyn n Jones which dismissed the claims of Rose Je nkins and Jenkins Subw ay and dismis sed Jones’ counter claim. I n support of its judg

ment, the trial cou

rt ruled that, eve

n if the subject ag

reements survive

d th e December

1993 death of Ed Jenki ns, the agr ee ments did not apply to the acquisition o

f Jones’ interest in the Health Ventures partnership and the hospital Subwa y fr anchise for at least three
reasons: (1) neither Ed Jenkins nor Rose Jenkins had any involvement in the acquisition of Jones’ interest in the hospital Subway franchise; (2) Rose Jenkins and Jenkins Subway waived their rights under the agreements or were estopped from asserting such rights; and (3) Lynn Jones’ performance of the agreements was excused as a l egal impo ssibility bec ause the Health V

entures partner

ship agreement

prohibited Jones from assigning his interest in the partnership and because the rules of the Subway franchisor prohibited a corporation, such as Jenkins Subway, from being a franchisee.

On appeal, Rose Jenkins and Jenkins Subway have presented the following issues for this court’s review:

I. Whether

the agreemen

ts between Ed Jenkins and Lynn Jones, dated November 17, 1991, and August 12, 1993, terminated at the death of Ed

Jenkins. II. If the November 17, 1991, and August 12, 1993, agreements didnot terminate at the death of Ed Jenkins, whether Lynn Jones breached

those agreeme

nts by claiming

sole ownership of an interest in the Subway shop in the Jackson-Madison County Gene

ral Hospital. III. Whether

Lynn Jones breached hi

s fiduciary duty as an office r of Jenkins Subway, Inc. IV. Whet herRos e Jenkins took any action or failed to take any action t hat reasonably allowed Ly nn Jones to believe that neither [Rose] Jenkins nor Jenkins Subway, I

nc. made a claim to the interest i n the Subway shop in the Jackson-Madison County Hospital; in other w

ords, whether [Rose

] Jenkins’ actions or inactions acted as an estoppel on her claim or the claim of Jenkins Subway

, Inc. to an int

erest i n the Subway shop in the Jackson-M

adison County

General Hospita

l. V. Whether

the trial court erred

in refusing to acknowledge LynnJones’ admission that Rose Jenkins owns a part of the intere

st in Health Ventures that bears Ly nn Jones’ name, so that even if the 1991 and 1993 c

ontracts fail

to apply and Jones did not breach his fiduciary duty to Jenkins Subway , Inc., a joint venture existed between R ose Jenkins and L ynn Jones in relation to the Subway store in the Jackson-Madi

son County General Hospital.
II. Survival of the 19

91 and 1993 Agreements

This appeal first requires us to determine whether the subject agreement s sur vived Ed Jenkins’ death. As noted by the trial court, the subject agreements were pe rsonal service contracts. As a general rule, “[c]ontracts to perform personal acts are considere d as made on the implied condition thatthe party shall be alive and capable of p

erforming the c

ontract, so that de

ath
or disability, including sickness, will operate as a discharge, termination of the contract, or excu

se for nonperformanc

e.” 17A C. J .S. Contracts § 465, at 623 (1963) ; accord Edelen Transfer & Storage Co. v. Willis , 66 S.W.2d 214, 216 (Tenn. App. 1932). In discus sing the rationa le for this rule, our supreme court has explained that, as a general proposition,

upon the death

of one of the contracting parties to a personal service con tract this voids the contr

act because it is

impossible for th

e performing party, he being dead, to complete his ser v ices that he agreed to. . . . “Where distinctly personal services, requiring peculiar s kill, are to be rendered by each of the contracting parties as inducements to the contract, the death of e ith er of the parties is the death of the contract.”
Rodgers v. Southern Newspapers, Inc. , 379 S.W.2d 7 97, 799 (Tenn. 1964) (quoting 12 Am. Jur. Contracts § 375, at 951); see, e.g. , Presley v. City of Memphis , 769 S.W.2d 221, 223 (Tenn. App. 1988) (indicating that contract to see Elvis Presley concert performance, as repr esented by concert ticket, was void because performance of concert became impossible when Presley died).

This rule does not apply, however, “where the acts called for by the contract are of such a character that they may be as well perfor

med by other s,” such as “the promisor’s personal representatives.” 17A C.J.S. Contracts § 465, at 626-27 (1963); accord Ro dgers , 379 S.W.2d at2 By the time of trial, the franchisor had changed its rules to pe rmit corporations to be franchisees. 799. Where the contract

with the decease

d is executory

, “and the person

al representat

ive can fairly andfully execute it as well as the deceased himself could

have done, he may do so, and enforce the contract.” Edelen Transfer & Storage , 66 S.W.2 d at 216 (qu oting Cox v. Martin , 21 So. 611, 612 (Miss. 1897)). The foregoing rule also does not apply “whe re the contract by its terms shows that performance

by others wa

s contemplated” o

r where the ag

reement provide

s “for its c o ntinuance after the death of one of the parties.” 17A C.J.S. Contracts § 465, at 627-28 (1963); see also Rodgers , 379 S.W.2d at 799 (citin g Howard v. Adams , 105 P.2d 971, 974 (Cal. 1940)). Moreover, “[t]he death of a party d

oes not excuse nonpe

rformance of a

contract w

hich embodie s a property right which passes to personal representatives of [the] deceased.” 17 C.J.S. Contracts § 465, at 627.

Th e iss ue of whether a particular contract survives the death of one of the parties implicates questions of law because, in order to r esolve this i ssue, the court must construe the parties’ contract. See Edelen Transfer& Storage , 66 S.W.2d at 216; see also Rodgers , 379 S.W.2d at 799. Applying the foregoing authorities to the contracts at issue in this case, we conclude that the subject contracts did not terminate upon the December 1993 de ath of Ed Jenkins. The 1993 agreement,

which provided that Lynn Jones wou ld continu e to manage any present or future Subway franchises in accordance

with the 1991 agr

eement, specifically provided that the agreement wou

ld apply to future franchise ac quisitions and that th e agreement w

ould be binding upo

n the parties’ “heirs and assigns.” As this court recently stated, where a contr act binds the parties’ “heirs and assigns,” such a provision “surely indicates an intent that the contract rights will surviv

e the death of one of the partie

s.” William son County Broad. Co. v. I nterMedia Partners , No. 01A01-9709-CH-00480, 1998 WL 4671 08, at *3 (T enn. App. Au g. 12, 1998) (citing Teague v. Sowder , 114 S.W. 484 (Tenn. 19 08)). Furthermo

re, these agreements em

bodied certain pr

operty rights which passed to Rose Jenkins upon the death of Ed Jenkins. After Ed Jenkins’ d eath, Rose Je nkins acqui red his Subway franchises. Jenki

ns Subway als

o continued to exist a

s a corporate entity after Ed Jenkins’ death, and Rose Jenk ins became its sole

shareholder. I

n the event it beca

me possible for a corporation to be

a Subway franchisee, 2 the agreemen ts required Lynn Jones to transfer any future franchises acquired in his name to Jenkins Subway. Accordingly, under the terms of the agreements, Jone

s assumed certai

n obligations to Jenk

ins Subway an

d not just to Ed Jenkins.Mo reo ver, contrary to Ly nn Jones’ argument on appeal, the agreements did not require Ed Jenkins to perfor m personal servic

es requiring any peculiar skill. Rather, as described by the agr eements, Ed Jenkins’ sole responsibility was to provide the financing for the acquisition of the Subway f

ranchises and fr

anchise assets. T

his function just as easi ly c ould have been performed by

Rose Jenkins, and, in f

act, it was Rose Jenk

ins to whom Jones turned to finance the acqu is ition of the hospital Subw ay franch ise. When the Bra

dfords and Cheri Ch

ildress initially approached

Jones, his response w

as to consult

with Rose Jenkins and t

o relay the

ir proposals

to her. When asked why Rose Jenkins obtained the loan from Volunteer Bank a nd then transmitted the funds to the Health Ventures partnership, Jones acknowledged that this method of financing was the way he and Ed Jenkins “had done business in the past.” In sum, we conclude that the agreemen

ts’ provisions and Jones’ own testim ony establis

h that the subject a

greements

survived the death of Ed Jenkins.
III. Waiver and Estoppel

We also conclude that the evidence prepondera tes ag ainst the trial court’s finding that RoseJenkins and Jenkins Subway waived their rights under the contracts or that they somehow were estopped from asserting their rights thereunder. The courts of this state

repeatedly

have held that, in order to constitu

te an abandonmen

t or waiver of a le

gal right,

“the re must be a clear, u nequivocal, and d

ecisive act of th

e party showing such a purpose, or acts amounting to

an estoppel on his part.” Ross v . Swan , 7 Lea, 468. Or, as stated in Masson v. Anderson , 3 B axt. 304: “Abandonment or waiver of a right importantto parties cannot be made out by uncertain implication, but ought clearly to appear. To constitute such a waiver of a benefit there must be clear, unequ

ivocal, and deci

sive acts of the pa

rty , an act which shows a determination not to have the benefit intended.”
Charleston, S.C., Mining & Mfg. Co. v. American Agric. Chem. Co. , 150 S.W. 1143, 1146 (Tenn. 1911); a ccord Springfield Tobacc o Redryers Corp. v. City of Springfield , 293 S.W.2d 189, 198 (Tenn. App. 1956); Koontz v. Fleming , 65 S.W.2d 821, 825 (Te nn. App. 1933); see also Stovall of Chattanooga, Inc. v. Cunningham , 890 S.W.2d 442, 444 (Tenn. App. 1994); Trice v. Hewgley , 381 S.W.2d 589, 595 (Tenn. Ap p. 1964); Webb v. Board of Trustees of Webb School , 271 S.W.2d 6,19 (Tenn. App. 1954). The law wil l not presume a waiver, and the party claiming the waiver has the burden of proving it by a preponderance of the evidenc e. Koontz , 65 S.W.2d at 825; see also Springfield

Tobacco Redryer

s , 293 S.W.2d at 198 (indicating that defendant has burden of proving affirmative defense of waiver). Waiver may be pr oved b y “express declaration; or by ac ts and declarations manifesting an intent and purpose

not to claim the supp

osed advantage ; or by a cou rse of acts and con duct, or by s o neglecting a

nd failing to act

, as to induce a be

lief that it was [th

e party’s] intention and purpose to waive.” Baird v. Fidelity-P henix Fire Ins. Co. , 162 S.W.2d 384, 389 (Tenn. 1942 ) (quoting Farlow v. Ellis , 81 Mass. 229, 231 (1860)). In order to establish waiver by conduct, th

e proof must show some “absolute action or inaction inconsistent with the claim or right”waived. Koontz , 65 S.W.2d at 825; accord Stovall , 890 S.W.2d at 444; Webb , 271 S.W.2d at 19.

As with the defense of waiver, the burden of establishing an estoppel also rests upon the party who invokes it. Third Nat’l Bank v. CapitolRecords, Inc. , 445 S.W.2d 471, 476 (Tenn. App. 1969). The courts have recognized a distinction between the conc

epts of waiver a

nd estoppel:

A waiver is an intentional rel inqui shment of a known right. An estoppel *** can be maintained only on the

ground that, by

the fault of one part y, another has been induce d *** to cha nge his position for the wor se in such a manner that it would operate as a virtual frau d upon him to allow the party by whom he has been misled toassert the righ t in con tro vers y.

Baird v. Fidelity-Phenix Fire Ins. Co. , 162 S.W.2d 384, 388 (T enn. 1942) (quotin

g Shaw v . Spencer , 100 Mass. 382, 395 ( 1868)); accord Burge Ice Mach. Co. v. Strother , 273 S.W.2d 479, 483 (Tenn. 1954); Gitter v. Tennessee Farmers Mut. Ins. Co. , 450 S.W.2d 780, 784 (Tenn. App. 1969); Shelby M

ut. Ins . Co. v. Wilson , 383 S.W.2d 791, 801 (T enn. App. 1964); Webb v. Board of Trustees of Webb School , 271 S.W.2d 6, 19 (Tenn. App. 1954). Stated another way, “[a] waiver is an intentional relinquishment, while the indispensable elements of an estoppel are ignorance of the party who invokesthe estoppel, a representation by the party estopped which misleads, and a n innocent and deleterious change of position in reliance on that representation.” Webb , 271 S.W.2d at 19 (quoting 56 Am. Jur. Waiver , at 104). In orde r to establish an estoppel, also known as an “imp lied waiver” or “wa iver by esto

ppel,” the party

asserting it must s

how that he prejud

iciallychanged his position in reliance upon the other party’s conduct. Gitter , 450 S.W.2d at 785.

After reviewing the

record in this case, we conclude that the evidence preponderates against the trial court’s findings of waiver and estoppel on t he part of Ros e Jenkins and Jenkins Sub way. Specifically, the record fails to contain any evidence of “clear, une

quivocal, and decisive” acts by Jenkins which would manifest an intent and purpose

not to claim Lynn Jones’ interest in the hospital Subw ayfranchise. On appeal, Jones claims that Jenkins manifested such an intent by agreeing to Jones’ participation in t he hospital Subway franchise and by f ailing to object to the partnership agreement which made Jones a 50% partner in Health Ventures.

We conclude that this

argument is

withoutmerit. Although the undisputed evidence showedthat Rose Jenkins agreed to L ynn Jo nes’ participation in the hospital Subway franchise, Jones failed to p resent any evid ence that, i n doing so, Jenki ns intended to reli nquish any r

ights inuring to her or Jenkins Subway under the 1991 and 1993 agreements. Regarding his participation in the Health Vent

ures partnershi

p, Jones testified tha

t:

I went back to [Rose Jen

kins] and told her th

ey offer ed to -- or we were going to look at d

oing a 50/50 ty

pe partnership. A

nd Ms. Rose said, “Can we ge t 51 pe rcen t?” “Ms. Rose, I don’t know. This is what they offered, a 50/50 partnership.” I said, “You need to understand that they’re not going to go in partners with you. They’r e not going to go in

partners with the corporation. That’s not what they’re asking for.” That they would be willing to go in with partners on me for 50 percent.

The problem with

Jones’ testimony is that

it in no way contradicted the rights conferred on Jenkins andJenkins Subway by

the 1991 and 1993 agreements. The agreements specifically contemplated that any future

Su b way franchises acquired by Ed Jenkins would be in Jones’ name but that Ed Jenkins would be the real party in interest. In acc ordance with Ed Jenkins’ obl igations under the agr eements, Ro se Jenkins provided all of the funding for Jones’ acquisition of his portion of the hospital Subway franchise. The fact that Jones’ name

appeared on the

Health Ventures

partnership agreement

did not conflict with the provisions of the 1991 and 1993 ag reements, which indicated that Jones’ name would appear on any Subwa

y franchis es acquired with

Ed Jenkins’ funds. Under3 Jones also points to the fact that Jenkins did

not report any

income from the He

alth Ventures partne

rship on either he

r personal or cor

porate tax return

s for 1994 and 1995 . Jones did the express terms of the agreements, therefore , the fact that Jones acquired the hospital Subway franchise in his name alone did not contradict Rose Jenkins’ and Jenkins Subway’s claims to be the real parties in in

terest.

As for Rose Jenkins’ agreement to Lynn Jones’ participation in the Health Ventures partnership and t

he hospital Subway

franchise, Jones f

urther testified

that:

We did talk

about it would be a ben efi cia ry [s ic] for Jen kin s Su bwa y, because the cash flow was so bad at that time, and anything we could do -- and I to

ld her, well, if the hospital becomes profitable, and at somepoint in ti me it is profitable, maybe I could reduce my salary down andtake my salary out of -- or my profits, salary, or w hatever the monies that come from the hospital, that I c an receive monies from that and continue living or continue to m ake m y liv ing t hat way, which would in turn reducethe cash flow coming out of the Jenkins Sub way.

. . . .

. . . Outside of that, we never got to any s

pecific agre

ements.

This testimony demonstrated that Jones and Jenkins discu ssed the possible be nefits of Jones’ participation and Jenkins’ investm ent in the hospital Su

bway fran chise
. Cont

rary to Jones’ argument
on appeal, howeve

r, this t estimony did

not indicate that Jen

kins agreed to g

ive up any ow

nership interest in the hosp

ital Subway f

ranchise in excha

nge for certa

in promised benef

its.

We also conclude that the evidence fails to support Lynn Jone

s’ assertion that Rose Jenkins misl ed him into changi ng his posit ion fo r the w orse. In sup por t of his est opp el t heo ry, Jones argues that Jenkins induced him to change his positio n by acquie scing in or ratif

ying Jones’ participation in the hospital Subway fra nchise. Jones’ test

imony, howev

er, failed to dem

onstrate how any repre

sentations or cond

uct on the part of Je

nkins induced him to d

etrimentally

change his position. If anything, the testimony suggested that it was Jones who presented the hospital Subway opportunity

to Jenkins for her consideration, that it was Jones who induced Jenkins to fund the initial investment of

almost $30,000, and

that it was Jones who la

ter voluntarily

reduced his

salary from Jenkins Sub way i n an effo rt t o he lp J enk ins and Jen kin s Su bwa y. 3 Singularly absen t from t henot testify, h owever, that he i

n any way

relied on this fac

t or that he even w

as aware of it. transcript is any testimony that

Jones ever

communicated to Jenkins his belief that his participation in the hospital Subway franchise would not be governed by the 1991 and 1993 agreements. I n fact, Jones’ understanding that the 1991 and 1993 agreements did not apply to his acquisition of the hospital Subway fra

nchise appeare

d to be based, not upon any discussions between the parties, but upon Jones’ subjective belief that the agreements did not survive the death of Ed Jenkins.
IV. Impossibility of Performance

Fin all y, we reject Lynn Jones’ contention that his performance of the 1991 and 1993 agreements

was rendered impossible by the terms of the Health Ventures

partnership

agreement and the rules of the Subway franchisor. A party is notrelieved of liability for his nonperformance of a contract based upon the defense of impossibility of performance where the impossibility is caused by the party’s own conduct or where t he impossibility is

caused by d

evelopments whic

h the party could have “prevented or

avoided or remedied

by appropriate corrective measures.” United Brake Sys., Inc. v. American Envtl. Protection, Inc. , 963 S.W.2d 749, 756-57 (Tenn. App. 1997); accord Tucker v. Hundley , 452 S.W.2d 658, 660 (Tenn. App. 1969 ). Specifically, the defense of impossibility

of perfo r mance is not available where the impossibility is caused by the defaulting party’sassumption “of obligations with respect to the subject-matter of the contract that ar

e wholly inconsistent”

with performance of

the contract. Brady v. Oliver , 147 S.W. 1135, 1139 (Tenn. 1911). In the present case, Jones knowingly exec uted a partn

ership agreement and acquired a Subway franchise the provisions of which effectively prohibited participation by Rose Jenkins andJenkins Sub way. Having chosen

this course of

action, Jones cannot now claim that his performance of the 1991 and 1993 agreements thereby was render ed impossible.

V. Constructive T

rust

I n light of our conclusion that, pursuant to the 1991 and 1993 agreements, Ros e Jenkins and Jenkins Subway were the ben eficial owners of Lynn Jones’ interest in the hospital Subway franchise, we f

urther conclude

that the trial cour

t should have gra

nted their reque

st toimpose

a constructive trust against Jones for the profits he earne

d from his interest

in the franchise. A constructive trust arises against one who, “in any way ag

ainst equity and good conscience, either has obtained or holds th

e legal right t

o property w

hich he ought not,

in equity and

good conscience, hold and enjoy.” Sand

ers v. Forcu m-Lannom, Inc. , 475 S.W.2d 172, 174 (T enn. 1972); accord Rowlett v. Guthrie , 867 S.W.2d 732, 734 (Tenn. App. 1993); Livesay v. Keaton , 611 S.W.2d 581, 584 (Ten n. A pp. 198 0). Und er t his rem edy, for example, a cor porate officer

who improperly

uses corporate assets for perso

nal gain must

account to the corporatio

n for any pr

ofits made by

the use of such assets. Central

Bus Lines, Inc. v. Hamilton N at’l Bank , 239 S.W.2d 583, 585 (Tenn. App. 1951). Similarly, an employee who wrongfully

appropriates his

employer’ s property f

or his own use holds the property and its proceeds in constructive trust for the employ er. Preston v

. M oore , 180 S.W. 320, 322 (Tenn. 191 5). In the pre sent case, Jones imp

roperly claimed sole ownership of property which he had acquired fo r the benefit of Ro

se Jenkins and Jenkins Su bway. This

property consisted of 50% of the partner ship whi ch owned and operated the hospital Subway franchise. Moreover, Jones received substantial profits fr om his us e of this property . Under these circumstances,

we hold that Jenkins and Jenkins Subway are entitled to a constr

uctive trust aga

inst Jones for his share

of the partnersh

ip profits of Heal

th Ventures.

VI. Conclusion

We reve rse the trial court’s judgment in favor of Lynn Jones and remand f or the imposition of a constructive t rust infavor of Jenkins Subway and Rose Jenkins and for other proceedings consistent with this opinion. Our

reversal is witho

ut prejudice to Jone

s’ right to raise the issue of any

offset he may be due for the salary he earned prior to his resignation from Jenkins Sub way. In light of our resolution of this appeal, we pretermit any remaining issues not discussed in the foregoing opinion. Costs of this appeal aretaxed to Jones, for wh ich execution may

issue if
nece ssa ry.

____________________________________ FARMER

, J.

______________________________ CRAWFORD, P.J., W.S. (Conc urs)______________________________

HIGHERS, J. (Conc

urs)