# FILED
November 25, 1998 Cecil W. Crowson Appellate Cou rt Clerk MALCOLM MIL

LS, JR. and ) MALCOLM MILLS, III, ) ) Plaintiffs/Appell

ees, ) Appeal No.

) 01-A-01-9803-CV-00162 v. ) ) Davidson Circuit KEN HANCO

CK, individually

and ) No. 95C-1080 d/b/a HANCOCK HOMES & ) HANCOCK ENTERPRISES , ) ) Defendants/Appel

lants, )

) IN RE: Nationa

l Bond and Surety ) Corporation, ) ) Surety/Appell

ant. )

COURT OF APPEALS OF TENNESSEE

APPEAL FROM THE DAV IDSON COUNTY CIRCUIT COURT AT NASHVILLE, TENNESSEE
THE HONORABLE HAMILTON V. GAYDEN, JR., JUDGE

ELLEN TAYLOR TURLEY 2620 Old Lebanon Pike Nashville, Tennessee 37214 ATTORNEY FOR PLAINTIFFS/APPELLEES JOEL H. MOSELEY Moseley & Moseley Suite 300, One Church Street 101 Church Street Nashville, Tennessee 37201-1609 ATTORNEY FOR SURETY/APPELLANT

AFFIRMED AND REMANDED

WILLIAM B. CAIN, JUDGE-2- 

## O P I N I O N
This appeal involves the liability of a surety upon a bond given for appeal to the Tennessee Court of Appeals fr om a j udgment in the Cir cuit Court of Davidson County. We must determ ine whether this

appeal bond covers the fees awardedto the appellees' a ttorney on the bas

is of this court's determination that the appeal was wrongfully prosecuted against the appell ees. The trial court he ld that the a ppeal bond did include the attorney fees and we affirm the court's decision on appeal.

I. FACTS

The appellees in this ac tion, Malc olm Mills, Jr. and Malcolm Mills, III (hereinafter

"Appellees"), w

ere the successful plaintiffs in a consumer f raud case which was tried in

both the General Sess

ions and the Circuit C

ourt of Davidson County. Both courts found that the defendants, Ken Hancock, individua lly and doing business as Hanc ock Homes & Hancock Enterprises (hereinafter "Defendants"), were guilty of fraud and

had violated the terms of the Tennessee Consumer

Prote ction Act in a deal invo lvin g the s ale of a used mo bile h ome . Both courts awarded tr

eble damages to Appe

llees and the

Circuit Court ruled that Defendants were

guilty of convers

ion.

The appellant in this action is the surety on the appeal bond which was filed by Defendants

when they appea

led theadverse judgm

ent in the trial cour

t. The bond, which was in

the amount of $1000, was filed with the Circuit Court
on aform provided by the court clerk and was signed by Defendants as principal and by National Bond and Su rety Corporation as surety (hereinafter "Appellant"). T

he bond provides in rele

vant part as follow s: T hat we, Ken Hanco

ck, individually , and d/b/a Hancoc k Hom es an d Ha ncock Enterprises, Pr incipal, and Natio

nal Bond and Surety Cor p., Sure ty, are held and firmly bound unto Malcolm Mills, Jr. and Malcolm Mills, III o r their certain atto rneys, execut

ors, administrators , or assigns in the p enal sum of ONE THOUSAND DOLLARS ($1,000), for the true pay ment wh ereof we bind ourselves, our heirs, execut ors and adm

inis trators firm

ly by these presents.-3-

The bond further designat ed that Defend ants and Appellant "s hall . . . in case they fail [toprosecute their appeal with effect], pay and satisfy the damages an

d costs which may be aw arded against them fo r wrongfully pr

osecuting said appeal, and satisfy the jud gment of said Court of App eals thereon."

The Court of Appeals dism issed the appeal find

ing that it was frivo

lo u s and ordering tha

t ju dgment be rende

red against Defe

ndants as principal a

nd against National Bond and Su

rety as surety

for costs of

this appeal. The

court's order directed that the case be remanded to the trial court for the entry of an appropriate

judgment as to A

ppellees' da

mages re sulting from the frivolous appeal. On remand, the trial court entered a final judgment which aw arded Appellees'

attorney, El

len Taylor T

urley, a jud

gment of $920 aga

inst Defendants only. In addition, the courtawarded Appelle es a judgment o

f $446 for the post judgment interest which h ad accrued during th e pendency of the appeal.

In January of 1998, Appellant paid the $978 balance of the bond into court. Appellant had previ ou sl y paid $22 in court c ost. The next m

onth, Ms. Turley made

a motion that the

court release to he

r the funds deposited with t he courtby Appellant sinc

e Defendants

had not yet paid to

her the fees the

court had awarded her.

The trial court ruled t

hat the terms of

the Circuit Court a

ppeals bond shouldbe enforced such that the $978 held by the Circuit Court C

lerk should be paidto Ms. Turley

as payment

towards the trial court's award of attorney fees

to Ms. Turley f

or the Defendants'

frivolous appeal.

II. ISSUE
Appellant insists that the court erred in holding that this bond, an appella te courtcost bond, can be used to satisf y a judgme

nt for attorney

fees. Appellant relies on a line of cases w hich add ress the in terpretation of sta tutory bonds, particularly Aetna Casualty & S urety Co. v. Wood

s , 565 S.W.2 d 861 (Tenn. 1978). Aetna involved a surety 's liability on a bond entered into pursu ant to1 This statute is now codified at Tenn. Code Ann. § 57-4-302(3)(A) (Supp. 1998). -4- Tenn. Code Ann. 57- 158(3 ) 1 , the statute which, at that time, required every Tennessean with a liquor licenc es to post a bond with the Commiss ioner of Revenue. The principal oper ated a hotel corporation w

hich included a lounge where liquor was sold by the drink. After the commissioner collected from the surety the principal's del

inquent tax liabilitie s not

only from

the sale of liquor but also from the sale s, franchise and e xcise ta xes fr om the hotel operations, the surety brought this action

to recover all taxes other than those incurred from

the
sa le of liqu or by the drink. In hold ing th at the s urety was only l iable for th e latter taxes, the

court made the

following statem

ents about statutory

bonds: We may assume . . . that the purpose of the parties in executing this bond was to compl

y with the

requirements of that

statute, nothing more and nothing l

ess. Although a bond is nonet heless a contract because i tis required by a statute , statutory bonds are construed in the

light of the statute creating th

e obligation secured an

d the purposes for which the bond is required, as disclosed in the

statute. The statute which provides for the giving of a bond becomes a pa rt of the bond and imports into the b

ond any conditions pr

escribed by the statute which are not in fact included in the bond as written. A lthough the obli goran d his surety may assume a grea ter obligation than that required by the statute,

it is presumed th

at the intention of

the parties was to execute such a bond as the la w required. . . . The obligations under a bo nd required by sta tute are to be measured by the particular

statute requiring

the bond, together w

ith oth er applicable statutes . . . . And, if a statutory bond c

ontain s cond itions t hat are not prescr ibed by the statute , such conditions may be eliminated as surplusage. Id. at 864.

After determining that the authorizing statute r e quired the surety to indemnify

the p rincipa l against only those taxes incurred as a

result of selling liquor by the drink,the court stated that it could "assume that the Commissioner in drafting the bond

intended to exact fr

om the obligor and

surety the obliga

tion required by the statute and no more, since t hat was the extent o f the Comm issioner's duty in this respect under the statute." Id. at 866. The bon d itself stated that it covered taxes which included "but [were] not limited to" those in Section 57-157. Id. In light of the contex t of these words and the overall purposeof the statute, the court rejected

the Commissioner's argument that t his-5-

language indicated an intent to include taxes other than those

imposed by S ection 57-157. Id.
Appeal bonds are manda

ted by Rule 6, Tenn. R.

App. P., whic

h is entitled "Security for

Costs on Appeal." T

his rule requires th

at, with a few exce

ptions,
an appellant must f

ile in the trial cour

t a bond for the costs

on appeal. The ru

le is clear that its purpose is "to secure the payment of costs if the appeal i s finally d ismissed." Tenn. R. App.P. 6. At the tim e these bonds were f

iled, Rule 6 required the cost bo nd to be in the amount o f $1000.
Appellant argues that the

obvious intent of the

partie s was to post on ly a bond for appellate cour

t costs. Had Def

endants and Appellant intende d the bond to cover more, it would have been hig her than $1000 and woul d have involved
astay pursuant to Tennessee Rul e of Civil Procedure 62. Rule 62.05 requires that a bond staying the j udgment be in the a mou nt "of the judgment in ful l, interest, damages for de

lay, and costs o

n appeal." It is Appell ant's contention, that when the obligations of t his bond are measure d by Rule 6 of the R

ules of Appellate Procedure and Rule

62 or the Rules of Civ

il Procedure, the

only proper conclusion

is that this was a bond

for appellate cour

t c ost, not

hing more and nothing less. Thus, the po rtio n of the appeal bond referencing attorney fees should be disregarded as surplus language.

After carefully considering Ap pellant's argument, we respectfully disagre e finding that we can not ignore the plain and clear language of this appeal bond. The attorney fees at issue here were damages awarded f or the wrongful prosecution

of this appeal. The bond, on its face, obligates the surety to satisfy the damages awa

rded against D efend ant "for wrongfull y prosecuting [th

is] appeal." In addition, the bond b egins by stating tha

t the Principal and t

he Surety "are held and fi rmly bound un to [Appell ees] or their certain attorneys . . . in the penal sum of . . . $1,000.00." (emphasis added). As a well-known p rinciple of contractinterpretation, our courts have stat ed t hat "[t]he court will look to the materialcontained within the fou r corners of the instr ument to ascer

tain its meaning as an expression

of the parties' intent." Gredig v. Tennessee Farmers Mut. Ins. Co. , 891 S.W.2d 909, 912 (Tenn. Ct. App . 1994) (citing Bob Pearsall-6-

Motors, Inc. v. Rega

l Chr ysler-Plymouth, Inc. , 521 S.W.2d 578 , 580 (Tenn.1975)).

We do not find

that the reasoning pr

onounced in Aetna is applicable in the instant case where the bo

nd language indisputably

obligates the surety

to pay the damages and costs for wrongf ully prosecuting t

he appeal. In Aetna , the language in the bond was unclear as to which taxes were covered, and thecourt resolved the uncert ainty in the bon d by l ooking to th e statute. See also Shelton D ental Assoc. v. LaFevre , 767 S.W.2d 665 (Tenn. Ct. App. 1989) (where langu age in bond created ambiguity, court looked to statute whi ch required the bond t o determine the parties' intent and then disregarded ambiguous surplus language). However, where, as in the instant case, the meaning of the bond's plain language is uncontrovertible, there is no need to look outside of the f our corners of the bond to ascertain the

parties' intent.

We therefore find tha

t the trial court did not

err in holding that the

terms of the appeal bond should be enforced. The bond, as we have interpreted it, does not conf lict with Rule 6 of the Tennessee Rules of Appellate Procedure . I t
mer ely provid es that , in add ition to cove ring th e costs as requ ired by Rule 6 , Defendantsand Appellant are re spo nsible for satisfying any damages awarded for the wrongful

prosecution of the appeal. Our courts have acknowledged that "the obligor and his surety may assum

e a greater obliga

tion than that required by the statute." Aetna , 565 S.W.2d at 864 ( citing Varner Constr. Co. v. Mid-Sout h Specialties, Inc. , 547 S.W.2d 569, 571 (Tenn. 1977)). In this case, Appellant

did
assu me additional liability by signing this part

icular bond. It can not

now escape its contractual obligation as outlined in the four corners of the

bond.

III. CONCLUSION

We hold t hat Appellant as sur ety is liable unde

r the appeal bond for

the attorn ey fee s awarded to Appellees' attorney as a result of the frivolous appeal brought by Defendants. We direct that the Cir cuit Court clerk, who holds the $978 balance of the bond on deposit, pay this sum toAppellees'

attorney to the extent that the judgm

ent has not

yet been satisf

ied. Therefore , the judgmen t of-7-

the trial court is affirmed and the cause is remanded for any f urther necessary pr ocee dings in conformity with this opinion. T

he costs on appeal ar

e taxed to Appellants.

____________________________ ___ WILLIA M B. CAIN, JUDGE

CONCUR:

_________________________________________ BEN H. CANTREL

L, PRESIDI

NG JUDGE, M.S.

_________________________________________ HENRY F. TODD, JUDGE