# FILED

0ctober 21, 1998 Cecil W. Crowson Appellate Cou rt Clerk 

## IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

FREDERIC B. INGRAM, ) ) Plaintiff/Appellee, ) ) Davidson Chancery VS. ) No. 94-842-III ) ) Appeal No. WILLIAM F. EARTHMAN, ) 01A01-9510-CH-00439 ) Defendant/Appel

lant. )

APPEAL FROM THE CHANCERY COURT FOR DAVIDSON COUNTY

AT NASHVILLE, TENNESSEE
THE HONORABLE ROBERT S. BRANDT, CHANCELLOR

For the Plaintiff/Appellee : For the Defendant /Appellant : James V. Doram

us Maclin P. Davis, Jr. Gregory Mitchell H. Buckley Cole Doramus & Trauger Jonathan Cole Nashville, Tennessee Baker Donelson Be arman & Caldwell Nashville, Tennessee



## AFFIRMED AND REMANDED

WILLIAM C. KOCH, JR., JUDGE1 Commerce Union Bank was late r acq uired by Sovran Bank. Sovran Bank, in turn, was acquired by NationsBank. For the sake of consistency, we will refer to the bank as “Commerce Union Bank” because the ownership of the bank playsno direct role in the resolution of the issues involved in this appe

al. -2-



## O P I N I O N

This appeal involv es a dis pute between two f ormer friends and b

usiness associates over a sizeab le p ersonal debt. Af ter one of the frie

nds failed to repay a $1 ,700,000loan, the friend who had loaned the money filed suit in the Chancer y Courtfor Davidson

County seeking

to recover the loan and interest. The borrower asserted that the

le nder had delayed too l ong in filing suit and coun terclaimed for allegedly unpaid compensation and retirement benefits. A jury awarded the lender $5,667,122.84

on the debt, and the trial court, with the parties’ consent,

awarded the lenderan additional $400,000 for his legal expenses. On this appeal,the borrower raises numerous issues relating to the denia l of his motions for directe d verdict, the adequacy of

the jury instructions,

the instructions limit

ing the use of

the evidence of the lender’s prior criminal con viction, and the exc

essiveness of the verdict. W e have determined that the

judgment should be aff

irmed.

I.

Frederic B. Ingram and Wi

lliam F. Earthm

an became acquaintance s in the early 1960's. Mr. Ingram was

the scion of a promine

nt, wealt hy Nashville

family. Mr. Earthman was the young, fast -rising president of

Nashville’s C ommerce Union Bank, 1 one of a group of banks extending credit to the I ng ram Corporation. Mr. Earthman had been the bank off icer assigned to

the Ingram Corpora

tion accounts for several years and had develo ped a cordial busines s relationship wi th Mr. Ingram’s father. The busines s dealings between the two men ripened into a close personal relationship bet ween the two men and thei r families.

In 1970 Mr. Earthman was elected chief operating officer of Tennessee Valley Bancorp, the holding company that owned Commerce U nion Bank. He retai

ned his positionas president of Comme rce Union Bank. D

espite the outward appearan

ce of financial success and security, Mr. Earthman’s personalfinances were bu rdened by largemedical expenses a

ssociated with

a chronic mental il

lness of one of his

children. Mr. Earthman was struggling to keep up with these expenses, an

d in September 1972,2 See United States v. McPartlin , 595 F.2d 1321 (7th Cir. 1979).

-3- he turned to Mr. Ingram for help. Mr. Ingram agre ed to loan Mr. Ear

thman $600,000 for six m onths, an d Mr. Earthman executed a note made payable to Mr. Ingram bearing an interest rate o f 51⁄2%. Mr. Ea

rthman was unable t

o pay t he note w hen it
came d ue, but Mr. Ingram did not insist on being repaid as long as Mr. Earthma n continued to pay the interest accruin g on the note.

In the early 1970's, the Ingram Corporat ion deci ded to pursue a lucra tive sludge-hauling

contract with the s anitary district se rving Chic ago and surrounding communities. Sometime before the fall of 1974, a federa l grand j ury in Chicago began looking into how the Ingr am Corporation

had secured the cont

ract and how it had obtained favor

able m odifications to the co ntract. The gra

nd jury eventually indicted Mr. Ingram and

other business associa

tes for paying more t

han $900,000 in bribes to an Illinois legislator and other city officials. I

n November 1977, fo

llowing
anine-week trial, Mr. Ingram was convicted of authorizing politicalpayoffs and was sentenced to imprisonment for four years. Mr. Earthman attended portions of the trial to support Mr. Ingram.

Mr. Ingram remained free on bond pending the appeal of his co nvic tion. In 1978, he and his brotherdecided to divide the family business. Mr. Ingram formed
anew entity and invite d several mem bers of the board of the former Ingram Corporation

to serve on the board of his new corpora tion. His brother invited t he remainingboard members to serve on the board of his corporation. After the United States Court of Appeals f

or the Sixth Circuit

affirmed his convic

tion in March 1979, 2 Mr. Ingram recruited several new board members, one of whom was Mr. Earthman. According

to Mr. Ingram, h

e sought out Mr. Ear

thman because he was “an astute and honest businessman.” Mr. Earthman, for his part, later stated that Mr. Ingram invited him to join the board to b e “his eyes and ear

s” while he was in p

rison.

Mr. Ingram began serving his sentence in January 1980. Mr. Earthman visited himfor the first time

in April 1980. Aft

er the federal Parole Comm ission set his release date for September 1982 even though he was eligible for parole in May 1981, Mr

. Ingram requested M r. Earthman and

others to assist him in

seeking an earlie

r release from prison. Mr.Earthman enliste d the aid of a local po

liticia n , John Jay Hooker, who assisted in obtain ing the services of a

lawyer and a

political consultant3 In late 1980, Mr. Ear thman ’s debts to other banks were between $1,050,000 and $1,291,000.

4 The standard for

m note defined the

term “prime rate

” as follows: Prime Rate means the Bank’s rate for loans to its most credit worthy customers for 90-day unsecured loans. At the time of this agr

eement, that rate is _________% per year, although it

will change from t

ime to time. If a ch

ange in the Prime Ra

te occurs, the interest on my loan may be adjusted upward or downward. -4- withgov ernmental connections and who a lso contacted Presi

dent Carter’s chi

ef of staff on Mr. Ingram’s beh alf.

Mr. Earthman visited M r. Ingram in priso n in September or O

ctober 1980 to discuss his personal financi al problems caused b

y his child’s continuing

illness. He
con tinued to be unable to repay Mr. Ingram the $60 0,000 he had borrowe

d eigh t years earlier, and he had accumulated large secured and unsecured debts at other banks. 3 Mr. Earthman again asked M r. Ingram for financial as sistance. Mr. Ingram desired to help his friend but m ade it clear that h

e woul d n ot incur any personal expensein doing so. Accordingl y, he proposed to guar

anty a $1,700,000 loan to Mr. Earthman from another Nas hville bank which held

asizeable amount of Mr. Ingram’s collateral. Mr. Earthman in formed Mr. Ingra

m that he planned to use the st o ck options he was rece

iving from Commerc

e Union Bank to repa

y his personal debts.

Instead of f

oll owing Mr. Ingram ’s suggestion, Mr. Earthman return ed to Nashville and arranged f

or a $1,700,000 loan fr om United American Bank in Knoxville

directly to Mr. Ingram. O n October 1 4, 1980, he also pre pared and executed a per sonal $1,700,000 note to Mr. Ingram, using a standard Commerce UnionBank n ote form . Mr. Earthma n wrote “Freder

ic B. Ingram” in t

he space for identifyingthe lending bank and also filled in another bla nk stating that the note woul d be due “Eighteen Months after Date.” With regard to the interest, Mr. Earthman checked a box signifyi ng thatthe interest would be “At the Bank’s ‘Prime Rate’ plus _____ % p er year.” 4

Thereaft er, Mr. Earthman mailed the note to Mr. Ingram’s assistant in New Orleans. United America n Bank wired the

loan proceeds to

Mr. Ingram’s personal account at a New Orlea

ns bank. On Octobe

r 24, 1980, the $1,700,000 was transferred to Mr. Earthman’s account at a New York bank. Three days later, Mr. Earthman used $600,000 of the pro ceeds to repay Mr. Ingram ’s 1972 loan.-5- Mr. Ingram received word in late December 1980 tha

t he had been granted a presidential commutation enabling him to be released from pr ison in May 1981. Followinghis release, Mr. Ingram pursued discussions with Mr. Earthman about Mr. Earthman’s leaving Commerce Union Ba nk and working full-time for the Ingram Corporation. The two men also di s cussed in ge neral terms the possibility that Mr. Ingrammight forgive Mr. Earthman’s $1,700 ,000 loan out of grati tude for his efforts in helping secure Mr. Ingram’s earl y release from pr

ison.

With regard to the of

fe r of employment with the Ingram Corporation, Mr. Earthman told Mr. Ingram th at leaving Commerc

e Union Bank w ould depen d on obtaining the bank b oard’s approval of h is early retireme

nt and that it could take several years to work this out. In the meantime, Messrs. Ingram and Earthman agreed that Mr. Earthman w

ould bec ome the “managing dir ector” of Ingram

Worldwide Investments, Ltd. On September 23, 1981, Mr. Ingram provided Mr. Earthmanwith
aletter agreeing

to pay Mr. Ingram supplementa l retirement bene

fits in return for hi s services to the Ingram Corporat io n and other related corporations. The purpose of this agreement was to compensate Mr. Earthm an for the differe nce between the amount of his early ret irement b enefit from the bank and the amount of his regular retirement

benefit if he retired at the a ge of sixty-five. In the letter, Mr. Ingram agreed to pay the supplementa l retirement bene

fits himself if the Ingram Corporatio n did not make them because of “the Board’s not having authorized and approved this agreement.”

In mid-December 19 81, Mr. Ingram r enoun ced his United States c itizenship and became a citizen

of Ireland. He

expl ained later that he took this step for tax reasons, but Mr. Earthma n added that Mr. Ing

ram was also angr

y about his treatment by the federal government. In late 1981 or earl y 1982, Mr. Ingram established several trusts in Liechtens tein and placed his pe

rsonal assets, valu

e d at between $100,000,000

and $150,000,000, in t

he hands of

the professional trustees retained to managethe trusts. On January 26, 1982, Mr. Ingram executed a n assignment in blank of Mr. Earthman’ s note and forwarde d the origi n al note and the incompl ete assignment

document to a Swi ss l awyer who was se rving as a trustee of

the Liechtenstein trus

ts.
Followingtheir discussion in mid-1981, Mr. E

arthman continued to f

ind ways to indu ce Mr. Ingram to forgive his $1,700,0

00 debt. During a te

lephone-6-

conversation

in early January 198 2, Mr. Ingram’s New Orleans lawyer and Mr. Earthman’s New York lawye r discussed various

possible forms for

the gift including
atestamentary gift to Mr. Earthman’s children and an outright inter vi vos gift. They reached no conclusion because of the unresolved que st ion about t he tax consequences of this gift to Mr. Ing ram.

In April 1982, Mr. Ingram received wordthat the $1,700,000 note in his name atUnited American Ban k was about to come due. Mr. Earthman informed Mr. Ingramthathe was unable to repay the loan and that he ha d made arrangeme

nts for United American Bank

to renew t he loan. Four months later, when it encountered federal regulatory pro blems of its own, U nited American Ba

nk called upon Commerce Union Bank to pu rchase Mr. Ingram’s loan. Despite the fact that Commerce Union Bank’s lo an co mmittee had declined to purchase Mr. Ingram’s note, a high ranking bank officer au thorized the purchase of the note after Mr. Ear thman assured him that “the loan will be out of the bank in a few day s. ” Accordingly, Commer ce Union Bank purcha sed Mr. Ingram’s

United American Ban k note a nd plac ed the current amou nt of the loan and acc umulated interest – $2,540,527.46 – o n its own books as a p ersonal loan to Mr. Ing ram.

On December 1, 1982, Commerce Union Bank debited Mr. Ingram’s account for a $66,333.99 intere st pa yment and th en sold the loan to a Ca yman Island bank named Banque d’l U

nion Europeene for

$2,606,863.45. As a condition to the sale, the Banque d’l Union Europeene required Comm erce Unio n Bank to execute an agreement to repur

chase the loan if it w

as not paid off befor

e May 15, 1983.

On Ma rch 29, 1983, Commerce Union Bank’s internal auditor and Mr. Earthman discussed the $2,540,527.46 per sonal lo an to Mr. Ingram as well as t wo otherpersonal loans

to others that Mr. I

ngram had guarantee

d. The auditor explained that there was an “appearance problem” with these loans because they had bee

n made whileMr. Earthman se

rved o n the In gram Corporation’s b oard of directors. Two weeks later, Mr. Earthman had a similar conver

sationwith the chairman of the loan audit committee. During neither conversation did Mr. Earthman reveal that he had received the proce

eds of Mr. Ingram ’s loan.

As the payment date for

Mr. Ingram’s loan approached, t he Banque d’l Union Europeene

called upon Commerc

e Union Bank to repurchase

the loan in accordance5 In addition to his debt to Mr. Ingram, Mr. Earthman’s secu red and unsecur

ed debt at the time was between $775,000 and $1,305,000. -7- withthe buy-back agree

ment. Mr. Earthman st

ill lacked the funds

to pay the note and accumulated interest 5 and understood that hav ing the bank purchase

the note could jeopardize his position with the ba nk. Accordingly, he

asked Mr. Ingram

to pay the note. Mr. Ingram expressed displeasure at being required to raise sucha large amount of mone y on short notice in orde r to prevent embarr

assment to Mr. Ea

rthm an an d Commerce Union Bank. However, on May 6, 1983, Mr. Ingram paid Banque d’l UnionEuropeene $2,729,675.95 to retire the loan after Mr. Earthman promised him that he would repay t

he loan as soon as he co

uld.

Mr. Earthman’s career at

Commerce Union Bank was nearing anend in mid1983. He had already ac

cepted full-time e

mployment

with the IngramCorporation when he negotiated a $200,000 per year consulting contract w

ith Commerce Unio

n Bank without informing Mr. Ingram. On May 31, 1983, Mr. Earthman resigned as president of Commerce Uni

on Bank and as c

hief exec utive officer of Tennessee Valley Bancorp effecti

ve on June 30, 1983. He remained on Commer ce Union Bank’s board and accepted the title of chair of the executive committee.

On June 19, 1983, Mr. Earthman signed an employment contrac

t with the IngramCorporation in

which Ingram agreed to pay him $300,000 per year in salary and an additional $100,000 per year i n deferred compensation. Mr. Earthman’s combined income from the Com merce Union Bank c

onsulting contract and from the Ingram Corporation far exceeded the salary he had been earning as president of the bank and chief exec

utive officer of th

e bank holding company.

Mr. Earthman went to work for the Ingr am Corporation on J uly 1, 1983. As
one of his f

irst assignments, Mr. Earthman traveled to London at Mr. Ingram’s request to examine the soundness of the business and in vestment practi

ce s of Tampimex, an Ingram subsidiar y. Two months

after M r. Earthman reported that Tampimex’s internal controls were sound, Tampimex los t approximately $100,000,000

because its internal control s failed to respond to a downturn in the oil market. Tampimex’s failure caused Mr. Ingram t o sell off the Ingra m Corporation assets and to disb and the c ompany. Tampimex’s creditor banks also directed Mr. Ingram to reduce M

r. Earthman’s s alary from $300,000 to $100,000.-8- Mr. Earthman formally retired from Commerce U

nion Bank in

February 1985. During the same month, Mr. Ingram receiv ed a telephone call

from Mr. Earthman’s Nashville lawyer seeking inf

ormation about Mr. Earthman’s acti vities with

regard to Mr. Ingram’s accounts at

Commerce Union Bank. The lawyer informed Mr. Ingram that the bank had appointed a special committee to review Mr. Earthman’s activities whilepresident and

chief executive officer with regard to Mr. Ingram’s loans and that the ba nk wa s considering cancel ing Mr. Earthman ’s $200,000 per year consulting contract, withdrawing

his retirement packag e, and rescinding hi s stock options

. Mr. Ingraminformed the lawyer that Mr. Earthman had rec eived the proceeds o

f one of the loans being question

ed by the bank.

Several days later, Mr. Earthman visited Mr. Ingram in London and expressed
concern about his precarious position with the bank.

Within a month, however, Mr. Earthman exercised the stock options he had accumul

ated while working

at the bank and earned between $4,0 00,000 and $5,000 ,000. Mr. Earthman di d not inform Mr. Ingramthat he had exercised these options and did not use any of the proceeds to repay his October 198 0 debt to Mr. Ingram.

Later in 1985, Commerce

Union Bank reduced Mr. Earthman’ s con sulting contractfrom $200,000 pe r year t o $100,000. Mr. Ingram also informed Mr. Earthman that “there . . . [was] nothing more he could add

to the Ingram Corpor

ation” and requested his resign

ation. Mr. Ear

thman submitted his

letter of resignation from the Ingram Corporatio

n o n O ctober 30, 1985. The other directors of the Ingram Cor poration

later resigned, a

nd the company eventua

lly went out of busi

ness as a result of Tampimex’s fi nancial reversals.

Mr. Earthman’s resignation from the Ingram C orp oration did not end his relationship

with Mr. Ingram . At Mr. Ingra m’s request, he r

emained on the board of directors of Arcata Corporation, a printing and wood products company in which IngramWorldwide Investm ent s had purchased an 8% inte rest in 1982. One of

the plans for Arcata was to break up the compa ny and sell its assets to J

apanese buyers. Mr. Ingram believed tha t Mr. Earthman c

ould play an instrument al role in this process because of his conta cts with Japanese bu sinessmen and agreed to pay Mr. Earthman $10,000 per mont h t o continue to serve on A rcata’s board. A

rcata also contracted with Mr. Earth man’s Cayman Isla

nd consulting company to serve a s its “financial advisor” with rega rd to its negotiations with the Japanese. Mr. Ingram and-9-

Mr. Earthman anticipa

ted that Mr. Ear

thman could earn a c

ommission

of as much as $8,000,000

if he engineered the sa

le of Arcata and that he

would use a portion of

this commission to repay his debt to Mr. Ingram.

In April and May 1987, M r. Earthman sen

t Mr. Ingram a se

ries of writt

e n proposals intended to r

esolve their financ

ial relationships. Each of these prop osals
was based on Mr. Earthman’s assumption that Mr. Ingram would agree to assume personal liabilityfor unpaid compensation due from the Ingram Corporation and that Mr. Ingram would forgive his $1,700,000 de bt. In his April 21, 1987 letter off

ering two alternati ves, M r. Earthman wa rned that the lack of

a resolution of the compensation

and debt issues could “‘fester’ i n such a way as to be de

trimental to our mutual best interest.” H

e also conceded that

he could not play a “constructive role” in Mr. Ingram’s bu siness ventures follo wing the completion of

the Arcata proje

ct.

In discussions following his rece ipt of th e April 21, 1987 letter, Mr. Ingram told Mr. Earthman that

his proposals were not acceptable. He told Mr. Earthman that the assumption that he wo uld assume the IngramCorporation’s fina ncial obligations
was “nuts” because

he had already lost $1 00,000,000 when the Ingram Corporatio

n failed and because he was not responsible for a

ssuming any other corp orate obligations. Despite Mr. Ingram’s respo nse, Mr. Earthman stated t hat he would submit a revised proposal in a more final form.

Mr. Earthman sent Mr. Ingram a revised proposal on

May 21, 1987. On this occasion, Mr. Earthman pr oposed that they enter

into a termination a

greement on or before December 31, 1987 and that either Mr . Ingram or his tru st forgive his debt and pay him an additional $500,000 by June 30, 1987. Mr. Ingram’s response, lik e his response to the earlier pro

posal, was bl

u nt. He informed M

r. Earthman tha

t the proposal was “totally

unacceptable in con

cept and every other

way” and that the only thing they had to talk about was “how he was going to pay me back the money he owed me on the n ote.” According to Mr. Ingram, t he two men discussed using the commission

Mr. Earthman expected from th e sale of Arcata to repay the debt after Mr. Ingram insisted that

they stop “worry[in

g] with these silly sc

hemes of trying

to figure out a way to get me to pay some money that I wasn’t obligated to pay.”

After this May 21, 1987 letter, Mr. Earthman made no o ther formal proposa

ls concerning

the forgiveness of his debt. In April 1988, as the statu te of limitations-10-

was abou t to run on his debt to Mr. Ingr am, Mr. Earth

man told Mr. Ingra

m that he
was still unable to repay the loan and accrued interest and thathe was still relying on the Arcata commissi

on to provide

the funds to do so. He did not tell Mr. Ingram that he had exercised his sto

ck options or

that his bank stock mad

e up $5,000,000 of his $5,520,000 net wort

h.

Even though Mr. Ingramreplaced Mr. Earthman on Arcata’s board during the Spring of 1988, Messrs. E arthman and Ingram

traveled to

Ja pan in August or September

1988 t o promote the Arcata sale. While in Tokyo, the

y agreed that the first $2,000,000 of an y commission from the sale of Arcata w

ould be paid to the former chairman of Citibank who was assisting them with the neg otiati ons. They also agreed that the next

portion of the commis sion would b e us ed to pay off Mr. Earthman’s debt to Mr. Ingram and that the remaining commissio n would be paid

to Mr. Earthman. In Oct ober 19 88, after the eff orts to sell Arcata

did not bear fruit, Arcata informed Mr. Ingram that it woul d not renew its consulting contract with him.

In April 1991, Mr. E

arthman enlisted Mr. Ingram’s assist ance in ano th er business venture involving the sa le of bottled w ater from a spring Mr. Earthman owned at Beersheba Spr

ings. Because of t

he growing popularity of bottled water, Mr. Earthman told Mr. Ingram that the venture could earn “m ore than ‘ walking around money’” and requested Mr. Ingram to contact a friend on Coca Cola ’s board with the proposal. According to Mr. Ingram, Mr. Earthman offered him 40% of the venture to settle his debt. Coca Cola eventually rejected the proposal, and by early 1992, Mr. Ingram believed that Mr. Earthman was losing enthusiasm about the venture.

As 1992 w ore on, Mr. Ingr am became increa

singly concerned about

the repayment

of Mr. Earthma

n’s loan and eventuall

y hired a Washington, D.C. law firm to look into th e activitie s of Mr. Earthma n and Commerce Un

ion Bank during the early 1980's. In late 1992, Mr. Ingram requested a meeting with Mr. Earthman after his lawyers informe

d him that the bank coul

d be liable to Mr. I

ngram based on the way it handled Mr. Ingram’s loans with United American Bank and the Banque d’l UnionEuropeene. In e

arly December 1 99 2, Mr. Ingram recounted his lawyer’s conclusions to Mr. Earthman during a three hour

meeting at the Adm

iral’s Club in the Dallas airport. Mr. I

ngram also asked Mr . Earthman to sign a statement det

ailing his actio ns with regard to Mr. Ingram’s loans and s

uggested that this stat

ement c oul d force the bank to be “a 50-50 partner in paying off his

obligation to me.” A

ccording-11-

to Mr. Ingram, Mr. Earthman acknowledged that he owed Mr. Ingram the money an d that “it would be very u seful to him if . . . [the bank] wou ld pay part of the bil l.” According

to Mr. Earthman , Mr. Ing r am also promised him that he “could go to Zurich and pick up the

note” if he signed the

statement.
Shortly after the

meeting in Dallas, Mr. Ingram’s Washington lawyers sent Mr. Earthman’s Nashville lawyer a draft of a statement for Mr. Earthman’s signature. Mr. Earthman declined to sign the sta tement because he assert

ed that it was not

accurate and because his law

yer advised him

that signing the

statement could expose him to criminal liability. With this development, Mr. Ingram decided that he had“gone the last mile” with Mr. Earthma n.

In March 1994 , Mr. Ingram filed a multi-c ount complaint ag ainst Mr. Earthman in the Chancery Court

for Davidson County seeking to recover the $1,700,000 debt and accrued interest

and attorney’s fees. In response, Mr. Earthman admitte d that he had borrowed $1,700,0

00 from Mr. Ingra

m in Octob er 198 0 and that he had not repaid the loan or paid any int

erest on the loan. H

owever, he also a

sserted numerous defenses, including laches and t he statute of limita

tions, and countercl

aimed for $6,500,000

in unpaid compensation and retirement benefits. In response, Mr. Ingram asserted that Mr. Earthm an was e stopped to assert a statute of limitations defense. Both parties eventually m oved for summary judg

ment, and the trial court dismissed all of Mr. Ingram’s

claims against Mr.

Earthman except for the “breach of contract/pro missory note” claim and declined to dismiss Mr. Earthman’s counterclaim against Mr. Ingram.
Followinga nine day trial, t he jury deliberate

d less th an one hour before returninga verdict finding th at Mr. Earthman wa s estopped from relyi ng on the stat ute of l imitations defense a nd awarding Mr. I

ngram a $5,667,122. 84 judgment against Mr. Earthman. The jury also determined thatMr. Earthman was not entitled to receive a pension from Mr.Ingram personally. Based on the partie s’ agreement, the trial courtals o awarded Mr. Ingram $400,000 for his legal expenses. Mr. Earthman has perf

ected this appeal.

II.6 See Act of May 22, 1995, ch. 397, 1995 Tenn. Pub. Acts 617, codified at Tenn. Code Ann. §§ 47-3-101, -605 (1996).

7 See Act of May 22, 1995, ch. 397, § 6, 1995 Tenn. Pub. Acts 617, 667. -12- The first step in suits like this one is to identify the body of l aw applicable to the dispute. See Richard B. Hagedorn, The Law of Promiss ory Notes ¶ 1.05 (1992) (“Hagedorn”). This case presents two issues in this regard. The fi rst issue concerns which version of the

Uniform Commercial Code should be used to determine whether Mr. Earthman’s Oct

ober 14, 1980 note is a

negotiable instrume

nt. The second issue
concerns whether the note is a negotiable instrum

ent under the applicable version o

f the Uniform Commerc

ial Cod e. If the note is a nego tiable instrument,

the parties’ rights are governed by

Art icle 3 of the Unifor m Commercial Code ; if it is nonnegotiable, we must look to the common law of contract s t o define the partie s’ rights and remedies

.
A.

In 1990 the National C onfere nce of Commissioner s on Uniform State Laws and the American La

w Institute made si

gnificant substantive

revisions to Arti

cle 3 of the Uniform Commercial Co de. See 2 James J. White & R obert S. Summer

s, Un iform Commercial Code § 16-2 (4th ed. 1995 ) (“White & Summers”). Th e General Assembly incorpora ted many of these

changes into Tennessee’s ve rsion of the Uniform Commerc

ial Code in 1995. 6 Because Mr. Ingram’s $1,700,000 loan to Mr. Earthman and Mr.

Earthman’s ex ecution of the promis sory note occurred i n 1980, we must at the outset determine which version of the Uniform Commercial Code should be used to determine whether Mr. Earthman’s note was a negotiable instrument.

The pre-1995 version

of Article 3 of the

Uniform Commerc

ial Code applies to this transaction for two reasons. First, the 1995 amendments themselves stat e tha t they will take effec

t on Ju ly 1, 1996. 7 Second, amendato ry acts that make substantive, as opposed to procedural, changes in existing law must be applied prospectively. S ee Kuykendall v. Wheeler , 890 S.W.2d 785, 787 (Tenn. 1994); Saylors v. Riggsbee , 544 S.W.2d 609, 610 (Tenn. 1976). Thus, like ot her statutes making substantive changes in existing law, we will

not apply the 1995 amendm ents to Article 3 to a tra

nsaction occurring be

fore the am endments’ effective d ate. See Resolution

Trust Corp. v. Maplewo

od Invs. , 31 F.3d 1276, 1286-88 (4th Cir. 1994);8 See Tenn. Code Ann. § 47-3-104(1) (1979).

9 See Tenn. Code Ann. § 47-3-104(1)(a).

10 See Tenn. Code Ann. §§ 47-3-104(1)(b), -105 (1979). -13- Bankers Trust (Del.) v. 236 Beltway Inv. , 865 F. Supp. 1186, 1192 n.7 (E.D. Va. 1994); Johnson v. Johnson , 614 N.E.2d 348, 354 (Ill. App. Ct. 1993); Woo v. Smart , 442 S.E.2d 690, 693 (Va. 1994). Instead, we will apply the version of the Uniform Commercial Code in effect at the time of the part

ies’ agreement a

nd the execution

of the October 14, 1980 not e. See Yin v. Society Nat’l Bank Indiana , 665 N.E.2d 58, 62 (Ind. Ct. App. 1996).

B.

We now turn to the questio n concernin g whethe r Mr. Earthman ’s note is negotiable

and, therefore, governed by Article 3 of the Uniform Commercial Code. Whether an instrument is negot

iable is a question of law to b e determined by the court. See Northern Bank v. Peffer oni Pizza Co. , 562 N.W.2d 374, 376 (Neb. 1997); Cartwright

v. MBank Corpus Christ i, N.A. , 865 S .W.2d 546, 549 (T ex. Ct. App. 1993); 5A Ronald A. Anderson, Anderson on the Unifor m Com mercia l Code § 3- 101:48 (3d ed. 1994) (“Anderson”). Using a version of the “fo ur corners rule, ” the courts determine

the negotiability fr

om the face of

the instrument without reference to extrinsic facts. See Bankers Trust ( Del.) v. 236 Beltway Investment , 865 F. Supp. at1192; Holsonback v. Fir st State Bank , 394 So. 2d 381, 383 (Ala. Civ. App. 1980); Partney v. Reed , 889 S.W.2d 896, 900 (Mo. Ct. App. 1994). If there is any doubt that
an instrument is nego tiable, the courts ge nerally find that it is nonnegotiabl e. See Geiger Fin. Co. v. G

raham , 182 S.E.2d 521,

525 (Ga. Ct. A

pp. 1971); Pa c ific Fin. Loans v. Goodwin , 324 N.E.2d 578, 580 (Ohio Ct. App. 1974); 5A Anderson, §§ 3- 101:21, -104:13, at 117

.
As it existed in 1980, Tennessee ’s version of the Un iform Commercia

l Code contained six requirements f or negotiability. In order

to be negotiable, an

instrument
was required to (1) be

in writing, 8 (2) be signed by the makeror drawer, 9 (3) contain
an unconditional promise or order, 10 (4) provide for the payment of a sum cer

tain in11 See Tenn. Code Ann. §§ 47-3-104(1)(b), -106, -107 (1979).

12 See Tenn. Code Ann. § 47-3-104(1)(c).

13 See Tenn. Code Ann. § 47-3-104(1)(d).

14 See Act of May 27, 1981, ch. 511, §§ 2 & 3, 1981 Tenn. Pub. Acts 846. The l egislative debates clearl y indicat e that this bill was designed to address the uncertainty about whether notes with variable inte

rest rate terms w

ere negotiable i

nstruments. -14- money, 11 (5) be payable on dem and or at a

definite time, 12 and (6) be payable to order
or to bearer. 13 At that time, the “sum certain” prov

ision in Tenn. Code A

nn. §§ 47-3- 104(1)(b), -106 required that t he “computa

tion [o f interest] must be one which can be made from the instr

um ent i tself without reference to any outside source.” See Tenn. Code A nn. § 47-3-106 cmt. 1 (19 79); Black v. Comm

erce Union Bank

, No. 01A01-9206-CH-00220 , 1992 WL 335948, at *2 (Tenn. Ct. App . April

4, 1994) (Not for Publication). Th

us, a majority of

courts construing simi

lar provisions have he

ld that notes containing variable interest rat e terms were nonnegoti able. See Doyl e v. Trust Sav. & Loan

Ass’n , 869 F.2d

558, 560 (10th Cir. 1 989); Northern Trust Co. v. E. T. Clancy Export

Corp. , 61 2 F . Supp. 712, 715 (N .D. Ill. 1985); Johnson v. Johnson , 614 N.E.2d at 352- 53; Centerre Bank of Branson v. Campbell , 744 S.W.2d 490, 496-98 (Mo. Ct. A

pp. 1988); DH Cattle Holdings Co. v. Reinoso , 575 N.Y.S. 2d 203, 204 (App. Div. 1991); 2 White & Summers, § 17-4, at n.7. After Mr. Earthman pre par ed and executed the $1, 700,000 promissory note , the General Assembly amended Tenn. Code Ann. §§ 47-3-10 4(1)(b) and 47-3-106 (1) to enable notes w ith variable interest

rates to be consider

ed negotiable instrum

ents. 14

Mr. Earthman’s note di

d not satisfy the “sum c

ertain” requirem

ent i n Tenn

. Code Ann. §§ 47-3-104(1)(b), -106 when it was sig ned because its

interest rate coul

d not be computed “from

the instrument itself without reference to any outside so urce.” See Tenn. Code Ann. § 47-3-1 06 cmt. 1. The note provided for intere st “[a]t the Bank’s ‘Prime Rate’ plus ___% per year.” It also defined the “Bank” as “Frederic B. Ingram” and “Prime Rate” as th e “Bank’s rat e for loans to its most credit worthy customers for 90-day unsecured loans.” Thus, the note required Mr. Earthman to pay interest at whatever rat

e Mr. Ingr am charged his most c redit worthy custom

ers for ninety-day unsec ured loans.

This interest rate

provision makes little sense on its face and certainly does not permit the calculation of i

nterest from the

face of the instrument itself. Mr. Ingram
was not in thebusiness of making nine ty-day unsecured loa

ns, and it is not

possible-15-

to determine from the face of the note what Mr. Ingram ’s “Prime Rate” might have been. Accordin gly, the note was not for a sum certain and,

therefore, wa

s not negotiable.

The 1981 chan ges in the substan ce of Tenn. Code Ann. §§ 47 -3-104(1)(b), - 106(1) do not applyto Mr. Earthman’s note. However, even if they did, they wo

uld not render the note negotiab le. As amended, Tenn. Code Ann. § 47-3-104 (1)(b)(ii) and Tenn. Code Ann. § 47-3-106(1)(f) permitted negotiab le in struments to contain renegotiable

or va ri able rates of inter

est and to require th

e payment of a “sum o

f money which is determinable by a formula as provided

in the writing, wh

ether or not such formula

requires the use

of extrinsic criteria.” Other courts that have construed these provisions have held tha t they authorize the use of readily asce rtainable formulae based on some objective or marketplace factor. See Randolph v. Resolution Trust Corp. , 995 F.2d

611, 614 (5th

Cir. 1993); Walters v. First T enn. Bank , 855 F.2d 267, 274-75 (6th Cir. 1988) ; First City Fed. Sav. Bank v. Bhogaonker , 715 F. Supp. 1216, 1219 (S.D.N. Y. 1989). Mr. I ngram’s “Prime R

ate” is not b ased on a rea dily ascertainable, objective

marke tplace standard. Thus, Mr. Ear thman’s October 14 , 198 0 note fails to meet the negotiabi lity requirements in

Tenn. Code Ann.§ 47-3- 104(1)(b)(ii) and Tenn. Code Ann. § 47-3-106(1)(f).

C.

The conclusion that Mr. Earthman’s no te was not a negotiable

instrument is entirelyconsistent with the c onduct of the parties . Their transac tion was not a
comm ercial one, but rather a f inancial accommoda

tion between frie

nds. Mr

. Earthman prepared the note, not with the intention or anticipation that it would enter the stream of commer

ce as a negotia

ble instrume nt, but rather as e vidence of his
a greement

to repay Mr. Ingram’s $1,700,000 loan. Thus, concluding that the not e was not negotiable does not conflict with th e parties’ expect

ations.
Likewise, the conclusion that Mr. Earthman’s note was not negotiab le does not materi ally alter or undermine th e parties’ legal righ ts or responsibil ities. An instrument

may still be

a note even if it is

not negotiable. See Cummings v. F reeman , 21 Tenn. (2 Hum.) 143, 145 (1840) (holding that negotiability is not an essential element of a note); see also Gibson v. H arl , 857 S.W.2d 260,

267 (Mo. Ct. App. 1993). Thus, the negotiabi lity of an instrument i s irrelevant in an a ction between the-16-

original parties to the note ba sed either on the note

itself or the underlying obligation. See Clements v. Lind

say , 320 So. 2d 6 08, 609 (La. Ct.App. 1975); Terry v. Superintendent

of Educ. , 52 So. 2d 13, 14 (Miss. 1951); Mauricio v. Mendez , 723 S.W.2d 296, 298 (Tex. Ct. A p p. 1987); Joseph St ory, Commentaries on the Law of Promissory Notes § 41 (Boston, Little, Br own, and Co. 1868).

III.

We now turn to Mr. Earthman’s asser tion th at he was entitled to a directed verdictbecause Mr. Ingram failed to produce the orig inal note at trial. He insists that the evidence of the cr

eationof Mr. Ingram’s

trusts and

the possession of the not e by
one of Mr. Ingram’s trustees requires the conclusion that Mr . Ingram was not the holder or owner of the note after

1982. We have determined that the evidence does
n otweigh so heavily in Mr. Earthman’s favor that it requires the finder -of-fact t o conclude that Mr. Ingram

assigned the

note to another and, therefore, was no longer the holder or owner of the note.

A.

An appeal from the de

nial of a direc ted verdict involves a question of law concerning

whether the

evidence is sufficient to create an issue for the jury to decide. See Underwood v. Waterslides of Mid-America, Inc. , 823 S.W.2d 171, 176 (Tenn. Ct. App. 1991); Norman v. Liberty Life Assurance Co. , 556 S.W.2d 772, 773 (Tenn. Ct. Ap p. 1977). The reviewing co urt does not weigh t he evidence, see Conatser v . Clarksville

Coca-Cola Bottling C

o. , 920 S.W.2 d 646, 647 (Tenn. 199 5); Benton v. Snyder , 825 S.W.2d 409, 413 (Tenn. 1992), or evaluate the credibility of th

e witnesses. See Benson v. Tennessee Valley Elec. Co op ., 868 S.W.2d 630, 638-3 9 (Tenn. Ct. App. 1993). Instead, it reviews the evide

nce most favorably to the par

ty against whom the motion is ma de, gives that party the benefit of all rea sonable inferences from the evidence, and also disregards a

ll evidence contrar

y to that party’s position. See Eato n v. McClain , 891 S.W.2d 587, 590 (Tenn. 1994); Gann v. International Harves

ter Co. , 712 S.W.2d 100, 105 (Tenn. 1986).

Directedverdicts are appropri at e only when reasona ble minds can reach

one conclusion. See Williams v. Brown , 860 S.W.2d 854, 857 (Tenn. 1993); Crosslin v. Alsup , 594 S.W.2d

379, 380 (Tenn. 1980

). A case should

go to the jury, even i

f the-17-

facts ar e undisputed, when re asonable persons coul

d draw conflicting c

onclusions from the facts. See Gulf, M. & O .R.R. v. U

nderwood , 182 Tenn. 467, 474 , 187 S.W.2d 777, 779 (1945); Pettus v. Hurst , 882 S.W.2d 783, 788 ( Tenn. Ct. App. 1993). These conclusion, however, must be based on more than spe cu lation, conjecture, and guesswork. See Daniels v. W hite Consol. Indus. , In c. , 692 S.W.2d 422, 425 (Tenn. Ct. App. 19 85).

B.
Despite his assertion that he

had owned nothing exce

pthis clothes since 1982, Mr. Ingram did not surrender all his assets direct l y into the Liechtenst ein trusts. Florian von Meiss, t

he Swiss lawyer serving as one the trus tees, held severa

l assets for Mr. Ingram until h

e could decide what

to do with them. One of the assets being held by Mr. von Meiss was Mr. Earthman’s note.

Mr. Ingra m tur ned over the note to Mr. von Meiss on January 26, 1982 in Zurich. On that date, Mr. Ingram executed a written assignment prepare

d by Mr. von Meiss but purposely did

not fill in the name of

the assignee. The

written assignment
was not affix ed to the note in any way.He then gave the or iginal note and the assignment

form to Mr. von Meiss. Both the assignment a nd the original note have been in Mr. von Meiss ’s hands ever since, awaiting Mr. Ing

ram’s directions.

Mr. Earthman was ge

nerally aware in

late 1981 that Mr. Ingram w as placing all his assets in trust

in order to avoid pa ying taxes in the Un ited States. He was not necessarily

aware of the loc ation or status of his note until December

1992. During their meeting in the Dallas airport, Mr. Ingram told Mr. Earthma

n that the note was in Zurich and invited him to pick u p the note in Zurich in return

for his signature on
astatement implicat

ing Commerce Unio

n Bank in the handling

of Mr. Ingram’s

loans at the United Ame

rican Bank and the B anque d’l Union Europeen e. In light of

this conversation, Mr. Earthmanknew more than sixteen months before Mr. Ingram filed suit that the note wa

s in Zurich.

Mr. Ingram alleged in hi s complaint that Mr.Earthman e x ecuted the $1,700,000

promissory note on Oc

tober 14, 1980 and appe

nded a copy

of the note

to15 Paragraph 14 of t he complaint state

s: On or about October 14, 1980 , Earthman signed an eighteen month promis sory n ote on a Commerce Union promissory note form promising to pay Ing ram $1,700,000 together with interest and delivered that note to In gram’ s secretary (the “Note”). A copy of the Note, which is due, owing and un

paid to the present day, is attached hereto as Exhibit A. -18- his complaint. 15 He also alleged that Mr. Earthm an had “refused to r

epay any of the money he borrowed or

received from In

gram,” that he ha

d “not recovered an

y of the funds he advanced to Earthman” and that Mr. Earthman did not dispute that he had not repaid the funds he had borrowed. Based on these a llegat ions, Mr. Ingram asserted in Count I of

his complaint , calle d “Breach of Contract/Pr omissory Note,” that “Earthman has agreed in writing and orall y to repay Ingram f

or all of his loans, advances and payments. Earthman has breached his obligations under the Note and his other obligations.”

Mr. Earthman admitted in his answer that he signed the note and tha

t the copy of the note appended to Mr. Ingram’s c omplaint was a true

and accurate

copy of the note he executed on October 14, 1980. He also admitted that he had “not repaid the note to Plaintiff of $1, 700,000 with interes t or any amount to repa

y t he Cay man Islands d ebt or attorneys’ fees and expenses.” With specific reference to Mr. Ingram’s “Breach of Contr act/Promissory No

te” claim, Mr.Earthman denied th at he renewedhis promise to

pay Mr. Ingram on m

any occasions and

asserted affirm

ative defenses based on l aches and the six-ye ar statute of limitat ions.

In November 1994, in response to Mr. Earthman’s motion for summary judgment, the trial court dism issed four of Mr. I

ngram’s five clai

m s again st Mr. Earthman after concluding that “[t]he facts Ingram a ll eges do not state a ca use of actionfor anything other tha n on the note.” Thus,

after November 1994, the parties prepared for trial with the und erstanding that Mr. Ingram’s claim against Mr. Earthman was essential ly a suit based on Mr . Earthman’s note.
Mr. Ingram was

deposed on April 20, 1995. In response to questions by Mr. Earthman’s lawyer, he desc ribed the creation of the Liechtenste in trus ts a nd explained how he had transferred as sets wor th between $100,000, 000 and $150,000,000

to thes e tr usts. While he cla imed that he owned no assets except his cl othes after 1982, Mr. Ingram also explain ed that Mr. von Meis s was holding th e original note and the blank assi gnment form u ntil he decided what to do with the16 During this instruction, the trial court illustr

ated its point by explaining: “If you borrow money from the bank and sign the note and you go back in and say to the bank, give me my

note back, and they give you the note, they can’t enforce the note anymore because they don’t have it.” -19- note. Mr. Ingram

also provided Mr. E

arthman’s lawyer

with a copy of

the note and the January 26, 1982 a

ssignment.

Both pa rt ies tried the case on the basis that Mr. Ingram’s claim against Mr. Earthman was premised on the October 14, 1980 note. Mr. Ingram’s lawyer displayed an enlarged copy of the note during his opening argument. Mr. Earthman’s lawyer argued that Mr. I

ngram’s claim wa

s based on the note and

admitted that Mr. Earthman had not paid the note when it came due

in April 1982. He told the jury that Mr. Earthman had not paid the note because Mr. Ingram had gratuitously promised to forgive Mr. Earthman’ s $1,700,000 debt and that Mr. Ingra

m lost his right to insist
on payment of the note after the statute of limitations ran in April 1988. Mr. Earthman’s lawyer did not a rgue to th e jury that Mr. Ing ram was not entitle

d to recover on the note because he was no longer the owner or holder of the note.

Mr. Ingram was the first witness du ring his case-in-chief

. Early on the sec

ond day of trial, his law

yer sought to introd

uce a cop y of Mr. Earthma n’s note into evidence by asking him to i dentify the copy. One of the lawyers representing Mr. Earthman pointed out that Mr. Ingram was seeking to introduce a c opy of the n ote rather than the original. Afte r Mr. Ingram tes tified that the copy s ought to be introduced was a true and accurate copy of the original note, the trial court admitted the copy into evidence

without objection fr

om Mr. Earthman

.
On the third day of trial, while bei ng c ross-examined about the discussion surroundingMr. Ingram’s gift of the note to Mr. Earthman, one of Mr. Ingram’s New Orleans lawyers testifie d that “the note obviousl y would not b e in Ingram’s possession

if it had been given a

way.” This state

ment prompted the tr

ial court, with the agreement of

the lawyers for bo

th parties, to give the jury a deta iled instruction concerning

the legal significance of a holder of a note giving the original note back to the maker. 16 Bef

ore Mr. Ingram c

losed his case-in-c

hief, he introduce

d portions of Mr. Earthman’s deposition in which Mr. Earthman admitte d (1) that he borrowed $1,700,000 from Mr. Ingram in 1980, (2) that he prepared and signed a promissory note for the $1,700,000 l oan on October 14, 1 980, (3 ) that he did not pay the note-20-

when it came due in April 1982, (4) that he has never repai

d the principal and int

erest, and (5) that Mr. Ingram never gave him the original note.

Mr. Earthman moved for a directed verdict at the close of Mr. Ingram’s casein-chief on two grounds. First, he asserted that Mr. Ingram had presented no material evidence on which a

verdict for

the plaintiff could stand. Second, he asserted that Mr. Ingramhad failed to prese ntevidence upon which t he jury could find that

his claim
was not barred by the sta

tute of limitations.He did not elaborat e on his first ground and never asserted spe

cifically that Mr.

Ingram had failed to prove that he was the holder or owner of the note. The tria l court responded to th

e motion as follows: in this case, Mr. E

arthman has adm

itt ed execution of the note and . . . that he

hasn’t paid it. The

n the burden shifts to him to prove a defense. All the holder of the note has to do is prove the signatur

e and nonpayment. The defense that Mr. Earthman offer s, and the only defense, is the statute of limitatio ns; I mean, the only one for the jury to decide. Thereafter, the trial court overruled Mr. Ear thman’s motion for directe d verdict, stating that “there is ample evidence in the recordso far to support a jur y conclusion that Mr. Earthman is estopped from raising the statute of limitations or Mr. Ingram’s excused for [sic] filing the cas e within the time peri od, however you want to put it.”
During his testimony on

the fifth day of trial, Mr. Earthman admitted that he borrowed $1,700,000 from Mr. Ingram in October 1980 and that he had never repaid the principal or interest. He also admitted that he prepared and signed the note, that he sent the note to Mr. Ingram’s secret ary in New Orle

ans, and thatMr. Ingram had never given him the or

iginal note despite the

ir discussions.

On the eighth day of tri al as Mr. E arthman’s cas e came to a close, Mr. Earthman’s lawyer sought to intr oduce the portions of M r. Ingram’s depos

iti o n containing his testimony about the transfer of his assets to the Liechtenstein trusts. For the first time, Mr. Earthma n’s lawyer argue d that this testimony was relevant because it “shows that he [M

r. Ingram] is not t

he holder of thi s note and that he transferredthe note to the trust, and he is not the holder

and he has no right to bring this action.” In respo

nse to this new argument, the trial court ruled “that the defense that Mr. Ingram is not a holder of the note sued upon is an affirmativ e defense and must be pled and is not plead and, therefore, it is not relevant in this case.”-21- Despite its ruling, the

trial court permitted Mr. Ingram’s lawyer to recall Mr. Ingramto the s ta nd to testify that he owned the note. Following Mr. Ingram’s testimony, the trial court permitted Mr. Earthman’s la wyer to read to the jury port ions of Mr. Ingram’s A

pril 29, 1995 deposition

in which he stated th

at he owned no assets after 1982 except his clothes

and t hat Mr. von Meiss ha d kept the note since 19 82. The trial court also

permitted Mr. In

gram’s lawyer to

read additional port

ions of the deposition

in which Mr. Ingram explained that Mr. von Meiss was holding th e note for him until he deci

ded what to do with it

.
Atthe close of all the proof, on the ninth and last day of trial, Mr. Earthman’s lawyer moved for ad irected verdict on the grounds that Mr. Ingram had failed to prove that he was the holde r of the note and that

the statute of

limitations barred Mr. Ingram’s claim.Mr. Ingram’s la wyer responded: This issue about the

ownership of the note

came up atthe last two days of t

he trial and doesn’t have anythin g to do with any issue in this trial. What i

t is is a bla

nk assignment, which in the

course of discovery I provided to M r. Da vis; it is a common wa y that something held in safekeeping

in another country so that in the e vent Mr. Ingramwants to transfer it to so mebody, he can tell Mr. von Meiss to put the name in there. Itis a blank assignment.

Mr. Ingram is the owne

r of the note and has been the owner of the note. It has been held, as he testified to in

his deposition, for saf

ekeeping by Mr. von Meiss with h

is other papers in Sw

itzerland.

* * * We could have the note he re probably on Tuesda

y if it’s needed. We have been prejudiced by his delay in raising this action because all we have to do is ca l l Mr. Flo rian von Meiss in Switzer land and he will send i

tb y courier to the United States, and we can’t have it here before Tuesday. Followingthese arguments, the trial court overru led Mr. Earthman’ s motion for directed verdict by stating: “ That was raised f

or the first time on the eighth day of a nine-day trial and as I previously held, I believe that’s an affirmative defense. It must be pled and it is not pled, and that’s not an issue in this case, at least today, and so I overrule the motion based on that.”
During its instructions, the tr ial court explained t

o the jury that Mr. Ingram’s claim against Mr. Earthman was ba sed on Mr. Earthman’ s note. The trial court also17 Producing a note at trial differs from the plaintiff’s traditional obliga tion to make profert of the note in its complaint. Making profert amounted to an averment by the plai ntiff that the original instrument on which its suit was based was in

court or in the possession of the pleader, ready to be produced or shown to the adverse party if desired. See Sam B. Gilreath & Bobb y R. Aderholt, Caruthers’

History of a

Lawsuit § 128, at 143 (8th ed. 1963). Profert was not required at common law in a suit on a note, see Gardner v. He nry , 45 Tenn. (5 Col d.) 458, 459 (1868), but had been required by statute in Tennessee ever since 1819. See Tenn. Co de Ann. § 20-7 06 (1955). The statutory obligation to

make profert was repealed in 1972 following the adoption of the Tennessee Rules of Civil Procedure, s ee Act of March 21, 1972, ch. 565, § 1(6), 1972 Tenn. Pub. Acts. 382, 384, and was replaced by Tenn. R. Civ. P. 10.03 which perm its attaching a copy of the written instrumentsued on rather than the original. Profert was never require d in suits on the debt underlying the note. See Gardner v. He nry , 45 Tenn. (5 Cold.) at 459. -22- pointed out that Mr. Earthman had admitted that he signed the note and that he had not repaid it. The trial court also explained that Mr. Earthman’s defense was based
on the statute of limitations and that Mr. Ingram had the burden of proving that Mr. Earthman was estopped to assert this defense. The trial court summarized the jury’s responsibility

as follows: “[T]her e are two questions you must decide. First, has Ingramestablished that Ea rthman is estopped fr

om relying on

the statute of limitatio

n
as a defense

. . . If, and on

ly if, you decide tha

t issue in favor of Ingram , you should
answer the second question which is, whatis the amount Earthman owes Ingram on the note.”
The jury returned a judgment for Mr. Ingram, and on June 19, 1995, the trial courtentered a judgment an d final order awarding Mr . Ingram $5,667,1 22.84 plus $400,000 in legal expenses. Mr. Earthman filed post-trial mo

tions on July 17, 1995 asserting, among other issues, that the trial courtshould have directed a verdict on the statuteof limitations and holder issues. Mr. Ingr am filed a response

to these motions
on August

28, 1995, and also submitted the original note. The trial court denied Mr. Earthman’s post-trial motions on September 8, 1995 and approximately one month later denied Mr. Earthman’s motion to strike the origina

l note from the rec

ord.

C.

Mr. Earthman insists that he was entitled to a directed v erdict because Mr. Ingramfailed to prove that he was the holder or ow

ner of the note by prod

ucing the original note at trial. 17 While producing the original note

at trial is the most e

fficient and conclusive way f

or a party to prove th

at it is the holder or owner of

a note, it is not the only way. Under the facts of this case, Mr. Ingr

am introduced other sufficient competent

evidence from which the jury could have concluded that he was the holder and owner of Mr. Earthman’s note.18 The maker of a note, as a general matter, gives a note as payment fo r an un derlying obligation. See Hagedorn, ¶ 11.06. The underlying obligation, usually i tself a contract, is the original obligation between the parties that led to the issuance of the note. The issuance of a note does not discharge the underlying obligation, but rather suspends it. See 2 White & Summers, § 16- 14. Refusal to pay a note when due results not only in a breach of the terms of the

note but also a breach of the underlying obligation. When a maker dishonors a note, the holder may seek judicial relief on the note

itself, the underlying obligation, or both in the alternative. See First State Bank & Trust Co. v. McIver , 681 F. Supp. 1562, 1564 (M.D. Ga. 1988); Reifeiss v. Barnes , 192 S.W.2d 427, 430 ( St. L. Ct. App. 1946); Rubbelke v. Strecker , 765 P.2d 314, 316 (Wash. Ct. App. 1 988)

. Thus, as between the origina l parties, the payee may sue the maker on the note or may waive the cause of action on the note and sue on the underlying obligation. See Alsobrook v. Hathaway , 35 Tenn. (3 Sneed) 454, 457 (1856); Cook v. Beech , 29 Tenn. (10 Hum.) 412, 414 (1849 ); see als o Affiliated Acceptance Corp. v. Boggs, 917 S.W.2d 652, 656 (Mo. Ct. App. 1996); Mansion Carpet, Inc. v. Marinoff

, 265 N.Y.S.2d 298, 299 (App. Div. 1965); Doyle v. Chladek , 401 P.2d 18, 25 (Ore. 1965). The suit on the note is preferable. See 3 Joseph F. R andolf, A Tre atise on the Law of Commercial

Paper § 1673 (St. Paul, West 2d ed. 1899). However, if the action is brought on the underlying obligation, the plaintiff need not produce the note. See Gardner v. Henry , 45 Tenn. (5 Cold.) at 459 (holding that pr

ofert was not nec

essary); see also United Postal Savs. Ass’n v. Norbob Enters., Inc. , 792 S.W.2d 898, 901 (Mo. Ct. App. 1990). In th

is circumstance,

the note is simply evidence of the maker’s indebtedness to the payee. See Owen v. George Cole Motor Co. , 155 Tenn. 250, 252, 292 S.W. 1, 2 (19 27); see also

Price v. Mize , 628 P.2d 705, 706 (Okla. 1981); Mortgage Assocs., Inc. v. Monona Shores, Inc. , 177 N.W.2d 340, 347 (Wis. 1970). The wording of Mr. Ingram’s c omplaint is broad e

nough to include a c

laim based on th

e O ctober 14, 1980 note and a

claim based on the

underlying $1,700,

000 loan. Thus, whil

e Mr

. Ingram could have elected to pursue Mr. Earthman on the underlying loan, he did not. The entire course of the proceedin

gs following the tri

al court’s N

ovember 1994 order dismissing all of Mr. Ingram’s claims against Mr. Earthman excep

t the claim based o

n the note

demon strates that Mr. Ingram elected to pursue the claim based on Mr. Earthman’s October 14, 1980 note. -23- Mr. Ingram’s claim a

gainst Mr. Earthman is

based only on

the note. 18 In a suit
on a note, the holder ma

kes out a prima fac

ie case by producing t

he note signed by the maker and by showing that there is a bala

nce dueon the note. See Crossland Fed. Sav. Bank v. A. Suna & Co. , 935 F. S upp. 18 4, 191 (E.D.N .Y. 1996); Smith v. Weindrop , 833 P.2d

856, 857 (Colo. Ct.App. 1992); Misemer v. Fre da’s Restaurant, Inc. , 961 S.W.2d

120, 121 (Mo. Ct. App. 1998); L. Harvey & Son, Co. v. Jarman , 333 S.E.2d 47, 52-53 (N.C.App. 1985); Judarl, L.L.C. v. Cycletech, Inc. , 667 N.Y.S. 2d 451, 452 (App. Div. 199 8).
Producing the original note is not, however, the only way to establ ish a prima facie case. The holder may also produce a copy of the note along with evidence that (1) the plaintiff is the

holder or owner of

the note, (2)that the maker signed the note, (3) that the note is in def

ault and there is a

balance due on the note, (4) that the copy produced at trial is a true a nd accurate copy of

the note sued on, and ( 5) that the holder has not

assigned, pledged,

or transferred t

he note to another. See Resolution Trust Corp. v. Starkey , 41 F.3d 1018, 1023 ( 5th Cir. 1995); FDIC v. McC rary , 977-24-

F.2d 192, 194 (5th Cir. 19 92); United States v. Golden Elevator, Inc., 868 F. Supp. 1063, 1065 (C.D . Ill. 1994); Sonne v. FDIC , 881 S.W.2d 789, 794 (Tex. Ct. A

pp. 1994); Edlund v. Bounds , 842 S.W.2d 719, 724 (Tex . Ct. App. 1992). The holder may supply one or more of t hese elements of

proof using the maker ’s admissions in its answer or during dis covery or at trial. See Vetter v. FDIC, 426 So. 2d 444, 446 (Ala. Civ. App. 1983); McLemore v. Sou thwest Ga. Farm

Credit, ACA , 495 S.E.2d 335, 337 (Ga. Ct. A

pp. 1998); Good v. Good

, 324 S.E.2d 43,

45 (N.C. Ct. App. 1985).

The purpose of the prese

ntment rule is to

facilitate proof that

the plaintiff is the holder of the note, see James Talcott, Inc. v. Allahabad Bank, Ltd. , 444 F.2d 451, 458 (5th Cir. 1971); Union Sav. Ba nk v. Cass ing , 691 S.W.2d 513, 515 (Mo. Ct. App. 1985), and to avoid the risk tha t the maker mig

ht be require d to pay the same note twice. See McKirgan v. Am erican Hosp. Supply Corp. , 375 A.2d 591, 593 ( Md. Ct. Spec. App. 1977); Prime Fin. Group, Inc. v. Smith , 623 A.2d 757, 759 (N.H. 1993); Haupt v. Coldwell , 500 S.W.2d 563, 565 (Tex. Civ. App. 1973). In disputes between the original parties,

the presentment rul

e is not as impor

tant when the note is not negotiable

because the holderis not a holder in due course and thus, the maker can assertthe defense of payment under Tenn. R. C

iv. P. 8.05 in a sub sequent suit on the same note.

D.

Itis the better prac

tice in a suit on a note , negotiable or not, for the plaintiff t

o produce the original note at trial and introduce it into evide

nce. Doing so eff

ectively forestalls any issue concerning whether th e plaintiff is the holder or owne r of the note. Had Mr. Ingram

produced Mr. Ear

thman’s original note , no dispute would have been precipitated later concern ing his status as the holder or owner of the note. However, Mr. Ingram did not produce the original note, and th u s we must now determine

whether the record contains sufficient evidence to defeat Mr. Earthman’s motion for directed verdict at the close of all the proof.

Mr. Ingram’s testimony

and Mr. Earthma

n’ s admissions es tablish conclusively (1) that Mr. Ear

thman prepared and executed the note, (2) that Mr. Earthman delivered the noteto Mr. Ingram, (3) that Mr. Ear thman did not pay the note when it
came due, (4) that Mr.Earthman has neve r repaid M

r. Ingram the principal and interest due on the note, and (5) th at the copy of the note Mr. Ingram produced at trial-25-

was a tr ue and accurate copy of the original note. The only remaining essential element of Mr. Ingram’s case concerns whether Mr. Ingram is the holder or owner of the note or whether he assigned or transferred the note to another.

Mr. Ea rthman would be entitled to a directed verdict only if the evidence permitted the jury to draw only one rea sonable conclusion –

that Mr. Ingram w

as not the holder or owner of

the notebecause he assigned it to Mr. von Meiss in 1982. The evidence is simply not sufficiently one- sided to support this conc lusion. To the contrary, the evid ence de monstrates rather convincingly that Mr. von Meiss was holding the original note as Mr. Ingram’s agent while Mr. Ingram decided wh at to do withthe note. Accord

ingly, rather than establishing that Mr. In gram was not the holder or owner

of the note, the evidence points toward a contrary result. Therefore, the trial court proper

ly denied Mr. Eart

hman’s motion for dir

ected verdict at th

e close of all the proof based o

n the claim that Mr.

Ingram had not prove

d that he was the holder or owner of the note.

IV.

Mr. Earthman also asserts that he was entitled to a direc ted verdict on his statuteof limitations defense. He argues thatthe only conclusions a reasonable factfindercould draw from the evidence wereei ther that he did not induce Mr. Ingram to delay filing suit on the note by promising to pay the note or that he did not revive the note after the sta

tute of limitations r

an by expressly promis

in g to pay it or by acknowledging

the debt and

expressing a

willingness to pay it. We have determined that the evidence prese

nts a jury que stio n concerning whether Mr. Earthman was estopped to rely on the statute of limitations and w

hether Mr. Ear

thman, by his statements and conduct, reviv e d his obligation under the note after the sta

tute of limitations ran.

A.

A def ense based on the statute of li mitations is an affi rmative defense. See Tenn. R. Civ. P. 8.03 . The de fendan t asserting it has the burden of establishing

all of its elements. See Carr v. Borchers , 815 S.W.2d 528, 532 (Tenn. Ct. App. 1991);-26-

Stockburger

v. Ray , 488 S.W.2d 378,

382 (Tenn. Ct. App. 1972); Jones v. Hamilton County , 56 Tenn

. App. 240, 247, 405 S .W.2d 775, 779 (1965 ). However, once the defendant establishes the defe

ns e, the burden shifts to the plaintiff to establi sh one
or more of the recogni

zed exceptions to

the defense. See Jones v. Coal C reek Mining & Mfg. Co. , 133 Tenn. 159, 169, 18 0 S.W. 1 79, 182 (191 5); Smith v. Southeaster n Properties, Ltd. , 776 S.W.2d 106, 109 (Ten n. Ct. App. 1989).

Mr. Earthman did not re

pay his no te to Mr. Earthman when it came due on April 14, 1982. Accordingly, Tenn. Code Ann. § 28-3-109(a)(3) (1980) required Mr. Ingramto file suit against M r. Earthman based on thenote within six year s or by no later than April

14, 1988. The parties

agreed that Mr. I

ngram did not file suit

against Mr. Earthman until March 24, 1992 – well after t he six-year limitations period had expired. Thus, Mr. Ear

thman established a pr

ima facie defense based on the running of the applicable

statute of limitatio

ns, and the

burden shifted back t

o Mr. Ingram to establish one or more of the e

xceptions to a sta

t ute of limitations defense. Mr. Ingramrelied on two exceptions. First, he asserted that Mr. Earthman was estopped to assert a statute of

limitations defense . Second, he asse rted tha t Mr. Earthm

an revived his obligation u

nder the note after

the limitation period

had expired.

In its jury instructions concerning the parties’ respective burdens with regard to the statute of limit ations defense, the trial co urt informed the jury that Mr. Earthman had established that Mr. Ingram did not file his suit until after the six-year limitation s period ex pired. Accordingly, the trial court instructed the jury that Mr. Ingramhad the burden of esta blishing either that M

r. Earthman wa

s estopped to assertthe statute of limita tions de fense or that Mr. Ear thman had revived his obligation

under the note after the statute

of limitations had run . The trial cour t also included a question on the jury form asking: “Has Ingram proven facts which estop Earthman from relying upon the statute of limitation as a defense or which e xcuse Ingramfrom failing to fi le suit within the six year limitation period.” The jury answered “Yes” to this question. Mr.Earthman now argues that this quest

ion should have been decided in his favor as a matter of l aw.

B.
Estoppe l an d revival are compl ementary responses

to a statute of limit

ations defense. A defendant will be estopped to assert a statute of limitations defense when19 A statute of limita tio ns bars the remedy only; it does not undermine the substance of the plaintiff’s claim or cause

of action. See Woodlie v. Towles , 68 Tenn. 592, 593- 94 (1877); Wyatt v. A-Best Prods. Co. , 924 S.W.2d 98, 102 ( Tenn. Ct. App. 1995) ; Rankhorn v. Sealtest Foods , 63 Tenn. App. 714, 723, 479 S.W.2d 649, 652 (1971). Some older decisions hold that the revival exception predicates liability on the original debt that has been revived, see e.g., Jordan v. Jordan , 85 Tenn. 561, 565 (1887); Woodlie v. Towles , 68 Tenn. at 594; Williamson Bros. v. Daniel , 21 Tenn. App. 346, 351, 11 0 S.W.2d 1028, 1031 (1937); while other older decisions predicated liability on the new promise. See e.g., Belote’s Executors v. Wynne , 15 Tenn. (7 Yer.) 534, 543-44 (1835). Ot her courts have observed

that whether the r

emedy for the old c

ause of action is r

evived or a new c

ause of action basedon the old

consideration is created are “questions of some metaphysical nicety, but [are] of no practical importance.” Hannah v. Hawkins , 73 Tenn. 240, 242 (1880). -27- itinduces a plaintiff to refr ain from filing suit d

uring the applicable

limitations period. See Dukes v. Montgomery Co unty Nursing Home , 639 S .W.2d 910, 912 (Tenn. 1982); American Mut. Liability Ins. Co. v. Baxter , 210 Tenn . 242, 2 47, 357 S.W.2d 825, 827 (1962). Sta

tements or conduct tha

t support an estoppel c

laim includerepresentations,

made prior to the ex

piration of the limit

ations period, that t

he defendant either would not asserta statute of limita tions defense or that

the dispute would be amicably resolved witho ut filing suit. See Sparks v. Metropolitan Gov’t , 771 S.W.2d 4 30 , 433 (Tenn. Ct.App. 1989); Whitlow v. Hardin C ounty , 13 Tenn. App. 347, 359 (1930). Persons who successfully es

tablish the estoppel e

xception to
astatute of limitatio

ns defense must file

suit within a reasonable time after becoming
aware that the

debtor will not pay the debt. See Neaterour v. Holt , 544 N.E.2d 846, 852 (Ill. App. Ct.1989); Cacdac v. Hiland , 561N.E.2d 758, 758 (Ind

. 199 0); Reifschneider

v. Nebraska Metho

dist Hosp. , 44 7 N .W.2d 622, 626 (Neb. 1989); Leonard v. Eskew , 731 S.W.2d 124, 129 (Tex . Ct. App. 1987).
Similarly, a defendant

may revive a plaintiff

’s remedy that had be

en barred by the running of a statute

of limitations 19 either by

expressly promising to

pay the debt
or by ac knowledging the d ebt and expressing a willingness to pa y it. See Hall v. Skidmore , 180 Tenn. 23, 27, 1 71 S.W.2d 274, 27 5 (1943 ), overruled on other grounds , Graves v. Sawyer , 588 S.W.2d 542, 544 ( Tenn. 1979); Warren v. Clevel and , 111 Tenn. 174, 177,

76 S.W. 910, 910 (1903); Crowder v. Nichol , 17 Tenn. (9 Yer.) 453, 454 (1836). The

defendant

must make the promise or give the acknow ledgment directlyto the plaintiff or s omeone standing in such a close relationship w ith the plaintiff that it is reasonable to infer that the defe ndan t’s statements wil l reach the plaintiff. See Jones v. Miller , 173 Te nn. 360, 363, 117 S.W.2d 745, 746 (1938); Roller v. Bachm

an , 73 Tenn. 153, 157 (188 0).

The expression of willi

ngness to pay the debt tha t must accompany th e acknowledgment

of the debt may be im

plied from the

defendant’s words

or acts but,-28-

in whatever form,

the words or

acts must amount to a recognition of the continuing obligation. See Hall v. Skidm ore , 180 Tenn. at

27, 171 S.W.2d at 275; C.A. Hobbs, Jr., Inc. v. Brainard

, 919 S.W.2d 337,

338 (Tenn. Ct. A

pp. 1995). Persons

who
s uccessful ly establish the reviva l exception to a statut

e of limitations def

ense must file suit with the applica ble limitations period measured from when the conduct constitutingthe revival occurred. See Graves v. Sawyer , 588 S.W.2d 542, 544 (Tenn. 1979).

C.

The record is replete

with evidence of num

erous instances occ

urring between April 1982 and December 1992 in which Mr. Earthman acknow ledged his debt

to Mr. Ingramand either stated or indicated a willing

ness to repay the debt

or to enter into
an amicable arrang

ement to discharge t

he debt. Mr. Ingr

am testi fied th at Mr. Earthman told him during a conver sation in April

1982 before Mr. Ear

thman’s note
came due that he was unable to pay the note and that he would ask United American Bank to renew the loan in Mr. Ingram’s name. Similarly, in May 1983, Mr. Earthman acknowledg e d his continuing obligation to repay Mr. Ingram when he asked Mr. Ingramto pay Banque d’l Uni on Europeene $2,729 , 675.95 in order to pre vent Commerce Union Bank from being called upon to repurchase Mr. Ingram’s note.

In April and May 1987, Messrs. Earthma n and Ingram discusse

d the possibility that Mr. Ingram might

forgive Mr. Ear

thman’s indebtedness.

Mr. Earthman sent Mr. Ingramthree proposals that in essence involved c anceling the debt in ord er to discharge Mr. Earthman’ s compensation claim s involving two of Mr.Ing ra m’s companies. When Mr. Ingram categorically re

jected these proposa

ls, Mr. Earthman acknowledged his continuing obligation to repay the loan, and thetwo men discussed how Mr. Earthman c

ould earn s uff

icient income from

other business ventures to enable him to repay Mr. Ingram.

The first venture Mess

rs. Ingram and

Earthman discusse

d involved the sale of Arcata Corpora

tion to Japanese invest

ors which, if acc

omplished, would re sult in a sizeable commission for Mr.Earthman. In A pril 1988, just as the s tatute of limitations was about to run on the note, Mr. Earthman told Mr. Ingram that he was still unable to repay the debt but that he hoped to be able to do so from the anticipated commission

from the Arcata sale. Later, in September 1988 durin g a trip to Tokyo,-29-

Mr. Earthman and Mr. Ingram agreed that any commission earned would be used to repay Mr. Earthman’s debt to Mr. Ingram before Mr. Earthman received anything

.

In April 1991 after the Arcata transaction fell through, Mr. Earthman offered to discharge his debt to Mr. Ingram by pro viding Mr. I ngram a 40% intere st in a venture to bottle and market springwate r fro m Mr. Earthman’ s Beersheba Spring s farm. The venture never

got off the ground after Coca-Cola Corporation expressed
no interest in it. Mr. Ing ram did not agree to acc ept Mr. Earthma

n’s offer when he sensed that Mr. E

arthman was losing i

nterest in the proje

ct.

The final discussion between Messrs. Earthman and Ingram concerning Mr. Earthman’s debt occ urred in December 1992 when the two men met in the Dallas airport. According to Mr. Ingram, Mr. E arthman acknowled

ged the debt and indicated that he remained willing but unable to pay it. He also told Mr. Ingram that he would assist

Mr. Ingram in his e

fforts to induce Com

merce Union Bank

to pay a portionof the debt

because of the way it had managed Mr. Ingram’s United American Bank and Banque d’l Union Europeene loans. Mr. In gram fi led suit against Mr. Earthman in Marc

h 1994.

Statute of limitations defenses can be factually trou blesome. See Hibner v. St. Paul Mercury Ins. C o. , 619 S.W.2d 109, 110 (Tenn. 1981). Accordingly, the jury shouldnormally decide whether a defendant should be prevented from a sserting a statuteof limitations defe nse. See Apperson v. P attison , 79 Tenn. 484, 486 (1883); Frazor v. Osborne , 57 Tenn. App. 10, 20, 414S.W.2d 118, 123 (1966 ), overruled on other grounds , Stanbury v. Bacardi , 953 S.W.2d 671, 675 (Tenn. 1997)

. The question should be withdrawn from the jury only when the trial court determines that reasonable

persons could reach

only one conclusi on based on the evidence . Our review of the evidence convinces us that a jury question existed concerning whether Mr. Earthman induced M r. Ingram to dela

y filing suit by

continuing to acknowle

dge his debt and by expressi

ng his willingness but ina bility to repay it.

V.

Mr. Earthman also tak

es issue with the jur

y instructions. Spec

ific ally, he asserts that the trial court’s instructions contain two misstatements of the law and that the trial court errone

ously declined to give f

our of his requested i

nstructi ons. W e-30-

have determined tha

t the trial court did not commit reversib le error by denying Mr. Earthman’s requested ins t ructions and that the t rial court’s instru

ctions, taken as a whole, fairly de

fined the issues in the

case and did not misle

ad the jury.

A.

Juries hav e the exclusive duty to decide all the disputed factual issues submitted to them , see McCormic v. Smith , 668 S.W.2d 304, 306 (Tenn. Ct. A

pp. 1984); Finks v. Gillum , 38 Tenn. App. 304, 311-12, 273 S.W.2d 722, 726-27 (1954), based on the law as explaine d by the trial court. See M cCorry v. King ’s Heirs , 22 Tenn. (3 Hum.) 267, 277-78 (1842); Ladd v. Honda Motor Co. , 939 S.W.2d 83, 93 (Tenn. Ct. App. 1996). Thus, the trial c ourt’s instructions

are the jury’s sole source of the legal principl es used to guide th eir deliberations. See S tate ex rel. Myers v. Brown , 2 09 Tenn. 141, 148-49, 351 S.W.2d 385, 388 (1961); Grissom v. Metropolitan Gov’t , 817 S.W.2d 679, 685 (Ten n. Ct. App. 1991).

Trial courts have aduty to give substantiall y accurate instructions with regard to e very f

act and theory raised by the pleadings a nd supported by t he proof. See Street v. Calvert

, 541 S.W.2d 576,

584 (Tenn. 1976); Souter v. Cracker B arrel Old CountryStore, Inc. , 895 S.W.2d 681, 684 (Tenn. Ct. App. 1994); Tuggle v. Raymon d Corp. , 868 S.W.2d 62 1, 626 (Tenn. Ct. App . 1992). These instructions should be couched in plain terms easil y understood by

lay persons. See Betty v. M etropolitan Gov’t , 835 S.W.2d 1, 10 ( Tenn. Ct. App.1992); Martin v. Castner- Knott Dry

Goods Co. , 27 Tenn. App. 421, 431, 181 S.W.2d 638, 642 (1944).

Instructions shouldnot contain inaccura te or inapplicable statements of legal principles that might tend to confuse the jury

. See Lantroop v. Moreland , 849 S.W.2d 793, 798 (Tenn. Ct. App. 1992 ). However, instr uctions are not expected to be perfect. In re Estate of

Elam , 738 S.W.2d 169,

174 (Tenn. 1987); Benson v. Tennessee Valley Elec. Coop. , 868 S.W.2d 630, 642-43 (Tenn. Ct.App. 1993). Our task onappeal is to review the instruc

tions in their entire

ty, see Otis v. Cambridge Mut. F ire Ins. Co. , 850 S.W.2d 439, 446 (

Tenn. 19 92); Ab bott v. American Honda Motor Co. , 682 S.W.2d 206, 209 (Tenn. Ct. App. 1984), an d t o examine the challe nged instruction in context to determine w het her the instructions, as a whole, fair

ly and accurately embody the parties’ theorie s. See Gorman v. Earhart, 876 S.W.2d 832, 836 (Tenn.-31-

1994); Mid-South

Pavers, Inc. v. Whitaker , 53 Tenn. App. 584, 593, 385 S.W.2d 284 , 288 (1964).
Appellate courts review the

entire charge just like a jury would, see Memphis St. Ry. v. Wilson , 108 Tenn. 618, 620, 69 S.W. 265, 265 (1902); Abbott v. Ameri can Honda Motor Co. , 682 S.W.2d at 209, rat her than through the practiced eye of a judge or lawyer. See Ladd v. Honda M otor Co. , 939 S.W .2d at 94. We wil l not invalidate instructions as long as

they fairly define

the legal issues in the

case and do not mislead the jury. See Otis v. Camb ridge Mut. Fire Ins. Co. , 850 S.W.2d at 44 6; Smith v. Parker , 213 Tenn. 147, 156 , 373 S .W .2d 205, 209 (1963); Grissom v. Metropolitan

Gov’t , 817 S.W.2d at 685. A n erroneous instructi on will not necessarily be cons

idered reversible

error if the trial court later explai ns or corrects the instruction

or if the trial court adequately explains the issues in the case in other portions of its charge. See In re Estate of Ela m , 738 S.W.2d at 17

4; Smith v. Parker , 213 Tenn. at 156, 373 S.W.2d at 209; Ladd v. Honda Motor C o. , 939 S.W.2d at 94 , 103.

Trial courts should caref ully consider request

ed instructions

b ecause the requesting parties a

re entitled to

them (1) if they are supp orted by the evidence , (2) if they embody a

theory relied on the party, (3) if they are correct sta tements of the law, and (4) if

their substance is not

already contained in other portions of the charge. See Ladd v. Honda Motor Co. , 939 S.W.2d at 103; Spellmeyer v. Tennessee Farmers Mut. Ins. Co. , 879 S.W.2d 843, 846 (T enn. Ct. App. 199 3). However, trial courts may decline to give a requested instruction (1) if it is not supported by the evidence,

see Payne v. Nashville, C. & St. L. Ry. , 106 Tenn. 167, 173-7 4, 61 S.W. 86, 87 (1900); Hartsell v. Fort S anders Reg’l Med. Ctr. , 905 S.W.2d 944, 949 (Te nn . Ct. App. 1995), (2) if its substance is already covered in the charge, see Jack M. Bas s & Co. v. Parker , 208 Tenn. 38, 49, 343 S.W.2d 879, 884

(1961); Tuggle v. Raymon d Corp. , 868 S.W.2d 621, 626 (Tenn. Ct. App. 1992), or (3) if it is incorrect or incomplete

in any respect. See Otis v. Camb ridge Mut. Fire I ns. Co. , 850 S.W.2d at 445; Morton v. Martin Aviation Corp. , 205 Tenn. 41, 53- 54, 325 S.W.2d 52 4, 53 0 (1959). B.

We turn first to Mr. E

arthman’s request

ed jury i nstru ctions. Of the fou r instructions den ied by the trial cou rt, two related to Mr. Ingram’s status as a holder20 HadMr. Earthman’s no te been governe

d by the Uniform Comm ercial Co de , the endorsement

of the separate assignment document would not have amounted to an endorsement in blank of the note. See Tenn. Code Ann. § 47-3-202(2) (1979). Without an assignment in blank, the notecould not have been negotiated by delivery alone. See Tenn. Code Ann. § 47-3-204(2) (1979). -32- or owner of Mr. E

arthman’s note, w

hile the remaining two involved Mr. Earthman’s statute of limitations defense.

T HE P ROPOSED I NSTRUCTIONS C ONCERNING M R . I NGRAM ’ S S TATUS

Mr. Earthman requested instructions concerning the legal signifi cance of an endorse me ntin blank and the consequ ences of transfer

ring an instrument. Both instructions were basedon the Uniform Commercial Code and were premised on Mr. Earthman’s assertion that Mr. Ingram was no longer the owner or holderof the note because he had endorsed it in bl

ank and had assigned it t

o Mr. von Meiss. W

hile the trial courtcould pr operly have instruct ed the jury concerni

ng the legal effec

t of transferring the n

ote, it did not err by

declining to give these

instructions.
Requested instructions must be supported by the evid

ence and must

be correct statements of the applicable law. The se two instructions were not correct statem ents of the law because the Uniform Commercial Code did not govern Mr . E arthman’s note. This note was not negotiable and, therefore, the rights an d liabiliti es of the parties to the note must be foun d in the common law of

bills and notes and in contract law.

The instructions were also not supported by the evidence. Mr. I

ngram did not endorsethe note in blank but ra ther executed a se

parate assignment f

orm with the space for the name of

the assignee left blank. The consequences of these acts differ because the assignment

document was not so f

irmly affixed to the note as to become partthereof. 20 While non-negotia ble notes may be tran sferred or assigned, see Wolfe

v. T yler , 48 Tenn. (1 He

isk.) 313, 316 (1870) , whether an assi gnment has occurre d depends on the intention and mu tua l assent of the assig nor and the assign ee. See Patton v. Gleaves , 206 Tenn. 5 41, 544, 334 S.W. 2d 946, 948 (1960); Hutsell v. Citizens’ Nat’l Bank, 166 Tenn. 598, 603 , 64 S.W.2d 188, 190 ( 1933). The evidence does not establish that Mr. Ingram intended to a ssign all his interest in the note to Mr.
von Meiss. At most, Mr. Ingram’s unrebutted testimony, buttressed by the separate assignment

form with the name of the assignee left blank , establishes that M r. von21 Even if Mr. von Meiss, rather than Mr. Ingram, was considered the holder of the note, the

relationship

between Mr. von Meiss and Mr. Ingr am supp orts an inferenc e that any stateme

nts acknowledging or reaffirming thedebt made to Mr. Ingram would have found their way to Mr. von Meiss in relatively short order. -33- Meiss was holding the note as Mr. Ingram’s agent until Mr. Ingram decided what to do with the note.

T HE P ROPOSED I NSTRUCTIONS C ONCERNING THE S TATUTE

OF L IMITATIONS D EFENSE

Mr. Earthman also re

quested two instruct

ions regarding his

statu te of limitations defense. The first instruction would have informed the jury that

In order to revive the deb t, the burden of proo f is on the Plaintiff, Ingra m, to prove by a prepondera nce of the evidence that the

Defe ndant, Earthman, made an unconditional promise to pay Ingram on or after March 24, 1988, or that on or after March 24, 1 988, E arthman engaged in conduct th at wou ld induce an ordinari ly prudent person not to file suit to collect the note. The second requested instruction would have informed the jury that

Statementsor conduct, lik e pa yments on a note, reaffi rming the debt, must be ma de to the holder of the note to toll the Statute of Limitations. If you find that Ingramwas not holding the $1. 7 million note, the statements or conduct by

Earthman toward Ingram during such times as Ingram was not holding th e $1.7 million note, will not bar or estop Earthman from relying upon the Statute of Limitations, a

s a defense to payme

nt of the$1.7 million note.

The trial court properly decl ined to give Mr. Earthm

an’s requested instr

uction that s tateme nts acknowledging a de bt will not revive a cause of action on a not e
u nless they are made directly to the holder. This proposed instruction is fa ulty fo r two reasons. First,

it is legally incorrect

because the statem

ents of acknowledgm

ent need not be made directly to the holder. They ma y also be made to persons w hose relationshi p with the holder is so c lose that it is reason

able to presume that

the statements found their way back to the holder. See Jones v. Miller , 173 Tenn. at 363, 117 S.W.2d at 746; Roller v. Bachm an , 73 Tenn. at 157.Second, it is not supported by the evidence because the evidenc e is insufficient to c

reate a jury questi

on concerning Mr. Ingram’s status as the owner or holder of the note. 21-34- Li kewi se, the trial court did not err by declining to give Mr. Earthman’s proposed instruction concern ing the substance of

the statements required to revive a debt. This proposed instruc tion was unduly narrow

because a cause

of a ction on a note can be revived not onl y by an “unconditional p romise to pay” but also by an acknowledgement

of the debt coupled w

ith an expression

of willingness to p ay. See Hall v. Skidmore , 180 Tenn. at 27, 171 S.W.2d a

t 275; Warren v. Clevel

and , 111 Tenn. at 177, 76 S.W. a

t 9 10. Th e substance of the r equested instruction w

as also adequately

covered in other por

tions of the trial cou

rt’s charge. Fol

lowing its instructions on estoppe

l, the trial court

charged the jury tha

t A debt, a collection of

which is barred by the statute of limitation, may al so be rev ived. If Earthman acknowledged the de bt and promised to pay Ingram after the six-year period expired then the debt was revived and the suit is not

barred by the six-ye

ar statute of

limitations. Ingram has the burde

n of proving the reviva

l of the debt. Mr. Earthman’s chief objection to the trial court’s i nstructions is that they permitted the jury to decide tha t statements o

r condu ct occurring befor e March 24, 1988 could prevent

him from asserting a s tatute of limitatio ns defense. We agree that the instructions perm

it the jury to draw t

his conclusion, but we fail to see the error. Promises and statements made before the limitations period expired will support an estoppel claim , just a s promises and statem ents made after th

e limitations period expired will supp ort a re vival claim. The trial court’s estoppel and revival instructions, taken as a whole, adequately provided the jury with the legal principles needed to decide Mr. Ea

rthman’s statute of

limitations defense . Accordingly, the trial court did not err by de

nying Mr. Earthma

n’s requested instru

ctions.

C.

Mr. Earthman also asserts that the trial court gave two err oneous instructions that affected the outcome o f the trial. The first instruct ion involved the permis sible
uses of the evidence invol ving Mr. Ingram’s

1977 criminal convict

ion. The second instruction inv olves the elements o f Mr. Ingram’s estoppel claim.

T HE I NSTRUCTION L IMITING THE USE OF M R . I NGRAM ’ S C ONVICTION

Mr. Earthman’s challenge to the trial court’s instruction limi ting the jury’s consideration

of Mr. Ingram’s

1977 conviction is

puzzling. This inst

ruction followed-35-

the trial court’s ruli

ng that the conviction c

ould not be used to impeach Mr. Ingram but that it could be used to illustrate the rela tionship between M

essrs. Ingram and Earthman and to provide backgro und information conce

rning th e loan t

ransaction itself. E ven though Mr. Ear thman has not directl

y challenged the tria

l court’ s evidentiary ruling, he takes iss ue with the instruct

ion necessitated by the ruling. Mr. Earthman’s failure to challen ge the evi den tiary ruling limiting the use of Mr. Ingram’s criminal conviction prevents him from tak ing issue with the limi ting instruction.

Were we to permit Mr.Earthman to colla terallyattack

the evidentiary ruli

ng,
w e would find that the tr ial court properly de

termined that Mr.Ingram’s 197 7 conviction

could not be used to impeach his credibility. Tenn. R. Evid. 609 permits using prior convictions to impeach a witness’s credibility. However, evidence of a conviction

that is more than ten years old cannot be used for im peachment unless the courtfirst determines “that theprobative value of th e conviction, support

ed by specificfacts and circums tances, substantially

outweighs its prejudicial effect.” See Tenn. R. Evid. 609(b). The rule discourages the u se of stal e convictions for impeachment

because they may no longer shed light on a witness’s credib ility. See Neil Cohen, et al., T

ennessee Law of Evidence § 609.5 (3d ed. 1995) (“Tennessee Law of Evidence”). T

hus, as a practica

l matter, the

balancing test requi

red by Tenn. R. Evid. 609(b) ordina

rily r esults in th e exclusion of the evi dence of the stale conviction. See Robert E. Burch, Trial Handbook for Tennessee Law yers § 16.11, at 220 (2d ed. 1995); T

ennessee Law of

Evidence, § 609.5 , at 372-73.

Like other evidentiary r

ulings, appella te courts review a trial court’s ruli

ng unde r Tenn. R. Evid. 609(b) usin g an abuse of discret ion standard. See S tate v
. Blanton , 926 S.W.2d 953, 959-6 0 (Tenn. Crim. App. 1996). Th e reviewing court does not reweigh

or re-evaluate the probative value and prejudicial effect of the pri or conviction. See State v. Robe rts , 943 S.W.2d 403, 408 ( Tenn. Crim. A

pp. 1996). The party desiring to use an old c onviction has the burde

n of demonstrating tha

t it s probative va lue out weighs its prejudi cial effect. See United States v. Beahm , 664 F.2d 414, 417-18 (4th Cir.

1981). Mr. Ear

thman has failed to ca rry his burden of proof and has failed to

demonstrate how the trial court erred by preventing

him from using the evidence of Mr. Ingram’s 1977 conviction to impeach his credibility.-36- If the trial court dec

ides to permit the int

roduction of

evidence of aconviction of a party who was released from custody morethan ten years before the action was commenced, it should instruct the jury concerning the permitted use of the evidence. See Tennessee Law of Evidence § 609.12. The trial court did precisely that when it instructed the jury th

at

. . . this evidence about Mr . Ingram’s convic

tion and being in prison is being a

dmi tted because it goes t o the whole questio n of the loan and the re lationship between t

he parties in the loan and

any provisions that we

re or were not made for paying it ba ck. Andso I instruct you that you’re not to consider this evidence about this conviction in Chicag o as evidence of bad character on the part of Mr. Ingra m, but o n ly for the limited purpose of helping you understand the tra

nsaction that is involved in this su it. Because we find no error with the trial court’s eviden tiary ruling, we find no e rror withits contemporaneou s limiti ng instruction regar ding the use of the evid

ence of Mr. Ingram’s 1977 conviction.

T HE E STOPPEL I NSTRUCTION

Mr. Earthman also tak

es issue with the por

tion of t he trial court’s estoppel instruction in which t

he trial court state

d: Earthman may also be estopped from relying on

the statuteof limitations i

f during the six-year p

eriod . . . he acknowl edged his indebtedness to Ingram. An acknowledgment

of the debt consti

tu tes an implied promise to pay it. He asserts that this instr uction could have induced the jury to decide that he was estopped to asserthis statute of limitations defense even in the absence of evidence that he expre ss ed a willingness to pa y the debt. This ar

gument reflects c

onfusion between the ingredie nts for an estoppel claim and a revival clai m.
Estoppel claims do not r equ ire proof that the de btor has expressed a willingness to pay. Rather, they require proof tha t the maker’s state

ments and conduct, made or occurring p rior to the expirati

on of the limitations

period, induced the holder of the note to believ e that the ma ker either would not assert a statute of limitations defense or that the dispute would be settled amicabl

y without litigation. Expressions of willingnes s to pay a fter the expiration of the limitations period are-37-

necessary ingredients of a cla im that an extingu

ish ed cause of action has been revived. See Hall v. Skidm ore , 180 Tenn. at 27, 171 S.W.2d at 275.
Dependingon the circumstances, a maker’s acknow ledgment of a debt co

uld providethe basis for an esto ppel claim if the ma

nner in which the ac

knowledgment
was made reasonably

induced the holder to f

orego filing suit

because of a belief that the maker would not asse rt a statute of limi

tations defense or th

at the maker intended to resolve the dispute without litigation. The trial court instructed the jury

A party by his conduct o r words may be estopped from rel ying on the statu te of limitation as a defense. I f Ingramwas induced to belie ve that Earthman w

as going to pay the debt, or otherwise satisfy the deb t, or reach some otheramicable settlem

ent of the debt and, in reliance on the conduct or words, Ingram delayed filing the sui

t within t he applicable limitat ion period then Eart hman is . . . estopped from relying on the st atute of limitations as a defense or, stated anotherway, if Earthman by his conduct or words induced Ingram to believe t hat the debt would be paid, or otherwise satisfi ed, or that some other ami

cable settlement

would be reache

d then . . . Ingram is excused from failing to file the

s uit within the six-yea

r limitation period.

* * * Ingrammust prove th at he relied on Earthman’s conduct and w ord s and that his reliance was reasonable. Whether any reliance was

reasonable

is . . . for you, the jur y, to decide from all t he facts and circu

msta nce s introduced into evidence. While the statement that “ [a]n acknowledgme nt of the debt co nstitutes an implied promise to pay it” may have been impre cise enough to be misint

erpreted by

the jury, itshould not be considere d out of context. Th

e trial court’s es

toppe l instru ctions, taken as a wh ole, f airly informed the jury of Mr. Ingra m’s burden of proof a

nd the essential ingredients of his est oppel claim. Acc

ordingly, we find no

reversible error in the trial court’s

estoppel instructions.

VI.

Mr. Earthman also asserts that the specia l verdict form is f

atally incomplete

. He takes the tria l court to task for not including questions concerning whether Mr. Ingramwas the holder or owner of the note and whether the acts found by

the jury to-38-

excuseMr. Ingram from

filing s uit occurred within the six-year limitatio

ns period. We find no reversible errors in the special verdict form.
Decisions regardi

ng the use of a special

verdict form and th

e questions to be included on the form are discreti onary. See Tenn. R. Civ. P. 49; Smith v. Parker , 213 Tenn. 147, 159-60, 373 S.W .2d 205, 211 (1963). W hen a special verdic t form is used, it should repeat and hi ghlight the issues cover

ed in the charge and s

hould b e couched in the sam e terms as the jury ins tructions. See Concrete Spaces, Inc. v. Sender , No. 01A01-9607-CH-00 288, 1998 WL 43016 5, at *6 (Tenn. Ct. App . July 31, 1998) (Tenn. R. App. P. 11 application pending) . Instructions and special verdict forms should be considered to gether to determine

whether they prese

ntthe contested issues to the jury in an uncloud ed and fair manner. See Morton v. City of C hicago , 676 N.E.2d 985, 990 (

Ill. App. Ct. 19 97); Capers v. The Bon March e , 955 P.2d 822, 825 (Wash. Ct. App. 1998). Reve rsal is required only when the special verdict form is confusing or incons istent with the trial court’s instructions. See Helmar v. Harsche , 686 A.2d 766, 775 (N.J. Super. Ct. App. Div. 1996).

The trial court did not

accept Mr. Earthman’ s proposed instruction c oncerning Mr. Ingram’s status as

a holder or owner o

f th e note and did not include a corresponding

question on the special verdict form. We have already f ound that the trial court did not commit reversible error by declining to give the requested instruction. Now we find that th e tr ial court did not err by declining to include a question concerning Mr. In gra m’s status as a holder or owner of the note

on the special verdict fo

rm. The proof sim

ply did not warrant i

ncluding this question.

The facts surrounding the dealings between M

essrs. Ingram and

von Meiss in 198 2 are straightforward. Mr. Ingram sent the original note and a sep arate , incomplete

assignment form t o Mr. von M eiss. By doing so, Mr. Ingram did not intend to relinquish all his

interest in

the note but rather i

ntended that Mr. von M

eiss, act ing as his agent, would hold the note while Mr. Ingram decided what he wan te d to do with it. The onl

y conclusion that a re

asonable fact-fi

nder could draw fr

om this evidence was that Mr. Ingr am retained contro

l over the note after Januar

y 1982 and did not lose his status as the owner or holder of th e note. Therefore, the trial court properlydeclined to include a question on the special verdict form asking the jury to determine whether Mr. Ingram was the holder or owner of the note.-39- VII.

In his penultimate issue , Mr. Earthma n asserts that the tr

ial c ourt shoul d not have submitted Mr. Ingram’s claim f or compound interest t

o the jury. He argues that determining

whether a note bears simple or compound interest is a questi on of law and that the trial court

should have concluded t

hat the October 14,

1980 note required only simple interest. We disagree. The m eaning of the intere st rate provision in the note presented a jur

y question.
Compound

interest is permissible in Tennessee as long as the p a rties have agreed to it. See Woods v. Rank in , 49 Tenn. (2 Heisk.) 46, 48 (1870); Hale v. Hale , 41 Tenn. (1 Cold.)

233, 236 (1860); Waid v. Greer , 56 S.W. 1029, 1029 (Tenn. App. 1900). In cases involving a pr omissory note, the pa

rties’ agreemen

t conc e rning interest should be reflected in the note itself. Thus, the first place to l ook for the parties’ agreement

concerning

interest is the note.

If the interest pr

ovision in the note is unambiguous and consiste nt with ot her applicable lega

l requirements, i

t will be enforced as written as a ma tter of law. If

, however, the i

nterest provision is ambiguous, the fact-finder must look elsewhere to ascertain the pa

rties’ agreemen

t concerning interest

.
The interest ra te provi sion in the October 14, 1980 note prepared by Mr. Earthman is far

from clear. Re

ad literally, it

obligates Mr. Ea

rthman to pay intere st atMr. Ingram’s “prime rate” – that is, the rate of interest that Mr. Ingram charges his “most credit worthy customers for 90-day unsecured loans.” The rec ord contains no evidence establishing what Mr. Ingram’s “Pri me Rate ” was. T hus, the fact-finder was required to look beyond the note to a scertain the parti

es’ agreement con

cerning interest payments on this loan.

Parol evidence cannot be used to contra di ct or alter the terms of a written contra ctthat is complete and unambiguous on its face. See Jones v. Brooks , 696 S.W.2d 885, 886 (Tenn. 1985 ); Airline Con str., Inc. v. Barr , 807 S.W.2d 247,

259 (Tenn. Ct. App. 1990). However, the pa rol evidence rule do

es not prevent the introduction

and consideration of e xt raneous evidence to explain an ambiguous contractual provision. See Faulkner v. Ramsey , 178 Tenn. 370, 374-75, 158 S.W.2d 710, 711- 12 (1942); Faithful v. Gardner , 799 S.W.2d 232, 235 (Tenn. Ct. A

pp. 1990). Likewise, the use of parol evidence to

explain a vague contractual term does-40-

not cause an otherwise valid written agreement to run afoul of the S ta tute of Limitations in Tenn . Code Ann. § 29-2-101 (Supp. 1998).

The parties disagreed at trial concernin g the meaning of the in te re st rate provision in the October 14, 1980 note. Mr. Earthman as serte d that the note permitted only simple interest b ecause it did not

explicitly state tha

t it bore compound interest. For hi s part, Mr. Ingram testified that the parties agreed that Mr. Ingram would not incur an y addi tional expense if he a greed to make the $1, 70,000 loan to Mr. Earthman. Thus , Mr. Ingram’s version of the meani

ng of “Prime Rate” was that Mr. Earthman agree

d to reimburse him f

or any interest expe

nse he incurred as a

result of the $1,700,000 lo an. Mr. I ngram also p resented evidence that the loans Mr. Earthman caused to be procure d for him at Unit

ed Am erican Bank and the Banque d’l Union Europeene bor e compound interest

w hich he was eventua

lly required to pay.

This conflicting evidenc e cre ated a jury issue wi th regard to whethe

r the October 14, 1980 note bore compound or simple interest. Accordingly, the trial court did not err by submittin

g this issue to the jury f

or resolution.

VIII.

In his final issue, Mr. Earthman asserts that the jury’s $5,667,122.84 verdict is excessive. He a

rgues that Mr. Ingr

am was entitled,

at most, to $2,729, 675.95 – the
sumMr. Ingrampaid to the Banque d’l Union Europeene in

May 1983 because thei

r agreement

was thatMr. Ingram’s ag reement to make the

$1,700,000 loan would

not
cos tMr. Ingram any money. Thus, he insists that he should not be require d to pa y Mr. Ingram an additional $3,937,446.92 which represents the simple interest on the $2,729,675.95 calc ulated at the prime rat e from May 1983 to May 1995.

We find that Mr. Earthman’s reliance on the parties’ a greem ent that Mr. Ingramwould i ncur no additional expe nse in this transacti

on is misplaced. A

t the time they entered into theoriginal loan transaction in 1980, the parties contemplated that Mr. Ea rthman w ould repay Mr. Ingr am’s United Amer

ican Bank loan plus interest when it became due in eighteen months. They did

not contemplate that Mr. Earthman would cause the note to be renewed or to

be sold to a foreign

bank or that22 Because we have affirme

d the judgment base

d on Mr. Ingram’s c

l aims arising from the October 14, 1980 note, we pr

etermit the three

issu es rai sed by Mr. Ingram concerning the trial court’s summary dismissal of his intentional and negligent misrepresentatio n claims and the calculation of in

terest should the c

ase be remande

d for a new trial. -41- Mr. Earthman would f

ail to repay the loan for

over twelve year

s after its original due date.

Mr. Earthman concede d that he expected to

pay Mr. Ingram principal a nd interest when he first borr

owed the $1,700,000 i

n October 1980. Te

nn. Code Ann. § 47-14-123 (1995) permits juries to aw ard prej udgment interest as d amages “in accordance with the principles of equity at any r

ate not in excess of a maxim um effective rate of ten p ercent (10%) per annum.” The jury’s decision to award Mr. Ingramsimple in terest calculated on his $2,729,675.95 payment to the Banque d’l UnionEuropeene is

consistent with Te

nn. Code Ann. § 47- 14-123 and is supported by the evidence. Accordingly, we find that the j ur y’s $5,667,122.84 ve rdict is not excessive.

IX.

We affirm the judgme

nt 22 and remand the case to the trial court for any further proceedings that may be r eq uired. We tax the costs of this appeal to William F. Earthman and his surety for which execution, if necessary, may issue.

_____________________________ WILLIAM C. KOCH, JR., JUDGE

CONCUR:

_________________________________ SAMUEL L. LEWIS, JUDGE

_________________________________ BEN H. CANTRELL, JUDGE