FILED

August 24, 1998

Cecil W. Crowson

Appellate Court Clerk

IN THE COURT OF APPEALS OF TENNESSEE

WESTERN SECTION AT JACKSON

 ______________________________________________

JOE WALDRON, 

Plaintiff-Appellant,

Bradford Chancery No. 20,214

Vs. C.A. No. 01A01-9712-CH-00740

GARY DELFFS and wife CLARA

DELFFS and JAMES COY DELFFS,

Defendants-Appellees.

____________________________________________________________________________

FROM THE BEDFORD COUNTY CHANCERY COURT

THE HONORABLE TYRUS C. COBB, JUDGE

John H. Norton, III of Shelbyville

Thomas F. Bloom of Nashville

For Appellant

Allen Shoffner of Shelbyville

For Appellee, James Coy Delffs

REVERSED AND REMANDED

Opinion filed: 

W. FRANK CRAWFORD,

PRESIDING JUDGE, W.S.

CONCUR:

ALAN E. HIGHERS, JUDGE

HOLLY KIRBY LILLARD, JUDGE

This case involves an attempt to recover money on a loan. Plaintiff/Appellant Joe

Waldron (Waldron) appeals from the trial court’s order granting judgment on the pleadings to

Defendant/Appellee James Coy Delffs.

Waldron’s Complaint alleges that on May 1, 1991, Defendants Gary and Clara Delffs
1

 Apparently the instrument originally indicated that the amount is due on June 6,

1994, but the document was subsequently altered by Waldron with Gary Delffs’s consent to

show “1995,” instead.

2

borrowed from Waldron $50,000 at an interest rate of thirteen (13%) percent. This indebtedness

was to be due and payable on May 1, 1992. In July of 1991, Gary and Clara Delffs borrowed

an additional $30,000 from Waldron that was also to be due and payable on May 1, 1992. The

loan was still outstanding on May 1, 1992, at which time Waldron extended the loan for another

year and lent an additional $4,000 to Gary and Clara Delffs. At this time, a note evidencing the

total indebtedness was signed by Gary and Clara Delffs, as well as by James Coy Delffs, the

father of Gary Delffs. The sum plus twelve (12%) percent interest was to be due and payable

on May 1, 1993. The loan was again renewed in May of 1993, at which time Waldron alleges

that he was owed the principal indebtedness of $120,000 plus eleven (11%) percent interest to

be due and payable on May 1, 1994.

When the loan was again not paid off in May of 1994, the parties entered into further

negotiations that resulted in the execution on June 10, 1994 of the note at issue in this case. This

instrument provides in pertinent part: 

----------------------------- after date ------------- promise to pay

to the order of one hundred and fifty three thousand and four

hundred and fourty dollars Dollars 

(The language underlined was written in by hand. Unused space is evidenced by hyphens.) A

copy of the note is attached as an addendum to this Opinion. Although there is some confusion

on the document, Waldron alleges that the note was due and payable by all defendants by June

10, 1995.1 Alleging that this document is a promissory note, Waldron sought judgment on the

“note” in the amount of $174,014.72 plus interest.

The defendants filed an Answer admitting that Waldron made certain loans to Gary

Delffs but disputing the amounts and interest rates represented in Waldron’s complaint. The

defendants also averred that the money was loaned solely to Gary Delffs, that the defendants

signed the note in blank, and that the note is unenforceable since no consideration was provided

for the defendants’ signatures. Defendant James Delffs filed an Amended Answer, CounterClaim, and Cross-Claim asserting that the note was blank when signed and completed without

authority, the note was “fraudulently and materially altered,” Waldron was not a holder in due
3

course, a condition precedent had not been satisfied, the note fails for lack of consideration,

Waldron and the other defendants conspired to deceive him into signing the document, the note

violates the Statute of Frauds, and the interest rate on the note is usurious. Waldron filed a

summary judgment motion, and James Delffs filed a motion for judgment on the pleadings or,

alternatively, for summary judgment.

On January 10, 1997, the trial court entered judgment on the pleadings for James Delffs

and dismissed the complaint as to him, finding that the instrument failed to qualify as a valid

promissory note. The trial court also found that this instrument was not a sufficient

memorandum of a promise to pay the debt of another to satisfy the Statute of Frauds. In

November of 1997, the trial court entered a judgment against the remaining defendants.

Thereafter, Waldron timely filed a Notice of Appeal of the trial court’s January order. James

Delffs is the sole Appellee in this case.

The sole issue for review is whether the trial court erred in granting judgment on the

pleadings to James Delffs. When a motion for judgment on the pleadings is made by the

defendant, it is in effect a motion to dismiss for failure to state a claim upon which relief can be

granted. 3 Nancy F. MacLean & Bradley A. MacLean, Tennessee Practice 190 (2nd ed. 1989).

 A motion to dismiss for failure to state a claim upon which relief can be granted is the

equivalent of a demurrer under our former common law procedure. Cornporpst v. Sloan, 528

S.W.2d 188, 190 (Tenn. 1975). Such a motion admits the truth of all relevant and material

averments in the complaint but asserts that such facts cannot constitute a cause of action. Id. at

190. In considering whether to dismiss a complaint for failure to state a claim upon which relief

can be granted the court should construe the complaint liberally in favor of the plaintiff taking

all of the allegations of fact therein as true. Humphries v. West End Terrace, Inc., 795 S.W.2d

128, 130 (Tenn. App. 1990). A complaint should not be dismissed upon such a motion “unless

it appears beyond doubt that the plaintiff can prove no set of facts in support of the claim that

would entitle the plaintiff to relief. Id. at 130 (quoting Fuerst v. Methodist Hosp. South, 566

S.W.2d 847, 848 (Tenn. 1978)). In the instant case, the complaint seeks recovery on a written

instrument attached as an exhibit and a determination of the validity of the instrument is a

question of law. Therefore, our review of the trial court’s order is de novo on the record before

this Court. Warren v. Estate of Kirk, 954 S.W.2d 722, 723 (Tenn. 1997).

TheinstrumentatissuewasexecutedinJuneof1994. TheTennesseeGeneralAssemblyamended
2

 This revision was placed into effect on July 1, 1996.

3

 This is the supplement to the 1979 bound volume.

4

itsversionoftheUniformCommercialCode(UCC)in1995.2

 Thereisnodisputethattheapplicablestatutesinthiscase

arethosethatexistedatthetimethatthedocumentwassignedin1994. SeeShellv.State,893S.W.2d416,419

(Tenn.1995)(“[A]basicruleofstatutoryconstructionprovidesthatstatutesaretobeappliedprospectively,unlessthe

legislatureclearlyindicatestothecontrary.”);17AAm.Jur.2dContracts§254(1991)(“[I]tisthelawinforceat

thetimeacontractualtransactionisconsummatedandmadeeffectualthatmustbelookedtoasdeterminingitsvalidity

and effect.”). 

Tennessee Code Annotated § 47-3-104 (Supp. 1992)3

 states:

(1) Any writing to be a negotiable instrument within this chapter must:

 (a) be signed by the maker or drawer; and

 (b) contain an unconditional promise or order to pay:

(i) a sum certain in money;

(ii)asuminmoneywhichisdeterminable

byaformulaasprovidedinthewriting,

whetherornotsuchformularequiresthe

use of extrinsic criteria; or

(iii)asumofmoneytheamountofwhich

issubjecttorenegotiationuponeitherthe

passageoftimeortheoccurrenceofan

event.

 (c) be payable on demand or at a definite time; and

 (d) be payable to order or to bearer.

Subsections (c) and (d) are in dispute in the present case. We shall first examine the latter subsection.

Subsection(d)requiresthattheinstrumentbepayabletoorderorbearer. Id.§47-3-104(1)(d). Since,the

partiesdonotdisputethatthedocumentisnotorderpaper,theissueconcernswhetherthedocumentconstitutesbearer

paper. Tennessee Code Annotated § 47-3-111 (1979) states that an instrument is bearer paper if it is paya

(a) bearer or the order of bearer; or

(b) a specified person or bearer; or

(c)“cash”ortheorderof“cash,”oranyotherindicationwhichdoesnotpurport

to designate a specific payee.

Sincethereisnodisputethatsubsections(a)and(b)areinapplicableandthattheinstrumentinthepresentcaseisnot

madepayableto“cash”ororderthereof,inquiryinthismatterfocusesonwhethertheinstrumentincludes“anyother

indication which does not purport to designate a specific payee.” Id. § 47-3-111 (c). 

NoTennesseecaseshaveaddressedtheissueathand. JamesDelffscitesdecisionsinDavisv.Davis,838

S.W.2d415(Ky.App.1992),andParkerv.Pledger,601S.W.2d897(Ark.App.1980),inwhichcourtsinour

neighboringstatesheldthatinstrumentsthatcontainblankspacewherethepayeeisintendedtobedesignatedarenot

bearerinstruments. Thesedecisionsarefullysupportedbytheofficialcommentsto§3-111oftheUCC,asitexisted

at that time, which state:
5

Paragraph(c)isrewordedtoremoveanypossibleimplicationthat“Paytothe

order of _____” makes an instrument payable to bearer.

T.C.A.§47-3-111CommentstoOfficialText. Wefindthatthesecasesareinappositetothecaseathand,sincethe

parties in the instant case did not leave blank the space designated for the listing of the payee. 

JamesDelffsalsocitesBroadwayMgmt.Corp.v.Briggs,332N.E.2d131(Ill.App.1975),acasein

whichthefactualcircumstancesareremarkablysimilartotheinstantcase. InBroadwayMgmt.,theinstrumentat

issue reads in pertinent part as follows:

NinetyDaysafterdate,,we,oreitherofus,promisetopaytotheorderofThree

ThousandFourHundredNinetyEightand45/100-------Dollars.” (The

underlinedwordsandsymbolshavebeentypedin;theremainderisprinted.)

Therearenoblanksonthefaceoftheinstrument,anyunusedspacehavingbeen

filled in with hyphens.

Id.at132. AftercitingtheaforementionedportionoftheofficialcommentstoU.C.C.§3-111,theIllinoisCourtfound:

 Theinstrumenthereisnotbearerpaper. Wecannotsaythatit“doesnot

purporttodesignateaspecificpayee.” Rather,webelievethewordingofthe

instrumentisclearinitsimplicationthatthepayee’snameistobeinserted

betweenthepromiseandtheamount,sothattheliteralabsenceofblanksis

legally insignificant.

BroadwayMgmt.,332N.E.2dat133. JamesDelffsalsocitesAnderson’streatiseontheUCC,whichstates:

“Whenanoteisimproperlywrittensothattheblankforthenameofthepayeeshowstheamounttobepaid,thepaper

isnotbearerpaper.” RonaldA.Anderson,UniformCommercialCode§3-111:4,at275-76(3ded.1994). However,

Broadway Mgmt. is the only authority cited by Anderson in support of this contention.

WebelievethattheholdinginBroadwayMgmt.isdifficulttoreconcilewithareadingoftheofficial

comments to UCC § 3-111. When interpreting subsection (c), the comments specifically state:

Instrumentspayableto the order of an estate,trust,fund, partnership,

unincorporatedassociationorofficearecoveredbytheprecedingsection. This

subsectionappliesonlytosuchlanguageas“Paycash,”“Paytotheorderof

cash,”“Paytotheorderofonekegofnails,”orotherwordswhichdonotpurport

to designate any specific payee.

T.C.A.§47-3-111CommentstoOfficialText. Interpretingthiscomment,WhiteandSummershaveopinedthat“it

appearsthatanydocumentwhichdirectspaymenttoortotheorderofaninanimateobjectqualifiesasabearer

instrument....” JamesJ.WhiteandRobertS.Summers,UniformCommercialCode§14-4,at621(3ded.1993);see

also Crandall, Herbert & Lawrence, Uniform Commercial Code § 16.3.1 (1996).

Asstatedpreviously,T.C.A.§47-3-111providesthataninstrumentconstitutesbearerpaperifitispayable

to“anyotherindicationwhichdoesnotpurporttodesignateaspecificpayee.” Id.§47-3-111(c)(emphasis

added). Theprovisiondoesnotcontainanylanguagethatqualifiesthelanguage,“anyotherindication.” Id. There

isnologicaljustificationforcreatingadistinctionbetweenthedesignationofaninanimateobject,suchasakegofnails,

asthepayeeandthedesignationofacertainsumofmoneyasthepayee. Judiciallycreatingsuchadistinctionwould
4

 As a practical matter if the testimony of the parties was considered it appears that

the alteration was made with the consent of Gary Dellfs.

6

riskuncertaintyforcontractingparties,thusthwartingtheveryintentoftheadoptionoftheUCC. SeeT.C.A.§47-1-

102(2)(1996). Moreover,Waldronaptlynotesthatitwouldappeartobea“perversionoflogic”ifaninstrument

payableto“cash”qualifiesasbearerpaper,whereasaninstrumentpayabletoaspecificamountofcashfailstoqualify

asbearerpaper. Therefore,wedeclinetofollowtheholdingoftheIllinoisCourtinBroadwayMgmt.and,instead,

hold that the instrument at issue qualifies as a negotiable instrument since it constitutes bearer paper.

Alternatively,JamesDelffsalsoassertsthattheinstrumentfailstoqualifyasanegotiableinstrumentbecause

itdoesnotsatisfytherequirementinT.C.A.§47-3-104(c)thatitbepayable“atadefinitetime.” JamesDelffsargues

thatsinceWaldronalteredthepayabledatefrom“June10,1994"to“June10,1995,"thereisambiguityonthefaceof

thedocument. Thiscontentioniswithoutmeritfortworeasons. First,wearedealingwithamotionforjudgmenton

thepleadings,andthenoteaspartofthepleadingsindicatesthatthepaymentdateisJune10,1995,whichwetakeas

true. Inanyevent,anegotiableinstrumentmustbe“payableondemandoratadefinitetime.” T.C.A.§47-3-104(c).

Ifthepayabledatehadnotbeenaltered,weknowitwouldhavebeenpayableonthedatethatitwasexecuted,June10,

1994. Therefore,itshouldbeconsideredademandnote. SeeT.C.A.§47-3-108(1979);Inre:EstateofMyers,

55Tenn.App.195,206,397S.W.2d831,837(1965). Thus,thefactthatthenotewasalteredenuredtothebenefitof

James Delffs.4

SincethenoteatissuesatisfiesthecriteriasetforthinT.C.A.§47-3-104,itqualifiesasanegotiableinstrument.

Accordingly,theorderofthetrialcourtdismissingplaintiff’scomplaintagainstJamesDelffsisreversed,andthiscase

isremandedtothetrialcourtforsuchfurtherproceedingsasarenecessary. Costsoftheappealareassessedagainstthe

Appellee.

_________________________________

W. FRANK CRAWFORD, 

PRESIDING JUDGE, W.S.

CONCUR:

____________________________________

ALAN E. HIGHERS, JUDGE

____________________________________

HOLLY KIRBY LILLARD, JUDGE