### IN THE COURT OF APPEALS OF TE NNESSEE AT KNOX VILLE A ssi gne d on Br ie fs , D ec em be r 12, 200 3 BRID GEC OUR T A PA RTM ENT S P AR TNE RS HIP v. CA RM EN H. ELLER BE
Direc t Appeal from the Chancer y Court for K nox Coun ty No. 155190-2 Hon. Daryl R. F ansler, Chancellor

F ILED FEBRUARY 2, 2004
No. E2003-01298-COA- R3-CV

Pla int if f p a id o ff mortg a g e on apa

rt me nts a ndthe n s ue d f

or a n a c c ou nti ng , a lle g ing ov e rp a y me nt. Th e Tria l Co urt in vo ke d th e vo lun tary pa y me nt ru le a nddis mis se d th e c a se . O n a pp e a l, w e a ff

ir m.

Te nn. R . A pp. P .3 App e al a s o f Rig ht ; J udgm e nt of t he Cha nc e r y C our t A ffirm e d.

H ER SCH EL P I CKE N S F RAN KS , J . delivere d the opi nion of t he court, in which C H A RLES D. S US ANO , J R ., J ., and D. M I CH A EL S WI NEY , J ., joined.

Ge ne A. Sta nle y , Jr. , K no xvill e , T e nn e sse e , f or Ap pe lla nts

. Thomas Privette, Jr., Knox ville, Tennesse e, for Appellee

.

OP IN ION
Plaintiff, Bridg ecourt Apartments Partne rship , a c q u ire d ti tl eto ana

p a r tme nt complex in Knox ville from B el Air Assoc iates (“ Be l Air”) a debtor in bankr

uptcy

. At t he time plaintiff a c qu ir e d th e apa

rt me nt c omp le x, de fe nd a nt C arm e n H. Ell e rb e he ld a de e d o f t ru st o n th e pr op e rt y se c ur e d b y

a lie n w hic h c on sti tut e d a

fi rs t mo rt g a g e on the a

pa rt me nts

. At or abo ut the time p la int if

f a c qu ir e d ti tle to the pr op e rt y El le rb e , b y

c ou ns e l, notified the bankr

uptcy attorney for B el Air of de fault. Subsequently , plaintiff’s partners neg otiated wi th d e fe nd a nt o ve r the a mou nt o f the ind e bte dn e ss, a nd ult imate ly pa id de fe nd a nt $ 47 2, 79 7. 25 to-2-

liquid ateth e ou ts tan di ng in deb ted nes s o n t he E ll erbe no te, whi ch p ay men t w as p reci pi tat ed al leg e dly du e to the ne c e ssi ty

of plaint if f’ s c los ing a

c on str uc tio n lo a n f

or re no vatio n o f the apa

rt me nts

. This action was the n broug ht for an a ccounting which aske d the Court for a J udg ment fo r the a mou nt o f any

pa y me nt i n e xce ss o f the true a ndc or re c t a mou nt o f the ind e bte dn e ss. I n de fe nd a nt’ s An sw e r, sh e sp e c if ic a lly de nie d sh e faile d to pe rf orm a ny c on dit ion s, a s a lle g e d, a nda s an a ff

ir ma tiv e de fe ns e sa id that th e plaint if f’ s p a y me nt w a s v olu nta

ri ly ma de wi th full knowledg e of the fac ts and without any fraud, duress or ex t o rt i o n , and plaintiff wa s theref ore estopped fr om rec overing . After the evidentiary

hearing, the Chance llor filed a Me m orandum Op ini on a ndwe qu ote , in pe rt ine nt p art :

. . . the plaintiffs in t h i s ca s e say that the payment was made under thre at of fore closure and there fore they wer e under duress. Certainly , Mr. Wise [ a partner a nd attorney for plaintiff] was knowle dg eable of all the fac ts a nd, indeed, he knew that fo r a su m sm a lle r tha n w hat he wa s p a y ing he c ou ld h a ve re a c he d the sa me re su lt; that is, a rele ase of the deed of trust. Yet the Plaintiffs chose to pay a lar g er a mount in an ef fort to pre serve the right to contest the re asonable ness of the attorney s’ fe es and the c alculation of the interest rate at a later date.

. . . There was a n option available to the Plaint i ffs; t hey could have paid what the y de e me d o we d a nd br ou g ht a n a c tio n a g a ins t the ho lde r of the no te , w hic h w ou ld be Ms. E llerbe, asking the Court to order her to r elea se that deed of trust in as much as the unde rly ing oblig ation had bee n satisfied, and a sk the Court to impose statutory sa nc tio ns fo r h e r f

a ilu re to r e le a se it.
. . . But t h e P l ai n t i ff s made a business decision in this case to g o forwa rd with the pay ment so they

could ar rang e financ ing. And if there was a rea l duress, it was fr om the oth e r l e nd e rs . I t w as made with a ll the knowledg e of the fac ts, the re was n o t hing unconsciona

ble. They

didn’t like it . . . But there ’s nothing u n conscionable about what h as t aken pla ce he re. The re’ s cer tainly nothing illeg al about what has taken place

. There ’s been no statutory scheme cited to the Court, it’s not a vi o l at i o n of public policy , and it fits squarely in the voluntary -payment rule.
The Court then e nter ed J u d gment dismiss ing the case , and plaintiff ha s appea led. Plaintiff arg ues that the e vidence prepond erates ag ainst the Chance llor’s finding that plaintiff voluntarily

and with knowledg e of th e fa cts, paid the indebte dness in a disputed amount on a rese rvation of rights pa y ment.-3- Plaintiff arg ues that def

endant’ s attorney

had indi cate d a for eclosurewould follow un le ss p la int if

f p a id the a mou nt o f the ind e bte dn e ss d e ma nd e d b y app e lla nt andthat amo un ted to duress whic h rende red the pay ment involuntary . I n response , defe ndant points to the testimonyof Mr. Wis e who was an attorney and a partne r in B ridg ecourt, w ho testified that defe ndant applied no pressure an d h ad done nothing , but that the pressure came from the “ Yount Dea l” (a nother transac tion). I ntere stingly , he explained that t he pressure was due to interim financ ing, by a loan that had mature d and had to be paid off.

A c o n c i s e s t a t e m e n to f

t h e r e q u i s i t e s f

o r b u s i n e s s c o m p u l s i o n o r

e c o n o m i c d u r e ss is set forth in 25 Am.J ur.2d Duress and Undue Influence , §7:

To constitute business compulsion or economic duress, there must be a wrong ful threat, financia l distress must be caused by the wrongf ul threat, and there must be no rea sonable a lternative to the terms prese nted by the wrong doer. The pr e ssu re mus t be wr on g fu l, an d not al l pre ssu re is wr on g fu l. Ac tio ns , n ot m oti ve s, mus t c a us e e c on omi c du re ss. Business c ompulsion i s not establis h ed mer ely by proof that c onsent was se c ur e d b y

the pr e ssu re of

fi nanc ia l c ir c ums ta nc e s, e sp e c ia lly wh e re the pa

rt y claiming duress is experienc ed in business and not a novic e, or by the fact that one party insisted upon a leg al rig ht and the ot h er pa rty y ielded to such insistence

. Con sis te nt w ith thi s p ri nc ipl e, it is re c og nize d th a t th e do c tr ine of “ bu sin e ss compulsion” ca nnot be pre dicated upon a demand which is lawful, or upon doing or threatening to do that which a pa rty has a le g al rig ht to do. . . .
Tenne ssee authorities are in acc ord with this statement. See Do ck er y v. E state of Massey , 9 58 S.W. 2d34 6- 34 8 ( Te nn . Ct . A pp . 1 99 7) ; Jaffe v. B olton , 817 S.W. 2d19 27 (T e nn . Ct

. Ap p. 19 91 ); McClellan v. M cClellan , 873 S.W .2d 350-352 (Te nn. Ct. App. 1993).
The e vidence does not preponde rate ag ainst the Trial Court’s finding s of fa ct. Tenn. R. App. P. 13(d). On that basis the Trial Court invoked the voluntary pay ment rule whic h holds that a voluntary

pay ment, even thoug h the per son making the payment protests the am o u n t the money so paid may

not be re cover ed on the g round the c laim was illeg al. W hitley v. Bry ’s , 15 Tenn. App. 86 (1932).
I n this case, the pa rtners w ere experience d in business, knew the fa cts and circ umstances a nd their rig hts, y et elec ted to pay the claimed amount. We conclude the voluntary pay ment rule is applica

ble. See Standard Oil Co. v. Storage Co. , 163 Tenn. 565-575 ( 1931). Next, plainti ff arg ues that it is entitled to a cre dit for an insura nce pr emium that the Chance llor failed to conside r. An e x amination of the documents relating to this transac tion revea l that a n a g re e me nt b e tw e e n d e fe nd a nt anda thi rd pa rt y wh ic h pla int if

f re lie s upo n d id n ot e sta

bli sh a b a s i s f o r r e c o v e r y.-4- Finally , plaintiff ar g ues that defendant did not comply with the t erms and c onditions in the mortg a g e no te to e na ble he r t o a c c e le rate the un pa id i nd e bte dness and enfo rc e the pe na lty provisions in the note for d efau l t

. T he Chanc ellor held that de fenda nt had met the conditions re q u i re d o f h eru n d ert h e m o rt gage an d t h e e v i d en ce d o e s n o tp re p o n d er at e a gai n s th i s fi n d i n g. Tenn. R. App. P. 13(d).

F or the fo re g oin g re a so ns we a ff ir m th e Judg me nt o f the Tria l Co urt a nd r e m a nd , w ith the cost of the a

ppeal a ssessed to B ridg ecourt Apartments Partne rship.

_________________________ H ER SCH EL P I CKE N S F RAN KS , J.