Court Opinion

ID: 1045970
Source: CourtListenerOpinion
Date Created: 2013-10-08 02:31:47.543702+00
Date Added: 2024-06-11T11:50:46.419679
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                           AT NASHVILLE
                                April 26, 2012 Session

        JANE FIELD v. THE LADIES’ HERMITAGE ASSOCIATION

                Appeal from the Chancery Court for Davidson County
                    No. 07-783-11    Carol McCoy, Chancellor

                   _________________________________________________

               No. M2011-01736-COA-R3-CV - Filed October 19, 2012
                   ________________________________________________

       This is the second round in a long-running dispute over the provisions in a
warranty deed conveying historic Tulip Grove to the Ladies Hermitage Association
(LHA). In the deed LHA agreed to make certain payments to the grantor and her heirs.
In a prior appeal this Court affirmed the chancellor’s ruling that the property did not
revert to the heirs so long as LHA paid the heirs at least $600 every six months. On
remand the chancellor held that LHA did not have an implied obligation to keep the
property open for paid tours and that LHA did not have to share with the heirs the income
derived from renting the property for special events. We affirm the chancellor on the
implied obligation and reverse the holding on the heirs’ right to a portion of the special
event income.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed in
                            Part and Reversed in Part.

B EN H. C ANTRELL, S R. J., delivered the opinion of the Court, in which F RANK G.
C LEMENT, J R. and R ICHARD H. D INKINS, JJ., joined.

W. Gary Blackburn and C. Dewees Berry, Nashville, Tennessee, for the appellant, Jane
Field.

Robb S. Harvey, Heather J. Hubbard and Mark M. Bell, Nashville, Tennessee, for the
appellee, The Ladies’ Hermitage Association.
                                       OPINION

                    I. FACTS AND PROCEDURAL HISTORY

A. The First Appeal

      The plaintiff/appellant Jane Berry Field (“Field” or “heirs”) is the granddaughter
and heir of Jane B. Buntin. Jane Buntin and her husband bought the property known as
Tulip Grove in 1914. The property consists of 26.33 acres and a home that belonged to
Andrew Jackson Donelson, nephew of Rachel Jackson. Tulip Grove is near the
Hermitage, home of Andrew Jackson. Defendant LHA is a non-profit organization that
has overseen the Hermitage and its surrounding property since 1889.

      Ms. Buntin, who had been active in LHA, signed a warranty deed dated March 11,
1964 transferring Tulip Grove to LHA in exchange for promises by LHA to pay Ms.
Buntin and her heirs certain monies. The deed reads, in part:

      FOR AND IN CONSIDERATION of the sum of Ten Dollars ($10.00) cash
      in hand paid and other good and valuable consideration, hereinafter
      described, paid and to be paid by the Ladies’ Hermitage Association,
      hereinafter “GRANTEE” to Jane B. Buntin, hereinafter “GRANTOR”,
      receipt of all of which is hereby acknowledged and in addition, the said
      Grantee, by the acceptance of this Deed, agrees to pay to Grantor, her heirs
      and assigns, for a period of ninety-nine (99) years from and after March 1,
      1964 one-third (1/3) of all gate receipts received by Grantee from visitors to
      Tulip Grove House located on said land, which payments are to be made on
      a monthly basis. If for any period of six (6) calendar months hereafter
      beginning July 1 to December 31, and from January 1 to June 30, and for
      each succeeding year, Grantee should fail to pay to Grantor, her heirs and
      assigns, from such gate receipts or from other funds of Grantee at least
      $600.00 (except during such time as Tulip Grove House is being restored or
      rebuilt after fire or other casualty), then and in that event the title to the
      property herein conveyed shall revert to Grantor, her heirs and assigns, and
      this deed shall become null and void.

                                           -2-
       In subsequent years, Tulip Grove was restored by LHA, and LHA enjoyed success
in charging visitors to view the house and grounds. From 1965 to 2001, LHA paid to Ms.
Buntin and her heirs over $300,000.00 out of the proceeds from the fees charged to admit
people to the house. From 1971 to 2001, LHA sold joint admission tickets to both The
Hermitage and Tulip Grove, but kept records of how many people visited Tulip Grove
and paid the heirs accordingly. In 2001 however, LHA determined that keeping the Tulip
Grove house open for tours had become unprofitable and closed it to the general public.
LHA continued to pay the heirs at least $600.00 every six months.

       After 2001, LHA began using the Tulip Grove property in a technically different
fashion by renting it to individuals or groups for use during “special events” such as
wedding receptions or corporate dinners. LHA did not pay to the heirs any portion of the
receipts from these special events. LHA began selling tickets specifically for the house
again in 2008, and in 2010 there were enough profits from these tickets to pay Buntin’s
heirs an amount over $600.00 for each six months.

       In April of 2007 the heirs filed suit alleging LHA had failed to comply with its
obligations under the deed. They claimed LHA failed to make payments as required
under the deed and that the property should revert. They asked the court to order an
accounting. LHA counterclaimed claiming there was no reversion and, in the alternative,
adverse possession. The matter was heard on two motions for partial summary judgment
filed by LHA. One sought to narrow the accounting and one sought a finding that no
reversion should occur. The motion which sought to narrow the accounting was
unopposed1 , and by order dated October 27, 2008 the trial court limited the accounting
and found that “gate receipts” as used in the deed meant tickets for tours of the house and
not charges for special events on the grounds. On November 12, 2008 the trial court
entered an order on LHA’s second motion for summary judgment and found that
reversion was not warranted. The court incorporated by reference its order of October 27.
This order was appealed by Field and the sole issue on that appeal was whether the
property had reverted to the heirs. This Court held that it had not and affirmed the

        1
        On appeal, this Court noted that “[i]t would be difficult to challenge the October order on appeal
when no objection was raised to the trial court.”

                                                    -3-
November 12 order. This Court made a point of not addressing the definition of gate
receipts in the October 27 order.2

B. The Present Appeal

        On remand, the case proceeded to be heard on the parties’ cross-motions for
summary judgment. Plaintiff claimed that closure of the property constituted a breach.
By order dated January 4, 2011, the trial court found that LHA had not breached the
warranty deed by closing the Tulip Grove house to visitors and granted LHA’s motion for
summary judgment. Field then filed a motion to alter or amend seeking to amend the
court’s order of January 4 to state that the court had not previously ruled on whether
plaintiff was entitled to a portion of rental income and whether failure to remit a portion
of these receipts constituted a breach. At a hearing on February 18, 2011 the court
determined that it would hear further evidence on the issue of revenue LHA had received
over the previous six years and instructed the parties to submit evidence on the issue by
stipulation or affidavit.

       After the court reviewed the evidence submitted, it issued a Memorandum and
Order dated April 12, 2011 stating that an evidentiary hearing would be necessary to
determine the issue. The hearing was held on July 13, 2011 and the court found that gate
receipts did not include rental of the house for special events. Plaintiff now appeals.

                                            II. ANALYSIS

A. Standard of Review

       The facts in this case are undisputed. Therefore, this appeal involves only
questions of law. See Union Carbide Corp. V. Huddleston, 854 S.W.2d 87, 91
(Tenn.1993). The standard of review for questions of law is de novo upon the record with
no presumption of correctness. Id. The interpretation of a deed is a matter of law.
Rodgers v. Burnett, 65 S.W. 161, 162 (Tenn.1901).

        2
         The Court also noted that “[t]he case is still pending before the trial court on several issues,
including whether the heirs are entitled to a monetary recovery from LHA based on its failure to pay the
Heirs of the gate receipts.”

                                                    -4-
B. Appellant’s First Issue

     The appellant’s first issue on appeal is: LHA HAS BREACHED ITS
OBLIGATION TO USE REASONABLE DILIGENCE TO GENERATE GATE
RECEIPTS.

        Although this obligation is not expressed in the deed, the appellant contends that
“the duty to collect gate receipts is an unexpressed but essential element of the
agreement.” In support of this argument, the appellant relies on numerous cases in
Tennessee and elsewhere that find implied obligations arising from written agreements
that are otherwise silent on the subject.

        The common law of Tennessee imposes on the parties to all contracts an implied
obligation of good faith and fair dealing. Waller v. Nat’l Bank of Commerce, 938 S.W.2d
684, 686 (Tenn.1997); TSC Industries, Inc. v. Tomlin, 743 S.W.2d 169, 173
(Tenn.Ct.App.1987). But the obligation sought to be enforced by the appellant in this
case is an obligation implied in fact. BVT Lebanon Shopping Center v. Wal-Mart Stores,
Inc., 1999 WL 236273 (Tenn.Ct.App.1999). The courts recognize that “contracts implied
in fact arise under circumstances which according to the ordinary course of dealing and
the common understanding of men, show a mutual intention to contract.” Weatherly v.
American Agricultural Chemical Co., 65 S.W.2d 592 (Tenn.Ct.App.1933).               The
Weatherly Court went on to say;

             [t]he court can declare implied covenants to exist only when there is a
      satisfactory basis in the express contract of the parties which makes it
      necessary to imply certain duties and obligations in order to effect the
      purposes of the parties to the contract made. And before a covenant will be
      implied in the express terms of the contract, or in view of the customs and
      practices of the business to which the contract relates, it must appear
      therefrom that it was so clearly in the contemplation of the parties that they
      deemed it unnecessary to express it, or that it is necessary to imply such
      covenant in order to give effect to the purpose of the contract as a whole.

Id. at 598.

                                           -5-
       As useful as they are in carrying out the intent of the parties, implied obligations
are not favored in Tennessee. Kroger Co. v. Chemical Securities Co., 526 S.W.2d 468,
471 (Tenn.1975)(citing Cousins Investment Co. v. Hastings Clothing Co., 113 P.2d 878,
879 (Cal.1941)). They “can be justified only upon the ground of legal necessity arising
from the terms of the contract.” Id.

       The requirement of legal necessity may be satisfied if the implied provision is
essential to the contract. Weatherly v. American Agricultural Chemical Co., 65 S.W.2d
592, 598 (Tenn.Ct.App.1933). It is harder, however, to show a legal necessity where the
negotiations were conducted by sophisticated and knowledgeable parties. Kroger at 468.

       Based on these legal principles we are convinced that the chancellor properly
rejected the argument that the deed to LHA contained an implied obligation to continue to
generate gate receipts and pay a percentage to the grantor’s heirs.

       We do not think the Court can (1) infer from the express terms of the deed a
mutual intention to include that provision, or (2) find that that provision is essential to the
effect the purpose of the written contract. See, gen. Weatherly. Nor do we think the
implied obligation can be justified on the ground of legal necessity. Kroger. The parties
were sophisticated and knowledgeable and they were represented by two of the leading
law firms in the city. The individual lawyers involved in the transaction would have
made a short list of the city’s well-known and respected practitioners. It is doubtful that
they would have considered a requirement of continuous operation so accepted and well
known that it was not necessary to include it in the agreement.

       The history of payments to the grantor and her heirs also suggests that the parties
intended to leave to LHA the choices about how the property would be operated. From
the date of the deed, March 11, 1964, to March 15, 1965 the property was not open for
tours. The grantor was paid $1200 for 1965. On March 15, 1965 after the house was
renovated by LHA, the house was opened to the public for general admission tours.
Between 1965 and 1971, LHA paid the grantor between $1200 and $2088.33 each year.

       In 1971 LHA decided to stop selling separate individual general admission tickets
to the house and included it in a package tour with the Hermitage. Payments to the
grantor increased dramatically to $17,390.82 for that year. It is noteworthy that the
decisions to include Tulip Grove house as part of the package and how to allocate the

                                              -6-
ticket price ($0.50 to Tulip Grove, $2.00 to the other properties on the tour) were made
exclusively by LHA. During the 1990s visitorship to Tulip Grove declined substantially
and in August of 2001 LHA decided to stop providing tours of the house for general
admission ticketed visitors. The expenses involved in operating the property and in
renovating the house to comply with government regulations had a bearing on the
decision.

       Finally, to infer that the parties to the deed had an unexpressed intent to maximize
the return to the grantor and her heirs would treat this transaction as a commercial arms-
length deal free of any donative intent on the part of the grantor. The grantor, however,
served as a board member of LHA from 1939 to 1954. Her daughter-in-law served on the
board from 1954 to 1983 and served as Regent of LHA from 1965 to 1969. The grantor’s
son and daughter-in-law actually lived at Tulip Grove during the time when the transfer
was being negotiated. It would be easier to draw an inference that a wish to preserve
Tulip Grove as part of the Hermitage was a substantial part of the consideration for the
transfer.

        These same considerations help to distinguish this case from BVT Lebanon
Shopping Center LTD v. Wal-Mart Stores, Inc., 48 S.W.3d 132 (Tenn.2001)(affirming the
Court of Appeals decision in 1999 WL 236273 (Tenn.Ct.App.1999). Both Courts
affirmed the trial court’s holding that a commercial lease had an implied covenant of
continued operation. The lease in question in BVT, however, was for an anchor tenant in
a shopping center and the base rent would not have amortized the cost of an expansion
financed by the landlord at the beginning of a new term. In addition, the Courts were
concerned about the effect on the shopping center as a whole if the anchor tenant left. In
fact, the transferee generated sales in the range of 10% to 30% of the sales generated by
the anchor tenant. Both Appellate Courts held that the proper measure of damages was
the diminution in value of the shopping center, not the lost stream of income.

C. Appellant’s Second Issue

     The Appellant’s second issue on appeal is: THE HEIRS OF JANE BUNTIN ARE
ENTITLED TO ONE-THIRD OF ALL REVENUES COLLECTED FOR THE
ADMISSION OF SPECIAL EVENT VISITORS TO THE TULIP GROVE HOUSE.

                                            -7-
       We start by noting that this issue involves a term included in the deed itself, not an
implied term. The deed requires LHA, for a period of ninety-nine years, to “pay to
Grantor, her heirs and assigns,.. one third (1/3) of all gate receipts received by Grantee
from visitors to Tulip Grove House located on said land...”

        The Affidavit and deposition testimony of the current President and Chief
Executive Officer of LHA showed that LHA had admitted visitors to the property for
special events and that LHA had not shared any of the revenue with the Plaintiff. He said
the special events included weddings, receptions, corporate dinners and other events. The
typical charge for such use of the property was $1,100 for each event. By his
interpretation of the deed, the obligation to share revenue with the grantor’s heirs only
extended to the sale of individual tickets to persons who toured the property because of
their interest in its history and its contents. This interpretation mutually excludes rentals
derived from special events where people attend because of the event and are otherwise
uninterested in the property’s history.

       In her final Order, the chancellor said:

               1. The Court has held, and continues to hold, that the Warranty
       Deed should be interpreted and construed as a matter of law. Plaintiff Jane
       Field has presented a number of arguments that she, and her sister Ms.
       Gray, should, in addition to a portion of receipts from ticketed visitors to
       Tulip Grove House, have been paid by Ladies’ Hermitage in the past, and
       be paid in the future, one-third of any rental payments received by Ladies’
       Hermitage in connection with special events at Tulip Grove House such as
       an occasional wedding reception or corporate/nonprofit function. Ladies’
       Hermitage has made payments since 1965 to the Grantor, Jane Buntin, or to
       the heirs of Jane Buntin, based upon receipts from ticketed visitors to Tulip
       Grove House. The Court holds that the Warranty Deed, and specifically the
       phrase “all gate receipts received by Grantee [Ladies’ Hermitage] from
       visitors to Tulip Grove House located on said land” does not include rental
       payments received by Ladies’ Hermitage in connection with Tulip Grove
       House.

                                             -8-
             2. Plaintiff Field’s request for an interpretation of the Warranty
       Deed contrary to this interpretation is DENIED. No monetary relief is
       awarded.

       Both parties agree that the language in the deed is plain and unambiguous. The
rules concerning the interpretation of deeds are well-settled and are designed to enable the
courts to ascertain the intention of the parties to the deed. Mitchell v. Chance, 149
S.W.3d 40, 44 (Tenn.Ct.App.2004)(citations omitted). The courts should first seek the
parties’ intention by examining the words in the deed, Hutchinson v. Board, 250 S.W.2d
82, 84 (Tenn.1952), and by considering these words in the context of the deed as a whole.
Collins v. Smithson, 585 S.W.2d at 603; Barber v. Westmoreland, 601 S.W.2d at 714:
Quarles v. Arthur, 231 S.W.2d 589, 590 (Tenn.Ct.App.1950).

       We are persuaded that the interpretation of the term “gate receipts” to mean only
the sale of individual tickets is too narrow. The deed says “[a]ll gate receipts received by
Grantee from visitors to Tulip Grove House on said land...” We see nothing in that
language or the surrounding circumstances that indicate the parties intended to restrict the
scope of LHA’s obligation to money received from visitors who hold an individual ticket,
or to money received from visitors who have an interest in history. We, therefore, hold
that the term “gate receipts” in the deed includes the rent paid to LHA for use of the
property for special events.

                            III. ISSUES RAISED BY LHA

A. Res Judicata

       LHA asserts on appeal that the issue of whether “gate receipts” covers special
event income was decided by the lower court in 2008 and was affirmed by this Court on
appeal.

       We disagree. In its September 12, 2008 motion for summary judgment LHA
asked the court to hold that the term “gate receipts” did not include rents from special
events. The order submitted by counsel for LHA actually included that specific language.
But the chancellor modified the order to read as follows:

                                            -9-
       a. “gate receipts” is interpreted to mean general admission tickets sold by
       Ladies Hermitage to the public who chose to tour the Tulip Grove House
       and specifically does not include charges for private special event rentals of
       the grounds.

       b. “received by Grantee [Ladies Hermitage] from visitors” is interpreted to
       mean gate receipts actually collected by Ladies Hermitage from visitors to
       Tulip Grove House.

       c. “to Tulip Grove House on said land” is interpreted to mean gate receipts
       received from visitors to Tulip Grove House and specifically does not mean
       receipts from visitors who visited the Hermitage or walked or were
       transported across land surrounding The Hermitage, Tulip Grove House, or
       other property held in trust by The Ladies’ Hermitage Association for the
       people of the State of Tennessee.

     The phrase “on the grounds” in paragraph a. was in the chancellor’s own
handwriting.

      On appeal, this Court pointedly did not review the trial court’s order on this issue.
The opinion states:

       This October 27 order was expressly incorporated into the November 12
       order that was appealed. The Heirs filed no opposition to the LHA motion
       for partial summary judgment pertaining to the accounting. It would be
       difficult to challenge the October order on appeal when no objection was
       raised to the trial court. In any event, on appeal the Heirs challenge only
       the November order finding that there was no reversion. Therefore, we
       make no comment and intend no inadvertent construction of the trial court’s
       interpretation of the deed in its October 27 order.

       The Court of Appeals opinion was filed on March 3, 2010.

                                            -10-
       On March 24, 2010 the lower court filed an order directing the plaintiff to set the
case for a final hearing on or before October 1, 2010 “to dispose of all remaining issues.”

        Through several motions and hearings, the parties were allowed to file cross-
motions for summary judgment. The plaintiff’s motion asserted that LHA had breached
its obligations under the deed by closing Tulip Grove to visitors in 2001. LHA’s motion
asserted that 1) the plain language of the deed showed that the obligations had not been
breached, and 2) that the plaintiff’s actions established a waiver or acquittance of the
breach of contract claim.

       On January 4, 2011, the court granted LHA’s motion but specifically did not rule
on the defenses of acquittance and waiver.

       In the subsequent proceedings in the court below, the pleadings failed to join issue
on whether “gate receipts” included special event revenues until the chancellor granted
LHA summary judgment on whether LHA had an obligation to keep the house open for
regular tours. In a motion to alter or amend, the plaintiff moved for specific findings of
fact and conclusions of law on whether the heirs of Jane Buntin were entitled to one-third
of the gate receipts for special events held at Tulip Grove. Over LHA’s strenuous
objection, the court allowed proof on the question of the special event income and set the
cause for final hearing on July 13, 2011. After that hearing, the court entered its Final
Order. It contained the following paragraphs:

       1. The Court has held, and continues to hold, that the Warranty Deed
       should be interpreted and construed as a matter of law. Plaintiff Jane Field
       has presented a number of arguments that she, and her sister Ms. Gray,
       should, in addition to a portion of receipts from ticketed visitors to Tulip
       Grove House, have been paid by Ladies’ Hermitage in the past, and be paid
       in the future, one-third of any rental payments received by Ladies’
       Hermitage in connection with special events at Tulip Grove House such as
       an occasional wedding reception or corporate/nonprofit function. Ladies’
       Hermitage has made payments since 1965 to the Grantor, Jane Buntin, or to
       the heirs of Jane Buntin, based upon receipts from ticketed visitors to Tulip
       Grove House. The Court holds that the Warranty Deed, and specifically the
       phrase “all gate receipts received by Grantee [Ladies’ Hermitage] from
       visitors to Tulip Grove House located on said land” does not include rental

                                           -11-
      payments received by Ladies’ Hermitage in connection with Tulip Grove
      House.

      2. Plaintiff Field’s request for an interpretation of the Warranty Deed
      contrary to this interpretation is DENIED. No monetary relief is awarded.

       Comparing the 2008 order with the 2011 order, it is clear that “private special
event rentals of the grounds” is not the same as “rental payments received by Ladies
Hermitage in connection with Tulip Grove House.”

       We cannot conclude that the 2008 order covered the rental income from all
private events at Tulip Grove.

B. Acquittance

       LHA asserts that the following provision in the warranty deed relieved it from any
further liability once it had made payments to the recipients named in the deed. That
provision is:

      ...[making] deposits in [First American National Bank of Nashville] shall
      relieve Grantee from any future liability or responsibility in connection with
      the future division or application of said payments and shall constitute a full
      acquittance to Grantee for such payments.

       We are satisfied, however, that the quoted language, by its own terms, only
relieves LHA from having to worry about how “said payments” would be divided among
Jane Buntin’s heirs. The key words are “any future liability or responsibility in
connection with the future division or application of said payments...” In our opinion,
the provision does not relieve the grantee from liability for failing to remit the proper
amount to the Buntin heirs.

                                          -12-
                                  V. CONCLUSION

      The judgment of the court below is affirmed in part and reversed in part and the
cause is remanded to the Chancery Court of Davidson County for any further
proceedings necessary. Tax the costs on appeal equally to the appellant and the appellee.

                                                 _________________________________
                                                  BEN H. CANTRELL, SENIOR JUDGE

                                          -13-