Court Opinion

ID: 1073013
Source: CourtListenerOpinion
Date Created: 2013-10-09 19:55:11.535374+00
Date Added: 2024-06-11T12:39:18.520481
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                               AT KNOXVILLE
                                         October 4, 2000 Session

                            JIM HOCKADAY v. DENNIS FREELS

                        Appeal from the Chancery Court for Morgan County
                          No. 99-17   Frank V. Williams, III, Chancellor

                                       FILED NOVEMBER 2, 2000

                                      No. E1999-02719-COA-R3-CV

This is an action for conversion of a $10,169.59 check. Responding to the plaintiff’s allegations, the
defendant claimed he had authority to negotiate the check because he and the plaintiff had orally
entered into a partnership or joint venture. Following a bench trial, the court below found that no
such relationship existed and that the defendant had wrongfully converted the check. We affirm.

            Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
                                 Affirmed; Case Remanded

CHARLES D. SUSANO, JR., J., delivered the opinion of the court, in which HOUSTON M. GODDARD,
P.J., and HERSCHEL P. FRANKS, J., joined.

Thomas M. Leveille, Knoxville, Tennessee, for the appellant, Dennis Freels.

Henry Clay Barry, Lebanon, Tennessee, for the appellee, Jim Hockaday.

                                                   OPINION

                                                         I.

       The plaintiff, Jim Hockaday, is in the business of manufacturing and selling hydraulic
mowers. At all times relevant to the issues in this case, Hockaday was conducting business through
his corporation, Rotary Manufacturing of Tennessee.1 The defendant, Dennis Freels, is in the
business of fabricating parts for equipment, and operates under the name of Liberty Machine & Tool.

        1
           At the time of trial, the corporation’s charter had been revoked. Hockaday, as the sole shareholder of the
corpora tion, was substitute d in its place as th e plaintiff in this suit.
        The parties met in May, 1997, through a mutual business acquaintance. They subsequently
agreed to build four mowers, but they failed to reduce their understandings to writing. The
testimony, especially as it relates to the parties’ business relationship, is in sharp conflict. According
to Hockaday’s testimony, he agreed to pay Freels for a certain number of hours and a certain price
per part for each mower. At trial, Hockaday testified that he told Freels that

                    if you will build these components for me, and I had a price, man-
                    hours, cost on material, everything, if you can do that, I will come up
                    to your place and be there and supervise because if you try to build it
                    without the full knowledge of what it actually does after it’s all put
                    together, there is too much room for error and most likely you would
                    not get it right.

In stark contrast, Freels testified that he and Hockaday did not discuss a certain price per mower or
an hourly rate, but rather agreed to equally share any profit remaining after payment of expenses.
He testified at trial that the parties were partners, saying that

                    [t]he only thing right from the start that was ever agreed on was he
                    told me he had four mowers sold, we build these four mowers and
                    split the profit, that’s what he said.

          In May, 1997, the parties undertook to build four mowers, and they continued this project
until June or July, 1997. The first mower was sold for $10,169.59 and delivered in early June to
McNeil Tractor in Mississippi. The parties disagree as to what happened to the $10,169.59 check
McNeil Tractor sent to Hockaday. Hockaday testified he received it in the mail and then “threw it”
on the seat of his truck on his way to Freels’ place of business. He testified that he then forgot about
it until, after talking with a representative of McNeil, he learned that Freels had endorsed the check
himself and deposited it to Freels’ bank account. Hockaday testified that he did not give Freels
permission to negotiate the check.

        Freels testified he did not take the check from Hockaday’s truck. He said that Hockaday gave
him the check sometime in July, 1997, and told him to use it to pay a steel supplier. He stated he
received no money from the McNeil transaction, and disavowed receiving any profit out of the
subject check.

        Hockaday filed suit on August 26, 1997, alleging that Freels wrongfully converted the
$10,169.57 check. Following a bench trial, the court below agreed, specifically finding that the
parties were not partners or engaged in a joint venture.2

          2
           The trial court made sev eral other find ings of fact relating to the ownersh ip of certain p ersonal pro perty. Freels
does not argue on appe al that these findings are erroneous. While Hockaday argues in his brief that the trial court was
correct as to the personal property, we do not add ress the per sonal pro perty as it w as not raised by either p arty on th is
                                                                                                                    (continu ed...)

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          2
              (...continued)
appeal.

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                                                  II.

        In this non-jury case, our review is de novo upon the record, with a presumption of
correctness as to the trial court’s factual determinations, unless the evidence preponderates
otherwise. Tenn. R. App. P. 13(d); Wright v. City of Knoxville, 898 S.W.2d 177, 181 (Tenn. 1995);
Union Carbide Corp. v. Huddleston, 854 S.W.2d 87, 91 (Tenn. 1993). The trial court’s conclusions
of law are reviewed de novo with no presumption of correctness. Campbell v. Florida Steel Corp.,
919 S.W.2d 26, 35 (Tenn. 1996); Presley v. Bennett, 860 S.W.2d 857, 859 (Tenn. 1993). Our de
novo review is subject to the well-established principle that the trial court is in the best position to
assess the credibility of the witnesses; accordingly, such determinations are entitled to great weight
on appeal. Massengale v. Massengale, 915 S.W.2d 818, 819 (Tenn. Ct. App. 1995); Bowman v.
Bowman, 836 S.W.2d 563, 566 (Tenn. Ct. App. 1991).

                                                  III.

        The first issue raised on appeal is whether the trial court erred in finding that no partnership
or joint venture existed. Freels argues that he and Hockaday were involved either in a partnership
or a joint venture and that Freels’ negotiation of the check was therefore authorized.

         A partnership is defined in T.C.A. § 61-1-105(a) (Supp. 1999) as “an association of two (2)
or more persons to carry on as coowners a business for profit….” A partnership can only be created
pursuant to a contract of partnership, though such an agreement may be either express or implied.
Bass v. Bass, 814 S.W.2d 38, 41 (Tenn. 1991). To determine whether a partnership exists, courts
must ascertain the intention of the parties. Id. In the absence of a written agreement, the requisite
intention is that which is deducible from the parties’ conduct. Wyatt v. Brown, 281 S.W.2d 64, 67
(Tenn. Ct. App. 1955). The parties need only intend “to do the things which constitute a
partnership.” Bass, 814 S.W.2d at 41. A partnership results if the parties “place their money, assets,
labor, or skill in commerce with the understanding that profits will be shared between them....” Id.
It is not necessary that the parties intend to actually form a partnership or even know that the legal
result of their actions is to create a partnership. Id. Accordingly, the terminology used by the parties
to describe their business relationship is of little import. Id.

       The determination of whether a partnership exists must be made “upon consideration of all
relevant facts, actions, and conduct of the parties,” id., and the burden of proof rests on the party
seeking to establish the existence of a partnership. Mullins v. Evans, 308 S.W.2d 494, 498 (Tenn.
Ct. App. 1957). “Generally, what will constitute a partnership is a matter of law, but whether a
partnership exists under conflicting evidence is one of fact.” Wyatt, 281 S.W.2d at 68.

       A joint venture has been described by the Supreme Court as “something like a partnership,
for a more limited period of time, and a more limited purpose.” Fain v. O’Connell, 909 S.W.2d
790, 792 (Tenn. 1995). Joint ventures are subject to the rules of law that govern partnerships.
Federated Stores Realty, Inc. v. Huddleston, 852 S.W.2d 206, 212 (Tenn. 1992).

                                                  -4-
        Freels argues that the trial court erred in finding that the parties were not partners. More
specifically, he asserts that Hockaday’s testimony alone establishes that Hockaday and Freels
combined their efforts, property, money, skill, and knowledge for the purpose of earning a profit, and
that this fact indicates that the parties were partners or, at a minimum, were involved in a joint
venture.

         The critical question in this litigation is whether the parties intended to share the profits
received from the sale of the mowers. On this point, Freels testified that they did so agree. On the
other hand, Hockaday testified that they did not agree to share the profits, but rather agreed that
Hockaday would pay Freels for a certain number of hours and a certain price per part for his work
in connection with each mower. Because the evidence on this point so sharply conflicts, the issue
narrows to a determination of the credibility of the witnesses. The trial court found the facts as
testified to by Hockaday. There is nothing in the record to prompt us to reject this determination.
As we have stated many times, a trial court’s credibility determinations are entitled to great weight
on appeal. See Massengale, 915 S.W.2d at 819; Bowman, 836 S.W.2d at 566.

        With respect to Freels’ argument that Hockaday’s testimony alone establishes that the parties
were partners, we disagree. While there is evidence in the record, in the form of Hockaday’s
testimony, tending to support the notion that the parties combined their efforts in producing and
delivering the mowers, there is absolutely nothing in Hockaday’s testimony establishing that the
parties were to share the profits generated by these sales. We therefore cannot say that the evidence
preponderates against the trial court’s conclusion that the parties were not partners or joint venturers.

                                                  IV.

        At oral argument, Freels, through his counsel, acknowledged that if we agreed with the trial
court on the issue of whether there was a partnership or joint venture, we would be compelled to
affirm the judgment of the trial court. Accordingly, because we agree with the trial court’s
determination that the parties were not partners or engaged in a joint venture, we will not address
Freels’ second issue regarding an accounting.

                                                   V.

        The judgment of the trial court is affirmed. The case is remanded for enforcement of the
judgment and for collection of costs assessed below, all pursuant to applicable law. Costs on appeal
are taxed to the appellant.

                                                        ___________________________________
                                                        CHARLES D. SUSANO, JR., JUDGE

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