ÿWPC! …# VU:a %› 0¸¡bY 4a u 0ü„ 0D€ Ä w@Ì D3 0J? 0T‰ 0^Ý 0h; 0r£ 0| 0†‘ 0 1u§U, 0dHU,¬U*ØB)DC+ AMn B»™Ø€q 0@ñÝ1v~vÓŒ AO_Æ® 0Dt D/¸ Bç ˜HP LaserJet 4Si/4SiMX PS 600dpiPSCRIPTÀÌÀääÀÀÌ0 , øð AZ‹"Arial RegularX( 7$¡¡Ò°ÒÒ„°ÒÑ` ` ÑÓÓÑTR[  AØ'ÿ Legal[  AØ'ÿ Legal AØ'ÿ Legal AØ'ÿ LegalTÑ- ù-©U!3|x(¬(3T6$¤¤Ý ƒ 7!ÝÒ°ÒÒ„°ÒÑ` °ÑÓÓÑTR[¤ AØ'ÿ Legal3Ø' AØ'ÿ Legalÿ3Ø'TÑÝ  Ýà ` àòòÚ  Ú0Ú  Úóó(#Ã$òòÚ  Ú0Ú  Úóó |}D~D€DD‚ƒ„D…Ó€****'ÿÿdxd2 ÿÿ0Indent1Ô2ÔÔ3  Ô2" ÿÿ0Indent2à0 àÔ2ÔÔ3  Ô2, ÿÿ0Indent3à0 àà0 àÔ2ÔÔ3  Ô26 ÿÿ0Indent4à0 àà0 àà0 àÔ2ÔÔ3  Ô2@ ÿÿ0Indent5à0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2J ÿÿ0Indent6à0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2T ÿÿ0Indent7à0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2^ ÿÿ0Indent8à0 àà0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô ÿÿ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)< Œ 9p`(ModernP ÿÿ8Mac DefaultMac DefaultÓ ` °šXÓ< Œ 9p`(Monaco< Œ 9p`(Arial% Line 7 d''''7Border 1dd€-(Cþÿ << Gÿÿ d Ý ƒ!ÝÑ  ÑÑ#€d#ÑÔ€ÔÔ€&ÔÒ  ÒÒ „ ÒÑ ` ÑÑ\R AØ'\ÑÝ  ÝÔ€&ÔÓ  ÓÔ YYY ÔFILEDÔ€&XÔÌÌò òAugustÏ22,Ï1996ÌÌCecilÏCrowson,ÏJr.ÌÔ€&ôÔAppellateÏCourtÏClerkó ó vÝ ƒ!ÝÑ#€d#ÑÔ€ÔÔ€&ÔÒ  ÒÒ „ ÒÑ ` ÑÑ\R AØ'\ÑÝ  ÝÝ ƒ$Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝThe€1990€note€was€non„negotiable€because€it€was€not€payable€at€a€definiteÏtime.Ì("ÿÿ$££Ò  ÒÒ  Ò ÓÝ ƒ!ÝÑ#€d#ÑÔ€ÔÔ€&ÔÒ  ÒÒ „ ÒÑ ` ÑÑ\R AØ'\ÑÝ  ÝÝ ƒ$Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝBut€a€renewal€of€a€previous€note€does€not€òòper€seóó›€extinguish€the€originalÏnote.€€òòCommerce€Union€Bank€v.€Burger„in„a„Pouch,€Inc.óó,€857€S.W.2d€88,€90€(Tenn.Ï1983).ÌPtPtHHÚ(ÿáÿâùFG(üHHØ(d'`Styl{WP}01•ÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃà Ãà Ãà Ãà Ãà ÃÃÃÃÃÃÃÃÃÃÃÐ ÐÐHHÐÐ  ÐÐ2ÐÐÿÿ¸æ$ÿÐÐHHÐÐÐÐÐÐÐÐ  ÐÐ ÐÐ ÐÑÑÑGenevaÑÑ ÑÑ € ÑÑ<Px–ÈÑÒÒÒ443!#4ÒÒ$ *$ÒÒ$*$ÒÒ ÿKK ÒÒ  Geneva ÒÒ  Geneva ÒÓ.,ÓÓÓÓ6ÓÓ ÓßßßßßßßßßßßßßßßßßßÑMonacoÑÑ ÑÒ  BA Op Monaco ÒÒ  BA Op Monaco Ò€-‚ƒCþÿ<< CÿÿƒLevel 1Level 2Level 3Level 4Level 5($$””ò òÚ  Ú1Ú  Úó ó„„'÷ÿ dxdüÿP PdÝ ƒ!ÝÔ . ÔÔ€ÔÓ&€%%X„d&ÓÑ#€%%Xd#ÑÔ€&ÔÒ  ÒÒ „ ÒÑ ` ÑÑ\R AØ'\ÑÝ  Ý›Ñ p ÑÑ€ÑÑ7€ïËXXdædÈ7ÑÑ  ÑÓ  Óò òœÙ€€ÙßL€)+(;+'h|` à. `€€Lß›IN€THE€COURT€OF€APPEALS€OF€TENNESSEEÌEASTERN€SECTION€AT€KNOXVILLEÌó ó„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„„ÌÓ  ÓÌÌÌRICHARD€P.€JAHN,€JR.,€LIQUIDATINGà à)ÌTRUSTEE€FOR€CRESCENT€OAKS€à à)ÌINVESTMENTS,€LTD.,€AND€ASÏà àà à)à àHAMILTON€CHANCERYÌBANKRUPTCY€TRUSTEE€FOR€à àà à)ÌRICHARD€CARMACK,à àà àà à)Ìà àà àà àà àà àà à)à àNo.€Ï03A01„9604„CH„00132Ìà àPlaintiff/Appellantà àà àà à)€€€€€€€€€€Ìà àà àà àà àà àà à)Ìv.à àà àà àà àà àà à)Ìà àà àà àà àà àà à)ÌJ.€FRANK€HARRISON,€JR.€à àà à)à àÌà àà àà àà àà àà à)à àREVERSED€AND€REMANDEDÌà àDefendant/Appelleeà àà à)ÌÌò òòòÌóóó óÌÌRichard€P.€Jahn,€Jr.,€Chattanooga,€For€the€Appellant€ÌÌJohn€W.€Murray,€III,€Chattanooga,€For€the€Appellee€ÌÌÌÌò òòòÓ  ÓO€P€I€N€I€O€NÌÌÌÓ  Óó óóóINMAN,€Senior€JudgeÌòòò òÌÌóóÌÓÓÓ  Óó óà àCrescent€Oaks€Investments,€Ltd.€was€a€LimitedÏPartnership€engaged€in€the€business€of€constructingÏand€operating€apartment€complexes.€€It€had€only€oneÍgeneral€partner,€Richard€E.€Carmack.Ìà àA€project€known€as€Crescent€Oaks€was€completed€in€1980.€€Cost€overrunsÏwere€troublesome.€€When€finally€adjusted,€these€overruns€amounted€toÏœ$325,742.00›€for€which€the€limited€œpartnership€(acting›€through€its€general€œpartner,ÏCarmack)›€delivered€to€Carmack€its€promissory€note€dated€December€15,€1983€andÏpayable€on€December€5,€1993€with€a€floating€rate€of€interest.€€We€refer€to€this€noteÏhereafter€as€the€œð ð1983›€note.ððÌà àAn€amendment€to€the€Partnership€Agreement€specifically€authorized€theÏexecution€and€delivery€of€the€note€to€Carmack.€€It€was€carried€on€the€books€of€theÏÑ  Ñlimited€partnership€as€a€long„term€debt,€and€its€validity€is€not€questioned.Ìà àCarmack€thereafter€fell€into€hard€financial€times.€€He€borrowed€$218,000.00Ïfrom€Harrison,€œthe€appellee,€which›€was€evidenced€by€a€promissory€note€datedÏOctober€23,€1989,€secured€by€the€signatures€of€his€two€sons€and€by€a€second€deedÏof€trust€on€lots€in€Jackson€Square€Subdivision.Ìà àThis€œfirst›€mortgage€was€foreclosed€about€one€year€later,€causing€HarrisonÏsome€anxiety,€to€alleviate€which€œhe€requested›€additional€security.Ìà àCarmack€met€with€Harrisonððs€attorney€on€December€8,€1990€to€discuss€theÏdemand€of€Harrison€for€additional€security.€€Carmack€revealed€that€the€LimitedÏPartnership€owed€him€about€œ$400,000.00›€œ(this›€is€the€1983€note€with€accruedÏœinterest)›€which€was€ð ðevidenced€by€two€promissory€notes€òòrecentlyóó€issuedðð€œ{actually,›Ïthe€preceding€œday).›Ìà àCarmack€agreed€to€assign€one€of€these€notes€to€Harrison€as€ð ðnewððÏcollateral.Ìà àð ðSometime€in€December€1990,ðð€Carmack,€Jr.,€using€the€1983€note€as€aÏguide,€drafted€a€promissory€note€payable€to€Carmack,€Sr.€by€the€LimitedÏPartnership€in€the€amount€of€$200,000.00€(the€1990€note).€€This€note€is€datedÏDecember€7,€1990€and€was€payable€ð ðwhen€the€Crescent€Oaks€Apartment€is€sold.ððÌà àThe€ð ðother€noteðð€was€never€issued.Ìà àOn€January€25,€1991,€Carmack,€by€written€instrument,€œð ðassigned,›€sold,Ïœconveyed,›€set€over€and€transferred€to€Harrison€all€of€his€right,€title€or€interest€in€theÏ1990€note,€as€security€for€and€payment€of€his€note€to€Harrison,€though€not€inÏextinguishment€of€œit.ðð›Ìà àIn€course,€the€Limited€Partnership€also€fell€into€hard€financial€times€andÏsought€bankruptcy€protection,€which€was€successful€to€the€extent€a€new€lender€wasÏdiscovered€who€paid€the€defaulted€first€mortgage.€€Carmackððs€1983€note€survivedÏthe€bankruptcy,€but€the€second€mortgage€securing€its€payment€was€required€to€beÏreleased,€and€certain€restrictions€were€imposed€with€respect€to€the€allocation€ofÏcash€flow.€€The€note€was€kept€with€Carmackððs€personal€papers€initially,€butÏthereafter€was€lodged€in€a€safe€at€a€relativeððs€house.€€Carmack€petitioned€forÏbankruptcy€and,€on€May€15,€1995,€one€of€his€sons€delivered€the€note€to€theÏbankruptcy€trustee.Ìà àThe€note€is€unmarked,€it€bears€no€endorsements€or€notations.€€The€TrusteeÏconsidered€it€to€be€an€asset€of€Carmackððs€bankruptcy€estate,€collectible€to€theÏTrustee€for€the€benefit€of€the€general€creditors€of€Carmack.Ìà àThe€Trustee€filed€this€action€for€a€declaratory€judgment€œthat:›Ìà0 àœ(1)›à àœthe›€Limited€Partnership€is€under€no€duty€or€obligation€to€pay€ð ðany€debtÏto€Carmack€or€to€Harrison€under€the€December€9,€1990€noteðð;Ìà0 à(2)à àœthe›€1983€note€be€declared€to€be€the€property€of€Carmackððs€bankruptcyÏestate.Ìà àThe€defendant€admitted€that€the€December€7,€1990€note€was€drawn€byÏCarmack€on€the€Partnership€payable€to€Carmack€and€assigned€to€the€defendant€asÏð ðcollateral€to€secure€payment€of€the€1989€noteðð€(the€personal€loan€from€Harrison€toÏCarmack).Ìà àThe€defendant€alleged€that€he€was€not€made€aware€of€the€1983€note€ð ðat€theÏœtimeðð;›€although€Carmackððs€financial€statement,€delivered€to€Harrison,€listed€it€as€anÏasset,€Carmack€did€not€proffer€it€as€security€for€the€loan.€€He€alleged€that€œCarmack›Ïintended€the€1990€note€òòto€represent€a€partial€replacement€for€the€debt€evidencedÏby€the€1983€noteóó,€which€Carmack€had€authority€to€issue€as€a€general€partner€of€theÏLimited€Partnership.Ìà àIn€short€summary,€the€defendant€insisted€that€the€1990€note,€assigned€toÏhim× ƒ, ××  ×€as€security€for€the€personal€loan€to€Carmack,€was€a€ð ðpartial€replacementðð€ofÍthe€1983€note€and€that€Carmack€simply€ð ðnever€got€aroundðð€to€the€execution€ofÏanother€note€representing€the€balance€of€the€1983€note.Ìà àThe€Chancellor€agreed,€finding€that€the€$200,000.00€note€œ(the›€1990€œnote)›Ïwas€a€valid€obligation€of€the€Partnership,€executed€in€partial€replacement€of€theÏ1983€note,€and€was€properly€pledged€to€secure€the€personal€obligation€of€CarmackÏto€Harrison.€€We€are€constrained€to€disagree€for€the€reasons€hereafter€appearing.€œÌ›œà àThe›€issue€is€whether€the€1983€note€was€canceled,€and€the€standard€ofÏreview€is€òòde€novoóó€on€the€record€accompanied€with€a€presumption€that€the€judgmentÏis€correct€unless€the€evidence€otherwise€preponderates.€€òòTenn.€R.€App.€P.óó€13(d).Ìà àRecourse€must€first€be€had€to€the€controlling€statutes€and€thereafter€to€theÏPartnership€Agreement:Ìà àT.C.A.€ðð€61„2„403€provides€that€ð ð.€.€.€a€general€partner€of€a€limitedÏpartnership€has€the€rights€and€powers€.€.€.€of€a€partner€in€a€partnership€withoutÏlimited€partners.ððÌà àT.C.A.€ðð€61„1„108€relating€to€partnerships€without€limited€partners€provides:ÌÓÓÌà0 àEvery€partner€is€an€agent€of€the€partnership€for€the€purpose€of€its€business,Ïand€the€act€of€every€partner,€including€the€execution€in€the€partnership€nameÏof€any€instrument,€for€apparently€carrying€on€in€the€usual€way€the€business€ofÏthe€partnership€of€which€he€is€a€member,€binds€the€partnership,€unless€theÏpartner€so€acting€has€in€fact€no€authority€to€act€for€the€partnership€in€theÏparticular€matter,€and€the€person€with€whom€he€is€dealing€has€knowledge€ofÏthe€fact€he€has€no€such€authority.ÌÓÓÌà àThe€Partnership€Agreement€provides:ÌÓÓÌà0 àòòPower€and€Authority€of€General€Partneróó.€€The€General€Partner€shall€haveÏcomplete€and€exclusive€control€over€the€management€of€the€PartnershipÏbusiness€and€affairs,€and€the€Limited€Partners€shall€have€no€right€toÏparticipate€in€the€management€of€conduct€of€the€Partnership€business€orÏaffairs€nor€any€power€or€authority€to€act€for€or€on€behalf€of€the€Partnership€inÏany€respect€whatsoever.€€Except€as€otherwise€specifically€provided€in€thisÏAgreement,€the€General€Partner€shall€have€the€right,€power€and€authority€onÏbehalf€of€the€Partnership€and€in€its€name,€to€exercise€all€of€the€rights,€powersÏand€authority€of€a€partner€of€a€partnership€without€limited€partners€under€theÏTennessee€Uniform€Partnership€Act.ÌÓÓÌà àThe€defendant€argues€that€Carmack€was€authorized€by€the€statute€and€theÏPartnership€Agreement€to€ð ðexecute€and€deliver€the€1990€note€in€replacement€forÏthe€1983€note€.€.€.€ðð€in€accordance€with€the€testimony.Ìà àCarmack€testified€that€he€considered€the€1983€note€ð ðnull€and€void,ðð€becauseÏhe€intended€that€the€1990€note€would€replace€it.€€œHe€was€somewhat€vague€aboutÏthe€balance€of€the€1983€note,€since€the€amount€of€the€1990€note€was€one„half€ofÏthe€1983€note.€€Since›€he€was€the€payee€and€holder€of€the€note,€this€testimony€inÏordinary€circumstances€would€be€significant€and€possibly€œcontrary›€to€theÏcontentions€of€the€Trustee;€but,€the€testimony€comes€in€hindsight,€after€the€TrusteeÏhas€taken€possession€of€the€note€and€asserted€a€differing€scenario,€thus€casting€aÏshadow€upon€it.€€His€testimony€is€supported€by€his€son,€Carmack,€Jr.€who€typed€theÏ1990€note„„using,€as€we€have€said,€the€1983€note€as€a€guide„„at€the€request€of€hisÏfather.€€He,€too,€considered€the€1983€note€to€have€been€replaced€by€the€1990€note.Ìà àœMilitating›€against€the€testimony€of€Carmack€and€son€are€these€undisputedÏfacts:Ìà0 à(1)à àNone€of€the€Limited€Partners€was€aware€of€the€1990€note.€€While€theÏdefendant€argues€that€the€partnership€has€in€no€way€been€harmed€by€theÏð ðtransaction,ðð€this€essentially€begs€the€question€and€is€not€relevant€to€theÏdispositive€issue.Ìà0 à(2)à àWhile€the€Partnership€Agreement€was€amended€to€authorize€òòin€haecÏverbaóó€the€execution€and€delivery€of€the€1983€note,€no€such€authorizationÏwas€sought€for€the€1990€note.Ìà0 à(3)à àThe€1983€note€was€shown€on€the€books€of€account€of€the€Partnership;Ïthe€1990€note€was€not.Ìà0 à(4)à àThe€CPA€who€had€done€all€of€Carmackððs€personal€and€businessÏaccounting€for€twenty€years€was€unaware€of€the€1990€note€until€March€1994,Ïnearly€three€years€after€its€execution€and€delivery.Ìà0 à(5)à àThe€1990€note€nowhere€refers€to€the€1983€note,€and€there€is€no€òòprimaÏfacieóó€indication€that€it€was€executed€and€delivered€in€lieu€of€the€1990€note.Ìà0 à(6)à àAlthough€Carmack€testified€that€the€Partnership€had€ð ðrecently€issuedÏtwo€notesðð€in€replacement€of€the€1983€note,€only€one€note€was€issued.Ìà0 à(7)à àThe€defendant€accepted€the€1990€note€per€assignment€withoutÏverification€and€did€not€notify€the€Partnership€of€the€assignment.Ìà0 à(8)à àThe€records€of€the€Partnership€reflect€nothing€about€the€1990€note.Ìà0 à(9)à àOn€March€16,€1992,€Carmack€confirmed€by€letter€to€CPA€HendersonÏòòthat€the€1983€note€remained€due€and€payableóó,€principal€$325,742.00€plusÍinterest€of€$123,799.68€as€of€December€31,€1991.€€œòòThis›€occurred€œeleven›€œ(11)›Ïmonths€after€the€1990€note€was€allegedly€delivered€in€replacement€of€theÏ1983€œnote.óó›Ìà0 à(10)à àCarmack€certified€an€audit€of€Crescent€Oaks€for€1992€reflecting€thatÏthe€1983€note€remained€due€and€payable.Ìà0 à(11)à àCarmack€again€certified€a€1993€audit€that€the€1983€note€was€due€andÏpayable,€principal€$325,742.00€plus€interest€of€$203,932.20€as€of€DecemberÏ31,€1993.€€This€certification€was€made€on€April€5,€1994,€after€he€filed€inÏbankruptcy,€òòmore€than€three€years€after€the€execution€of€the€1990€noteóó.Ìà0 à(12)à àIn€June€1993,€Carmack,€responding€to€Harrisonððs€request€for€anÏupdate€on€his€assets€œadvised›€him€that€ð ðhis€note€from€Crescent€Oaks€payableÏto€meðð€(the€1983€note)€was€worth€about€$525,000.00.Ìà àAs€we€have€said,€the€Chancellor€found€that€Carmack€intended€to€cancel€andÏdid€cancel€the€1983€note€by€the€issuance€of€the€1990€note,€i.e.,€that€a€novationÏoccurred.€€We€cannot€agree.Ìà àA€novation€is€a€contract€which€substitutes€a€new€obligation€for€an€old€oneÏwhich€is€thereby€extinguished.× ƒ. ××  ×€òò€Blaylock€v.€Stephensóó,€258€S.W.2d€779,€781€(Tenn.ÏApp.€1953).€€The€burden€of€proving€a€novation€is€upon€the€defendant,€òòBank€ofÏCrockett€County€v.€Cullipheróó,€752€S.W.2d€84,€89€(Tenn.€App.€1988),€and€must€beÍclearly€established€by€evidence€of€the€discharge€of€the€original€debt€by€expressÏagreement€or€by€the€acts€of€the€parties€clearly€showing€the€intention€to€work€aÏnovation.€€œòòIdóó›€and€cases€œcited.Ìà àIn€the€case€at€bar,€the€1990€note€was€for€an€amount€less€than€one„half€of€theÏnote€allegedly€replaced;€the€due€date€was€changed€from€definiteness€to€one€ofÏindefiniteness;€on€three€occasions€after€the€1990€note€was€executed€„„€rangingÏfrom€12€months€to€three€years€„„€Carmack€represented€and€affirmed€that€the€1983Ïnote€remained€due€and€payable;€and€the€records€of€the€Partnership€nowhereÏreflected€the€1990€note.Ìà àGiven€these€undisputed€facts,€it€is€clear€that€the€defendant€failed€to€prove€„„Ïmuch€less€ð ðclearly€establishðð€€that€a€novation€occurred.€€Moreover,€T.C.A.€ðð€47„3„605€(47„3„604€effective€July€1,€1996)€provides€the€exclusive€means€for€theÏdischarge€of€negotiable€instruments.€€òòCommerce€Union€Bankóó,€657€S.W.2d€88,€91Ï(Tenn.€1983).€€It€is€provided€that:ÌÓÓÌà0 à(1)€€The€holder€of€an€instrument€may€even€without€consideration€dischargeÏany€party;Ìà0 àà0 à(a)à0 àin€any€manner€apparent€on€the€face€of€the€instrument€or€theÏendorsement,€as€by€intentionally€cancelling€the€instrument€orÏthe€partyððs€signature€by€destruction€or€mutilation,€or€by€strikingÏout€the€partyððs€signature,€orÌà0 àà0 à(b)à0 àby€renouncing€his€rights€by€a€writing€signed€and€delivered€orÏby€surrender€of€the€instrument€to€the€party€to€be€discharged.Ìà àT.C.A.€ðð€47„3„605€(1992).ÌÓÓÌà àThe€Chancellor€found€that€Carmack€renounced€his€rights€under€the€1983Ïnote€by€executing€a€new€note.€€We€do€not€agree€for€the€reasons€heretoforeÏexpressed,€emphasizing€that€Carmack€expressly€certified€on€three€occasionsÏranging€from€12€months€to€3€years€after€the€1990€note€was€issued€that€the€1983Ïnote€remained€viable.€€This€undisputed€conduct€completely€negates€any€assertionÏof€renunciation€or€any€inference€of€it.Ìà àWe€conclude€that€the€1983€note€was€not€canceled€or€replaced€and€remainsÏa€valid,€enforceable€obligation€payable€to€his€bankruptcy€estate.€€The€evidenceÏpreponderates€against€the€judgment,€which€is€reversed€at€the€costs€of€the€appellee,Ïand€the€case€is€remanded€for€all€necessary€purposes.Ì€ÌÓÓà àà àà àà àà àà àòò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€óóÌà àà àà àà àà àà àWilliam€H.€Inman,€Senior€JudgeÌÌÌConcur:ÌÌÌÌòò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€óóÌDon€T.€McMurray,€JudgeÌÌÌÌòò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€óóÌHerschel€P.€Franks,€JudgeÌÌÌ