ÿWPC‘( ¾# t U: %¹ 0û¿ w@º 4ú   # 0J) 0TsÇ 0^Ï 0h- 0r• 0| 0†ƒ 0  1u™ 0d BrU *B)¹DCâ AM% D3r£¥ªH 0@òq2£s¥v~vÓ– AOi$Ƹ$ 0D~% D/Â% Bñ% 0?& 0DM(˜HP LaserJet 4SiHPPCL5MS,ü,,,,,ü0nLüÏ,c½¬AZ‹"Arial RegularX(Ó~Ð$¡¡Ñ  ÑÒH°ÒÒ°ÒÑTR[  AØ'ÿ LegalLˆhÐ (Avery 4167 Post Card AØ'ÿ LegalhÐ (Avery 4167 Post CardTÑÔ€Xm¢XXXÔÑ7€¥3XXdìXXdæ7Ñ ÙÊÚÊÛÜDÝPÞßEàÊáÓ€íR¦"„ô` ÿ3|xïHÈ2 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)P ÿÿ8Mac DefaultMac DefaultÓ ` °šXÓ d< Œ 9p`(Arial% Line 7 d''''7Border 1dd€-(Cþÿ << Gÿÿ$$$$'ÿÿdxd ™Ý ƒ!ÝÑ  ÑÑ#€d#ÑÔ€&ÔÑ  ÑÒ  ÒÒ H ÒÑ\R AØ'\ÑÑ#€d#ÑÝ  ÝÔ€&ÔÓ  ÓÔ YYY ÔFILEDÔ€&XÔÌÌò òJuneÏ9,Ï1997ÌÌCecilÏCrowson,ÏJr.ÌÔ€&ôÔAppellateÏCourtÏClerkó ó  Ý ƒ!ÝÑ#€d#ÑÔ€&ÔÑ  ÑÒ  ÒÒ H ÒÑ\R AØ'\ÑÑ#€d#ÑÝ  ÝÝ ƒ¼$Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝScant€proof€was€offered€about€this€voucher,€and€the€parties€do€not€accord€itÏmuch€significance€or€attention.Ì("ÿÿ$££Ò  ÒÒ  Ò gÝ ƒ!ÝÑ#€d#ÑÔ€&ÔÑ  ÑÒ  ÒÒ H ÒÑ\R AØ'\ÑÑ#€d#ÑÝ  ÝÝ ƒ¼$Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝA€ð ðCD€accountðð€is€a€contradiction€in€terms.€€Although€both€briefs€refer€to€theÏdeposited€funds€as€a€Certificate€of€Deposit,€it€is€apparent,€and€the€parties€soÏconceded€during€argument,€that€the€funds€were€intended€to€be€deposited€in€anÏordinary€savings€account.€€No€Certificate€of€Deposit€was€issued.€Ì øÝ ƒ!ÝÑ#€d#ÑÔ€&ÔÑ  ÑÒ  ÒÒ H ÒÑ\R AØ'\ÑÑ#€d#ÑÝ  ÝÝ ƒ¼$Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝThe€evidence€is€confusing€as€to€when,€and€precisely€how,€the€funds€wereÏlost€to€Pacific,€but€the€parties€agree€that€eventually€the€funds€were€applied€inÏpayment€of€Stalcupððs€personal€borrowing.Ì iÝ ƒ!ÝÑ#€d#ÑÔ€&ÔÑ  ÑÒ  ÒÒ H ÒÑ\R AØ'\ÑÑ#€d#ÑÝ  ÝÝ ƒ¼$Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝThree€years€after€delivering€of€the€check€to€Stalcup.ÌPtPtHHÚ(ÿáÿâùFG(üHHÚ(d'hStyl{WP}01•ÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃà Ãà Ãà Ãà Ãà ÃÃÃÃÃÃÃÃÃÃÃÐ ÐÐHHÐÐ  ÐÐ2ÐÐÿÿ¸æ$ÿÐÐHHÐÐÐÐÐÐÐÐ  ÐÐ ÐÐ ÐÑÑÑGenevaÑÑ ÑÑ € ÑÑ<Px–ÈÑÒÒÒ443!#4ÒÒ$ *$ÒÒ$*$ÒÒ ÿKK ÒÒ  Geneva ÒÒ  Geneva ÒÓ.,ÓÓÓÓ6ÓÓ ÓßßßßßßßßßßßßßßßßßßÑGenevaÑÑ ÑÒ  h HD: Geneva ÒÒ  h HD: Geneva Ò€-‚ƒCþÿ<< CÿÿƒLevel 1Level 2Level 3Level 4Level 5($$””ò òÚ  Ú1Ú  Úó ó„„'÷ÿ dxdüÿP Pd(ï(3R$¤¤Ý ƒ~Ð!ÝÑ  ÑÒH°ÒÒ°ÒÑTR[  AØ'ÿ Legal3Ø' AØ'ÿ Legalÿ3Ø'TÑÔ€X ËXXXÔÑ7€ ËXXdædæ7ÑÝ  Ýà ` àòòÚ  Ú0Ú  Úóó(#Ã$òòÚ  Ú0Ú  ÚóóÝ ƒ!ÝÔ . ÔÔ€&ÔÑ  ÑÒ  ÒÒ H ÒÑ\R AØ'\ÑÑ#€Xd#ÑÑ#€Xd#ÑÝ  Ýò ò›Ó  ÓœÞ ÞÌIN›€THE€COURT€OF€APPEALS€OF€TENNESSEEÌ̜ـ€ÙßR€)+(A1-j|` à. `€€@ÿRß›EASTERN€SECTION€AT€KNOXVILLEó óÌÓ  ÓÌÌÌÌÌPACIFIC€PROPERTIES,à àà àà à)à àSEVIER€CIRCUITÌà àà àà àà àà àà à)à àà àà àà àà àà àÌà àPlaintiff/Appelleeà àà àà à)à àNO.€€03A01„9701„CV„00020Ìà àà àà àà àà àà à)à àÌv.à àà àà àà àà àà à)à àHON.€€WILLIAM€R.€HOLT,€JR.Ìà àà àà àà àà àà à)à àJUDGEÌHOME€FEDERAL€BANKà àà àà à)ÌOF€TENNESSEE,à àà àà àà à)à àà àÌà àà àà àà àà àà à)à àÌà àœDefendant/Appellantà à›à à)à àÌà àà àà àà àà àà à)à àÌv.à àà àà àà àà àà à)Ìà àà àà àà àà àà à)ÌMICHAEL€S.€STALCUP,à àà àà à)Ìà àà àà àà àà àà à)Ìà àThird„Party€Defendantà àà à)à àAFFIRMEDÌÌÌÌÌW.€W.€Davis,€Jr.,€Knoxville,€for€Appellant.ÌJohn€B.€Waters,€œIII,€›Knoxville,€for€Appellee.ÌÌÌòòò òÓ  ÓO€P€I€N€I€O€NÌÓ  ÓÌó óóóà àà àà àà àà àà àà àINMAN,€Senior€JudgeÌÌÓÓà àThis€action€for€conversion€was€submitted€to€a€jury€which€returned€a€generalÏverdict€for€the€plaintiff,€thereby€implicitly€finding€that€the€fact„driven€œprincipal€defense›Ïof€the€Statute€of€Limitations€was€not€well„taken.€€Home€Federal€œappeals›€andÏpresents€for€œreview›€issues€œwhich,€as€paraphrased,€question€the€propriety€of€theÏsubmission€of€the€case€to€the€juryÔ% € Ô,€whether€the€defense€of€Statute€of€Limitations€wasÍwell„taken,€as€a€matter€of€law,€whether€requested€jury€instructions€should€haveÏbeen€given€and€whether€the€drawer€of€a€check€adequately€instructed€the€draweeÏBank€as€to€its€disposition.òò›Ìóóœà àPacific€Properties€[Pacific]€is€a€California€general€partnership€created€inÏ1969.€€Its€principals€are€Edmund€S.€Wilkinson€and€his€daughter,€Chris€Wilkinson.€€ItÏhas€multi„state€investments€in€real€estate,€generally€utilizing€the€limited€partnershipÏconcept.€€Ìà àÌà àIn€1987,€Wilkinson€and€his€brother„in„law,€Stalcup,€who€was€a€resident€ofÏTennessee,€agreed€to€form€a€limited€partnership€under€the€style€of€WilkinsonÏProperties,€Ltd.€€In€the€Certificate€of€Limited€Partnership€dated€February€1,€1988,ÏStalcup€was€named€the€General€Partner€with€Pacific€as€the€limited€partner.€€PacificÏwas€to€receive€all€net€distributions€until€it€recouped€its€entire€investment€withÏinterest;€thereafter,€the€profits€were€to€be€divided€equally.€€The€stated€purpose€ofÏWilkinson€Properties,€Ltd.€was€the€ownership€and€rental€of€vacation€chalets€inÏSevier€County,€Tennessee.Ìà àPacific€loaned€the€limited€partnership€$21,000.00€to€purchase€a€building€lotÏin€Gatlinburg›,€and€about€one€month€later€made€an€additional€loan€of€$79,000.00€toÏenable€the€partnership€to€purchase€acreage€in€œPittman›€œCenter,€Sevier€County.›€ÏConstruction€funds€were€required,€and€Wilkinson€and€Stalcup€met€with€officers€ofÏHome€Federal€to€discuss€the€financing€of€the€proposed€chalets.Ìà àWilkinson€believed€that€a€deposit„relationship€with€Home€Federal€wouldÏestablish€a€banking€relationship€œand€facilitate€the€loan€process.€€Ten›€days€beforeÍthe€meeting€with€Home€Federal€officials,€he€drew€a€check€on€Pacific,€dated€œMay€13,Ï1988,›€for€the€amount€of€$100,000.00€payable€to€Home€Federal€with€anÏaccompanying€voucher€which€read:ÌÓÓà8 àð ðto€purchase€$100,000.00€CD€to€be€pledged€to€construction€loans€forÏWilkinson€Properties,€Gatlinburg€rentals.ððÌÓÓÓÓÌÓÓà àThis€voucherœ× ƒ, ××  ×›€was€removed€by€Wilkinson€before€the€check€was€delivered€toÏHome€Federal.€€œThe€check€alone€was›€handed€to€Stalcup€by€Wilkinson€withÏinstructions€to€deliver€it€to€Home€œFederal,€whose€officials›€were€not€instructedÏœconcerning€the€purpose€of€the€funds.›Ìà àWilkinson€testified€that€an€official€of€Home€Federal,€Steve€Jones,€told€him€thatÏð ðif€we€move€the€CD€back€here€[from€a€California€bank]€and€established€a€CD€atÏHome€Federal,€they€would€definitely€make€us€a€construction€loan.ððÌà àœÌà àÌà àOn›€May€26,€1988€Stalcup€deposited€the€check€with€Home€Federal€into€aÏ$100,000.00€œð ðCD›€œaccountðð›× ƒ. ××  ×€œin€the€name€of€Wilkinson€Properties,€Ltd.€€›€ShortlyÏthereafter,€construction€began€on€Lot€5,€and€the€account€was€pledged€as€collateralÏfor€loans€to€Wilkinson€Properties,€Ltd.€to€finance€the€costs€of€construction,€not€onlyÏon€Lot€5€but€also€on€Lot€10.€€When€construction€was€completed,€permanent€loansÍwere€made€by€Home€Federal€to€Wilkinson€Properties,€Ltd.€which€executed€deeds€ofÏtrust€on€the€lots€as€security,€thereby€ð ðfreeing€upðð€the€account,€but€Stalcup€continuedÏto€borrow€against€it€and€the€account€was€soon€dissipated.œ× ƒ/ ××  ×›Ìà àIn€the€Spring€of€1991,× ƒ0 ××  ×€Wilkinson€learned,€according€to€his€testimony,€that€theÏð ðCD€account€had€not€been€properly€set€up.ðð€€On€July€17,€1992,€his€attorney€enquiredÏof€Home€Federal€about€the€status€of€the€ð ðCD,ðð€and€œWilkinson›€says€he€discoveredÏthat€the€Pacific€check€payable€to€Home€Federal€was€deposited€in€a€ð ðCD€accountððÏheld€by€Wilkinson€Properties,€Ltd.€and€that€œit›€had€been€pledged€to€financeÏconstruction€costs€of€the€chalets.€€Kim€Huff,€an€employee€of€Home€Federal,€testifiedÏthat€during€a€meeting€with€Darryl€Roberts,€a€Home€Federal€officer,€and€Stalcup,€sheÏwas€instructed€by€Roberts€to€ð ðset€upðð€an€account€in€the€name€of€WilkinsonÏProperties,€Ltd.Ìà àHome€Federal€seemingly€violated€its€in„house€rules€respecting€partnershipÏaccounts.€€A€Partnership€Certification€form€was€required€to€be€executed,€but€theÏprocedure€was€not€followed.€€Had€this€form€been€completed,€the€identity€of€theÏpartners,€their€addresses,€which€partner(s)€could€bind€the€partnership,€the€tax€IDÏnumber€and€pertinent€addresses€would€have€been€readily€available.Ìà àWilkinson€testified€that€the€first€indication€to€him€that€the€ð ðCD€accountðð€wasÏnot€properly€handled€by€Home€Federal€occurred€in€the€Spring€of€1991€when€heÍreceived€a€box€of€documents€from€Stalcup,€followed€shortly€by€a€communicationÏfrom€the€Tennessee€State€Bank€that€Wilkinson€Properties,€Ltd.€had€loansÏoutstanding€of€which€he€was€likely€unaware.€€Wilkinson€thereupon€engagedÏcounsel€to€investigate,€who€requested€that€Home€Federal€advise€with€respect€to€theÏð ðCD€account.ðð€€By€letter€dated€July€20,€1992,€Home€Federal€responded€to€theÏrequest€and€revealed€that€Pacificððs€check€had€been€deposited€to€an€account€in€theÏname€of€Wilkinson€Properties,€Ltd.Ìà àThe€appellant€argues€that€the€trial€court€should€have€directed€a€verdict€on€theÏissue€of€the€Statute€of€Limitations.€€We€respectfully€disagree.Ìà àAs€the€parties€seemingly€recognize,€the€manner€of€the€handling€of€PacificððsÏfunds€was€somewhat€œsingular.€€Home€Federal›€accepted€for€deposit€Pacificððs€checkÏdrawn€on€a€California€bank,€òòpayable€to€itself,óó€and€then€deposited€the€funds€œto›€aÏdifferent€account€solely€upon€the€instructions€of€Stalcup,€and€without€reference€toÏthe€drawer.€€In€light€of€the€testimony€of€Wilkinson€concerning€his€earliest€knowledgeÏof€the€mishandling€of€the€funds,€the€issue€of€the€accrual€of€the€Statute€of€LimitationsÏwas€for€the€jury,€whose€verdict€may€constitutionally€be€set€aside€only€if€there€is€noÏmaterial€evidence€to€support€it.€€òòSands€v.€Evans,€óó635€S.W.2d€377€(Tenn.€1982).Ìà àT.€C.€A.€œðð€28„3„105›€requires€actions€for€conversion€to€be€œcommenced›€withinÏthree€years€from€the€accrual€of€the€cause€of€action,€which€means€from€the€time€whenÏthe€plaintiff€knew€or€reasonably€should€have€known€that€a€cause€of€action€existed.€ÏòòStone€v.€Hinds,€óó541€S.W.2d€598€(Tenn.€App.€1976).€€œÌà àThe€burden€of€proving€the€affirmative€defense€of€the€Statute€of€LimitationsÏwas€upon€Home€Federal.€€òòSee,€Prescott€v.€Adams,€óó627€S.W.2d€134€(Tenn.€Ct.€App.Í1981).€€€Appellant€recognizes€this€principle,€and€argues€that€after€proof€of€thisÏdefense€has€been€proffered€the€burden€shifted€to€Pacific€to€prove€that€the€StatuteÏdid€not€begin€to€accrue€until€after€April€29,€1990,€citingòò€Smith€v.€SoutheasternÏProperties,€Ltd.,€óó776€S.W.2d€106€(Tenn.€Ct.€App.€1989).€€We€have€no€quarrel€withÏthis€argument€since€the€general€rule€respecting€the€accrual€of€the€Statute€ofÏLimitations€in€cases€of€this€kind€is€as€stated€in€òòStone,€supra.óó€€But€appellant€says€thatÏPacific€failed€to€present€evidence€that€Home€Federalððs€actions€prevented€discoveryÏof€the€misdirected€deposit,€and€that€this€omission€was€fatal€to€its€case.€€We€cannotÏagree.ÌÑ  Ñà àIt›€was€the€duty€of€the€jury€to€œweigh›€the€evidence€directed€to€the€question€ofÏwhen€Wilkinson€reasonably€should€have€known€that€Home€Federal€had€convertedÏhis€funds.€€œReasonable›€minds€could€differ€on€this€issue,€and€we€cannot€interfere€œwithÏ›the€jury€function.€œ€We›€acknowledge€that€there€is€much€about€this€case€that€jars€theÏsensibilities,€but€appellate€review€is€restricted€and€we€are€not€free€to€interfere€withÏthe€findings€of€the€œjury.€€The€Court€of€Appeals€does€not€reweigh€the€evidence€orÏreevaluate€witnessesðð€credibility€in€an€appeal€from€a€jury€verdict.€€òòGrissom€v.ÏMetropolitan€Govððt.€of€Nashville,€óó817€S.W.2d€679€(Tenn.€1991).›€€The€jury€chose€toÏaccept€the€testimony€of€Wilkinson€as€to€when€he€was€aware€of€a€defalcation,€orÏwhen€he€should€have€been€aware€of€an€œimpending›€loss.Ìà àAppellant€œnext€complains›€of€the€failure€of€the€trial€judge€to€instruct€the€juryÏthat€ð ðignorance€alone€cannot€toll€the€Statute€of€Limitations,ðð€because€Pacific€madeÏno€investigation€of€the€ð ðCD€accountðð€until€July,€1992.€€It€is€true€that€mere€ignoranceÏand€failure€of€Wilkinson€to€discover€the€existence€of€a€cause€of€action€is€notÍsufficient€to€toll€the€statute.€€òòHall€v.€œDeSaussure›,óó€297€S.W.2d€81€œ(Tenn.€Ct.›€App.Ï1956).€€The€jury€was€instructed€that:ÌÓÓà8 àð ðNow€the€defendant€takes€the€position,€well€okay,€those€are€rules€ofÏlaw,€but€we€have€defenses€to€it€and€one€is€the€Statute€of€Limitations,Ïwhich€requires€that€you€file€an€action€within€three€years€after€you€know€Ïor€should€have€known€by€the€use€of€reasonable€diligence€that€theÏmoney€has€been€converted,€or€that€you€should€have€known€that€duringÏthat€time€period€that€it€had€been€converted.ÌÌà@ à*€€*€€*ÌÌà8 àThe€plaintiff€has€the€burden€of€proving€by€a€preponderance€of€theÏevidence€that€they€are€not€bound€by€this€Statute€of€Limitations.€€Itððs€aÏœÔ% € Ôquestion›€of€fact€for€you€to€determine,€when€did€the€plaintiff€have€noticeÏor€when€should€a€reasonable,€cautious€person€have€had€notice€if€theyÏhad€acted€as€a€reasonable€person€under€the€circumstances.€€In€otherÏwords,€when€would€or€should€a€reasonable,€cautious€person€haveÏknown€of€a€conversion€under€the€facts€and€circumstances€of€this€caseÏif€there€was€a€conversion.ÌÌà8 àIn€other€words,€if€there€was€a€conversion,€at€what€point€and€time€did€itÏoccur,€and€when€did€Pacific€have€notice€or€should€have€had€notice€ofÏit?€€Did€they€file€suit€within€three€years€of€the€date€they€discovered€orÏshould€have€discovered€that€there€was€a€conversion.€€If€not,€they€areÏbarred.€€Thatððs€what€the€Statute€of€Limitations€is€about.ððÌÌÓÓà àWe€think€this€instruction€adequately€apprised€the€jury€that€Wilkinson€couldÏnot€prevail€if€he€unreasonably€failed€to€investigate€the€status€of€his€funds€with€HomeÏFederal.Ìà àThe€court€instructed€the€jury€that€Home€Federal€had€a€duty€to€enquire€into€theÏauthority€of€Stalcup€when€presenting€the€check€for€deposit€to€the€account€ofÏWilkinson€Properties,€Ltd.€€Appellant€argues€that€this€instruction€was€improperÏbecause€Stalcup€had€apparent€authority,€as€a€general€partner€of€WilkinsonÏProperties,€Ltd.,€to€deposit€the€check.Ìà àA€short€answer€to€this€argument€is€simply€that€the€check€was€payable€toÏHome€Federal,€and€drawn€on€the€funds€of€Pacific.€€€òòSeeóó€10€œAm.›€œJur.›€œ2nd›,€òòBanksóó,€œðð›Ï560.€€A€check€payable€to€the€order€of€a€bank€to€which€the€drawer€is€not€indebtedÏprecludes€its€diversion€in€the€absence€of€instructions€by€the€drawer.€€There€is€noÏevidence€in€this€record€that€Home€Federal€was€authorized€by€the€drawer€of€theÏcheck€to€make€the€funds€available€to€a€third€party,€keeping€in€mind€the€testimony€ofÏKim€Huff€that€a€Home€Federal€officer€instructed€her€to€ð ðset€upðð€an€account€in€theÏname€of€Wilkinson€Properties€Ltd.€€Moreover,€the€jury€was€instructed€to€determineÏwhether€from€all€the€facts€and€circumstances€Stalcup€had€the€actual€or€apparentÏauthority€to€cause€Pacificððs€check€to€be€deposited€into€an€account€for€WilkinsonÏProperties,€Ltd.€€This€cautionary€instruction€was€directed€to€the€principal€defenseÏthat€Stalcup€was€authorized€to€control€the€negotiation€of€the€check€which€wouldÏexonerate€Home€Federal.€€The€verdict€effectively€settled€the€issue€of€StalcupððsÏapparent€authority.Ìà àThe€appellant€next€argues€that€the€trial€court€erred€in€refusing€to€instruct€theÏjury€that€the€taking€of€a€security€interest€in€personal€property€does€not€constituteÏconversion.€€This€instruction€is€irrelevant€under€the€evidence€presented.€€We€haveÏexamined€the€instructions€respecting€conversion;€they€are€in€traditional€form€andÏare€not€questioned.Ìà àThe€Tennessee€State€Bank€was€originally€a€defendant€in€this€action.€€PacificÏsettled€its€complaint€against€this€Bank€by€the€purchase€of€promissory€notesÏdiscounted€by€$61,000.00.€€Evidence€of€this€disposition€was€excluded€by€Motion€inÍLimine€based€apparently€on€principles€of€comparative€fault.€€We€see€no€error;€theÏpoint€is€not€crucial.Ìà àFinally,€appellant€argues€that€the€court€erred€in€charging€the€jury€that€PacificÏwas€a€depositor€in€the€Home€Federal€institution€because€the€word€ð ðdepositorðð€wasÏmisleading.€€We€see€no€error€in€this€instruction.Ìà àThe€judgment€is€affirmed€at€the€costs€of€the€appellant€and€the€case€isÏremanded€for€all€appropriate€purposes.Ìà àÌÓÓà àà àà àà àà àà à___________________________________Ìà àà àà àà àà àà àWilliam€H.€Inman,€Senior€JudgeÌÌCONCUR:ÌÌÌÌ_______________________________ÌHouston€M.€Goddard,€Presiding€JudgeÌÌÌÌ_______________________________ÌCharles€œD.›€Susano,€Jr.,€œJudge›Ìà àà àà àà àà àà àÌÌà à€œ›Ìœ