ÿWPCá …# VU:a %› 0û¡w@œ 4Ü ð ÿ  0? 0DD ˆ Ž 0J” 0TÞ 0^2 0h 0rø 0|j 0†æ 0l 1uü 0dqU*ÕB)ÿDC( Bk AMˆ£Õv~xvÓö D3É 0@ü AO<Æ‹ 0DQ D/• BĘHP LaserJet 4SiHPPCL5MS,ü,,,,,ü0nLlÎ,c½¬AZ‹"Arial RegularX(ÓGƒ$¡¡Ñ  ÑÒH°ÒÒ°ÒÑTR[  AØ'ÿ Legal[  AØ'ÿ Legal AØ'ÿ Legal AØ'ÿ LegalTÑÔ€Xm²XXXÔÑ7€ÅXXdìXXdæ7Ñ ¥E¦§¨D©ªÊ«¬Ê­Ê®Ó€R¦"3|x¹H¿(ï(2"$¤¤Ý ƒGƒ!ÝÑ  ÑÒH°ÒÒ°ÒÑTR[  AØ'ÿ Legal3Ø' AØ'ÿ Legalÿ3Ø'TÑÔ€Xš¥XXXÔÑ7€š¥XXdæXXdð7ÑÝ  Ýà ` àòòÚ  Ú0Ú  Úóó(#Ã$òòÚ  Ú0Ú  ÚóóÈÈ2 ÿÿ0Indent1Ô2ÔÔ3  Ô2" ÿÿ0Indent2à0 àÔ2ÔÔ3  Ô2, ÿÿ0Indent3à0 àà0 àÔ2ÔÔ3  Ô26 ÿÿ0Indent4à0 àà0 àà0 àÔ2ÔÔ3  Ô2@ ÿÿ0Indent5à0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2J ÿÿ0Indent6à0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2T ÿÿ0Indent7à0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2^ ÿÿ0Indent8à0 àà0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô ÿÿ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)P ÿÿ8Mac DefaultMac DefaultÓ ` °šXÓ< Œ 9p`(Arial% Line 7 d""""7Border 1dd d€-#Cþÿ << Gÿÿ ™Ý ƒ!ÝÑ  ÑÑ#€d#ÑÔ€!ÔÑ  ÑÒ  ÒÒ H ÒÑ\R AØ'\ÑÑ#€d#ÑÝ  ÝÔ€!ÔÓ  ÓÔ YYY ÔFILEDÔ€!XÔÌÌò òMayÏ13,Ï1997ÌÌCecilÏCrowson,ÏJr.ÌÔ€!ôÔAppellateÏCourtÏClerkó óPtPtHHÚ(ÿáÿâùFG(üHHÚ(d'hStyl{WP}01•ÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃà Ãà Ãà Ãà Ãà ÃÃÃÃÃÃÃÃÃÃÃÐ ÐÐHHÐÐ  ÐÐ2ÐÐÿÿ¸æ$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$$$$'ÿÿdxd("ÿÿ$££Ò  ÒÒ  Ò€-‚ƒCþÿ<< CÿÿƒLevel 1Level 2Level 3Level 4Level 5($$””ò òÚ  Ú1Ú  Úó ó„„'÷ÿ dxdüÿP PdÝ ƒ!ÝÔ . ÔÔ€!ÔÑ  ÑÒ  ÒÒ H ÒÑ\R AØ'\ÑÑ#€Xd#ÑÑ#€Xd#ÑÝ  ÝÓÓò òÔ% € ÔÙ€€ÙÓ  ÓßR€%&#A1-j|` à. `€€@ÿRßÞ ÞÌIN€THE€COURT€OF€APPEALS€OF€TENNESSEEÌEASTERN€SECTION€AT€KNOXVILLEó óÌÓ  ÓÌÓÓSAVCO,€INC.,à àà àà àà à)à àWASHINGTON€CIRCUITÌà àà àà àà àà àà à)à àà àà àà àà àà àÌà àPlaintiff/Appelleeà àà àà à)à àNO.€€03A01„9611„CV„00360Ìà àà àà àà àà àà à)à àÌv.à àà àà àà àà àà à)à àHON.€€LEWIS€W.€MAY,€JR.,Ìà àà àà àà àà àà à)à àJUDGEÌCENTURY€HOME€IMPROVEMENT,€à à)ÌINC.à àà àà àà àà àà à)à àà àÌà àà àà àà àà àà à)à àÌà àDefendantà àà àà àà à)Ìandà àà àà àà àà àà à)Ìà àà àà àà àà àà à)à àà àà àà àà àà àÌMARVIN€GRIFFITH,à àà àà à)à àÌà àà àà àà àà àà à)à àAFFIRMEDÌà àDefendant/Appellantà àà à)ÌÌEdward€T.€Brading,€Johnson€City,€for€Appellant,€Marvin€Griffith.ÌWalter€Lee€Davis,€Jr.,€Johnson€City,€for€Appellee,€Savco.ÌÌòòò òÓ  ÓO€P€I€N€I€O€NÌÓ  ÓÌó óóóà àà àà àà àà àà àà àINMAN,€Senior€JudgeÌÌÓÓÓ  Óà àThis€is€a€suit€on€open€account.€€The€plaintiff€corporation€sold€a€quantity€ofÏbuilding€materials€to€the€defendant€corporation€which€acknowledges€the€debt;€butÏits€sole€shareholder,€Marvin€Griffith,€was€also€held€liable€for€the€account€and€heÏappeals.Ìà àTo€reach€the€shareholder€it€was€necessary€to€'pierce€the€corporate€veil'€andÏwhether€the€evidence€was€sufficient€to€ignore€the€Charter€of€the€debtor€corporationÏis€the€issue€presented.Ìà àOur€review€is€òòde€novoóó€on€the€record,€accompanied€by€a€presumption€that€theÍfindings€of€fact€of€the€trial€court€are€correct€unless€the€evidence€otherwiseÏpreponderates.€€òòRule€13óó(d),€òòTenn.€R.€App.€Póó.€€There€is€no€presumption€of€correctnessÏwith€regard€to€the€trial€court's€determination€of€questions€of€law.€€òòNCNB€v.€Thrailkill,Ïóó856€S.W.2d€250,€153€(Tenn.€App.€1993).Ìà àThe€plaintiff,€now€defunct,€was€engaged€in€the€business€of€wholesaling€vinylÏsiding,€windows€and€shutters.€€The€appellant€owned€40%€of€its€outstanding€shares,Ïand€was€also€its€full„time€employee.Ìà àIn€early€1994€the€plaintiff€began€doing€business€with€Century€HomeÏImprovement,€Inc.,€whose€shares€were€wholly€owned€by€Charles€T.€Bowers.Ìà àMr.€Bowers,€on€behalf€of€Century,€obtained,€in€March,€1994,€a€$5,000.00€lineÏof€Ñ  Ñcredit€from€the€plaintiff.€€Ìà àIn€July,€1994,€Mr.€Griffith€acquired€all€of€the€outstanding€shares€of€CenturyÏfrom€Mr.€Bowers,€for€which€he€apparently€paid€nothing.€€He€testified,€somewhatÏinconsistently,€that€"I've€put€money€into€it€for€capital,"€and€"the€only€thing€I've€everÏdone€is€loan€the€company€money."€€As€sole€shareholder€and€President€of€CenturyÏhe€exercised€complete€control€of€the€corporation.Ìà àThe€trial€court€described€Century€as€a€"sham€corporation€.€.€.€set€up€for€theÏpurpose€of€doing€that€which,€while€not€illegal,€was€certainly€unethical€in€theÏbusiness€they€were€operating,"€apparently€in€reference€to€the€fact€that€a€minorityÏshareholder€of€the€wholesaler€acquired€the€retailer€of€comparable€goods.€€WhateverÏthe€business€ethics€of€this€acquisition€may€have€been,€the€evidence€does€not€reflect;Ïbut€we€note,€in€passing€through,€that€the€majority€shareholders€of€Savco€not€onlyÏoffered€no€objection€to€the€acquisition,€but€expressly€approved€it.€€As€may€beÍdeduced€from€this€record,€the€appellee€defends€the€judgment€upon€the€basis€thatÏGriffith€(1)€controlled€Century€especially€in€the€area€of€paying€bills,€(2)€usedÏcorporate€funds€and€employees€for€his€personal€benefit,€(3)€transacted€businessÏthrough€Century€which€did€not€have€sufficient€operating€capital,€(4)€had€a€personalÏrelationship€with€the€majority€shareholders€of€Savco€which€he€misused€to€incur€debtÏon€behalf€of€Century.Ìà àAs€to€(1),€there€is€little€or€no€doubt€that€Mr.€Griffith€exercised€absolute€controlÏof€Century,€superimposed€upon€his€substantial€influence€with€Savco.€€As€to€(2),€theÏevidence€consists€of€testimony€that€he€utilized€the€services€of€a€Century€secretary€toÏcompile€information€for€him€about€another€lawsuit€in€which€he€was€a€party€and€thatÏCentury€made€payments€on€his€boat.€€As€to€(3),€the€evidence€reveals€that€Mr.€GriffithÏ"paid€no€capital€into€the€corporation"€which€usually€had€only€one€or€two€thousandÏdollars€in€its€checking€account.€€As€to€(4),€one€of€the€majority€shareholders€of€SavcoÏtestified:ÌÓÓà8 àQ:à0 àBut€it's€also€your€testimony€that€Mr.€Griffith,€I€suppose,Ïhoodwinked€Savco€into€letting€Century€go€over€the€$5,000.€inÏMay€of€1995.€€Is€that€also€your€€testimony?ÌÌà8 àÌà àA:à0 àI€would€not€consider€it€hoodwinked.€€I€would€consider€it€using€hisÏrelationship€with€Savco€and€our€personal€friendship€to€increase€theÏcredit€amount.ÌÌÓÓà àThe€record€does€not€reveal€whether€Mr.€Griffith€was€a€director€of€eitherÏcorporation,€and€neither€party€raises€the€issue€of€his€fiduciary€duty,€or€consequently,Ïof€any€breach€thereof.€€The€appellee€merely€argues€that€in€light€of€the€circumstancesÏthe€trial€judge€correctly€held€that€the€Charter€of€Century€should€be€ignored.Ìà àThe€controlling€principles€of€law€are€set€forth€in€òòElectric€Power€Bd.€ofÏChattanooga€v.€St.€Joseph€Valley€Structural€Steel€Corp.,€óó691€S.W.2d€522€(Tenn.Ï1985):ÌÓÓà8 àà àA€corporation,€of€course,€has€an€existence€separate€and€distinctÏfrom€that€of€the€owners€of€its€capital€stock,€but€this€separate€entity€mayÏbe€disregarded€upon€the€showing€of€special€circumstances,€such€as,Ïthat€the€corporation€is€a€sham€or€dummy€so€that€failure€to€disregard€itÏwould€result€in€an€injustice.€€òòFidelity€Trust€Co.€v.€Service€Laundry€Co.,Ïóó22€S.W.2d€6€(1929);€òòAmerican€Indemnity€Co.€v.€Southern€MissionaryÏCol.,€óó260€S.W.2d€269,€(1953);€òòTennessee€Consol.€Coal€Co.€v.€HomeÏIce€&€Coal€Co.,€óó386€S.W.2d€918€(1964).Ìà àÌà8 àà àIn€our€most€recent€case€discussing€the€circumstances€which€willÏcause€a€court€to€disregard€the€separate€entity€of€a€subsidiaryÏcorporation€and€fix€its€liability€on€the€parent€corporation,€we€said:Ìà8 à"€.€.€.€application€of€the€instrumentality€rule€requires€proof€of€theÏfollowing€three€elements:Ìà8 à"(1)€The€parent€corporation,€at€the€time€of€the€transaction€complainedÏof,€exercises€complete€dominion€over€its€subsidiary,€not€only€ofÏfinances,€but€of€policy€and€business€practice€in€respect€to€theÏtransaction€under€attack,€so€that€the€corporate€entity,€as€to€thatÏtransaction,€had€no€separate€mind,€will€or€existence€of€its€own.Ìà8 à"(2)€€Such€control€must€have€been€used€to€commit€fraud€or€wrong,€toÏperpetrate€the€violation€of€a€statutory€or€other€positive€legal€duty,€or€aÏdishonest€and€unjust€act€in€contravention€of€third€parties'€rights.Ìà8 à"(3)€€The€aforesaid€control€and€breach€of€duty€must€proximately€causeÏthe€injury€or€unjust€loss€complained€of."€€òòContinental€Bankers€Life,€Etc.Ïv.€Bank€of€Alamo,€óó578€S.W.2d€625,€632€(1979).ÌÌà8 àòòSee€also,€óó7€Tennessee€Jurisprudence€235„236,€òòCorporations,€óósect.€3Ï(1983);€18€Am.€Jur.2d,€òòCorporations,€óósect.€17€(1965);€63€Am.€Jur2d.ÏòòProducts€Liability,óó€sect.€166€(1984).ÌÌà8 àà àThe€conditions€under€which€the€corporate€entity€will€beÏdisregarded€vary€according€to€the€circumstances€present€in€each€caseÏand€the€matter€is€particularly€within€the€province€of€the€trial€court.€ÏMoreover,€a€determination€of€whether€or€not€a€corporation€is€a€mereÏinstrumentality€of€an€individual€or€a€parent€corporation€is€ordinarily€aÏquestion€of€fact€for€the€jury.€€òòTrans„American€Communications,€Inc.€v.ÏNolle,€óó134€Ga.€App.€457,€214€S.E.2d€717€(1975);€òòAlexander€v.€AbbeyÏof€The€Chimes,€óó104€Cal.€App.€3d€39,€163€Cal.€Rptr.€377€(1980).ÌÌÓÓà àWe€particularly€take€note€of€the€admonition€that€"a€determination€of€whetherÏor€not€a€corporation€is€a€mere€instrumentality€of€an€individual€.€.€.€is€ordinarily€aÏquestion€of€fact€for€the€jury,"€here,€the€trial€judge.€€Applying€this€standard,€we€cannotÏfind€that€the€evidence€preponderates€against€the€findings€of€the€trial€judge.ÌÑ  Ñà àMr.€Griffith€was€an€employee€of€Savco;€he€owned€40%€of€its€shares;€€he€wasÏpersuasive€in€the€conduct€of€its€wholesaling€business.€€He€acquired€100%€of€theÏstock€of€Century,€a€retail€customer€of€Savco,€for€which€he€paid€nothing.€€CenturyÏcontinued€to€do€business€with€Savco,€surpassing€its€established€credit€line€ten„fold.€ÏFor€all€practical€purposes€Mr.€Griffith€sold€Savco's€inventory€to€himself€without€theÏonus€of€payment.€€Century€doubtlessly€was€his€instrumentality.Ìà àWhile€there€is€no€evidence€that€Century€was€"set€up"€to€perpetuate€a€courseÏof€dealing,€since€it€pre„existed€Mr.€Griffith's€ownership,€we€are€unable€to€find€that€theÏevidence€preponderates€against€the€finding€of€the€Chancellor€that€the€Charter€ofÏCentury€should€be€ignored€under€the€circumstances€of€this€case.Ìà àThe€Judgment€is€affirmed€at€the€costs€of€the€appellant.ÌÔ% € ÔÓÓÌÌà àà àà àà àà àà à__________________________________Ìà àà àà àà àà àà àWilliam€H.€Inman,€Senior€JudgeÌÌCONCUR:ÌÌÌÌ_______________________________ÌHouston€M.€Goddard,€Presiding€JudgeÌÌÌÌ_______________________________ÌCharles€D.€Susano,€Jr.,€JudgeÌÌÌÔ% € Ô