WPCT |yz;t8GERߤ /84'--vPJHh*439;J6G*q:k^^X6kH ^A;rL߈ٍ~r% \2COԦC'G ef)z(0r#ca_UԟZ_\[^o}';:.*jx.` `@E"8+` 8ttxPZ* tE `     h      p   W.FRANKCRAWFORD, 1--  `     h      p   PRESIDINGJUDGE,W.S.CONCUR:DAVIDR.FARMER,JUDGEHOLLYKIRBYLILLARD,JUDGE 5 955  ;77 56TR[A' legal[A' LegalA' LegalA' LegalT ?cћ6776 ` Thisappealinvolvesadisputeconcerningdistributiontostockholdersina  closelyheldcorporation.Plaintiffstockholders,KennethM.Bess(Bess)andThomasR.Cummings,Jr.,(Cummings)appealfromthejudgmentofthetrialcourtdenyingthereliefsoughtagainstdefendant,AssociatedBrokersofTennessee,Inc.(ABT). ` PlaintiffscomplaintallegesthatbyvirtueofthestockholderagreementdatedMay3,1990,betweenthemandWilliamW.Johnson(Johnson)andABT,Bessbecamea25percentshareholderofABTandCummingsbecamea20percentshareholderofABT.Plaintiffsallegethatinlate1994,JohnsoncausedABTtosellallorsubstantiallyallofitsassetstoAcostaSalesCompany,Inc.(Acosta).Theplaintiffsaverthatalthoughtheyweredirectorsandshareholders,theywerenotinformedofthetransactionuntilithadbeenconsummatedandwerenotgivenanopportunitytovoteonthetransaction.PlaintiffsfurtherallegethatsincethesaleoftheassetstoAcosta,ABThasbeendivertingallofthepaymentsmadebyAcostatoJohnson,whoisnotperforminganyservicesforABT.Plaintiffsaverthatasshareholders,theywereentitledtovotepursuanttoT.C.A.4822102(1995)concerningthesaleoftheassets,andfurtherthattheywerenotadvisedoftheirrightsasdissentersasprovidedinT.C.A.4823201, etseq. (1995). $   ` PlaintiffscomplaintseeksaninjunctionrequiringABTtocomplywiththeprovisionsofT.C.A.4823201 etseq. ,or,alternatively,forajudgmentagainstABT ($$ inanamountequaltothefairvalueoftheirstockatthetimeofthesale.Plaintiffsalsoseekattorneysfeesandcosts. ` ABTsansweradmitsthattheplaintiffsbecameshareholdersonMay3,1990,butaversthattheywerenotshareholdersatthetimeofthesaleoftheassetstoAcosta.ItadmitsthattheplaintiffsweredirectorsatthetimeoftheAcostatransactionandthattheywerenotnotifiedandgiventheopportunitytovoteuponthetransaction.ABTadmitsthatJohnsonhasbeenreceivingthepaymentsmadebyAcostafortheassets,statingspecifically: AsthesoleshareholderoftheDefendant, 844 WilliamW.JohnsonreceivedandiscurrentlyreceivingpaymentsfromAcostaSalesCompany,Inc.inreturnforthesaleoftheassetsoftheDefendant.Theanswerdeniestheremainingmaterialallegationsofthecomplaintandjoinsissuethereon.π ` BessandCummingswereemployedbyABTin1976and1980respectively.   AtthetimethatCummingsjoinedABTin1980,Johnsonservedaspresidentofthecorporationandownedonehundred(100%)percentofthestock.By1990,ABTwasstrugglingfinancially.Asaresult,JohnsonandtheplaintiffsenteredintoaStockholderAgreementwherebyJohnsonagreedtosell125sharesofABTtoBess(25%ofthecompanysstock)inexchangefora$30,000promissorynote,and100sharesofABTtoCummings(20%ofthestock)inexchangefora$24,000promissorynote.TheStockholderAgreementstatesinpertinentpart:68868 ` 8 ` !` !Paymentshallbemadebytheexecutionofapromissorynoteintheoriginalprincipalamountofthepurchasepriceforeachofthepurchasers....    ̜6766766996Thepromissorynotessignedbytheplaintiffseachincludeapaymentscheduleandanaccelerationclausewherebytheholder(Johnson)mayelectfortheprincipaltobecomeimmediatelydueandpayableintheeventofdefault.Thenotesarecollateralizedbytherespectivesharessoldbytheagreement,andthenotesspecificallyprovide:̜6866866::68 ` 8 ` !` !  AssecurityforthepaymentofthisNote,theholdershallretainpossessionofinpledgeandhaveasecurityinterestintheonehundred(100)sharesofcommonstockofAssociatedBrokers,Inc.,beingconveyedpursuanttoaStockholderAgreementofevendateherewithbetweenWilliamW.Johnson,KennethM.Bess,andThomasR.Cummings,Jr.,untilsuchtimeasthisNotehasbeenpaidinfull.AllrightsinconnectionwithorincidenttotheownershipofsuchsharesshallbevestedsolelyintheholderofthisNoteuntilsuchtimeasthisNotehasbeenpaidinfull.    Itisundisputedthatatthetimeofthetrial,nopaymentshadbeenmadeonthenotesbyeitherBessorCummings,andJohnsonhadnotdemandedpaymentorotherwisetakenanyactionauthorizedbythenotes. 844  ` InDecemberof1993,arepresentativeofAcostaSalesCo.,Inc.,alargeregionalbroker,indicatedaninterestinpurchasingABTsassets.JohnsonnegotiatedasaleonbehalfofABT,whichenteredintoaMasterBrokerAgreementandanAgreementforPurchaseofAssetswithAcostaonFebruary28,1994.InaccordancewiththeMasterBrokerAgreement,AcostaagreedtopayABToveraperiodoftenyearsavariablestreamofrevenuethatreflectsaportionofthecommissionsthatAcostaearnsfromABTsproductlines. Johnsontestifiedthatheorallyagreedatthis   timetoretireafteroneyearandsignanoncompetecovenant.TheAgreementforPurchaseofAssetsincludesthefollowingclause:8 ` 8 ` !` !CovenantNottoCompete. p Tofacilitatethesaleand  thepurchaseoftheAssetspursuanttothisAgreement,SellerherebyagreesthatitshallnotwithintheCentralandEastTennessee[illegible]engageincompetitionwithBuyer,eitherdirectlyorindirectly,intheoperationorownershipofafoodbrokerageorfoodservicesbusinesses[sic].    TheAgreementforPurchaseofAssetsexplicitlydefines Selleras ABT. ##  1      ׀The  remainderofABTsemployees,includingtheplaintiffs,weretobeindefinitelyemployedbyAcosta.Manyoftheseemployees,includingtheplaintiffs,signednoncompetecovenantswithAcostainexchangefortheconsiderationofemploymentwithAcosta. ` OnMay31,1994,Johnson,actingonbehalfofABT,enteredintoarevisedMasterBrokerAgreementwithAcosta.ThisrevisedagreementalterstherevenuestreamandalsoincludesanoncompetecovenantthatdidnotappearintheoriginalMasterBrokerAgreementsignedonFebruary28,1994.Thisclausestates:8 ` 8 ` !` !Johnsonagreesthatduringsuchperiodofreceiptofmonthlypaymentshereunder,hewillnotdirectlyorindirectlyenterinto,orinanymannertakepartin,anybusiness,professionorotherendeavor,whetherasanemployee,agent,independentcontractor,owneror 400 otherwise,intheCentralandEastTennesseeMarketswhichisincompetitionwithAcostasfoodbrokerage 400 business....    OneofAcostasremediesforbreachofthiscovenantisrelieffromtheobligationtomakepaymentsunderthetermsoftheagreement. ` Followingabenchtrial,thetrialcourtfoundthatBessisa25percentshareholderandCummingsisa20percentshareholderofABT.Thetrialcourt,however,foundthatJohnsonheldasecurityinterestintheplaintiffsshares,thusentitlingJohnsonto alltherightsinconnectionwithorincidenttotheownershipoftheshares.BecauseJohnsonwasabeneficialshareholder,thetrialcourtheldthattheplaintiffsdidnothavethestatutoryrighttoexercisedissentersrightsinaccordancewithT.C.A.4823201 etseq. .   ` ThetrialcourtproceededtofindthatthevalueofJohnsonsnoncompetecovenantreflectedintherevisedMasterBrokerAgreementequals$90,000peryearforeachofthetenyearsoftherevenuestreampursuanttotheagreement.Thetrialcourt,then,orderedABTtopayJohnson$7,500eachmonthfortenyearsasconsiderationforhissigningthecovenant.AftereachmonthlypaymenthasbeenmadetoJohnson,thetrialcourtheldthateachoftheshareholdersisentitledtoanyremainderoftheproceedsfromABTssaleinaccordancewiththeirproportionateownership.Thetrialcourt,however,heldthatABTisnotrequiredtomakecertaindistributionstothe plaintiffs untiltheexpirationofthetenyearperiod.  ##  2      ׀In ($$ addition,thetrialcourtruledthatABTisnotrequiredtomakedistributionstotheplaintiffsuntiltheyhavefullypaidtheamountsdueunderthepromissorynotes. ` Onappeal,theplaintiffscontendthatthetrialcourterredwhenitorderedABTtopayJohnson$900,000forthenoncompetecovenant.TheplaintiffsalsoarguethatthetrialcourterredwhenitheldthatABTneednotmakecertaindistributionstotheplaintiffsuntilthetenyearrevenuestreamexpiresanduntilthe 400 promissorynotesarepaid.  ##  3         ` XzXXXzSincethiscasewastriedbythetrialcourtsittingwithoutajury,wereviewthe  case denovo upontherecordwithapresumptionofcorrectnessofthefindingsoffact  bythetrialcourt.Unlesstheevidencepreponderatesagainstthefindings,we# XzXX Xz/)#XzXXXzmust   affirm,absenterroroflaw.T.R.A.P.13(d). ` Itisfundamentalcorporatelawthatanownerofacorporationsstock# XzXX Xz*#is   entitledtoaproportionateshareofanyofthecorporationsdistributions. See,e.g.,    7Tenn.Jur.Corporations43(1997);11FletchersCyclopediaofCorporationsStock  &Stockholders5352(1995).Theplaintiffscontendthatthetrialcourtsruling  abrogatesthisprinciple:bymandatingthatproceedsfromtheAcostarevenuestreamareinitiallydivertedtocompensateJohnsonforthenoncompetecovenant,theplaintiffsareeffectivelydivestedoftheirproratashareoftherevenue.TheplaintiffsnotethatJohnsonsnoncompetecovenantwasnotexecuteduntiltherevisedMasterBrokerAgreementwassignedinMayof1994,threemonthsaftertheinitialMasterBrokerAgreementwassigned. ##  4      ׀SincealloftheagreementsbetweenABTandAcosta   requireAcostatomakeallpaymentstoABT,theplaintiffsfurtherarguethatthetrialcourthaseffectivelyrewrittentheseagreementssothat$900,000fromthisrevenuestreamisdivertedtoJohnson.Finally,theplaintiffsassertthattherecorddoesnotsupportthetrialcourtsfindingthatJohnsonsnoncompetecovenantwasworth$900,000toAcosta. ` ABTrespondsbycontendingthatABTbenefittedfromJohnsonsnon competecovenant,sinceAcostawouldnothaveenteredintotheagreementshadthe .** covenantsnotbeenincluded. ##  5      ׀Iftheplaintiffstheoryprevails,ABTinsiststhat   Johnsonwillreceivenoconsiderationforandbenefitfromthenoncompetecovenant.Incontrast,ABThasnotreceivedabenefitfromthenoncompetecovenantsbytheplaintiffs,whoareabletocontinuetobeemployedbyAcosta.Inaddition,ABTcontendsthatitwillbe unjustlyenrichedifitispermittedtoretainthebenefitfromJohnsonsnoncompetecovenantwithoutcompensatingJohnson. ` In Warrenv.MetropolitanGovtofNashville&DavidsonCounty ,955   S.W.2d618(Tenn.App.1997),wediscussedtheroleofaCourtininterpretingacontract:8 ` 8 ` !` !XzXXXzCourtsaretointerpretandenforcethecontractas  written,according toitsplainterms. Pettyv.Sloan ,197  Tenn.630,277S.W.2d355,358(1955); Home  BeneficialAss'nv.White ,180Tenn.585,177S.W.2d  545,546(1944).Weareprecludedfrommakingnewcontractsforthepartiesbyaddingordeletingprovisions. CentralAdjustmentBureau,Inc.v.Ingram ,678S.W.2d   28,37(Tenn.1984); ShellOilCo.v.Prescott ,398F.2d   592(6thCir.1968).Whenclearcontractlanguagerevealstheintentoftheparties,thereisnoneedtoapplyrulesofconstruction.Anambiguitydoesnotariseinacontractmerelybecausethepartiesmaydifferastointerpretationofcertainofitsprovisions. Oman " ConstructionCo.v.TennesseeValleyAuth. ,486F.Supp. # 375(M.D.Tenn.1979).Acontractisambiguousonlywhenitisofuncertainmeaningandmayfairlybeunderstoodinmorewaysthanone;astrainedconstructionmaynotbeplacedonthelanguageusedtofindanambiguitywherenoneexists. EmpressHealthand ($$ BeautySpa,Inc.v.Turner ,503S.W.2d188,19091 )%% (Tenn.1973).Wearetoconsidertheagreementasawholeindeterminingwhetherthemeaningofthecontractisclearorambiguous. Gredigv.Tennessee ,(( FarmersMut.Ins.Co. ,891S.W.2d909,912 -)) (Tenn.App.1994).Ifacontractisplainand .** unambiguous,themeaningthereofisaquestionoflawforthecourt. Pettyv.Sloan ,277S.W.2dat358.    Id. at62223.AccordingtotheplaintermsofthecontractsbetweenABTand  Acosta,which Johnson negotiatedforonbehalfofABT,therevenuestreampaidby   AcostaispaidsolelytoABT.NothinginthecontractsindicatesthatanyoftheproceedsshouldbepaiddirectlytoJohnson,noristhereevidenceofanyagreementbetweenABTandJohnsonbywhichABTagreestocompensateJohnsonforaccedingtothenoncompetecovenant.# XzXX Xz=5#    ` NotonlyisthereisnoevidenceofanyagreementbetweenABTandJohnsonconcerningcompensationtoJohnsonforthenoncompetecovenant,JohnsonsanswertothecomplaintspecificallystatesthatheisreceivingtheAcostapaymentsasthesoleshareholderofABTandinreturnforthesaleoftheassets.Moreover,wefindnothingintherecordtosuggestavalueforJohnsonsnoncompetecovenant. ` TennesseeCodeAnnotated4816401(1995)addressestheauthorizationforshareholderdistributionbyaboardofdirectors.Intheabsenceofanyenforceablecontractstothecontrary,alldistributionsfromacorporationtoshareholdersmustbedisbursedprorata. Tubbv.Fowler ,118Tenn.325,99S.W. #  988(1906);7Tenn.Jur.Corporations43;11FletchersCyclopediaofCorporations %!! Stocks&Stockholders5352.ABThasnotcitedanyauthoritythatwouldwarrantan '## exceptiontothisprinciple.SincethereisnoevidenceofanyprovisionforpaymentbyABTtoJohnsonforhisnoncompetecovenantwithAcosta,anyamountsreceivedbyJohnsonshouldbeconsideredadistributionfromABT. See T.C.A.4811 -)) 201(8)(1995). ` ItisundisputedthatneitherplaintiffhaspaidanyamountdueunderthepromissorynotesheldbyJohnsonforthepurchasepriceofthestock.Thenotesprovidethatthesharesofstockareheldassecurityforthepaymentofthenotesandwhilethenotesremainunpaid,Johnson,astheholderthereof,retainsallrightsofownershipintheshares,whichnecessarilymustincludetherighttoreceivea 955  ?c  shareholderdistribution.11FletchersCyclopediaofCorporationsStocks&  Stockholders5382(1995).However,sincethestockisheldasasecurityforan  indebtedness,anyamountsreceivedbythebeneficialowneronlyapplytoreducetheamountoftheindebtedness. Paynev.Fowler ,12Tenn.App.449,461(1930)   ( Theruleisthatintheabsenceofanagreementtothecontrary,apledgerofsharesofstockascollateralsecruuritycarrieswithit,asanincidentofthepledgeesspecialownership,therighttoreceivedividendsafterdeclared, tobeappliedonthedebt ,   (citing6FletchersCyclopediaofCorporations,3704)) ##  6      ׀(emphasisadded); seealso  NashvilleTrustCo.v.FirstNat.Bank ,123Tenn.617,626,134S.W.311,314   (1911)( Thepledgeedoesnotacquireabsolutetitlebysuchacontract,butonlyaspecialpropertyinthethingpledged,withtherighttopossession untiltheobjectof  thepledgebeaccomplished .)(emphasisadded);Annotation,RightofPledgeeof  CorporateStockinRespectofDividendsDeclaredThereon,67A.L.R.485(1930),103  A.L.R.849(1936);KennethB.Davis,Jr.,PledgedStockandtheMystiqueofRecord  Ownership,1992Wis.L.Rev.997,100102(1992).Thisisreinforcedby   TennesseesadoptionofArticle9oftheUniformCommercialCode,whichstatesthat,intheabsenceofanagreementtothecontrary,whenthepledgeepossessesthecollateral:8 ` 8 ` !` !(c)thesecuredpartymayholdasadditionalsecurityanyincreaseorprofits(exceptmoney)receivedfromthecollateral,butmoneysoreceived,unlessremittedtothedebtor,shallbeappliedinreductionofthesecuredobligation.    T.C.A.479207(2)(c)(1996). ` ThejudgmentofthetrialcourtorderingABTtopaythesumsassetoutthereinisvacated.PaymentsmadetoJohnsonheretoforeareconsideredadistributionthatshouldbeallocatedbetweenBess,Cummings,andJohnson,inaccordancewiththeirstockownership.TheamountsdueBessandCummingsshall 622 firstbepaidonthenoteindebtedness,andthecasemustberemandedtothetrialcourtfordeterminationastothecorrectamountoftheindebtednessdueonthenotesandtheamountpaidtoJohnsonthusfarasadistribution.Whentheentireindebtednessonthenotesispaid,theownershipofthesharesrevertstoBessandCummings,andtheyarethenentitledtoreceivetheirproratadistribution. ` Insum,thejudgmentofthetrialcourtisreversed,andthecaseisremandedtothetrialcourtforfurtherproceedingsconsistentwiththisopinion.Costsoftheappealareassessedonehalftoplaintiffsandonehalftodefendant.XzXXXz `     h      p _________________________________   `     h      p W.FRANKCRAWFORD,   `     h      p PRESIDINGJUDGE,W.S. # XzXX XzR#   CONCUR:   XzXXXz____________________________________    DAVIDR.FARMER,JUDGE # XzXX XzT#    XzXXXz____________________________________   HOLLYKIRBYLILLARD,JUDGE # XzXX Xz