WPC0 na raR. Cq0HʘaRTmDp1m ^sF:T_D갚 t'/y(JJ}[{.T!do4rvMD~B:<03x!{>n{QLiraoִ|k_zQ̟Hj7fAA >D4+$[?sLFDЍnؔn^d޹d؈0 A9gI{sM4(88z%d:Zj d:'xr:H \k?ؘzv緄 YXXtFiIg9OU&KڷXo.{{KU}Z뤡>sR4=ЖE>`qX1PEs&,kϴ%&2 ]hgE+ϫ\!< b#\ %% ^ + 07 UN w 4 z%  q  m   y ?U}>N   0DE7'99\`Y8P{ y"!)"""i#i-%-%&&&&&))b++++++++++++++++++++++++++++++++++++ 0++++ B,, 0, D3T- D-- 0K-- AS-R. 0/ 0D/ A0\\ib01s01\clerk1nas,,,,0t1 (`$.8dd8    ("  Z6Times New Roman RegularY1:i+00 C:\PROGRA~1\COREL\WORDPE~1\TEMPLATE\CUSTOM~1\REVISE~1.WPTC:\Program Files\Corel\WordPerfect Office 2000\Template\Custom WP Templates\revised standard opinion.wpt 3|x U SMYTHELevel 1Level 2Level 3Level 4Level 5Level 1Level 2Level 3Level 4Level 5Level 1Level 2Level 3Level 4Level 5Level 1Level 2Level 3Level 4Level 5\  `&Times New Roman  RA$      9  )  _Thecommentstotheofficialtextexplaintherationalbehindthenewstatute. Withtheincreasinguseof  electronicmeansofcommunication,thestatuteoffraudsisunsuitedtotherealitiesofthesecuritiesbusiness.For t securitiestransactions,whateverbenefitsastatuteoffraudsmayplayinfilteringoutfraudulentclaimsareoutweighed 8 bytheobstaclesitplacesinthedevelopmentofmoderncommercialpracticesinthesecuritiesbusiness.SeeComments L ToOfficialText,Tenn.CodeAnn.478113.(#$  0    RA$      2  )  _ThoughthecompanyneverissuedsharesofstocktoWilson,itisundisputedthatWilsonhasowned10%of  theoutstandingsharessince1974. R RA$      3  )  _WilsonstatesthatthepurchasepricewasbasedonthefactthattheMetropolitanDevelopmentHousing  AuthorityhadjustpurchasedMcCannSteelspropertyfor$3million.Therecordindicatesthat_MDHA_Ԁpurchasedthe t McCannSteelpropertyalongwithnumerousotheradjoiningtractstofacilitatetheconstructionofafootballstadium, 8 whichisnowknownastheColiseum. O RA$      8  )  _))ItisundisputedthatMcCannSteelisacloselyheldcorporation.Closelyheldstockisasecuritywithinthe  meaningofChapter8oftheUCC,thusthestatuteoffraudsfoundatTenn.CodeAnn.478319isapplicable. t Wakefieldv.Crawley,6S.W3d442,445(Tenn.1999),Tenn.CodeAnn. 478102(1)(a)(ii)and(1)(b)(ii)(1996Repl.).#))~# x RA$      1  )  _Uponacquiring100%ofthesharesofthecompanyfromtheMcCannfamily,Smythegifted75%ofthe  outstandingsharesofthecompanytomembersofhisfamilyand10%toWilson,asmorethoroughlydiscussed t hereinafter,retaining_15%_Ԁforhimself.Lateron,Smythetransferredmoreofhisshares,11%oftheoutstandingshares, 8 toanonfamilymember,leavingSmythewith4%oftheoutstandingsharesofthecompany. . RA$      5  )  _Thecourtcreditedthe$100,000corporateloanasanoffsetofthejudgmentagainstSmytheandordered  McCannSteeltoforgivethe$100,000loantoWilson. F RA$      4  )  _Wilsonhadpreviouslytransferredtitletothetwocompanyvehiclestohimself;thus,itwasnotnecessaryto  requesttransferofthetitletothetwovehiclesuponhisretirement. q RA$      13  )  _))XX) C #)XX#Subsection(c)alsorequiredthatthewrittenconfirmationbesufficientunderparagraph(a)andbe received  bythepartyagainstwhomenforcementissoughtandhehasfailedtosendwrittenobjectiontoitscontentswithin(10) t daysafteritsreceipt.Tenn.CodeAnn.478319(c).#))# ~ R$      8    _ o RA$      7  )  _))Tenn.CodeAnn.478319wasrepealedeffectiveJanuary1,1998#))~#))by1997PublicActs,Chapter79,1.#))#  RA$      10  )  _Thetrialcourtdidnotidentifythewritingbutthepartiesacknowledgethatthe2000letterfromWilsonto  Smytheisthewritingatissue. _ RA$      11  )  _))ThisstatutewasrepealedeffectiveJanuary1,1998#))#))by1997PublicActs,Chapter79,1.#))# _ RA$      12  )  _))ThisstatutewasrepealedeffectiveJanuary1,1998#))#))by1997PublicActs,Chapter79,1.#))#  RA$      14  )  _))Wilsonalsocontendsthathisactoffurnishinghisowntransportationbenefittedthecompanyandqualifies  aspartialperformance.ThiscontentionisunderminedbythefactthatthevehiclesWilsonusedforhistransportation t hadbeencompanyvehicles;however,Wilsontransferredthetitleofbothvehiclestohimselffornoconsideration.#))#))Based 8 onthesefacts,wefindthisargumentwithoutmerit,ifnotdisingenuous.#))A#  RA$      6  )  _Thefailureofthetrialcourttoidentifythedocumentthatsupportedthetrialcourtsfindingthattherewasa  writtenagreementwasaddressedbyWilsonscounselinoralargument.Wilsonscounselassertedthat thewritingwas t Wilsons2000letterrecountingthetransactionhesenttoSmythethreeyearsaftertheallegedoralagreement.- -(|G2A$ !.8E!dd8         0  ) d(|3u$ !.8E!dd8     VVVV'dxd)!dxdx( $ Figure  1  ^_X`YE<<CLevel 1Level 2Level 3Level 4Level 5(|3u$ !.8E!dd8     ($$   1  X[Z&OLE 2.0 Box <=8C HKKKK !.8E!dd8     _  E!8XXdd8  @ KE!INTHECOURTOFAPPEALSOFTENNESSEE  @kk$ATNASHVILLE#E!K #Ԉ &   May6,2004Session L XXE! #E!XX#J.B.WILSONv.JAMEST.SMYTHE,etal.XXE!  J @@ AppealfromtheCircuitCourtforDavidsonCounty  J @@No.00C2057CarolSoloman,Judge  6 @@*AV) ` dE< ` A    @@TTNo.M200300645_COA_ԄR3CVFiledDecember10,_2004_   AV) ` dE<` A      Employeeandpresidentofa#E!XXi#XXE!closelyheldcorporationseekstoenforceapurportedoralagreement   requiringthedefendanttopurchasehissharesofstockinthecorporation.Plaintiffclaimsinteralia x  thatJamesT.Smytheorallyagreedtopurchasehissharesfor$300,000inpartialconsiderationfor d theplaintiffscontinuedemployment.Thetrialcourtfoundtheoralagreementenforceableand P orderedSmythetopurchasetheplaintiffsshares.Wereversefindingthatthepurportedoral < agreementisunenforceablebecauseitviolatedXXXXTennCodeAnn.478319,#XXXX##E!XX#XXE!Ԁthestatuteoffrauds, (x whichwasineffectin1997whenthepartiespurportedlyenteredintotheoralagreement.#E!XX#XXE! d  Tenn.R.App.P.3AppealasofRight;JudgmentoftheCircuitCourt < ReversedandRemanded  (   #E!X#XX.E!FrankG.Clement,Jr.,J.,deliveredtheopinionofthecourt,inwhichWilliamB.Cain,and  PatriciaJ.Cottrell,JJ.,joined.  JamesC.Wright,Knoxville,Tennessee,fortheappellants,JamesT.Smythe,individually,McCann t SteelCompany,Inc. ` PamelaM.Spicer,Nashville,Tennessee,fortheappellee,J.B.Wilson. 8!    OPINION #E!XX #XXE! #`"     J.B.Wilson,anemployeeandpresidentofa#E!XX #XXE!McCannSteelCompany,Inc.,acloselyheld $8 $ corporation,filedthisactiontoenforceapurportedoralagreementwherebyJamesT.Smytheagreed %$!% topurchaseWilsonssharesfor$300,000uponWilsonsretirement.WilsonclaimsthatSmythe &"& enteredintothisagreementwithWilsonin1997toenticeWilsontocontinuetoserveaspresident '"' ofMcCannSteelthrough1999.#E!XX{ #XXE!Ԁ (#(   WilsonworkedforMcCannSteelfor59yearsinvariouscapacities,havingstartingwiththe p*%*  companyin1940attheageof16.#E!XX#XXE!ԀThecompanyhadbeenownedbytheMcCannfamilythroughout \+&+Y Wilsonsemploymentuntil1974whentheysoldthecompanytoSmythe.#E!XX#XXE! #  1      ׀#E!XXe#XXE!ԀWilsonwaspresident   ofthecompanyandresponsiblefordaytodayoperationswhenSmythepurchaseditin1974.#E!XX#XXE!  Smythe,whohadnotworkedforthecompany,askedWilsontocontinuetoserveaspresidentand  chiefoperatingofficerofMcCannSteel,offeringWilson10%oftheoutstandingsharesofstockin t thecompany#E!XX#XXE!inadditiontohissalary,bonusesandbenefits. #  2      #E!XX#XXE!ԀWilsonagreedandcontinuedtoserve ` aspresidentandchiefoperatingofficerofMcCannSteeluntilthisdisputearoseinFebruaryof1999, L  theweekofWilsonsplannedretirement.Thedisputepertainstoapurportedoralagreemententered 8  intobetweenWilsonandSmytheinJanuaryof1997. $ t   WilsonclaimsthatinJanuaryof1997Smytheagainenticedhimtoremainaspresidentand  L  chiefoperatingofficerofthecompany,thistimeuntilFebruary26,1999,Wilsons75thbirthday.  8  #E!XX#XXE!WilsonassertsthatheandSmytheenteredintoanoralagreementinJanuaryof1997,whereby:(1) $  Smytheand/orthecompanywouldpurchaseallofWilsonssharesfor$300,000uponWilsons   retirement,#E!XX#XXE!_ #  3      _#E!XX#XXE!Ԁ#E!XX#XXE!(2)thecompanywouldwriteoffa$12,000debtWilsonowedthecompany,and(3)the   companywouldtransferownershipoftwocompanyvehiclestoWilson.ByWilsonsaccount,the   oralagreementwassealedwithahandshake.     WilsonsubmittedhisresignationinFebruaryof1999,asplanned,atwhichtimeheasked \ SmythetofulfilltheiroralagreementtopurchaseWilsonssharesandtoforgivethe$12,00debt H Wilsonowedthecompany.  #  4      ׀WilsonassertsthatSmytherefused,tellingWilsonhedidnothavethe 4 money.  p   Elevenmonthslater,onJanuary25,2000,WilsonmailedtoSmythealetterinwhichhe H summarizedtheelementsofthepurportedoralagreementfrom1997.Wilsonsbelatedletter,dated 4 threeyearsaftertheallegedagreement,istheonlywritingsupportingthepurportedagreement.The   letterissignedbyWilson.ItisnotsignedbySmythe.      Thereafter,Wilsonbroughtthisactionseekingtoenforcethepurportedagreementagainst  McCannSteelandSmythe,individually.Sittingwithoutajury,thetrialcourtruledforWilson,  piercingthecorporateveilofMcCannSteelandawardingWilsona$300,000judgmentagainst  Smythe.ThecourtalsoorderedSmythetoremoveWilsons$12,000debtfromthebooksof  McCannSteel.Thecourtcreditedthe$100,000loanfromMcCannSteeltoWilsonasanoffset  againstthe$300,000judgment. #  5      ׀Theneteffectoftherulingsresultedinapersonaljudgmentagainst t Smytheof$200,000andWilsonbeingrelievedofthe$12,000debttothecompany. `   Thetrialcourtfoundtherewasawritingevidencingtheagreementandthatthewriting 8  satisfiedthestatuteoffrauds;however,thetrialcourtdidnotidentifywhichdocumentsupported $ t thisconclusion., #  6      XXXXԀ#XXXXl"#ThetrialcourtalsofoundthetestimonyofDavidHall,McCannSteelsaccountant,  ` andNorma_Divinny_,McCannSteelssecretaryandbookkeeper,sufficientevidencetoestablishthe  L  termsoftheagreement.XXXX  8  #XXXX##  ThepersonaljudgmentagainstSmythewasdueinparttothetrialcourtsdecisiontopierce   thecorporateveilbasedonitsconclusionthatMcCannSteelandSmythewereoneandthesame.   Thetrialcourtfoundthattherewasnocredibleevidenceofcorporatemeetings,boardofdirector   meetingsorshareholdermeetings,thatSmytheneversoughtapprovalfromtheboardofdirectors   forhisactionsonthecompanysbehalf,andthatSmythefailedtomaintainanarmslength p relationshipwithMcCannSteel,exercisingcompletedominionandcontroloverMcCannSteelto \ suchanextentthatMcCannSteellostitsseparatecorporateidentity. H XXXX  #XXXXE'#Onappeal,SmytheandMcCannSteelcontendthatthepurported1997agreementwas  p unenforceableunderXXXXTenn.CodeAnn.478319#XXXX (#,whichcodifiedthestatuteoffraudsineffectin  \ 1997andwhichrequiredthatagreementspertainingtothesaleorpurchaseofsecuritiesbein H writing.XXXXԀDefendantsfurthercontendthatthewritingthetrialcourtreliedontoholdthattheoral 4 agreementisbindingisinsufficienttosatisfythestatuteoffraudsbecauseitwasnotsignedby   Smythe.#XXXX0)#XXXX     Wilsonsetsforthfourargumentstosupporthispositionthattheallegedagreementis  enforceable.One,theUniformCommercialCodestatuteoffraudsDefendantsrelyonwasrepealed  #XXXXa*#XXXXeffectiveJanuary1,1998,andwasreplacedbyastatuteWilsoncontendsisretroactivethatdoesnot l requiresuchagreementstobeinwriting;therefore,thestatuteoffraudsisinapplicable.#XXXX+#XXXXԀTwo,the X  trialcourtfoundtherewasawrittenagreementbetweenSmytheandWilsonmemorializingtheoral D! agreementwhichsatisfiedthestatuteoffrauds.Three,theJanuary25,2000,lettertoSmythe 0"  satisfiesthestatuteoffraudsbecauseitservesasawrittenconfirmationoftheagreementas #l! permittedbyTenn.CodeAnn.478319(c)#XXXX,#XXXX.#XXXX.#XXXXFour#XXXX.#XXXX,theagreementisexemptfromthestatuteof $X" fraudsbecauseofthedoctrinesofpartialperformance,impliedcontract,andpromissoryestoppel.#XXXX2/# $D #  %0!$ _  StandardofReview   S0  XXXXAnappellatecourtsreviewofatrialcourtsfindingsoffactisdenovoupontherecordof  thetrialcourtaccompaniedbyapresumptionofthecorrectnessofthefindings,unlessthe t preponderanceoftheevidenceisotherwise.#XXXX0#XXXXTenn.R.App.P.13(d).Unlessthereisanerroroflaw, ` wemustaffirmthetrialcourtsdecisionaslongastheevidencedoesnotpreponderateagainstthe L  findings.Umstotv.Umstot,968S.W.2d819,821(Tenn.Ct.App.1997). 8    Theweight,faithandcredittobegiventoawitnesstestimonylieswiththetrialjudgeina  ` nonjurycasebecausethetrialjudgehadanopportunitytoobservethemanneranddemeanorofthe  L  witnessduringtheirtestimony.Robertsv.Roberts,827S.W.2d788,795(Tenn.Ct.App.1991);  8  Weaverv.Nelms,750S.W.2d158,160(Tenn.Ct.App.1987).#XXXX2#XXXXԀThere#XXXX?5#XXXXԀisnopresumptionof $  correctnesswithrespecttothetrialcourt'sconclusionsoflaw.#XXXX5#XXXXԀCampbellv.FloridaSteelCorp.,#XXXX86#XXXXԀ919   S.W.2d26,35(Tenn.1996)andTenn.R.App.P.13(d).   #XXXX6#XXXX#XXXXD7#XXXX   StatuteofFrauds    7#XXXX7#XXXX  Tounraveltheissuespresented,wewillfirstdeterminewhethertheUniformCommercial \ Code(UCC)statuteoffraudsineffectin1997,codifiedinTenn.CodeAnn.478319,#XXXX8#XXXXԀappliesto H thetransaction.#XXXX&9#XXXXIn1997,whenthepurportedoralagreementwasenteredinto,theUCCstatuteof 4 fraudsprovidedthatacontractforthesaleofsecuritiesisnotenforceablebywayofactionor  p defenseunless:  \ 8  (a)thereissomewritingsignedbythepartyagainstwhomenforcementissoughtor 4 byhisauthorizedagentorbrokersufficienttoindicatethatacontracthasbeenmade   forsaleofastatedquantityofdescribedsecuritiesatadefinedorstatedprice;or    8  ....   8  (c)withinareasonabletimeawritinginconfirmationofthesaleorpurchaseand  sufficientagainstthesenderunderparagraph(a)hasbeenreceivedbytheparty l againstwhomenforcementissoughtandhehasfailedtosendwrittenobjectionto X  itscontentswithin(10)daysafteritsreceipt;or....D!   Tenn.CodeAnn.478319#XXXX9#XXXX.Thisstatute,however,#XXXX>#XXXXwasrepealedeffectiveJanuary1,1998  #  7      ׀and, #l! atthesametime#XXXXv>#XXXXԀTenn.CodeAnn.478113,enactedin1997,wastotakeeffect.#XXXX[?#XXXXԀEffectiveJanuary $X" 1,1998,Tenn.CodeAnn.478113nullifiedtheforegoingrequirementthatagreementsforthe $D # saleorpurchaseofsecuritiessatisfytheUCCstatuteoffrauds.T #  8      #XXXX?#XXXXԀThenewstatuteprovides: %0!$  &"% 8   ` Notwithstandingtheprovisionsof292101[thestatuteoffrauds],a  contractormodificationofacontractforthesaleorpurchaseofasecurityis  enforceablewhetherornotthereisawritingsignedorrecordauthenticatedbyaparty  againstwhomenforcementissought,evenifthecontractormodificationisnot t capableofperformancewithinone(1)yearofitsmaking. #  9      `   #XXXXVA#XXXX  #XXXX4D#XXXXԀTheallegedagreementwasenteredintoinJanuaryof1997andt#XXXXD#XXXXheeffectivedateofthenew 8  statuteandrepealoftheformerstatutewasJanuary1,1998.#XXXXE#XXXXGenerally,statutesaretobeapplied $ t prospectivelyintheabsenceofclearlegislativeintenttothecontrary.VanTranv.State,66S.W.3d  ` 790,797798(Tenn.2001).SeealsoNuttv.ChampionInternationalCorp.,980S.W.2d365,368  L  (Tenn.1998);Statev.Cauthern,967S.W.2d726,735(Tenn.1998);Shellv.State,893S.W.2d416,  8  419(Tenn.1995).#XXXXE#XXXXԀOurTennesseeconstitutionprovidesthat noretrospectivelaw,orlawimpairing $  theobligationsofcontracts,shallbemade.#XXXXG#XXXXԀArticleI,Section20#XXXXH#XXXX.Anexceptionexistsforstatues   thatareremedialorproceduralinnaturewhicharesubjecttoretroactiveapplication,Keev.Shelter   Insurance,852S.W.2d226,228(Tenn.1993);however,whenastatutecreates anewright,   eliminatesavestedright,orimpairsacontractualobligationitsretrospectiveapplicationis   constitutionallyforbidden.Bryanv.Leach,85S.W.3d136,143(Tenn.Ct.App.2001).Thus, p retroactiveapplicationofthenewstatutewouldbeimpermissibleifitcreatesacontractwherenone \ existedin1997,becausebydoingsowouldimpose newdutiesandcreate newobligationsin H violationofArticle1,Section20oftheTennesseeConstitution,asconstruedbyDoev.Sundquist, 4 2S.W.3d919,923(Tenn.1999).#XXXXH#XXXXԀ#XXXXL#XXXX  p   Oursupremecourt#XXXX8M#XXXXԀdealtwithasimilarconflict,oneresultingfromthesubsequentenactment H ofasavingsstatuteandwhetheritappliedretroactively,therebytrumpinganexistingpolicyof 4 insurancethatrequiredinsuredstobringsuitsonthepolicywithin oneyearafterthelossordamage   occursafteranyclaimisdenied.Kee,#XXXXM#XXXXԀ#XXXX{O#XXXX852S.W.2d#XXXXO#XXXXat227.TheinsuredinKeecompliedwiththe   policybycommencingtheactionwithinoneyear,however,theinsuredvoluntarilydismissedthe  action.Whentheinsuredrefiledtheaction,Sheltermovedtodismissbasedonthecontracts  limitationofactionprovision.Theinsuredreliedonanamendmenttothesavingsstatutewhich  becameeffectiveafterthepolicyissuedandthelossoccurred,butbeforetheoriginalactionwasfiled l andthevoluntarydismissaltaken.Ifappliedretrospectively,thesavingsstatutesavedtheaction X  becausetheamendmentmadethesavingsprovisionapplicabletoalimitationofactionincontracts, D! whichhadnotbeenthecaseunderpriorlaw.Keefoundthesavingsstatuteremedialandtherefore 0"  shouldbeappliedretrospectivelyunlessbydoingsowouldtakeawayavestedrightorexisting #l! obligationunderthepolicy,thepartiescontract.852S.W.2d#XXXX P#XXXXat#XXXXT#XXXX228.Initsanalysisthecourt $X" consideredthatatthetimethecontractatissuewasexecutedtheinsuredwouldhavebeenrequired $D # tobringthesuitwithinoneyearaftertheclaimwasdeniedandthatunderthenexistingTennessee %0!$ courtdecisionsthesavingsstatutedidnotapplytothecontractuallimitationssuchastheone_at &"% issue.Thecourtemphasizedthesignificanceoflawsinexistenceatthetimeacontractisexecuted  stating, Itiswellestablishedthatthelawsaffectingenforcementofacontract,andexistingatthe  timeandplaceofitsexecutionenterintoandformpartofthecontract.852S.W.2d#XXXXT#XXXXat#XXXX4X#XXXX228.  Ѐ8   ` Thoselawswhichinanymanneraffectthecontract,whetheritsconstruction, ` themodeofdischargingit,orwhichcontroltheobligationwhichthecontract L  imposes,areessentiallyincorporatedwiththecontractitself....8      ... $ t 8   ` [T]helegalobligationofcontracts!thatis,thelegalmeansofenforcing  ` them,whichconstitutedtheirlegalobligation,orthelegalobligementbywhichthey  L  wereenforced!shouldnotbeimpairedorweakened,orrenderedlesseffective,than  8  whenthecontractwasenteredintoandtheobligationimposedortakenuponthe $  party....    Kee,852S.W.2d#XXXXX#XXXXat#XXXXM\#XXXX228229,quotingWebsterv.Rose,53Tenn.93(1871)#XXXX\#XXXX.Findingretrospective   applicationoftheamendmenttothesavingsstatuteimproper,theKeecourtstated:   8   ` Inthepresentcase,thelossoccurred,andthereforethecontractualright \ accrued,nearlyoneyearbeforethestatutoryamendmentwasadopted.Atthetime H theinsurancecontractwasexecutedandatthetimeofloss,thelawofthisstate,as 4 incorporatedintothecontract,requiredthatthesuitcommencedwithinthe  p contractuallylimitedtimebethesuitprosecutedtojudgment.Theamendment,if  \ appliedretrospectively,negatesthatrequirementandallowsthepolicyholderto H extendhiscauseofaction,despitethefactthathefailedtocomplywiththe 4 contractualobligation.Clearly,retrospectiveapplicationoftheamendmentwould   impairtheaccruedcontractualrightsoftheinsuror.Accordingly,weconcludethat   wherethecontractwasalreadyexecutedandthecontractualrightaccruedbeforethe  amendment'seffectivedate,retrospectivelyapplyingthe1989amendmentimpairs  theobligationofcontractandviolatesArticleI,Section20oftheTennessee  Constitution.l   852S.W.2d#XXXX]#XXXXat#XXXX c#XXXX229. D!   Ifweweretoapplythe1998statuteretroactively,wewouldbecreatingarightthatWilson #l! didnothavewhentheoralagreementwaspurportedlyenteredinto,therighttonowenforcewhat $X" wasanunenforceablecontractunderexistinglawin1997.#XXXXYc#XXXXԀKeemakesitclearthatsucharesult $D # wouldbeconstitutionallyimpermissible,852S.W.2d#XXXXd#XXXXat#XXXXe#XXXX229,andArticleI,Section20prohibitsus %0!$ frommakingenforceablethatwhichwasunenforceable.#XXXXe#XXXXԀWe,therefore,findthatretroactive &"% applicationofTenn.CodeAnn.478113isconstitutionallyimpermissibleherebecauseitwould '#& createanewright!therighttoenforcewhatwasanunenforceablecontractwhenitwasallegedly (#' enteredinto.#XXXXf#XXXXԀAccordingly,weholdthatthe1997statuteoffraudsembodiedinTenn.CodeAnn. )$( 478319applies#XXXX#h#.Therefore,wemustnowdeterminewhetherthepurportedagreementcomplies |*%) withthestatuteoffraudsorescapesitsapplicationunderanexceptiontothestatuteoffrauds. h+&* Ї@k k XXXXThe#XXXXi#XXXXRequirementofa Writing#XXXXj#XXXXinTenn.CodeAnn.478319(a)#XXXXxj#    ThetrialcourtheldthattheletterfromWilsontoSmythedatedJanuary25,2000,was  sufficienttosatisfyTenn.CodeAnn.478319(a).! #  10      ׀DefendantsinsistthatWilsonsletter,which t wassignedbyWilsonbutnotSmythe,failstosatisfythestatuteand,therefore,thetrialcourts ` conclusionoflawonthispointwaserror. L    TherulingbythetrialcourtthatthelettersatisfiesTenn.CodeAnn.478319(a)isa $ t conclusionoflawandwereviewXXXXatrialcourt'sconclusionsoflaw#XXXXm#XXXXԀwithoutapresumptionof  ` correctness.#XXXXn#XXXXԀCampbellv.FloridaSteelCorp.,#XXXXn#XXXXԀ919S.W.2d26,35(Tenn.1996)andTenn.R.App.  L  P.13(d).#XXXXn#  8    SubsectionXXXX(a)#XXXXo#ofTenn.CodeAnn.478319XXXXԀhadtwocomponents,thefirstofwhichisthat   thereisawritingsignedby thepartyagainstwhomenforcementissought.$ #  11      ׀Here,Smytheisthe   partyagainstwhomenforcementissought#XXXXp#XXXX.Thetrialcourtheldthe2000letterfromWilson#XXXXq#XXXXԀsatisfied   the writingcomponentofthestatuteoffrauds.The#XXXXr#XXXXrecordbeforeusclearlyestablishesthatthe   letteratissuewasnotsignedbySmythe,norwasanyotherwritingsufficienttosatisfy#XXXXr#Tenn.Code p Ann.478319XXXX(a)signedbySmythe.Thus,Wilsonfailed#XXXXs#XXXXԀtosatisfyanessentialcomponentof \ subsection(a),thatthewritingbesignedbySmythe,thepartyagainstwhomenforcementissought.#XXXXt#XXXX H    WrittenConfirmationunderTenn.CodeAnn.478319(c)#XXXXt#XXXX   p 2u  WilsonalternativelycontendsthathislettertoSmytheinJanuaryof2000satisfiesthe H  writtenconfirmationcomponentofanothersubsectionofTenn.CodeAnn.478319,subsection 4 (c)#XXXXu#XXXX.% #  12      ׀SmytheandMcCannSteelinsistWilsonsletterisstilldeficientforitwasnotreasonably   timelyasthestatuterequires#XXXXw#XXXX.     Subsection(c)providedanotherexceptiontotheprohibitionagainstoralcontractsforthesale  orpurchaseofsecuritiesandthatwasif withinareasonabletimeawritinginconfirmationofthe  saleorpurchaseisprovidedtothepartyagainstwhomenforcementissought.0 #  13      ׀Theobvious l questiontheniswhetherWilsonsletterinconfirmationofthesaleorpurchasewasprovidedto X  Smythe withinareasonabletime.#XXXXBx#XXXXԀ#XXXX{#XXXX D!  0"    Aconfirminglettersubmittedbyapersonotherthanthepartytobechargedisanauthorized  exceptiontothestatuteoffrauds.Exceptionstothestatuteoffraudsaretobestrictlyconstruedso  thatitsunderlyingpolicyprovisionsarenotdefeated.RonaldA.Anderson,Andersononthe  UniformCommercialCode8319:72(3ded.1996Revision).Thewrittenconfirmationmaybein t theformofaletter,brokersconfirmationslip,orasellersinvoice.Andersonat8319:86.#XXXXE{#XXXXTo ` qualifyasawrittenconfirmationunderTenn.CodeAnn.478319(c),thewritingmustcontainthe L  sameinformationthatwouldmakeitsufficientundersubsection(a).Awritingthatisindefiniteor 8  contemplatesafuturetransactionisnotsufficient.U.C.C.#XXXX~#XXXXԀat8319:87.Furthermore,thewritten $ t confirmationmustbesentwithina reasonabletime.  `   Tosatisfythe reasonabletimecriteriaonemustdispatchtheconfirmingwriting within  8  areasonabletimeaftertheoccurrenceoftheallegedoraltransaction.Andersonat8319:88.#XXXX#XXXXԀ $  Andersonexplainsthattheobjectofthistimelimitationistoensurethattherecipientofthe   confirmationwillassociatetheconfirmationwiththepriororaltransaction:   8   ` Whatisareasonabletimeforsendingaletterconfirminganoralcontractis   notamattertobedecidedinavacuumbutistobedeterminedinthelightofallthe p circumstancesofthecaseandoftheobligationofthepartiestoactingoodfaith. \ Whenthereisareasonablecausefordelayinputtinganythinginwriting,adelayin H sendingawrittenconfirmationwillnotbeheldunreasonablydelayedbymerely 4 countingthenumberofdays. p   Id.at8319:88. H   Whatisareasonabletimefortakinganyactiondependsonthenature,purposeand   circumstancesofsuchaction.Tenn.CodeAnn.471204(2).#XXXX^#XXXXԀThoughthiscriteriaisnot   amenabletoa brightlinetest,weareunabletoenvisionacircumstancewherebyathreeyeardelay  insubmittingwrittenconfirmationwouldbewithinareasonabletime.    AnadditionalcircumstanceunderminesWilsonsbelatedwrittenconfirmation:Wilson l mailedtheletterafterSmythehaddeniedthepurportedagreementandrefusedtopurchaseWilsons X  shares.Tenn.CodeAnn.478319#XXXX؅#XXXX(c),uponwhichWilsonrelies,notonlyrequiredthat within D! areasonabletimeawritinginconfirmationofthesaleorpurchaseandsufficientagainstthesender 0"  underparagraph(a)hasbeenreceivedbythepartyagainstwhomenforcementissought,italso #l! _provided_Ԁthatthepartyreceivingthewrittenconfirmationmay sendwrittenobjectiontoitscontents $X" within(10)daysafteritsreceipttonullifytheeffectofthewrittenconfirmation.Here,Smythehad $D # alreadynullifiedthepurportedagreementpriortotheletterbeingsent.#XXXXF#XXXXThus,themechanics %0!$ providedforinsubsection(c)werefrustratednotonlybythetardinessofWilsonsletterbutalsoby &"% thefacttheletterwassentafterSmythehaddeniedtheagreement. '#&   Forthesereasons,wefindthatWilsonfailedtocomplywiththeletterandspiritofTenn. )$( CodeAnn.478319#XXXX7#XXXX(c).Accordingly#XXXX#XXXX,Wilsonisnotaffordedthebenefitofthewritten |*%) confirmationexception. h+&* Ї   The PartialPerformanceException    Wilsonalsoarguesthattheagreementshouldbeexceptedfromthestatuteoffraudsunder  thedoctrineof partialperformancefortworeasons.One,WilsoncontendsthatSmythepartly t performedhispartoftheagreementbypayingWilsonthe$100,000contemplatedintheagreement. ` Two,Wilsoncontendsthathefullyperformedhispartoftheagreementbycontinuingtoserveas L  thecompanyspresidentuntilthecompanymovedtoitsnewfacility.#XXXXg#XXXXԀ#XXXX#XXXXSmythecounters,arguingthat 8  therecorddoesnotindicateanyquidproquofortheallegedagreementespeciallyintheformof $ t Wilsonagreeingtoremainwiththecompanyinreturnfor_Smythe_sagreementtobuyhisstock.  ` Further,SmythearguesthatitiserroneousforWilsontoarguethatthe$100,000 loanconstitutes  L  partialperformancebecauseitwasaloan,notpartialpaymentfortheshares.  8    Theequitabledoctrineofpartialperformanceistobeappliedwithcareandbalance.See   Sheddv.GaylordEntertainmentCompany,118S.W.3d695,698(Tenn.Ct.App.2003)#XXXX#XXXX.Ifthe   doctrineistooliberallyapplied,itcouldeasilyresultintheexceptionofpartialperformance   swallowingtheruleofthestatuteoffrauds,allowingtheproliferationofevilsthestatutewascreated   toguardagainst.118S.W.3d695,698(Tenn.Ct.App.2003). p   Determiningwhetherornottherewasapartperformanceofacontractdependsuponthe H particularfactsofeachcase.Foustv.Carney,329S.W.2d826,829(1959).#XXXX*#XXXXԀ#XXXX#XXXXToconstitutepartial 4 performancethatwilltakeanoralcontractforthesaleofsecuritiesoutofthestatuteoffrauds, the  p buyermustperformanactdirectlyrelatedtothestock,suchasacceptingdeliveryofthestock,  \ registeringthestock,orpartiallypayingforit.Andersonat8319:78.Performingservices H  pursuanttoanoralcontractdoesnotconstitutepartperformancethatwilltakeanoralcontract 4 forthesaleofsecuritiesoutofthestatuteoffrauds.Andersonat8319:79(citingBetaDrilling,   Inc.v.Durkee,821S.W.2d739(Tex.Ct.App.1992)).Betareliedheavilyontherationaleof   anotherTexascase,Wileyv.Bertelsen,770S.W.2d878,882(Tex.Ct.App.1989)indenyingthe  presidentandchiefexecutiveofficers#XXXX#XXXXԀemploymentwiththecompanyasanactsufficientto  constitutepartialperformance.ThetestsetoutinWileystated:  8  Performanceofanallegedoralagreementinordertoremovetheagreementfromthe X  operationofthestatuteoffrauds,mustbeunequivocallyreferabletotheagreement D! andcorroborativeofthefactthatacontractactuallywasmade.(citationsomitted). 0"  Whatisdonemustitselfsupplythekeytowhatispromised.Renditionofservices #l! forwhichapersonreceivesamonthlysalaryisinsufficienttotakethealleged $X" agreementoutofthestatuteoffraudsbecausetheserviceswerefullyexplainedby $D # thesalarywithoutsupposinganyadditionalconsideration.(citationsomitted).%0!$   Wiley,770S.W.2d#XXXX#XXXXat882.#XXXX#XXXX '#&   AdifferentresultwasreachedinSchniderv.CarlisleCorporation,65S.W3d619(Tenn. )$( Ct.App.2001)whereinthiscourtusedthedoctrineofpartialperformancetoenforceanagreement |*%) thatdidnotcomplywiththestatuteoffrauds.ThekeydifferencebetweenSchnider,whichheldfor h+&* theemployee/plaintiff,andBetaandWileyandthefactspresentedhereisthefactthatthecompany  withwhichMr.Schnidermadetheagreementbywhichhewouldacquiresharesforhiscontinued  employment#XXXX/#XXXXԀalsoperformeditspartoftheagreementinadditiontotheemployeeperforminghispart  ofthepurportedagreement#XXXX#XXXX.Schniderwasachefwhoagreedtoserveasarestaurantsmanagerin t exchangeforasalary,benefitsand15%ofthesharesofthecompany.Thetermsof_Schnider_s ` employmentweresetforthinanunsigned FinalDraftagreement.Althoughtheagreementwas L  notsignedbyeitherparty,thepartiesstipulatedtoitsterms.TheagreementprovidedSchniderwith 8  athreeyearemploymentterm,salaryandcarallowance,15%stockownershipinthenewventure, $ t healthinsuranceandbonuses.Schniderwenttoworkimmediately,butwasdischargedwithin5  ` months.Upholdingtheagreement,thiscourtfoundthatbothpartieshadperformedunderthe  L  agreement.ThecourtheldthatSchniderdevotedhistimetooperatingtherestaurantandthusfully  8  performedandCarlislepartiallyperformedinthatitpaidSchniderthecarallowance,benefits,and $  salarycalledforintheagreement.AlthoughCarlisledidnotissuestockcertificatesevidencing   Schneidersownership,CarlisleidentifiedSchneiderasa15%shareholderindocumentssigned   underoathandfiledwiththeStateofTennesseeAlcoholicBeverageCommission.#XXXXǢ#XXXX     TheevidenceofferedbyWilsonasproofofpartialperformancebythepartieswasthe p remittancetohimof$100,000byMcCannSteelandhiscontinuedemployment.' #  14      ׀#XXXX#XXXXԀ#XXXX#XXXXWilsoncontends \ the$100,000wasremittedaspartialpaymentofthe$300,000purchasepriceforhissharesofstock. H Theproblemwiththiscontentionisthatthepartiestreatedtheremittanceasa loanof$100,000. 4 #XXXXC#XXXXThecompanysfinancialrecordsidentifiedtheremittanceasaloan.DavidHall,thecompanys  p accountant,testifiedthatthe$100,000remittancewasaloan.Smythealsotestifiedthatthe  \ remittancewasaloananditwasnotapaymentforWilsonsshares.Withthesoleexceptionof H Wilsonstestimony,theevidenceestablishesthatthe$100,000remittedtoWilsonwasaloan, 4 nothingmore,nothingless.Thus,theevidencepreponderatesagainstafindingthatthe$100,000    loanwasanythingbutthat,aloan.     ItisundisputedthatWilsoncontinuedtoreceivehissalaryandbenefitswhileemployed  duringthetwoyearsheclaimstohavebeenpartiallyperformingthepurportedagreement.  Therefore,Wilsonscontinuedemployment,forwhichhewascompensated,doesnotsupply the l keytowhatwaspromisedand,thus,doesnotsatisfythepartialperformanceexception.#XXXX#XXXXԀThere X  beingnootherevidenceofpartialperformance,wefindtheevidencepreponderatesagainstafinding D! thatthepartiespartiallyperformedtheagreement. 0"      ImpliedContract $X" 1  Wilsonassertsthatthepurportedagreementshouldbeenforcedasanimpliedcontract.#XXXX0#XXXXAn %0!$ expresscontractiscreatedbytheparties'actualassenttomutuallyacceptableterms.Engenius &"% Entertainment,Inc.v.W.W.Herenton,971S.W.2d12,18(Tenn.Ct.App.1997).Incontrast,"a  contractimpliedinlawisimposedbyoperationoflaw,withoutregardtotheassentoftheparties,  ongroundsofreasonandjustice."Scandlynv.McDillColumbusCorp.,895S.W.2d342,345  (Tenn.App.1994)(quotingContinentalMotelBrokers,Inc.v.Blankenship,739F.2d226,232(6th t Cir.1984)).Elementsofacauseofactionforimpliedcontractinclude: ` 8  Abenefitconferreduponthedefendantbytheplaintiff,appreciationbythedefendant 8  ofsuchbenefit,andacceptanceofsuchbenefitundersuchcircumstancesthatit $ t wouldbeinequitableforhimtoretainthebenefitwithoutpaymentofthevalue  ` thereof.Themostsignificantrequirementforarecovery...isthattheenrichment  L  tothedefendantbeunjust. 8    Haynesv.Dalton,848S.W.2d664,666(Tenn.App.1992)(quoting_Paschall_'s,Inc.v.Dozier,407   S.W.2d150,155(1966)).     InthiscaseWilson,hasfailedtoprovetheelementsnecessarytoproveanimpliedcontract.   First,theonlybenefittoSmytheand/orMcCannSteelthathecanprove#XXXX#XXXXishiscontinuedemployment p withthecompany,yetWilsonwaspaidforhisservices.SinceWilsonwaspaidforhisservices,it \ wouldnotbeinequitableforthedefendantstoretainthebenefitofhisservicesunlesshewas H substantiallyunderpaidandthereisnoevidencethatWilsonwasundercompensatedforhisservices 4 thatwouldgiverisetoanequitableargument.Reviewoftherecorddoesnotshowthatabenefitwas  p conferreduponthedefendantsbyWilson,orthattherewasanappreciationofsuchbythe  \ defendants,orthattherewasanacceptanceofanysuchbenefitbythedefendantsundersuch H circumstancesthatitwouldmakeitinequitableforthemtoretainsuchbenefitwithoutpaymentof 4 thevaluethereof.AsstatedinHaynes,themostsignificantrequirementforsucharecoveryisthat   theenrichmenttoourdefendantsbeunjust.#XXXX#XXXXThereissimplynoevidenceinthisrecordthatwould   justifysuchaconclusion.#XXXX#XXXX848S.W.2dat666.WethereforefindthatWilsonfailedtoestablishthat  animpliedcontractexistedwithSmytheorwithMcCannSteel.     @ PromissoryEstoppel  l  \  Wilsonalsocontendsthattheallegedagreementshouldbeupheldunderthedoctrineof D! promissoryestoppel.HearguesthatthisisjustifiedbecauseSmythereceivedthebenefitofWilsons 0"  continuedservicetothecompanyfromFebruary,1997,thedateoftheallegedagreement,until #l! WilsonsretirementinFebruary,1999.Wilsoninsiststhathereliedontheagreement,continuing $X" toworkforthecompany,andthatitwouldbeunjusttoallowSmytheand/orMcCannSteeltoescape $D # liabilityonthebasisthattherewasnoagreementorthattheagreementisnotenforceablebecause %0!$ itfailstocomplywiththestatuteoffrauds. &"% #XXXX#XXXX  Likeanimpliedcontractclaim,aclaimofpromissoryestoppelisnotdependentuponthe (#' existenceofanexpresscontractbetweentheparties.EngeniusEntertainment,Inc.at19. )$( #XXXX#XXXXPromissoryestoppelisexplainedasfollows: Apromisewhichthepromisorshouldreasonably |*%) expecttoinduceactionorforbearanceonthepartofthepromisee...,andwhichdoesinducesuch h+&* actionorforbearance,isbindingifinjusticecanbeavoidedonlybyenforcementofthepromise.  Calabrov.Calabro,15S.W.3d873,878(Tenn.Ct.App.1999),citingAmacherv.Brown-Forman  Corp.,826S.W.2d480,482(Tenn.Ct.App.1991)(quotingRestatement(Second)ofContracts  90);seealsoAldenv.Presley,637S.W.2d862,864(Tenn.1982).#XXXX##XXXXԀAnotherexplanationof t promissoryestoppelis ` 8  whenone...byhispromiseinducesanothertochangehissituation,arepudiation 8  ofthepromisewouldamounttoafraud.Whereonemakesapromisewhichthe $ t promisorshouldreasonablyexpecttoinduceactionorforbearanceofadefiniteand  ` substantialcharacteronthepartofthepromisee,andwheresuchpromisedoesinfact  L  inducesuchactionorforbearance,itisbindingifinjusticecanbeavoidedonlyby  8  enforcementofthepromise.$    Foster&CreightonCo.v.WilsonContractingCo.,579S.W.2d422,427(Tenn.Ct.App.1978)   (citing17C.J.S.Contracts74);seealsoRestatement(Second)ofContracts90(1)(1979).In   additiontoshowingthatthedefendantmadeapromiseuponwhichtheplaintiffreasonablyrelied,   theplaintiffmustshowthatthisrelianceresultedindetrimenttotheplaintiff.Foster&Creighton p Co.at427.Estoppelhasbeenappliedin exceptionalcaseswheretoenforcethestatuteoffrauds \ wouldmakeitaninstrumentofhardshipandoppression,vergingonactualfraud.Balilesv.Cities H ServicesCompany,578S.W.2d621,624(Tenn.1979).Therearelimitstotheapplicationof 4 promissoryestoppel:  p Ѐ8  Detrimentalactionorforbearancebythepromiseeinrelianceonagratuitous H promise,withinlimitsconstitutesasubstituteforconsideration,orasufficientreason 4 forenforcementofthepromisewithoutconsideration.Thisdoctrineisknownas   promissoryestoppel.Apromisorwhoinducessubstantialchangeofpositionbythe   promiseeinrelianceonthepromiseisestoppedtodenyitsenforceabilityaslacking  consideration.Thereasonforthedoctrineistoavoidanunjustresult,anditsreason  definesitslimits.Noinjusticeresultsinrefusaltoenforceagratuitouspromisewhere  thelosssufferedinrelianceisnegligible,norwherethe_promisee_'sactioninreliance l wasunreasonableorunjustifiedbythepromise.Thelimitsofpromissoryestoppel X  are:(1)thedetrimentsufferedinreliancemustbesubstantialinaneconomicsense; D! (2)thesubstantiallosstothepromiseeinactinginreliancemusthavebeen 0"  foreseeablebythepromisor;(3)thepromiseemusthaveactedreasonablein #l! justifiablerelianceonthepromiseasmade.8@   $X" Calabro,15S.W.3dat879#XXXX#XXXX,quotingAldenv.Presley,637S.W.2d862,864(citingL.Simpson,Law %0!$ ofContracts61(2ded.1965)). &"% #XXXX#XXXX  Wilsonhadtoprovethatthedetrimenthesufferedinrelianceon_Smythe_spromisewas (#' substantialinaneconomicsense;however,w#XXXX#XXXXefindthatWilsonfailedtoestablishthiselementof )$( promissoryestoppel.#XXXX#XXXXԀHehadbeenanemployeeofMcCannSteelfor57yearswhentheagreement |*%) waspurportedlyenteredinto.Thepurportedagreementcalledforhimtoworktwoadditionalyears. h+&* #XXXX#XXXXInsteadofmakingachangetohiseconomicdetriment,Wilsoncontinuedinthesameposition,as  before,andcontinuedtoreceivehissalaryandbenefits,asbefore.Moreover,Wilsonhadownedthe  sharesfor23years!withoutanagreementwith#XXXX#XXXXԀSmytheorMcCannSteeltopurchasehisshares!  andattheendofthetwoyearperiodatissueheownedtheshares,asbefore.#XXXX#XXXXԀ#XXXX#XXXXThus,theevidence t preponderatesagainstafindingthatWilsonsufferedasubstantialeconomiclossbyworkingfor ` McCannSteelduringthetwoyearsatissue.Accordingly,wefindthatWilsonfailedtoestablisha L  primafaciecaseofpromissoryestoppel. 8     AdditionalIssuesRaisedbyAppellants  `   Appellants SmytheandMcCannSteelraisedtwoadditionalissueswhichrelatetocorporate  8  managementandpiercingthecorporateveil.Ourrulingsaboverendersuchissuesmoot . Therefore, (  theyarenotdiscussed.     InConclusion      Theevidenceinthiscasepreponderatesagainsttherulingofthetrialcourt.Theagreement x assertedbyWilsonisunenforceablebecauseitfailstocomplywithTenn.CodeAnn.478319of d thestatuteoffraudsanddoesnotfitwithinanyexception.Becausetheagreementisunenforceable P onthatbasis,itisnotnecessarytoexaminewhethertheagreementviolatedlawsrelatingtoconflict < ofinteresttransactionsbyanofficerordirector.InthatSmytheisnotliable,itfollowsthatthereis (x nojustificationtopiercethecorporateveil.#XXXX#ԀSincetheagreementunderwhichthe$100,000loan d fromMcCannSteeltoWilsonandWilsons$12,000debttoMcCannSteelwouldbeforgiven P cannotbeenforced,thesedebtscannotbeoffsetorforgivenbaseduponanunenforceableagreement. <   Costsofappealareassessedagainsttheappellee,J.B.Wilson.     `     h     ___________________________________ `     `     h     FRANKG.CLEMENT,JR.,JUDGE L!