WPCb 4?k#5Ffh$T?(B ʋ#7>0{LQO|+u. "MM@&% q`xo d"'^4kQ9w9tjhNjzW0#e}td6Iv'b=ҎL,Hv; &f*664wQ^7ݠ0&xH5@0-n,&sjʥs3%bf{1rN  ERbkyroM_Q0eif]egBsFADf=`_46P]bZs[2F-00FUQeib6Ll!"^ZcN`h1z^~XSfpz7d#!xU=N % 0:U$,' 0cS 1u 72+ 0w] 0 0^ 0 0 0y 0T 0DC 1 72^ BwN4Rfu mwfM 0 I 0 D7bxM^t4 &R!x"#](u)k,+,.W0.13G;.?^AN%CNsDNuDNEnGH(XJ`KU,Lx MaOKR0UUU,^^' _U:1`1`1`1`1`1`1`1`1`1`1`1`1`1`1`1`1`1`1`1`1`1`1` Bk` 0V` D5````` ASafa 0V,b 0DbHP LaserJet 8000 Series PS0(uH Z6Times New Roman RegularX($USUS.,,yAZArial (;3$2#  0  .3  0  ##37=CIQYag1.a.i.(1)(a)(i)1)a)i)(O;$0  2#  a  .3  0` (#(#(b$0  0` (#(#2#   .3  0 ` (#` (#(xir$0  0` (#(#0 ` (#` (#2#(  0  )3  0 (# (#($0  0` (#(#0 ` (#` (#0 (# (#2#(  a  )3  0h(#(#(F$0  0` (#(#0 ` (#` (#0 (# (#0h(#(#2#(   )3  0h(#h(#($0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(#2#  0  )3  0(#(#({$0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(#0(#(#2#  a  )3  0p(#(#(F$0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(#0(#(#0p(#(#2#     )3  0p(#p(#  xEGaeimquy}Bullet ListBullets ListHua'L @q':i+003|xU \\RA' Legal\  C G$USUS.,@@9XX   4    _ 9SeeTenn.CodeAnn.478102(1)(a)(ii)(Supp.1986).#9 #((28$ !USUS.,  38XX   0  (#$  0   - G$USUS.,@@9XX   18    _ 9Tenn.CodeAnn.478103(a)(Supp.1998).#9 # n G$USUS.,@@9XX   7    _ 9See_U.C.C._Ԁ8102,CommentstoOfficialText,n.2(1977). #9 # C G$USUS.,@@9XX   5    _ 9SeeTenn.CodeAnn.478102(1)(b)(ii)(Supp.1986).#9 #  G$USUS.,@@9XX   13    _ 9Tenn.CodeAnn.478102(1)(a)(ii)wasamendedtoprovidethatcertificatedsecurities   were [e]itherstockofacorporation(regardlessofwhetherpubliclytradedandwithoutregardto   shareholdersagreements,bylawprovisions,transferrestrictionsorothersuchmattersapplicable T | thereto)oranyothershare,participationorotherinterestorobligationofatypecommonlydealtin  : onsecuritiesexchangesormarketsorcommonlyrecognizedinanyareainwhichitisissuedor   dealtinasamediumforinvestment....   Tenn.CodeAnn.478102(1)(b)(ii)wasamendedtoprovidethatuncertificatedsecuritieswere  2  [e]itherstockofacorporation(regardlessofwhetherpubliclytradedandwithoutregardto  shareholdersagreements,bylawprovisions,transferrestrictionsorothersuchmattersapplicable   thereto)oranyothershare,participationorotherinterestorobligationofatypecommonlydealtin Dl  onsecuritiesexchangesor#9 # 9markets....#9 # *  S  G$USUS.,@@9XX   14    _ 9SeeActofApril6,1995,ch.86,3,1995Tenn.Pub.Acts,120;Tenn.CodeAnn.47   8101,CompilersNotes(1996Repl.).#9 # * G$USUS.,@@9XX   10    _ 9Tenn.CodeAnn.478102(Supp.1986).#9 #  G$USUS.,@@9XX   2    _ 9SeeActofMarch8,1963,ch.81,1963Tenn.Pub.Acts243.  G$USUS.,@@9XX   11    _ 9SeePowell,supranote8,at599n.159.  G$USUS.,@@9XX   16    _ 9TheCourtofAppealsobservedthattheBlasingamedecision apparentlygavebirthtothe   1995amendmenttoT.C.A.478102,andthatevenifBlasingamehadbeenstatutorilyoverruled   bythe1995amendmenttotheUCC, itcannotbeappliedretrospectively.TheCourtofAppeals T | evidentlyconsideredthe1995amendmentstobethefirstindicationthatthelegislatureintendedthe  : CodetoincludecloselyheldstockasasecurityundertheUCC.Aswehavestated,closelyheld   stockcamewithintheambitofUCCsecuritiesinTennesseein1986,whenthelegislatureadopted   the1977versionoftheUCC.The1995amendmentsmerelyclarifiedthatposition. Thereforethe Lt lawthatcloselyheldstockisaUCCsecuritycontrolsthefactsinthiscase.#9 #  2 S  G$USUS.,@@9XX   12    _ 9Id.#9 #   G$USUS.,@@9XX   6    _ 9TheOfficialCommentsfollowingthesectionexplainthatthepurposeofthisomissionwas   toexcludecertaininterests,suchascheckingandsavingsaccounts,that would[otherwise]be   classifiedassecuritiesundertheumbrellaoftheomittedphrase.#9 # 9ԀSee_U.C.C._Ԁ8102,Comments T | toOfficialText,n.2.(1977).#9 0#  G$USUS.,@@9XX   8    _ 9SeeTracyA.Powell,StockinaCloselyHeldCorporation:IsItaSecurityforUniform   CommercialCodePurposes?,42Vand.L.Rev.579,602(1989).#9 # ! G$USUS.,@@9XX   17    _ 9TheGeneralAssemblysmostrecentrevisionstothedefinitionofasecurityinChapter8   appearatTenn.CodeAnn.478102(15)(1998Supp.)andwereadoptedin1997.SeeActof   April14,1997,ch.79,1997Tenn.Pub.Acts109. #9 # u G$USUS.,@@9XX   19    _ 9Tenn.CodeAnn.478103,CommentstoOfficialText,n.2(Supp.1998)(emphasis   added).#9 # $ G$USUS.,@@9XX   15    _ 9Seeid.(emphasisadded)#9 #. _ GUSUS.,@@9XX   9     9OthercourtshavelookedtotheOfficialCommentstoconcludethatstockincloselyheld   corporationsmeetsthedefinitionfoundintheUCC.SeeInre_Hryniewicz_,222_B.R._Ԁ14,18(_Bankr_.   D.Conn.1998);Allenv.Coates,661So.2d879,882(Fla.Dist.Ct.App.1995);_Haught_Ԁv._Lante_ T | Corp.,No.9C02342,1991WL148198,at*23(N.D.Ill.July26,1991);_Medesco_,Inc.v._LNS_Ԁ_Intl_,  : Inc.,762F.Supp.920,923n.4(D.Utah1991);InreDomesticFuel,70_B.R._Ԁ455,462(_Bankr_.   _S.D.N.Y._Ԁ1987);Katzv.Abrams,549_F.Supp_.668,671(E.D.Penn.1982);_Dionisi_Ԁv._DeCampli_,No.   9424,1991WL118185,at*3(Del.Ch.July2,1991),amendedby_Dionisi_Ԁv._DeCampli_,,No.9425, Lt 1996WL39680(Del.Ch.Jan.23,1996);Thompsonv.Kohl,453S.E.2d485,487(Ga.Ct.App.  2 1994);United_Indep_.Ins.Agencies,Inc.v.BankofHonolulu,718P.2d1097,1102(Haw.Ct.App.  1986);_Bahre_Ԁv.Pearl,595A.2d1027,1035(Me.1991);Kenneyv.Porter,604S.W.2d297,301   (Tex.Ct.App.1980);_Wamser_Ԁv._Bamberger_,305N.W.2d158,162(Wis.Ct.App.1981).#9 # Dl  S = G$USUS.,@@9XX   21    _  9 InhisconcurrencetotheCourtofAppealsopinion,JudgeSusanoassertedthathefelt   boundbythe_Blasingame_decision,buturgedtheSupremeCourtto revisit_Blasingame_󀀀   becausehefeltthat thecasesespousingthemajorityviewarearguablythebetterreasoned V ~ casesonthesubjectathand.   8      @   < #9 #  G$USUS.,@@9XX   20    _ 9AlsoimportanttonoteisthattwodecisionsreliedonbytheBlasingamecourthavebeen   overruled.Zamorev.Whitten,395A.2d435(Me.1978)wasoverturnedbyBahrev.Pearl,595   A.2dat1035andKenneyv.Porter,557S.W.2d589(Tex.Ct.App.1977)wasoverturnedby T | Kenneyv.Porter,604S.W.2dat30102.#9 # T G$USUS.,@@9XX   25    _ 9SeeBunchv.MacawberEngineering,Inc.,No.911374(D.W.Penn.). #9 # D G$USUS.,@@9XX   26    _ 9SeeTenn.CodeAnn.478319(d)(1992Repl.&1996Repl.).#9 # D G$USUS.,@@9XX   28    _ 9SeeTenn.CodeAnn.478319(a)(1992Repl.&1996Repl.).#9 # D G$USUS.,@@9XX   29    _ 9SeeTenn.CodeAnn.478319(b)(1992Repl.&1996Repl.).#9 # d G$USUS.,@@9XX   30    _ 9SeeTenn.CodeAnn.478319_(c)_Ԁ(1992Repl.&1996Repl.).#9 #  G$USUS.,@@9XX   31    _ 9SeeMichaelJ.Herbert,ProcedureandPromise:RethinkingtheAdmissionsExceptionto   theStatuteofFraudsUnderU.C.C.Article2,2A,And8,45Okla.L.Rev.203,209(1992).#9 #  G$USUS.,@@9XX   3    _ 9SeeActofApril15,1986,ch.737,1986Tenn.Pub.Acts571. V G$USUS.,@@9XX   23    _ 9See_Unif_.CommercialCode,1A_U.L.A._Ԁ1(Supp.1999).,  AZArial  n G$USUS.,@@9XX   24    _ 9TheallegedagreementinthiscaseisgovernedbyTenn.CodeAnn.478319asit   existedinthe1992Replacementvolume.Howeverthestatutehasnotbeenamendedsince   appearinginthatvolume,andouranalysisalsoappliestothecurrentversionofthestatute,foundin T | the1996Replacementvolume.#9 # W G$USUS.,@@9XX   22    _ 9Itisnotnecessaryforustoaddressthepolicydebateconcerningwhethercloselyheld   stockiscommonlydealtinonsecuritiesexchangesormarketsoriscommonlyrecognizedasa   mediumforinvestmentbecausetheOfficialCommentsaccompanyingourcurrentversionofthe T | UCChavespecifiedthatcloselyheldstockistobeconsideredasecurityundertheUCC.#9 #Ԁ 9See  : Tenn.CodeAnn.478103,CommentstoOfficialText,n.2(Supp.1998).#9 # A G$USUS.,@@9XX   1    _? 9ThetransactionsinthiscasearegovernedbyTenn.CodeAnn.478102asitexistedin   the1992Replacementvolume.Althoughthestatutehasbeenamendedseveraltimessince   appearinginthatvolume,ourholdingalsoappliestothestatutescurrentversion,foundinthe1998 T | Supplement.Level 1Level 2Level 3Level 4Level 5  G$USUS.,@@9XX   27    _ 9Cf._Keigan_Ԁv._Goode_,556N.E.2d118,11920(Mass.App.Ct.1990)(holding,inasuitto   establishtheexistenceofanoralagreementforthesaleofstock,thatthejudicialadmission   exceptionwasnotsatisfiedbytheplaintiffsdepositiontestimonyacknowledgingthatbefore T | negotiationshadbrokendownthepartieshadreachedanagreementwithregardtopriceand  : quantityofstockandhaddraftedadocumentreflectingtheagreement);_Oakley_Ԁv.Little,272S.E.2d   370,374(N.C.Ct.App.1980)(holdingthatthejudicialadmissionexceptiondidnotapplytoprove   theexistenceofanoralagreementforthesaleofstock,wherethedefendantofferedhisdeposition Lt testimonyacknowledgingthatthepartiesagreedtohaveadocumenttransferringthestocksdrafted  2 byanattorney,becausethedefendantsreferencestotheagreementwere intermsofatentative  orincompleteagreementandbecause [a]nyadmissionofsuchacontractwouldnecessarilyhave   toincludeastatementofthepriceandquantityterms);Nelsonv._Brostoff_,689P.2d1056,106062 Dl  (Or.Ct.App.1984)(holding,inanactionbroughtbybuyersforspecificperformanceofacontract *  forthesaleofstock,thatthejudicialadmissionexceptionwasnotsatisfiedbythesellersdeposition   testimonyadmittingthataftermeetingwiththebuyerheshookthebuyershandandstated weve ~  gotadealbecausethestatement,evenwhentakenincontextwiththeprecedingnegotiations <d  describedbythesellerinhisdeposition,establishedneitheraquantitynorpriceforthestocks).,yAZArial   b"USUS.,  _BXKXXXB8MXBXK   Ad FILEDBXKXB8M  November1,1999CecilCrowson,Jr.AppellateCourtClerkdA ,cAZ"Arial Regular d(.3$ !USUS.,  YYYY)!dxdxabZc[E<<CLevel 1Level 2Level 3Level 4Level 5(.3$ !USUS.,  ($$   1  !USUS.,  _TR[A' Legal3'A' Legal3'T ` 8XXdd8XKXXX†    X9XKXXXK  =XXdd=x`A[B2.jz@`  `@Ex ` 8ttxP ( x_  0 @ INTHESUPREMECOURTOFTENNESSEE    @(ATKNOXVILLE @      =XXdXXd=  0      8      @      H!   0      8      @     0      8      @      H! STEVENA.WAKEFIELD,0 8 08$8$)0$$ FORPUBLICATION  0$$   0      8   ) Plaintiff/Appellee,0  08$$08$8$)0$$ Filed:November1,1999  $$   0      8   )v.0 00 $ $00 $0 $0$$08$$08$8$) $$   0      8   )0  BlountChancery $$ MICHAELF.CRAWLEY,MacTENN0  )| $$ VALVECOMPANY,aTennessee0  )b $$ Corporation,andMACAWEBER0 8 08$8$)0$$Hon.ChesterS.Rainwater,Hl$$ SYSTEMS,INC.,aTennessee0 8 08$8$)0$$Chancellor..R$$ Corporation,0 0 00 $0 $0$$08$$08$8$)8$$   0      8   ) Defendants/Appellants.0 8 08$8$)0$$NO.03S019903CH00029$$ ForPlaintiffAppellee:0  08$$08$8$0$$ForDefendantsAppellants:%$$ H.AllenBray0  0$$08$$08$8$0$$WilliamS.Lockett,Jr.' $$ Maryville,Tennessee0  08$$08$8$0$$Kennerly,Montgomery&Finley,PC(!$$   0      8     Knoxville,Tennessee@VV( 94X9XKOPINION #9XKX94 #Ԉ .#( TRIALCOURTANDCOURTOFAPPEALSREVERSED;CAUSEDISMISSED0  08$$08$8$0$$0@$$0@$@$0$$DROWOTA, 4). J.#XKXX9XKW# #5*/$$= #_Ӏ Wegrantedthisappealtodeterminewhetherstockinacloselyheld   corporationisa security,asdefinedbyTenn.CodeAnn.478102(1992Repl.   &Supp.1998)< #  1      ,sothatChapter8oftheUniformCommercialCode(UCC) p  governsitssaleortransfer.InBlasingamev.AmericanMaterials,Inc.,654 <d S.W.2d659,664(Tenn.1983),weconcludedthatcloselyheldstockwasnota 0 securitywithinthemeaningofChapter8oftheUCC.Becausewehave   determinedthattheOfficialCommentsofthe1977versionoftheUCC,adopted   bytheTennesseeGeneralAssemblyin1986,aswellasthe1995and1997 l  amendmentstotheCode,overrulethereasoninginBlasingame,wenowholdthat 8` closelyheldstockisasecuritywithinthemeaningoftheUCCsChapter8,and , thatthecloselyheldstockatissueinthiscaseisgovernedbyChapter8.  Becausetheplaintiffcannotproduceasignedwritingthatcomportswiththe  statuteoffraudsfoundatTenn.CodeAnn.478319(1992Repl.&1996Repl.), h norcanhesatisfyoneofthestatutoryexemptions,wereversethejudgmentsof 4!\ thelowercourtsandfindinfavorofthedefendant. @    #( = FACTSANDPROCEDURALHISTORY  &     Thepartiesinthisactionbecameacquaintedin1986whenthedefendant, H*p $ MichaelCrawley,actingthroughMacawberEngineering,Inc.,acorporationof ,<"& whichhewasthesoleshareholder,becameinvolvedwithaprojectinvolvingthe -$( developmentoftechnologytocleantheaccumulationofimpureresidueincoal /%* mines.Mr.Crawleyapproachedtheplaintiff,StevenWakefield,aninvestment   banker,andsolicitedhishelpinobtainingfinancingfortheproject.Whilethe   miningprojectnevermaterialized,thedefendantenlistedtheplaintiffsassistance p  infinancialconsulting.Specifically,thedefendantsoughthelpinrevamping <d MacawberEngineeringsfailingfinancialsituation.Withoutaformalemployment 0 agreementbetweentheparties,theplaintiffassentedtoassistingthedefendant,   andbeganconsultingwithcreditorsinanattempttoobtainfinancingforvarious   companyprojects. l   Between1987and1992theplaintiffcontinuedtoperformfinancial , consultingforMacawberEngineering.Incompensationforhisservices,the  partiesagreedinSeptember1990thattheplaintiffwouldbeplacedonthe  corporationspayrollandwouldreceive$10,000permonth.Thatfeewaslater h reducedto$6,000permonth,andfinallyto$4,000permonthduetothe 4!\ companysstrainedfinancialsituation.  #(   By1991MacawberEngineeringcontinuedtostrugglefinanciallyandwas &  onthebrinkofbankruptcy.Theplaintiffmaintainedthatinordertoremedythe p(" corporationspoorimageandfinancialstatusandtoprotectitscreditorsitwas <*d $ essentialtocreatea cleancompanythatwouldbemoresuccessfulatobtaining ,0"& andperformingcontracts.Thedefendantagreedthattheemployeesand -#( creditorsofMacawberEngineeringwouldbestbeprotectedifthecompanycould /%* existandtransactbusinessinadifferentform.Toachievethis,theplaintiff l1', suggestedthattwonewcompaniesbeformed.Accordingly,MacawberSystems, 83`). Inc.( MSI)andMacTennValveCompany( MacTenn)wereincorporatedduring 5,+0 † TR[A' Legal[A' Legal A' Legal A' LegalT   1991and1992.Thedefendantwasthesoleshareholderineachnew   corporation.    Thedefendant,anengineer,contendsthathewasignorantaboutthe <d nuancesofthistransactionandthathewascompletelydependantuponthe 0 plaintiffandFrederickGertz,anattorneywhosehelptheplaintiffhadenlisted,in   implementingthenecessarycorporatechanges.Thedefendantassertsthatin   1991and1992hewasinstructedbytheplaintiffandMr.Gertztoprepareaseries l  ofdocumentsthatwouldfacilitatethecreationofthenewcorporationsandwould 8` transferlicensesandassetssothatthebusinessescouldcontinuetooperate. , TheplaintiffandMr.Gertzprovidedthedefendantwithalistofdocumentstobe  prepared,thecompilationofwhichthedefendantdescribesasa bogusstock  transfer.Thedocumentsrepresentedseveralongoingtransfersthatweremade h overanextendedperiod,includingtransfersofintellectualproperty,technology 4!\ licenses,patentsandcertaincompanyrights.Someoftheserightswere #( transferredfromMacawberEngineeringtothedefendant,inhispersonalcapacity; $ othersweretransferreddirectlytothenewcorporations. Thedefendantasserts &  thattheplaintiffandMr.Gertzadvisedhimtobackdatethedocumentssixmonths p("  inordertoestablishsomekindofperiodthatwasnecessarytopreservethe <*d $ authenticityoftheagreements. ,0"&  Althoughthedefendantcontendsthathewasconfusedaboutthelegal /%* implicationsofpreparingagreementsinthismanner,hedraftedthedocumentsin l1', accordancewiththeplaintiffsandMr.Gertzsinstructions.Howeverthe 83`). defendant,underthebeliefthattheagreementsweremere contingency 5,+0 documents,didnotexecuteanyoftheformsbutmerelypresentedthemtothe   plaintiffwithouthavingsignedthedocuments.Thedefendantassertsthatduring   thisperiodhehadgrowndistrustfuloftheplaintiffandhadbeguntoquestionthe p  motivationbehindtherequestforthedocumentshehadprepared.Asaresult, <d whentheplaintiffandMr.Gertzrequestedstockcertificatesrepresentingcertain 0 stockinMSIandMacTenn,thedefendantprovidedonlycopiesoftheoriginal   certificatesandhidtheoriginals.    Thepartiesengagedinanongoingdisputein1992regardingtheplaintiffs 8` compensationforhisfinancialconsultingservices.Aseriesofletterswere , exchangedinwhichtheplaintiffexpressedhisunderstandingthathewasto  receive$250,000aspaymentforpastservices.Thedefendantmaintainedthat  anypaymentstotheplaintiffwereconditioneduponthesuccessfulsaleor h refinancingofcertaincompanystocktoinvestors,acontingencywhichdidnot 4!\ occur.Theplaintiffdisputedthis,assertingthathisfeewasfixed.Theparties #( agreethatnowritten,mutualagreementresultedfromtheseletters.Afterthis $ exchange,relationsbetweenthepartiesdeteriorated. @      &   Thepartiesalsodisagreeabouttheexistenceofanoralagreement 0*X $ wherebytheplaintiffwastobecompensatedthroughapercentageofeachnew +$"& corporationsstock.Theplaintiffcontendsthatincompensationforthefinancial -#( consultinghehadalreadyprovided,andinordertoenticehimtocontinueseeking /%* capitalforthecompanies,thepartiesagreedthathewouldreceiveeightypercent `1', ofMSIsstockandeightypercentofMacTennsstock.Thedefendantdenies ,3T). thatsuchanoralagreementwasreached.Frustratedbytheongoingdisputes 4 +0 andaperceivedlackofadequatecompensation,theplaintiffseveredtheparties   relationsinthesummerof1992.    OnMay28,1993,theplaintifffiledsuitagainstMichaelCrawley,MacTenn <d andMSIintheChanceryCourtforBlountCounty,assertingthathewastheowner 0 ofeightypercentofeachnewcorporationsstockandseekinganordertoenforce   thedeliveryofthestockcertificates.Thedefendantrespondedbydenyingthat   theplaintiffpossessedanyownershipinthetwocorporationsandasserting l  certaindefenses,includingthestatuteoffraudsunderTenn.CodeAnn.478 8` 319(Repl.1992).Followingabenchtrial,thetrialcourt,applyingtheruleof , practicalconstruction,determinedthatthepartiesconductindicatedtheexistence  ofanoralagreementthattheplaintiffwasentitledtoreceivethecertificatesin  question.Thecourtdeemedthestatuteoffraudstobeinapplicabletothese h facts. 4!\  TheCourtofAppealsaffirmedthejudgmentinfavoroftheplaintiff, $ declaringthatclearandconvincingevidencesupportedthetrialcourtsfindingthat &  anoralagreementexistedbetweentheparties.Theintermediatecourtthen d(" addressedtheapplicabilityofthestatuteoffraudsgoverningcontractsforthesale 0*X $ ofsecurities,foundatTenn.CodeAnn.478319(Repl.1992).Relyingon +$"& Blasingamev.AmericanMaterials,Inc.,654S.W.2dat659,theCourtofAppeals -#( determinedthatthestockatissuewasnota securitywithinthemeaningof /%* Chapter8oftheUCCbecauseitwascloselyheldstock,andthatthestatuteof `1', fraudsinthechapterdidnotapply.Afterconcludingthattheoralagreementwas ,3T). notrenderedunenforceableforanyotherreason,theintermediatecourtaffirmed 4 +0 thejudgmentinfavoroftheplaintiff.    Wegrantedthedefendantsapplicationforpermissiontoappealinorderto p  determinewhetherthestockofacloselyheldcorporationisa securityunder <d Tenn.CodeAnn.478102(1992Repl.&Supp.1998).Becausewehave 0 determinedthattheOfficialCommentsofthe1977versionoftheUniform   CommercialCode,adoptedbytheTennesseeGeneralAssemblyin1986,aswell   asthe1995and1997amendmentstotheCode,overrulethereasoningin l  Blasingamev.AmericanMaterials,Inc.,654S.W.2dat664,weholdthatclosely 8` heldstockisasecuritywithinthemeaningofChapter8oftheUCC.Accordingly, , weconcludethatthestatuteoffraudsfoundatTenn.CodeAnn.478319  (Repl.1992)appliestothetransactionsinthiscase.Becausetheplaintiffcannot  produceasignedwritingthatcomportswiththestatute,norcanhesatisfyoneof h thestatutoryexemptions,wereversethejudgmentsofthetrialcourtandCourtof 4!\ Appealsandfindinfavorofthedefendant.   @  #(   $    ANALYSIS &  A.StandardofReview H*p $ A Webeginbyarticulatingtheapplicablestandardofreview.Directedby - $( Tenn.R.App.P.13(d),wemustfirstmakeadenovoreviewofthetrialcourts /%* findingsoffact,accompaniedbyapresumptionofcorrectness,unlessthe 1', preponderanceoftheevidenceisotherwise.SeeWalkerv.SaturnCorp.,986 \3). S.W.2d204,207(Tenn.1998).Inthiscasewearecalledupontointerpreta (5P+0 statutoryscheme.Issuesofstatutoryconstructionarequestionsoflaw,see   Jordanv.BaptistThreeRiversHosp.,984S.W.2d593,599(Tenn.1999);Beare   Co.v.TennesseeDep'tofRevenue,858S.W.2d906,907(Tenn.1993),andshall p  berevieweddenovowithoutapresumptionofcorrectness,seeStatev. <d Levandowski,955S.W.2d603,604(Tenn.1997);Ridingsv.RalphM.Parsons 0 Co.,914S.W.2d79,80(Tenn.1996).    lC  B.TheBlasingameDecision l  G  InthisCourt,thedefendantsprimarycontentionisthattheCourtof D AppealsrelianceontheBlasingamecaseismisplaced.Thedefendantasserts  thattotheextentthatBlasingameholdsthatstockinacloselyheldcorporationis  nota securityundertheUCC,thecasewasstatutorilyoverruledin1986,when  theTennesseeGeneralAssemblyadoptedthe1977versionoftheUCC.We L!t agreewiththedefendantscontention. #@  TheplaintiffinBlasingameclaimedthatthedefendant,AmericanMaterials, &  Inc.,orallypromisedhim,inadditiontootherincentives,anoptiontopurchase |(" onefourthofitsstockinexchangefortheplaintiffsemploymentwiththe H*p $ corporation.Althoughtheplaintiffassentedtothetermsoftheofferandworked ,<"& forthecompanyforsevenyears,hewascontinuallydeniedanopportunityto -$( purchasethestock.Theplaintifffinallyfiledsuit,seekingthevalueofthe /%* promisedshares.Attrialtheplaintiffattemptedtointroducealetterfromoneof x1', theshareholdersacknowledgingtheagreementconcerningthestockpurchase D3l). option.Thedefendantcorporationinsistedthattheletterwasbarredbythe 58+0 statuteoffraudsgoverningthesaleofsecurities,foundatTenn.CodeAnn.47   8319(1979Repl.),andsoughttoamenditsanswertoraisethatdefense.This   Courtassentedtohearingthecaseinordertodecidewhetherthestockinaclose p  corporationisasecurityunderChapter8oftheUCC,andconsequently,whether <d thestatuteoffraudsgoverningthatchapterappliedtotheallegedoption 0 agreement.    ThisCourtdeterminedthatthedefendantcorporationsstockdidnotmeet l  thedefinitionofa securityunderthe1962versionoftheUniformCommercial 8` Code,adoptedbytheTennesseeGeneralAssemblyin1963,$ #  2      ׀becauseitwasnot ,  ofatypecommonlydealtinuponsecuritiesexchangesormarketsorcommonly  recognizedinanyareainwhichitisissuedordealtinasamediumfor  investment.Tenn.CodeAnn.478102(1)(a)(ii)(1979Repl.).TheCourt h focusedonthefactthattherehadbeenonlyonesaleofstockinthecorporations 4!\ historyandthatitwasclearthat therewasnomarketavailableforthisstock. #( Blasingame,654S.W.2dat664.ThisCourtconcludedthatwhetherthestockin $ acloselyheldcorporationwasdealtwithorrecognizedinaccordancewiththe &  definitionfoundatTenn.CodeAnn.478102(1)(a)(ii)(1979Repl.)andcouldbe d(" consideredasecurityundertheUCCisaquestionoffact. 0*X $    C.ChangesintheUCCsincetheBlasingameDecision -#( 6U  In1986theTennesseeGeneralAssemblyadoptedthe1977versionofthe x1', UCC,7 #  3      ׀whichistheversionthatgovernsthetransactionsinthiscase.The1977    versiondepartedfromitspredecessorbycreatingtwocategoriesofsecurities   certificatedN #  4      ׀anduncertificated  #  5      .Thedefinitionofa certificatedsecurity p  remainedidenticaltothepreviousversion;thedefinitionofan uncertificated <d securitydeletedthelanguagemandatingthattheinterestbe commonly 0 recognizedinanyareainwhichitisissuedordealtinasamediumfor   investment.Tenn.CodeAnn.478102(1)(b)(ii)(Supp.1986).(Z #  6      ׀Thedefendant   insiststhatthereviseddefinitionofasecurityclearlyencompassedstockin l  closelyheldcorporations,andthattheGeneralAssemblysadoptionofthe1977 8` UCCoverruledtheholdinginBlasingame. XXԀ#XX ([# , Ѐ  0        Assupportforthiscontention,thedefendantpointstotheOfficial  Commentsaccompanyingthetext,inwhichthedraftersofthe1977UCC h specificallyaddresstheeffectofthedefinitionchangesonthestockofclosely 4!\ heldcorporations.Thecommentsinstructthat #( 8 [i]nterestssuchasthestockofcloselyheldcorporations,although $ theyarenotactuallytradeduponsecuritiesexchanges,areintended % tobeincludedwithinthedefinitionsofbothcertificatedand &  uncertificatedsecuritiesbytheinclusionofinterestsofatype ~'! commonlytradedinthosemarkets.  #  7      ׀   @   d(" ! ! 1]ThedefendantinsiststhattheGeneralAssemblysadoptionofthisversionofthe 0*X $ UniformCommercialCodesignalsitsdisapprovaloftheholdinginBlasingame   thatcloselyheldstockisnotasecurityundertheUCCunlesscertainfactual   inquiriesweresatisfied. p   Atleastoneauthoragrees.InanarticleurgingTennesseecourtsto 0 expresslyoverruleBlasingameandholdthatthestockofcloselyheldcorporations   shouldbeconsideredasecurityforUCCpurposes,oneauthorhasemphasized   that [t]hedrafters[oftheUCC],recognizingthatcertaincourtsfollowedthe l  Blasingamerationale,insertedtheCommentstoclarifytheirposition.The 8` languageofatypeisthepartofthedefinitionthatallowscloselyheldstocktofall , withinitsparameters.) #  8      ׀    Whilenotcontrollingauthority,theOfficialCommentstotheUCCprovide h guidanceinconstruingstatutorylanguageandofferassistanceindiscerningthe 4!\ intentofthelegislatureinadoptingthestatutoryscheme.SeeSmithv.FirstUnion #( NatlBankofTennessee,958S.W.2d113,116(Tenn.Ct.App.1997).This $ CourthaslookedtotheOfficialCommentswheninterpretingthemeaningof &  certainUCCprovisions.SeeLanev.Doe,767S.W.2d138,140(Tenn.1989); d(" ContinentalBankersLifeIns.Co.oftheSouthv.BankofAlamo,578S.W.2d625, 0*X $ 630(Tenn.1979);InternationalHarvesterCompanyv.Carr,466S.W.2d207,209 +$"& (Tenn.1971). Moreover,Tenn.CodeAnn.471102(1)(1996Repl.)directs -#( that [i]nanydisputeastotheproperconstructionofoneormoresections[ofthe /%* UCC],theOfficialComments...shallconstituteevidenceofthepurposesand l1', policiesunderlyingsuchsections....Accordingly,wewillrefertotheOfficial   Commentsinthiscaseaspersuasiveauthorityindiscerninglegislativeintent.- #  9           Interestingly,whentheGeneralAssemblyadoptedthe1977versionofthe <d UCCin1986,theofficialAnnotatedCode#~  #  10      ׀didnotincludethedrafterscomments 0 quotedabove.%  #  11      ׀TheOfficialCommentsdidnotappearintheofficialstatutory   compilationuntilthe1992Replacementvolume,representingtheCodethat   governsthetransactionsthatarethesubjectofthissuit.Whenasked,the l  TennesseeCodeCommissioncouldnotprovideanexplanationastowhythe 8` commentswereomittedfromthe1986compilation,'  #  12      ׀andwedonotviewtheir , omissionasbeingindicativeoflegislativeintent.Atleastonecourthasheldthat  alegislaturesfailuretoadopttheOfficialCommentstotheUCCdoesnotrender  thecommentsinsignificantininterpretingtheCode.SeeInreAppealof h Copeland,531F.2d1195,1203n.4(3dCir. 1976). 4!\  TheGeneralAssemblysintentconcerningcloselyheldstockwasclarified $ later,in1995,whenitamendedthedefinitionsofbothcertificatedsecuritiesand   uncertificatedsecuritiestoincludelanguagethatencompassedthestockof   closelyheldcorporations.! #  13      ׀Althoughthe1995amendmentsarenotapplicableto p  thefactsintheinstantcase,weattachsignificancetothecommentssurrounding <d thechangesbecausetheyprovideguidanceastotheintentofthelegislaturein 0 adoptingthe1977versionoftheCode.Inenactingthe1995amendments,the   GeneralAssemblystatedthat   8 [t]heprovisionsofthisactareintendedtobeaclarificationof Rz  existinglawwithrespecttothedefinitionofasecurityunderArticle 8` 8oftheTennesseeUniformCommercialCode,particularlyinthe F contextofperfectionofasecurityinterestinstockorother , investmentinstrumentsbypossessionoftheinstrument.Theintent  istoremoveanyuncertaintycreatedbylanguageoftheTennessee  SupremeCourtinthecase,Blasingamev.AmericanMaterials,Inc.,  654S.W.2d659(Tenn.1983)."<  #  14      ׀ ! ! r TheGeneralAssemblyapparentlysoughttoputanendtothe uncertainty N v createdbytheBlasingamedecisionbyexpresslyincludingthestockofclosely "B heldcorporationsinthedefinitionofasecurity.Becausethe1995amendments # were intendedtobeaclarificationofexistinglaw,,  #  15      ׀itisclearthattheprevious % versionoftheUCCtheversionthatgovernsthiscasewasalsointendedto   encompasscloselyheldstock.& #  16      ׀ItfollowsthattheholdinginBlasingamecannot   bereconciledwitheitherthe1977versionoftheUniformCommercialCodenor p  withthesubsequentversions,includingtheonecurrentlyineffect.*D #  17      ׀ <d  AlthoughthecurrentversionoftheUCCisnotcontrollinginthiscase,we   finditsignificanttonotethatin1997theGeneralAssembly,actingtodelineate   rulesfordeterminingwhetheraninterestisasecurityormerelyafinancialasset, l  streamlinedthedefinitionof securityfoundatTenn.CodeAnn.478102(15) 8` (Supp.1998)andenactedTenn.CodeAnn.478103(Supp.1998),which , providesthat [a]shareorsimilarequityinterestissuedbyacorporation,business  trust,jointstockcompany,orsimilarentityisasecurity.F  #  18      ׀IntheCommentstothe  OfficialText,thedraftersexplainthattheprovision establishesanunconditional h rulethatordinarycorporatestockisasecurity.Thatissowhetherornotthe 4!\ particularissueisdealtinortradedorsecuritiesexchangesorinsecurities #(  exchanges[sic]orinsecuritiesmarkets.Thus,sharesofcloselyheld[sic]are $ Article8securities.+ #  19      ׀   8      @          Webelievethatbyadoptingthe1977versionoftheUCCtheGeneral t  Assemblysignaleditsintentthatthestockincloselyheldcorporationsmeetthe @h definitionof securityundertheUCC.Thisintentwasclarifiedbythelegislatures  4 amendmentstotheCodein1995and1997andbytheaccompanyingcomments.   Accordingly,weholdthatthestockofcloselyheldcorporationsisasecuritywithin   themeaningofTenn.CodeAnn.478102(Supp.1998).Becausethis p  conclusioncannotbereconciledwithourholdinginBlasingame,thatcaseis <d overruledtotheextentthatitstandsforthepropositionthatcloselyheldstockis 0 notasecuritywithinthemeaningoftheUCC./  #  20      ׀     D.OtherJurisdictions x  @ # OurholdingbringsTennesseewithinthemajorityofstatesthathave (#P addressedthisissueandhaveconcludedthatthestockofacloselyheld $ corporationisa securityundertheUCC.. #  21      ׀SeeGiuffreOrg.,Ltd.v. &  EuromotorsportRacing,Inc.,141F.3d1216,1218(7thCir.1998);Inre (" Hryniewicz,222B.R.at18;InreTurley,213B.R.857,861(Bankr.C.D.Cal.   1997)(holdingthatcloselyheldstockisasecurityunderChapter8ofCalifornias   UCC)(revdonothergrounds,172F.3d671,675(9thCir.1999)(reversingon p  othergroundsbutalsofindingthatcloselyheldstockisasecurityforUCC <d purposes);Haughtv.LanteCorp.,1991WL148198,at*23;Medesco,Inc.v. 0 LNSIntl,Inc.,762F.Supp.at923;InreDomesticFuelCorp.,70B.R.at462;In   reSandefer,47B.R.133,138(Bankr.N.D.Ala.1985);DataConsultants,Inc.v.   Traywick,593F.Supp.447,457(D.Md.1983);Katzv.Abrams,549F.Supp.at l  671;Dionisiv.DeCampli,1991WL1181850,at*3,amendedbyDionisiv. 8` DeCampli,1996WL39680;Allenv.Coates,661So.2dat882;Thompsonv.Kohl, , 453S.E.2dat487;UnitedIndep.Ins.Agencies,Inc.v.BankofHonolulu,718  P.2dat1102;Cambronv.Moyer,519N.W.2d381,383(Iowa1994);Smithv.  Baker,715S.W.2d890,892(Ky.Ct.App.1986);Bahrev.Pearl,595A.2dat h 1035;Schultzv.Schultz,No.40681,1981WL137977,atn.7(Mo.Ct.App.May 4!\ 26,1981),revdonothergrounds,Schultzv.Schultz,637S.W.2d1,7(Mo.1982); #( Stancilv.Stancil,392S.E.2d373,376(N.C.1990);Grossv.Vogel,81A.D.2d $ 576,577(N.Y.App.Div.1981);Domov.BoulderBluffCorp.,No.920T065,1993 &  WL527911,at*2(OhioCt.App.Dec.17,1993);Jennisonv.Jennison,499A.2d d(" 302,304(Pa.Super.Ct.1985);Kenneyv.Porter,604S.W.2dat302;Wamserv. 0*X $ Bamberger,305N.W.2dat162. +$"&  Othercourtshaveindirectlyespousedthemajorityviewbyfindingthat /%* Chapter8oftheUCCappliestotransfersofstockincloselyheldcorporations. `1', SeeBakerv.Gotz,387F.Supp.1381,138990(D.Del.1975)(findingthat ,3T). negotiableinstrumentswereinvestmentsecuritiesunderChapter8theUCC 4 +0 becausetheywere ofatypecommonlydealtinuponsecuritiesexchangesor   markets,irrespectiveofthefactthatthenotesinquestionwereneverpublicly   traded) affdmem.,523F.2d1050(3dCir.1975);J.M.Prod.,Inc.v.Arkansas p  CapitalCorp.,910S.W.2d702,708(Ark.Ct.App.1995)(withoutspecifically Hp addressingtheissue,findingthatcloselyheldstockwasasecurityunderChapter < 8ofArkansassUCC);Kielyv.St.Germain,670P.2d764,769(Colo.1983)   (holdingthatChapter8ofColoradosUCCappliedtothesaleofsharesina   corporationwhoseentirestockwasheldbyoneindividual);Midfeltv.Lair,561 x  P.2d805,812(Kan.1977)(holdingthatthestatuteoffraudsofChapter8of Dl KansassUCCappliestothesaleof50%ofbanksstock);Morrisv.Peoples 8 Bank&TrustCo.,580So.2d1037,104041(La.Ct.App.1991)(findingthat  Chapter8ofLouisianasUCCappliestoanoptioncontractbetweenformerbank  presidentandmajoritystockholderofbanktorepurchasea maximumnumberof t sharesofstockinconnectionwithacontractofemploymentandthatsuchstock @!h isasecuritywithinthemeaningofChapter8);Thomasv.Prewitt,355So.2d657,  #4 65960(Miss.1978)(holdingthatthestatuteoffraudsfoundinChapter8of $ MississippisUCCappliestothesaleofsharesofstockinacorporation &  comprisedofonlytwelveshareholders);Youngv.Young,393S.E.2d398,401 p(" (Va.1990)(analyzingthetransferofcloselyheldstockasatransferofsecurities <*d $ withinthemeaningofChapter8ofVirginiasUCCbutdeterminingthatcommon ,0"& lawrulesforgiftsalsogovernedthetransactionandwerecontrollinginthat -#( instance);Yostv.Haun,512S.E.2d228,231(W.Va.1998)(determiningthat /%* stockpledgedbyJamesC.HauninHaunHoldings,Inc.tohisfatherwasa l1', securityunderChapter8ofWestVirginiasUCC). 83`).  5,+0  OnlyRhodeIslandcurrentlyembracestheminorityviewthatstockof   closelyheldcorporationsisnotasecurityforUCCpurposes.Thisviewisbased   onthebeliefthatcloselyheldstockisnot ofatypecommonlydealtinupon p  securitiesexchangesandthatthereisnoreadymarketfortheshares.See <d Kottisv.Cerilli,612A.2d661,667(R.I.1992);RhodeIslandHosp.V.Collin,368 0 A.2d1225,1227(R.I.1977).; #  22      ׀  8      @      H!     Ourformaladoptionofthemajorityrulenotonlyclarifiesanareaof x  commerciallawthathadbeenmarkedbysomeconfusioninTennessee,butit Dl alsopromulgatesthepoliciesandgoalsunderlyingtheUCC.OneoftheUCCs 8 mainpurposesis tomakeuniformthelawamongthevariousjurisdictions.See  Tenn.CodeAnn.471102(2)(c)(1996Repl.).BecauseChapter8oftheUCC  hasbeenadoptedbyallfiftystates,8L #  23      ׀itisimportantthatTennesseeconstrueits t provisionsinaccordancewiththegrowingnumberofstatesaddressingthisissue. @!h Thisuniformityamongjurisdictionswillfacilitatepredictabilityandeasein  #4 interstatetransactions.   8      @  $    0      8     E.ApplicationoftheStatuteofFrauds T*| $  HavingdeterminedthatChapter8oftheUCCgovernsthiscase,wenow .,$( addressthedefendantscontentionthattheallegedagreementbetweenthe   partiesdoesnotsatisfytheapplicablestatuteoffrauds,foundatTenn.CodeAnn.   478319(1992Repl.&1996Repl.),: #  24      ׀becausenosignedwritingmemorializes p  itsexistence.TheplaintiffarguesthatTenn.CodeAnn.478319(1992Repl.& <d 1996Repl.)doesnotrendertheallegedagreementunenforceablebecausethe 0 agreementstermswerereducedtoasignedwritingand,alternatively,oneofthe   statutoryexceptionsappliestoprovetheexistenceoftheagreement.We   disagreewithbothcontentions. l   ThestatuteoffraudsgoverningChapter8transactionsprovides,inrelevant , part:  8 Acontractforthesaleofsecuritiesisnotenforceablebywayof h actionordefenseunless:(a)thereissomewritingsignedbythe N v partyagainstwhomenforcementissoughtorbyhisauthorized 4!\ agentorbrokersufficienttoindicatethatacontracthasbeenmade "B forsaleofastatedquantityofdescribedsecuritiesatadefinedor #( statedprice...# ! ! zTenn.CodeAnn.478319(1992Repl.&1996Repl.). &  Ѐ  d("  Theplaintiffinsiststhatampleproofexists,inavarietyofforms,toshow 0*X $ thatanagreementexistedwherebyhewastoreceive,ascompensationforthe +$"& financialconsultingserviceshehadrendered,eightypercentofthestockin -#( MacTennandeightypercentofthatinMSI.Asexamplesofthisproof,the /%* plaintiffrecallscommentsbythedefendantacknowledgingsuchanagreement   andassertsthathehasseendocumentssignedbythedefendantevidencingan   agreement.However,throughoutthislitigationtheplaintiffhasfailedtoproduce p  asinglewriting,signedbythedefendant,contemplatingoreffectuatingthe <d transferofthestockinquestion.Withoutsuchawriting,therequirementsof 0 Tenn.CodeAnn.478319(1992Repl.&1996Repl.)aresimplynotsatisfied.    IncompliancewiththeplaintiffsandattorneyGertzsinstructionsto l  prepareaseriesofdocumentsthatwouldfacilitatethecreationofthenew 8` corporations,thedefendantdiddraftanumberofdocuments,includingproposed , agreementstransferring80,000sharesofMSIstockand80,000ofMacTenn  stockfromthedefendanttotheplaintiff.Howeverthedefendant,apparentlywary  oftheplaintiffsmotivationsconcerningthetransaction,andunderthebeliefthat h thedocumentswerepartofamerecontingencyplan,didnotsignthecontracts, 4!\ butturnedthemovertotheplaintiffwithouthissignature.Inthesamemanner, #( whentheplaintiffandMr.Gertzrequestedstockcertificatesrepresentingcertain $ sharesofMSIandMacTenn,thedefendantprovidedonlycopiesofthe &  certificatesandhidtheoriginals. d("  Theevidenceintherecordrevealsthatthedealingsbetweentheparties +$"& wereunusual,tingedwithdistrustandperhapsunethicalmotivations.Anexample -#( ofthissuspicionsurroundsthe contingencyplan,completewithdocuments /%* backdatedsixmonths.Whilewedonotendorsethemannerinwhichthese `1', partieschosetotransacttheiraffairs,thefactremainsthattherecordcontainsno ,3T). writing,signedbythedefendant,thatevidencesanagreementforthetransferof 4 +0 stocks,asrequiredbyTenn.CodeAnn.478310(1992Repl.&1996Repl.).    Theplaintiffnextarguesthatevenifnosignedwritingsatisfiesthestatute p  offraudsfoundinChapter8,theallegedagreementtotransferstockis <d enforceablenonethelessbecauseoneofthestatutesexceptionstothewriting 0 requirementappliesinthiscase.Theplaintiffdirectsustothefollowingexception:   8 Acontractforthesaleofsecuritiesisnotenforceablebywayof   actionordefenseunless:l  ! ! ̀*** 8` 8 thepartyagainstwhomenforcementissoughtadmitsinhis , pleading,testimonyorotherwiseincourtthatacontractwas  madeforsaleofastatedquantityofdescribedsecuritiesata  definedorstatedprice. ! ! } Tenn.CodeAnn.478319(d)(1992Repl.&1996Repl.). h   Theplaintiffinsiststhatthisexceptionissatisfiedbecausethedefendant,in #( adepositioninconnectionwithanunrelatedcase,0 #  25      ׀testifiedthatheownedtwenty $ percentofthestockinMSIandthattheplaintiffownedtheremainingeighty &  percent.Whenaskedaboutthistestimonyduringthetrialinthiscase,the d(" defendantassertedthateventhoughhehadnotsignedthedocumentsthatwould 0*X $ havetransferredthestocksinquestion,hewasundertheimpressionthatthe +$"& contingencythedocumentswerecreatedtoaddresswasimminent,andthatthe -#( stockswouldbetransferredassoonashesignedthedocuments.Becausethe /%* documentswerebackdated,hefeltthathewas speakingforthefuturewhile `1', testifyinginthepreviouslitigation,andsohereferredtoeightypercentofthestock ,3T). asbelongingtotheplaintiff.Thedefendantnowinsiststhatheneversignedthe   documents,afterall,andthathisprevioustestimonydoesnotevidencean   enforceableagreementbetweenthepartieswithinthemeaningofthestatutory p  exception. <d  Afterconsideringtheplaintiffscontention,wehavedeterminedthatthe   exceptionfoundatTenn.CodeAnn.478319(1992Repl.&1996Repl.)isnot   satisfied.Theexceptionrequiresthatthepartyagainstwhomthewritingistobe l  enforcedadmit,inpleadingsorotherwiseincourt,theexistenceofacontract 8`  madeforsaleofastatedquantityofdescribedsecuritiesatadefinedorstated , price.1 #  26      ׀Asthedefendantpointsout,hisdepositiontestimonyinunrelated  litigationmerelyacknowledged(incorrectly,ashecontends)thattheplaintiffwas  theownerofeightypercentofMSI,butdoesnotadmittheexistenceofacontract h foraspecifiednumberofshares,nordoesitdiscussaprice. 4!\  WehavefoundnoTennesseecasesdefiningthelanguage, acontractwas $  madeforsaleofastatedquantityofdescribedsecuritiesatadefinedorstated &  price,withinthemeaningofthisexception.> #  27      ׀Howeverwehavedeterminedthat    thedefendantsadmissiondoesnotsatisfythesespecificdemands.Thestatute   offraudsrequirementsaredesignedtoensurethatsomeconducthasoccurred p  thatguaranteesthatanagreementhasbeenreachedthatspecifiesthequantity <d andpriceofthesecuritytobetransferred.Suchconductincludessigninga 0 writingevidencingtheagreement,3p  #  28      ׀deliveringthesecurity,4 #  29      ׀orconfirming,in   writing,thetransferofthesecurity.5| #  30      ׀Thejudicialadmissionsexception shouldbe   appliedonlyinsituationswhereitconstitutesabadgeofcredibilitycomparablein l  strengthtotheotherbadgesofcredibilityidentifiedbythe[statuteoffrauds].6 #  31      ׀ 8`  Nobadgeofcredibilityindicatesthatthepartiesinthiscaseformeda  legallybindingcontract.Despitethedefendantsstatementduringdeposition,in  anunrelatedcase,thattheplaintiffwasownerofeightypercentofMSIsstock, h theplaintiffnevertookorattemptedtotakecontrolofMSIandnooriginalstock 4!\ certificatesevidencingatransferweredelivered.Whilethedefendants   statementandexplanationofthatstatementarecertainlyunusual,the admission   simplydidnotacknowledgethatasalecontracthadbeenreachedfor astated p  quantityofdescribedsecuritiesatadefinedorstatedprice.   H!  #  <d   Theintermediatecourtagreedwiththetrialcourtthattherecordcontains   ampleevidencetoprovethatthepartiesreachedanoralagreementforthesaleof   stock. Wedisagree.Aswehavealreadymadeclear,asidefromthelackofa l  signedwritingevidencinganagreement,thepartiesactionsdonotindicatethata Dl contracthadbeenformed.Theplaintiffneverexercisedorattemptedtoexercise 8 anycontrollinginterestinMSIand/orMacTenn. Nocertificatesevidencinga  transferweredelivered.Infact,afterexchangingaseriesoflettersthateach  partyconcedesdidnotripenintoanagreement,thepartiespartedways.       @ CONCLUSION  0#X  Insum,weholdthatcloselyheldstockisasecuritywithinthemeaningof &  theUCCsChapter8,andthatthecloselyheldstockatissueinthiscaseis (" governedbyChapter8.Becausetheplaintiffcannotproduceasignedwriting l* $ thatcomportswiththestatuteoffraudsfoundatTenn.CodeAnn.478319 8,`"& (1992Repl.&1996Repl.),norcanhesatisfyoneofthestatutoryexemptions,we .,$( reversethejudgmentsofthelowercourtsanddismissthiscause.Costsofthis /%* appealtaxedagainsttheplaintiff,StephenA.Wakefield,forwhichexecutionmay 1', issueifnecessary. h3).  45\+0    0      8      @  0 00 $ $00 $0 $0$$ 8  ` Ѐ Fn ______________________________________,T$$   0     FRANKF.DROWOTA,III, :    0     JUSTICE    =ւXXdXXd=Concur:    Anderson,C.J.     8      @      Birch,Barker,JJ,Byers,Sp.J. 8