text:
    WYLIE STEEL FABRICATORS, INC. v. Ruth E. JOHNSON, Commissioner of Revenue for the State of Tennessee.
    Court of Appeals of Tennessee, Western Section, at Nashville.
    March 1, 2005 Session.
    April 28, 2005.
    Application for Permission to Appeal Denied by Supreme Court Oct. 24, 2005.

      Gerald B. Kirksey, Timothy H. Nichols, Brentwood, TN, for Appellant.
    Paul G. Summers, Attorney General and Reporter, Wyla M. Posey, Assistant Attorney General, Nashville, TN, for Appellee.
   OPINION

ALAN E. HIGHERS, J.,

delivered the opinion of the court,

in which W. FRANK CRAWFORD, P.J„ W.S., and HERSCHEL P. FRANKS, P.J., joined.

This appeal involves a sales and use tax assessment issued by the Tennessee Department of Revenue against a taxpayer engaged in the business of fabricating steel products for use in various structures. The taxpayer obtained purchase orders from three churches for raw materials to be used in the fabrication of steel products which were to be incorporated into the churches then under construction. The taxpayer secured the raw materials, fabricated the steel products, and installed them in the churches. The taxpayer did not pay sales or use tax on any of the raw materials used in the fabrication process. The department subsequently audited the taxpayer and assessed a tax liability for taxes owed on the materials. The taxpayer paid the amount assessed and filed suit in the chancery court to contest the assessment. Specifically, the taxpayer asserted that it was entitled to an exemption under section 67-6-209(b) of the Tennessee Code. After both parties filed cross-motions for summary judgment, the chancery court granted the department’s motion and denied the taxpayer’s motion. We affirm in part, reverse in part, and remand this case to the trial court for further proceedings consistent with this opinion.

I.

Factual Background and Procedural History

Wylie Steel Fabricators, Inc. (“Wylie Steel” or “Appellant”) is a Tennessee Corporation engaged in the business of fabricating steel products for use in various structures. Wylie Steel’s principal business office is located in Brentwood, Tennessee, and its primary fabrication facility is located in Springfield, Tennessee. In order to fabricate steel products, Wylie Steel purchases raw materials from suppliers in Tennessee and other states. Ordinarily, Wylie Steel contracts with the general contractor at a particular construction project to fabricate and install the steel products to be used in the construction process. Wylie Steel does not utilize its own employees to install the steel products it fabricates but, instead, subcontracts with another company to carry out the installation process. Occasionally, Wylie Steel will sell some of the products it fabricates to other persons or businesses without installing the items. When Wylie Steel purchases raw materials from its suppliers, it does not pay sales tax at the time of purchase. Instead, Wylie Steel provides its suppliers with a resale certificate.

At issue in this case are three church construction projects undertaken in Tennessee for which Wylie Steel fabricated and installed the necessary steel products. For each church project, the church issued a purchase order to Wylie Steel for the raw materials to be utilized in fabricating the steel products necessary for each construction project. The purchase orders did not contain a specific quantity of materials, but they merely expressed an approximate cost of securing such materials. After securing the raw materials, Wylie Steel contracted with the general contractor for each church project to fabricate, deliver, and install the fabricated steel products. The amount to be paid to Wylie Steel under each subcontract represented Wylie Steel’s cost for securing the raw materials and fabricating them, as well as its overhead and profit.

On its Tennessee sales and use tax return, Wylie Steel claimed, as exempt sales, the cost of the raw materials it used- to fabricate the steel products installed in the churches. In 2000, the Tennessee Department of Revenue (“Department”) audited Wylie Steel for the period between December 1, 1996, through December 31, 1999. During the audit, the Department used a “test period” audit method and examined sample periods which included the three church projects. Wylie Steel signed an audit procedure agreement expressing its agreement with the audit procedure used, but it wrote the following at the bottom of the document: ‘WSF reserves the right to demonstrate actual volume of certain transaction types occurring during the audit periods selected above.”

The Department identified the three church projects as having taxable sales and/or uses for which Wylie Steel did not pay taxes. The Department asserted that Wylie Steel could not claim the cost of the raw materials for each church as exempt. As a result, the Department issued a sales and use tax assessment against Wylie Steel in the amount of $201,720.00 for taxes owed and $47,194.62 in interest. Of the $201,720.00 in taxes assessed, $52,158.00 represented unpaid sales tax on materials purchased by Wylie Steel from out-of-state suppliers or from Tennessee suppliers by presenting a resale certificate which Wylie Steel later fabricated and installed on non-church projects. Wylie Steel did not challenge this portion of the assessment. The remainder, $149,562.00, represented tax allegedly owed by Wylie Steel on the purchase and use of materials it installed for tax exempt entities. Wylie Steel contested this portion of the assessment.

In March of 2001, Wylie Steel met informally with the Department to discuss the tax assessment. The Department’s Administrative Hearing Officer subsequently informed Wylie Steel that the Department correctly assessed the tax liability. On July 27, 2001, Wylie Steel sent a check to the Department in the amount of $274,980.00 for payment in full of the tax assessment. The Department received the payment on July 30, 2001, and applied the payment to Wylie Steel’s account. As of that date, $54,304.73 in interest had accrued on the challenged portion of the assessment, and $18,468.57 in interest had accrued on the unchallenged portion of the assessment. Thus, as of July 30, 2001, the total amount due was $274,493.30. Having overpaid by $486.70, the Department credited Wylie Steel’s account in this amount.

On January 25, 2002, Wylie Steel filed a complaint in the Chancery Court of Davidson County against the Commissioner of Revenue (“Commissioner”), pursuant to section 67-1-1801 et seq. of the Tennessee Code, to challenge the Department’s tax assessment. Specifically, Wylie Steel alleged that it was entitled to the tax exemption found in section 67 — 6—209(b) of the Tennessee Code. In the alternative, Wylie Steel sought a refund of the tax it paid arguing that, as a result of the audit method utilized by the Department, it was required to make an overpayment in taxes.

The parties subsequently filed cross-motions for summary judgment. The trial court conducted a hearing on the motions on September 4, 2003, and entered a Final Judgment on September 30, 2003, granting the Department’s motion and denying Wylie Steel’s motion. In entering its judgment in this case, the trial court made the following findings:

Wylie Steel contends that it is entitled to a refund of taxes paid in the amount of $203,866.73 and that the refund claimed includes $159,744.55 regarding the taxes assessed on the materials used to construct the churches involved, and $44,172.18 in an asserted over-assessment on those materials by the Commissioner of Revenue. Wylie Steel contends that it is exempt from the sales and use taxes assessed in this case under Tenn.Code Ann. § 67-6-209(b). The Commissioner contends that Wylie Steel is not entitled to the contractor’s use tax exemption stated in Tenn.Code Ann. § 67-6-209(b) since Wylie Steel either purchased or used all of the materials at issue in Tennessee, that none of the churches involved purchased any of the materials at issue, and that Wylie Steel could not, by law, resell and transfer title to any of those materials to those churches as tangible personal property since Wylie Steel contracted to install those materials as a part of realty. The Commissioner also contends that the Tennessee Code contains an explicit codification of this legal concept in Tenn.Code Ann. § 67-6-209(c) which clearly states that any transfer by Wylie Steel of materials that [sic] installs as part of realty cannot be considered a sale of tangible personal property for sales and use tax purposes. All of the materials involved in this case fit in this category.
Upon consideration of the entire record including the complaint, answer, motions for summary judgment by both parties and memoranda in support thereof, responses and replies of both parties, affidavits, material fact statements, and the parties’ joint stipulations of fact, the Court concludes that the Commissioner of Revenue properly assessed sales and use tax upon Wylie Steel’s purchase or use of all the disputed items in this case and that Wylie Steel does not qualify for any exemption from the tax assessed. The Court finds that the churches involved did not have title to the tangible personal property involved prior to its installation as realty- Wylie Steel purchased all of that property, the materials at issue, and then later transferred those materials to the churches in the form of realty by installing them as part of a building. Thus, the materials were not transferred to the churches as tangible personal property. Such a transfer cannot, by law, be considered a sale or resale of tangible personal property since those materials are not transferred as tangible personal property, but rather as realty. Such a transfer also cannot, by law, be considered a sale or resale of those materials since Tenn.Code Ann. § 67-6-209(c) explicitly codifies this principle of law and states that any such transfer does not constitute a sale under Tennessee sales and use tax law. Therefore, Wylie Steel is not entitled to the exemption it seeks under Tenn.Code Ann. § 67 — 6—209(b) since by law it could not sell, and thus transfer title, to the materials to the churches at issue in the form of tangible personal property.
The Plaintiff is also not entitled to any refund of the amount that it claims to be an over-assessment by the Commissioner. The Plaintiff claims that this over-assessment amount exists even if the Commissioner’s legal arguments regarding Tenn.Code Ann. § 67-6-209(b) are held to be correct. The Plaintiff is not entitled to a refund for the claimed over-assessment because Wylie Steel entered into an audit procedure agreement with the State of Tennessee and it was under an obligation to bring all of its information with respect to that audit period forward at that time during the audit. In that agreement, Wylie Steel agreed to the audit sampling procedure used by the Commissioner and agreed that the sample periods selected were representative of all transactions occurring throughout the entire audit period. Thus, as a matter of law, Wylie Steel could not wait until litigation and claim that it was over-assessed by asserting that a different audit method should be used to calculate the amount of tax due. The Court finds that the audit procedure agreement is a valid and binding agreement and that Wylie Steel is precluded from asserting that a different audit method from the one to which it agreed in the audit procedure agreement should be used to calculate the amount of the tax due in this case.

Wylie Steel subsequently filed an appeal to this Court. While neither party frames the issues to be resolved in this case in terms of a review of the trial court’s grant of summary judgment, we are mindful that our primary task on appeal is to ascertain whether the trial court properly granted summary judgment to the Appellee in this case. To answer that question, we will need to consider the following issues, as we perceive them, raised by the Appellant on appeal:

I. Whether the Appellant is entitled to the tax exemption found in section 67-6-209(b) of the Tennessee Code;
II. Whether section 67-6-209(c) of the Tennessee Code negates the tax exemption in section 67-6-209(b) of the Tennessee Code; and
III. Whether the Appellant is entitled to illustrate the actual volume of certain types of transactions to demonstrate that the Appellee’s “test period” audit method resulted in an over-assessment in tax liability to the Appellant.

For the reasons set forth more fully herein, we affirm in part, reverse in part, and remand this case to the trial court with instructions to conduct further proceedings consistent with this opinion.

II.

STANDARD OF REVIEW

In assessing the correctness of the trial court’s grant of summary judgment in this case, we employ the following standard of review:

“Our review of a trial court’s award of summary judgment is de novo with no presumption of correctness, the trial court’s decisions being purely a question of law.” Scott v. Ashland Healthcare Ctr., Inc., 49 S.W.3d 281, 285 (Tenn.2001) (citing Mooney v. Sneed, 30 S.W.3d 304, 306 (Tenn.2000)). Summary judgment is appropriate where there is no genuine issue of material fact relevant to the claim or defense and where the movant is entitled to judgment as a matter of law on the undisputed facts. See Tenn. R. Civ. P. 56.03; Bain v. Wells, 936 S.W.2d 618, 622 (Tenn.1997); Carvell v. Bottoms, 900 S.W.2d 23, 26 (Tenn.1995).

BellSouth Adver. & Publ’g Co. v. Johnson, 100 S.W.3d 202, 205 (Tenn.2003).

In interpreting and applying the pertinent statutory language to the facts in this case, we are guided by the following principles:

Issues of statutory construction are questions of law that this Court reviews de novo without any presumption of correctness. Bryant v. Genco Stamping & Mfg. Co., 33 S.W.3d 761, 765 (Tenn.2000); Freeman v. Marco Transp. Co., 27 S.W.3d 909, 911 (Tenn.2000).
Our duty in construing statutes is to ascertain and give effect to the intention and purpose of the legislature. See Lipscomb v. Doe, 32 S.W.3d 840, 844 (Tenn.2000); Freeman, 27 S.W.3d at 911. “ ‘Legislative intent is to be ascertained whenever possible from the natural and ordinary meaning of the language used, without forced or subtle construction that would limit or extend the meaning of the language.’ ” Lipscomb, 32 S.W.3d at 844 (quoting Hawks v. City of Westmoreland, 960 S.W.2d 10, 16 (Tenn.1997)).
When the statutory language is clear and unambiguous, we must apply its plain meaning in its normal and accepted use, without a forced interpretation that would limit or expand the statute’s application. See id.; Carson Creek Vacation Resorts, Inc. v. State Dep’t of Revenue, 865 S.W.2d 1, 2 (Tenn.1993). Where an ambiguity exists, we must look to the entire statutory scheme and elsewhere to ascertain the legislative intent and purpose. State v. Walls, 62 S.W.3d 119, 121 (Tenn.2001); Freeman, 27 S.W.3d at 911. The statute must be construed in its entirety, and it should be assumed that the legislature used each word purposely and that those words convey some intent and have a meaning and a purpose. Tennessee Growers, Inc. v. King, 682 S.W.2d 203, 205 (Tenn.1984). The background, purpose, and general circumstances under which words are used in a statute must be considered, and it is improper to take a word or a few words from its context and, -with them isolated, attempt to determine their meaning. First Nat’l Bank of Memphis v. McCanless, 186 Tenn. 1, 207 S.W.2d 1007, 1009-10 (Tenn.1948).
In addition to general principles of statutory construction, we must also consider the rules of construction specifically applicable to tax statutes. Statutes imposing a tax are to be construed strictly against the taxing authority. See Covington Pike Toyota, Inc. v. Cardwell, 829 S.W.2d 132, 135 (Tenn.1992). However, statutes granting exemptions from taxation are construed strictly against the taxpayer. Tibbals Flooring Co. v. Huddleston, 891 S.W.2d 196, 198 (Tenn.1994); Covington Pike Toyota, 829 S.W.2d at 135.

Eastman Chem. Co. v. Johnson, 151 S.W.3d 503, 506-07 (Tenn.2004).

III.

Law and Analysis

A.

Sales and Use Tax Assessed

The Tennessee Retailers’ Sales Tax Act (“the Act”), codified at section 67-6-101 et seq. of the Tennessee Code, governs the imposition of sales and use taxes in this state. The Act provides, in relevant part, as follows:

Taxable privilege declared. — It is declared to be the legislative intent that every person is exercising a taxable privilege who:
(1) Engages in the business of selling tangible personal property at retail in this state;
(2) Uses or consumes in this state any item or article of tangible personal property as defined in this chapter, irrespective of the ownership thereof or any tax immunity which may be enjoyed by the owner thereof....

Tenn.Code Ann. § 67-6-201 (2003). “ ‘Tangible personal property’ means and includes personal property, which may be seen, weighed, measured, felt, or touched, or is in any other manner perceptible to the senses.... ” Tenn.Code Ann. § 67-6-102(a)(31) (2003). “The commissioner shall administer and enforce the assessment and collection of the taxes and penalties imposed by this chapter.” TenmCode Ann. § 67-6-401 (2003). “The commissioner has the power to make and publish reasonable rules and regulations not inconsistent with this chapter or the other laws, or the constitution of this state or the United States, for the enforcement of the provisions of this chapter and the collection of revenues hereunder.” Tenn.Code Ann. § 67-6-402(a) (2003).

The Act imposes a sales tax on the sale of tangible personal property in this state, providing:

For the exercise of the privilege of engaging in the business of selling tangible personal property at retail in this state, a tax is levied on the sales price of each item or article of tangible personal property when sold at retail in this state; the tax is to be computed on gross sales for the purpose of remitting the amount of tax due the state and is to include each and every retail sale.

Tenn.Code Ann. § 67-6-202(a) (2003); see also Colemill Enters., Inc. v. Huddleston, 967 S.W.2d 753, 756 (Tenn.1998). The Act defines a “retail sale,” in relevant part, as follows:

“Retail sales” or “sale at retail” means a taxable sale of tangible personal property or specifically taxable services to a consumer or to any person for any purpose other than for resale. ... Any sales for resale must, however, be in strict compliance with rules and regulations promulgated by the commissioner.

Tenn.Code Ann. § 67-6-102(a)(25)(A) (2003) (emphasis added). The Act defines a “sale” as follows:

“Sale” means any transfer of title or possession, or both, exchange, barter, lease or rental, conditional, or otherwise, in any manner or by any means whatsoever of tangible personal property for a consideration, and includes the fabrication of tangible personal property for consumers who furnish, either directly or indirectly, the materials used in fabrication work, and the furnishing, repairing or serving for a consideration of any tangible personal property consumed on the premises of the person furnishing, preparing or serving such tangible personal property!.]

Tenn.Code Ann. § 67-6-102(a)(27)(A) (2003).

Thus, the Act excludes from the definition of retail sale a sale made to a taxpayer for resale. Sec. Fire Prot. Co., Inc. v. Huddleston, 138 S.W.3d 829, 837 (Tenn.Ct.App.2003). However, sales for resale must strictly comply with the rules and regulations established by the Commissioner. Tenn.Code Ann. § 67-6-102(a)(25)(A) (2003). Under the rules promulgated by the Department, it is permissible for a contractor-dealer to avoid paying tax at the time of purchasing materials by providing the supplier a resale certificate. The rule, commonly referred to as “Rule 8,” provides:

(1) Contractors and sub-contractors engaged in the business of erecting, building or otherwise improving, altering and repairing real property of others, and also engaged in the business of selling building materials and supplies to other contractors, consumers, and users, and who may not be able to segregate that portion of the materials and supplies that they will use or consume in the fulfillment of their contracts from that portion of the materials and supplies that they will sell at retail, may give a resale certificate to the seller of the materials and supplies.
(2) Contractor-dealers making sales of tangible personal property shall report all sales made, and all withdrawals from inventory for use as a contractor each month, and pay any applicable Sales or Use Tax due. Any withdrawal from inventory for use as a contractor shall be reported and the tax due thereon shall be paid with the return for the location of the inventory, regardless of the place of use, either in or out of the state.
(3) Suppliers making sales of materials and supplies to contractor-dealers and delivering such materials and supplies to a job site for use, or tagging or marking particular materials and supplies for a particular job being performed by the contractor-dealer, shall collect the applicable Sales or Use Tax on those sales.

Tenn. Comp. R. & Regs. 1320-5-1-.08 (2000). Rule 8 permits a contractor-dealer to purchase materials under a certificate of resale when it cannot know, at the time of purchasing those materials, whether it will resell the materials or use them in the performance of a contract. See Sec. Fire Prot. Co., 138 S.W.3d at 838-39. Therefore, had Wylie Steel not presented a resale certificate when it purchased the raw materials in Tennessee it subsequently incorporated into the steel products for the churches, it would have been required to pay sales tax at the time of purchasing those materials. See id. at 838 (citing NASCO, Inc. v. Jackson, 748 S.W.2d 193, 195 (Tenn.1998)); see also Tenn. Comp. R. & Regs. 1320-5-1-68(2) (2000) (“All sales for resale which are not supported by resale certificates properly executed shall.be deemed retail sales, and the dealer held liable for the tax....”).

The Act also imposes a use tax on the use of tangible personal property in this state, providing:

A tax is levied at the rate of the tax levied on the sale of tangible personal property at retail by the provisions of § 67-6-202 of the cost price of each item or article of tangible personal property when the same is not sold but is used, consumed, distributed, or stored for use or consumption in this state; provided, that there shall be no duplication of the tax.

Tenn.Code Ann. § 67-6-203(a) (2003); see also BellSouth Adver. & Publ’g Co. v. Johnson, 100 S.W.3d 202, 205 (Tenn.2003). “ 'Use tax’ includes the ‘use,’ ‘consumption,’ ‘distribution,’ and ‘storage’ ” of tangible personal property. Tenn.Code Ann. § 67-6-102(a)(34) (2003). The legislature has defined “use” as follows:

“Use” means and includes the exercise of any right or power over tangible personal property incident to the ownership thereof, except that it does not include the sale at retail of that property in the regular course of business[.]

Tenn.Code Ann. § 67-6-102(a)(33(A) (2003).

The primary function of the use tax is to prevent the evasion of sales tax under the Act by a person purchasing tangible personal property outside of Tennessee for use -within this state. Young Sales Corp. v. Benson, 224 Tenn. 88, 450 S.W.2d 574, 576 (1970); Sec. Fire Prot. Co., 138 S.W.3d at 841. The legislature intended the use tax to operate as a complement, not supplement, to the sales tax. Young Sales Corp., 450 S.W.2d at 576. We have previously described the interplay between the sales and use taxes, stating:

[T]he use tax levies a tax on property purchased out of Tennessee but used in this state where such property would have been subject to sales tax had it been purchased in Tennessee. Young Sales, 450 S.W.2d at 576.... As a result, taxpayers who import property for use in Tennessee pay the same amount in taxes as they would have paid had they purchased the property in Tennessee. The sales and use taxes, therefore, complement each other to impose a uniform amount of tax on property purchased in Tennessee and property purchased out-of-state but used in Tennessee. Id. The use tax thereby puts Tennessee vendors on parity with out-of-state vendors who sell property for use in this state. Id.

Sec. Fire Prot. Co., 138 S.W.3d at 841; see also BellSouth Adver. & Publ’g Co., 100 S.W.3d at 206.

It is undisputed that Wylie Steel did not pay sales or use taxes on the purchase or use of the raw materials used to fabricate the steel products installed in the three churches at issue. In this case, we are called upon primarily to interpret and apply a specific provision of the Act which provides as follows:

(b) Where a contractor or subcontractor defined in this chapter as a dealer uses tangible personal property in the performance of the contract, or to fulfill contract or subcontract obligations, whether the title to such property be in the contractor, subcontractor, eontrac-tee, subcontractee, or any other person, or whether the title holder of such property would be subject to pay the sales or use tax, except where the title holder is a church, private nonprofit college or university and the tangible personal property is for church, private nonprofit college or university construction, such contractor or subcontractor shall pay a tax at the rate prescribed by § 67-6-203 measured by the purchase price of such property, unless such property has been previously subjected to a sales or use tax, and the tax due thereon has been paid. The exemption provided for in this subsection (b) for private nonprofit colleges or universities shall apply only to the state portion of the sales tax. The sales or use tax levied by this chapter shall not apply to carpet installed for a church when the church is exempt from sales or use taxes under § 67-6-322.
(c) The tax imposed by this section shall have no application where the contractor or subcontractor, and the purpose for which such tangible personal property is used, would be exempt from the sales or use tax under any other provision of this chapter. However, the transfer of tangible personal property by a contractor who contracts for the installation of such tangible personal property as an improvement to realty does not constitute a sale, except as provided in § 67 — 6—102(a)(9), and the contractor shall not be permitted on this basis to obtain the benefit of any exemptions or reduced tax rates available to manufacturers under § 67-6-206 or § 67-6-102(a)(25)(E). Each location of a taxpayer will be considered separately in determining whether the taxpayer qualifies or is disqualified as a manufacturer at that location.

Tenn.Code Ann. § 67-6-209 (2003).

On appeal, Wylie Steel contends that its transfer of the raw materials to the individual churches in this case falls within the definition of a “sale” under section 67-6-102(a)(27)(A) of the Tennessee Code. In turn, it argues that it is exempt from paying sales tax “upon tangible personal property or taxable services sold, given, or donated to any ... church, temple, synagogue or mosque[.]” Tenn.Code Ann. § 67 — 6—322(a)(1) (2003). Regarding the use taxes assessed by the Department, Wylie Steel asserts that it qualifies for the exemption in section 67-6-209(b) of the Tennessee Code. In essence, Wylie Steel takes the position that, pursuant to the purchase orders issued by each church, the churches became title holders to the raw materials subsequently used by Wylie Steel in fabricating the steel products it later installed in each church. Wylie Steel seeks to differentiate between the initial purchase of the raw materials and the subsequent contract entered into between Wylie Steel and the general contractors at each project for the fabrication and installation of the steel products.

The Commissioner contends that Wylie Steel does not qualify for the exemptions it seeks because the churches never became a “title holder” of the raw materials used in the fabrication of the steel products. The Commissioner argues that the churches could only obtain title to the raw materials in two ways: (1) purchase the materials directly from the supplier themselves, or (2) purchase those materials from Wylie Steel through a resale. As for the first manner of gaining title, the Commissioner argues that the undisputed facts show that Wylie Steel, not the churches, initially purchased the raw materials. Regarding the second method of gaining title, the Commissioner argues that section 67-6-209(c) of the Tennessee Code expressly provides that Wylie Steel’s purchase and subsequent installation of the steel products as improvements to realty cannot constitute a sale, thereby making the churches title holders.

In order for Wylie Steel to avail itself of the exemption set forth in section 67 — 6—209(b) of the Tennessee Code and avoid paying the taxes assessed, by the Department, we must necessarily determine whether the respective churches were “title holders” of the raw materials used by Wylie Steel to fabricate the steel incorporated into the structures. The legislature has not defined the term “title holder” for purposes of the tax statute at issue in this case. In ascertaining when title to tangible personal property is transferred from a seller to a buyer for purposes of Tennessee’s tax statutes, the courts of this state look to the provisions of the Uniform Commercial Code as adopted by the legislature. Eusco, Inc. v. Huddleston, 835 S.W.2d 576, 579 (Tenn.1992); see also Sec. Fire Prot. Co., Inc. v. Huddleston, 138 S.W.3d 829, 834 (Tenn.Ct.App.2003). The UCC provides that “[u]n-less otherwise explicitly agreed title passes to the buyer at the time and place at which the seller completes performance with reference to the physical delivery of the goods.... ” Tenn.Code Ann. § 47-2-401(2) (2003) (emphasis added). “Unless provided otherwise, by contract, materials furnished by a subcontractor generally remain his property until they are affixed to the land of the owner or are delivered to, and accepted by, the owner as his property.” Vinsant Plumbing & Heating Co., Inc. v. Rudder Constr. Co., Inc., 486 S.W.2d 540, 543 (Tenn.Ct.App.1971) (citations omitted); see also Sec. Fire Prot. Co., 138 S.W.3d at 835.

In Townsend Electric Company v. Evans, 193 Tenn. 536, 246 S.W.2d 967 (1952), an electrical dealer and contractor paid a sales and use tax assessment under protest and sued for a refund. Townsend Elec. Co., 246 S.W.2d at 967. The electrical contractor purchased supplies he used in the construction of electric transmission lines in performing his contract. Id. Our supreme court, citing the decisions in cases from our sister states with approval, stated:

The complainant in its capacity as an electrical contractor is not a seller of the tangible personal property incorporated into the contract, but is a user of such property. ... “The complainant, by its undertaking, agreed to construct for a stated sum a completed system- for transmitting electric power. In so doing it was not in the business of selling to the contractees items of tangible personal property as such. In other words, it is not engaged in the business of buying and selling to said contractees, but in so far as they were concerned, it was engaged in the business of buying materials and equipment which it used in the assembling of an electrical project, for delivery to said contractees as a completed unit.”
“When a contractor fabricates his materials for the contractee, and the completed structure is erected on the owner’s land, it is as much real property as the land itself. The constituent elements of tangible personal property have been destroyed by their incorporation into the completed structure. And such a contractor, therefore, is not making a sale of tangible personalty to his contractee.”
“A contractor who buys building material is not one who buys and sells — a trader. He is not a ‘dealer,’ or one who habitually and constantly, as a business, deals in and sells any given commodity. He does not sell lime and cement and nails and lumber.
“His undertaking is to deliver to his obligee some work or edifice or structure, the construction of which requires the application of skill and labor to these materials so that, when he finishes his task, the materials purchased are no longer to be distinguished, but something different has been wrought from their use and union. The contractor has not resold but has consumed the materials. Sales to contractors are sales to consumers * * *.”

Id. at 969-70 (citations omitted) (emphasis added); see also Pidgeon-Thomas Iron Co. v. Garner, 495 S.W.2d 826, 832 (Tenn.1973) (ruling that the taxpayer, a fabricator of steel products, was not a seller at retail of the tangible personal property it used to fabricate the steel products it incorporated into a structure); Tenn. Blacktop, Inc. v. Benson, 494 S.W.2d 760, 765 (Tenn.1973) (noting that a contractor who installs fixtures in a building is not a seller of the tangible personal property used in performing the contract but a user of that personal property); S.M. Lawrence Co. v. MacFarland, 210 Tenn. 100, 104, 355 S.W.2d 100 (1962) (holding that the contracts at issue called for completed air-conditioning systems, therefore, the taxpayer was a user, not a seller, of the materials used in performing the contract); John W. McDougall Co., Inc. v. Atkins, 201 Tenn. 589, 301 S.W.2d 335, 335 (1957) (“[A] contractor who erects buildings or installs fixtures therein is not ‘a seller of the tangible personal property incorporated into the contract, but is a user of such property’.”).

In the instant case, Wylie Steel has not cited to any provision in the three subcontracts it entered into with the general contractors for each church expressly providing for the transfer of title to the general contractor or church of the raw materials purchased by Wylie Steel for use in fabricating the steel products. Our own independent review of each sub-contract reveals no provision specifically addressing when title to the raw materials passed from Wylie Steel to the churches. To the contrary, each subcontract states that Wylie Steel will furnish all materials and labor necessary to perform its obligations under the contract. Wylie Steel seeks to demonstrate that it resold the materials to the individual churches, thereby making the churches the “title holders” of the raw materials, by relying on the purchase orders issued by the churches. However, the individual purchase orders contained only “estimates” for the cost of the raw materials, they did not list any quantities of raw materials to be purchased, and they do not state the circumstances by which the churches will accept delivery of the raw materials. While the record does demonstrate that Wylie Steel invoiced the churches for the raw materials after purchasing them, Wylie Steel retained control of the materials in order to use them in fabricating the necessary steel products. It is undisputed that, shortly after receiving these purchase orders, Wylie Steel subcontracted with the general contractor at each site for the fabrication, delivery, and installation of its fabricated steel products. It is also undisputed that the amount to be paid Wylie Steel under each subcontract included the cost incurred by Wylie Steel for raw materials and fabrication, as well as its overhead and profit.

There is no indication in the record before this Court that the churches ever accepted delivery of the raw materials pri- or to their use in fabricating the steel to be used in the construction process. The record reveals that, contrary to the position taken by Wylie Steel, the churches were not entering into two distinct transactions with Wylie Steel — one for raw materials and one for fabrication of the steel needed in the construction process. To the contrary, the churches sought a completed structure which would incorporate the steel fabricated and installed by Wylie Steel as one of the subcontractors on each project. After Wylie Steel performed its contract and installed the steel products it fabricated into the churches, the steel products became real property. Accordingly, Wylie Steel could not have resold the raw materials to the churches at this point either. See Tenn.Code Ann. § 67-6-102(a)(27)(A) (2003) (defining “sale” as the transfer of tangible personal property).

The position taken by our supreme court in the aforementioned cases is also incorporated into the following rule adopted by the Commissioner, which provides:

Contractors engaged in constructing or improving real property, whether on a lump sum or cost-plus basis, are purchasers and consumers of the materials used by them, and are required to pay the Sales and Use Tax on such materials or equipment purchased or imported into this State for use in connection with their contracts.

Tenn. Comp. R. & Regs. 1320-5-1-07(1) (2000) (emphasis added). Furthermore, in section 67-6-209(c) of the Tennessee Code, the legislature expressly provided, in relevant part, as follows:

However, the transfer of tangible personal property by a contractor who contracts for the installation' of such tangible personal property as an improvement to realty does not constitute a sale, except as provided in § 67-6-102(a)(9), and the contractor shall not be permitted on this basis to obtain the benefit of any exemptions or reduced tax rates available to manufacturers under § 67-6-206 or § 67-6-102(a)(25)(E).

Tenn.Code Ann. § 67-6-209(c) (2003) (emphasis added). The statutory language is not ambiguous, and none of the exceptions or exemptions referenced in the statute apply in this case. Therefore, based upon the undisputed facts in this case, Wylie Steel, as a matter of law, did not sell the raw materials to the churches but, instead, used them in the performance of its contracts. Accordingly, we affirm the trial court’s grant of summary judgment to the Commissioner on this issue.

B.

The Audit Procedure Agreement

The Audit Procedure Agreement entered into between the parties contains the following provision below the signature of Wylie Steel’s representative:

I concur with the Tennessee Department of Revenue Tax Auditor for the procedures to be used in the audit. I believe that the transactions included in the period(s) selected are representative of all transactions occurring during the audit period from 12-1-96 to 12-31-99.

Wylie Steel’s representative also marked this section with an asterisk and wrote the following at the bottom of the page: ‘WSF reserves the right to demonstrate actual volume of certain transaction types occurring during the audit periods selected above.”

On appeal, Wylie Steel contends that the trial court erred in refusing to allow it to illustrate the actual volume of certain types of transactions in order to show that the Department’s “test period” audit method resulted in an over-assessment of tax liability. In asserting that it reserved the right to do so in the Audit Procedure Agreement, Wylie Steel argues that the trial court’s grant of summary judgment on this issue stands in direct contravention of the remedies permitted a taxpayer under section 67-1-1801 of the Tennessee Code. Conversely, the Department argues that Wylie Steel signed the Audit Procedure Agreement which specified the periods to be used under the sample audit method. The Department contends that, since Wylie Steel did not come forward with new information during the audit period, it is foreclosed from doing so after the audit was concluded and the tax liability assessed. The Department, however, cites to no authority for this proposition, nor do we find citation to any authority to support its position in its response to Wylie Steel’s motion for summary judgment.

The legislature has provided that, when a taxpayer is assessed a tax liability by the Department which the taxpayer believes “to be unjust, illegal or incorrect,” then the taxpayer may file suit “challenging all or any portion of the assessment of such tax including any interest and penalty associated therewith.” Tenn.Code Ann. § 67-l-1801(a)(1)(B) (2003). When a taxpayer challenges a tax assessment issued by the Department, the court must presume the assessment to be correct. Stratton v. Jackson, 707 S.W.2d 865, 867 (Tenn.1986). In evaluating a taxpayer’s challenge to the assessment issued by the Department, our supreme court has provided the courts of this state with the following guidance:

The burden of proof is upon the taxpayer to prove that the assessment made is incorrect and to prove its right to recovery by clear and convincing evidence ....
This rule clearly places the burden upon the taxpayer to disprove the result of the assessment made by the Department of Revenue.
Vague allegations by the taxpayer to the effect that the Department’s method of ascertaining the taxes due from him was incorrect are not sufficient to carry the taxpayer’s burden. He must show by a preponderance of evidence that he not only has overpaid his taxes, but, also, the amount of such overpayment.
We hold that the taxpayer in this case has failed to carry its burden of proof. It has failed to produce an audit, actual books and records, or summaries thereof, or other evidence to establish that it owes less taxes than the amount assessed by the Department of Revenue. The taxpayer has done no more than to make allegations to the effect that the State’s audit method was incorrect, inapplicable or constitutes only an estimate; this is wholly insufficient to support a judgment in favor of the taxpayer.

Edmondson Mgmt. Serv., Inc. v. Woods, 603 S.W.2d 716, 717-18 (Tenn.1980) (citation omitted).

In this case, Wylie Steel presented sufficient evidence to raise a factual issue as to whether the Department over-assessed its tax liability. In the trial court below, Wylie Steel asserted that the Department over-assessed its tax liability by $44,172.18. Thus, it asserted the amount of overpayment. In addition, Wylie Steel submitted the deposition testimony and affidavits of Walter E. Porter, Jr. (“Mr.Porter”), Wylie Steel’s treasurer. In his deposition, Mr. Porter explains how he believes the Department over-assessed Wylie Steel’s tax obligation. Furthermore, attached to Mr. Porter’s deposition are accounting and financial documents which allegedly prove this over-calculation. Unlike the taxpayer in Edmondson Management Service, Inc., 603 S.W.2d at 718, Wylie Steel has done more than make a perfunctory allegation that the Department has miscalculated its tax obligation. Accordingly, the trial court erred in holding that Wylie Steel was precluded from presenting evidence of an over-assessment at trial because it did not present such evidence during the audit. Therefore, we reverse the trial court’s decision to grant summary judgment to the Department on this issue. On remand, the trial court is instructed to determine whether the Department has over-assessed Wylie Steel’s tax liability in aceor-dance with section 67-1-1801 et seq. of the Tennessee Code.

C.

Attorney’s Fees

Both parties have asked this Court to award them their respective attorney’s fees and litigation expenses incurred in this case pursuant to section 67-1-1803 of the Tennessee Code. Tennessee follows the American Rule which provides that, absent a statute or agreement to the contrary, each litigant is responsible for paying its own attorney’s fees and litigation expenses. State v. Brown & Williamson Tobacco Corp., 18 S.W.3d 186, 194 (Tenn.2000). Section 67-l-1803(d) of the Tennessee Code provides as follows: “The court shall award to the prevailing party reasonable attorney’s fees and expenses of litigation up to twenty percent (20%) of the amount assessed or denied, including interest after payment.” TenmCode Ann. § 67-1-1803(d) (2003) (emphasis added). Since we find it necessary to remand this case to the trial court for a determination as to whether the amount assessed by the Department is correct, we cannot properly assess such fees and expenses at this stage of the proceedings. Accordingly, we leave the application of section 67-l-1803(d) of the Tennessee Code to the trial court after it determines the proper amount of tax to be assessed in this cause.

IV.

Conclusion

For the aforementioned reasons, we affirm in part and reverse in part the décision of the trial court in granting summary judgment to the Appellant. This case is remanded to the trial court with instructions to conduct further proceedings consistent with this opinion. Costs of this appeal are to be shared equally between the Appellant, Wylie Steel Fabricators, Inc. and its surety, and the Appellee, Ruth E. Johnson, Commissioner of Revenue for the State of Tennessee, for which execution may issue if necessary.

      . The three fabrication and installation projects were performed on Faith is the Victory Church located in Nashville, Tennessee, First Baptist Church located in Franklin, Tennessee, and Cornerstone Church located in Madison, Tennessee.

      . Section 67-1-1801 of the Tennessee Code provides, in relevant part, as follows:
      Enumeration of remedies.—
      (a)(1) In all cases in which any officer, charged by law with the authority to assess taxes which are collected or administered by the commissioner of revenue, shall assess a tax alleged or claimed to be due, if the taxpayer against whom the assessment is made believes the assessment to be unjust, illegal or incorrect, the taxpayer’s remedies shall be as follows: (A) The taxpayer may pay the tax and file a claim for refund thereof and proceed as provided in this part; or
      (B) The taxpayer may file suit against the commissioner in the chancery court in the appropriate county in this state, challenging all or any portion of the assessment of such tax including any interest and penalty associated therewith....
      Tenn.Code Ann. § 67-l-1801(a)(l) (2003); see also Tenn.Code Ann. § 67-1-1802 (2003) (governing refunds of taxes paid).

      . " 'Commissioner' means and includes the commissioner of revenue or the commissioner's duly authorized assistants[.]” Tenn.Code Ann. § 67-6-102(a)(3) (2003).

      . During the proceedings below, the Department did not take a position regarding whether Wylie Steel qualified as a contractor-dealer under Rule 8. Wylie Steel contends that it is a contractor-dealer coming within the purview of Rule 8. In any event, we do not need to decide this issue in order to resolve the other issues presented for review on appeal.

      . Wylie Steel argues that the legislature enacted section 67-6-209(c) of the Tennessee Code to limit a contractor’s right to qualify for a manufacturer's exemption. Wylie Steel devoted a significant portion of its brief and oral argument to the legislative history of the statute and policy arguments in an attempt to bolster its position on this issue. When dealing with statutory language, however, we must "examine the language of the statute and, if the language is unambiguous, apply the ordinary and plain meaning.” Galloway v. Liberty Mut. Ins. Co., 137 S.W.3d 568, 570 (Tenn.2004) (citing Parks v. Tenn. Mun. League Risk Mgmt. Pool, 974 S.W.2d 677, 679 (Tenn.1998)). Only when a statute is ambiguous do we "examine the entire statutory scheme and the legislative history to ascertain and give effect to the legislative intent.” Id.; see also Eastman Chem. Co. v. lohnson, 151 S.W.3d 503, 507 (Tenn.2004).

      . The Commissioner noted that Wylie Steel has not conducted its own independent audit and presented those results to the trial court. The Commissioner also directs our attention to the fact that Mr. Porter’s testimony simply expresses the results of his recalculation of the three church projects which were part of the sample period used by the Department. While Wylie Steel has not presented proof of the actual volume of certain transactions for the audit period, it has presented sufficient evidence to create a disputed issue of fact regarding the correctness of the amount assessed by the Department. See Tenn.Code Ann. § 67-1-1801(a)(1) (2003).

      . "Except as otherwise provided by statute or these rules, ... if a judgment is affirmed or reversed in part ... costs shall be allowed only as ordered by the appellate court.” Tenn. R.App. P. 40(a) (2004). "In cases involving the state of Tennessee, its officers, or agencies, costs shall be awarded in accordance with the provisions of subdivision (a) of this rule.” Tenn. R.App. P. 40(b) (2004).


source: Caselaw Access Project

author: ALAN E. HIGHERS, J,

license: Public Domain

text:
    Sandra Kaye Kemp PARISH, et al. v. Jerry Donald KEMP, et al.
    Court of Appeals of Tennessee, at Jackson.
    Sept. 21, 2004 Session.
    March 2, 2005.
    Application for Permission to Appeal Denied by Supreme Court Oct. 24, 2005.

      Kenneth R. Jones, Jr., Nashville, TN, for Appellants.
    Robert T. Keeton, Jr., Laura A. Keeton, Huntingdon, TN, for Appellees.
   OPINION

ALAN E. HIGHERS, J,

delivered the opinion of the court,

in which W. FRANK CRAWFORD, P.J., W.S., and DAVID R. FARMER, J., joined.

This appeal arises out of a complaint filed by Appellants seeking to invalidate certain inter vivos transfers made by Decedent as well as the Wills executed by Decedent while living with Appellees. After a hearing in which a jury received evidence from numerous witnesses and exhibits, Appellants sought a directed verdict on whether, as a matter of law, the burden to prove the validity of the Wills and the inter vivos transfers shifted to Appellees. The trial court denied this motion, and the jury returned a verdict in favor of Appel-lees, upholding Decedent’s Last Will and Testament and the inter vivos transfers. Review by this Court is sought by Appellants, and, for the following reasons, we reverse.

Facts and Procedural History

Mamie Kemp Fesmire (“Aunt Mamie” or “Decedent”) was a resident of Carroll County for a majority of her life and lived with her husband, E. Howard Fesmire (“Uncle Howard”), until he died in May 1996. Aunt Mamie and Uncle Howard had no children of their own, and, therefore, Uncle Howard’s estate passed to Aunt Mamie upon his death. For a short time following Uncle Howard’s death, Aunt Mamie lived by herself in her home in Atwood, Tennessee.

Shortly after her husband died, Aunt Mamie, who was eighty-nine years old, fell and injured herself. While moving her mother, Mildred Inell Kemp Coleman, into her home, Marilyn Aten (“Ms. Aten”), one of Aunt Mamie’s nieces, received a call from Annie Jo Kemp (“Ms. Kemp”), notifying her of Aunt Mamie’s injury. After having surgery and spending time in a rehabilitation center, Aunt Mamie moved in with Ms. Aten and her family in their home in Pegram, Tennessee.

While living with Ms. Aten and her husband, Aunt Mamie refused to contribute to household expenses or to the expansion of the house in order to have enough room for everyone living in the home. Within a few weeks, it was decided that Aunt Mamie would move out of the Aten’s home. Prior to her departure, Ms. Kemp suggested, after a discussion with Ms. Aten, that Aunt Mamie should execute a power of attorney naming Ms. Kemp and Ms. Aten as Aunt Mamie’s joint attorneys-in-fact. Former attorney and current general sessions judge James B. Webb prepared such durable power of attorney and additionally prepared a codicil to Aunt Mamie’s Will executed in 1988, amending the appointment of the executor to Ms. Kemp and Ms. Aten, and both documents were executed by Aunt Mamie on July 12, 1996. Subsequently, after exploring the option of having a professional caretaker live with Aunt Mamie in her home, she moved into the home of Ms. Kemp and her husband, Jerry Donald Kemp (“Mr. Kemp” or, collectively with Ms. Kemp, the “Appellees”), in Nashville, Tennessee.

Shortly after moving in with Mr. and Ms. Kemp, Aunt Mamie decided to revisit James Webb’s law office, and Mr. and Ms. Kemp drove her to meet with him. At such meeting on August 9,1996, Mr. Kemp “jokingly” said that he would become Aunt Mamie’s attorney-in-fact if she transferred $200,000 to him and his wife, Ms. Kemp. In discussing the transfer of $200,000 to Mr. and Ms. Kemp privately with Aunt Mamie, James Webb felt uncertain of whether she wished to make such a transfer and decided against drawing up documents for the transfer. However, Aunt Mamie executed another power of attorney worded exactly like the power of attorney executed on July 12, 1996, except that it removed Ms. Aten’s name as an attorney-in-fact and replaced it with Mr. Kemp’s name. Additionally, that same day, Aunt Mamie executed a second codicil to her 1988 Will devising her house in Atwood, Tennessee, to Mr. and Ms. Kemp. Mr. and Ms. Kemp both testified that the second power of attorney and codicil were executed upon Aunt Mamie’s suggestion.

After she started living with Mr. and Ms. Kemp, Aunt Mamie began changing the ownership status of various assets. Specifically, she began renewing certificates of deposit not only in her name but in Mr. and Ms. Kemp’s names with a right of survivorship, or they were made payable on Aunt Mamie’s death to Mr. and Ms. Kemp. Such CD’s and checking accounts totaled approximately $450,000, leaving approximately $290,000 to pass pursuant to Aunt Mamie’s Will. Mr. and Ms. Kemp and various bank employees testified that Aunt Mamie received private advice and counsel from bank personnel before finalizing any changes in ownership status.

Additionally, Aunt Mamie began paying Mr. and Ms. Kemp’s monthly expenses. Such expenses included the monthly notes on Mr. and Ms. Kemp’s 1996 Toyota Camry, paying off the balance due on the 1999 Toyota Camry in the amount of $19,900.53, the car insurance for Mr. and Ms. Kemp’s cars, the utility bills for Mr. and Ms. Kemp’s house, partial payment for Mr. and Ms. Kemp’s new roof on their home in the amount of $2,000, the property taxes for Mr. and Ms. Kemp’s house in 1999, Mr. and Ms. Kemp’s credit card bills, and paying off Mr. Kemp’s debt incurred at Farmers and Merchants Bank in the amount of $15,400.

Finally, in November 1996, Aunt Mamie discussed executing a new Will and another power of attorney. She met privately with an attorney, D.D. Maddox (“Maddox”), who discussed the ramifications of her actions. After this meeting, she executed a third and final power of attorney, again naming Mr. and Ms. Kemp her attorneys-in-fact, dated November 5, 1996, and a new Will dated January 7, 1997 (the “1997 Will”). The 1997 Will, naming Mr. Kemp the executor, made various specific bequests, the most significant being bequests of $100,000 to Mr. and Ms. Kemp each. Finally, in 1999, Aunt Mamie wished to execute another Will. On this occasion, she sought the legal services of Walton West (“West”) who, after conferring with Aunt Mamie privately about her intentions, drafted a new Will which Aunt Mamie executed on July 13, 1999 (the “1999 Will”). The primary differences between the 1997 Will and the 1999 Will are that the specific bequest amounts for the beneficiaries were modified and the bequests to Mr. and Ms. Kemp were deleted from the 1999 Will. The reason for the deletion of the bequests to Mr. and Ms. Kemp, as West testified, resulted from the fact that Aunt Mamie had converted CD’s and bank accounts to joint accounts with a right of survivorship.

By all accounts, Aunt Mamie remained a strong-willed person who was “tight with money” until her death. She had heart problems requiring her to see physicians, and she was required to use a walker while living with Mr. and Ms. Kemp. She died on August 17, 2000.

After Aunt Mamie died, the 1999 Will was submitted to the probate court, and Mi’. Kemp was appointed the executor of Aunt Mamie’s estate. Subsequently, a complaint was filed and later amended by Sandra Kaye Kemp Parish, Marilyn Coleman Aten, Gary Harlan Coleman, Sr., Jimmie Austin Kemp, William Buman Argo, Nancy Kemp Petty, Charles S. Aten, Angela Y. Aten, Gary H. Coleman, Jr., Vicky Coleman-Bird, Thomas A. Kemp, Michael A. Kemp, and David Argo (collectively the “Appellants”), who are all nieces, nephews, great nieces, or great nephews of Decedent. After a trial before a jury, the Appellants moved for a directed verdict on the issue that a confidential relationship per se had been established by the evidence and that the burden of proof, as a matter of law, should fall to the Appellees to prove the fairness of the transactions for their benefit. After the trial court denied the Appellants’ motion, the jury returned a verdict in favor of Appellees, finding that the inter vivos transactions and the execution of the 1999 Will were free of undue influence and valid. The Appellants filed a motion for partial judgment notwithstanding the verdict on the issue of which party had the burden of proving the validity or invalidity of the transactions at issue, and they filed a motion for a new trial raising as error the trial court’s instructions to the jury and that the jury’s verdict was against the weight of the evidence. After denying the Appellants’ motions, the Appellants filed a notice of appeal to this Court, seeking review of the following issues, as we perceive them:

I. Whether the trial court erred when it failed to grant Appellants’ motion for directed verdict and instruct the jury that Appellees had a confidential relationship with Decedent as a matter of law creating a presumption of undue influence and requiring the Ap-pellees to prove by clear-and convincing evidence the fairness of the inter vivos and testamentary transfers for their benefit;
II. Whether the trial court erred when it improperly instructed the jury as to how a power of attorney could establish a confidential relationship and failed to instruct the jury that Decedent’s inter vivos and testamentary transfers for the Appellees’ benefit were presumed invalid because of a confidential relationship;
III. Whether the trial court erred in its jury instruction concerning: (i) the nature and extent of advice necessary to qualify as “independent advice” for purposes of rebutting the presumption ■ of undue influence arising from transfers for the benefit of a dominant party in a confidential relationship; (ii) the need to prove such advice in order to rebut the presumption; and (in) the effect of that advice on the presumption of undue influence; and
IV. Whether there is any material evidence to support the jury’s verdict in favor of the Appellees.

For the following reasons, we reverse and remand for further proceedings.

Standard of Review

The Tennessee Supreme Court has previously addressed an appellate court’s standard of review for an order on a motion for directed verdict:

A directed verdict is appropriate in a will contest case only when the evidence in the case is susceptible to but one conclusion. See Eaton v. McLain, 891 S.W.2d 587, 590 (Tenn.1994). An appellate court must take the strongest legitimate view of the evidence favoring the opponent .of the motion when called upon to determine whether a trial court should have granted a directed verdict. Id. Furthermore, all reasonable inferences in favor of the opponent of the motion must be allowed and all evidence contrary to the opponent’s position must be disregarded. Id. Ultimately, an appellate court “may grant the motion only if, after assessing the evidence according to the foregoing standards, it determines that-reasonable-minds could not differ as to the conclusions to be drawn from the evidence.” Id. (citations omitted).

Childress v. Currie, 74 S.W.3d 324, 328 (Tenn.2002).

This Court has also addressed the standard of review for appellate courts when examining jury instructions:

Appellate courts give trial courts leeway with regard to the substance of their jury instructions in will contest cases. Thomas v. Hamlin, 56 Tenn.App. 13, 37, 404 S.W.2d 569, 579-80 (1964). However, they should prepare their instructions with care because “will contests are always surrounded with confusion and uncertainty and fraught with great possibilities of the miscarriage of justice” and because jurors have a natural tendency to superimpose their judgment on the testator’s. Hager v. Hager, 13 Tenn.App. 23, 27 (1930).
The trial court’s instructions are the jury’s only proper source of the legal principles to guide its deliberations. State ex rel. Myers v. Brown, 209 Tenn. 141, 148-49, 351 S.W.2d 385, 388 (1961). Accordingly, trial courts should give substantially accurate instructions concerning the law applicable to the matters at issue. Street v. Calvert, 541 S.W.2d 576, 584 (Tenn.1976). The instructions need not be perfect in every detail, Davis v. Wilson, 522 S.W.2d 872, 884 (Tenn.Ct.App.1974), as long as they are, as a whole, correct. In re Elam’s Estate, 738 S.W.2d 169, 176 (Tenn.1987).

Mitchell v. Smith, 779 S.W.2d 384, 390 (Tenn.Ct.App.1989).

Finally, we are mindful that “[flindings of fact by a jury in civil actions shall be set aside only if there is no material evidence to support the verdict.” Tenn. R.App. P. 13(d) (2004).

Directed Verdict on Confidential Relationship

First, Appellants argue that the trial court erred when it failed (1) to grant their motion for directed verdict on the issue of the existence of a confidential relationship between Decedent and Appellees and (2) instruct the jury that the presumption of undue influence arose requiring the Appel-lees to prove the fairness of the transactions at issue by clear and convincing evidence.

“Under Tennessee law, as in most jurisdictions, a presumption of undue influence arises where the dominant party in a confidential relationship receives a benefit from the other party.” In re Estate of Hamilton, 67 S.W.3d 786, 793 (Tenn.Ct.App.2001) (citing Matlock v. Simpson, 902 S.W.2d 384, 386 (Tenn.1995); Crain v. Brown, 823 S.W.2d 187, 194 (Tenn.Ct.App.1991)). “[A] confidential relationship arises as a matter of law when an unrestricted power of attorney is granted to the dominant party.” Childress, 74 S.W.3d at 328-29 (citing Matlock, 902 S.W.2d at 386); see also In re Estate of Hamilton, 67 S.W.3d at 793; Mitchell, 779 S.W.2d at 389 (“A person authorized to act on behalf of another by virtue of an unrestricted power of attorney has a confidential relationship with the person who executed the power of attorney.”). No confidential relationship arises when an unrestricted power of attorney is executed but has not yet been exercised. Childress, 74 S.W.3d at 329. A power of attorney is restricted and a confidential relationship does not exist as a matter of law when the power of attorney never came into effect and the person granting the power of attorney may alter or revoke it at any time. McKinley v. Holt, No. 03A01-9807-PB-00220, 1999 WL 233400, at *4, 1999 Tenn.App. LEXIS 247, at *12 (Tenn.Ct.App. Apr.15, 1999); see also Smith v. Smith, 102 S.W.3d 648, 653 (Tenn.Ct.App.2002).

Once a presumption of undue influence arises, in order to overcome the presumption, the dominant party must establish that the transaction at issue was fair by clear and convincing evidence. In re Estate of Hamilton, 67 S.W.3d at 793. With a will contest, evidence that the testator received independent, legal advice concerning the contents of a will may rebut this presumption. Id. (citing Crain, 823 S.W.2d at 194). Finally, we are mindful that “the presumption of undue influence extends to all dealings between persons in fiduciary and confidential relations, and embraces gifts, contracts, sales, releases, mortgages and other transactions by which the dominant party obtains a benefit from the other party.” Gordon v. Thornton, 584 S.W.2d 655, 658 (Tenn.Ct.App.1979) (citing Williams v. Jones, 54 Tenn.App. 189, 388 S.W.2d 665 (1963); Roberts v. Chase, 25 Tenn.App. 636, 166 S.W.2d 641 (1942)).

The trial court denied the Appellants’ motion for directed verdict on the issue of whether a confidential relationship was established such that the burden would shift to the Appellees to show the fairness of the transaction. We disagree. In this case, it is undisputed that the Appellees were Decedent’s attorneys-in-fact from August 1996 until her death in August 2000. It is also undisputed that the two powers of attorney naming the Appel-lees Decedent’s attomeys-in-fact were in effect upon execution. Further, there is no dispute that the Appellees exercised their authority under the powers of attorney. Finally, there is no question that the change of ownership of the bank accounts and certificates of deposit from Decedent’s sole ownership to joint ownership with the Appellees giving them a right of survivor-ship benefitted the Appellees.

The Appellees argue that the denial of the Appellants’ motion for directed verdict was proper because the power of attorney was “restricted” since the Appellees were prohibited from “changing the ownership status of any property.” The Appellees further argue that denial of Appellants’ motion for directed verdict was proper because they did not exercise the power of attorney to change the ownership status of Decedent’s CD’s or bank accounts, and, therefore, in accordance with Childress v. Currie, 74 S.W.3d 824 (Tenn.2002), no confidential relationship existed because they did not exercise any power of attorney to change the ownership status of the CD’s or bank accounts. We disagree.

First, as support for the argument that the power of attorney in effect in this case was “restricted” because the Appellees did not have the power to change the ownership status of any of Decedent’s property, the Appellees cite this Court’s decision of In re Estate of Coggins, No. 03A01-9604-PB-00131, 1996 WL 571510 (Tenn.Ct.App. Oct.3, 1996). However, that case did not address the question of whether the absence of a power of changing a principal’s ownership status of property creates a “restricted” power of attorney for purposes of establishing a confidential relationship. Rather, in that case, this Court addressed the issue of whether an attorney-in-fact held the authority under a power of attorney to change the ownership status of the principal’s property to joint ownership with the attorney-in-fact. In re Estate of Coggins, 1996 WL 571510, at *1. After our review of Tennessee jurisprudence, we cannot say that the power of attorney in this case is “restricted,” and therefore that the presumption of undue influence does not arise when the attorney-in-fact lacks a power to change the ownership status of the principal’s property.

Second, the Appellees argue that because they did not use their authority under the power of attorney to convert Decedent’s property to joint ownership, the power of attorney was not exercised to create a confidential relationship in accordance with the Tennessee Supreme Court’s decision in Childress v. Currie, 74 S.W.3d 324 (Tenn.2002). However, in Childress v. Currie, the court did not hold, as the Appellees contend, that a power of attorney that is executed and exercised, but not exercised to convert assets to joint ownership, does not create a confidential relationship such that the presumption of undue influence arises. Childress, 74 S.W.3d at 329. Rather, the court held that “[wjhen an unrestricted power of attorney is executed but has not yet been exercised, good sense dictates that there exists no dominion and control and therefore no confidential relationship based solely on the existence of the power of attorney.” Id. Unlike the case at bar, the Tennessee Supreme Court in Childress v. Currie addressed a situation where a power of attorney had been executed but never exercised. Id. at 325. In this case, it is undisputed that the Appellees exercised the power of attorney.

The Appellees further argue that relationships between family members do not establish a confidential relationship per se. It is true that the relationships between family members and relatives are not by themselves confidential relationships. Mitchell v. Smith, 779 S.W.2d 384, 389 (Tenn.Ct.App.1989) (citing Halle v. Summerfield, 199 Tenn. 445, 287 S.W.2d 57, 61 (1956); Harper v. Watkins, 670 S.W.2d 611, 628 (Tenn.Ct.App.1983)). However, the Appellants in this case do not rely on the familial relationship between the Appellees and Decedent to establish a confidential relationship per se. Rather, the Appellants rely on the rule that an executed, unrestricted power of attorney establishes a confidential relationship per se. Therefore, such rule is inapplicable to this ease, and this argument has no merit. Though it is rare for a court to grant a plaintiffs motion for directed verdict, we believe that the trial court should have granted the Appellants’ motion in this case given the undisputed facts. However, the error created by the trial court’s failure could have been cured by a proper jury instruction. Therefore, we now examine the instructions given to the jury by the trial court to determine if such instructions constitute reversible error.

Jury Instructions on the Presumption of Undue Influence

The Appellants argue that the trial court aggravated the error of denying their motion for directed verdict by misinforming the jury about how a power of attorney can create a confidential relationship per se, such that the presumption of undue influence is raised and the burden is shifted to the Appellees to prove the fairness of the transactions at issue by clear and convincing evidence.

As an initial matter, we note that

[w]hen the alleged error concerns a jury instruction actually given to the jury, there is no requirement that the appropriate instruction be provided to the trial court. In fact, there is no duty to object to the instruction at' trial (although the better practice certainly would be to point out any problem to the trial court).

In re Estate of Calfee, No. E-2000-01720-COA-R3-CV, 2001 WL 584248, *3, 2001 Tenn.App. LEXIS 404, at *9 (Tenn.Ct.App. May 31, 2001) (citing Grandstaff v. Hawks, 36 S.W.3d 482, 489 (Tenn.Ct.App.2000)). There is no requirement that a motion for new trial be filed stating the specific objectionable material. Id. Though not required, the Appellants set forth their objections to the trial court’s jury instructions in their motion for a new trial. Additionally, for this Court to review the propriety of a trial court’s instructions to a jury, such instructions must be made a part of the record. In re Estate of Elam, No. 85-15-II, 1985 WL 3859, *5, 1985 Tenn.App. LEXIS 3283, at *8-9 (Tenn.Ct.App. Nov.27, 1985). In the present case, such instructions were included in the record on appeal.

In this case, the jury instruction at issue is Jury Instruction No. 29 in which the trial court instructed the jury as follows:

An unrestricted power of attorney, in and of itself, creates a confidential relationship between the parties.
An unrestricted power of attorney, however, does not, in and of itself, create a confidential relationship between the parties if the attorney in fact did not exercise the power or was not aware of the power.
A general clause in a power of attorney given for a specific purpose, authorizing the agent to do “any and every act” in the principal’s name which he could do in person, must be construed to relate to the specific purpose, and does not constitute such agent a general agent. In re estate of Coggins (Ct.App.1996)

Tennessee law as found in T.C.A. 34-6-108(c) provides:

(c) Nothing contained in this section and “34-6-109 shall be construed to vest an attorney in fact with, or authorize an attorney in fact to exercise, any of the following powers:
(1) Make gifts, grants, or other transfers without consideration, except in fulfillment of charitable pledges made by the principal while competent;
(2) Exercise any powers of revocation, amendment, or appointment which the principal may have over the income or principal of any trust;
(3) Act on behalf of the principal in connection with any fiduciary position held by the principal, except to renounce or resign such position;
(4) Exercise any incidents of ownership on any life insurance policies owned by the principal on- the life of the attorney in fact;
(5) Change beneficiary designations on any death benefits payable on account of the death of the principal from any life insurance policy, employee benefit plan, or individual retirement account;
(6) Change, add or delete any right of survivorship designation on any property, real or personal, to which the principal holds title, alone or with others;
(7) Renounce or disclaim any property or interest in property or powers to which the principal may become entitled, whether by gift or testate or intestate succession;
(8) Exercise any right, or refuse, release or abandon any right, to claim an elective share in any estate or under any will; or
(9) Make any decisions regarding medical treatments or health care, except as incidental to decisions regarding property and finances.
In the case before you, if you find that the -power of attorney granted by Mamie Fesmire to Jerry Kemp and Annie Jo Kemp does Not include any or all of the above provisions, then the power of attorney is restricted and is not an unrestricted power of attorney. Therefore, the presumption of undue influence would not arise. As it relates to power of attorney, the presumption of undue influence arises only when the power of attorney is an unrestricted power of attorney.

(emphasis added).

Our review of Tennessee case law reveals no requirement that a power of attorney must include “any or all” of the provisions listed in Tenn.Code Ann. §' 34-6-108(c) (2001) in order to be “unrestricted” for purposes of creating a confidential relationship and raising the presumption of undue influence. Therefore, we conclude the trial court committed reversible error by providing the jury with a checklist of powers needed to create an “unrestricted” power of attorney and a confidential relationship. It follows that, because the jury was misled as to how a confidential relationship can be created by a power of attorney, the presumption of undue influence could not have been raised, causing the burden to shift to the Appellees to prove the fairness of the transactions by clear and convincing evidence. For these reasons, we reverse the trial court’s denial of the Appellants’ motion for a new trial and remand for a new trial. As a result of our disposition on this issue, the Appellants final two issues are pretermitted.

Conclusion

For the reasons stated above, we reverse and remand this case for further proceedings consistent with this opinion. Costs of this appeal are taxed to the Ap-pellees, Jerry Donald Kemp and Annie Jo Kemp, for which execution may issue if necessary.

        . This was pursuant to Uncle Howard’s Last Will and Testament.

      . The durable power of attorney stated that Ms. Kemp and Ms. Aten would have

        full power to act, for me and in my stead, to manage and conduct my personal business and affairs, to execute and deliver deeds in my name, execute receipts, receive money and any funds owed me in any manner and deposit the same to my account in my bank, to endorse any checks payable to me for deposit in my bank, and to write, sign, give and deliver checks against my personal account in my bank, and in payment of any and all of my legal debts or obligations; to demand and receive payment from creditors; and to sign all necessary instruments, and to sell and convey and encumber all of my right, title and interest in and into, including but not limited to Settlement Sheets, Contracts, Warranties and Warranty Deeds concerning a house and lot located in the town of Atwood, 21st Civil District of Carroll County, Tennessee, and more particularly described in Warranty Deed from Curtis W. Younger to Howard E. Fesmire and wife, Mamie Fesmire dated August 27, 1962 and recorded in Deed Book _, Page_in the Register’s Office of Carroll County, Tennessee, and to otherwise manage my personal affairs and to sign any papers, documents or demands in connection with any of my personal business as fully, completely and amply, to sill intents and purposes whatsoever, as I might or could do if acting personally.

      . Aunt Mamie’s 1988 Will appointed her husband, Uncle Howard, executor of her estate and Ted Fesmire as an alternate executor.

      . The only other change the second codicil made was to place Elta Fesmire’s share of Aunt Mamie’s estate in a trust with Mr. and Ms. Kemp named as the trustees. Elta Fes-mire was a sibling of Uncle Howard.

      . Specifically, a certificate of deposit at the Bank of Huntingdon in the amount of $100,000 was placed in the name of “Mamie Fesmire or Jerry D. Kemp and Annie Jo Kemp” with a right of survivorship on October 3, 1998. Such CD was renewed again in 1999 and Aunt Mámie died before the maturity date in 2000. A CD at Carroll Bank & Trust in the amount of $100,000 in Aunt Mamie’s name was made payable on death to Mr. and Ms. Kemp in September 1996. Such CD matured and was renewed every six months until Aunt Mamie died. This CD, while originally payable on death, was placed in joint ownership with a right of survivorship in 1998 and continued in the name of "Mamie Fesmire or Jerry D. & Annie Jo Kemp” Until Aunt Mamie’s death. A CD at Citizens Bank & Trust in the amount, of $100,000 was originally payable on death to Mr. and Ms. Kemp but became payable to "either or survivor" and finally payable to "Mamie Fesmire or Jerry D. Kemp or Annie J. Kemp.” Such CD was renewed every six months. A CD at Farmers and Merchants Bank in the amount of $63,000 was issued in October 1996 in the name of "Mamie Fesmire-Jerry D & Annie J Kemp POAs.” This CD was renewed in the same name and amount in 1997, but in 1998, the name of the depositor changed to "Mamie Fesmire & Jerry D. Kemp & Annie Jo Kemp.” Additionally, the amount of the CD increased to $100,000 in 1998. A checking account with Citizens Bank & Trust was originally in the name of "Mamie Fesmire c/o Annie Jo Kemp” but changed to list Mr. and Ms. Kemp’s names on the account. Mr. and Ms. Kemp closed the account and had a cashier’s check in the amount of $22,142.57 issued to them after Aunt Mamie died. Finally, an advantage rate money market account with SunTrust Bank was created in the amount of $63,500 in the name of "Mamie Kemp Fes-mire or Jérry D Kemp or Annie Jo Kemp.”

      .Though the final power of attorney does not change the attorneys-in-fact, it states that the purposes of the power of attorney include, but are not limited to, the following:
      1.To receive and receipt for any and all sums of money, or payments due or to become due to me, to deposit all in my name by. them in my behalf;
      2. To act for me in any business in which I am now or may become interested;
      3. To endorse or make notes, checks, drafts or bills of exchange which may require my endorsement or signature, and to deposit as cash or for collection in any bank or savings institution, or to acquire funds in a like manner;
      4. To draw checks against my accounts in any bank or savings institution, to make notes for funds or withdrawals of savings accounts or certificates of deposit with any financial institution;
      5'. To accept all drafts or bills of exchange which may be drawn upon me in the usual course of my business;
      6. To receive the dividends which are now due or which may hereafter become due to me on stock now owned or hereafter acquired in my name;
      7. To sell, assign, mortgage, transfer, convey, lease, or set over all or any part of my real or personal property or estate of whatever nature and wherever situated.
      8. To purchase real estate or personal property and to sign my name to all necessary instruments incidental to this purpose.
      9. I hereby grant an unlimited guardianship of my person to the attorneys in fact named herein, and as a part thereof they or either of them shall have full authority to act on my behalf in nominating a doctor for my medical care, select hospitals and do all other things for my medical care and treatment, and I direct that they shall have the authority and be required to withhold medical treatment in the event that there is little prospect for my recovery, and they shall refuse the authority and affirmatively act to stop any medical treatment that would keep me alive by extreme means and/or by mechanical or medical techniques that would not leave me conscious. They shall see that I will have medication to keep me from pain but otherwise shall not prolong my life by extraordinary medical procedures.
      10. These persons nominated as my power of attorney will authorize the use of any organs of which I may die possessed useful to any other living person to be used therefore and they are hereby empowered so to do.

      . In Ms. Kemp’s deposition testimony which was read into the record, she admits that she signed the documents' to renew the CD’s as Decedent’s attorney-in-fact. Ms. Kemp also admitted in her trial testimony that she signed renewal documents for Decedent’s CD’s pursuant to her authority under the power of attorney. Additionally, Mr. Kemp signed documents as Decedent's attorney-in-fact. One such example "includes a disclosure statement for a CD with Citizens Bank & Trust dated March 23, 2000. Such statement names Mr. and Ms. Kemp joint owners with Decedent and grants them a right of survivorship. Mr. Kemp confirmed that he signed this document as Decedent's attorney-in-fact in his trial testimony.