author: MAUS, Judge.

text:
    BIG VALLEY, INC., and Lloyd E. Mitchell and Julia Mitchell, Plaintiffs-Appellants, v. FIRST NATIONAL BANK OF PULASKI COUNTY and Arthur B. Cohn, Defendants-Respondents.
    No. 10600.
    Missouri Court of Appeals, Southern District, Division Two.
    March 8, 1979.

      Margaret Bush Wilson, Wilson, Smith, Wunderlich & Smith, St. Louis, for plaintiffs-appellants.
    William C. Morgan, Waynesville, for defendants-respondents.
   MAUS, Judge.

This is an action to enjoin a foreclosure under a power of sale in a deed of trust. The deed of trust was executed on February 2, 1970, to secure a note for $63,500.00 due on demand or 180 days. The petition was filed September 2, 1976, after publication of notice of the sale was commenced. As bases for the relief sought the amended petition in substance alleged: the plaintiffs were not in default; an agreement to accept installment payments; that a dispute existed between the parties concerning credits and the amount of the indebtedness. It was further alleged that among the credits not given to plaintiffs were the proceeds from four collateral transactions involving sums ranging from $5,000 to $22,500. The plaintiffs sought a restraining order, an interlocutory judgment for an accounting and a determination of the balance due, and a permanent injunction against foreclosure upon the basis of defendant bank’s existing claims of default.

A restraining order was issued and the defendants ordered to show cause why a temporary injunction should not be granted restraining the foreclosure sale and directing the defendants to provide an accounting. On the day set for the show cause hearing the defendants filed a motion to dissolve the restraining order and an answer. On that day, the record shows that on the request of the parties “the matter is passed for resetting.” The restraining order was continued upon an increased bond. Some four months later the case was called for hearing and both parties announced ready. There is now a dispute concerning whether this hearing was upon the order to show cause or upon the merits of the case. Nevertheless, the plaintiffs assumed the lead and presented five witnesses and a host of exhibits principally pertaining to the issue of credits. These exhibits included schedules of payments provided plaintiffs by defendant bank in August before the scheduled foreclosure in September and 242 receipts for payments. The defendants’ only evidence was testimony pertaining to attorney fees. The matter was taken under advisement and five days later a judgment was entered dissolving the restraining order, awarding defendants $1,000 plus interest on the unpaid balance during the period of the restraining order and dismissing the petition. Plaintiffs appeal.

The unilateral, non-judicial exercise of a power of sale is a potent means for the enforcement of a security interest. It is capable of being used in an arbitrary and oppressive manner. On the other hand, it is a remedy agreed to by the parties to the security instrument. It is a recognized and useful device facilitating and lending stability to security transactions. The courts should interfere with the exercise of this remedy only under compelling circumstances, and then only upon such conditions that will protect the interests of the secured party.

A legitimate interest of the debtor is to know with reasonable certainty the amount of the indebtedness for which his property is to be sold. When there is a bona fide dispute as to a proportionately substantial amount of the indebtedness, a sale upon an excessive demand can be oppressive. For example, before the sale the debtor is entitled to pay the indebtedness and retain his property. If a substantially excessive sum is demanded, he may be unable to do so.

This does not mean that in every instance in which a debtor disputes the amount of the indebtedness he is entitled to a judicial determination of what is due before foreclosure. If the situation involves only a calculation of the application of payments to principal and interest, he may well be east upon his own determination. But, circumstances may justify the stay of a sale until such a determination is made. “A sale under the power may be enjoined where it appears that the amount of the debt is unliquidated, uncertain, in dispute, or only capable of ascertainment on a detailed and complicated accounting; but, where the amount due, although in dispute, is capable of ascertainment, a temporary, rather than a permanent, injunction should be granted.” 59 C.J.S. Mortgages § 552, p. 895.

The evidence in this case concerning the amount due is far from satisfactory. Neither side presented a comprehensive summary of the debits and credits alleged to be involved. It may well be plaintiffs, as they contend in this court, regarded the hearing as a hearing upon the show cause order with an accounting to follow. While the hearing on the merits may be advanced and consolidated with the hearing upon the show cause order upon agreement or notice, the record before this court does not reflect the notice of the hearing in this case. For the proper procedure in this connection see Adams v. Adams, 294 S.W.2d 18 (Mo.1956); State ex rel. Eagieton v. Cameron, 384 S.W.2d 627 (Mo.1964); Bayer v. Associated Underwriters, Inc., 402 S.W.2d 11 (Mo.App.1966).

The determination of the balance of the indebtedness does involve a complicated accounting. This results from the following: the loan was a participation loan and two schedules of payments were maintained, with an initial entry of 50% of the loan for each participating bank. Payments were often allocated, with no adherence to an established pattern, between the two schedules. Mitchells had the loan in question (No. 1527), and at least two other loans with defendant bank. Receipts issued by defendant bank, with no established pattern, contained the loan number in question, one of the other loan numbers or more often no loan number at all. Further complications are involved because of the sales of portions of collateral which will be hereinafter mentioned.

There was evidence to lend some credence to plaintiffs’ claim of excessive indebtedness as a bona fide dispute rather than such a claim being asserted for mere delay. From a cursory examination we are unable to correlate receipts bearing Loan No. 1527 totalling $600 with corresponding credits on the schedule of payments. On the other hand, we find many receipts bearing no loan number that correlate with credits on the schedule of payments. Mitchells’ daughter correlated many receipts with other loans.

As stated, plaintiffs alleged four transactions in which their property was sold to third parties with the proceeds to be applied upon the loan in question. In their petition plaintiffs alleged two of these sales occurred in 1972. Before the hearing commenced, plaintiffs sought to amend the year in one instance to 1970 and the other to 1971. They were not permitted to do so and plaintiffs’ tendered proof on those transactions was excluded as outside the scope of the pleadings. Since the total of credits upon the note is a principal issue, plaintiffs should be permitted to amend and show those transactions.

One of these transactions involved the sale of a tract of real property originally covered by the deed of trust in question. On January 29,1971, this tract was sold for $11,000, paid in the form of a check for $7,500 and a trailer valued at $3,500 delivered to the then president of defendant bank. The consideration was to be applied on the note in question. The schedules of payments show credits of $2,369.54 on that day but no further entries which correlate with this sale. The other alleged transactions involved sales of construction equipment for amounts of $5,000, $8,500 and $22,500. Evidence was admitted concerning the latter sale. We find no credits on the schedules correlating with these transactions. However, we do find some rather large credits but they do not now appear to correlate with these transactions.

Further basis for the dispute is a letter from the auditor of defendant bank to Mitchell. This letter dated June 29, 1976, asked the Mitchells to verify that the balance of Loan No. 1527 was $16,057.86. The auditor had examined a ledger card or cards and not the schedule of payments. By its answer filed September 15, 1976, the defendant bank alleged the balance to be $31,-829.98. No explanation of the difference was offered.

It was essentially admitted on behalf of the plaintiffs that there was a balance on the note of approximately $16,000. The basis for the action of the trial court is not expressly set forth. It seems likely the petition was dismissed because it was established that there was a balance of some amount due upon the note. There is authority to support that position. State ex rel. Central States Life Ins. Co. v. McElhinney, 232 Mo.App. 107, 90 S.W.2d 124 (1936). Also see Lackey v. Mitchell, 14 N.C.App. 748, 189 S.E.2d 626 (1972).

However, there is authority to the contrary. “It will be seen that the learned trial court proceeded on the theory that in showing that there was an amount due on the notes under which the foreclosure was to be had, it was unnecessary to go into and take an accounting as between the parties covering all the receipts and expenditures and payments on account of the indebtedness. In this we are compelled to hold that the learned trial court was in error.” Glines v. Theo. R. Appel Realty Co., 201 Mo.App. 596, 213 S.W. 498, 499 (1919). Also see Koslosky v. Bloch, 191 Mo.App. 257, 177 S.W. 1060 (1915); Farrell v. Seelig, 27 S.W.2d 489 (Mo.App.1930); Irving Bank & Trust Co. v. Second Land Corp., 544 S.W.2d 684 (Tex.Civ.App.1976).

In this case we are not called on to adopt either position. For in addition to the existence of a dispute involving a proportionately substantial amount and a complicated accounting, there is another reason that compels an accounting. The evidence established that at least some of the consideration for the sale of portions of the collateral did reach the bank or its officers. In this respect the bank occupied a fiduciary relationship to the plaintiffs and is under a duty to account to plaintiffs for the application of such funds and property. 1 C.J.S. Accounting § 19, p. 655.

The defendants support the action of the trial court because there was no tender by the plaintiffs. Normally, a debt- or should plead and prove a tender of the amount admitted to be due. Farrell v. Seelig, supra. However, plaintiffs’ failure to do so is not fatal. “It was enough that they made the tender in court as soon as the amount was ascertained.” Koslosky v. Bloch, supra, at 1062. Further, when Mitchell wanted to discuss the disputed amount with the bank, he was told the amount due was the bank’s figure and there was nothing to discuss. A futile tender is not required. 86 C.J.S. Tender § 5, p. 559.

We are aware of Rule 83.13(c) requiring this court, if possible, to finally dispose of the case. However, upon the basis of the record we are unable to determine with any degree of accuracy the balance due on the indebtedness and the matter must be remanded. Capoferri v. Day, 523 S.W.2d 547, 558 (Mo.App.1975). This is possibly because both parties regarded the hearing as one upon the order to show cause. At least the defendant bank offered no evidence to explain any of the ambiguities raised. It may very well be that upon further proceedings the defendant bank will make such explanation and establish that the balance claimed is in fact correct.

By this decision we do not intend to establish that an accounting is a necessary prelude to a foreclosure sale every time a debtor disputes the amount of his indebtedness. Here, because the determination of that balance involves complicated calculations, the amount of the disputed indebtedness is proportionately substantial, there is some reasonable factual basis from which the plaintiffs could dispute the balance and because of the payment of plaintiffs’ funds and property to the bank by third parties, we believe an accounting should be had to determine the balance due. Until that is done, the foreclosure for non-payment should be restrained upon such bond and conditions as will reasonably protect the interests of defendant bank. The judgment dissolving the restraining order and dismissing the petition is set aside and the cause remanded for further proceedings.

BILLINGS, P. J., and HOGAN, J., concur.

      . Such action is not conclusive that plaintiffs regarded the hearing to be upon the merits rather than the show cause order. State ex rel. Eagleton v. Cameron, 384 S.W.2d 627 (Mo.1964).

      . As in State ex rel. Eagleton v. Cameron, supra, the record in this case does not show an express agreement to such advancement. An implicit agreement was reached in Frimel v. Humphrey, 555 S.W.2d 350 (Mo.App.1977).

      . “As a prerequisite to the consolidation of the hearing on an application for a preliminary injunction with the trial on the merits of a permanent injunction the parties must be informed that such action is contemplated, in order that they may have a clear opportunity to object or to suggest special procedures if a consolidation is to be ordered. The notice to the parties must be adequate and clear and unambiguous.” 43A C.J.S. Injunctions § 226, p. 495.


source: Caselaw Access Project

author: COOPER, Justice.

license: Public Domain

text:
    Billy D. BALILES, Petitioner, v. CITIES SERVICE COMPANY, Respondent.
    Supreme Court of Tennessee.
    March 5, 1979.

      Thomas Noel Phillips, Copperhill, for petitioner.
    Arthur G. Seymour, W. Kyle Carpenter, Frantz, McConnell & Seymour, Knoxville, for respondent.
   OPINION

COOPER, Justice.

This is an action for specific performance of a contract for the sale of real property or, in the alternative, for damages for its breach. The chancellor decreed specific performance on completion of a condition precedent. The Court of Appeals reversed the chancellor’s decree and dismissed the action.

Certiorari was granted to review the determination by the Court of Appeals that the written memorandum of an agreement to sell real estate was not sufficient to comply with the statute of frauds (T.C.A. § 23-201(4)); and that neither the doctrine of part performance nor estoppel was effective to take the transaction out of the statute of frauds.

In July 1974, the respondent Cities Service Company orally agreed to sell one of its employees, Dewey M. Newman, Jr., lots 99 and 100 in the Cherokee Hills Subdivision. It became necessary for Mr. Newman to borrow money from the local bank to cover costs of the construction planned for lots 99 arid 100. An official of the bank requested a letter from respondents setting forth its commitment to sell lots 99 and 100 to Mr. Newman. On July 23, 1974, respondent sent the following letter to the bank, addressed to Mr. Newman:

Cities Service Company has agreed to sell to you lots 99 and 100 in Cherokee Hills for residential purposes.
As soon as residences are well under construction deeds to these lots will be delivered to you.

On receipt of the letter, the bank loaned Mr. Newman $5,000.00. Mr. Newman then began construction of a residence on lot 100. He completed the foundation and the outer-walls of a ground-level basement before encountering financial difficulties.

In the summer of 1975, being in financial difficulty and realizing that he had no chance to build a second house, Mr. Newman went to respondent’s offices and released lot 99 to respondent. It also appears that he requested a deed to lot 100, but was refused “until the house was in the dry.”

On August 25, 1975, Mr. Newman assigned his interest in lots 99 and 100 to petitioner, Billy D. Baliles, for $6,500.00, the approximate value of the labor and materials expended in improving lot 100.

Petitioner wrote respondent on December 14, 1975, informing it that he had acquired Mr. Newman’s interest in lot 100. By letter, dated December 16, 1975, respondent took the position that the agreement between it and Mr. Newman was not assignable.

Thereafter petitioner filed a complaint in the Chancery Court of Polk County, Tennessee, seeking specific performance of the agreement between respondent and Mr. Newman or, in the alternative, damages for its breach.

Cities Service Company defended the action on the grounds (1) the written memorandum signed by respondent was not sufficient to comply with the statute of frauds; (2) the agreement was not assignable by Mr. Newman to a non-employee; and (3) that petitioner was not entitled to a deed to lot 100 since the condition precedent of having the residence “well under construction” had not been met.

The chancellor found the memorandum of the agreement for the sale of lots 99 and 100 met the requirements of the statute of frauds. He further found that the assignment by Mr. Newman of his rights in lot 100 under the contract to petitioner was valid and would be enforceable when the residence on lot 100 was “well under construction” — which the chancellor concluded to be when the residence was “under roof.” The chancellor then ordered respondent to execute a deed to petitioner for lot 100 when the residence was put “under roof.”

The chancellor also found that the assignment by Mr. Newman to petitioner of his rights to lot 99 was ineffectual, as Mr. Newman had returned that lot to defendant before the assignment was executed.

Respondent appealed from that part of the chancellor’s decree that affected lot 100. The Court of Appeals reversed the chancellor, holding that the memorandum of the agreement between respondent and Mr. Newman does not comply with the requirements of the statute of frauds. The Court of Appeals further held that part performance would not take the contract in question out of the operation of the statute of frauds, and that plaintiff could not rely upon the doctrine of equitable estoppel under the circumstances of this case. The Court of Appeals also noted that even if the agreement to sell lot 100 was not within the statute of frauds the petitioner was not entitled to a deed to the property because a condition precedent to receiving a deed— that is, to have the residence under roof— had not been met.

The applicable section of the statute of frauds, T.C.A. § 23-201, provides that:

No action shall be brought: * * * (4) upon a contract for the sale of lands . [u]nless the promise or agreement upon which such action shall be brought or some memorandum or note thereof, shall be in writing, and signed by the party to be charged therewith, or some other person by him thereunto lawfully authorized.

The purpose of the statute of frauds “is to reduce contracts to a certainty, in order to avoid perjury on the one hand and fraud on the other.” Price v. Tennessee Products & Chemical Corporation, 53 Tenn.App. 624, 385 S.W.2d 301 (1964). Consequently, to comply with the statute of frauds, a memorandum of an agreement to sell must show, with reasonable certainty, the estate intended to be sold.

Where the instrument is so drawn that upon its face it refers necessarily to some existing tract of land, and its terms can be applied to that one tract only, parol evidence may be employed to show where the tract so mentioned is located. But, where the description employed is one that must necessarily apply with equal exactness to any one of an indefinite number of tracts, parol evidence is not admissible to show that the parties intended to designate a particular tract by the description.” Dobson v. Litton, 45 Tenn. 616. See also Dry Goods Co. v. Hill, 135 Tenn. 60, 185 S.W. 723 (1916).

The memorandum relied on by petitioner as written evidence of the agreement to sell, and which is set out above, does not locate the Cherokee Hills Subdivision by county or state. Neither doés it contain any information which would tend to locate the subdivision. Further, the description of the specific property that is the subject of the oral agreement is by lot numbers only. There is no recorded plat to show the location of lot 100 within the subdivision, nor its dimensions or calls.

In Kirshner v. Feigenbaum, 180 Tenn. 476, 176 S.W.2d 806 (1944), it is pointed out that a memorandum of an agreement for the transfer of an interest in real property which fails to designate the county and state where the land is located is insufficient under the statute of frauds, unless the description of the property as set out in the memorandum is otherwise so definite and exclusive that “it does not reasonably appear that the description given would fit equally any other tract, then parol proof is admissible to locate and designate the tract intended.”

We think it evident, and we agree with the Court of Appeals, that the description in the memorandum does not describe the tract of land with reasonable certainty, that the description is of no material aid in locating the property that is the subject of the agreement to sell, and consequently does not satisfy the requirements of the statute of frauds.

Petitioner insists that even though the memorandum of the agreement to sell is insufficient to meet the requirements of the statute of frauds, the agreement should be enforced on the basis of part performance, or by the application of the doctrine of estoppel.

The appellate courts of this state consistently have refused to enforce an oral contract for the sale of land on the basis of part performance alone. Knight v. Knight, 222 Tenn. 367, 436 S.W.2d 289 (1969); Goodloe v. Goodloe, 116 Tenn. 252, 92 S.W. 767 (1905). And, it is now a rule of property in this state that part performance of a parol contract for the sale of land will not take the agreement out of the statute of frauds. Goodloe v. Goodloe, supra. The harshness of this rule has been mitigated by the application of the doctrine of equitable estoppel in exceptional cases where to enforce the statute of frauds would make it an instrument of hardship and oppression, verging on actual fraud. Covington v. McMurray, 4 Tenn.C.C.A. 378 (1913); Gheen v. Osborne, 58 Tenn. 61 (1872). See also Decherd v. Blanton, 35 Tenn. 373 (1855); Williams v. Conrad, 30 Tenn. 412 (1850); Bloomstein v. Clees Brothers, 3 Tenn.Ch. 433 (1877); Interstate Co. v. Bry-Block Mercantile Co., 30 F.2d 172 (D.C.W.D.Tenn.) (1928).

“Equitable estoppel, in the modern sense, arises from the ‘conduct’ of the party, using that word in its broadest meaning, as including his spoken or written words, his positive acts, and his silence or negative omission to do any thing. Its foundation is justice and good conscience. Its object" is to prevent the unconscientious and inequitable assertion or enforcement of claims or rights which might have existed, or been enforceable by other rules of law, unless prevented by an estoppel; and its practical effect is, from motives of equity and fair dealing, to create and vest opposing rights in the party who obtains the benefit of the estoppel.” Evans v. Belmont Land Co., 92 Tenn. 348, 365, 21 S.W. 670, 673-674 (1893).

We think this is such a case. In dealing with Mr. Newman, respondent not only placed him in possession and permitted him to construct improvements on lot 100, but took affirmative action thereafter to aid Mr. Newman secure a $5,000.00 loan— this latter action being taken with the knowledge that the proceeds of the loan were to be used in the construction of a dwelling on lot 100. In the face of this affirmative action by respondent, to allow it to set up the statute of frauds as bar to enforcement of the agreement to sell lot 100 to Mr. Newman, and thus secure to itself the improvements on lot 100 would be a gross injustice and moral fraud on Mr. Newman.

Petitioner had no direct dealings with respondent relative to lot 100, except to give notice of the assignment executed by Mr. Newman. However, by virtue of the assignment, petitioner acquired all the rights and remedies possessed by Mr. Newman under the agreement to sell, and took the contract subject to the same restrictions, limitations, and defenses as it had in the hands of Mr. Newman. See generally, 6A C.J.S. Assignments § 88. It follows that since it is unconscionable to allow respondent to set up the statute of frauds as a bar to enforcement of the agreement to sell lot 100 to Mr. Newman, it would be unconscionable to permit the defense to be interposed in this action brought by Mr. Newman.

Respondent argues that the agreement to sell lot 100 was not assignable— that it was a special kind of contract entered into only with respondent’s employees. We find nothing in the record to indicate that the agreement was not assignable. To the contrary, the representative of respondent who made the agreement testified that there was nothing to prevent an employee from taking a lot, putting up a house, and then selling it to someone who was not an employee.

The Court of Appeals pointed out in its opinion that even if the agreement to sell lot 100 is enforceable, respondent is not now entitled to a deed to the property because a condition precedent to receiving a deed — that is, to have the residence under roof — has not been met. The chancellor also recognized that the condition precedent had not been met by petitioner at the time of trial of the cause. He also noted the practical difficulty, or dilemma, faced by petitioner in expending additional monies on the residence to place it under roof in the face of the insistence of respondent that Mr. Newman’s rights in lot 100 were not assignable, and absent a judicial declaration of the efficacy of the agreement between Mr. Newman and respondent. In resolving this dilemma, the chancellor pointed out that the action brought by petitioner “conforms to a certain extent to a declaratory judgment.” The chancellor then undertook to declare the rights of the parties in the agreement. He held the agreement to sell was enforceable, the assignment was valid, and that petitioner would be entitled to a deed to lot 100 when he had the residence under roof. We think the chancellor’s findings were correct and that his declaration of petitioner’s right to a deed to lot 100, when the condition precedent is met, was timely and proper.

The judgment of the Court of Appeals is reversed. The judgment of the chancellor is affirmed. Costs of the cause are adjudged against respondent.

FONES, BROCK, and HARBISON, JJ., and ALLISON B. HUMPHREYS, Special Judge, concur.


author: FONES, Justice.

text:
    CONTINENTAL BANKERS LIFE INSURANCE COMPANY OF the SOUTH, Petitioner, v. The BANK OF ALAMO, Respondent.
    Supreme Court of Tennessee.
    March 12, 1979.

      William Rice, Jr., Rice & Rice, Jackson, for petitioner.
    T. J. Emison, Jr., Emison & Emison, P. C., Alamo, for respondent.
   OPINION

FONES, Justice.

This is a suit to recover $50,000 deposited in the Bank of Alamo by Peoples Protective Life Insurance Company (PPLI), represented by a certificate of deposit (CD) dated May 5, 1974, due in thirty days. Bank refused payment and defended the suit on the theory that the deposit was first made in November 1973 as “security” for a $100,-000 loan to Peoples Protective Corporation (PPC), the parent corporation of the depositor, or in the alternative, that the parent’s domination of the subsidiary allowed bank to invoke the “instrumentality” rule to disregard the corporate entities and gave rise to the right to set off the $50,000 CD against the loan balance due from the parent.

The trial court and the Court of Appeals held that the two corporations should be treated as one; the trial court apparently held that the bank had a security interest in the CD and also was entitled to set off the funds deposited against the loan balance, alleged to be $75,000. The Court of Appeals affirmed, without discussion of a security interest, and remanded the case to the trial court for an accounting by bank to determine the amount to be credited to the loan, realized and to be realized, from certain security that was given to the bank by the parent subsequent to default.

Billy Jack Goodrich and Curtis Mansfield represented both corporations in the original transaction with the Bank of Alamo in November 1973. Goodrich was general counsel and a director of both corporations and Mansfield was vice president and treasurer of both corporations. Robert W. Conley, executive vice president of the Bank of Alamo, made the loan in November 1973 and extended it in May 1974. On or about April 19, 1974, Joe Jack Merryman purchased all of the stock of the life insurance company from PPC; the sale was consummated May 1, 1974, and the name of the corporation was changed to Continental Bankers Life Insurance Company of the South, hereinafter referred to as plaintiff.

I.

In the summer of 1973, Goodrich sought a loan from the Bank of Alamo on behalf of PPC and was advised by Conley that the bank was in the middle of its heavy lending period to its farming clientele and was not interested in any other loans. In early November 1973, Goodrich called Conley again and the bank agreed to make the loan. There is no dispute that the loan was to be $100,000 and that $50,000 was to be deposited with the bank, represented by a CD, and that the due date of both the loan and the deposit would be six months.

The transaction was closed on November 5, 1973. Goodrich and Mansfield came to the bank and delivered to Conley the following documents: (1) a resolution of the executive and finance committees of PPC authorizing Mansfield to act for that corporation in obtaining a $100,000 loan from the Bank of Alamo, certified by Jerrell H. Parchman, secretary of PPC; (2) an unsecured promissory note dated November 1973, signed by Mansfield as vice president and treasurer of PPC in the principal sum of $100,000, bearing interest at the rate of 9½ per annum and due in 180 days; and (3) a PPLI check dated 2 November 1973, in the sum of $50,000 payable to the Bank of Alamo, signed by Charles Dawson and countersigned by Mansfield.

Conley delivered to Goodrich and Mansfield the following documents: (1) a Bank of Alamo check in the sum of $100,000 payable to PPC and (2) a CD of the Bank of Alamo, # 3080 dated November 5, 1973, with this recitation on its face:

“Peoples Protective Life Insurance Company has deposited in this bank exactly $50,000 dollars payable to themselves in current funds on the return of this certificate properly endorsed 6 months after date with interest at the rate of 5½ per cent per annum for the time specified only.”
s/ Patricia Nolen
Authorized Signature

It is undisputed that the five documents described above are the only writings involved in the November transaction. The note has no language reciting that any security, pledge or collateral was given. The CD was facially unencumbered and, as stated, it was delivered to Goodrich and Mansfield.

May 5,1974, was the due date of the note and the CD. Neither the trial court nor the Court of Appeals gave any consideration to the facts surrounding the extension of the loan and the reissuance of the CD in May 1974.

Goodrich called Conley about May 10, or May 11, and asked for a thirty-day extension of the loan, which was refused. Goodrich then proposed that PPC pay $25,000 plus the six months accumulated interest, plus interest in advance at the rate of 10%, for a thirty day extension on the $75,000 balance. Conley accepted that proposal. PPC’s check was mailed to the bank.

At the time that Conley and Goodrich discussed and agreed upon the thirty-day extension, PPC had sold all of the stock of PPLI to Merryman and members of his immediate family, and Goodrich was neither an officer nor a director of PPLI. The agreement for the sale of the stock was made on or about April 19, 1974, and the sale was consummated on or before the first day of May 1974.

On May 8, 1974 PPLI delivered the November CD to the collections department of the First National Bank of Jackson, Tennessee with the request that it be sent to the Bank of Alamo for collection. The record is not explicit as to the date the certificate was received at the Bank of Alamo, but it is certain that it was received subsequent to consummation of the Conley-Goodrich agreement to extend the due date of the balance of the loan to PPC. Upon receipt of the CD, Conley attempted to contact Goodrich but was unable to do so prior to departing to attend a bankers’ convention. He instructed Mac Goode, assistant vice president of the Bank of Alamo, to contact Goodrich and remind him of the November agreement, that, in Conley’s words, the CD would “stay there as long as the loan was there.”

Goode’s version of his conversation with Goodrich on Monday, May 13, 1974, was as follows': On direct examination he testified that he called Goodrich, reminded him of the November agreement that the “note would be paid in full before we released the funds”; that Goodrich acknowledge that was the agreement but said “he wanted to check” and would call back; that Goodrich called back the same morning and said “go ahead and renew the CD”; that Goode then issued the new CD backdated to May 5, due June 5, 1974, to coincide with the due date of the loan.

On cross examination Goode admitted that someone else from “the life insurance company” called him that morning and discussed the interest rate with him. He would not admit that the caller told him the life insurance company had been sold, but acknowledged receiving a letter from J. Michael Houser, vice president of PPLI, dated May 13, confirming the redeposit of $50,000 for a period of thirty days from May 5, 1974, at five percent interest, and informing Goode that the life insurance company was under new ownership and management.

Goodrich’s version of the call from Goode was as follows: Conley had asked Goode to call and inform him that the owners of PPLI wanted to cash the CD and, “Could I help them keep the deposit”; that he explained to Goode that he was no longer connected with the life insurance company since it had been sold, but he would do what he could; that he called Houser, told him the substance of Goode’s call and asked him if he would “see what he could do about keeping the CD at the Bank of Alamo.” It is undisputed that after these conversations on May 13, Goode having possession of the $50,000 CD due on May 5, 1974, had a new $50,000 CD issued, payable to Peoples Protective Life Insurance Company, due June 5, 1974, with interest at five percent, and directed the issuance of a check to Peoples Protective Life Insurance Company in the sum of $1,375.00 in payment of the interest from November 5, 1973, to May 5, 1974. The check and the CD were mailed to the bank -in Jackson for delivery to Peoples Protective Life Insurance Company. The check was dated May 16, 1974, and was received by the Jackson bank on May 17, 1974. The letter from Houser to Goode advising that the insurance company was under new ownership and management was dated May 13, 1974, and Goode admitted that he would have received it in one or two days, mailed from Jackson.

PPC did not pay the note and on June 11, 1974, the bank was given, as security for the unpaid balance, notes and trust deeds, in a face amount that cannot be determined from the record, but was referred to several times as totalling $71,000. The bank took the position that the facts about the collateral given on June 11, and how much money had been realized thereon, were immaterial to the issues, and the trial court agreed. The Court of Appeals remanded for an accounting.

On or about June 14, plaintiff made formal demand upon the bank for payment of the May CD, which was refused.

II.

Bank’s answer asserts that Goodrich and Mansfield promised Conley that the $50,000 would be left with the bank “as security for the loan.” Under cross examination at the trial on September 8, 1975, Conley testified as follows:

Q. Did Mr. Goodrich tell you — or Mr. Mansfield tell you that you would have a security interest of any kind in the certificate — represented by the money represented by the certificate of deposit in this case or was secured interest or collateral ever mentioned in connection with the loan.
A. Security interest was not mentioned.
Q. Was collateral ever mentioned?
A. I’m sure not.

When asked about a security interest at another stage of his testimony he said the only security interest was set off. The trial court expressly found that the certificate of deposit represented “additional security for the loan,” and the decree adjudged that bank was entitled to “possession” of the certificate of deposit. The Court of Appeals opinion did not expressly address the issue of a security interest in the CD.

The writing that constitutes the basis for petitioner’s demand for payment is a certificate of deposit. It is an instrument subject to the commercial paper statute. See Old Southern Life Ins. Co. v. Bank of North Carolina, 244 S.E.2d 264 (N.C.App.1978). T.C.A. § 47-3-104 provides the requirements of a negotiable instrument:

(1) Any writing to be a negotiable instrument within this chapter must
(a) be signed by the maker or drawer; and
(b) contain an unconditional promise or order to pay a sum certain in money and no other promise, order, obligation or power given by the maker or drawer except as authorized by this chapter; and
(c) be payable on demand or at a definite time; and
(d) be payable to order or to bearer.
(2) A writing which complied with the requirements of this section is
(c) a ‘certificate of deposit’ if it is an acknowledgment by a bank of receipt of money with an engagement to repay it.

The writing in controversy here meets all of the above criteria for negotiability except (l)(d), “be payable to order or to bearer”; the CD reads, “Payable to.” Under pre-UCC law there was some authority that a CD in this form was negotiable. See generally 5B Michie’s Banks and Banking §§ 313-328 (1973). Though the comments to T.C.A. § 47-3-104(l)(d) authorize court-imposed substitutes for the symbols of negotiability, it was the intent of the drafters that “in doubtful cases the decision should be against negotiability.” Comment 5, T.C.A. § 47-3-104; see White & Summers, Uniform Commercial Code 464-65 (1972). Nevertheless, though the instrument is nonnegotiable, it still falls within the scope of the commercial paper chapter of Title 47. T.C.A. § 47-3-805 provides, “This chapter applies to any instrument whose terms do not preclude transfer and which is otherwise negotiable within this chapter but which is not payable to order or to bearer, except that there can be no holder in due course of such an instrument.” Accord, First Nat. Bank in Grand Prairie v. Lone Star Life Ins. Co., 17 UCC Rep. 835, 524 S.W.2d 525 (Tex.Civ.App.1975), cert. denied, 529 S.W.2d 67 (1975).

It is consistent with the commercial paper statute and with the parol evidence rule that a prior or collateral oral agreement which varies or contradicts the express terms of an instrument is inadmissible in evidence. See Gibson Co. v. Fourth & First Nat. Bank, 20 Tenn.App. 168, 177, 96 S.W.2d 184, 189 (1936); 17A C.J.S. Contracts § 323 (1963). Cf. Lazarov v. Klyce, 195 Tenn. 27, 255 S.W.2d 11 (1953). By its express terms, the CD provides for the payment of the amount on deposit plus interest upon maturity and demand by the holder of the instrument. The CD does not contain any restrictions on its face or provide that it is subject to a separate agreement. An oral agreement that money on deposit was to exist as a security interest certainly is inconsistent with the provisions of a negotiable instrument. In fact, Conley acknowledged that, to retain a security interest, the customary practice was for the bank to take possession of the CD or make a notation on a savings sheet. Of course, the proper method of perfecting would be to take the CD as a pledge by possession. T.C.A. § 47-9-304. The commercial paper chapter provides that an instrument “may be varied by a separate written agreement," (emphasis added) but consistent with the policy of promoting certainty in commercial transactions, it otherwise follows the provisions of the parol evidence rule. T.C.A. § 47-3-119. Moreover, there has been no showing of fraud, duress or mutual mistake which would suspend the operation of the rule. Thus the assertion that it was the “understanding” of the bank that the CD was security for PPC’s loan is incompetent for it contradicts the express terms of the CD.

We find it pertinent to note that neither the Chancellor nor the intermediate court found that an oral agreement ever existed. Rather, the Chancellor characterized the “gist” of the action:

“The Defendant, Bank of Alamo, contends that all such transactions were tied together, with the assumption clear that it was the intention that the certificate of deposit was to be additional security for the loan and that this certificate of deposit should be applied to the balance of the loan made by the Bank of Alamo. (Emphasis added.)

It is our conclusion that there was no material evidence to support a finding that the CD represented “additional security for the loan”, and that as a matter of law the bank had no security interest in the certificate of deposit.

III.

This brings us to the principal defense to the action on the certificate of deposit, the right to set off the insurance company’s $50,000 against the unpaid balance of the loan to its parent corporation, PPC. It is the general rule that to invoke the remedy of set off the debts must be due between the same parties, and in recognition of that principle, the bank predicates its right of set off upon its claim that the two corporate entities should be disregarded and treated as one, and both courts below have sustained that contention.

The general rule is that corporate entities will be recognized as separate and distinct from their stockholders and that to disregard the corporate entities requires, in the case of parent and subsidiary, more than a showing that they have similar corporate names and locations and the exercise of dominion through common officers and directors. See 18 Am.Jur.2d Corporations § 17 at 564-65 (1965). The case law covers a broad spectrum of disagreement as to the additional elements of proof required to disregard corporate entities.

The trial court and the Court of Appeals relied upon Neese v. Fireman’s Fund Ins. Co., 53 Tenn.App. 710, 386 S.W.2d 918 (1964). In that case, the Court of Appeals found that Scott N. Brown, the majority stockholder of two corporate entities, operated the corporations as a single entity, including commingling their funds to such an extent that the bank accounts amounted to a single treasury. The suit was brought by Neese, trustee in bankruptcy of First Trust Company, to recover upon a real estate agent’s and salesman’s bond that covered losses occasioned by failure of Real Estate Management, Inc. to remit rents collected for the account of its principals. The trustee sought to recover rents collected and allegedly not remitted by Real Estate Management, Inc. to its affiliated corporate entity, First Trust Company. The Court of Appeals opinion cites a number of cases wherein corporate entities have been disregarded, in a variety of situations, but applied the identity theory, which was appropriate under the facts of that case.

The Court of Appeals, in the case at bar, interpreted a quote in the Neese opinion as establishing the principles for determining the application of the instrumentality theory. We do not agree that the Neese court intended the quote from 1 Fletcher Cyc. Corp. § 43 (perm. ed. 1963) to define the elements of proof required to invoke the instrumentality rule in Tennessee.

The Tennessee cases involving efforts to disregard corporate entities and hold one corporation liable for the debts of another, often referred to as “piercing the corporate veil”, provide no significant analogy to the instant case. In the considerable body of American case law, all of the numerous theories, such as alter ego, instrumentality, identity, agency and estoppel, have been articulated in widely varying language, and each theory has been criticized by one or more authoritative sources.

Our research has led us to the same conclusion as that expressed by the author of the annotation in 38 A.L.R.3d 1102 § 2 at 1110 (1971):

“There have been a number of formulations of rules of parental liability, varying from the short to the long, but unfortunately the concept is still as enshrouded in the ‘mists of metaphor’ as it was in 1926 when Judge Cardoza made that observation.”

We are persuaded that the rule as formulated in Lowendahl v. Baltimore & O. R. Co., 247 App.Div. 144, 287 N.Y.S. 62 (1936), aff’d 272 N.Y. 360, 6 N.E.2d 56, rehearing denied, 273 N.Y. 584, 7 N.E.2d 704 (1937), expresses the elements of proof required in a plurality of jurisdictions and is consistent with the expressions and results reached in most of the Tennessee cases. See, e. g., Fisser v. International Bank, 282 F.2d 231 (2d Cir. 1960); Majestic Co. v. Orpheum Circuit, Inc., 21 F.2d 720 (8th Cir. 1927); Brown v. Margrande Compania Naviera S. A., 281 F.Supp. 1004 (E.D.Va.1968); National Bond Finance Co. v. General Motors Corp., 238 F.Supp. 248 (W.D.Mo.1964), aff’d, 341 F.2d 1022 (8th Cir. 1965).

Paraphrased from Lowendahl, application of the instrumentality rule requires proof of the following three elements:

(1) The parent corporation, at the time of the transaction complained of, exercises complete dominion over its subsidiary, not only of finances, but of policy and business practice in respect to the transaction under attack, so that the corporate entity, as to that transaction, had no separate mind, will or existence of its own. (2) Such control must have been used to commit fraud or wrong, to perpetuate the violation of a statutory or other positive legal duty, or a dishonest and unjust act in contravention of third parties’ rights. (3) The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of.

Tennessee Consol. Coal Co. v. Home Ice & Coal Co., 25 Tenn.App. 316, 156 S.W.2d 454 (1941) involved a question of priority between Roberts and the successor corporation to Independent Life Insurance Company in a general creditors proceeding. Independent came into possession of real estate and personal property upon a loan default and found it expedient to protect those assets by organizing and controlling the Home Ice and Coal Company. That corporation later became insolvent, and its assets were administered in Davidson County Chancery Court. In the trial court, the claim of the parent corporation, Independent, was subordinated to the claims of all creditors, including Roberts, on the grounds that Home Ice and Coal Company was a mere “agency or instrumentality” of Independent. Independent accepted that result as to all creditors except Roberts, maintaining on appeal that Roberts was not misled, deceived or defrauded because he was president of Independent when it organized and dominated the operation of Home Ice and Coal Company. The Court of Appeals affirmed Roberts’ priority citing strong equitable considerations: that the money advanced by Roberts, personally, was used for operating expenses by the subsidiary and directly benefitted the parent as the proof showed that it had already received $13,000 out of the subsidiary’s properties, which were worth only $3,000 or $4,000 when the corporation was organized. The Court of Appeals held that:

“By the ordinary rules of principal and agent, the Independent as principal is liable to Roberts for the acts of its agent within the scope of the agent’s authority. It is not denied that the sums he advanced and the loan procured on the pledge of his stock were received by the agent and used in the operation of the business, and thus went directly for the benefit of the Independent. The business was really the Independent’s business, and the money advanced by Roberts for operating expenses of the business should be treated as advancements to the Independent.” 25 Tenn.App. at 322, 156 S.W.2d at 458.

However, that Court also stated the following principle, apparently in reference to the application of the instrumentality rule:

“It is not necessary for one to show that he has been misled, deceived or actually defrauded, to enable him to invoke this rule. It is enough that the parent corporation’s domination of the subsidiary was so complete as to make them practically indistinguishable or to make the subsidiary a mere tool, agency or instrumentality of the parent; and that he will suffer loss unless the parent be held.” 25 Tenn.App. at 321, 156 S.W.2d at 458.

That statement was unnecessary to sustain the result in favor of Roberts.

In a factual situation involving priority among creditors, the courts are inclined to require less dominion of corporation operations and little equity; where, as here, the transaction attacked involves a direct contractual relationship, the proof required is more stringent. We agree with the result reached in Home Ice & Coal Co. but do not agree that the instrumentality rule was appropriately used or stated therein.

IV.

Applying the three elements of the instrumentality rule to the facts in this case, we conclude, as a matter of law, that the bank has failed to make out a case that justifies disregard of the corporate entities of the life insurance company and its former parent corporation, to whom the loan was made.

Parenthetically, it is worthy of note that almost without exception, the relevant eases involve efforts to reach the assets of the parent corporation for the debts of the subsidiary; whereas here, it is the subsidiary that proved to be financially stable, and the parent unstable. See Annot., 38 A.L. R.3d, supra. It is worthy of note, because this record shows that the bank did not give a “thought” to requiring from the parent any of the usual types of collateral, or requesting a security interest in the CD.

Conley gave the following testimony at the trial on September 8, 1975:

Q. Mr. Connelly [sic], do you think that Mr. Goodrich and Mr. Mansfield acted in bad faith in making representation to you in connection with this loan?
A. No, sir.
Q. Do you think that Mr. Goodrich or Mr. Mansfield made any misrepresentations to you or attempted to defraud the Bank of Alamo in connection with this loan?
A. With the making of this—
Q. Any false representations or—
A. (Interposing) In the making of this loan?
Q. Yes, sir. Or attempted to defraud the bank?
A. No, sir.

The trial court found that neither Goodrich nor Mansfield “intended to defraud” the bank. But, that finding falls short of the full import of the testimony quoted above, not elsewhere contradicted, that puts completely to rest any question of fraud, misrepresentation or bad faith.

The trial court made this finding of fact:

“On the occasion when this instant loan was made, Billy Jack Goodrich had come to the Bank of Alamo requesting the loan and it was he who drafted all legal documents required for closing the loan.”

The trial court’s opinion continued with the observation that Conley “testified that at all times pertinent he did not know the difference between PPC and PPLI and thought that he was dealing with one corporation . . that he thought the loan and the certificate of deposit was made to the same company.”

The trial court then proceeded with a lengthy analysis of the 1972 annual report of PPC and its subsidiaries and concluded that the report “reinforced the impression that PPLI was operated as a division of PPC.” The trial court summarized its findings and stated its conclusions as follows:

“Mr. Conley impressed the Court as a man who made the loan in good faith, relying upon the representation of Mr. Mansfield and Mr. Goodrich, especially Mr. Goodrich, who had previously handled legal matters for the Bank of Alamo. Mr. Conley relied upon Mr. Goodrich to take care of all legal matters necessary to complete the transaction. This is not to say that Mr. Goodrich or Mr. Mansfield intended to defraud the Bank of Alamo, but simply to say that Mr. Conley relied upon their representations, and reasonably believed from all the circumstances that the funds represented by the certificate of deposit would be kept on deposit in the Bank of Alamo for the life of the loan, and simply represent additional security for the loan. Mr. Conley understood that so long as the $50,000 remained on deposit in the Bank of Alamo, the bank would have the right to set-off the deposit against the loan should it not be paid when due.
This Court finds that the funds, accounts, operations, directors, officers, and shareholders, of Peoples Protective Corporation and Peoples Protective Life Insurance Company were so closely bound together, overlapping, and interchanga-ble, that this Court of equity should refuse to indulge the legal fiction that they were wholly separate, distinct and independent corporate entities. (Emphasis added.)

The finding that Goodrich drafted all the legal documents required and that Conley relied upon him to take care of all legal matters necessary to complete the transaction apparently served the purpose of insulating Conley from knowledge that he was making a loan to one corporation, receiving the funds of another corporation, an insurance company, and issuing a certificate of deposit to that company. There was no contention or finding that any of the documents in November or May were erroneously prepared or failed to contain any agreement that was intended to be reduced to writing.

It was undisputed that Goodrich and Mansfield went to the Bank of Alamo on November 5,1973, armed with an appropriate resolution of PPC authorizing the loan, a promissory note of that corporation and the insurance company’s check in the sum of $50,000. Obviously they did not bring with them the check of the Bank of Alamo to PPC in the sum of $100,000 or the certificate of deposit payable to the insurance company in the sum of $50,000. The testimony of Goodrich and Mansfield was unequivocal that Conley was told to have the $100,000 check made out to Peoples Protective Corporation and the $50,000 CD payable to the insurance company. Conley’s testimony was equivocal in that he admitted that that might have happened, but he thought he merely told Goodrich to instruct the bank employee that performed that function to prepare the check and CD as they should be. In view of the finding of the trial court we are required to resolve this conflict, if such it be, in favor of Conley, but that does not resolve the issue. The Bank of Alamo, not Conley, is the defendant and the party having the burden of establishing, as a defense, the one corporation theory. It is immaterial whether Conley actually issued the instructions for the preparation of the check and CD or actually observed and mentally recorded the documented fact that the bank was issuing its CD to one corporation and its check for the proceeds of the loan to another corporation. The November CD, payable to the insurance company, was signed by Patricia Nolen, assistant cashier of the bank, whose authority to sign for the bank was not questioned. The check to PPC was not made an exhibit but was obviously signed by a person authorized by the bank because it was cashed by PPC. While there is no direct evidence one way or the other, it must be presumed that the bank’s internal records were kept in accord with standard bookkeeping practices, which would require the posting of a $100,000 loan debit to PPC and a $50,000 deposit credited to the insurance company. These documentary facts are binding on the Bank of Alamo and render immaterial and irrelevant Conley’s thoughts about whether he was dealing with one corporation or two. The bank cannot hide behind Conley’s claim that he refused to take cognizance of facts that its own documents and records reflected; nor is this Court bound by a finding of the trier of fact that accepted a senior bank officer’s thoughts that were contradicted by documentary evidence.

Nevertheless, we further examine Conley’s testimony bearing on the issue of whether he was justified in thinking he was dealing with one corporation. Plaintiff took a discovery deposition of Conley on January 16, 1975, and again on April 16, 1975, and those depositions were introduced as part of the plaintiff’s proof at the trial. Conley also testified at the trial on September 8 and September 29, 1975.

On January 16, Conley was examined by counsel for plaintiff and testified in part as follows:

Q. Whose request or idea was it that the additional money be deposited by the other corporation? Was that your request in order to secure the $100,000 loan, or was that a suggestion made by Mr. Goodrich?
A. That was a suggestion made by Mr. Goodrich as part of the whole package.
And at the time — I’ll say this. You’re saying the “other corporation”. At the time I didn’t know there were two.
Q. Well, you thought it was one corporation at that time? ■
A. Well, I don’t know as I even thought about a difference. It never occurred to me one way or the other.
Q. What would have been the purpose of a single corporation depositing $50,000 and borrowing $100,000?
A. Well, what they told me was they had to keep a certain amount of cash reserve on hand all the time in the amount of deposits of one type or another.
Q. Mr. Goodrich told you this or Mr. Mansfield?
A. I have no earthly idea, Robert.
Q. You don’t remember which one?
A. No, I don’t remember how it came up or anything about it, but, now, this was part of what I was told or led to believe and so forth in the corporation.
Of course, I didn’t dream up the cash reserve that they’re talking about they had to keep on hand. Now, they said that was a part of the insurance company’s cash reserve.
Q. Okay. Then at some point in that conversation you had to realize they were talking about two different companies?
A. Well, I don’t know whether I did or not. I don’t know whether I did or not. I don’t — I don’t really think I did.
Q. Well
A. I don’t guess I understood the workings of the corporation as well as I should have.

It is incredible if Conley, the executive vice president of the Bank of Alamo, president at the time of trial, with twenty-seven years banking experience did not realize they were talking about two different companies at that time, but, if that be true, both he and the bank were charged with that knowledge on November 5 when the documents were signed, reflecting beyond any peradventure of doubt that the loan was being made to PPC and that the “reserve fund” was deposited by, and a CD issued to, PPLI.

Another factor, not considered by either of the courts below, was the significance of Conley’s admitted knowledge that the $50,-000 was the insurance company’s cash reserve. Mansfield testified that he and Goodrich also expressly told Conley that the insurance company’s reserve “could not be tied in any way to the loan because it was funds of Peoples Protective Life Insurance Company and the insurance company could not pledge any of its assets for a corporate debt.”

In Central Sav. Ass’n v. Central Plaza Bank & Trust Co., 223 So.2d 50 (Fla.App. 1969), cert. denied, 232 So.2d 176 (1969), the court denied the right of a bank to set off a $50,000 certificate of deposit of a savings and loan association against a loan to its parent corporation that was in default, on the ground that the savings and loan was a regulated company and as such prohibited from lending its credit, as distinguished from lending its money.

The Tennessee statutes governing domestic life insurance companies severely restrict the use and investment of its assets (see T.C.A. §§ 56-305, 306, 307) with the underlying purpose of protecting the policy holders, just as the statutes and regulations governing banks are designed to protect depositors. PPLI was a domestic life insurance company. When a bank, acting as a lender, has knowledge that it is dealing with the reserve funds of a life insurance company we think it is charged with notice that the use of those funds is regulated and restricted for the protection of policy holders, and at the very least, it is a signal that inquiry and investigation are called for, as distinguished from “assumptions.”

The Courts below gave no consideration to the fact that, after knowledge of the sale of stock of the life insurance company by PPC, the bank extended the loan to PPC and reissued the CD to the life insurance company in May, 1974.

This Court is not bound by the concurrent finding of fact rule with respect to material evidence that has not been the subject of specific findings by the trial judge. City of Columbia v. C. F. W. Constr. Co., 557 S.W.2d 734 (Tenn.1977); Kemp v. Thurmond, 521 S.W.2d 806 (Tenn.1975).

In addition to the documented facts related in Section I of this opinion that show Goode had knowledge of the sale before he issued the CD to the insurance company, Conley admitted that he read an. article in the Jackson Sun or the Memphis Commercial Appeal, or both, announcing the sale. The record shows that an article announcing the sale appeared on the front page of the Jackson Sun on April 21, 1974. Although Conley denied that Goodrich or Mansfield, or anyone else, gave him “notice” of the sale, there being no finding by the lower courts, we find that the bank, through Conley and Goode, knew that the stock of PPLI was not owned by PPC, and a fortiori, that any identification of PPLI with PPC was at an end, before the extension of the loan on or about May 10, 1974, and the issuance of the CD that is the subject of this suit on May 16, 1974.

Both lower courts considered it significant that the two corporations had common officers and directors, used the same building, address, telephone number, etc., and as stated earlier, the trial court placed particular emphasis on the annual report of PPC. Conley did not testify that he read or relied upon anything in the annual report as indicating that there was only one corporation. In fact, no emphasis was put on the annual report at the trial, except that, as noted by the trial court, Mansfield stated that if Conley had read the annual report which was left with him in the summer of 1973, he would have realized that PPC and PPLI were separate corporations, and the trial judge’s findings disagreed with that conclusion, as did the Court of Appeals.

What impression the annual report presented is immaterial here, in the absence of testimony from Conley that it actually deceived him, and that reasonable minds would agree that a senior bank officer would be deceived by it.

The trial court concluded that denying recovery “would work an injustice and cause an injury to the Bank of Alamo which has done no wrong.” That conclusion will not withstand analysis. The essential fact undergirding the bank’s theory of recovery is that Conley and the bank were dealing with one corporation. The bank cannot espouse that theory for one purpose and disclaim it for another. Given the one corporation theory, the borrower paid 9⅛⅛% per annum on $50,000 of the bank’s money and 9½% on $50,000 of its own money, and received 5½% interest on its own money, or a net return to the bank of 4% on the $50,000 of the borrower’s money. Thus, the borrower paid, and the bank received, 13½% interest for the use of the bank’s money, a usurious rate. T.C.A. § 47-14-104. The illegal act of usury dispells, as a matter of law, any claim of equity in favor of the Bank of Alamo. See 1 Gibson’s Suits in Chancery § 51 (5th ed. 1955).

We conclude that the bank has failed to carry the burden of proving the three elements necessary to invoke the instrumentality rule. The corporate structure of PPC and its subsidiaries may have been such that PPC, through common officers and directors, exercised dominion over subsidiaries, but in this transaction the facts show that PPLI had a mind of its own and that the bank knew or should have known that the insurance company’s $50,-000 was not deposited either as security or as a potential set off, if the loan was not paid. We further find that such control as PPC exercised over PPLI was not used to commit fraud, misrepresentation or a dishonest or unjust act upon the bank. One of the incidents of the banking business is evaluating loan risks. The conclusion to be drawn from this record is that Conley and the bank regarded PPC as a sound risk for an unsecured loan of $100,000 until sometime after May 16, 1974.

The judgment of the Court of Appeals is reversed. Judgment will be entered in this Court in favor of plaintiff against the Bank of Alamo in the sum of $50,000 plus interest from May 5,1974 to June 5,1974 at the rate of 5%, plus interest from June 5, 1974 to May 27, 1976 at 6%, plus interest from May 27, 1976, until paid at the rate of 8%.

HENRY, C. J., and COOPER, BROCK and HARBISON, JJ., concur.

      . “In order to hold one corporation liable for the debts of another it must appear that they are the business conduits or the alter ego of one another.” Smith v. Henry Knight and Son, Inc., 211 Ky. 111, 277 S.W. 290 (1925).

      . Lowendahl v. Baltimore & O. R. Co., cited and referred to infra.

      ."The whole problem of the relation between parent and subsidiary corporations is one that is still enveloped in the mists of metaphor. Metaphors in law are to be narrowly watched, for starting as devices to liberate thought, they end often by enslaving it.” Berkey v. Third Ave. Ry. Co., 244 N.Y. 84, 155 N.E. 58 (1926), rehearing denied, 244 N.Y. 602, 155 N.E. 914 (1927).


author: HARBISON, Justice.

text:
    Burnace Wilson TERRELL, Petitioner-Defendant, v. Margot Lamanna Drew TERRELL, Respondent-Plaintiff.
    Supreme Court of Tennessee.
    March 26, 1979.

      Dick L. Lansden, Nashville, for petitioner-defendant.
    William R. Willis, Jr., Marian F. Harrison, Nashville, for respondent-plaintiff.
   OPINION

HARBISON, Justice.

The parties to this domestic relations action are residents of Tennessee. Both concede that they were validly divorced by a decree awarded to the husband in the Civil Court of Port-au-Prince, Haiti on June 3, 1974. In that action the wife was represented by counsel, a personal appearance was entered for her, and she submitted voluntarily to the jurisdiction of the court.

Despite that fact, however, the wife instituted the present action in Tennessee for divorce and alimony on September 13,1974. The trial court sustained the divorce decree on grounds of public policy, and that issue was not pursued on appeal.

Both the trial court and the Court of Appeals, however, found that the Haitian divorce did not cut off the wife’s right to seek alimony in Tennessee, and both approved an award of alimony and counsel fees to her. In doing so they relied heavily upon Toncray v. Toncray, 123 Tenn. 476, 131 S.W. 977 (1910).

We find little or no persuasive analogy between this case and Toncray. In this case the husband and wife were married in Haiti in 1971, immediately after he divorced his previous wife there. In 1974, after considerable marital discord, the wife consented to the husband’s returning to Haiti to obtain a divorce from her. She drove him to the airport for that purpose. Three days before he left she executed and delivered to him a power of attorney, naming counsel to represent and act for her in the Haitian proceedings. The record shows that he did so act and that the husband had separate counsel. Neither court below found this power of attorney invalid.

Pursuant to the power of attorney, a general appearance was entered on behalf of the wife in Haiti. She had every opportunity to litigate a counterclaim for divorce and alimony in that jurisdiction had she seen fit to do so. There were no such facts present in Toncray, where the husband obtained a completely ex parte divorce in Virginia, service of process having been accomplished only by publication. Such a divorce was held not to preclude the right of the wife, a resident of Tennessee, later to claim alimony in the Tennessee courts.

In our opinion, the wife waived any claim for alimony by not asserting it in the Haitian court, when she entered a general appearance there and was represented throughout the proceedings by counsel. Cf. Grant v. Grant, 383 A.2d 627 (Vt.1978) (wife who appeared personally in Virgin Islands divorce proceedings held precluded from later claiming alimony in state court).

Our conclusion is not altered by the fact that shortly after the husband returned from Haiti, on June 6, 1974, the parties entered into an unusual arrangement, reflected by a written agreement. Under its terms the petitioner agreed to support respondent for eighteen months, to transfer certain assets to her and to pay educational expenses for her child by a former marriage. Respondent agreed that she would “take care of her wifely responsibilities” for petitioner. The agreement recited that it contained a full settlement of all claims of either party against the other “relative to alimony support division of property or otherwise [sic].”

In this case neither party has claimed any rights or benefits under this document, nor does either seek its enforcement. Respondent does contend that its execution is evidence of her intention not to waive her rights to support and alimony despite her acquiescence in her husband’s obtaining the Haitian divorce. We do not so regard it, nor could it obviate the legal effect of her submitting her marriage and its incidents to the jurisdiction of the foreign court by voluntary, unrestricted personal appearance therein.

The judgments of the courts below are reversed, and the suit is dismissed at the cost of respondent.

HENRY, C. J., and COOPER, FONES and BROCK, JJ., concur.

      . Cf. Hyde v. Hyde, 562 S.W.2d 194 (Tenn.1978) (foreign divorce recognized on principles of comity).

      . Prior to their wedding, which was the second marriage for both parties, they executed an antenuptial agreement mutually renouncing any claims to each other’s property.


author: HENRY, Chief Justice.

text:
    GENESCO, INC., Appellant, v. Jayne Ann WOODS, Commissioner of Revenue, Appellee.
    Supreme Court of Tennessee.
    March 26, 1979.

      W. W. Berry, Bass, Berry & Sims, Nashville, for appellant.
    William M. Leech, Jr., Atty. Gen., Jim G. Creecy, Asst. Atty. Gen., Nashville, for ap-pellee.
   OPINION

HENRY, Chief Justice.

This case involves the amount of interest payable upon a deficiency assessment of excise tax for Genesco’s fiscal years 1963 through 1969, inclusive. More specifically, we deal with a consideration of Chapter 693, Public Acts of 1974, codified as § 67-112, T.C.A.

This section, relating to the imposition of interest on state taxes, provides, in substance, that [except in penalty cases] the Commissioner of Revenue, acting in his discretion, fixes a rate of interest on deficiency assessments between 6% and 8%. Criteria for the establishment of the rate are set out. The rates so established must be certified and published in the office of the Secretary of State. The section concludes:

The provisions of this section shall be operative upon all assessments of interest made on and after October 1, 1974, without regard to the taxable period involved. (Emphasis supplied)

On July 22, 1974 the then Commissioner of Revenue certified and published a regulation fixing interest at eight percent (8%) on taxes paid on or after October 1, 1974.

In May 1977, Genesco was assessed additional excise tax for its fiscal years ending July 31, 1963 through July 31, 1969, plus interest at the rate of 8% per annum for the entire time.

Genesco insisted in the trial court that the rate should have been 6% up until October 1, 1974 and 8% from that date until the date of payment.

The entire assessment, principal and interest, was paid under protest and this suit was instituted for the recovery of the agreed amount of interest.

The Chancellor dismissed the action. We concur.

The statutory language is susceptible to no difference of opinion as to its construction. We cannot think of any language that would have been clearer. It plainly states that “this section shall be operative on all assessments of interest made on and after October 1,1974, without regard to the taxable period involved.” This assessment was made May 24, 1977.

Genesco insists, however, that the retroactive application of this statute to assessments covering years prior to its adoption, even when made after adoption, denies them equal protection under the Fourteenth Amendment to the Constitution of the United States. The basis for this insistence is that corporate taxpayers who owed taxes for the same period were only charged 6% when the assessment was made prior to October 1, 1974.

The phrase “equal protection”, as used in the Fourteenth Amendment to the Constitution of the United States, requires that all persons and entities shall be treated the same under like circumstances and conditions, both as to privileges conferred and liabilities incurred. Mascari v. Intrn’l Brotherhood, Etc., 187 Tenn. 345, 215 S.W.2d 779 (1948).

States have the right to adjust their systems of taxation in all proper and reasonable ways and the courts will not invalidate a tax statute on the basis of equal protection so long as the classification and selection are reasonable. Bank of Commerce v. Senter, 149 Tenn. 569, 260 S.W. 144 (1923). It is fundamental to our law that every intendment supports the validity of an act of the legislature.

It is important to a consideration of this issue, and virtually conclusive of its resolution, to note that all excise taxpayers assessed after October 1, 1974 are treated on the same basis, and without any semblance of discrimination. All changes in a taxing act must have a starting point; during the transition inequalities may arise resulting from the application of assessment dates, or other necessary procedures and mechanisms, but these do not operate per se to invalidate the statute.

The test must be whether the statute rests on a reasonable basis, Bank of Commerce, supra, and it will not be held discriminatory if there is any possible reason or justification for its passage. Ogilvie v. Hailey, 141 Tenn. 392, 210 S.W. 645 (1918).

The “equal protection of the law” provision of the Fourteenth Amendment only requires that there be “ 'some relevance to the purpose for which the classification is made’ therefore, the legislature “may impose special burdens upon defined classes in order to achieve permissible ends.” Rinaldi v. Yeager, 384 U.S. 305, 309, 86 S.Ct. 1497, 1499, 1500, 16 L.Ed.2d 577, 580 (1966). As stated in Ross v. Moffitt, 417 U.S. 600, 612, 94 S.Ct. 2437, 2444, 41 L.Ed.2d 341 (1974), the Fourteenth Amendment “ ‘does not require absolute equality or precisely equal advantages.’ ” See Nolan v. State, 568 S.W.2d 837, 840 (Tenn.Crim.App.1978).

The legislature has wide discretion in the adoption of tax measures, for they produce the revenue under which government operates and, while not unrestrained, its judgment must be accorded great respect and its enactments must be given every intendment. See generally, Marion County, Tennessee River Transp. Co. v. Stokes, 173 Tenn. 347, 117 S.W.2d 740 (1938); Sterchi Bros. Stores v. Wallace, 168 Tenn. 299, 77 S.W.2d 807 (1935).

The assessment made by the Commissioner of Revenue is in accord with the clear mandate of the statute and is not offensive to the controlling principle that all persons must be treated alike under like circumstances and conditions in the imposition of liabilities.

FONES, HARBISON and BROCK, JJ., and HUMPHREYS, Special Justice, concurring.

      . The application of the act is not challenged under the Constitution of Tennessee.


author: PARROTT, Presiding Judge (E.S.).

text:
    Stanford TATE and wife, Emma Tate, Appellees, v. The COUNTY OF MONROE, Appellant.
    Court of Appeals of Tennessee, Eastern Section.
    Nov. 28, 1978.
    Certiorari Denied by Supreme Court March 12, 1979.

      Robert J. Ames, Asst. Atty. Gen., Nashville, Thomas W. Patton, Sp. Trial Counsel, Knoxville, Brooks McLemore, Jr., Atty. Gen., Nashville, of counsel, for appellant.
    J. Curwood Witt, Jr., Madisonville, for appellees.
   OPINION

PARROTT, Presiding Judge (E.S.).

The plaintiffs, Stanford Tate and his wife, brought this inverse condemnation suit against Monroe County alleging damages from the construction of the Madison-ville By-Pass. Plaintiffs owned and operated a business, Tate Builders Supply, which originally fronted on old Highway 411. With the construction of the by-pass, old 411 became a service road which was completely terminated to the north of the plaintiffs’ property. The only ingress and egress to the new 411 by-pass was a ramp built to the south. There was no property of the plaintiffs physically taken or appropriated.

Because of the presentation of incompetent evidence, a mistrial was declared initially. The second trial in circuit court resulted in a jury verdict for the plaintiffs. The plaintiffs were awarded $50,000.00 in actual damages and $18,034.11 for expenses and attorney fees.

Final judgment was signed on March 18, 1977 and entered on May 18, 1977. The defendant made a timely motion for new trial which was filed on June 16, 1977. An amended motion for new trial was filed on September 16, 1977. In late September the defendant drafted, signed, and presented to the court an order overruling the motion for new trial. This order was taken under advisement and on December 1, 1977, was entered by the court. The order granted the defendant 30 days to file an appeal bond and 90 days to file the bill of exceptions. The defendant contends that he did not receive notice of the filing of this order until mid-March 1978 at which time the plaintiffs wrote the defendant demanding payment. On March 21, 1978, a “motion to set aside order overruling motion for new trial,” which had been prepared by the defendant, was made pursuant to Rule 60 of Tennessee Rules of Civil Procedure. This motion was sustained by the circuit judge and on March 27, 1978, a new order overruling the motion for new trial was entered. This order granted the defendant 30 days from March 27, 1978, to perfect an appeal and file the bill of exceptions.

Both parties have appealed. The plaintiffs assign as error: (1) the setting aside of the original order overruling the motion for new trial, and (2) the granting of 30 days in which to file the bill of exceptions after the original 90-day period had expired. The plaintiffs also move this court to dismiss the appeal and strike the bill of exceptions.

Rule 60 specifies the grounds upon which relief from judgments and orders may be granted. This rule sets out two procedures, motion and independent suit, by which a party can attain such relief. Rule 60.02(1) provides that a court may relieve a party from a final judgment or order for the reason of “mistake, inadvertence, surprise or excusable neglect.”

The Supreme Court has recently held that the failure of a clerk to provide counsel with a copy of the order overruling the motion for a new trial or to notify the counsel of the existence of such an order constitutes excusable neglect. Jerkins v. McKinney, 533 S.W.2d 275, 281 (Tenn.1976). Jerkins was a case in which the respondent had brought an independent suit under Rule 60 seeking relief from a prior judgment. The court refused to allow the respondent the use of an independent suit where other alternatives for relief, such as a Rule 60 motion or writ of error, were available. The Court stated in describing when an independent suit under Rule 60 could be used: “It must . . . appear that the situation in which the party seeking relief finds himself is not due to his own fault, neglect or carelessness.” In other words, the petitioning party must not be negligent in creating the situation from which relief is sought. If he is, no independent suit under Rule 60 can be maintained.

The Court in Jerkins did not specifically deal with the issue concerning negligence of the moving party when seeking relief by a Rule 60 motion. They did state, however, that Rule 60 motions could provide relief “not only for mistake, etc. of the moving party, but also from that of other parties to the action . . . .” Negligence on the part of the moving party, therefore, appears to be precisely the type of error a Rule 60 motion is designed to relieve.

For the reasons above we reject the assignments of error charged by the plaintiff. We hold that the trial judge did not err in sustaining the motion to set aside the original order overruling the motion for new trial. The Rule 60 motion is made within the one-year time limit set out in Rule 60.02(1), Tenn.R.Civ.P., and failure to notify the defendant comes within the type of error set out in Rule 60.02(1). We further overrule the plaintiffs’ motion to dismiss this appeal and to strike the bill of exceptions.

The defendant has appealed from the jury verdict and contends the court erred in: (1) overruling appellant’s motion for summary judgment; (2) overruling appellant’s motion to dismiss made at the close of appellees’ proof; (3) admitting into evidence the traffic survey and allowing same to be used as the basis for determining damages, all over appellant’s objections; (4) admitting into evidence over appellant’s objection testimony as to the ramp area being difficult and hazardous; (5) refusing to allow appellant to examine fully its expert witness and thereby rebut the proof tendered by appellees; and (6) awarding attorneys’ fees without factual support or a hearing as requested by the appellant.

The circuit judge was correct in overruling the defendant’s motion for summary judgment and dismissal of the action. Where the trial court’s denial of a motion for summary judgment is predicated upon the existence of a genuine issue of fact, the overruling of that motion is not reviewable on appeal where there has been a judgment rendered upon a trial of the merits of the case. Boyles Galvanizing and Plating Co. v. Hartford Accident and Indemnity Co., 372 F.2d 310 (10th Cir., 1967); William W. Honeycutt v. The Brass Register, Inc. (Unreported case by Eastern Section, Court of Appeals, Hamilton County, 1975).

The motion for dismissal made by the defendant appears to be predicated on the general proposition that the plaintiffs are not entitled to recover inasmuch as no portion of their property has been taken and there is no damage or injury peculiar to them. The position of the defendant in this matter is in error and the circuit court was correct in overruling this motion. T.C.A. 23-1537 speaks in terms of “property or property rights” in determining damages to which an owner is entitled to recover. It is the law in this state that the right of an abutting landowner to ingress and egress exists not only to and from the property to the street but also over and on the street to the next intersecting street. Such is called an easement of way or an easement of access and is clearly a property right which cannot be taken.or impaired without compensation to the owner. Illinois Central R. Co., et al. v. Moriarity, 135 Tenn. 446, 186 S.W. 1053 (1916); East Park United Methodist Church v. Washington County, 567 S.W.2d 768 (Tenn.App.1977); Graham v. Hamilton County, 224 Tenn. 82, 450 S.W.2d 571 (1969).

For the reasons stated above, the defendant’s first two assignments of error are overruled. This Court further overrules assignments of error four, five and six.

Evidence as to the ramp area, which was in fact the plaintiffs’ only means of ingress and egress, was proper and the court was correct in overruling the defendant’s objection thereto. In Shelby County v. Barden, 527 S.W.2d 124 (Tenn.1975), the Supreme Court quoted with approval from Brookside Mills, Inc. v. Moulton, 55 Tenn.App. 643, 404 S.W.2d 258 (1965), as follows:

“The fact that the property has other access, or is given other access in the course of construction would be a material factor to be taken into consideration in determining the before and after value . and, consequently, the value of the access taken.”

Evidence which would tend to show that a newly constructed access enhanced the property value is admissible. So is evidence, such as that presented here, which shows the access to be difficult and hazardous and, therefore, adversely affects the property value.

The trial court did not err in sustaining the plaintiffs’ objection to the question asked by the defendant in examining the expert witness. These questions appear irrelevant and immaterial and, at most, failure to allow such was harmless error.

This Court sustains assignment of error number three. As stated before, this state allows recovery where “the property right taken is the right of access to or over a public street.” Stokely v. Southern Railway Co., 57 Tenn.App. 271, 279, 418 S.W.2d 255, 260 (1967). The correct measure of damages in an inverse condemnation case is the same as that in any condemnation suit, the difference between the fair market value of the plaintiff’s property prior to the taking or impairment of the access and its value after the taking. Stokely v. Southern Railway Co., supra; Brookside Mills, Inc. v. Moulton, 55 Tenn.App. 643, 404 S.W.2d 258 (1965); E. Park United Methodist Church v. Washington County, supra.

At the trial below testimony relating to traffic statistics was admitted to show the amount of traffic which flowed over the old 411 prior to construction and the amount of traffic flowing over the new 411 by-pass and old 411 after construction. These statistics show that approximately 54 percent of the traffic traveled on old 411 while 46 percent of the traffic traveled on the by-pass. Apparently the trial judge was of the impression the diversion of traffic was to be considered in estimating damages because when the attorney for the plaintiff moved to strike this testimony, the trial judge instructed the plaintiff to ask the witness: “What portion of this is attributable to diversion of traffic to the bypass?” When the plaintiff’s attorney refused, the judge on his own behalf, asked: “What portion of the $59,700.00 do you attribute to the diversion of traffic to the by-pass?” These percentages were subsequently used by the real estate appraiser to apportion damages. This was error.

There can be no recovery based solely on diversion of traffic because the property owner has no right to insist on the entire volume of traffic. The state has the authority to control the flow of traffic and the exercise of this authority does not justify compensation. State v. Rascoe, 181 Tenn. 43, 178 S.W.2d 392 (1944). This does not, however, mean that the loss of access and diversion of traffic must be apportioned in estimating the amount of damages suffered by the injured party.

To allow testimony as to statistical data of the amount of traffic flowing over a particular route is to naturally tie such statistics to damages and damages to diversion of traffic. The measure of damages as stated before is the difference in value of the property before and after the taking of the impairment. If the closing of the access on the north side of the plaintiffs’ property is found to cause this difference in value, then the difference is recoverable. Because diversion of traffic is a necessary and natural result of the elimination of one access to the plaintiffs’ property, there is no need to apportion the amount of damages to these two aspects. We hold that the evidence admitted as related to traffic flow is inadmissible and reversible error. The cause is remanded for a new trial not inconsistent to the principles set forth in this opinion.

Let the costs incident to this appeal be taxed to Stanford Tate and wife. All other costs will abide the outcome and be taxed in the discretion of the court below.

SANDERS and GODDARD, JJ., concur.