author: BROCK, Justice. HARRISON, Justice BROCK, Justice.

text:
    METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY, Tennessee, Appellant, v. Maggie B. MILES, Appellee.
    Supreme Court of Tennessee.
    Jan. 20, 1975.
    Rehearing Denied June 9, 1975.
    Harbison, J., concurred in part and dissented in part and filed opinion in which Fones, C. J., concurred.
    Fones, C. J., and Harbison, J., concurred in part and dissented in part on denial of petition to rehear.

      Robert B. Eadie, Nashville, for appellant.
    Avon N. Williams, Jr., Nashville, for ap-pellee.
   OPINION

BROCK, Justice.

The appellee, Maggie B. Miles, was arrested by police officers of the Metropolitan Government of Nashville and Davidson County, Tennessee, and charged with interfering with a police officer, which in the warrant of arrest was denominated “the offense of violation Metropolitan Code Chapter 34 Section 1 — 1.” The penalty for this violation is a fine of fifty dollars while failure to pay it results in imprisonment for not more than three months. See: Attached Appendix. Thereafter her case came on for trial before the General Sessions Court for the Metropolitan Government of Nashville and Davidson County and after a trial on the merits was dismissed on July 3, 1973. In due course the Metropolitan Government appealed this decision to the Sixth Circuit Court of Tennessee in and for the County of Davidson for a trial de novo. The appellee then filed a motion in the Circuit Court to dismiss the appeal upon the grounds that (1) Section 14.26 of the Metropolitan Charter, relied upon by the appellant, does not by its terms provide for an appeal de novo by the Metropolitan Government from a decision of the General Sessions Court dismissing on the merits a charge of violation of a Metropolitan ordinance, and, (2) that if the Metropolitan Charter provision above-mentioned were construed to provide for an appeal de novo, it would, in that event, be in violation of Article 1, Section 10 of the Constitution of the State of Tennessee and of the Fifth and Fourteenth Amendments to the Constitution of the United States which provide that “no person shall, for the same offense, be twice put in jeopardy of life or limb.”

After due consideration of said motion to dismiss the Circuit Court rendered a written opinion agreeing with the appellee on both points, holding that Section 14.26 of the Metropolitan Charter did not grant to the Metropolitan Government a right of appeal de novo from a judgment of dismissal of a charge of violating a city ordinance and, secondly, that if said charter provision were construed to grant such appeal it would violate the double jeopardy clauses of the State and Federal Constitutions as above-mentioned. Accordingly, the appeal was dismissed and from this judgment of the Circuit Court the Metropolitan Government has appealed to this Court, there being no disputed issues of fact.

The Metropolitan Government insists that the Circuit Court erred in dismissing the appeal and asserts that Section 14.26 of the Metropolitan Charter and T.C.A., Section 27-509, grant to the Metropolitan Government the right to appeal de novo to the Circuit Court a judgment of the General Sessions Court dismissing on the merits a charge of violation of a city ordinance, the punishment for which is the imposition of a fine; and, that such right of appeal does not violate the constitutional provisions, above-mentioned, prohibiting double jeopardy. The appeal here sought is not one merely for the correction of errors of the lower court; it is de novo, that is, a completely new trial at which either side may call such witnesses as it desires and the higher court makes an independent determination of guilt or innocence.

The Metropolitan Charter provision and the state statute relied upon for granting to the Metropolitan Government a right of appeal in the circumstances of this case are as follows, to wit:

“Section 14.26. Appeals.
“. . . Appeals on behalf of the defendant from a judgment in any criminal case tried by the court may be taken to the criminal court of Davidson County, Tennessee. Such appeal shall be prayed and granted within ten days from the rendition of the judgment or as otherwise provided by law, and shall not act as a stay or supersedeas of the judgment unless the defendant shall execute an appeal bond with good and solvent surety, to pay the fines at costs and other costs adjudged upon appeal. Provided, that this section shall not be construed to require the Metropolitan Government to make bond to perfect any appeal taken hereunder. Any such appeal shall be perfected by written notice from the director of the Metropolitan Department of Law or any assistant thereof, addressed to the court clerk of the Metropolitan General Sessions Court.” Metropolitan Charter, Section 14.26.
“27-509. Appeal from general sessions court. — Any party may appeal from an adverse decision of the general sessions court to the circuit court of the county within a period of ten (10) days on complying with the law as now provided for appeals from justices of the peace courts. This provision allowing ten (10) days in which to perfect an appeal shall apply in every county in Tennessee, any provision of any private act to the contrary notwithstanding, it being the legislative intent to establish a uniform period of ten (10) days in which any such appeal may be perfected in any county in Tennessee. Any appeal shall be heard de novo in the circuit court. If no appeal is taken within the time provided, then execution may issue.” T.C.A., Section 27-509.

We find that Section 14.26 of the Metropolitan Charter leaves much to be desired in the way of clarity and that it fails to expressly grant the asserted right of appeal, although, it may do so by implication.

There is no doubt, however, that T.C.A., Section 27-509, does grant an appeal from the judgment of a General Sessions Court in a civil action. Of course, the insistence of the Metropolitan Government that this provision applies in this case upon the theory that this is a “civil” case begs the question. We must decide the constitutional questions asserted.

In addition to the fact that Article 1, Section 10 of the Constitution of Tennessee affords protection from double jeopardy the citizen is given a like protection by the Fifth Amendment to the Constitution of the United States. Benton v. Maryland, 395 U.S. 784, 89 S.Ct. 2056, 23 L.Ed.2d 707 (1969). It has been said that the doctrine is so ancient that it is impossible to trace its origin. Commonwealth v. Payne, 245 S.W.2d 581 (Ky.). Such an ancient right is not to be given a narrow construction.

In Waller v. Florida, 397 U.S. 387, 90 S.Ct. 1184, 25 L.Ed.2d 435, it was held that the trial of a person in a municipal court of a state for alleged violation of a “municipal ordinance” constituted jeopardy and prohibited a later trial in a trial court of general jurisdiction of that state for violation of a “state law” based upon the same facts. That case disposed of the argument that a municipality should be treated as a separate sovereign from that of the state of which it is a political subdivision and, thus, that one could be tried for the same offense in both a municipal court and a state court of general jurisdiction without violation of the double jeopardy clause.

However, the Metropolitan Government in this case asserts that the proceeding against the appellee is a “civil” one as distinguished from a “criminal” action. This assertion is somewhat anomalous since the appellant relies upon Section 14.26 of the Metropolitan Charter, above quoted, which refers to “appeals ... in any criminal case . . . may be taken to the criminal court.” (Underscoring added.) The Metropolitan Government relies upon the decisions of this Court in O’Haver v. Montgomery, 120 Tenn. 448, 111 S.W. 449 (1908); O’Dell v. City of Knoxville, 214 Tenn. 237, 379 S.W.2d 756 (1963). These cases do, indeed, support the contention of the Metropolitan Government that a proceeding for violation of a municipal ordinance is a civil, as distinguished from a criminal, action and that judgment of a municipal court does not prevent a second trial in the Circuit Court. Nevertheless, those cases have been, at least impliedly, overruled by the decision of this Court in State v. Jackson, 503 S.W.2d 185 (Tenn.1973). There it was held that a juvenile who had been found not guilty in the juvenile court in a proceeding considered “civil” could not be tried again for the same offense upon an appeal de novo to the Circuit Court. The Court adopted the following statement from United States of America v. Dickerson, 168 F.Supp. 899 (D.C.1958), to wit:

“Ineluctable logic leads to the conclusion that the constitutional protection against double jeopardy, as is the case with the right of counsel and the privilege against self-incrimination, is applicable to all proceedings, irrespective of whether they are denominated criminal or civil, if the outcome may be deprivation of liberty of the person. Necessarily, therefore, this is true of proceedings in the Juvenile Court. Precious constitutional rights cannot be diminished or whittled away by the device of changing names of tribunals or modifying the nomenclature of legal proceedings. The test must be the nature and the essence of the proceeding rather than its title. If the result may be a loss of personal liberty, the constitutional safeguards apply.” (Underscoring added.)

It is to be noted that in the Jackson case it was the liberty of the citizen which was protected by the double jeopardy clause. This leaves remaining unanswered the question whether or not the double jeopardy clause protects one from a second trial in which, if found guilty, a “fine,” rather than imprisonment, may be imposed. In effect, the holding of the United States Supreme Court in Ex parte Lange, 85 U.S. 163, 168-169, 21 L.Ed. 872, 877, 878 (1873), was that such protection is provided. It was there held that a judgment of conviction and imposition of a fine could not be re-opened by the government to allow the additional infliction of imprisonment. The Court said:

“If there is anything settled in the jurisprudence of England and America, it is that no man can be twice lawfully punished for the same offense.” (Underscoring added.)

The Court also said that double jeopardy protection applies to “felonies, minor crimes and misdemeanors alike . . .” Again, in Helvering v. Mitchell, 303 U.S. 391, 58 S.Ct. 630, 82 L.Ed. 917, Mr. Justice Bran-déis, speaking for the Court, said:

“Where the objective of the subsequent action likewise is punishment, the acquittal is a bar, because to entertain the second proceeding for punishment would subject the defendant to double jeopardy . . . ” (58 S.Ct. 630, 632) (Underscoring added.)

And, in Pennywell v. McCarrey, 9 Cir., 255 F.2d 735, 17 Alaska 580, it was held that “A defendant who has paid a fine imposed for violation of law is placed in double jeopardy by a subsequent proceeding to collect the same fine a second time.” We hold that the imposition of a fine is punishment.

It was also held in Helvering v. Mitchell, supra, that in order for an alleged “civil” action to be considered beyond the protection of the double jeopardy clause it was necessary that such action be “remedial in nature” and not intended to have the effect of inflicting “punishment” upon the citizen in order to vindicate public justice. The Georgia Court of Appeals in Cushway v. State Bar, 120 Ga.App. 371, 170 S.E.2d 732, 735-736 (1969) has reached a like conclusion and employed language which we adopt, to wit:

“A matter is criminal only if imprisonment or the assessment of a fine may follow conviction . . . only actions intended to authorize criminal punishment as distinguished from remedial actions subject the defendant to ‘jeopardy.’ ‘[T]he double jeopardy clause prohibits merely punishing twice, or attempting a second time to punish criminally, for the same offense.’ ”

The appellant also asserts that the de novo nature of the second trial which is sought in the Circuit Court prevents the application of the double jeopardy clause upon the theory that the judgment of the General Sessions Court is “wiped clean” and cannot, therefore, be considered a former jeopardy. We are not impressed with this argument. It, too, begs the question at issue. It has, in effect, already been answered contrary to the insistence of the Metropolitan Government by the decision of this Court in the Jackson case, supra, because the second trial of the juvenile in Jackson was, likewise, a “de novo” hearing in the Circuit Court which this Court held to be a violation of the double jeopardy clause. The double jeopardy clause protects not only from a second punishment for the same offense, it also forbids a second trial for the same offense. Ex parte Lange, supra; Kepner v. United States, 195 U.S. 100, 24 S.Ct. 797, 49 L.Ed. 114; Green v. United States, 355 U.S. 184, 78 S.Ct. 221, 2 L.Ed.2d 199 (1957); Price v. Georgia, 398 U.S. 323, 90 S.Ct. 1757, 26 L.Ed.2d 300 (1970); Pettyjohn v. Evatt, 369 F.Supp. 865 (D.C.1974).

We, therefore, hold that a proceeding in a municipal court for the imposition of a fine upon a person for allegedly violating a city ordinance is criminal rather than civil in substance, in that, it seeks punishment to vindicate public justice and, therefore, constitutes jeopardy under the double jeopardy clauses of the Tennessee and Federal Constitutions, and, consequently, the alleged offender, whether acquitted or convicted, cannot again be tried for the same offense in a state trial court of general jurisdiction over the timely objection of the defendant. Thus, T.C.A., Section 27— 509, and Metropolitan Charter, Section 14.-' 26, cannot be construed to authorize the appeal sought herein because, if so construed, they would be unconstitutional.

In conclusion, we affirm the action of the trial court in holding that neither the Metropolitan Government Charter, Section 14-26, nor T.C.A., Section 27-509, authorizes the Metropolitan Government to appeal and have another trial de novo in the Circuit Court for the same offense and, concur in the action of the trial court in dismissing said appeal.

All costs of this appeal will be adjudged against the appellant, Metropolitan Government of Nashville and Davidson County, Tennessee.

COOPER and HENRY, JJ., concur.

HARBISON, J., concurs in part, dissents in part.

FONES, C. J., concurs in part in the opinion of HARBISON, J.

APPENDIX

“§ 1-1-7 Metropolitan Code § 1-1-8 “Sec. 1-1-7. General penalty.

“Whenever in this Code or in any other ordinance or resolution of the metropolitan government or in any rule, regulation or order promulgated by any officer or agency of the metropolitan government under authority duly vested in him or it [sic] any act is prohibited or is made or declared to be unlawful or an offense or a misdemeanor, or the doing of any act is required or the failure to do any act is declared to be unlawful or an offense or a misdemeanor, where no specific penalty is provided therefor, the violation of any such provision of such Code or any other ordinance or resolution of the metropolitan government or such rule, regulation or order shall be punished by a fine not exceeding fifty dollars. For failure to pay any such fine, the offender may be imprisoned in the metropolitan jail or metropolitan workhouse for not more than three months.

“Except where otherwise provided, every day any violation of this Code or any other ordinance or resolution of the metropolitan government or such rule, regulation or order shall continue shall constitute a separate offense.

“Sec. 1-1-8. Commitment to workhouse upon failure to pay or secure fine.

“Upon the failure of any person to pay or secure any fine imposed by a judge of division I, division II or division III of the metropolitan courts, he shall be committed to the metropolitan workhouse and there required to perform such manual labor as may be required of him until such fine is paid off at the rate provided for county workhouses in Tennessee Code Annotated, section 41-1223, or any amendments thereto. No prisoner shall be discharged upon the act of insolvency nor before such fine has been worked out, fully paid or secured, or unless he is pardoned or paroled in accordance with the provisions of the Metropolitan Charter. (66-18, § 1.)”

OPINION CONCURRING IN PART AND DISSENTING IN PART

HARRISON, Justice

(concurring in part and dissenting in part).

I am in agreement with the result stated in the principal opinion prepared for the Court by Justice Brock, to the effect that where there has been a trial on the merits for violation of a penal ordinance and an acquittal of the accused, the municipal government does not have a right of appeal from such acquittal.

In my opinion, however, this result is not brought about in the present case by the wording of the Metropolitan Charter, because I believe that the charter language is sufficiently broad to permit an appeal.

A section of the State Criminal Code, however, T.C.A. § 40-3403, provides:

“The state has no right of appeal or other remedy for the correction of errors, upon a judgment of acquittal in a criminal case of any grade.”

The two immediately preceding sections of the Code authorize an appeal in the nature of a writ of error to either party in a criminal action, with the exception stated in T.C.A. § 40-3403.

It seems to me that if a municipal government is to be deemed an arm of the state government, and not a separate sovereign, then it is bound by this general statute and cannot appeal any sort of criminal action after there has been an acquittal after trial on the merits. I think that it can and does have a right of appeal where there has been a dismissal on a preliminary motion or any other termination of the proceedings, short of an acquittal after a full trial.

It seems to me that not all proceedings for violations of city ordinances are criminal in nature. Where city ordinances undertake to proscribe conduct which is made criminal by state statute or by the common law, then I would agree that proceedings for violation of such ordinance are sufficiently criminal in nature that an acquittal on the charges concludes the matter and that there is no right of appeal by the municipal government. There are many city ordinances, however, which are purely civil in nature, and proceedings for the violation thereof, in my opinion, could not in any sense be deemed criminal. I would include in this category violations of most parking and other traffic ordinances, where proceedings are instituted merely by a citation or summons, together with numerous other types of ordinances, such as health and licensing regulations, taxing ordinances, zoning ordinances and many others. Violations of these, in my opinion, should not be placed in the category of “criminal”. I would limit the holding of the present case to ordinances which are clearly penal in nature.

As noted in the principal opinion, there is a long line of Tennessee cases holding that actions for violation of city ordinances are civil proceedings rather than criminal. In one of the leading Tennessee cases on the subject, however, O’Haver v. Montgomery, 120 Tenn. 448, 111 S.W. 449 (1908), a case widely cited in treatises on municipal corporations, the Court stated:

“. . .In truth, when a violator of a municipal ordinance is arrested and brought before the municipal court, he is tried for an offense committed against the laws of the corporation; but, in the absence of apt legislation to the contrary, his punishment is in the form of the assessment of a penalty. The practice partakes of both a civil and criminal character. He is arrested on warrant as in criminal cases, and if found guilty a judgment is entered against him as for a fine, and on failure to pay the amount assessed against him he may be held in custody until he pays or secures it, or be put at labor to pay it. If dissatisfied with the judgment he may appeal, as in civil cases, upon complying with the law or statute applicable, and may have a retrial in the circuit court, where the matter will be heard de novo, the rules of practice applicable to civil cases applying in such trial; but at last the purpose of the action is punishment. So it is perceived the action is partly criminal and partly civil; a criminal action in substance and purpose, and partly civil and partly criminal in the practice governing it. When we characterize the action as being of a criminal nature, we do not mean to be understood as using the term wholly in the sense in which it is applicable to actions brought by the state in the form of indictments and presentments for violation of the criminal laws of the state, but rather by analogy, and for want of a better term.” 120 Tenn. at 459-460, 111 S.W. at 451.

I do not understand that the present holding would affect the principles announced in the O’Haver case, particularly insofar as the procedure to be followed on appeal by persons accused of violating a city ordinance. City charters usually provide for the handling of these cases, and traditionally, as pointed out in the O’Haver case, supra, they have been considered civil cases for purposes of appeal and procedure. I think it important to state that these rules are not affected by the present holding, according to my understanding.

The nature of the violation of a city ordinance, as being civil or criminal, has been considered by this Court in a number of contexts, and uniformly the Court has held that the principles of civil rather than criminal law are applicable. Thus in the case of Deitch v. City of Chattanooga, 195 Tenn. 245, 258 S.W.2d 776 (1958), an ordinance of the City of Chattanooga forbade the possession of federal wagering stamps and provided penalties for violation. The defendant, charged with such violation, insisted that introduction of his application for wagering stamps and the tax returns filed with the federal government by him violated his constitutional protection against self-incrimination. This Court held to the contrary on the ground that the proceedings were civil rather than criminal in nature. In Guidi v. City of Memphis, 196 Tenn. 13, 263 S.W.2d 532 (1953), the Court held that a warrant charging violation of a city ordinance was civil, rather than criminal, and that principles of the criminal law with regard to the sufficiency of criminal warrants were not applicable. In O'Dell v. City of Knoxville, 214 Tenn. 237, 379 S.W.2d 756 (1963), this Court held that the procedure on appeal from violation of a city ordinance should be that followed in civil rather than in criminal cases, and in the subsequent appeal of the case reported at 54 Tenn.App. 59, 388 S.W.2d 150 (1964), the Court of Appeals cited numerous Tennessee eases to the effect that such eases are generally considered to be civil matters.

The subject is treated in depth at 9 McQuillin, Municipal Corporations, §§ 27.05 et seq. In § 27.06 the following statement is made:

“The decisions present some apparent conflict respecting the precise nature of proceedings to enforce ordinances. Whether in character they are to be considered civil or quasi civil, criminal or quasi criminal has been discussed in relation to:
“(1) The method of instituting the proceedings.
“(2) The name in which the action should be brought.
“(3) The sufficiency of the pleadings.
“(4) The mode of trial, whether summary or by jury.
“(5) The arraignment and plea of the defendant.
“(6) The admission of evidence, burden and degree of proof.
“(7) The verdict, judgment and sentence and mode of execution, and
“(8) The method of review.
“Leaving the details of the judicial rules to be presented in the sections which follow, only a few general observations will be mentioned here. The weight of judicial authority declares that the prosecution is in the nature of a civil action for the recovery of a debt. Thus, prosecutions for violations of ordinances are not ‘criminal,’ as that term is used in constitutions and statutes. And the fact that the process shall be a warrant and that the one named therein may be arrested and retained in custody or under reasonable recognizance until the next sitting of the local court, and moreover, that in event of judgment against defendant and refusal or neglect to pay the same, he may be committed, does not render the case criminal.”

With respect to the precise question presented in this case, the following statement is found at § 27.65 (pp. 788-789):

“The right of a municipal corporation to appeal is authorized ordinarily by statute or charter, although this right has in many cases been denied. It frequently is made to depend upon whether the proceeding is civil in character, or criminal or quasi criminal. In those jurisdictions where the action is held to be civil, ordinarily the corporation is given the right of appeal from a judgment of acquittal. But where the action is regarded as criminal or quasi criminal, especially if the offense is in its essence a misdemeanor at common law or by statute, unless expressly authorized by law, it is generally held that no appeal lies in behalf of the corporation from a judgment in favor of the defendant.”

As previously stated, I concur in the result reached in the principal opinion to the effect that the Metropolitan Government should not be allowed a right of appeal from acquittal after a trial on the merits for violation of a penal ordinance. To avoid possible confusion or misunderstanding, however, I think that the holding should be limited precisely to that situation.

I do not consider that State v. Jackson, 503 S.W.2d 185 (Tenn.1973) (a case involving acquittal of juvenile offenders) purports to overrule previous decisions with regard to municipal ordinances, or that it should be so construed. It does establish the principle that once there is an acquittal after trial on the merits of any proceeding which might involve the liberty of an individual there is no right of appeal by the public body involved, even though the proceedings be described as merely “quasi criminal” or even “civil” in nature.

I am authorized to state that Chief Justice FONES concurs in this separate opinion.

OPINION ON PETITION TO REHEAR

BROCK, Justice.

The appellant has filed a petition to rehear and a supplemental petition to rehear in this cause and the Attorney General of the State of Tennessee, as amicus curiae, and both the parties have filed briefs all of which have been thoroughly considered by the Court. The Court is of the opinion that the petition and supplemental petition to rehear fail to advance any argument, cite any new authority or point out any material fact which is shown to have been overlooked in the original opinion.

The appellant and the Attorney General, amicus curiae, express certain apprehensions with respect to the impact which they fear the original opinion may have upon issues not presented to the Court in this cause. We know that the apprehensions expressed are sincerely held but we are of the opinion that the original opinion of the Court does not justify such fears and that the holding of the Court clearly is restricted to the question presented. In the event that the feared results should occur, the questions thus raised must await a case by case determination in the ordinary way.

The petition and supplemental petition to rehear are denied.

COOPER and HENRY, JJ., concur.

FONES, C. J., and HARBISON, J., concur in part, dissent in part.

      . “Sec. 34 — 1-1. Resisting or interfering with officers.
      “It shall be unlawful for any person to resist any police officer, any member of the police department or any person duly empowered with police authority, while in the discharge or apparent discharge of his duty, or in any way to interfere with or hinder him in the discharge or apparent discharge of his duty. (66-928, § 66.)” Metropolitan Code.

      “7. As to courts and imprisonment, see ch. 12 of this Code. As to penalty for violation of regulations adopted by traffic and parking commission, see § 27-1-21.”


source: Caselaw Access Project

author: GODDARD, Judge.

license: Public Domain

text:
    John W. TESTERMAN et ux., Appellants, v. HOME BENEFICIAL LIFE INS. CO. and Park National Bank, Appellees.
    Court of Appeals of Tennessee, Eastern Section.
    Nov. 26, 1974.
    Certiorari Denied by Supreme Court April 14, 1975.

      Harold B. Stone, Knoxville, for appellants.
    Foster D. Arnett and Arnett, Draper & Hagood, Knoxville, for appellees.
   OPINION

GODDARD, Judge.

In the autumn of 1971 John W. Tester-man, who together with his wife are Plaintiffs-Appellants, and who will hereafter be referred to as Plaintiff, was seeking a permanent loan in connection with property he was developing on Chesire Drive in Knoxville, which was to be known as Windover Apartment Project. Plaintiff is a real estate developer in Knoxville, who owns or controls over 600 apartment units in the Knoxville area, and who holds Bachelor of Arts and Bachelor of Law degrees from the University of Tennessee.

He had hoped initially to be able to borrow some $3,000,000 to finance the entire development. However, because of the condition of the money market it was deemed more feasible to build and finance the project in phases. Apparently the financing of phase one had been solved, because he was attempting to secure a permanent commitment in connection with phase two. In furtherance thereof he executed a contract dated December 2, 1971 with Provident Trust Company of Nashville, with whom he had been dealing since 1965, constituting it his agent for the purpose of locating a loan in the amount of $1,500,000 under terms as detailed in the contract. Thereafter, a commitment was secured from Home Beneficial Life Insurance Company, Defendant-Appellee, which bound the Defendant to lend the Plaintiff the sum of $1,500,000, the disbursements for which were to be made between January 1 and August 21, 1973. The loan was to be under the terms and conditions as specified in the commitment agreement. This agreement was dated December 21, 1971 and accepted by the Plaintiff on December 27, 1971.

This commitment provided, among other things, as follows:

“All cost incidental to the preparing of this loan, including title fees, legal fees, appraisal fees, surveys, et cetera, shall be borne by the borrower and may be deducted from the proceeds of this loan. In the event this loan is not closed all fees so incurred shall be payable on demand.
“This commitment, to be binding, must be accepted by signing one of the enclosed copies, the acceptance to be in this office within ten days from date hereof, accompanied by a standby deposit fee of $30,000.00, said fee to be refunded if loan closed.”

Instead of forwarding the standby deposit fee of $30,000 as required by the agreement, the Plaintiff prevailed upon the Defendant to accept a guaranty letter from Park National Bank, the bank with which the Plaintiff did business. This undated letter which was executed at his direction and approved and signed by him and his wife, provides as follows:

“GUARANTY
Home Beneficial Life Insurance Company Richmond, Virginia
Gentlemen:
You have issued your commitment for a real estate loan in the amount of $1,500,000 to John Testerman, et ux dated December 21, 1971, a copy of which commitment is attached hereto and made a part hereof.
Your commitment provides that in the event said loan is not consumated on or before August 21, 1973, you are to be paid a commitment fee of $30,000.
This is to advise that this bank irrevocably guarantees the payment of said $30,000 commitment fee in the event said loan is not consumated by John Tester-man, et ux as provided in the annexed commitment. Upon your advice in writing signed by an officer of the Home Beneficial Life Insurance Company that said loan has not been consumated and that said $30,000 fee is due and payable under the terms of your commitment, we will immediately remit to you the $30,000 commitment fee.
In the event said loan is consumated pursuant to said commitment, then the Guaranty shall become null and void and of no further force or effect on the date the loan is consumated.”

Thereafter, Plaintiff found his cost estimates too low as to both phase one and two. By letter dated August 17, 1972 he informed Defendant of this situation, advised that he did not intend to start phase two until phase one was completed and “fully paid for,” requested that he be released from the commitment contract and be refunded the $30,000 standby fee. He offered to pay such expenses as the Defendant had incurred in connection with the proposed loan. This letter was answered by the Defendant through L. W. Richardson, its Vice-President, by letter dated September 11, 1972 wherein the Defendant offered to review the matter with the idea, perhaps, of being able to lend an additional $200,000 and, on November 20, 1972, came to Knoxville and inspected the building site with Plaintiff. This proposal did not bear fruit because of Plaintiff’s failure to forward certain financial information required by the Defendant in connection with increasing the loan. By letter dated December 7, 1972, Plaintiff’s loan application for $3,600,-000 was approved by Western Savings Bank, which required a two percent refundable standby fee. Thereafter by letter dated December 19, 1972, Plaintiff advised Defendant that, because he really needed a loan of $3,600,000, he considered the negotiations with the Defendant at an end and made demand for the return of the $30,000. This demand was refused by Defendant’s Vice-President Richardson by letter of January 17, 1973, wherein he advised Plaintiff as follows:

“In the event the loan is not closed according to those terms the sum of $30,000 deposited by you will be forfeited as per our contract.”

Sometime in the interim, Provident Trust Company received information regarding the problem with the loan commitment and its President, Keeling Turner, wrote Defendant on August 31, 1972 and concluded the letter as follows:

“It is our hopes [sic] that this loan can be saved; however, as your loan correspondent, my first responsibility is to you. Whatever you feel is the right action, we will follow in that direction.”

On April 27, 1973, John W. Testerman and wife Leslie H. Testerman, Plaintiffs-Appellants, filed suit in the Chancery Court for Knox County against Home Beneficial Life Insurance Company, Defendant-Appel-lee, and Park National Bank. They obtained a temporary injunction enjoining the Defendant Insurance Company from calling upon the Bank to honor the guaranty, and the Bank from paying the $30,000, and sought a decree that this fee amounted to an uncollectable and unenforceable penalty. The temporary injunction remains in effect pending this appeal. Park National Bank takes no adversary position in this matter, but casts itself in the role of a stake holder and has evidenced its willingness to make such disposition of the $30,000 as the Court may direct.

Only the Defendant’s Vice-President Richardson testified on behalf of the Defendant, and his undisputed proof is that such fees in the amount of two percent are “very standard” and “used by most companies that don’t use three percent”; that, although the out-of-pocket loss in connection with the proposed loan by the Defendant was only $3,877.35, because of the loss of participation in rents in connection with the loan, the total loss to the Company would amount to approximately $97,000. He admitted on cross-examination that his Company attempted to keep the money “working at all times” and could not say that his Company failed to make any particular loan because of its commitment to the Plaintiff. He did concede that interest rates rose subsequent to the period the loan to Plaintiff was to be consummated.

The matter was heard before the Chancellor on September 11, 1973 and decision reserved. Thereafter, by memorandum opinion dated October 29, 1973, the Court found for the Defendant Home Beneficial Life Insurance Company, dissolved the temporary injunction and ordered the $30,000 standby fee be paid by the Bank to Home Beneficial Life Insurance Company. Plaintiffs excepted and duly perfected their appeal to this Court.

The validity of the standby fee is assailed by assignments of error in this Court on several fronts.

First, it is urged that the $30,000 fee was not reasonable for liquidated damages, but was in fact a forfeiture or unenforceable penalty.

It is clear that the law of this State does not favor forfeitures and penalties; and, even though a sum be stipulated liquidated damages, if it is not reasonable, the Courts will treat it as a penalty or forfeiture and refuse enforcement. Further, if there is a doubt whether a sum is in fact a penalty or liquidated damages, the Courts are inclined to hold the former. Baird v. Tolliver, 25 Tenn. 186 (1845); Patterson v. Anderson Motor Co., 45 Tenn.App. 35, 319 S.W.2d 492 (1958).

The cases cited and relied upon by Plaintiffs do not involve a standby fee, such as the case at bar, and the parties concede their research does not disclose such authority in this State.

It is the position of the Defendant Home Beneficial Life Insurance Company that the fee is not a forfeiture or liquidated damages, but rather a part of the consideration of the commitment agreement. The Defendant relies strongly on Goldman v. Connecticut General Life Ins. Co., 251 Md. 575, 248 A.2d 154 (1968); and this case, in our view, is most nearly in point. The commitment agreement in the Goldman case provided as follows:

“This commitment, however, shall not became [sic] effective until such time as the Lender has received in addition to the acceptance of this commitment a fee in the amount of $17,000. The Lender agrees to refund this fee if and when the loan is closed and the proceeds have been disbursed. The payment of this fee in no way lessens the Borrower’s obligation to close the loan in accordance with the terms of this commitment.” 248 A.2d, pp. 155 — 156.

The Court of Appeals of Maryland sustained the right of Connecticut General Life Insurance Company to retain the fee and employed the following reasoning:

“In today’s world, the commitment fee has become a fact of financial life. Most large projects are financed under agreements substantially similar to the one entered into between Greenspring and Connecticut. Boston Road Shopping Center v. Teachers Ins. & Annuity Ass’n, supra, 213 N.Y.S.2d at 526; Continental Assurance Co. v. Van Cleve Bldg. & Const. Co., supra, 260 S.W.2d at 321 — 322. The commitment fees are substantial, but are usually stated as a small precentage [sic] of the amount ultimately to be loaned. The courts, in holding that the fees were non-refundable in the event that the project is abandoned or that the borrower fails to take down the funds, have supported their conclusions by finding that the fee was intended to constitute liquidated damages, as in Boston Road; as a fee for the commitment, as in Regional Enterprises and Paley [Paley v. Barton Savings & Loan Ass’n, 82 N.J.Super. 75, 196 A.2d 682 (1964) as a stand-by fee, as in Chambers; or as stand-by interest, as in Continental Assurance.
We approach the problem somewhat differently. It will be recalled that in the case before us, the contract described the $17,000 as ‘a fee’ and that the effectiveness of the commitment was conditioned upon the payment of it. The agreement provided that the fee would be refunded when the loan was closed, but neither made reference to the disposition to be made of the fee if the transaction was never consummated, nor described the amount as liquidated damages. Connecticut does not claim that it made any segregation of its funds to cover the commitment, but says that it has been put to expense, which cannot be calculated with any precision. It might also have argued that the fee was intended to protect the lender against the uncertainties of the money market, since a borrower may go elsewhere if interest rates soften.
“Under the facts of this case, we view the payment made by Greenspring to Connecticut as the consideration paid for Connecticut’s commitment letter.” 248 A.2d, pp. 157-158.

There are cases from a number of other jurisdictions, most of which are cited in Goldman, supra, that sustain the validity of such fees. Regional Enterprises v. Teachers Ins. and Annuity Assoc., 352 F.2d 768 (9th Cir. 1965); Boston Road Shopping Center, Inc. v. Teachers Insurance, 13 A.D.2d 106, 213 N.Y.S.2d 522 (1961); White Lakes Shopping Center, Inc. v. Jefferson Standard Life Insurance Co., 208 Kan. 121, 490 P.2d 609 (1971); Continental Assur. Co. v. Van Cleve Bldg. & Const. Co., Mo.App., 260 S.W.2d 319 (1953); Chambers & Co. v. Equitable Life Assurance Soc., 224 F.2d 338 (5th Cir. 1955).

It is true, as pointed out by the Plaintiffs, that the letter from Defendant to Plaintiff dated December 11, 1972, used the word “forfeited” in connection with the fee. However, particular words used are not conclusive on the parties or the Court. City of Nashville v. Nashville Tractor Co., 142 Tenn. 475, 220 S.W. 1087 (1920). Additionally, the Patterson case, supra, cited in Plaintiff’s brief, contains the following:

“In determining whether the amount specified in a bond for performance is a penalty or liquidated damages, the particular words are not conclusive on the parties or the Court.” 45 Tenn.App. 35, 55, 319 S.W.2d 492, 501.

We concur in the holding of the Chancellor that it is the substance of the transaction, and not the words, that govern. The Defendant’s use of the word “forfeited” does not change the substance of the transaction. We likewise concur with the finding of the Chancellor that this fee was a part of the consideration and if reasonable, and does not involve oppression or overreaching, should be sustained.

Plaintiff next contends that the commitment letter was ambiguous, in that, although it provided a refund of the fee in the event the loan was closed, it did not provide the disposition in the event the transaction was not consummated.

We are unable to concur in Plaintiff’s reasoning. This alleged ambiguity evidently did not become apparent to Plaintiffs’ attorneys from April 27, 1973, the date they filed their suit until September 11, 1973, the date of the trial when they sought to have the complaint amended to allege the ambiguity. Additionally, it affirmatively appears that the ambiguity was not apparent to the Plaintiff, as the letter of guaranty by Park National Bank, forwarded at his direction and over his signature, specifically provided for a disposition of the $30,000, which we think is clearly implicit in the commitment agreement.

Plaintiffs also insist that the letter from Provident to Home Beneficial created a dual agency, not known to Plaintiff, and made any contract negotiated in connection therewith voidable at his option.

We agree with this general proposition of law. However, we do not believe the facts of this case sustain a finding that Provident was in fact an agent of Home Beneficial. Agency must be proved by the party asserting the same) Cobble v. Langford, 190 Tenn. 385, 230 S.W.2d 194 (1950), and may not be proved by the statements of the agent. Wade v. Whitsitt, 9 Tenn.App. 436 (1928).

We do not believe the proof in this case sustains the proposition of agency; but, on the contrary, concur in the finding of the Chancellor that such agency has not been shown.

The Plaintiffs further argue that, as the interest rates increased subsequent to the period the loan should have been closed, the Defendant actually suffered no damage; but, in fact, benefited in that it lent its money to others at a higher interest rate. This argument ignores the testimony of Vice-President Richardson concerning the rental participation feature of the loan. We should also remember that contracts of this nature must be viewed prospectively from the vantage point of the parties on the date of the execution of the agreement, not on the basis of what did happen, but rather on what could or might have happened.

Assuming arguendo, that the interest rates had softened and Plaintiffs could procure a loan at a lesser interest, certainly under the contract they had a right to borrow the money at a more favorable rate. Just as certainly, in our view, they would not be entitled to a refund of their standby deposit fee.

Although it may be Defendant could not point to any particular loan that it did not make during the period in question, it is apparent that it was required to keep its financial house in order for some 20 months to insure having $1,500,000 available to Plaintiff.

In this case the Plaintiff entered into a solemn contract with the Defendant whereby the Defendant was requested to make available to Plaintiff one and one-half million dollars, under agreed terms and at an agreed interest rate. A $30,000 refundable standby fee was required. Plaintiff found another lender with whom he could and did deal more advantageously. Under these circumstances, we should think a court of equity would be the last place for Plaintiff to seek relief.

Accordingly, all assignments of error are overruled, the judgment of the Chancellor affirmed, and the costs incident to the appeal taxed to the Plaintiff and the sureties on his appeal bond.

The order of this Court shall be entered 10 days after the filing of this opinion to permit Plaintiff to seek additional review and a continuance of the temporary injunction.

PARROTT and SANDERS, JJ., concur.


author: SHRIVER, Judge.

text:
    METROPOLITAN FIRE FIGHTERS ASSOCIATION, LOCAL 763 (AFL-CIO), et al., Complainants-Appellants, v. Beverly BRILEY, Mayor of the Metropolitan Government of Nashville and Davidson County, and Bill Mykitta, Payroll Supervisor of the Metropolitan Government of Nashville and Davidson County, Defendants-Appellees.
    Court of Appeals of Tennessee, Middle Section.
    Aug. 30, 1974.
    Certiorari Denied by Supreme Court March 17, 1975.
    Cecil D. Branstetter and Carrol D. Kil-gore, Nashville, for complainants-appellants.
    Robert W. Rutherford and Edward W. McCabe, Metropolitan Attys., Dept, of Law of the Metropolitan Government of Nashville and Davidson County, Nashville, for defendants-appellees.
   OPINION

SHRIVER, Judge.

THE CASE

This is a declaratory judgment suit which was instituted and sustained as a class action on behalf of all salaried employees of the Metropolitan Government of Nashville and Davidson County, Tennessee, which seeks recovery of a half-month’s salary alleged to have been withheld from each employee as a result of an executive order of the Mayor changing the dates of all paydays from a time during each two week pay period to a date one week after the end of such pay period.

The case was heard by Chancellor Frank F. Drowota, III, and resulted in an opinion and decree holding that the executive order in question merely accomplished a change in accounting procedures, which order was within the authority of the Mayor and which did not change the substantive rights of the employees, hence, the recovery of alleged salary loss was denied.

From this decree the complainants duly perfected their appeal to this Court and have assigned errors.

THE PLEADINGS

The Original Bill charges and the record shows that on November 12, 1971, the Payroll Supervisor of the Department of Finance of the Metropolitan Government issued a memorandum to all Metropolitan employees, notifying them that, pursuant to Executive Order No. 42 issued by the May- or, the semi-monthly dates of payment of salaried employees of the Metropolitan Government would be gradually changed over a 10-month period so that the paydays would be on the 7th and 22nd days of each month, one week after the end of such pay period, rather than on the 12th and 28th of each month, during the pay period, as had been true previously.

It is alleged that the practical result for the current fiscal year ending June 30,1972, was to reduce the annual salary of all salaried employees by the amount of one bimonthly payment, or one-twenty-fourth of the annual salary of each employee. It is asserted that, although, technically, this amount would be recovered at the termination of the employee’s service, it would amount to a forced loan without interest for an indeterminate number of years.

It is further alleged that the change in paydays amounts to a change in the pay plan in effect prior to November 12,1971 in a manner other than that prescribed by Article XII, § 12.10 of the Charter of the Metropolitan Government of Nashville and Davidson County.

It is further charged that the change in paydays also violates the specific provisions of Chapter 7, Section 12 of the Civil Service Rules and Regulations of the Metropolitan Government which provides that: “Salaried employees shall be paid on a semi-monthly basis. Such payment received shall be in full for the current pay period.”

It is also alleged that the change in paydays constitutes a breach of the contract of employment of all employees affected, which contract impliedly incorporated the annual salary schedule legally provided or in effect at the time of employment.

It is charged that the change in paydays is illegal insofar as it delays any part of the employee’s salary earned in 1972 beyond June 30, 1972, because it deprives them of money already duly appropriated by the Metropolitan Council for their payment and makes them dependent upon the possibility of new appropriations in the future for the payment of earned salaries.

Finally, it is averred that all members of the class represented by the complainants are entitled to a declaratory decree establishing the illegality of the change in paydays and to a judgment for the unpaid portions of the salaries of all members of the class.

The defendants answered the bill, admitting certain of the facts alleged as to the effect of the executive order of the Mayor in question.

A motion for summary judgment was filed by the complainants on the ground that there is no substantial dispute as to any material fact affecting the rights of the complainants and the class they represent.

In support of the motion certain affidavits and exhibits were filed, including the Rules of the Civil Service Commission and the official pay plan of the Metropolitan Government.

Subsequently, the defendants filed a motion for summary judgment, together with affidavits and exhibits. In said motion it is agreed that there is no substantial dispute as to any material facts as alleged in complainants’ motion, but they deny that complainants have a right to recover any damages as a matter of law and deny that they have suffered any loss by reason of the change in dates of payment.

After hearing the cause the Chancellor filed a Memorandum Opinion on November 27th, 1973, followed by a decree in which it was recited that the cause came on to be heard before the Honorable Frank F. Dro-wota, III, Chancellor, on May 11, 1973, as a class action maintained by the named complainants on behalf of all salaried employees of the Metropolitan Government, excluding those employees requesting exclusion from the class by written application, on the pleadings, motion of the defendants to dismiss, motion of the defendants for summary judgment, affidavits and exhibits in support of said motions, together with motion of complainants for summary judgment and affidavits and exhibits in support of same, arguments and briefs of counsel, and the entire record; whereupon, the defendants’ motion for summary judgment was sustained and complainants’ motion for summary judgment was overruled.

The decree recites that for reasons assigned by the Court in the Memorandum Opinion, which is incorporated by reference, the defendants’ motion for summary judgment is sustained and the case dismissed and an appeal to this Court granted.

ASSIGNMENTS OF ERROR

There are four assignments of error.

Assignment No. 1 charges error in failing to hold that each salaried employee of the Metropolitan Government was deprived of a half-month’s salary by the executive order in question.

Assignment No. 2 charges error in holding that the Metropolitan Mayor had authority and power to alter the substantive rights of the employees by changing the days of the month on which the salaried employees should be paid, thus, causing each employee to lose a full half-month’s salary.

Assignment No. 3, while in different language, is, in substance, the same as Assignment No. 2.

Assignment No. 4 charges error in failing to hold that the plan of payment put into effect by the executive order constituted a violation of the contractual rights of the employees and was in violation of Article I, Section 10 of the United States Constitution.

THE CHANCELLOR’S OPINION AND OUR CONCLUSIONS

As was found by the Chancellor in his Memorandum Opinion, the Payroll Supervisor of the Department of Finance of the Metropolitan Government, on November 12, 1971, issued a memorandum to all Metropolitan employees which contained a schedule of payroll date changes to facilitate the transition to new payroll dates set by the Mayor in Executive Order No. 42, and pursuant to said memorandum, the payroll dates were ultimately changed from the 12th and 28th to the 7th and 22nd of each month, so that under the new pay plan, on the 7th day of the month, a salaried employee would receive his pay for the period from the 16th day through the end of the preceding month. On the 22nd, he would receive pay covering the period from the 1st through the 15th of each month. Thus, there would be a lag of one week from the end of the work period to the date of payment.

It is noted that complainants contend that:

(1) The practical result of this action was to reduce the annual salary of the fiscal year ending June 30,1972 of all members of the class by an amount equal to one bimonthly payment, which constituted a forced loan of that amount to the Metropolitan Government by the class members until termination of employment;

(2) The action was in violation of Article XII, § 12.10 of the Charter of the Metropolitan Government, which section outlines the manner in which the pay plan is to be adopted;

(3) The action violates Chapter 7, Section 12 of the Civil Service Rules and Regulations of the Metropolitan Government which provides that: “Salaried employees shall be paid on a semi-monthly basis. Such payment received shall be in full for the current pay period.”

(4) The action constitutes a breach of the contract of employment of each member of the class; and,

(5) The action is illegal in that it deprives members of the class of money already duly appropriated for their salaries in 1972.

In dealing with these contentions, the Chancellor found as follows:

“The contention that the action results in a forced loan from 1972 until the termination of employment is without merit. Assuming, without deciding, that the action constitutes a forced loan, the obligation matures at the close of the pay period but is paid in full seven days later. For instance, at the end of a given month, the Metropolitan Government owes its salaried employees one-half-month’s pay, which is paid in full on the seventh day of the next month; therefore, there is no obligation owing from the 7th until the 15th day of that month. As regards the argument that this action constitutes a wrongful infringement upon the rights of a civil service employee, case law indicates that the change of a pay day by seven days in and of itself does not constitute an actionable wrong. Although civil service employees have rights which the courts will protect against unlawful infringement, such rights are not vested contractual rights which are protected by constitutional guarantees from being changed. Risley v. Board of Civil Service Commissioners [60 Cal.2d 32], 140 P.2d 167, 171 (1943).
Plaintiffs second contention that the action violates Chapter XII, § 12.10 of the Charter is without merit. A reading of this Charter provision does not support plaintiffs’ position. Under the provision, the ‘pay plan’ contemplates a classification of jobs and an ‘assignment of each classification to grades equitably related to each other.’ The details of payroll procedures, such as time of payment, are not within the scope of Section 12.10. Thus, the procedural requirements of that section do not control alterations such as a change in the date of payment.
Under the principle of the Risley case, it is the opinion of this Court that plaintiffs’ contentions that the action constitutes a breach of contract or an illegal deprivation of monies are also without merit.
The most difficult question involves plaintiffs' contention that defendants’ action is in violation of Chapter 7, Section 12 of the Civil Service Commission Rules and Regulations. Section 12 states:
‘Salaried employees shall be paid on a semi-monthly basis. Such payment received shall be in full for the current pay period.’
There can be little dispute that under the plain language of Section 12, the salaried employees are not receiving payment ‘in full for the current pay period’ when a given payday is seven days following the expiration of the corresponding pay period. Therefore, the determinative issue is whether the defendant Briley, as Chief Executive of the Metropolitan Government, has the authority, express or implied, to take the action in question. Ris-ley, supra, at 171.
The general powers and duties of the Mayor of Metropolitan Nashville are outlined in Article 5 of the Charter. Section 5.01 states that:
‘The executive and administrative power of the Metropolitan Government shall be vested in and exercised by a Metropolitan County Mayor and such other departments, boards, commissions, officers and agencies as are created or authorized by this Charter.’
Section 5.03 states:
‘The Mayor is authorized to administer, supervise and control all departments created by this Charter, except as otherwise specifically provided, and also all departments created by ordinance pursuant thereto. Such administration shall be by and through departmental directors under the supervision and control of the Mayor.’
These quoted provisions vest defendant Briley with authority to control the Department of Finance as established pursuant to Chapter 1, Article 8 of the Charter. Under Section 8.103(b) of the Charter, the Director of Finance under ‘supervision and control’ of the Mayor shall:
‘Maintain accounting systems for the general services district and the urban service district of the Metropolitan Government, and for each department, office and agency thereof, in accordance with generally recognized governmental accounting principles and procedures . . .’ [Emphasis added.]
Therefore, absent a valid restraint upon the powers of defendant Briley, as the Mayor of Metropolitan Nashville, he is vested with the power to order changes in accounting procedures which do not adversely affect substantial rights of the employees of Metropolitan Nashville. The test to determine validity of such executive action would be a weighing of the utility of the action vis á vis the gravity of the resulting harm to those rights are affected.
Chapter 7, Section 12 of the Civil Service Commission Rules and Regulations appears to be the only possible restraint upon defendant Briley’s authority to take the action in question. A study of the basic objectives of the regulations in conjunction with the principle that the regulations should not be applied so as to confine the process of personnel administration to a strait jacket, Default [Dufault] v. Hebert [99 R.I. 181], 206 A.2d 456 (1965) undergirds the position of the defendants herein.”

It is pointed out that the objective of the Civil Service Rules and Regulations is to promote efficient and equitable procedures for the administration of the metropolitan system and the Chancellor was of the opinion that the new pay dates provide for a more efficient financing system.

It is also to be noted that the Charter contains a provision which calls for audits prior to payment of the payroll and this seems to be in conflict with Section 12 of Chapter 7, bearing in mind that payroll obligations are necessarily contingent in amount until the end of a given pay period because an employee may be absent due to sickness or other causes during part of the pay period and, thus, not earn the full amount of his salary for that period. Thus, if the payroll is made up before the end of the period for a large number of employees, it must necessarily follow that in many cases the amount of the checks for salaries for a full pay period would amount to an overpayment where the employee, for any reason, did not perform his work during the entire period.

It, thus, appears that the requirement in the Charter calling for an audit of the payrolls before they are paid presents an impossible situation where the attempted audit is made before the end of the period.

This was one of the impelling reasons for changing the dates of paydays to a time one week after the end of the work period so that an accurate audit could be made before the checks for the payroll were made up.

The Chancellor noted that he was unable to find any case law directly in point with respect to the action of the defendants in this matter but referred to the case of Douglas v. MacLean, Sup., 155 N.Y.S.2d 547 (1956), where a City Commissioner, by executive order, made a minor alteration in a pay plan and the Court upheld this action, stating that he acted within his power because it was reasonably calculated to achieve the objective of a more efficient system. The Court’s opinion concluded:

“It is the opinion of this Court that the defendants’ action was within their authority and said action is hereby upheld.”

It seems appropriate to comment briefly on one or two other matters contained in the record that bear on this question. For example, it is pointed out in the affidavit of A. W. Mykitta, Payroll Supervisor of the Department of Finance, which affidavit was attached to the motion for summary judgment, that the firm of public accountants who conducted the annual audit of the records of the Department of Finance of the Metropolitan Government, along with other firms who had previously audited said accounts, complained about the practice of paying employees prior to the end of a particular pay period. They stated that such practice resulted in payrolls being authorized after only a few days into a period for which work was certified to have been performed. It was pointed out that numerous unearned checks were unavoidably prepared, and, presumably cancelled at a later date, thus, involving a constant correction process of completed payroll execution, and that under this plan it was possible for an employee to receive payment for unearned wages.

In his affidavit Mr. Mykitta recommended to the Director of Finance that the date of paydays for salaried employees be gradually changed from the 12th and 28th until there existed a lag of seven days from each payroll period.

His affidavit stated, among other things:

“This plan is necessary both from internal control and to furnish us sufficient time under the Data Processing Method of payroll procedures. This allows certification on the date the payroll period ends and affords sufficient time to process the payrolls and issue pay checks after such certification. This plan assures the correct certification of the payroll and eliminates all guess work.”

He further states in said affidavit:

“It is impossible to issue a payroll check for the pay period with correct and proper certification without a seven day lag period.”

We are impressed that the position of the appellants that the employees lost two weeks pay because they received only twenty-three pay checks in 1972, presents a somewhat artificial distinction inasmuch as it is shown that the missing paycheck was merely delayed until January 5, 1978. Defendants plausibly argue that each paycheck is simply postponed one week and not to the end of an employee’s tenure with Metropolitan Government.

Again, we are impressed that the Metropolitan Charter, Article XII, Section 12.10, hereinabove referred to, does not set forth the details of payroll procedure, including the time of payment, and that the pay plan in effect at the time the paydays were changed nowhere referred to the time of payment; hence, impliedly, leaving the time of payment to be established administratively. Thus, we are unable to agree with the contention of appellants’ counsel that the Mayor’s action in establishing a time of payment, followed by an appropriate order from the Finance Department, was inconsistent with Section 12.10, supra.

On the whole, we feel compelled to agree with the conclusions of the Chancellor with respect to this matter; hence, his decree is affirmed.

Affirmed.

TODD, J., and SMITH, Special Judge, concur.


author: WALKER, Presiding Judge. DWYER, Judge

text:
    Barbara Sue PATMON and David G. Patmon, Plaintiffs in Error, v. STATE of Tennessee, Defendant in Error.
    Court of Criminal Appeals of Tennessee.
    Dec. 2, 1974.
    Certiorari Denied by Supreme Court as to David G. Patmon, May 27, 1975.
    F. Thornton Strang and Robert N. Townsend, Chattanooga, for plaintiffs in error.
    Milton P. Rice, Atty. Gen., Michael E. Terry, Asst. Atty. Gen., Nashville, Robert J. Batson and Stanley J. Lanzo, Asst. Dist. Attys. Gen., Chattanooga, for defendant in error.
   OPINION

WALKER, Presiding Judge.

The defendants below, Barbara Sue Pat-mon and David G. Patmon, were convicted in Hamilton County of receiving stolen property over the value of $100 and sentenced to three years in the penitentiary. The trial judge granted Barbara Sue Pat-mon’s petition for a suspended sentence. Both appeal in error contending that the evidence does not support the verdict and that the trial judge erred in refusing to direct the verdict in their favor.

On July 20, 1972, the defendant Barbara Sue Patmon, then Barbara Sue McGee, bought from Trotter Pontiac in Chattanooga a green 1969 Oldsmobile for $2,474.95. Soon thereafter Trotter Pontiac assigned the sales contract to American National Bank of Chattanooga.

When Mrs. Patmon bought the car she was married to one Otis McGee who was at that time in military service in Florida. On Mr. McGee’s return to Chattanooga about August 7, 1972, and his learning of her purchase, he objected particularly when he found that the car was in the possession of her friend, the defendant David G. Patmon. Mr. McGee forced his wife immediately to sign a voluntary repossession agreement and to surrender title to the bank. After some difficulty in regaining possession, he had the car returned and at the direction of the bank’s vice-president had it placed on the lot of Trotter Pontiac, where it remained until it was stolen about October 27, 1972.

Some time after the surrender of the automobile, Barbara Patmon divorced Otis McGee and married David G. Patmon, her codefendant. On May 2, 1973, officers searching for the stolen automobile found it in the possession of the defendants and arrested them. David G. Patmon was driving it at the time and Barbara Sue Patmon was with him.

The defendant David G. Patmon did not testify. In her statement to officers and in her testimony, she said that in October or November 1972, she bought this automobile in question from one Fish Mouth for $400. She testified she saw Fish Mouth on 9th Street in Chattanooga and he told her he had an automobile for sale; that two weeks later she bought this car from him for $350 in cash and $50 to be paid later; the car had been wrecked but Fish Mouth said it would not take much to repair it. By her testimony he said the car was his and she did not know that it was the same one she bought in July 1972 and surrendered in August 1972. She said she did not notice that it had the same license plates issued to her; that Fish Mouth told her she would get papers for the car when she made her final payment of $50; that she did not know Fish Mouth’s real name or where he lives and that she has never seen him again. From her testimony, she was in possession of the car soon after its theft. The evidence shows that both defendants had been driving the car and that David G. Patmon had been driving it to and from work.

From this evidence the jury could infer that the defendants were in possession of the recently stolen automobile with the requisite guilty knowledge. We follow the objective test rule for determining guilty knowledge by which its existence is regarded as established when the circumstances surrounding the receipt of the property is such as would charge a reasonable man with notice or knowledge or would put a reasonable man on inquiry which if pursued would disclose that conclusion. See Kessler v. State, 220 Tenn. 82, 414 S.W.2d 115; Taylor v. State, Tenn.Cr.App., 493 S.W.2d 477. The unexplained possession of recently stolen goods may warrant the inference that they were illegally received. Tackett v. State, 223 Tenn. 176, 443 S.W.2d 450. The jury did not believe the defendants’ explanation of their possession of the property. Under this evidence, it was warranted in returning a verdict of guilty of receiving stolen property against both defendants.

Without merit is the contention that proof of value over $100 was not proven. Barbara Sue Patmon’s testimony is that she paid $400 for the repurchase of the vehicle. She had purchased the same car a few months before for over $2400. The testimony of the manager of Trotter Pontiac was admissible on that value. The trial judge did not err in refusing to direct a verdict for the defendants on the evidence presented here.

The sentence reflects that both defendants are “disqualified from exercising the elective franchise.” Chapter 740, Sec. 4(70), of the Public Acts of 1972, deleted this provision. The judgment is modified by striking this disqualification.

As modified the judgment is affirmed.

O’BRIEN, J., concurs.

DWYER, J., concurs with opinion.

DWYER, Judge

(concurring).

I am in complete accord with my esteemed Presiding Judge in his treatment of the assignments of error advanced in this record and the results of his considerations of them. However, under Rule 43 of the Supreme Court, Judicial Canon 19, I am prompted to write about T.C.A. § 40-2901. This section is highlighted in this opinion, by the appeal of Barbara Sue Patmon, because the learned trial judge suspended her sentence and also allowed direct appeal of her conviction.

It may be judicially acknowledged that one of the foremost problems in this country today is the rising crime rate. The writer believes that one way of combatting this deleterious blight on our society is by expeditiously arriving at a conclusion to a prosecution.

The statute by its terms confers on the defendant the right to petition for a suspended sentence without loss of direct appeal. We think this is good legislation and have no quarrel with that facet of the statute.

However, the merits of the statute end when it extends the power of the judge to grant or deny a suspended sentence after this court or the Supreme Court has returned final judgment. The proviso in question states:

“. . . Provided further, That any defendant may file application for such a suspension of sentence or parole therefrom, upon the return of the final verdict, judgment or award of the court of criminal appeals, or the Supreme Court of Tennessee, as the case may be, whichever may be final, on or before the expiration of the term to which the procedendo of the final appellate court is returned, and the trial court shall have full power to act thereon.”

Under this proviso, see Chapter 513, Public Acts of 1972 and reading the recent decision of our Supreme Court, see Stiller v. State, Tenn., 516 S.W.2d 617, released November 12, 1974 at Nashville, the defendant may, after affirmation, again petition for a suspended sentence and if denied again appeal from that judgment and thereby, again, abate incarceration pending that appeal. I think this portion of the statute is useless and senseless legislation which should be repealed.

I concur in affirming this judgment.


author: PER CURIAM.

text:
    FRYMIRE ENGINEERING COMPANY, INC., Petitioners, v. Patricia GRANTHAM, Respondent.
    No. B-5124.
    Supreme Court of Texas.
    June 18, 1975.
    Bailey, Williams, Westfall & Henderson, C. Edward Fowler, Jr., G. David Westfall and James A. Williams, Dallas, for petitioner.
    Wilson, Berry, Jorgenson <& Johnson, Kenneth W. Fuqua, Dallas, for respondent.
   PER CURIAM.

This is a suit for damages based upon the negligent installation of wiring in which the defendant, Frymire Engineering Company, Inc. had on file a general denial, but failed to appear at trial. The trial court heard evidence from the plaintiff, Patricia Grant-ham, as to damages, but no evidence was introduced that the defendant installed the wiring. The court of civil appeals, after a remittitur, affirmed the trial court’s judgment in favor of the plaintiff. 517 S.W.2d 820.

The court of civil appeals held that there was no necessity for plaintiff to prove defendant’s liability because the posture of this ease allowed the entry of a judgment of nihil dicit (defendant says nothing). 517 S.W.2d at 825. That holding is in conflict with Texas Rules of Civil Procedure, rule 92, which provides:

“A general denial of matters pleaded by the adverse party which are not required to be denied under oath, shall be sufficient to put the same in issue. . . ”

See, Shell Chemical Co. v. Lamb, 493 S.W.2d 742, 744 (Tex.1973); Trevino v. American Nat’l. Ins. Co., 140 Tex. 500, 168 S.W.2d 656 (1948). That holding further conflicts with this Court’s decision in Tally v. Thorn, 35 Tex. 727 (1872), wherein we held that, defendants having filed their answers, the plaintiff was required to prove his case even though the defendants failed to appear at the trial. See also, Finlay v. Jones, 435 S.W.2d 136, 138-39 (Tex.1969); Hanks v. Rosser, 378 S.W.2d 31, 34 (Tex.1964); World Co. v. Dow, 116 Tex. 146, 287 S.W. 241, 243 (1926); Kinnard v. Herlock, 20 Tex. 48 (1857); Able v. Chandler, 12 Tex. 88 (1854); Ryburn v. Nail, 4 Tex. 305 (1849); Webb v. Reynolds, 207 S.W. 914, 916 (Tex.Comm.App.1919, jdgmt. adopted); Griffin v. Browne, 482 S.W.2d 716, 717 (Tex.Civ.App.—Houston [1st Dist.] 1972, writ ref’d n. r. e.).

This is not a true nihil dicit judgment, which is usually limited to situations where (1) the defendant has entered some plea, usually of a dilatory nature, but such plea has not placed the merits of the plaintiff’s case in issue, or (2) the defendant has placed the merits of the case in issue by filing an answer, but such answer has been withdrawn. 4 R. McDonald, Texas Civil Practice § 17.25, pp. 126-28 (1971); 3 A. Freeman, Freeman on Judgments 2628 (2d ed. 1925); 1 H. Black, Black on Judgments 83 (1891). If defendant has filed an answer placing in issue the merits of plaintiff’s cause of action, defendant’s failure to appear at the trial is neither an abandonment of defendant’s answer nor is it an implied confession of any issues thus joined by the defendant’s answer. See, Tex.R.Civ.P. 239; Finlay v. Jones, 435 S.W.2d 136, 138-39 (Tex.1969); Hanks v. Rosser, 378 S.W.2d 31, 34 (Tex.1964); World Co. v. Dow, 116 Tex. 146, 287 S.W. 241, 243 (1926). Cf. Mullen v. Roberts, 423 S.W.2d 576 (Tex.1968), in which defendant’s attorney withdrew and the trial court, after hearing the evidence, entered a judgment by default.

Pursuant to Tex.R.Civ.P. 483, the application for writ of error is granted and, without hearing argument, the judgments of the courts below are reversed and the cause is remanded to the trial court. Tex.R.Civ.P. 505.

      . E. g., Spivey v. Saner-Ragley Lumber Co., 284 S.W. 210 (Tex.Comm.App.1926, jdgmt. adopted); O’Quinn v. Tate, 187 S.W.2d 241 (Tex.Civ.App.1945, writ refd).

      . E. g., Graves v. Cameron, Castles & Storey, 77 Tex. 273, 14 S.W. 59 (1890); Janson v. Bank of Republic, 48 Tex. 599 (1878); Storey v. Nichols, 22 Tex. 87 (1858); Cartwright v. Roff, 1 Tex. 78 (1846); Howe v. Central State Bank of Coleman, 297 S.W. 692 (Tex.Civ.App.—Austin 1927, writ refd).