                 IN THE COURT OF APPEALS OF TENNESSEE
                            AT KNOXVILLE
                           Assigned on Briefs November 28, 2000

        BERMAN D. KENNEDY v. DARLENE LANE-DETMAN, ET AL.

                    Appeal from the Chancery Court for Hamilton County
                      No. 98-1077    W. Frank Brown, III, Chancellor

                                    FILED JANUARY 30, 2001

                                  No. E2000-01315-COA-R3-CV


The defendant Herbert G. Adcox guaranteed, in part, payment of a $35,000 promissory note executed
by Darlene Lane-Detman in favor of the plaintiff Berman D. Kennedy. Adcox’s guaranty took the
form of a post-dated check in the amount of $30,000. When Detman defaulted on the note and
Adcox then stopped payment on the check, the plaintiff sued Adcox on the check. The trial court
granted Adcox summary judgment, finding that the record before it established a number of
affirmative defenses. We affirm the trial court’s decision to grant summary judgment to Adcox,
because we find that Kennedy modified the repayment terms of Detman’s note without Adcox’s
consent.

          Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
                               Affirmed; Case Remanded

CHARLES D. SUSANO, JR., J., delivered the opinion of the court, in which HOUSTON M. GODDARD ,
P.J., and D, MICHAEL SWINEY , J., joined.

Charles D. Paty, Chattanooga, Tennessee, for the appellant, Berman D. Kennedy.

Barry L. Abbott, Chattanooga, Tennessee, for the appellee, Herbert G. Adcox.

                                              OPINION

                                                   I.

        A few core facts are not in dispute. The plaintiff, Berman D. Kennedy, loaned Darlene Lane-
Detman (“Detman”) $30,000 on April 22, 1998. In return, he took a promissory note from her, also
dated April 22, 1998, in the face amount of $35,000. The note, see Appendix A, does not expressly
state that it bears interest. It does provide for “[p]ayment in full...on or before the 1st day of June,
1998.” It is undisputed that, on or about April 20, 1998, the defendant Herbert G. Adcox signed and
delivered a post-dated (to June 1, 1998) check to Kennedy in the amount of $30,000. While the
parties to this litigation disagree on a number of facts, they both agree that the check was given to
the plaintiff as a partial guaranty of Detman’s note to Kennedy.
      The dispute in this case is impacted by another and separate agreement between Kennedy and
Detman, which is also dated April 22, 1998. It provides, in its entirety, as follows:

              To B.D. Kennedy, of Kennedy Jewelry Inc.

              I, Darlene Lane-Detman, do hereby declare the following:

              I am borrowing from B.D. Kennedy the sum of 30,000 dollars.
              10,000 dollars cash. 20,000 dollars cashiers check from First
              Tennessee Bank, made out to the order of Debra Adams, for me, I
              cannot transact any business loans with to [sic] bank, because of a
              pending business loan with the Small Business Administration. I
              don’t want to jeopardize this loan.

               I promise to pay back the sum of 35,000 dollars by June 01, 1998.
               30,000 with 5,000 dollars in interest. If the total amount cannot be
               paid in full, then partial payment will be accepted with additional
               interest that is pro-rated. Collateral will be presented to B.D.
               Kennedy by Darlene Lane-Detman, to secure the loan, (see
               information with contract) House, bonds, office equipment, etc.

This document, which we will call, for lack of a better name, the “Kennedy-Detman side
agreement,” is signed by Kennedy and Detman. Significantly, it is not signed by Adcox who
testified by affidavit, without contradiction, that he was unaware of its existence when he gave
Kennedy the post-dated check.

       The record is clear that Detman made two payments on the note: the first for $1,500 on June
3, 1998, and a second payment in the amount of $500 on July 24, 1998. As can be seen, both
payments were tendered to, and accepted by, Kennedy after the June 1, 1998, due date of Detman’s
note.

        It is clear from the record that Detman failed to make any further payments; that Kennedy,
in August, 1998, notified Adcox of Detman’s default; and that Adcox thereafter stopped payment
on his check.

       The trial court granted Adcox summary judgment. In doing so, it stated its rationale as
follows:

               The Court finds particularly compelling in support of the Court’s
               ruling that the plaintiff failed to obtain a Deed of Trust for the
               property referenced in the Promissory Note evidencing the loan from
               Kennedy to Detman with respect to the property referenced in the
               Promissory Note owned by Defendant Detman and located at 3729
               Queens Road. The Court further finds that the [sic] as support of the

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               Court’s ruling that the plaintiff modified the principle [sic] agreement
               by entering into a separate agreement with Detman modifying the
               terms of repayment. Finally, the Court finds particularly compelling
               that the plaintiff Kennedy appears before this Court with unclean
               hands because the defendant has entered into an agreement to loan
               money to Detman at an interest rate in excess of 175% interest and
               has also agreed with the defendant to structure the transaction to
               avoid the scrutiny of the Small Business Administration for which
               defendant Detman was applying for a loan.

We must decide if the record before the trial court, and now before us, justifies a grant of summary
judgment to Adcox.

                                                 II.

        In deciding whether a grant of summary judgment is appropriate, courts are to determine “if
the pleadings, depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.” Tenn. R. Civ. P. 56.04. Courts “must take the
strongest legitimate view of the evidence in favor of the nonmoving party, allow all reasonable
inferences in favor of that party, and discard all countervailing evidence.” Byrd v. Hall, 847 S.W.2d
208, 210-11 (Tenn. 1993).

                                                 III.

       The promissory note guaranteed by Adcox grants to the plaintiff alone the option of electing
to renew the Detman note:

               At the end of the term of this note [i.e. June 1, 1998], the Lendor may
               demand payment in full of the balance due or the Lendor may elect
               the [sic] renew the loan as agreed and negotiated with the Obligor at
               the time of renewal.

(Underlining in original). By the terms of the Kennedy-Detman side agreement, the existence of
which was unknown to Adcox, the plaintiff entered into a binding agreement that he would accept
partial payments beyond the note’s due date of June 1, 1998:

               I promise to pay back the sum of 35,000 dollars by June 01, 1998.
               30,000 with 5,000 dollars in interest. If the total amount cannot be
               paid in full, then partial payment will be accepted with additional
               interest that is pro-rated.

(Emphasis added). The plaintiff, in effect, agreed by this two-sentence provision to extend the time
for paying the note. This can be seen by comparing the wording of the first sentence with that of the

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second sentence. The first sentence reiterates the obligation in the note to pay the debt in full by
June 1, 1998. The second sentence is obviously designed to address a time frame beyond June 1,
1998. This can be seen from the introductory clause of the second sentence – “[i]f the total amount
cannot be paid in full.” We find, from the juxtaposition of these two sentences that the second
sentence necessarily must be interpreted1 to mean a repayment scheme that extends beyond June 1,
1998. According to the second sentence, those partial payments “will be accepted.” This is
mandatory language. The plaintiff, in fact, subsequently accepted two partial payments after the due
date of the note. It is clear that, in so doing, the plaintiff extended the term of the note, as he was
bound to do by the provisions of the Kennedy-Detman side agreement.

       In Bank of Waynesboro v. Ghosh, 576 S.W.2d 759 (Tenn. 1979), the Supreme Court stated
the applicable principle of law:

                   Given a noncommercial guarantor, where a principal and creditor,
                   without the guarantor’s consent, make a binding agreement to extend
                   the time of payment by the principal, the guarantor is discharged
                   unless the creditor expressly reserves his rights against him.

Id. at 762 (footnote omitted). This principle is also stated in 38 Am. Jur. 2d Guaranty § 92 (1999):

                   An extension of time for the payment of the principal obligation by
                   the creditor, if not consented to by the guarantor, and given as the
                   result of a binding agreement between the creditor and debtor,
                   releases or discharges the guarantor from liability on the contract of
                   guaranty....

(footnote omitted).

       We find and hold that Kennedy, the beneficiary of Adcox’s guaranty, made a binding
agreement to extend the time of payment of the note, thus extinguishing Adcox’s liability on his
guaranty. Summary judgment on this basis is appropriate.

         We have reviewed the other bases for the trial court’s summary judgment. As to each, we
find that there are genuine issues of material fact and/or reasonable doubt as to whether the plaintiff
is entitled to relief, rendering summary judgment on those other bases inappropriate.

                                                             IV.




         1
         The interpretatio n of a wr itten agreem ent is a matter o f law for th e court. Rapp Constr. Co . v. Jay Re alty Co.,
809 S.W.2d 49 0, 491 (Tenn. Ct. App. 199 1).

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        The judgment of the trial court dismissing the plaintiff’s suit is affirmed. Costs on appeal
are taxed to the appellant. This case is remanded to the trial court for the collection of costs assessed
there, pursuant to applicable law.


                                                ___________________________________
                                                CHARLES D. SUSANO, JR., JUDGE




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