No. 01S01-9303-CH-00029.Supreme Court of Tennessee.
Filed April 4, 1994.
Helen O. Young, Carmack C. Shell, Clarksville, TN.
Timothy K. Barnes, Gregory D. Smith, Clarksville, TN.
OPINION
PER CURIAM.
1 The plaintiff/appellant, Bonnie Black, filed this declaratory judgment action in Montgomery County Chancery Court against Commerce Union Bank (the “Bank”) and Eddie Black, regarding the rights and obligations of the parties with respect to a promissory note, executed by plaintiff, in the Bank’s possession and a child support arrearage owed by plaintiff’s former husband, Eddie Black, who had assigned the note in question to the Bank. Both lower courts found that the note was conditional, therefore, subject to the personal defenses of the maker, Bonnie Black. The two courts differed, however, on the granting of a set-off. While the trial court awarded Bonnie Black a set-off against the Bank, the Court of Appeals held that allowing Bonnie Black such a set-off based on the child support arrearage would amount to allowing her to take credit for amounts due her children. We do not agree with the analysis of the Court of Appeals regarding the child support arrearage and set-off and reinstate the judgment of the trial court.
The appellant presents two (2) issues for review. First, whether the judgment of child support arrearages represents an obligation imposed by law to the custodial parent’s children rather than to the custodial parent. Second, whether appellant is entitled to claim the judgment for child support arrearage as a set-off against any obligation owed to the Bank on the note.
Bonnie Black and Eddie Black were divorced in 1986. The divorce decree awarded custody of the parties’ two (2) minor children to Bonnie Black and ordered Eddie Black to make monthly child support payments until 1991, when the youngest child was no longer a minor. The parties’ real property was awarded to Bonnie Black, but the court ordered her to execute a promissory note in the principal amount of $12,000 with an annual interest rate of 7.5%, payable to Eddie Black in exchange for the interest in the real estate he was required to relinquish. The decree also contained the following provision:
To enforce the prompt payment of child support by the Defendant to Complainant, it is further ordered that should at any time the Defendant fail to pay child support as herein provided, the accrual of interest shall cease and be tolled until such time as all child support payments are made to be current and up to date.
This provision was incorporated into the promissory note executed by Bonnie Black.
Eddie Black became in arrears in making child support payments. He assigned the note executed by his ex-wife to the Bank. Following that assignment, Bonnie Black instituted this present action in 1987. The Chancellor rendered his decision in 1992, after the youngest child had reached majority.
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The Bank adopts the decision of the Court of Appeals that the indebtedness Bonnie Black claims as a set off is in fact an obligation imposed by law to the parties children.
We are of the opinion that this issue does not require discussion. Bonnie Black is entitled to claim the judgment for child support arrearages as a set-off against the note held by the Bank.
2 The provision regarding the payment of interest contained in the note held by the Bank makes the payment indefinite and therefore, the note is not a negotiable instrument and is subject to the personal defenses of the maker, Bonnie Black. See
T.C.A. § 47-3-104; Walters v. First Tennessee Bank, 855 F.2d 267 (6th Cir. 1988). Our Legislature has decreed that “[a]ny order for child support shall be entitled to be enforced as any other judgment.” T.C.A. § 47-3-101(a)(5) (Supp. 1989). Having determined that the judgment for child support arrearages is due Bonnie Black, she may off-set that sum against the Bank’s claim. T.C.A. § 25-1-103(1980).
The judgment of the Court of Appeals is reversed insofar as it vacates and disallows a set-off to plaintiff/appellant, Bonnie Black, on the claim of the Commerce Union Bank of Clarksville predicated on the promissory note assigned to it by defendant, Eddie Black.
The Court of Appeals judgment and the judgment of the trial court are otherwise affirmed.
The cause is remanded to the trial court for such other and further proceedings as may be required.
Costs are assessed against appellees.
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