Chattanooga Lumber & Coal Corp. v. Phillips

• Decision Date: 07 June 1957
• Citation: 6 McCanless 266,202 Tenn. 266,304 S.W.2d 82
• Parties: CHATTANOOGA LUMBER & COAL CORPORATION v. Leslie PHILLIPS et al. 6 McCanless 266, 202 Tenn. 266, 304 S.W.2d 82
• Court: Tennessee Supreme Court

Page 82

304 S.W.2d 82

CHATTANOOGA LUMBER & COAL CORPORATION v. Leslie PHILLIPS et al.

6 McCanless 266, 202 Tenn. 266, 304 S.W.2d 82

Supreme Court of Tennessee.

June 7, 1957.

Wilkerson, Meacham & Abshire, Chattanooga, for appellant (complainant).

W. W. Robinson, Chattanooga, for Leslie Phillips.

Moon, Anderson, Harris & Dineen, Chattanooga, for John S. Beene, Jr., and wife appellees (defendants).

NEIL, Chief Justice.

The Chattanooga Lumber & Coal Corporation filed its original bill in the Chancery Court and alleged the following facts: that John S. Beene, Jr., and wife, Faye H. Beene, are the owners of certain real estate located in Hamilton County (describing it) and that it furnished to the defendant, Leslie Phillips, contractor, and under a contract with Beene and wife materials to make repairs and improvements on said property and delivered same according to its contract. The balance due on account for said materials, so furnished and delivered, and unpaid amounted to $945.48. The complaint gave due notice to the defendants, Beene and wife, of its claim of lien within the time required by law and filed same for record in the Register's office of Hamilton County on September 22, 1956, and the same appears of record in Lien Book 9, page 40. A copy of the claim of lien is made an exhibit to the bill. Notice of the claim of lien was duly served upon Beene and wife as owners of the property.

Defendant, Title Guaranty & Trust Company, Trustee, is named as such in a deed of trust registered June 7, 1956, in the Register's office to secure Rossville Federal Savings and Loan Association. The bill charges that the complainant's first delivery of materials was prior to the date of the registration of the aforesaid deed of trust and its claim is superior thereto. 'Wherefore, complainant has and claims a lien on the hereinbefore described property to secure the payment of said indebtedness under the provisions of the Mechanic's and Furnisher's Lien Law of Tennessee'. Section 64-1101, et seq., T.C.A.

The bill prayed (1) that an attachment issue and be levied upon the described property; (2) that it have a decree for the amount of its indebtedness and a lien be declared upon the property to secure payment of its debt; (3) that said property be sold to satisfy the debt; (4) that the rights, interests and priorities be fixed and declared by the court.

The bill was duly verified by W. L. Adams, President, etc., of the complainant corporation.

The 'lien claim', denominated 'Furnishers Lien Claim', filed as Exhibit to the bill is also sworn to by the said Adams, and addressed to Beene and wife, owners, and Leslie Phillips, contractor. It reads, as follows:

'The Chattanooga Lumber & Coal Corp., claims a lien given by statute to secure the sum $943.48 for materials furnished to Leslie Phillips, Contractor for improvements on Mr. & Mrs. John S. Beene's property, described as follows: Lot Eight and Nine Block K in Delray Park Addition as shown on platt of record in the Register's office of Hamilton County, Tenn.,

                'Amount of claim          $943.48
                'Cost of Recording Lien      2.00
                                         --------
                'Total amount of Claim   $945.48'
                

The verification to the foregoing is, as follows:

'W. L. Adams, President of Chattanooga Lumber and Coal Co. being duly sworn on oath says that the foregoing statements of claim of lien are true to the best of his knowledge and belief.'

The attachment as prayed for was duly served and levied upon the property.

The defendant, Leslie Phillips, answered the bill, admitting the facts set forth in the bill. But states he is not informed as to amount of materials furnished; 'he neither admits or denies that the Complainant has complied with the law as to liens.'

The defendants, John S. Beene, Jr., and wife demurred to the bill as follows:

'Come defendants, John S. Beene, Jr. and wife, Faye H. Beene, and demur to the bill heretofore filed against them, on the ground that same shows on its face by Exhibit A thereto that it is not acknowledged as required by Tennessee Code Annotated, Section 64-2201, and not entitled to registration, and hence cannot be the foundation for any alleged lien.'

The chancellor sustained the demurrer of Beene and wife and dismissed the bill. The complainant prayed and was granted an appeal to this Court.

The assignments of error, 1 and 2, are as follows:

'The Chancellor erred in sustaining the demurrer of defendants John S. Beene, Jr., and wife Faye H. Beene, the owners of the realty, dismissing the bill as to them and holding that the claim of furnisher's lien, being sworn to but not acknowledged, was not entitled to registration and therefore did not create a valid furnisher's lien on the real estate of said owners.'

'The Chancellor erred in sustaining the demurrer of defendants John S. Beene, Jr. and wife Faye H. Beene, the owners of the realty, dismissing the bill as to them and holding that the claim of furnisher's lien was required to be acknowledged and registered to fix a valid lien on the realty of said owners.'

The complainant contends that 64-1112 and 64-1117, T.C.A., requires only 'a sworn statement' of the claim, the same to be filed with the County Register for registration and that an acknowledgment of such claim is not required. Thus it is argued by counsel, 'Neither affidavit, acknowledgment or registration of a claim of lien is necessary to bind the owner and fix the lien on his realty, if notice in writing is served upon him in accordance with Section 64-1115, Tennessee Code Annotated.'

It is argued in support of assignment No. 2:

'Registration is not necessary as against the owners for the perfection or preservation of the mechanic's liens of subcontractors, furnishers and workmen, but is only necessary as against third persons, subsequent purchasers or encumbrancers for value.

'The original bill clearly alleges on its face that notice of said claim of lien was served upon defendants John S. Beene, Jr. and wife, Faye H. Beene, as owners, pursuant to statute.'

The Chancellor dealt with the question of notice, holding that the notice of a claim of lien, as filed in the Register's office was not acknowledged as required by Sections 64-2201, and 64-2208, T.C.A. These sections of the Code relate to 'methods of authentication'. Code Section 64-2201 reads as follows:

'To authenticate an instrument for registration, its execution shall be acknowledged by the maker, or proved by two (20) subscribing witnesses, at least.'

Section 64-2208 prescribes a 'Form for authentication of corporate instrument'. There is no other form of acknowledgment for a corporate deed. The form set forth in this section of the Code must be substantially followed. Pennington v. Webb-Hammock Coal Co., 182 Tenn. 33, 184 S.W.2d 47.

Coming now to the insistence of the complainant that the claim of lien requires only that 'a sworn statement' be filed for registration, and that an acknowledgment is not required, both counsel for the complainant and the defendants rely on McDonnell v. Amo, 162 Tenn. 36, 34 S.W.2d 212, 213.

We need not quote these Code Sections in this opinion. Suffice it to say that these Code Sections relating to liens upon property and their enforcement must be considered in pari materia. The vital question at issue is whether or not registration and acknowledgment is necessary to preserve, and enforce, a furnisher's lien. In support of the Chancellor's decree the appellees say:

'Appellees submit that registration is essential to establish, perfect, preserve and enforce a furnisher's lien, where the furnisher dealt with the contractor and not the owner. If the furnisher had dealt with the owner, under Section 64-1116 TCA, notice was not even necessary. In the case at bar furnisher dealt with contractor, which made notice to owner necessary under Section 64-1115 TCA, and since priority of lien in favor of furnisher is sought, Section 64-1117 TCA requires registration.'

We think the foregoing contention is supported by McDonnell v. Amo, supra, and other decisions hereinafter referred to.

In considering the questions made in the second assignment of error, Mr. Justice McKinney says in McDonnell v. Amo, supra:

'A materialman's lien is altogether statutory, and, when the lawmaking body prescribes the terms upon which it may be...