In re Anderson
| Decision Date | 04 April 1983 |
| Docket Number | Adv. No. 182-0505.,Bankruptcy No. 181-03033 |
| Parties | In re Jeff Benny ANDERSON, Debtor. Sam J. McALLESTER, III, Trustee, Plaintiff, v. Norma L. ALDRIDGE, et al., Defendants. |
| Court | U.S. District Court — Middle District of Tennessee |
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Russell H. Hippe, Jr., Nashville, Tenn. and Charles W. Wade, Lewisburg, Tenn., for Frances Hardison and Frank Hardison; Freddie T. Mustain and Judith H. Mustain; and Dorlene Sargent and Roy L. Sargent.
Julie N. Jones, Nashville, Tenn., for Norma L. Aldridge; James M. Jones, Jr., Trustee; and Peoples and Union Bank.
Walter Bussart, Lewisburg, Tenn., for Connie B. Armstrong and Maynard B. Armstrong; Carolyn N. Bingham and James H. Bingham, Jr.; Marvin G. Burrow, Jr. and Salene Burrow; Grover Collins and Peggy P. Collins; Addie W. Harris and L.R. Harris, Jr.; Henry L. Hulshof and Dorothy Y. Hulshof; David Jent and Patricia H. Jent; Ron Klenk; John David Murray and Yolanda Murray; Mike Samford; and Ed E. Smotherman.
Sam J. McAllester, Nashville, Tenn., for trustee.
W. Gary Blackburn, Nashville, Tenn., for Gayle B. Spivey and Peggy G. Spivey.
Roger E. Brandon, Lewisburg, Tenn., Robert Ziegler, Nashville, Tenn., for debtor, Jeff Benny Anderson.
Sylvia Brown, Nashville, Tenn., for Farmers Home Admin.
Douglas Fisher, pro se.
REPORT AND NOTICE
Pursuant to Federal Rule of Civil Procedure 53(e)(1), the Standing Master submits this proposed order or judgment, including any required findings of fact and conclusions of law, to the United States District Court for the Middle District of Tennessee with the recommendation that this proposed order or judgment be approved. Notice is hereby given that all parties in interest have ten days within which to file objections to this Report with the Bankruptcy Court Clerk designated under Administrative Rule No. 28-3 as the Clerk for the United States District Court for the Middle District of Tennessee.
This matter is before the court on the plaintiff's and defendants' cross motions for summary judgment pursuant to Federal Rule of Civil Procedure 56 as made applicable to bankruptcy proceedings by Bankruptcy Rule 756.1 Upon consideration of the evidence presented, stipulations, exhibits, briefs of the parties and the entire record, this court concludes that the trustee's motion for summary judgment to avoid the seven transfers of real property at issue pursuant to § 544(a)(1) and (2) should be granted and the defendants' motion for summary judgment dismissed. The court further finds that the trustee holds these properties in a constructive trust for the benefit of the defendant record titleholders and that these defendants should pay all the trustee's costs incurred in initiating this proceeding, including attorney's fees. Each of these defendants shall bear these costs equally and, once a defendant pays his proportionate share of this amount, the trustee shall convey to this defendant his real property interest as reflected in the public records.
The following shall represent findings of fact and conclusions of law pursuant to Rule 752 of the Federal Rules of Bankruptcy Procedure.
The sole issue presented for this court's resolution is whether seven warranty deeds executed by the debtor Jeff Benny Anderson prior to the filing of his bankruptcy petition can be avoided by the trustee pursuant to his powers under 11 U.S.C. § 544(a).2 Except for the Farmers Home Administration, each of the numerous defendants claims title to various tracts of real property through these deeds (hereinafter these parties will be referred to simply as the "defendants").3 The trustee alleges that these deeds are defectively acknowledged since each fails to state that the notary acknowledging the deed was "personally acquainted" with the grantor, the debtor in this case. The trustee thus submits that the deeds are null and void under applicable Tennessee law and can be avoided by him pursuant to § 544(a). After the trustee commenced this proceeding, the defendants rerecorded their deeds to correct the allegedly improper acknowledgements.
Both the trustee and the defendants have submitted cross motions for summary judgment on this issue.4 The bankruptcy court has previously outlined the prerequisites for the entry of a summary judgment. Such a judgment may only be granted "if, upon consideration of the entire record, there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law." Stewart v. Brewer, 17 B.R. 186, 188 (Bkrtcy.M.D.Tenn.1982). See also Bohn Aluminum and Brass Corp. v. Storm King Corp., 303 F.2d 425, 427 (6th Cir.1962). This criterion is clearly satisfied in this case since no material facts are disputed and only a question of law remains unresolved.
The trustee seeks to avoid the seven deeds at issue pursuant to 11 U.S.C. § 544(a), commonly known as the "strong arm clause," which vests a trustee at the commencement of a debtor's bankruptcy petition with the state defined rights and powers of a judgment lien creditor of the debtor, an unsatisfied execution creditor of the debtor and a bona fide purchaser of real property from the debtor.5 On the basis of this statute, the trustee now attacks the validity of these seven conveyances of the debtor vis-á-vis his interest as defined in § 544(a).
The court must concur with the trustee's assessment that under Tennessee's registration statutes each of these deeds was defectively acknowledged and therefore null and void as to the debtor's creditors and bona fide purchasers from the debtor without notice. Section 66-22-107 of the Tennessee Code prescribes in detail the correct language to be utilized in a certificate of acknowledgment. Tenn.Code Ann. § 66-22-107 (1982) provides:
The law of Tennessee is well established that the form for a certificate of acknowledgment, which is essential to the valid registration of a deed, must substantially comply with the aforementioned statutory language. The language is prescribed and a probating officer has little if any discretion to vary the form of the certificate. See, e.g., Kelly v. Calhoun, 95 U.S. 710, 711-713, 24 L.Ed. 544 (1878); In the Matter of Viking Co., 389 F.Supp. 1230, 1231-1234 (E.D.Tenn.1974), aff'd 510 F.2d 974 (6th Cir.1975); In re Englewood Mfg. Co., 28 F.Supp. 653, 654-656 (E.D.Tenn. 1939); Lancaster v. Boatright (In re Grable), 8 B.R. 363, 364-365 (Bkrtcy.E.D.Tenn. 1980); Chattanooga Lumber & Coal Corp. v. Phillips, 202 Tenn. 266, 304 S.W.2d 82, 85-87 (1957); Pennington v. Webb-Hammock Coal Co., 182 Tenn. 33, 184 S.W.2d 47, 48 (1944); Granger v. Webster, 162 Tenn. 459, 36 S.W.2d 883, 884 (1931); Newton Finance Corp. v. Conner, 161 Tenn. 441, 33 S.W.2d 95, 96-97 (1930); Figuers v. Fly, 137 Tenn. 358, 193 S.W. 117, 120-121 (1917); Henderson v. Ish, 3 Shannon 84, 84-85 (1879); Henderson v. McGhee, 53 Tenn. (6 Heisk.) 55, 57-58 (1871); Turbeville v. Gibson, 52 Tenn. (5 Heisk.) 565, 582-583 (1871); Mullins v. Aiken, 49 Tenn. (2 Heisk.) 535, 546-547 (1870); Harrison v. Wade, 43 Tenn. (3 Cold.) 505, 507-509 (1866); R.B. Bone & Bro. v. Greenlee, 41 Tenn. (1 Cold.) 28, 30-31 (1860); Fall & Cunningham v. Roper, 40 Tenn. (3 Head) 485, 486 (1859); Brogan v. Savage, 37 Tenn. (5 Sneed) 689, 692 (1858); Johnson v. Walton, 33 Tenn. (1 Sneed) 257, 259-261 (1853); Garnett v. Stockton, 26 Tenn. (7 Hum.) 84, 85-86 (1846); Peacock v. Tompkins, 20 Tenn. (1 Hum.) 135, 140 (1839); American City Bank v. Western Auto Supply Co., 631 S.W.2d 410, 423-424 (Tenn.App.1981).
If the probating officer does not substantially comply with the statutory form of acknowledgment, the deed is deemed null and void as to "existing or subsequent creditors of, or bona fide purchasers from, the makers without notice." Tenn.Code Ann. § 66-26-103 (1982). As recently explained by the Tennessee Court of Appeals in American City Bank v. Western Auto Supply Co., 631 S.W.2d at 423-424:
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