Pennington v. Webb-Hammock Coal Co.

• Decision Date: 02 December 1944
• Citation: 184 S.W.2d 47,182 Tenn. 33
• Parties: PENNINGTON v. WEBB-HAMMOCK COAL CO. et al.
• Court: Tennessee Supreme Court

184 S.W.2d 47

182 Tenn. 33

PENNINGTON v. WEBB-HAMMOCK COAL CO. et al.

Supreme Court of Tennessee.

December 2, 1944

Appeal from Chancery Court, Scott County; J. H. Wallace, Chancellor.

General creditors' proceeding by L. C. Pennington against Webb-Hammock Coal Company and others wherein Nashville Coal Company intervened. From the decree an appeal was taken.

Affirmed in part and in part remanded for further proceedings. GREEN Chief Justice.

This is a general creditors' proceeding in which there are numerous controversies. We have dealt with all these matters in a memorandum heretofore filed. Two of the questions we considered are of general interest to the profession and our discussion of these questions is here reproduced.

To secure purchase money indebtedness to Nashville Coal Company Webb-Hammock Coal Company, the insolvent corporation being wound up herein, executed a trust deed. The chancellor and the Court of Appeals denied priority of payment to this claim over the claims of general creditors. The lower courts so decreed because in their opinion the acknowledgment of the trust deed was defective and that instrument was not entitled to registration although it was spread on the books of the register's office in Scott County. Of course it is the law that registration of a document upon a defective certificate of acknowledgment does not serve as notice under the registration laws. Hunt v. Curry, 153 Tenn. 11 282 S.W. 201; Bank of Jellico v. McCarty, 99 Tenn 469, 42 S.W. 4.

As heretofore stated, Webb-Hammock Coal Company executing this trust deed was a corporation and acknowledged the trust deed according to the form prescribed for individuals before a notary public. Section 7663 of the Code provides two forms for the authentication for record of a deed or other instrument in writing executed by a corporation. Both of these forms are set out in that section. Both require that the officer make oath as to his official corporate capacity, as to whether he is president or other officer, and both require that he make oath as to his authority to act for the corporation. No such oath is required of an individual acknowledging a deed or other instrument for registration. Code, § 7634.

Section 7663 of the Code, prescribing forms for corporate acknowledgment, is taken from subsection 3 of section 1 of Chapter 48 of the Public Acts of 1919. The first paragraph of section 1 of the Act of 1919 contains this language: 'Either the forms of acknowledgment now in use in this State, or the following may be used in the case of conveyances or other written instruments, whenever such acknowledgment is required or authorized by law for any purpose.' The Act then goes on to provide forms of acknowledgment for natural persons and forms of acknowledgment for corporations or joint stock associations, to which latter forms we have just above referred.

The Code entirely omitted the language just quoted from section 1 of the Act of 1919. Furthermore, section 3 of the Act was carried into section 7632 of the Code but in a modified form and that portion of section 1 of the Act carried into section 7634 of the Code was modified. Clearly, then, Chapter 48 of the Public Acts of 1919 was revised before it was embodied in the Code of 1932, and section 2 of the Code contains the following:

'All public and general acts passed prior to the present session of the general assembly, and all such acts the subjects whereof are revised in this Code, except those named below, subject to the limitations and with the exceptions herein expressed, are repealed.'

The Act of 1919 does not fall within any of the exceptions and there is no escape from the conclusion of the chancellor and the Court of Appeals that the Code worked a repeal of Chapter 48 of the Public Acts of 1919 including the first paragraph of the first section of that Act authorizing the use of old forms of acknowledgment. As to natural persons, to avoid any confusion, it is to be noted that section 7634 of the Code expressly authorizes the use of the old form of acknowledgement as well as the use of the new forms contained in the Act of 1919. There is no authority, however, in the Code for the use of any other form of acknowledgment for a corporate deed save the forms set out in Code, § 7663, and we are of opinion that those forms should be substantially followed.

In this matter the decree of the lower court is affirmed.

The other question we consider herein is whether workmen's compensation claims are entitled to priority of payment over claims of general creditors.

The chancellor held that the compensation claims were entitled to no preference over the claims of general creditors. The Court of Appeals held that such installments of the compensation claims as accrued within three months before suit was brought were entitled to preference. The chancellor based his decision on Francis v. Williams Coal Mining Co., 178 Tenn. 203, 156 S.W.2d 434. In its modification of the chancellor's decree, the Court of Appeals distinguished the Francis case.

The relevant statutes controlling this controversy are these. The Workmen's Compensation Act provides:

'6868. All rights of compensation granted by this chapter shall have the same preference or priority for the whole thereof against the assets of the employer as is allowed by law for any unpaid wages for labor; provided, however, that such compensation shall not prejudice or be superior to the rights and interests of third persons in and to such assets if such rights and interests are secured by registered mortgage in any form or manner which is valid as to general creditors of the employer.'

The laborers' lien statutes provide:

'7989. All employees and laborers of any corporation, or firm, carrying on any corporate or partnership business shall have a lien upon the corporate or firm property of every character and description, for any sums due them for labor and service performed for such corporation or firm, and such lien shall prevail over all other liens, except the vendor's lien or the lien of a mortgage, or deed of trust to secure purchase money.'

'7990. The lien herein created shall only extend to and protect such claims as may have accrued within three months of the bringing of any suit for the enforcement thereof, and shall continue during the pendency of any suit brought for its enforcement.'

'7991. No corporation or partnership doing business in this state shall have the power to execute a mortgage or deed of trust or other instrument creating a lien upon the property of such corporation prior to that in favor of such employees and laborers, except to secure purchase money.'

While Code, § 6868, says that the rights of compensation shall have the same preference as is allowed by law for any unpaid wages for labor, further language of that section shows that claims for compensation do not have the same preference as claims for unpaid wages. Section 6868 subordinates compensation claims to rights and interests secured by a registered mortgage which is valid as to general creditors, while Code, § 7991, forbids the execution by any corporation or partnership of a mortgage or other instrument creating a lien upon the property of such corporation prior to that in favor of employees and laborers, except to secure purchase money. Under section 6868 a corporation solvent at the time might execute a mortgage which would be good against general creditors and consequently have priority over compensation claims, though not to secure purchase money.

Under section 7991 a solvent corporation could not, except for purchase money, execute a mortgage which would be prior in right to wage claims of employees and laborers.

The specific provision of section 6868 would, of course, control. Section 13 of the Code provides, 'If provisions of different chapters or articles of the Code appear to contravene each other, the provisions of each chapter or article shall prevail as to all matters and questions growing out of the subject matter of that chapter or article.'

Code, § 7989, gives employees and laborers a lien for wages due them but ...