Associates Capital Corp. v. Cookeville Production Credit Ass'n

569 S.W.2d 474, 1978 Tenn. App. LEXIS 296
CourtCourt of Appeals of Tennessee
DecidedMay 5, 1978
StatusPublished
Cited by12 cases

This text of 569 S.W.2d 474 (Associates Capital Corp. v. Cookeville Production Credit Ass'n) is published on Counsel Stack Legal Research, covering Court of Appeals of Tennessee primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Associates Capital Corp. v. Cookeville Production Credit Ass'n, 569 S.W.2d 474, 1978 Tenn. App. LEXIS 296 (Tenn. Ct. App. 1978).

Opinion

OPINION

DROWOTA, Judge.

The issue in this case is whether a 12' X 65' “mobile home” that has had its wheels removed and has been affixed to realty is subject to the certificate of title provisions for motor vehicles under chapters 1 and 3 of Title 59 of Tennessee Code Annotated. If so, the security interest of plaintiff Associates Capital, which was noted on a certificate of title to the home, was perfected in accordance with those provisions and takes priority over defendant Cookeville Production Credit’s real estate mortgage, which was not noted on the certificate. If Title 59 is not applicable, on the other hand, priority must be given to defendant’s realty mortgage, which was created by a deed of trust properly recorded in accordance with state mortgage law and with the U.C.C. provisions on fixtures.

In October of 1973, Carlos Gaw and De-Wayne Adams bought a tract of land consisting of about 60 acres in Jackson County. On the property was located, in addition to a house, a 1971 Capella mobile home. This home, which had been placed on the property by the previous owner in 1971, was 65 feet long and 12 feet wide. Its condition and connection to the realty on which it was located are described in more detail below.

To secure a purchase-money loan of $51,-286.00 on the property, Gaw and Adams executed a deed of trust to L. H. Williams, secretary-treasurer of defendant Cookeville Production Credit Association. The deed, executed on October 19, 1973, conveys the realty “together with all buildings and improvements thereon or hereafter erected thereon and all rights and appurtenances thereto belonging . . . .” The deed of trust was recorded in the Jackson County Register’s Office on October 23, 1973.

Subsequently, Gaw borrowed $5,256.00 from plaintiff Associates Capital Corporation. This debt is evidenced by a note dated April 12, 1974, and signed by Gaw and his wife. In a security, agreement of the same date, the Gaws granted associates Capital a security interest in the 1971 Capella home to secure payment of the note. The security agreement contains the Gaws’ warranty that the collateral is free of “all security interests, liens and encumbrances,” and does not mention any interest of Adams in the property. Associates Capital entered its name as “1st lienholder” on a motor vehicle certificate of title that was certified by the Commissioner of the Department of Revenue on May 31,1974. The certificate describes the Capella home and lists Carlos Gaw as the owner. Plaintiff Associates retained the certificate, and no other liens have been noted on it.

The instant suit was brought in Jackson County Chancery Court by plaintiff Associates on December 18, 1975. Plaintiff alleged that defendant had taken unlawful possession of the Capella home, and asked the court to decree its entitlement to possession and a reasonable rent for the period during which defendant had maintained possession. In its answer, filed March 26, 1976, defendant admitted that it had taken possession of the home on November 26, 1975, but asserted that this had been lawfully done pursuant to the deed of trust. [476]*476Defendant also asserted that the property subject to the deed of trust, which included the Capella home as a fixture to the realty, had been deeded to it by the trustee after a foreclosure sale, and that defendant was the owner of the home. Defendant contended that its lien and ownership were superior to plaintiff’s claim against the home.

At the brief trial, an employee of plaintiff Associates testified that there was a balance of $1,168.00 due on its note, on which the Gaws defaulted in December of 1975. He stated that prior to default, plaintiff had no indication either of defendant’s claim against the Capella home or that DeWayne Adams had any interest in the property.

Testimony was also given by Jim Jackson, the man who had sold the property to Gaw and Adams. He said that he had put the 65’ by 12’ Capella home on the property in 1971. He had attached metal “underpinning,” which runs from the bottom of the home to the ground and is designed both to improve the appearance of the home and to keep the weather from the pipes and other attachments underneath it. He had also built concrete steps up to the front door of the home. The steps were placed on a concrete slab or apron in front of the home. Jackson had connected the home to electricity, and had erected next to it a small “block building” for the well and pump and for storage. He had also connected the home to a water supply and to a septic tank, which he had had installed to dispose of sewage. Jackson had also equipped the home with a central air conditioning system, connected to a small “pump house” outside. Numerous slides were introduced to document the appearance of the home and its attachments as Jackson described them. Finally, Jackson explained that the home had had wheels and axles when it was brought to the property and installed, but that he had removed these after installation and had given them to the workmen who connected the septic tank. Jackson testified that, when he bought and installed the Capella home, it was his intention to live in it as a home. He also stated that he thought he had given Gaw a certificate of title to the home when he sold the property to him.

Gaw himself testified briefly about the loan transactions. He said that he had considered the Capella home, which was resting on blocks with the underpinning around it when he bought the property, as part of the collateral conveyed by the deed of trust at the time of the deed’s execution. Two employees of defendant, one of whom examined the property three months after execution of the trust deed while the other saw it at the time of the foreclosure sale, testified that the home was attached and that it was considered part of the realty.

The Chancellor, after hearing the evidence and allowing the parties to file briefs, rendered his decree on June 9, 1977. He found that the Capella mobile home had been a fixture to the realty when the deed of trust was executed. He also found that the home was subject to the deed of trust. Considering that defendant’s lien on the home was superior to plaintiff’s, he concluded that defendant owned the home through its purchase at the foreclosure sale and dismissed the case.

Plaintiff Associates appealed. On June 30, 1977, pursuant to a motion, the trial court entered an order allowing H. Marshall Judd, trustee in bankruptcy for the Gaws, to intervene as a party plaintiff. Apparently the debt to Associates had been satisfied in the bankruptcy proceeding, and the trustee is now asserting the rights of Associates under the security interest in the Capella home. The trustee is the only party plaintiff who has filed a brief and prosecuted its appeal in this Court.

The trustee’s position on appeal is that the Capella home was subject to the certificate of title provisions of chapters 1 and 3 of Title 59 of the Code when the deed of trust to defendant was executed. Thus, the argument proceeds, T.C.A. § 59-327 provides that notation on the certificate of title is the only way to perfect a lien on the home, and the U.C.C. expressly defers to Title 59 in this regard in § 47-9-302(3)(b) & [477]*477(4). Since defendant recorded its deed of trust in the proper place for recording liens against realty but did not note its interest on the certificate of title, the trustee argues that defendant did not properly perfect its lien against the home.

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Bluebook (online)
569 S.W.2d 474, 1978 Tenn. App. LEXIS 296, Counsel Stack Legal Research, https://law.counselstack.com/opinion/associates-capital-corp-v-cookeville-production-credit-assn-tennctapp-1978.