Title: Pulaski Lumber Co., Inc. v. Harpeth South, Inc.

State: tennessee

Issuer: Tennessee Supreme Court

Document:

501 S.W.2d 275 (1973) PULASKI LUMBER COMPANY, INC., Plaintiff-Appellee, v. HARPETH SOUTH, INC., et al., Defendants-Appellants. Supreme Court of Tennessee. November 5, 1973. Denty Cheatham, Cheatham & Cheatham, Pulaski, for plaintiff-appellee. John R. Parker, Vaden Lackey, Jr., Denney, Lackey, Chernau & Castleman, Nashville, for defendants-appellants. W.M. LEECH, Special Justice. From a final decree of the Chancery Court for Davidson County, two of the defendants in that court were granted and perfected an appeal to the Court of Appeals. The Chancellor's decree recites: The above quote discloses that this was a final decree of a lower court determined by a "method not involving a review or determination of the facts", and the appeal should have been to this Court. For that reason, we have granted certiorari and will review the record upon the assignments of error made in the Court of Appeals as if the appeal had been made direct to this Court. See, T.C.A. § 16-408. The Pulaski Lumber Company, Inc., filed suit in the Chancery Court to enforce liens for materials furnished in the construction of houses in a subdivision in Davidson County, Tennessee. The complaint alleged that plaintiff furnished materials and supplies to the defendant, J.O. Scoggin, doing business as Scoggin Enterprises and/or Twenty-first Century Company, who was the contractor for the defendant, Harpeth South Company, Inc., in the construction of houses on eleven lots in two subdivisions owned by Harpeth South. In addition, the complaint alleged that the materials were used in the construction of the houses on said lots and that the sum of $2,590.56 was due plaintiff. The complaint also alleged that: The above averment is the only reference in the complaint pertaining to the interest of the two defendants who have appealed, J.J. Foley, Trustee, and J.I. Kislak Mortgage Corporation of Florida. In response to the complaint, defendants filed a motion to dismiss as follows: *277 The motion to dismiss was overruled and the defendants filed separate answers. However, these answers, with the exception of those of the contractor Scoggin, did not raise any new or additional defense to those in the motion to dismiss. Scoggin in his separate answer affirmatively alleged that he had filed a petition in bankruptcy. The cause was heard upon the technical record, admissions and statement of counsel in open court and a decree was subsequently entered by the Chancellor awarding a recovery to plaintiff for the amount of the claim with interest from the date of the filing of the bill, but stating that since the defendant, Scoggin, had filed a petition in bankruptcy and had been discharged no recovery was awarded against him. Since J.I. Kislak Mortgage Corporation of Florida and J.J. Foley, Trustee, are the only parties that have appealed, we quote only that portion of the decree that affects their interest, as follows: The defendants have assigned errors as follows: The third assignment will not be considered because the recitals in the decree reveal that no proof was necessary. Turning then to the first assignment, defendants contend that, since the notices of liens which were filed for record were not sworn to, they do not comply with T.C.A. §§ 64-1112 and 64-1117. These Code sections are as follows: The two filed notices were not sworn to, but they were signed by Robert F. Storey, Vice-President of Pulaski Lumber Company, Inc., the plaintiff, and acknowledged as follows: In McDonnell v. Amo, 162 Tenn. 36, 34 S.W.2d 212 (1930), the question was considered whether a notice of lien was entitled to registration so as to give it precedence over a mortgage in view of Section 3541 of Shannon's Code (now T.C.A. § 64-1117). Therein we said that: We therefore held that even though a statement of an owed account was filed with the register, it was not entitled to be registered because it was not verified. Thus, the filing was a nullity and did not give notice. A similar question was raised in Chattanooga Lumber Co. v. Phillips, 202 Tenn. 266, 304 S.W.2d 82 (1957). However, in Chattanooga Lumber Co. the notice of lien was sworn to but not acknowledged. In deciding the case we indicated that: Therefore, in the instant case we hold that in order to register notice of a lien so as to entitle the lienholder to priority over subsequent purchasers or encumbrancers for value, such lienholder must not only acknowledge his notice of lien in compliance with T.C.A. § 64-2201 et seq., but must in addition verify the notice by a sworn statement of the amount due as required by T.C.A. §§ 64-1112 and 64-1117. Since the notices of liens which were filed for record in the instant case were not sworn to in compliance with our aforementioned holding, the filing was a nullity and did not give notice. Plaintiff argues that a corporation cannot make a sworn statement since it is a fictional person, having neither soul nor conscience and incapable of committing perjury. Assuming arguendo that this premise is correct, there is no valid reason why some officer or employee of the corporation who is familiar with the facts creating the lien could not swear to the notice of claim just as any other person could do. This being true, we cannot allow a corporation to escape the lien statutes merely because it is a fictional person. We hold therefore, that plaintiff corporation must comply with all the provisions of the lien statutes as would any natural person. Petitioner's first assignment of error is sustained, thus the Chancellor's decrees must be modified to hold that the plaintiff's notice of liens were not properly registered, therefore, they did not give notice sufficient to have precedence over the claims of J.I. Kislak Mortgage Corporation of Florida and J.J. Foley, Trustee. The question remains, however, whether plaintiff's liens take precedence by virtue of some other reason. Having carefully examined the pleadings, it is clear that plaintiff made no allegation that their claim was superior to any other. Plaintiff merely sought to have a "claimed lien enforced". In addition, the complaint was absolutely void of any allegation from which the Chancellor could say that the plaintiff had a superior claim. Moreover, even if it could be read into the complaint that the plaintiff alleged that its claim had priority, there was no proof entered to sustain the fictional allegation. Therefore, the plaintiff failed to meet the burden of proof. Also, in Brown v. Brown, 25 Tenn. App. 509, 160 S.W.2d 431 (1942), the court indicated that a lien claimant has the burden of showing that the third party had notice. Here again there was no such showing. Thus, we think that the motion to dismiss should have been sustained by the Chancellor in the first instance. Having decided the first assignment of error as we have, it is unnecessary to consider the second assignment, therefore it is pretermitted. In conclusion, it results that the cause is remanded to the lower court for proceedings consistent with this opinion. And any sale resulting from the Chancellor's decree involving the interests of J.I. Kislak Mortgage Corporation of Florida and J.J. Foley, Trustee, must be subject to their claims and not those of Pulaski Lumber Company. DYER, C.J., and CHATTIN, McCANLESS and FONES, JJ., concur.