### IN THE COURT OF APP EALS OF TENNESS EE AT NAS HVILLE A pr il 10, 200 7 S es sio n
MARKS, SHE LL & MANESS , ET AL 

### . v. CYNTHI A T. MANN, ET AL


### .

Appeal f rom the Chancer y Court for Montgom ery C ounty No. MC- CH-CV- 98-08-0011 John H. Gasaway, III, Ju dge

No. M2006- 01142-COA-R 3-CV - F iled on May 7, 2007

A j u d gm en tl i en h o l d er

ap p ea l s fr o m a t ri al co u rt ’s d et er m i n at i o nt h at a p u rc h as e m o n ey m o rt gage lien on rea l property

has priority

over a previously rec orded judgme nt lien. Ba sed upon this court’s holding in Guffey v . Creutzinger , 948 S.W. 2d 21 9 (T e nn . Ct. App . 199 8) , we a ff ir m the tr ia l c ourt

. Tenn. R. App . P . 3 Appeal as of Right; Judgme nt of th e Chancer y Court Aff irm ed

P ATR I C I A J. C O T T RE LL , J ., delivere d the opinion of the cour t, in which W I L L I AM C. K O CH , J R ., P.J
., M.S. and F RAN K G. C L EME NT , J R ., J ., joined.

Rog e r A . M ane ss, Cla

rk sv ill e , T e nn e sse e , f

or the a pp e lla nts Ma rk s, She ll & Ma

ne ss, e t a l.

Stanle y A. Kw e lle r, Na sh vil le , T e nn e sse e , f or the a pp e lle e , Cy

nth ia T. Ma nn , e t a l.

OP IN ION

The issue in this case is which of t wo l iens takes priority : (1) a previously filed j udg ment lien

o r ( 2 ) a p u r c h a s e m o n e y m o rt g a g e l i e no nl a t e r

- a c qu i r e d r e a l p r o p e rt y.

The judgme nt lien arose from a judgme nt e ntere d by the Chance ry Court of M o n t go m ery C o u n t y i nf a v o r o f t h e l aw f i r m o f M ar k s , S h e l l & M an e s s a g a i n s tC y n t h i a T

. M an nand Ga ry

J. Mann for $553,006.79. That judg ment was filed o n Marc h 28, 2002, cre ating a judg ment lien pursuant to Tenn. Code Ann. § 25-5-101 and Te nn. R. Civ. P . 69.07. Mr. and Mrs. Ma nn divorce d. On Aug ust 29, 2003, Mr. Mann purc hased r eal pr operty i n M o n tgome ry County and executed a promissory

note for $121,320, se cure d by a trust deed to the orig inal mortg ag ee, Washing ton Mutual Ba nk, F.A., w hich was r ecor ded on September 4, 2003.

Th e law f ir m f ile d a mot ion a sk ingthe c ourt

to o rd e r a sa le of

thi s r e a l pr op e rt

y to s a tis fy its judgme nt lien. The bank’s succe ssor in interest, Amer ica’ s Servicing Company , I nc., interve ned and opposed the lawfirm’s motion, asserting that its purchase money mortg ag e lien wa s superior.-2-

The trial c ourt ag ree d with the mortg ag ee a nd, in an opinion and orde r ente red Ma y 24, 2006, found that the indebtedness cre ated by Mr. Mann in f avor of Americ a’s Ser

vicing Company , I nc. wa s

a purc ha se mon e y mor

tg a g e

. Th e c ourt

he ld t hat Guffey v. Greutzinger , 9 48 S.W. 2d 21 9 ( Te nn . Ct

. App. 1998), g overne d the priority issue and quoted f

rom that opinion:

A mortg ag e on l an d ex ecuted to secure the purc hase mone y by a purc haser

of the land contempor aneously

with the acqu i s ition of the leg al title thereto, or a fterw ard but as a pa

rt of the same transac tion, is a pur chase money mortg ag e, and is e ntitled to a pre fer ence as such over all other claims or liens arising throug h the mortg ag er, althoug h they

are prior in point of time.

Ba sed upon the Guffey

case , the trial cour

t concluded:

Although the judgme nt lien in f avor of the plaintiffs wa s filed prior to the a cquisition by the def endant, Ga

ry J . Mann, of the subject re al prope rty and prior to the c reation of the purc ha se mon e y

mor tg a g e in f a vo r o f the in terve nin g pe tit ion e r, the law i n Tenne ssee is we ll settled that the purchase money mortg ag e enjoy s a priority over the judgme nt lien. The law doe s not preve nt the pl aintiffs from conducting the re quested sale bu t the proce eds of suc h a sale would have to be applied to satisfying the purcha se money

mortg ag e bef

ore satisfy ing the judgme nt lien.

We a g re e wi th the tr ia l c ourt that Guffey is applicable to the facts and cir cumstance s in the

cas e b e f o r e u s

. T h e la

w f ir m d o e s n o t d is a g r e e an d
, in f a c t, c h ar a c te r iz e s it s a

p p e a l a s a “f

rontal assault” on the holdingof Guffey

.
The Guffey

case invol v ed t h e same question of priority betwee n a prior judg ment lien and an af ter-a cquire d purcha se m oney mortg ag e li en. The same argument was made that the re cording statutes, specific ally

Tenne ssee Code A nnotated § 66-24- 119 (st ati ng that the first re g istered instrument has pref

ere nce ove r later

regis t er ed i nstruments), g ive priority to the prior-r ecor ded judgme nt lien. Gu

f fey , 984 S.W .2d at 221. Howe ver, the Guffey c ourt de te rm ine d th a t pu

rc ha se money instruments reta in specia l priority rig hts, i.e. , that they are entitled to pr efe renc e over all other clai m s o r l iens arising throug h the mortg ag or. As the c ourt explained, this priority , based on the unique nature of purc hase mone y financing, ha s been r ecog nized in a number of jurisdictions and is the g ener al rule. Guffey , 984 S.W .2d at 222.

The Guffey court thoroughly examined the sever al ra

tionales courts have g iven to explain the specia l p r io r it

y g iv e n to p u r c h a s e mo n e y mo rtg a g e s , in c lu d in g th e d o c tr in e o f in s ta n ta n e o u s or transitory seisin and the theor

y that the only

title the purcha ser rec eives is encumber ed title. Id . The court a lso discussed the public policy rea sons justi fying the imposit ion of the rule of superiority

for purcha se money

mortg ag e liens. Id . Finally , the cour t survey ed Te nnessee law and stated:-3- Howeve r, fr om the above c ases, we conclude that Tenne ssee ha s rec og nized the spec ial nature of purc hase mone y mortg ag es whe reby the vende e is not vested with absolute title. See Prichard Bros. v. [ Cousey ], 158 Tenn. [53, 58] , 12 S.W .2d [711, 712 (1929)]. We must assume that the leg islature in e nacting this statute wa s cog nizant of t h e l aw as established by our Supreme Court g iving pr efe renc e to a mortg ag ee ove r a me chanic ’s lien in a purc hase mone y m o rt g ag e tra nsaction. The statute by its terms provides that judg ments “shall be e ffe cti v e aga inst any person having , or later

acquir ing, a

n interest in such prope rty .” T.C.A. § 6 6 -2 4-119. The judgme nt can be eff

ective only

as to the intere st acquire d, which in a sa les transa ction and a co n t em p orane ous purcha se money mortg ag e is “land subjec t to the vendor’s lien.” Pr ic ha rd

Br os

. , 1 58 Te nn . at 57 , 1 2 S. W.2 d at 71 2. Th e Ge ne ra l A sse mbl y did no t e xpre ssl y

a br og a te thi s c omm on

law n oti on

and
, thu s, we do no t c on str ue it

as intending to do so. Perry v . Sentry Ins. Co.
, 938 S.W .2d 404, 406 (Tenn. 1996) (“G ener ally , statutes in derog ation of the c ommon law are to be strictly construed a

nd confine d to their express terms.”)

Guffey , 984 S.W .2d at 224.

The Guffey

court c oncluded that the e x ecution and de livery of the de ed to the purc haser s and the deed of trust to the mortg ag or, which instruments were simult aneously rec orded, w ere in such proxi mity in time to constit ute “one continuo u s t ransaction” and that the title convey ed to the purcha sers wa s considere d encumbe red by the mortg ag ee’ s lien when it was c onvey ed. Id

.
We have c are fully

revie wed the a

rg uments made he rein a n d find no rea son to depart f rom the holding a

nd rea soning in Guffey . A c c or din g ly , w e a ff ir m th e jud g me nt o f the tr ia l c ourt

. Cos ts on appea l are taxed to the appellants, Marks, Shell & Maness, e t al.

____________________________________ PATRI CI A J . COTTREL L , J UDGE