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                                                                    EXHIBIT 3(b)

                                     BYLAWS

                                       OF

                               CLAYTON HOMES, INC.

                (DELAWARE CORPORATION EFFECTIVE JANUARY 1, 1997)

                                     OFFICE

                1.         The principal office of the Corporation shall be in
Wilmington, Delaware, and the Corporation shall have such other offices at such
other places within or without the State of Delaware as the Board of Directors
may from time to time determine or as the business of the Corporation may
require.

                             SHAREHOLDERS' MEETINGS

                2.         Annual Meeting.

                An annual meeting of the shareholders of the Corporation shall
be held on such date as may be determined by the Board of Directors. The
business to be transacted at such meeting shall be the election of directors and
such other business as shall be properly brought before the meeting. If the
election of directors shall not be held on the day designated by the Board of
Directors for any annual meeting, or at any adjournment of such meeting, the
Board of Directors shall call a special meeting of the shareholders as soon as
conveniently possible thereafter. At such special meeting the election of
directors shall take place and such election and any other business transacted
thereat shall have the same force and effect as if transacted at an annual
meeting duly called and held.


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                3.         Special Meetings.

                Special meetings of the shareholders, unless otherwise required
by law, may be called at any time by the Chairman, President or Secretary and
shall be called by the Chairman, President or Secretary at the request in
writing of a majority of the Board of Directors or of shareholders owning 10% or
more of the entire capital stock of the Corporation issued and outstanding and
entitled to vote at such meeting. Such request must state the purpose or
purposes for which the meeting is called and the person or persons calling the
meeting.

                4.         Place of Meetings.

                Annual and special meetings of the shareholders shall be held at
the Corporation's principal office or at such other place within or without the
State of Delaware as may be designated by the Board of Directors.

                5.         Notice of Meetings; Waiver.

                           (a) Annual Meetings.  Written or printed notice 
stating the place, day and hour of the annual meeting of shareholders shall
be given in person or by mail to each shareholder of record entitled to vote at
such meeting. If mailed, such notice shall be delivered not less than ten (10)
days nor more than sixty (60) days before the meeting. Mailed notice shall be
deemed to be delivered when deposited, with postage prepaid, in the United
States mail addressed to the shareholder at his address as it appears on the
records of the Corporation at the close of business on the record dates
established for such meeting. If delivered 



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personally, such notice shall be delivered not less than five (5) nor more than
sixty (60) days before the date of the meeting and shall be deemed delivered
when actually received by the shareholder.

                           (b) Special Meetings.  Written or printed notice of 
every special meeting of shareholders shall be given in person or by mail
to each shareholder of record entitled to vote at such meeting. Such notice
shall state the place, day, hour, purpose or purposes for which the meeting is
called, and the person or persons calling the meeting. If mailed, such notice
shall be delivered not less than ten (10) days nor more than sixty (60) days
before the meeting. Mailed notice shall be deemed to be delivered when
deposited, with postage prepaid, in the United States mail addressed to the
shareholder at his address as it appears on the records of the Corporation at
the close of business on the record date established for such meeting. If
delivered personally, such notice shall be delivered not less than five (5) nor
more than sixty (60) days before the date of the meeting and shall be deemed
delivered when actually received by the shareholder.

                           (c) Waiver. A shareholder may waive the notice of
either an annual or a special meeting by the submission by the shareholder
or his proxy holder of a written waiver of notice either before or after such 
meeting.

                6.         Quorum.

                Except as otherwise required by law or provided in these Bylaws,
a quorum at any meeting of shareholders shall consist of the holders of record
of a majority of the shares issued and outstanding and entitled to vote thereat,
present



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in person or by proxy. If, however, such majority shall not be present
or represented at any meeting of the shareholders, the shareholders present in
person or by proxy and entitled to vote thereat shall have power to adjourn the
meeting from time to time, and to any other place, without notice other than
announcement at the meeting of the time and place to which the meeting is
adjourned. At any adjourned meeting at which the requisite amount of voting
stock to constitute a quorum shall be represented, any business may be
transacted which might have been transacted at the meeting as originally called.

                7.         Record Dates.

                The record date for the determination of shareholders entitled
to notice of and entitled to vote at any meeting of shareholders or any
adjournment thereof, shall be such date as shall be determined by the Board of
Directors, but which in any event shall not be less than ten (10) days prior to
the date of such meeting. If the Board of Directors does not fix such record
date, the record date for the determination of shareholders entitled to notice
of and entitled to vote at any meeting of shareholders or any adjournment
thereof shall be the close of business on the day next preceding the day on
which notice is given.

                8.         Voting of Shares.

                Unless otherwise provided in the Charter, such shareholder of
the Corporation shall be entitled, at each meeting of the shareholders and upon
each proposal presented at such meeting, to one vote for each share of the
capital stock having voting power registered in his name on the books of the
Corporation on the 



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record date. Each shareholder having the right to vote shall be entitled to vote
in person or by proxy appointed by an instrument in writing executed by such
shareholder or his duly authorized attorney-in-fact and bearing a date not more
than eleven (11) months prior to said meeting, unless said instrument provides
for a longer period. Unless the Charter, these Bylaws or applicable law
specifically provide otherwise, the affirmative vote of a majority of shares
represented and entitled to vote at a meeting at which a quorum is present shall
be the act of the shareholders, except that directors shall be elected by a
plurality of the votes cast in the election. At each election of directors,
every shareholder shall have the right to vote the number of shares which he is
entitled to vote at such meeting for as many persons as there are directors to
be elected at said meeting, but cumulative voting for such business shall not be
permitted unless the Charter otherwise provides.

                9.         Presiding Officer.

                Meetings of the shareholders shall be presided over by the
Chairman, or if he is not present, by the President, or if he is not present, by
a Vice President, or if neither the Chairman, President nor a Vice President is
present, by a chairman to be chosen by a majority of the shareholders entitled
to vote at such meeting. The Secretary of the Corporation or, in his absence, an
Assistant Secretary shall act as secretary of every meeting, but if neither the
Secretary nor an Assistant Secretary is present, the shareholders entitled to
vote at such meeting shall choose any person present to act as secretary of the
meeting.


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                                    DIRECTORS

                10.        Powers and Duties.

                The business and affairs of the Corporation shall be managed by
the Board of Directors. In addition to the powers and authority expressly
conferred upon them by these Bylaws, the Board may exercise all the powers of
the Corporation and do all lawful acts and things as are not by applicable law,
by the Charter of the Corporation or by these Bylaws directed or required so be
exercised or done by the shareholders.

                11.        Number, Term, Qualification, and Vacancies.

                           (a) Number.  The Board of Directors shall consist 
of not less than three (3) nor more than eight (8) members, unless all of
the outstanding stock of the Corporation is owned of record by less than three
(3) shareholders, in which case the number of directors may be less than three
(3), but not less than the number of shareholders of record. Subject to the
provisions of paragraph 11(b), the exact number within such maximum and minimum
numbers shall be determined from time to time by resolution adopted by a
majority of the entire Board of Directors, except as hereinafter provided,
directors shall be elected at the first meeting of shareholders and thereafter
at the annual meeting of shareholders and each director shall serve for a term
not to exceed three (3) years and until his successor shall be elected and
qualified.

                           (b) Increase in Number. The number of members of the
Board of Directors may be increased from time to time by either the
directors or the 



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shareholders. The number of directors may be increased by the Board of Directors
upon the affirmative vote of a majority of the entire Board. If the number of
directors is increased by the Board, a vacancy or vacancies caused by such
increase shall be filled by the vote of a majority of the directors then in
office although less than a quorum exists. The number of directors may also be
increased by the shareholders at any meeting thereof by a majority vote of the
shares represented and entitled to vote. If the number of directors be increased
by action of the shareholders, a vacancy or vacancies caused by such increase
shall be filled by the shareholders in the same manner as at an annual meeting.
Directors elected to fill vacancies caused by increase in number of members of
the Board shall hold office until the next annual meeting of shareholders and
thereafter until their successors are elected and qualified.

                           (c) Decrease in Number. The number of members of the
Board of Directors may be decreased by either the directors or the
shareholders at any time there is an unfilled vacancy or there are unfilled
vacancies on the Board of Directors, provided that the number of members may be
decreased only to the extent of the number of vacancies on the Board of
Directors existing at that time. If the number of directors is decreased by the
Board, such action shall be taken by the vote of a majority of the directors
then in office although less than a quorum exists. If the number of directors is
decreased by the shareholders, such action shall be taken by a majority vote of
the shares represented at any meeting and entitled to vote thereat.



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                           (d) Vacancies. In case there are vacancies on the
Board of Directors, other than vacancies created by the removal of a
director or directors (which shall be governed by paragraph 15(b)) and other
than vacancies created by an increase in the number of directors (which shall be
governed by paragraph 11(b)), the remaining directors may by a majority vote of
the directors then in office elect a successor or successors who shall hold
office until the next annual meeting of shareholders and until his or their
successors are elected and qualified.

                           (e) Qualification. Directors need not be shareholders
of the Corporation or residents of Delaware, but must be of legal age. 

                12.        Quorum. 

                A majority of the total number of directors in office shall 
constitute a quorum for the transaction of business. If, at any meeting of the
Board of Directors, there shall be less than a quorum present, a majority of
those present may adjourn the meeting, without further notice, from time to time
until a quorum shall have been obtained.

                13.        Manner of Acting.

                The act of a majority of the directors present at a meeting at
which a quorum is present shall, unless otherwise provided by applicable law or
those Bylaws, be the act of the Board of Directors. Any action required or
permitted to be taken at a meeting of directors may be taken without a meeting
if a consent in writing, setting forth the action is taken, is signed by all the
directors. Such written consent shall have the same force and effect as a
unanimous vote at a 




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meeting of the Board of Directors.

                14.        Meetings; Notice.

                Meetings of the Board of Directors may be held either within or
without the State of Delaware. Notice of a meeting of the Board of Directors
need not state the purpose of, nor the business to be transacted at, such
meeting.

                           (a) Regular Meetings.  Regular meetings of the Board
of Directors shall be held at such times as are fixed from time to time by
resolution of the Board, and may be held without notice of the time or place
therefor.

                           (b) Special Meetings.  Special meetings may be held 
at any time upon call of the Chairman, the President or a Vice President. Notice
of the time and place of each special meeting shall be given to each director at
either his business address, as shown by the records of the Corporation, at
least forty-eight (48) hours prior thereto if mailed and on the day prior
thereto if delivered or given in person or by telephone or telegraph. If mailed,
such notice shall be deemed to be delivered when deposited, so addressed and
with postage prepaid, in the United States mail. If notice is given by telegram,
such notice shall be deemed to be delivered when the telegram, so addressed, is
delivered to the telegraph company. If notice is given in person, such notice
shall be deemed to have seen given when it is hand delivered to the director at
his business or residence address. Any director may waive notice of any meeting
before, at or after such meeting and the attendance of a director at a meeting
shall constitute a waiver of notice of such meeting except when a director
attends for the sole, express purpose of objecting 



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to the transaction of business thereat, on the ground that the meeting is not
lawfully called or convened, and so states in writing prior to the conduct of
any business at the meeting.

                15.        Removal.

                           (a) By Shareholders.  Unless the Charter otherwise 
provides, at any meeting of the shareholders, the entire Board of Directors or
any number of directors may be removed from office, with or without cause, by a
majority vote of the shares represented and entitled to vote thereat.

                           (b) Replacement. When any director or directors are
removed, new directors may be elected to fill the vacancies thereby at
the same meeting of the shareholders or Board of Directors, as the case may be,
for the unexpired term of the director or directors removed. If the shareholders
fail to elect persons to fill the unexpired term or terms of the director or
directors removed by them, such unexpired terms shall be considered vacancies on
the Board to be filled by the remaining directors as provided in paragraph
11(d).

                16.        Compensation.

                Directors, and members of any committee of the Board of
Directors shall be entitled to such reasonable compensation for their services
as directors and members of any such committee as shall be fixed from time to
time by resolution of the Board of Directors, and shall also be entitled to
reimbursement for any reasonable expense incurred in attending such meetings.
Any director receiving compensation under these provisions shall not be barred
from serving the 



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Corporation in any other capacity and receiving reasonable compensation for such
other services.

                                   COMMITTEES

                17.        Executive Committee.

                There may be, if so determined by a resolution adopted by a
majority of the entire Board of Directors, an Executive Committee of the Board
consisting of two (2) or more directors. The Board of Directors may delegate to
such Executive Committee all the power and authority of the Board that it deems
desirable, except for any matters which cannot by law be delegated by the Board
of Directors. Unless specifically authorized by the Board, the Executive
Committee shall not have the power to adopt, amend or repeal these Bylaws, to
submit to shareholders any matter that by law requires their authorization, to
fill vacancies in the Board of Directors or in any committee or to declare
dividends or make other corporate distributions.

                18.        Other Committees.

                The Board of Directors may create such other committees as it
may determine to be helpful in discharging its responsibilities for the
management and administration of the Corporation. Each such committee shall
consist of such persons, whether directors, officers or others, as may be
elected thereto by the Board of Directors, and each committee shall perform such
functions as may be lawfully assigned to it by the Board of Directors.



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                                    OFFICERS

                19.        Number.

                The officers of the Corporation shall be a Chairman, a
President, a Secretary and such other officers as may be from time to time
elected by the Board of Directors. One person may hold more than one office
except the President may not hold the office of Secretary.

                20.        Election and Term of Office.

                The principal officers shall be elected annually by the Board of
Directors at the first meeting of the Board following the shareholders' annual
meeting, or as soon thereafter as is conveniently possible. Subordinate officers
may be elected from time to time. Each officer shall serve at the pleasure of
the Board for such term as the Board of Directors may set and until his
successor shall have seen elected and qualified, or until his death, resignation
or removal.

                21.        Removal.

                Any officer may be removed from office by the Board of Directors
whenever in its judgment the best interests of the Corporation will be served
thereby, but such removal shall not prejudice the contract rights, if any, of
the persons so removed.

                22.        Vacancies.

                Any vacancy in an office from any cause may be filled for the 
unexpired portion of the term by the Board of Directors.




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                23.        Duties.

                           (a) Chairman.  The Chairman shall preside at all 
meetings of the shareholders and the Board of Directors, shall be the Chief
Executive Officer of the Corporation, and shall see that all orders and
resolutions of the Board of Directors are carried into effect.

                           (b) President. The President shall be the Chief
Operating Officer of the Corporation and shall have general supervision over
the active management of the business of the Corporation. He shall have the
general powers and duties of supervision and management usually vested in the
office of the President of a Corporation and shall perform such other duties as
the Board of Directors may from time to time prescribe.

                           (c) Vice President.  The Vice President or Vice 
Presidents (if any) shall be active executive officers of the Corporation,
shall assist the Chairman and the President in the business, and shall perform 
such other duties as the Board of Directors may from time to time prescribe.

                           (d) Secretary.  The Secretary shall attend all 
meetings of the Board of Directors and all meetings of the shareholders and
record all votes and the minutes of all proceedings in a book to be kept for
that purpose; he shall perform like duties for any committee when required. The
Secretary shall give, or cause to be given, notice of all meetings of the
shareholders and of the Board of Directors when required, and unless directed
otherwise by the Board of Directors, shall keep a stock record containing the
names of all persons who are shareholders of the 



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Corporation, showing their place of residence and the number of shares held by
them respectively. The Secretary shall perform such other duties as may be
prescribed from time to time by the Board of Directors.

                           (e) Treasurer.  The Treasurer shall have the custody 
of the Corporation's funds and securities, shall keep or cause to be kept full
and accurate account of receipts and disbursements in books belonging to the
Corporation, and shall deposit or cause to be deposited all moneys and other
valuable effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors. The Treasurer shall
disburse or cause to be disbursed the funds of the Corporation as required in
the ordinary course of business or as may be ordered by the Board, taking proper
vouchers for such disbursements, and shall render to the Chairman, the President
and directors at the regular meetings of the Board, or whenever they may require
it, an account of all of his transactions as Treasurer and the financial
condition of the Corporation. He shall perform such other duties as may be
incident to his office or as prescribed from time to time by the Board of
Directors. The Treasurer shall give the Corporation's bond, if required by the
Board of Directors, in a sum and with one or more sureties satisfactory to the
Board for the faithful performance of the duties of his office and for the
restoration to the Corporation in case of his death, resignation, retirement, or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
Corporation.



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                           (f) Other Officers. Other officers appointed by the 
Board of Directors shall exercise such powers and perform such duties as
may be delegated to them.

                           (g) Delegation of Duties. In case of the absence or
disability of any officer of the Corporation or of any person authorized
to act in his place, the Board of Directors may from time to time delegate the
powers and duties of such officer to any officer, or any director, or any other
person whom it may select, during such period of absence or disability.

                24.        Indemnification of Officers and Directors.

                The Corporation shall indemnify each present and future director
and officer of the Corporation, or any person who may have served at its request
as a director or officer of another company (and, in either case, his heirs,
executors and administrators) to the full extent allowed by the laws of the
State of Delaware, both as now in effect and as hereafter adopted.

                        CERTIFICATES FOR SHARES OF STOCK

                25.        Form.

                           (a) Stock Certificates.  The Interest of each 
shareholder of the Corporation shall be evidenced by a certificate or
certificates for shares of stock. The certificate shall include the following on
its face: (i) the Corporation's name, (ii) the fact that the Corporation is
organized under the laws of the State of Delaware, (iii) the name of the owner
of record of the shares represented thereby, (iv) the number of shares
represented thereby, (v) the class of shares and the 



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designation of the series, if any, which the certificate represents, (vi) the
par value of each share or a statement that the shares are without par value,
and (vii) such other information as applicable law may require or as may be
lawful.

                           (b) Signatures. The certificates for stock shall be
signed by the Chairman, the President or a Vice President, and by the
Secretary, an Assistant Secretary, the Treasurer, or an Assistant Treasurer.
Where any certificate is manually countersigned by a transfer agent or
registered by a registrar who is not an officer or employee of the Corporation,
the signatures of the Chairman, President, Vice President, Secretary, Assistant
Secretary, and/or Treasurer upon such certificate may be facsimiles, engraved or
printed. In case any officer who has signed, or whose facsimile signature has
been placed upon, any certificate shall have ceased to be such before the
certificate is issued, it may be issued by the Corporation with the same effect
as if such officer had not caused to be such at the time of its issue.

                26.        Subscriptions for Shares.

                Subscriptions for shares of the Corporation shall be valid only
if they are in writing, signed and delivered by the subscriber. Unless the
subscription agreement provides otherwise, subscriptions for shares, regardless
of the time when they are made, shall be paid in full at such time, or in such
installments and at such periods, as shall be so determined by the Board of
Directors. All calls for payments on subscriptions shall be uniform as to all
shares of the same class or of the same series.



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                27.        Transfers.

                Transfers of shares of the capital stock of the Corporation
shall be made only on the books of the Corporation by (i) the holder of record
thereof, (ii) by his legal representative, who shall furnish proper evidence of
authority to transfer, or (iii) his attorney, authorized by a power of attorney
duly executed and filed with the Secretary of the Corporation or as duly
appointed transfer agent. Such transfers shall be made only upon surrender of
the certificate or certificates for such shares properly endorsed and with all
taxes thereon paid.

                28.        Loss, Destroyed, or Stolen Certificates.

                No certificate for shares of stock of the Corporation shall be
issued in place of any certificate alleged to have been lost, destroyed, or
stolen except in production of evidence, satisfactory to the Board of Directors,
of such loss, destruction or theft, and, if the Board of Directors so requires,
upon the furnishing of an indemnity bond in such amount (but not to exceed twice
the value of the shares represented by the certificate) and with such terms and
such surety as the Board of Directors may in its discretion require.

                                CORPORATE ACTIONS

                29.        Contracts.

                Unless otherwise required by the Board of Directors, the
Chairman, the President or any Vice President shall execute contracts or other
instruments on behalf of and in the name of the Corporation. The Board of
Directors may from time to time authorize any other officer or officers or agent
or agents to enter into 



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any contract or execute any instrument in the name of and on behalf of the
Corporation as it may deem appropriate, and such authority may be general or
confined to specific instances.

                30.        Loans.

                No loans shall be contracted on behalf of the Corporation and no
evidence of indebtedness shall be issued in its name unless authorized by the
Chairman, the President or the Board of Directors. Such authority may be general
or confined to specific instances.

                31.        Checks, Drafts, etc.

                Unless otherwise required by the Board of Directors, all checks,
drafts, bills of exchange and other negotiable instruments of the Corporation
shall be signed by either the Chairman, the President, a Vice President or such
other officer or agent of the Corporation as may be authorized to do so by the
Board of Directors. Such authority may be general or confined to specific
business, and, if so directed by the Board, the signatures of two or more such
officers may be required.

                32.        Deposits.

                All funds of the Company not otherwise employed shall be
deposited from time to time to the credit of the Corporation in such banks or
other depositories as the Board of Directors may authorize.

                33.        Voting Securities Held by the Corporation.

                Unless otherwise required by the Board of Directors, the
Chairman or the President shall have full power and authority on behalf of the
Corporation to 



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attend any meeting of security holders, or to take action on written consent as
a security holder, of other corporations in which the Corporation may hold
securities in connection therewith the Chairman or the President shall possess
and may exercise any and all rights and powers incident to the ownership of such
securities which the Corporation possesses. The Board of Directors may, from
time to time, confer like powers upon any other person or persons.

                34.        Dividends.

                The Board of Directors may, from time to time and the
Corporation may pay, dividends on its outstanding shares of capital stock in the
manner and upon the terms and conditions provided by applicable law. The record
date for the determination of shareholders entitled to receive the payment of
any dividend shall be determined by the Board of Directors, but which in any
event shall not be less than ten (10) days prior to the date of such payment.

                                   FISCAL YEAR

                35.        The fiscal year of the Corporation shall be
determined by the Board of Directors, and in the absence of such determination,
shall be the calendar year.

                                 CORPORATE SEAL

                36.        The Corporation shall have a corporate seal, which 
seal shall have the letters CHI in the middle and the words Clayton Homes, Inc.
on the border.



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                               AMENDMENT OF BYLAWS

                37.        These Bylaws may be altered, amended or repealed, and
new Bylaws may be adopted at any meeting of the shareholders by the affirmative
vote of a majority of the stock represented at such meeting, or by the
affirmative vote of a majority of the members of the Board of Directors who are
present at any regular or special meeting; provided, however, that any amendment
to these Bylaws changing the number of directors, if adopted by the Board of
Directors, shall require the affirmative vote of a majority of the members of
the entire Board of Directors.





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