State of Tennessee Ex Rel. Herbert H. Slatery, III, Attorney General and Reporter v. HRC Medical Centers, Inc.

06/10/2022
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
February 3, 2022 Session
STATE OF TENNESSEE EX REL. HERBERT H. SLATERY, III,
ATTORNEY GENERAL AND REPORTER
V. HRC MEDICAL CENTERS, INC. ET AL.
Appeal from the Circuit Court for Davidson County
No. 12C4047 Don R. Ash, Senior Judge
No. M2021-00488-COA-R3-CV
The State appeals the trial court’s holding that Tenn. Code Ann. § 66-8-101(1) applied to
the State’s attempt to have the Defendants’ real estate sold in order to collect on its
judgment, such that the statutory right of redemption could not be barred. Because we
conclude that the sale sought by the State could proceed under subsection (2) of that statute,
we vacate the court’s order and remand for further proceedings.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Vacated;
Case Remanded
ANDY D. BENNETT, J., delivered the opinion of the Court, in which FRANK G. CLEMENT,
JR., P.J., M.S., and ARNOLD B. GOLDIN, J., joined.
Herbert H. Slatery, III, Attorney General and Reporter, Andrée Blumstein, Solicitor
General, and Jared Alan Hagler, Assistant Attorney General, for the appellant, State of
Tennessee.
W. Kennerly Burger, Murfreesboro, Tennessee, and Steven Lee Lefkovitz, Nashville,
Tennessee, for the appellees, Dan Hale, Dixie Hale, and Don Hale.
OPINION
In this appeal, we construe the statutory right of redemption set forth in Tenn. Code
Ann. § 66-8-101, and specifically whether that right could be curtailed in this case when
the State sought an order of sale of real property to satisfy its money judgment. In 2017,
the State of Tennessee prevailed in a Tennessee Consumer Protection Act action and was
awarded a judgment of $18,141,750 against Dan Hale, Dixie Hale, and Don Hale
(“Defendants”), who were held personally liable for engaging in fraudulent and deceptive
practices in their operation of bio-identical hormone replacement therapy centers; the
judgment was affirmed on appeal. See State ex rel. Slatery v. HRC Med. Ctrs, Inc., 603
S.W.3d 1 (Tenn. Ct. App. 2019). The State recorded the judgment in the counties where
the Defendants owned real property, perfecting its judgment lien.1 The State then moved
for an order authorizing the sale of the Defendants’ real properties in an attempt to satisfy
the judgment. In an effort to maximize the value and purchase price of these properties, the
State subsequently requested that the order of sale specifically confirm that no right of
redemption existed, in accordance with Tenn. Code Ann. § 66-8-101(2). That statute reads:
Real estate sold for debt shall be redeemable at any time within two (2) years
after such sale:
(1) Where it is sold under execution;
(2) Where it is sold under any decree, judgment, or order of a court of
chancery, whether founded upon a foreclosure of a mortgage, or
deed of trust, or otherwise, unless, upon application of the
complainant, the court orders that the property be sold on a credit
of not less than six (6) months, nor more than two (2) years; and
that, upon confirmation thereof by the court, no right of
redemption or repurchase shall exist in the debtor or the debtor’s
creditor, but that the title of the purchaser shall be absolute; and
(3) Where it is sold under a deed of trust or mortgage without a
judicial sentence, unless the right of redemption is expressly
waived by the deed or mortgage; and a waiver of the “equity of
redemption,” or a waiver using words of similar import, shall be
sufficient to waive the right of redemption afforded by this section
in all deeds of trust and mortgages, whether heretofore or hereafter
existing.
Tenn. Code Ann. § 66-8-101.
The circuit court concluded that the State was executing on a judgment and therefore
Tenn. Code Ann. § 66-8-101(1), not subsection (2), applied; thus, the properties could be
redeemed by the Defendants within two years of the sale. Accordingly, it denied the State’s
request to bar the right of redemption.
1
“[P]ursuant to Tennessee Code Annotated section 25-5-101(b)(1), a lien on a debtor’s real property is
perfected by recording the judgment in the register’s office of the county where the property is located.”
Andrews v. Fifth Third Bank, 228 S.W.3d 102, 107 (Tenn. Ct. App. 2007); see also TENN. R. CIV. P.
69.07(2).
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The State appealed, and raises the following issue for our review:
Whether the trial court erred in concluding that a court-ordered sale of
Defendants’ real properties for payment toward the State’s judgment lien was
a sale “under execution,” in accordance with Tenn. Code Ann. § 66-8-101(1),
and in therefore denying the State’s application for sale of the properties free
of the statutory right of redemption.
STANDARD OF REVIEW
The construction of statutes and the application of the law to the facts present
questions of law, which we review de novo with no presumption of correctness. Sallee v.
Barrett, 171 S.W.3d 822, 825 (Tenn. 2005).
HISTORICAL PERSPECTIVE
In this case, we are examining the right of redemption set forth in Tenn. Code Ann.
§ 66-8-101, which is a “statutory right of redemption.” Many of the cases interpreting this
right also use the phrase “equity of redemption.” The difference between the two concepts
concerns when they are exercised:
Rights of redemption are basically of two types: those before the sale
of property to satisfy a debt and those after. The two types are denominated
according to their origins. The right to redeem before the sale is a creature of
courts of equity, and is therefore referred to as the “equity of
redemption.” The right to redeem after the sale is created by statute and is
referred to as the “statutory right of redemption.”
Benjamin Pitts, Waiver of Redemption Rights in Tennessee Mortgages: Discarding the
Contracts Clause & Common-Law Concepts, 55 TENN. L. REV. 733, 734 (1988) (emphasis
added) (footnotes omitted). The Tennessee Supreme Court, in Swift v. Kirby, 737 S.W.2d
271 (Tenn. 1987), a case dealing primarily with subsection (3) of Tenn. Code Ann. § 66-
8-101, found “that the phrase ‘equity of redemption’ by common usage, embraced the
statutory right of redemption” and explained:
The “idea” that the phrase [“]equity of redemption[”] represented,
originated when mortgages were used as security instruments, prior to the
advent of the deed of trust, and when courts of equity decided to relieve
debtors of the harshness of the law of mortgages that vested full title in the
mortgagor immediately upon default. The remedy provided by the courts
allowed the debtor to redeem at any time between default and consummation
of a foreclosure sale. All authorities agree that that right was the original
meaning of the equity of redemption. However, with the advent of the right
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of redemption created by statute in the various states, the right of redemption
continued to be referred to in many states, as in Tennessee, as the “equity of
redemption.”
Id. at 275, 276.
The statutory right of redemption, which is at issue in this case, “was created in the
early 1800s to deal with the problem of inadequate sale price”:
Legislation in various states gave mortgagors and/or judgment debtors the
right to redeem property for a time after the sale by paying to the purchaser
the purchase price plus interest and costs. This right of redemption put
pressure on the bidders to bid the property’s true value and prevented the
mortgagee or judgment creditors, often the principal if not the only
bidder, from obtaining the property for a nominal amount. The debt for
which the property was sold was extinguished only to the extent of the
proceeds from the sale. If the sale price was less than the amount of the debt
and also less than the property’s value, the debtor was still liable for the debt,
and the debtor’s only resource for paying the debt may have been taken in
the sale. The statutory right of redemption allowed the debtor to repurchase
the property if the sale price was inadequate. The debtor could then
extinguish the debt with proceeds from either refinancing or resale at fair
market value. In this manner, the statutory right of redemption, like the equity
of redemption before it, helped ensure that satisfaction of debt and not the
acquisition of property was the result of the transaction.
Pitts, 55 TENN. L. REV. at 735 (footnotes omitted). In 1820, Tennessee first enacted a
statutory right of redemption. 1820 Tenn. Pub. Acts, ch. 11. The Tennessee Supreme Court
acknowledged the purpose of such a right in Ewing v. Cook, 3 S.W. 507 (Tenn. 1887) when
it observed, “The legislative purpose in securing both to the judgment debtor and his
creditors a right of redemption was to make the land pay as large a part of the debts of the
owner as possible.” Id. at 510. In 1833, the Legislature enacted an exception to that right,
which provided that the right of redemption “shall not exist” in cases “where land or
interests in lands are directed to be sold by order of the court of chancery, founded upon a
foreclosure of a mortgage, deeds of trust or any other case where the specific land to be
sold is mentioned in the decree,” provided that the complainant makes an application that
the property “be sold on a credit of not more than two years nor less than six months” and
that the sale is made by the master or commissioner and confirmed by the court, resulting
in the purchaser’s title being absolute. 1833 Tenn. Pub. Acts, ch. 47, sec. 2. With that
historical perspective in mind, we turn to the merits of this appeal.
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ANALYSIS
The State was awarded a sizeable money judgment, which constitutes a debt, against
the Defendants, and sought a sale of the Defendants’ real property to satisfy that debt. Land
is “only subject to redemption under our statute when sold for debt.” White v. Bates, 15
S.W. 651, 652 (Tenn. 1891). Our task is to construe Tenn. Code Ann. § 66-8-101 to
determine whether the State sought a sale “under execution,” pursuant to subsection (1) of
the statute, which would permit the Defendants to redeem the property, or whether it sought
a sale pursuant to subsection (2) such that the right of redemption could be barred. The
State argues that it “has not sought to execute on the money judgment by writ and levy
. . . [but i]nstead . . . perfected its judgment lien and sought an order of sale to enforce that
lien, consistent with the trial court’s dominion over the Hales’ properties through its
appointed receiver,”2 such that subsection (2) applies and the Defendants’ right of
redemption can be barred.
We first look to the text of the statute and give the words of the statute “their natural
and ordinary meaning in the context in which they appear and in light of the statute’s
general purpose.” Mills v. Fulmarque, Inc., 360 S.W.3d 362, 368 (Tenn. 2012). In giving
words “their ordinary and natural meaning,” we may “refer to dictionary definitions, where
appropriate.” State v. Majors, 318 S.W.3d 850, 859 (Tenn. 2010) (citing State v.
Williams, 690 S.W.2d 517, 529 (Tenn. 1985)).
I. Interpreting and Applying Tenn. Code Ann. §66-8-101(1)
Tennessee Code Annotated section 66-8-101(1) provides that “Real estate sold for
a debt shall be redeemable at any time within two (2) years after such sale . . .[w]here it is
sold under execution.” However, the statute provides two avenues for the right of
redemption to be removed: by asking the chancery court to remove it when the land is to
be sold on a credit of between six months and two years and the court confirms that the
sale complied with the credit terms and that the purchaser’s title is absolute (id. § 66-8-
101(2)), or when the right is waived ahead of time, as by specific language in a deed of
trust (id. § 66-8-101(3)).
The State invoked subsection (2), but the trial court held that the State was actually
seeking to execute on a judgment, such that subsection (1) applied. Thus, we must first
examine the nature of a sale “under execution.” In doing so, we do not construe Tenn. Code
2
Tennessee Code Annotated section 29-1-103 provides, “The courts are all vested with power to appoint
receivers for the safekeeping, collection, management, and disposition of property in litigation in such
court, whenever necessary to the ends of substantial justice, in like manner as receivers are appointed by
courts of chancery.” In this case, the trial court appointed a receiver in 2013 over the personal and real
assets of the Defendants and placed all of the Defendants’ assets in custodia legis, subject to the exclusive
jurisdiction of the court.
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Ann. § 66-8-101 in a vacuum but must consider other relevant rules and statutes.
Tennessee Code Annotated section 26-1-103 provides that “[a]ll judgments and decrees of
any of the judicial tribunals of this state for money may be enforced by execution.” The
term “execution” is not defined in Titles 26 or 66, so we deem this an appropriate occasion
to consult the dictionary. See Majors, 318 S.W.3d at 859. “Execution” is defined as
“[j]udicial enforcement of a money judgment, usu[ally] by seizing and selling the judgment
debtor’s property” and also as “[a] court order directing a sheriff or other officer to enforce
a judgment, usu[ally] by seizing and selling the judgment debtor’s property.” Execution,
BLACK’S LAW DICTIONARY (11th ed. 2019).
“When the judgment is for the recovery of money, the usual process for enforcement
is a writ of execution, also called a writ of fieri facias.” Lawrence A. Pivnick, TENNESSEE
CIRCUIT COURT PRACTICE, § 29:1 (2021) (footnotes omitted). “Fieri facias” is “[a] writ of
execution that directs a marshal or sheriff to seize and sell a judgment debtor’s property to
satisfy a money judgment.” Fieri facias, BLACK’S LAW DICTIONARY (11th ed. 2019).
Seeking execution to satisfy a money judgment requires no action by the court. Tenn. Code
Ann. § 26-1-201 (“The clerks of the several courts may issue executions in favor of the
successful party on all judgments as soon after the adjournment of the court as practicable
within the time prescribed by this code, without any demand of the party.”). In Hyder v.
Butler, 52 S.W. 876, 877 (Tenn. 1899), the Tennessee Supreme Court stated, “It is not
required in a money recovery whether a decree in chancery or a judgment at law that the
Court shall in terms direct the issuance of an execution. Such a decree or judgment, without
more, is, in and of itself, an award of execution.” This Court, in Keep Fresh Filters, Inc. v.
Reguli, 888 S.W.2d 437 (Tenn. Ct. App. 1994), devoted much discussion to the topic of
execution in the context of determining the priority of liens:
A writ of execution is now the customary vehicle for enforcing money
judgments. It is simply an order directing the sheriff to levy upon and sell the
judgment debtor’s property identified in the writ that is not statutorily
exempt. Clerks of the courts of record must issue writs of execution thirty
days after the entry of a judgment as a matter of course or sooner if requested
by the judgment creditor.
A levy of execution is the officer’s act of appropriating or singling-
out the debtor’s property for the satisfaction of a debt. It is accomplished by
the officer’s asserting dominion over the property by actually taking
possession of it or doing something that amounts to the same thing.
Id. at 443-44 (citations omitted). We are also mindful of Rule 69.07 of the Tennessee Rules
of Civil Procedure, which is titled “Execution on Realty” and states, in relevant part:
(2) Judgment Lien. A judgment lien against the judgment debtor’s realty is
created by registering a certified copy of the judgment in the register’s office
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of the county where the realty is located. Once a judgment lien is created by
registration, it will last for the time remaining in a ten-year period from the
date of final judgment entry in the court clerk’s office and for any extension
granted by the court pursuant to Rule 69.04. For the extension of the lien to
be enforceable, the judgment creditor must register the court’s order
extending the judgment.
(3) Levy. As long as a judgment lien is effective, no levy is necessary; the
judgment creditor may move for an order of sale. Otherwise a levy occurs
when the sheriff exercises control over the judgment debtor’s realty. The first
judgment creditor to deliver a writ of execution to the sheriff, as shown by
record in the clerk’s office, has priority over other judgment creditors as to
the realty levied upon.
(4) Sale. The sheriff shall sell the debtor’s interest in realty by auction. . . .
TENN. R. CIV. P. 69.07. Pursuant to Rule 69.07(3), the judgment creditor has the option of
taking the clerk-issued writ of execution to the sheriff or moving for an order of sale. In
Kuykendall v. Wheeler, 890 S.W.2d 785, 786-87 (Tenn. 1994), the Tennessee Supreme
Court stated:
If the judgment creditor is unable to collect the judgment by legal
execution or garnishment, then the creditor may seek the aid of the chancery
court. Tenn. Code Ann. § 16-11-104 (1994). The chancery court has the
power to subject the property of the judgment debtor which cannot be
reached by legal execution to satisfaction of the judgment. Gibson’s Suits in
Chancery § 456 (7th ed. 1988).
Id. at 786-87. Tennessee Code Annotated section 16-11-104, as relied upon by the Supreme
Court above, reads: “The chancery court has exclusive jurisdiction to aid a creditor, by
judgment or decree, to subject the property of the defendant that cannot be reached by
execution to the satisfaction of the judgment or decree under this code.”
In this case, the trial court appointed a receiver in 2013 over the personal and real
assets of the Defendants and placed all of the Defendants’ assets in custodia legis, subject
to the exclusive jurisdiction of the court. The amount of the judgment outweighed the
estimated value of the Defendants’ real property. On those facts, the customary process of
racing to the sheriff’s office with a writ of execution to see how much money could be
raised by an execution sale may have been less fruitful than attempting to sell the properties
free of the right of redemption. Obviously, sales of real estate subject to redemption may
not always sell for the highest price. Swift, 737 S.W.2d at 276 (“[T]he forced sale value of
real estate, which is well below fair market value, would be significantly further reduced
by sale subject to the two year right of redemption.”). Cutting off the statutory right of
redemption, pursuant to Tenn. Code Ann. § 66-8-101(2) can actually be a benefit to both a
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defendant and his creditors, as the Tennessee Supreme Court stated in 1872 when
interpreting the statutory language now codified at Tenn. Code Ann. § 66-8-101(2):
The statute intends to benefit both debtor and creditor—the first, by
exposing to sale his property under such circumstances as promise an
approximation to its value, by giving time for payment to the purchaser; and
the creditor, by an assurance that an absolute sale will more nearly pay his
debt. That buyers will give more for an absolute than a contingent estate, was
a motive to the passage of the Act—the provisions for credit is a main
element of the law. Which element in its decree the court is not authorized to
sell, barring the right of redemption.
Hodges v. Copley, 58 Tenn. (11 Heisk.) 332, 334-35 (Tenn. 1872).
The State was certainly entitled to pursue execution as a means of satisfying its
money judgment, but we do not read a requirement in Tenn. Code Ann. § 66-8-101 that
the State must pursue an execution sale because it had a money judgment. In other words,
the statute does not specify that a judgment creditor is categorically unable to seek a sale
that barred the right of redemption.
II. Interpreting and Applying Tenn. Code Ann. §66-8-101(2)
We now turn to examine the applicability of subsection (2) of the statute to the facts
of this case. Again, that provision reads:
[w]here it is sold under any decree, judgment, or order of a court of chancery,
whether founded upon a foreclosure of a mortgage, or deed of trust, or
otherwise, unless, upon application of the complainant, the court orders that
the property be sold on a credit of not less than six (6) months, nor more than
two (2) years; and that, upon confirmation thereof by the court, no right of
redemption or repurchase shall exist in the debtor or the debtor’s creditor,
but that the title of the purchaser shall be absolute[.]
Tenn. Code Ann. § 66-8-101(2).
The above language clearly contemplates that a chancery court will order the sale
that bars the right of redemption. The Defendants argue that the State’s election to seek a
judicial sale pursuant to Tenn. Code Ann. § 66-8-101(2) in circuit court is fatal to its cause.
We disagree. While the statute explicitly vests the chancery court with the power to order
a sale that bars the right of redemption, as does an analogous statute, Tenn. Code Ann. §
21-1-803, the circuit court is also vested by statute with the power to perform the functions
of a chancery court. Tenn. Code Ann. § 16-10-111 (“Any suit of an equitable nature,
brought in the circuit court, where objection has not been taken to the jurisdiction, may be
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transferred to the chancery court of the county, or heard and determined by the circuit
court upon the principles of a court of equity, with power to order and take all proper
accounts, and otherwise to perform the functions of a chancery court.”) (emphasis added);
see also TENN. R. CIV. P. 69.01 (“A Circuit Court judgment will reach equitable interests
without a Chancery Court action to enforce the judgment.”). In light of the protracted
nature of these proceedings and the circuit court’s familiarity with them, as well as the fact
that the Defendant’s assets were already in custodia legis and the Defendants have not
otherwise challenged the circuit court’s jurisdiction, we discern no issue with the State’s
election to pursue recovery of its judgment by seeking an order barring the right of
redemption from the circuit court.
The language of subsection (2) also contemplates that the land be sold under a
decree, judgment, or order that is “founded upon a foreclosure of a mortgage, or deed of
trust, or otherwise,” issued by a chancery court. Tenn. Code Ann. § 66-8-101(2).
Obviously, the judgment in this case was not founded upon a foreclosure of a mortgage or
deed of trust, and thus the State must necessarily contend that the proceedings below
resulted in an order “founded upon . . . otherwise.” “Otherwise” is a broad term that is
defined as “in another manner,” “[b]y other causes or means,” “[i]n other conditions or
circumstances,” or “[e]xcept for what has just been mentioned.” Otherwise, BLACK’S LAW
DICTIONARY (11th ed. 2019). By its plain language, the statute means that any judgment
that is rendered by a court exercising chancery powers could subject the debtor’s land to a
judicial sale that bars the right of redemption, as long as the requirements of the statute are
met.
The Defendants contend that the statute should not be read so broadly and that the
right of redemption limitation in subsection (2) only applies to “divorce, partition, estates
or similar Chancery type (in rem) property liquidation, or unless it has been waived in
writing” and go on to argue:
[T]here are no exceptions, as urged by the State. The right of redemption
applies to tax cases, and to civil judgment creditors of every nature and in
every context. If the State’s present position carries any viability, where is
the specific case that directly refutes Gibson’s description of the traditional
view? That case does not appear in the State’s brief.
Curiously, the Defendants themselves cite to no legal authority to support this position.
Given the facts of this particular case, where the Defendants’ assets have been in the circuit
court’s custody since 2013, we find their argument unavailing. Moreover, as will be
discussed in greater detail below, there are several cases that directly refute the Defendants’
arguments.
In response to the Defendants’ argument, the State argues that any decree ordering
a sale of the property can be used to bar the right of redemption, as long as the judgment
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creditor asks the court of equity for such a limitation. The State relies on the similar
language of Tenn. Code Ann. § 21-1-803,3 which is found in Title 21, which pertains to
“Proceedings in Chancery,” and reads:
Where, upon the foreclosure of a mortgage or deed of trust, or in any
case, the specified land to be sold is mentioned in the decree, the court, upon
the application of the complainant, may order that:
(1) The property be sold on a credit of not less than six (6) months nor
more than two (2) years;
(2) When the sale is made, reported and confirmed, no right of
redemption or repurchase shall exist in the debtor or the debtor’s creditors,
but that the purchaser’s title shall be absolute; and
(3) The surplus of the purchase money, or the bonds or notes taken for
the purchase money, over and above what is necessary to pay the
complainant’s debt, be paid to the debtor or the debtor’s other creditors
entitled to the payment.
Despite the confusing use of punctuation in the introductory phrase of the above
statute, we think that the treatise Gibson’s Suits in Chancery, which is based on its author’s
interpretation of both Tenn. Code Ann. §§ 66-8-101 and 21-1-803, correctly inserts the
word “where” in his discussion of “Sale of Land in Bar of Redemption”:
One naturally loves the land one owns, and in all ages among all civilized
nations, the law has regarded a person’s home as sacred, and has declared
that when sold it should be subject to redemption.
A. When the Right to Redeem Exists, and When it May Be Barred.
Ordinarily, real estate sold for debt under any judicial procedure is sold
subject to redemption at any time within two years after such sale. However,
upon a foreclosure of a mortgage, or deed of trust, or in any case where the
specific land to be sold is mentioned in the decree, the Court, upon
application of the plaintiff, may order: (1) that the property be sold on a credit
of not less than six months, nor more than two years; (2) that when the sale
3
The State argues that the language of Tenn. Code Ann. § 21-1-803 “places no limitation on the court’s
power to bar the right of redemption where a party is seeking to enforce a judgment,” and by imposing one,
the trial court has created a statutory conflict where none exists. We disagree with the premise of the State’s
argument; Tenn. Code Ann. § 21-1-803, as we read it, clearly places a limitation on the court’s power to
order a sale that bars the right of redemption: when the circumstances do not merit it. The court’s discretion
is not unbridled; a decision to limit the right of redemption must be based on a request by the judgment
creditor and on the facts and the law. Because we ultimately conclude that the trial court erred in its
conclusion that Tenn. Code Ann. § 66-8-101(2) did not apply, no conflict between the statutes has been
created.
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is made and reported, and confirmed, no right of redemption or repurchase
shall exist in the debtor or his creditors, but that the purchaser’s title shall be
absolute.
Henry R. Gibson, Gibson’s Suits in Chancery, § 18.03 (William H. Inman ed. 8th ed. 2004)
(footnotes omitted) (emphasis added). The bolded language above comports with the
Legislature’s 1833 Act, chapter 47, section 2, which is the predecessor of Tenn. Code Ann.
§ 21-1-803 and marks the Legislature’s first authorization of a chancery court’s authority
to bar the right of redemption. Despite the language of the Act, a comma was codified in
place of the word “where” in section 4489 of the 1858 Code of Tennessee, and has been
carried forward to the present version of Tenn. Code Ann. § 21-1-803. Regardless of
whether a comma or the word “where” should appear in § 21-1-803, the broad language in
that statute as well as Tenn. Code Ann. § 66-8-101(2) does not limit the court’s authority
to order a sale barring the right of redemption in the way argued by the Defendants. We
conclude that an order arising out of any case where the specific land to be sold is identified
by the court will suffice. Our conclusion in this regard is supported by the following cases,
in which a bar to the right of redemption was invoked, despite the fact that they arose out
of circumstances other than foreclosure on a mortgage or deed of trust or “divorce,
partition, estates[,] or similar Chancery type (in rem) property liquidation,” as listed by the
Defendants.
In State v. Duncan, 71 Tenn. 679, 691 (Tenn. 1879), the State of Tennessee and
Davidson County filed suit in chancery court as lienholders due to the Defendant’s failure
to pay several tax bills and sought to sell two pieces of property without the right of
redemption to satisfy outstanding tax bills. The Tennessee Supreme Court held that “taxes,
when assessed, become a personal debt, and the government is entitled to all the remedies
for their collection, including an ordinary suit at law, if it chooses to resort to that remedy.”
Id. at 685. The Court applied section 4489 of the 1858 Code, which is the nearly identical
predecessor of Tenn. Code Ann. § 21-1-803, and went on to state:
The provisions of our Code, sec. 4489, are general and comprehensive, and
give the chancery court the power to sell on a credit, so as to cut off the equity
of redemption in all cases where the specific land to be sold is mentioned in
the decree. In our opinion these provisions are broad enough to include this
case.
Id. at 691.
In another similar case, Thomas v. Hammer, 81 Tenn. 620 (Tenn. 1884), which is,
admittedly, more about tax lien priority than the statutory right of redemption, the tax
collector, operating under the authority of the State, first asked the circuit court for an order
of condemnation and sale of land to recover delinquent taxes that had been assessed in
1871, 1872, and 1873. Id. at 620. When the sale was determined to be invalid by the
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Comptroller due to some unspecified irregularity, the tax collector paid the amount of taxes
himself and then filed a bill against the owners of the property, seeking the court’s aid to
be substituted on the lien, and for a sale of the land upon a credit of six months in bar of
the right of redemption, which was granted. Id. at 620-21. At that sale, Mr. Hammer bought
the property, the court confirmed the sale, and the master executed a deed to Mr. Hammer
on July 24, 1880. Id. at 621. However, an execution issued by a justice of the peace in 1874
had been levied on the lot, and the circuit court ordered the lot condemned and sold at a
sheriff’s sale, where Mr. Thomas purchased it; his deed was dated May 20, 1880. In June
1881, Mr. Thomas filed a bill in the chancery court seeking to set aside Mr. Hammer’s
deed as invalid because “the specific directions of the statute for the sale of land by revenue
collectors was not pursued by the decree or the clerk and master under it.” Id. The
chancellor concluded that Mr. Hammer acquired title to the land by his purchase of the
land under the decree—a decree that barred the right of redemption—and dismissed Mr.
Thomas’ complaint. Id. Because the lien for taxes existed at the time they were assessed,
which was before the levy of execution and the proceedings at which Mr. Thomas
purchased, the Tennessee Supreme Court affirmed the chancellor’s decree. Id. at 622.
In City of Nashville v. Lee, 80 Tenn. 452 (Tenn. 1883), the bill was filed in chancery
court by the Mayor and City Council “to subject [a] lot to sale for the satisfaction of the
taxes due the city,” and the court ordered the lot sold “upon a credit and in bar of the equity
of redemption,” which was not challenged on appeal. Id. at 453.
In State v. Covington, 72 Tenn. 51 (Tenn. 1879), the circuit court ordered the sheriff
to sell land to satisfy a judgment enforcing a tax lien, on a credit of six and twelve months
credit free from the equity of redemption. Id. at 53. Ultimately, the case came down to
whether a justice of the peace had jurisdiction to enforce the State’s tax lien when the
amount was less than $50, which is not relevant to our decision in this case, but the fact
that the circuit court ordered the sheriff to conduct a sale of land “free from the equity of
redemption” to satisfy the lien certainly is. The Supreme Court did not consider whether
the equity of redemption was properly barred, but it is apparent that the parties raised no
issue with the right to redeem being barred.
In Smith v. Taylor, our Supreme Court held that a judgment creditor was entitled to
a sale of land in bar of the right of redemption to satisfy the judgment when such a sale had
been requested in the bill as alternative relief. 79 Tenn. 738, 744 (Tenn. 1883). In Smith,
the judgment creditor (“Smith”) initially sought a sale of land under execution to recover
a judgment before realizing that the land had previously been sold to another judgment
creditor whose execution had been levied a year prior.4 The Supreme Court held that the
4
Two money judgments had been recovered against the defendant, Mr. Taylor, in 1877: one by the
complainants, who were the executors of Smith’s estate, in August 1877 and another a few months prior by
“Nassauer & Lowenthal.” Id. at 739-40. Mr. Taylor apparently owned one lot of land, which was sold twice
to satisfy the two judgments. Id. Execution issued on Nassauer & Lowenthal’s judgment was levied in
January 1878, and they purchased the land at the first execution sale, which was held in July 1878. Id. at
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title of the purchaser of land sold by virtue of a levy of execution and an order of sale
relates to the date of the levy. Id. at 741. Accordingly, when Smith’s execution was levied,
the judgment debtor no longer held title to the property, as it had been sold under the
execution of another judgment creditor and vested in that party, who had purchased the
land at an earlier execution sale. Id. at 740-41. Because Smith “acquired nothing” by
purchasing the property at the later execution sale, he could not “maintain the bill [which
presumably sought to have title of the property vested in Smith] on any right then
acquired.” Id. at 743. As a means of alternative relief, the complainants had asked “that
the satisfaction of [their] judgment be set aside, and that the lot be subjected to the
satisfaction of the debt by sale, free from the equity of redemption.” Id. The court granted
the complainants the alternative relief they sought, setting aside the satisfaction of the
judgment because no title had been required by the sale and ordering the land to be “sold
on a credit of twelve months, free from any equity of redemption, in satisfaction of the
complainant’s judgment, interest and costs, and cost of this cause.” Id. at 744.
In Turner v. Argo, 14 S.W. 930 (Tenn. 1890), the complainants filed suit against a
husband-and-wife partnership to collect on an account for goods sold and to set aside a
fraudulent sale of goods. Id. at 930. The complainants, in their amended bill, sought a sale
of three lots owned by the defendant wife to satisfy the debts. Id. The chancellor entered a
decree in favor of the complainants for the amount of their debts and ordered the sale of
the lots upon a credit barring the equity of redemption and refused to grant the defendant
wife a homestead exemption. Id. Pertinent to the case before us, our Supreme Court held
that because there was no application in the amended bill to bar the right of redemption,
the chancellor’s decree should be modified such that the land would be sold for cash,
subject to the right of redemption. Id. The Supreme Court modified the court’s order only
because the complainant did not ask that the bar of redemption apply; the Court did not
indicate that the case was of a type where the bar of the right of redemption could not be
sought. Id.We find compelling the following language from the Tennessee Supreme Court in
the 1870 case of McBee v. McBee:
The general law is, that all real estate sold under execution, or under
a decree, judgment or order of any Court of Chancery, whether founded on a
foreclosure of a mortgage, or deed of trust, or otherwise, shall be redeemable
at any time within two years after such sale. Code, 2124. By this general law
the right of redemption is secured, whether the sale be for cash or on a credit.
But this right of redemption is subject to this exception: When, upon
739. Shortly thereafter, execution issued on the complainants’ judgment was levied in January 1879, and
the complainants purchased the land at the second execution sale, which was held in June 1879. Id. at 740.
The sheriff gave Nassauer & Lowenthal a deed to the property in 1880, and the sheriff made the
complainants their deed in 1881. Id. at 739, 740.
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application of a complainant, the Court orders that the property be sold
on a credit of not less than six months nor more than two years, upon
confirmation thereof by the Court, no right of redemption or re-
purchase shall exist in the debtor or his creditor, but the title of the
purchaser shall be absolute. In such case no right of redemption or of
re-purchase exists. Code, 2124 and 4489. By this exception, the
complainant may, with the assent of the Court, deprive the debtor of the
benefit of redemption secured to him by the general law. In the case
of Burrow v. Henson, 2 Sneed, 658, this Court said, that to obtain the benefit
of the exception and destroy the right of redemption, the sale must be brought
strictly within its provisions. Two things, therefore, must appear distinctly in
the decree to make it operative in destroying the right of redemption. First, it
must appear that complainant made the application for a sale on credit. It is
not sufficient that the Chancellor, of his own motion, ordered the sale on a
credit. It must appear that he was moved to do so upon the application of
complainant. Such was the holding of the Court in Burrow v. Henson, just
referred to. In that case there was no order that the land be sold free from
redemption. In the case before us, it is not stated that the Chancellor, upon
the application of complainant, ordered the land to be sold on a credit of six
months; but at the conclusion of the decree it is stated, that at the special
instance and request of the complainant the said land shall be sold without
the equity of redemption. This, we think, was a substantial compliance with
the requisites of the exception, and that in this respect the decree was not
erroneous.
48 Tenn. (1 Heisk.) 558, 562-63 (Tenn. 1870). McBee was a divorce action in which the
Supreme Court ultimately held that the right of redemption should not have been cut off
because the sale was not executed properly; the court required part of the sale to be in cash
and limited the credit to “so short a time as six months,” violating “[b]oth the letter and
spirit of the law.” Id. at 565. In discussing the right of redemption, the McBee Court
referenced Code §§ 2124 and 4489, which read substantially the same as Tenn. Code Ann.
§§ 66-8-101 and 21-1-803, respectively, do today. Importantly, in the above quoted
language, the McBee Court made no distinction as to what type of case or what type of sale
this exception might apply. It certainly drew no distinction between chancery cases and
circuit court cases, or the type of proceedings that resulted in the judgment.
While the Defendants argue that “[t]he right of redemption applies to tax cases, and
to civil judgment creditors of every nature and in every context,” the preceding cases
provide authority to the contrary. Both the chancery and circuit courts have ordered sales
of land that barred the right of redemption to satisfy tax liens, and the above cases stand
for the proposition that in any case where land is to be sold to pay a debt, a complainant
may seek an order from a court of equity for a sale of the specifically identified property
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on credit and in bar of the right of redemption.5 Based on the foregoing authority, we
conclude that subsection (2) of Tenn. Code Ann. § 66-8-101 is broad enough to include the
facts of this case within its ambit.
III. Waiver
We next address the Defendants’ argument that because the State did not seek a sale
that barred the right of redemption in the initial application, it has waived its right to do so.
Tennessee Code Annotated section 66-8-101(2) states that the court can extinguish the
right if redemption “upon application of the complainant.” The State styled its initial
application as a “Motion for an Order of Sale of Real Properties Owned by Don and Dixie
Hale” and a “Motion for an Order of Sale of the Real Properties of Dan Hale.” Each motion
requested an order of sale of the respective Defendants’ real estate to satisfy their debt.
Those motions did not contain any language requesting that the sale be made on a
credit of no less than six months nor more than two years, nor did it explicitly request that
no right of redemption exist. Instead, it requested that the sale of Don and Dixie Hale’s
residence be effectuated through the “retention of qualified real estate professionals,” since
“a sale of the . . . [p]roperty through a real estate broker will likely yield the highest value.”
The motion also requested that the property be sold “free and clear of all interest and liens
and that any such interest attaching to the net sale proceeds” and that those Defendants
vacate the premises and leave it in good and marketable condition in order to prepare it for
sale. With respect to the sale of Dan Hale’s numerous properties, the State’s motion sought
the court’s authorization for the receiver to contract with a licensed auction company for
the sale of the properties by public auction “to the highest bidder free and clear of all
interests, with any interest that may exist attaching to the net proceeds of the sale.” The
Defendants filed separate responses to the motions; Dan Hale disputed no part of the
5
Gibson’s Suits in Chancery neatly sums up the process:
Pursuant to these statutory provisions, three things must be done to destroy the right of
redemption:
1. The plaintiff must pray in his complaint that the land specified in the complaint be
sold on a credit, and in bar of the equity of redemption;
2. This specified land must be mentioned in the decree of sale; and
3. The decree must order that the sale be on a credit, specifying the time, which must
be not less than six months, nor more than two years, and that when made no right of
redemption shall exist.
. . . It is not imperative that a sale on credit and in bar of the equity of redemption be ordered
merely because the plaintiff asks for such relief in his complaint. It is a matter of sound
legal discretion to be exercised in view of the facts of the case.
Id. at §18.03 (footnote omitted).
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motion that pertained to the sale of his property, and Don and Dixie Hale disputed only the
need for them to vacate their property prior to the sale.
In its subsequent application, the State specifically asked that the court order the
sale of two properties that were “ready to be sold”; one was Don and Dixie Hale’s
residence, the other was Dan Hale’s most valuable parcel. The State also asked that the
order of sale “include a judicial bar to the right of redemption.” The State’s application
specifically requested the court order the sale be made “on a credit of not less than six (6)
months, nor more than two (2) years in accordance with Tenn. Code Ann. § 66-8-101” and
confirm “that no right of redemption or repurchase shall exist in the debtor or debtor’s
creditor but that the title of the purchaser shall be absolute.” The trial court declined to
grant such an order.
In Rigsby v. Marler, 66 S.W.2d 232 (Tenn. Ct. App. 1932), the chancery court
ordered land sold for debt without the right of redemption despite the fact that the bill
“contained no prayer for sale in bar of redemption” and the complainant made no such
request at the hearing. Id. at 235. The bill only asked “that the property be sold on six and
twelve months’ time.” Id. This Court noted the rule that “the complainant must pray in his
bill for sale to be in bar of the equity of redemption in order to bar the right to redeem”;
because that had not been done and because a sale had not yet occurred, the lower court
was ordered to correct its decree. Id. In contrast, in McBee, the Tennessee Supreme Court
held that the complainant’s “substantial compliance” with the law was sufficient to justify
the court’s decision to bar the right of redemption where the complainant did not apply for
the land to be sold on a credit of six months, but did request that the land be sold without
the equity of redemption. 48 Tenn. at 562-63.
The best practice for a complainant seeking a sale that bars the right of redemption
is to explicitly request a sale using the language set forth in Tenn. Code Ann. § 66-8-101(2)
in the initial application. See Hodges, 58 Tenn. at 336 (“For complainants desiring to sell
land cutting off the equity of redemption, and asking a cash payment, it is the better
practice, if not the only proper one, to present the application in the original bill[.]”). While
the language the State used in its initial motion is not entirely clear and certainly does not
follow that of Tenn. Code Ann. § 66-8-101(2), the State did file a second application prior
to the trial court’s entry of an order on their first motion, in which it clarified that it sought
a sale that barred the right of redemption.6 We apply the Supreme Court’s rationale in
6
The Defendants argue that “it is indeed untimely to later attempt[] to request a waiver [of the right of
redemption] – particularly after the State’s unopposed order has been heard and granted.” Apparently the
trial court had orally indicated at a hearing that the State could move forward with its request to sell two of
the properties, but no order to that effect appears in the record. It was not until after this hearing that the
State filed its amended application. Because a trial court speaks through its orders, Palmer v. Palmer, 562
S.W.2d 833, 837 (Tenn. Ct. App. 1977), the absence from the record of the order referenced by the
Defendants short-circuits this particular argument.
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McBee, 48 Tenn. at 562-63, to the unique facts before us and conclude that the State’s
subsequent application substantially complied with Tenn. Code Ann. § 66-8-101(2). The
State did not waive its right to seek a sale that barred the right of redemption.7
In light of the foregoing discussion, we vacate the judgment of the trial court and
remand the matter for further proceedings. On remand, the decision of the trial court as to
whether or not to bar the right of redemption is one we leave to its discretion. Hoyal v.
Bryson, 53 Tenn. (6 Heisk.) 139, 142-43 (Tenn. 1871) (“[W]e hold it is not imperative on
the court to bar the equity of redemption, but a matter of sound legal discretion, to be
exercised in view of the fact[s] of the case.”); see also Smith, 79 Tenn. at 744; Gibbs. v.
Patten, 70 Tenn. 180, 185 (Tenn. 1879) (holding that generally, where the complainant
asks in his bill for a sale in bar of the right of redemption, he is “clearly entitled” to such a
decree unless it is a “very exceptional” case).
CONCLUSION
The judgment of the trial court is vacated, and the case is remanded. Costs of this
appeal are assessed against the appellees, Dan Hale, Dixie Hale, and Don Hale, for which
execution may issue if necessary.
_/s/ Andy D. Bennett_______________
ANDY D. BENNETT, JUDGE
7
Our holding in this regard is only applicable to the two parcels of land mentioned in the State’s
subsequent application, which substantially complied with Tenn. Code Ann. § 66-8-101(2). As the State
has not moved for a sale barring the right of redemption with respect to the remaining properties of Dan
Hale that were identified in the State’s initial motion, we do not reach the issue of whether the right has
been barred with respect to Dan Hale’s remaining properties.
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