Session August 29, 2017
from the Chancery Court for Rutherford County No.
2011-RC-357, 11CV-498, 16CV-453 J. Mark Rogers, Judge
purchaser bought real property at a delinquent tax sale in
Rutherford County, Tennessee. The delinquent taxpayer who
owned the property at the time of the sale moved to redeem
the property within one year of confirmation of the sale.
After moving to redeem the property, the delinquent taxpayer
conveyed it to a third party. The tax sale purchaser
contested the redemption and, alternatively, requested
reimbursement for expenses paid to preserve the value of the
property during the redemption period. The trial court
confirmed the redemption, divested title from the tax sale
purchaser, vested title in the third party, and found that
the tax sale purchaser was only entitled to reimbursement for
property taxes paid on the property. The tax sale purchaser
appealed. We affirm as modified.
R. App. P. 3 Appeal as of Right; Judgment of the Chancery
Court Affirmed as Modified
Jonathan C. Stewart, Nashville, Tennessee, for the appellant,
Thomas G. Hyde.
N. Bulso, Jr., and Paul Joseph Krog, Nashville, Tennessee,
for the appellees, Terry Lounds and Barry Gregory.
D. Bennett, J., delivered the opinion of the Court, in which
Frank G. Clement, Jr., P.J., M.S., and W. Neal McBrayer, J.,
D. BENNETT, JUDGE
Factual and Procedural Background
to 2013, Terry Lounds owned real property located at 159
Dalton Circle, Rockvale, Tennessee ("the
Property"). When Mr. Lounds failed to pay taxes
assessed against the Property between 2008 and 2011,
Rutherford County initiated this action to recover the
delinquent property taxes. The trial court entered a default
judgment against Mr. Lounds on March 13, 2013, and Rutherford
County sold the Property at a tax sale on June 20, 2013.
Thomas Hyde purchased the Property at the tax sale for $50,
000, subject to a one-year right of redemption. On July 17,
2013, the trial court entered a decree confirming the sale
which, pursuant to Tenn. Code Ann. § 67-5-2702(a)
(2013), commenced the running of Mr. Lounds's
one-year right of redemption.
time of the tax sale, the Property was vacant and in
disrepair. There were holes in the roof and numerous missing
shingles. The yard consisted of overgrown grass and shrubs
with branches growing into the eaves of the house. The inside
of the house was in even worse condition. As a result of the
holes in the roof, water puddled at the base of the walls in
some rooms and mold and mildew formed on sections of the
drywall. The house had been without electricity for
approximately three years. There was no running water and
some of the pipes had burst during a previous winter.
2013, Mr. Hyde took possession of the Property and began
making repairs and improvements. He spent approximately $41,
900 between July and October 2013 cleaning up and improving
the property by (1) repairing the windows, (2) replacing the
roof, (3) installing a new HVAC unit, (4) removing moldy
drywall and rotten carpet, (5) installing new drywall and
carpet, (6) painting, (7) installing new bathroom fixtures,
and (8) affixing a new mailbox. Thereafter, Mr. Hyde rented
the Property to a tenant and collected $30, 525 in rent.
2, 2014, the trial court filed a letter from Mr. Lounds
requesting that the letter "serve as a request for
motion" to resolve the following issues: receipt by Mr.
Lounds of the excess proceeds from the sale of the Property,
his waiver of the remainder of the redemption period, and his
expressed intent not to reclaim the Property, but rather to
quitclaim it to Mr. Hyde. The trial court scheduled the
letter/motion for a hearing on June 24, 2014, but the hearing
23, 2014, Mr. Lounds filed a "Statement of Person
Redeeming Property" along with payment of $19, 002.87
for the delinquent taxes, penalties, and interest. That same
day, Mr. Lounds recorded a quitclaim deed transferring his
interest in the property to a third party, Barry Gregory.
After receiving notice from the clerk and master that Mr.
Lounds had redeemed the Property, Mr. Hyde filed a motion
contesting the redemption and, alternatively, seeking to
recover the funds he expended on the Property. On March 12,
2015, following a lengthy discovery period, Mr. Lounds and
Mr. Gregory filed a response to Mr. Hyde's motion
contending that the redemption was valid and that most of the
expenses sought by Mr. Hyde were not compensable upon
redemption because they constituted improvements rather than
costs to preserve the value of the Property.
trial court heard the matter without a jury on May 2, 3, and
10, 2016. On May 25, 2016, the trial court entered a decree
confirming the redemption, finding that (1) Mr. Lounds
properly redeemed the Property, (2) the title to the Property
should be vested in Mr. Gregory pursuant to the quitclaim
deed, (3) Mr. Hyde was entitled to reimbursement of $1, 937
for property taxes he paid on the Property but no other
expenses, and (4) neither Mr. Lounds nor Mr. Gregory was
entitled to recover rents collected by Mr. Hyde during the
redemption period. On May 31, 2016, Mr. Hyde accepted a check
from the clerk and master's office in the amount of $57,
200.22, which represented the taxes he paid on the Property
during the redemption period ($1, 937) and a return of the
purchase price he paid at the tax sale ($50, 000), plus
interest at a rate of ten percent per annum. Thereafter, Mr.
Hyde perfected this appeal.
Standard of Review
review a trial court's findings of fact de novo with a
presumption of correctness unless the evidence preponderates
otherwise. Tenn. R. App. P. 13(d); Church v. Church,
346 S.W.3d 474, 481 (Tenn. Ct. App. 2010). Because a trial
court is in a better position to observe a witness's
demeanor as he or she testifies, a trial court is
"accorded significant deference in resolving factual
disputes when the credibility of the witnesses is of
paramount importance." Davis v. Davis, 223
S.W.3d 233, 238 (Tenn. Ct. App. 2006) (citing Wells v.
Tenn. Bd. of Regents, 9 S.W.3d 779, 783 (Tenn. 1999)).
When a trial court fails to make specific findings of fact,
we "review the record to determine where the
preponderance of the evidence lies" with no presumption
of correctness. State v. Delinquent Taxpayers, No.
M2004-00951-COA-R3-CV, 2006 WL 3147060, at *3 (Tenn. Ct. App.
Nov. 2, 2006). Interpretation of the statutes governing the
sale of property for delinquent taxes involves a question of
law, which we review de novo with no presumption of
correctness. See In re Estate of Tanner, 295 S.W.3d
610, 613 (Tenn. 2009).
Waiver of Right to Appeal
preliminary matter, Mr. Lounds and Mr. Gregory contend that
the appeal is moot because Mr. Hyde accepted payment of the
sum awarded to him in the decree confirming the redemption.
In response, Mr. Hyde asserts that the appeal is not moot
because the only change in circumstance is that he lost in
the trial court. We believe the parties incorrectly frame
the issue as a mootness inquiry. When a party accepts payment
of a judgment and then appeals the judgment, Tennessee courts
have considered the issue as being whether the party waived
his or her right to appeal.
Bond v. Greenwald, 51 Tenn. 453, 458 (1871), the
trial court awarded a seller a judgment for $10, 504.83 under
a contract for the sale of cotton. After the trial court
rendered its judgment, the seller appealed. Bond, 51
Tenn. at 465. The seller abandoned the appeal and received
full payment of the judgment. Id. The seller then
filed a writ of error challenging the amount of the
judgment. Id. The buyer argued that the
seller waived his right to appeal because he accepted payment
of the judgment. Id. at 467. Our Supreme Court
rejected the argument, stating:
We are unable to see how [the seller's] proceeding to
enforce his decree can be held, as matter of law, to be a
waiver of his right afterwards to exercise the right of
resorting to the writ of error, to have his own decree
reviewed and reversed. He had indicated his
dissatisfaction with its amount, by praying an appeal.
In applying for this writ of error, within the time
prescribed by law, he was in the exercise of a right secured
by law to either party. He took the chances of the result of
his writ of error-if he should fail in the Supreme Court to
obtain any decree at all, or one less than he obtained below,
he would have been compelled to refund. If he succeeded in
obtaining a larger decree, he would make the difference.
Id. at 468-69 (emphasis added). Several cases have
affirmed Bond in principle. See Burcham v.
Carbide & Carbon Chems. Corp., 221 S.W.2d 888,
889-90 (Tenn. 1949); Peabody v. Fox Coal & Coke
Co., 54 S.W. 128, 132 (Tenn. Ch. App. 1899); Gaines
v. Fagala, 42 S.W. 462, 463 (Tenn. Ch. App. 1897).
the more recent cases that affirmed the principles of
Bond is McClendon v. House, 637 S.W.2d 883
(Tenn. Ct. App. 1982). In McClendon, a jury awarded
the plaintiff damages in the amount of $6, 000 for injuries
she sustained in an automobile accident. McClendon,
637 S.W.2d at 883. The plaintiff retrieved the funds
deposited by the defendant with the court to satisfy the
judgment and then appealed, challenging the sufficiency of
the damages amount. Id. The defendant argued that
the plaintiff waived her right to appeal because she accepted
the benefits of the judgment. Id. We rejected this
argument and adopted the following reasoning:
"'[W]here a judgment is appealed on the ground
that the damages awarded are inadequate, acceptance of
payment of the amount of the ...