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IN THE COURT OF APPEALS OF TENNESSEE AT JACKSON
April 25, 2003 Session CHAQUELA MORGAN, CONSERVATOR OVER THE PERSON AND PROPERTY OF KATIE MAE HIGH v. CHAMPION ROOFING & REMODELING, ET AL. V. CHARLES F. HILL
A Direct Appeal from the Chancery Court for Shelby County No. 107301-3 The Honorable D. J. Alissandratos, Chancellor

No. W2002-01941-COA-R3-CV - Filed July 29, 2003

This case involves issues of equitable subrogation, estoppel, abandonment of realty, and unjust enrichment. Appellant is the owner of a one-half undivided interest in the property at issue in this case. The owner of the other one-half interest pledged that interest as collateral on a home improvement loan made by Appellee. Appellant was not a party to this loan and, at the time of the loan, had not lived at the property for several years although there had been no transfer of his title. The original loan went into default and Appellee sought foreclosure on the property. An injunction was issued to stop the foreclosure and the Appellant entered that suit as an Intervening Plaintiff. Following a non-jury trial, the trial court found that Appellant had abandoned the property thereby losing this one-half interest. The trial court subrogated Appellant's interest in the property to the lien held by Appellee. Appellant appeals from this final order. We affirm in part, reverse in part and remand.

Tenn. R. App. P. 3, Appeal as of Right; Judgment of the Chancery Court Affirmed in Part, Reversed in Part and Remanded W. FRANK CRAWFORD , P.J., W.S., delivered the opinion of the court, in which DAVID R. FARMER, J. and HOLLY M. KIRBY, J., joined. John D. Horne, Memphis, Attorney for Intervening Plaintiff-Appellant, Charles F. Hill J. Alan Hanover, Memphis, For Defendant-Appellee, Boshwit Brothers Mortgage Corp. OPINION On June 17, 1955, Charles F. Hill ("Hill," "Intervening Plaintiff," or "Appellant") and Katie Mae High ("High") acquired property at 1417 Rayner in Memphis, Tennessee (the "Residence"). In conjunction with the purchase of the Residence, Hill and High executed a First Mortgage Deed

of Trust, to secure their purchase money debt to Leader Federal Bank. Both the Warranty Deed pursuant to which Hill and High acquired the Residence and the Deed of Trust Hill and High executed in favor of Leader Federal indicated that Hill and High were husband and wife. However, Hill and High were never married but were merely living together. Hill and High continued to reside together until approximately 1983,1 at which time they separated. After their separation, High continued to live in the Residence. In 1995, High contracted with Champion Roofing and Remodeling ("Champion") to perform work on the Residence. In order to obtain financing for the work, Champion contacted Boshwit Brothers Mortgage Corporation ("Boshwit," and together with Champion and Morgan2, "Defendants," or "Appellees"). Boshwit has been in the business of mortgage loans and property management in Memphis since 1865. Boshwit obtained a title search, which revealed that the original deed reflected that Hill and High were married when, in fact, they were not, and that the Residence was not owned solely by High, but by Hill and High as tenants in common. On March 27, 1995, Boshwit made a loan to High in the principal amount of $12,318.60. The funds loaned by Boshwit were used for the benefit of the Residence, including payment of pastdue taxes and exterior repairs and remodeling. Hill did not join in the Promissory Note and did not convey his interest in the Residence as collateral. The Deed of Trust executed in conjunction with the Promissory Note lists only High. The Deed of Trust was recorded in the Shelby County Register's Office at Instrument Number EZ 7106 and reads, in pertinent part, as follows: This Instrument Prepared by: BOSHWIT BROS. MORTGAGE CORP. Memphis, Tennessee 38104 DEED OF TRUST This Indenture made and entered into this 27th day of March, 1995 by and between KATIE MAE HIGH, A/K/A KATIE MAE HILL, Unmarried Party of the first part, and Party of the second part, Felix H. Bean, III, Trustee, WITNESSETH: ...[S]aid party of the first part has bargained and sold and does hereby bargain, sell, convey and confirm unto the

There is some d ispute in the record as to the exact date that Hill left the Resid ence. Hill's Complaint states that he left in 1965.
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1

Chaquela Morgan was appointed conservator over the person and property of Katie Mae High, see infra.

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said party of the second part the following described real estate situated and being in Memphis, Shelby County, Tennessee, to wit: Lot 119, South Parkway Willett Subdivision, of record in Plat Book 8, Page 106, of the Register's Office of said County. This being the same property conveyed to Charles F. Hill and wife, Katie Mae Hill, from B.W. Johnson and wife, Merita Johnson, by deed dated June 17, 1955, recorded June 20, 1955, in Deed Book 3507, Page 018, in the Register's office of Shelby County, Tennessee. PARCEL #048-034-00004 PROPERTY ALSO KNOWN AS: 1417 RAYNER, MEMPHIS, TENNESSEE * * *

But this is a Deed of Trust, and is made for the following uses and purposes, and none other; that is to say: the said party of the first part is justly indebted to BOSHWIT BROS. MORTGAGE CORP. Or the holder of the notes hereinafter mentioned, in the sum of Thirty-Three Thousand Four Hundred Twenty-Five and 28/100----Dollars... High defaulted on the loan and, in April of 1996, Boshwit began foreclosure proceedings on the Residence.3 Thereafter, the original litigation in this case was commenced on behalf of High to enjoin Boshwit's foreclosure. During the course of the original litigation, Chaquela Morgan ("Morgan," and together with Champion and Boshwit, "Defendants," or "Appellees"), was named conservator over the person and property of High. High died soon thereafter. During settlement negotiations, Boshwit attempted to have Hill transfer his interest in the Residence to them for consideration. Hill refused to do so. At some point during the pendency of the litigation, a Quit Claim Deed was discovered. This Quit Claim Deed, dated August 27, 1998, was recorded in the Shelby County Registrar's Office at Instrument Number HS 9947 and purported to transfer Hill's interest in the Residence to High. Hill asserts that this Quit Claim Deed was neither executed nor authorized by him. Boshwit denies any involvement in the preparation or filing of this Quit Claim Deed. In June of 2000, and after High's death, Boshwit found that the Residence was abandoned. On advice of counsel, Boshwit had the Residence repaired, and then rented it. Boshwit kept records of all rental income and expenditures.

3

From our review of the record, there is no indication that this foreclosure was finalized.

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On July 17, 2001, a Consent Order was entered in the Chancery Court of Shelby County, granting Hill leave to file an Intervening Complaint in the pending lawsuit. On August 2, 2001, Hill filed an Intervening Complaint to Set Aside Fraudulent Conveyance, To Quiet Title and Recover Damages (the "Complaint"). The Complaint reads, in relevant part, as follows: 4. On or about June 17, 1955, Hill and High purchased a parcel of real property located in Shelby County, Tennessee and municipally known as 1417 Rayner, Memphis, TN 38109 (hereinafter referred [to] as the "Residence").... 5. While Hill and High were not married when they acquired the residence, the preparer of the Warranty Deed, nonetheless, showed Hill and High as husband and wife, thereby creating a tenancy by the entireties. While Hill and High, by operation of law, could not have acquired the Residence as tenants by the entireties, the same practical result would have been reached

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