author: COOPER, Chief Justice.

text:
    The METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY, Petitioner, v. Cleophius COUNTS and Mary Alice Counts, Respondents.
    Supreme Court of Tennessee.
    Aug. 9, 1976.

      Peter H. Curry, Nashville, for petitioner.
    Robert T. McGowan, Jack Norman, Nashville, for respondents.
   OPINION

COOPER, Chief Justice.

Cleophius and Mary Alice Counts (hereinafter referred to as plaintiffs) filed an action against the Metropolitan Government of Nashville and Davidson County (hereinafter referred to as defendant), seeking to recover damages for the death of their son, Michael, by drowning in a pond located on the premises of the Bordeaux County Hospital. The hospital is owned and maintained by defendant. At the close of plaintiffs’ proof, the trial court directed a verdict for defendant on the ground of governmental immunity, plaintiffs’ proof not having shown any affirmative act by defendant necessary to invoke the nuisance exception to the rule of governmental immunity. In granting the motion for directed verdict, however, the trial court specifically found that plaintiffs’ proof would have been sufficient to submit the case to the jury under the doctrine of attractive nuisance if the rule of governmental immunity had not been applicable. The Court of Appeals agreed that plaintiffs’ proof had made out a prima facie case of attractive nuisance and reversed the trial court’s dismissal of the action, holding that a prima facie case of attractive nuisance triggers application of the nuisance exception to the rule of governmental immunity. The Court of Appeals thus remanded the case for a jury determination of defendant’s liability under the doctrine of attractive nuisance. We granted defendant’s petition for the writ of certiorari in order to consider two issues: (1) whether as a matter of law plaintiffs’ proof was sufficient to establish defendant’s liability under the attractive nuisance doctrine; and (2) whether the nuisance exception to the rule of governmental immunity encompasses the doctrine of attractive nuisance.

Early on the day of August 9, 1973, Michael Counts, ten years old, was at his home under the care of an older brother and sister. During that morning another brother, Gary, thirteen years old, had been swimming at the cattle pond located on the premises of the Bordeaux County Hospital. Later Gary returned home to see if Michael wanted to go swimming with him. Gary and Michael returned to the pond, gaining entrance to the field in which it was located by stepping over a trampled down portion of the wire fence surrounding the field. The boys swam or waded in the pond for about an hour before Michael ventured out into the deeper water and drowned.

The pond in this case is located in a pasture area adjacent to a playground also maintained by defendant. The playground is in a residential area, and plaintiffs’ home is located approximately two blocks away. The playground area and the field in which the pond is located are separated by a fence of woven wire overlain with a strand of barbed wire. The proof shows that portions of this fence were in a state of disrepair and that access to the pasture area was easily gained by merely stepping over trampled down portions of the woven wire and under the barbed wire. The pond is located approximately one hundred feet beyond the fence and is not visible from the playground. There is evidence, however, that the pond is frequented by fishermen who can be seen by the children from the playground and that the existence of the pond is generally known to the neighborhood children. Although neither Michael nor Gary had visited the pond area prior to the day of the drowning, there is evidence that on occasion children visited the pond to watch the fishermen or to play and swim in the water.

The proof concerning the nature of the pond itself in this case reveals that it is an ordinary cattle pond maintained by the county hospital for the purpose of watering livestock. The banks of the pond are seeded with grass, level with the water at some points, and at other points six inches higher than the water. The water is dark and muddy so that the bottom is not visible. The depth of the water at the pond’s edge is approximately six inches and gradually increases toward the center of the pond to approximately eighteen feet. The bottom of the pond is not particularly slippery so as to cause difficulty in walking into or out of the pond.

A determination of the applicability of the doctrine of attractive nuisance is in the first place a question for the court. Williams v. Town of Morristown, 32 Tenn.App. 274, 222 S.W.2d 607 (1949); Louisville & N. R.R. v. Ray, 124 Tenn. 16, 134 S.W. 858 (1911). Viewing the proof in the light most favorable to plaintiff’s theory and disregarding any conflicting facts or inferences, the trial court must determine if there is any evidence from which a jury could conclude that all of the elements of the doctrine of attractive nuisance have been established so as to impose liability on defendant. The elements of attractive nuisance in Tennessee are essentially those outlined in the Restatement (Second) of Torts, § 339, entitled “Artificial Conditions Highly Dangerous to Trespassing Children:”

“ . . . (a) the place where the condition exists is one upon which the possessor knows or has reason to know that children are likely to trespass, and
(b) the condition is one of which the possessor knows or has reason to know and which he realizes or should realize will involve an unreasonable risk of death or serious bodily harm to such children, and
(c) the children because of their youth do not discover the condition or realize the risk involved in intermeddling with it or in coming within the area made dangerous by it, and
(d) the utility to the possessor of maintaining the condition and the burden of eliminating the danger are slight as compared with the risk to children involved, and
(e) the possessor fails to exercise reasonable care to eliminate the danger or otherwise to protect the children.”

In applying the doctrine of attractive nuisance, however, the Tennessee cases have consistently maintained the requirement that the injured child be enticed or lured onto defendant’s premises by the instrumentality or condition causing the harm. See, e. g., Bloodworth v. Stuart, 221 Tenn. 567, 428 S.W.2d 786 (1968); Gouger v. Tennessee Valley Authority, 188 Tenn. 96, 216 S.W.2d 739 (1949); Pardue v. City of Sweetwater, 54 Tenn.App. 286, 390 S.W.2d 683 (1965). This rather harsh requirement is modified, however, by application of the playground doctrine under which liability may be established if “the landowner knows or, by the exercise of reasonable care, should know that children of immature years are habitually trespassing upon his land to use it as a playground, under conditions other than natural, which the landowner knows or should know involve an unreasonable risk of bodily injury and which children because of their youth will fail to discover and appreciate.” Gatlinburg Construction Co. v. McKinney, 37 Tenn.App. 343, 263 S.W.2d 765, 767 (1953). See also Pardue v. City of Sweetwater, supra. The enticement or allurement requirement of the attractive nuisance doctrine in Tennessee and the theory of the playground doctrine are essentially the same as the first element of the Restatement rule, requiring that the landowner must know or have reason to know of the presence of trespassing children.

Although in the present case there is evidence from which a jury could conclude that defendant knew or should have known of the presence of trespassing children, there is no evidence in the record from which a jury could conclude that any of the remaining elements of the doctrine of attractive nuisance are present. Specifically, the element of an unreasonable risk of death or serious bodily harm is not present because the pond in this case is an ordinary cattle pond and there is no evidence that it is characterized by any unusual or hidden danger. Tennessee cases have consistently applied the rule that absent evidence of an unusual or hidden danger — a danger other than that incident to all bodies of water — a landowner will not be held liable for the death of a trespassing child by drowning in a pond or other body of water maintained on his premises. Bloodworth v. Stuart, 221 Tenn. 567, 428 S.W.2d 786 (1968); Russell v. City of Chattanooga, 38 Tenn.App. 670, 279 S.W.2d 270 (1954); Vaughn v. City of Alcoa, 194 Tenn. 449, 251 S.W.2d 304 (1952); McCay v. DuPont Rayon Co., 20 Tenn.App. 157, 96 S.W.2d 177 (1935); City of Memphis v. Trice, 13 Tenn.App. 607 (1931); Benson v. Howard-Park Brick Co., 6 Tenn.Civ.App. 497 (1916); Cooper v. Overton, 102 Tenn. 211, 52 S.W. 183 (1899); compare Williams v. Town of Morristown, 32 Tenn.App. 274, 222 S.W.2d 607 (1949); DuPont Rayon Co. v. Roberson, 12 Tenn.App. 261 (1930). For eases from other jurisdictions in accord with the Tennessee rule, see generally Annot., 8 A.L.R.2d 1254.

Plaintiffs rely on the case of Williams v. Town of Morristown, 32 Tenn.App. 274, 222 S.W.2d 607 (1949), in which the defendant municipality was held liable for the drowning of a child and her adult companion in a reservoir maintained as a part of the waterworks system for the city. Williams is clearly distinguishable on its facts, however, for evidence in that case established that the water was very clear, and thus deceptive as to depth, and that the walls of the reservoir were steep, sloping, and covered with slick moss, making it extremely difficult for even an adult to pull himself out of the water. The holding in the Williams case is thus consistent with the general rule and with our holding as to the facts in the present case.

Evidence of the third element of the attractive nuisance doctrine — the inability of children, because of their youth, to discover or comprehend the risk involved— is also absent in this case. It is well established that the attractive nuisance doctrine does not apply to situations in which the condition causing the harm is one involving a common and obvious danger. Pardue v. City of Sweetwater, 54 Tenn.App. 286, 390 S.W.2d 683 (1965); Ray v. Hutchison, 17 Tenn.App. 477, 68 S.W.2d 948 (1933). The danger of drowning incident to an ordinary pond or other body of water not characterized by an unusual or hidden danger is one so common and obvious that we must assume that it was recognized and appreciated by the ten-year-old child in this case.

Finally, the fourth element of attractive nuisance requires a comparison of the utility of maintaining the condition, and the burden of eliminating any danger, with the risk of harm to trespassing children. In this case the pond served the useful function of watering livestock kept by the county hospital. In view of the fact that the risk of drowning in this pond is slight, there being no unusual or hidden danger present, we think that it would be an unreasonable burden to require defendant to maintain a full-time guard or to erect and maintain a fence which would effectively prevent the trespass of children. See Russell v. City of Chattanooga, 38 Tenn.App. 670, 279 S.W.2d 270 (1954); City of Memphis v. Trice, 13 Tenn.App. 607 (1939).

There being no evidence in this record to support a jury finding of defendant’s liability under the doctrine of attractive nuisance, we must reverse the Court of Appeals and dismiss this action. In view of the specific holding of the Court of Appeals, however, we are constrained to confront the issue of whether the nuisance exception to the rule of governmental immunity encompasses the doctrine of attractive nuisance. By holding that a prima facie case of attractive nuisance will invoke an exception to the rule of governmental immunity, the Court of Appeals implies that an attractive nuisance is a true nuisance. In support of its holding, the Court of Appeals cites Pardue v. City of Sweetwater, 54 Tenn. 286, 390 S.W.2d 683 (1965), and Johnson v. Tennessean Newspaper, Inc., 192 Tenn. 287, 241 S.W.2d 399 (1949). After a study of these cases and Williams v. Town of Morristown, 32 Tenn.App. 274, 222 S.W.2d 607 (1949), relied on by plaintiffs, we have concluded that they do not support the holding of the Court of Appeals. In Williams the court specifically held that maintenance of the reservoir was a part of the proprietary function of providing a waterworks system for the town of Morristown and for that reason the rule of governmental immunity would not apply. In Pardue the defense of governmental immunity was not raised probably because, again, the water tank from which the injured child fell in that case was maintained by the city of Sweet-water in its proprietary capacity. Johnson v. Tennessean Newspaper, Inc. is the leading case on the nuisance exception to the rule of governmental immunity. Johnson does not involve an attractive nuisance, however, but rather a public nuisance arising out of the maintenance of a known inherently dangerous condition in a public park which the public-at-large was invited to frequent.

In considering the doctrine of attractive nuisance, we have noted that the term has frequently been criticized as an inappropriate one. Prosser, for example, describes the doctrine as “sadly miscalled by the name of attractive nuisance” in “a supposed analogy to conditions dangerous to children in the highway or otherwise outside of the premises . . . .” W. Prosser, the Law of Torts, § 59, at 365, n. 37 (1971) (emphasis added). He proceeds to conclude that liability under the doctrine is only a phase of ordinary negligence liability which operates to establish an otherwise absent duty of due care on the part of a landowner toward trespassing children. See generally id. at 364-376. The Restatement (Second) of Torts treats the rule as one of ordinary negligence liability and excludes use of the term “attractive nuisance.” See § 339, Comment, p. 198. In Anderson v. Peters, 22 Tenn.App. 563, 124 S.W.2d 717, 720 (1938), the Tennessee Court of Appeals offered the following observation concerning liability under the doctrine of attractive nuisance: “To call the thing from which the injury results an ‘attractive nuisance’ does not solve the question. . . . The test is whether defendants were guilty of negligence. . . . ” For other Tennessee cases discussing the doctrine of attractive nuisance in the language of negligence liability, see McCulley v. Cherokee Amusement Co., 182 Tenn. 68, 184 S.W.2d 170, 172 (1944); Pirtle v. Hart’s Bakery Inc., 52 Tenn.App. 131, 372 S.W.2d 209, 212 (1963).

The above-cited authorities convince this court that liability under the doctrine of attractive nuisance is based on defendant’s negligence in failing to exercise due care to warn trespassing children of an unreasonably dangerous condition or instrumentality on his land or in failing to render the condition reasonably safe under the circumstances. This statement of the basis of liability under the doctrine of attractive nuisance does not approach the type of conduct necessary to invoke the nuisance exception to the rule of governmental immunity. In Johnson v. Tennessean Newspaper, Inc., recently affirmed by this court in Savage v. Metropolitan Government of Nashville & Davidson County (Tenn.1976), the court discussed the nuisance exception in terms of the affirmative acts of the municipality in intentionally creating and maintaining a known and inherently dangerous condition from which injury to the plaintiff was almost certain to result. This treatment of nuisance approaches that of nuisance liability based on intentional, as opposed to merely negligent, conduct by defendant. See Prosser, supra, § 87, at 874.

In addition to this distinction in the basis of liability under the doctrine of attractive nuisance and the nuisance exception to the rule of governmental immunity, we have concluded that nuisance cannot be the basis of liability to a trespasser. A true nuisance is categorized as either private or public in nature. If private, liability is based on a landowner’s use of his property in such a manner as to unreasonably interfere with plaintiff’s use or enjoyment of his own property. Prosser, supra, § 89, at 591-602; see City of Nashville v. Mason, 137 Tenn. 169, 192 S.W. 915 (1917); City of Knoxville v. Klasing, 111 Tenn. 134, 76 S.W. 814 (1903). If public, nuisance liability is based on interference with the public’s use and enjoyment of a public place or with other common rights of the public. Prosser, supra, § 88, at 583-91; see Johnson v. Tennessean Newspaper, Inc., 192 Tenn. 287, 241 S.W.2d 399 (1949); City of Knoxville v. Lively, 141 Tenn. 22, 206 S.W. 180 (1918).

Although a few early Tennessee cases applied the doctrine of attractive nuisance to establish liability of a municipality for a condition maintained in a public place (see, e. g., Doyle v. City of Chattanooga, 128 Tenn. 433, 161 S.W. 997 (1913)), we think that the doctrine should be limited in its application to cases involving trespassing children. This is the view of the Restatement and, we think, the more theoretically sound view. In cases involving a condition maintained in a public place or on or along a public highway, ordinary principles of negligence or nuisance will suffice to establish a defendant’s liability. Cf. Town of Clinton v. Davis, 27 Tenn.App. 29, 177 S.W.2d 848 (1943). If, for example, a municipality maintains a dangerous condition on a public street, ordinary principles of negligence will apply because maintenance of a public street is a proprietary function to which the rule of governmental immunity does not apply. Shepherd v. City of Chattanooga, 168 Tenn. 153, 76 S.W.2d 322 (1934). Compare Doyle v. City of Chattanooga, 128 Tenn. 433, 161 S.W. 997 (1913). If a municipality maintains a dangerous condition in a public park — or other place at which the public has a right to be — the maintenance of which is a governmental function, liability may be founded on maintenance of a public nuisance if the proof establishes the kind of affirmative conduct on the part of the municipality required by Johnson v. Tennessean Newspaper, Inc.

In summary, therefore, we hold that an attractive nuisance is not a true nuisance and that liability under the doctrine of attractive nuisance is based on the negligence of the defendant landowner in failing to exercise reasonable care to warn trespassing children of an unreasonably dangerous condition or instrumentality maintained on his premises or in failing to render the condition or instrumentality reasonably safe. In addition, we hold that application of the doctrine is limited to cases in which the injured child is a trespasser. Thus, the doctrine of attractive nuisance cannot invoke the nuisance exception to the rule of governmental immunity, nuisance liability being limited to conditions interfering with plaintiff’s use or enjoyment of his own property or with the public’s use and enjoyment of a public place or other place where the public rightfully may be.

The judgment of the Court of Appeals is reversed, and the complaint in this case is dismissed. Costs incident to this appeal will be taxed to plaintiffs and their surety.

FONES, HENRY, BROCK and HARBI-SON, JJ., concur.


source: Caselaw Access Project

author:
FONES, Justice.
      BROCK, Justice

license: Public Domain

text:
    IMPAC LIMITED, INC., et al., Appellants, v. THIRD NATIONAL BANK and First and Mid-South Mortgage Company, Appellees.
    Supreme Court of Tennessee.
    Aug. 16, 1976.

      Gail P. Pigg, Nashville, for appellant.
    Thomas P. Kanaday, Jr., Stephen W. Ramp, Farris, Evans & Warfield, Nashville, for appellees.
   OPINION

FONES, Justice.

The question presented by this interlocutory appeal is whether a section of the National Bank Act prohibits a state court from issuing an injunction against a national bank, as mortgagee, temporarily restraining it from foreclosing upon appellant's property.

Appellant brought this action against ap-pellee in the Chancery Court of Davidson County when appellee declared appellant in default on a note secured by a deed of trust on real property and advertised the property for sale, pursuant to terms contained in the deed of trust. Appellant sought to enjoin appellee from proceeding with the foreclosure sale and set forth the grounds upon which it sought the injunction. The Chancellor found, upon the pleadings, exhibits, and arguments of counsel at the show cause hearing, that there existed issues which should be determined upon a full hearing; and that appellants would suffer irreparable harm if the foreclosure sale occurred prior to the hearing. Upon these findings, the Chancellor issued a temporary injunction prohibiting appellee from foreclosing on appellant’s property prior to a full hearing on the merits of the cause.

Appellee then moved the Trial Court to dissolve the temporary injunction on the basis that 12 U.S.C.A. § 91, denied the Court jurisdiction to issue the injunction. The motion was granted, and the Chancellor allowed appellant a discretionary appeal to this Court.

The statute upon which appellee relies, reads as follows:

§ 91. Transfers by bank and other acts in contemplation of insolvency
All transfers of the notes, bonds, bills of exchange, or other evidences of debt owing to any national banking association, or of deposits to its credit; all assignments of mortgages, sureties on real estate, or of judgments or decrees in its favor; all deposits of money, bullion, or other valuable thing for its use, or for the use of any of its shareholders or creditors; and all payments of money to either, made after the commission of an act of insolvency, or in contemplation thereof, made with a view to prevent the application of its assets in the manner prescribed by this chapter, or with a view to the preference of one creditor to another, except in payment of its circulating notes, shall be utterly null and void; and no attachment, injunction, or execution, shall be issued against such association or its property before final judgment in any suit, action, or proceeding, in any State, county, or municipal court.

Appellee maintains that this statute, and the case law construing it, prohibits the courts of this State from issuing an interlocutory injunction against a national bank under any circumstances. This view necessarily encompasses the position that regardless of the degree of wrongdoing on the part of a national bank against one of its debtors, resulting in irreparable damage, our courts, both state and federal, are prohibited from exercising jurisdiction and allowing an equitable remedy until a full trial on the merits of the cause has been completed. We cannot accept appellee’s position as a correct exposition of the law.

The leading case construing the statute is Pacific National Bank of Boston v. Mixter, 124 U.S. 721, 8 S.Ct. 718, 31 L.Ed. 567 (1888). There plaintiffs began a suit against the bank in the United States Circuit Court (now District Court) of Massachusetts by writ of attachment for the amounts owed them. At the time the lawsuit was instituted, the bank was solvent; but it later closed, and a receiver was appointed to wind up its affairs. The question before the Court was whether an attachment could issue against a solvent national bank before final judgment in a suit begun in federal court.

The Court noted that although the prohibition against interlocutory injunctions did not expressly apply to federal courts, those courts were only authorized to issue attachments in common law causes as provided by the applicable state law. The Court held that the power of state courts to issue attachments (and injunctions) prior to final judgment had been eliminated by the federal statute and that the statute was not limited to protecting insolvent banks:

Although the provision was evidently made to secure equality among the general creditors in the division of the proceeds of the property of an insolvent bank, its operation is by no means confined to cases of actual or contemplated insolvency. The remedy is taken away altogether and cannot be used under any circumstances. 124 U.S. at 727, 8 S.Ct. at 721.

We are of the opinion that the precedential value of the broad language of the last quoted sentence is limited to the facts of the case in which it was spoken, and that the ratio decidendi of Mixter does not extend to the facts of the case at bar. We reach this conclusion only after a careful search for subsequent decisions of the United States Supreme Court interpreting 12 U.S.C.A. § 91. We are unable to find that the Mixter rationale has been applied to the converse situation; that is, a situation in which a debtor of a national bank is seeking, by interlocutory injunction, to protect his property from wrongful seizure and foreclosure sale by the bank. See, Van Reed v. People’s National Bank of Lebanon, 198 U.S. 554, 25 S.Ct. 775, 49 L.Ed. 1161 (1905); Mechanics Universal Joint Company v. Culhane, 299 U.S. 51, 57 S.Ct. 81, 81 L.Ed. 33 (1936). Nor have we found any federal court of appeals or district court decisions which make the Mixter decision so applicable.

Although we have read with interest the opinions in other states which hold contra to our decision today, Freeman Mfg. Co. v. National Bank of Boston, 160 Mass. 398, 35 N.E. 865 (1894); Metropolitan Lumber Co. v. Fordham Nat. Bank, 102 N.J.Eq. 514, 141 A. 742 (1928); First National Bank of Oakland v. Superior Court, 240 Cal.App.2d 109, 49 Cal.Rptr. 358, cert. denied 385 U.S. 829, 87 S.Ct. 65, 17 L.Ed.2d 65 (1966), we are not persuaded by what appears to be blind reliance on dicta in the federal cases. Rather, we look to the purpose of the statute which was to secure the assets of a bank, whether solvent or insolvent, for ratable distribution among its general creditors and to protect national banks in general. See, e. g., First National Bank v. Colby, 21 Wall. 609, 22 L.Ed. 687 (1874); Loew’s Inc. v. Superior Court, 301 P.2d 64 (Cal.App.1956).

In our opinion, the decision in Earle v. Pennsylvania, et al., 178 U.S. 449, 20 S.Ct. 915, 44 L.Ed. 1146 (1900), undermines the literalism accorded by courts of our sister states to the Mixter Court’s statement that the remedies of attachment, injunction and execution are taken away altogether and cannot be used under any circumstances. A writ of attachment by garnishment was issued and served upon the Chestnut Street National Bank, as garnishee, to reach the assets of one James Long; and upon the answer and interrogatories filed by the bank, judgment was entered against the bank. Shortly thereafter the bank closed, and Earle was appointed receiver. He intervened and moved to vacate the judgment and dismiss the attachment upon the authority of the statute under consideration here. In reviewing the decision of the Supreme Court of Pennsylvania sustaining the attachment and judgment against the bank or garnishee, Mr. Justice Harlan, writing for the court said:

“Sections 5234, 5235, and 5236, above quoted, have reference to the affairs and property of national banks in the hands of receivers, and the administration of its assets by the Comptroller; and the words in § 5242, ‘no attachment, injunction, or execution shall be issued against such association or its property before final judgment in any suit, action, or proceeding in any state, county, or municipal court,’ are to be construed in connection with the previous parts of the same section declaring null and void certain transfers, assignments, deposits, and payments made after the commission by the bank ‘of an act of insolvency, or in contemplation thereof,’ with the intent to prevent the application of the bank’s assets in the manner prescribed by Congress, or with a view to the preference by the bank of one creditor to another. Whatever may be the scope of § 5242, an attachment sued out against the bank as garnishee is not an attachment against the bank or its property, nor a suit against it, within the meaning of that section. It is an attachment to reach the property or interests held by the bank for others.” 178 U.S. at 453, 454, 20 S.Ct. at 917.

In the instant ease, appellee is not using the statute as a shield to protect its assets, but is using it to preclude appellant from protecting its own property. True, appellee has a security interest of $700,000 in the property. However, the property is in the form of an office building allegedly worth in excess of $1,000,000 which cannot be sold, or assigned, or spirited away in the dark of the night so as to defeat appellee’s security interest. The Chancellor predicated the temporary injunction (before it was dissolved) upon the condition that appellant continue to pay interest on the $700,000 at the contract rate until a final determination on the merits could be made. In short, appellee’s security interest in appellant’s property was completely protected.

Without the issuance of the temporary injunction, however, appellant’s property would have been sold without equity of redemption; and its only remedy would be to bring an action against the bank for damages. This type of inadequate and incomplete relief at law prompted the fashioning of equitable relief, which appellee says is not available in this situation.

Appellee seeks to rely on the procedure of public foreclosure sale sanctioned by the laws of this State, but maintains that appellant is unable to avail itself of the statutory protection of T.C.A. §§ 23-2401 et seq. We cannot allow appellee to avail itself of the law favorable to it and not be bound by that part which accords relief to appellant, State v. Superior Court, 128 Wash. 100, 222 P. 203 (1924).

We have determined that the United States District Courts in this State would have no jurisdiction to entertain this action, Bachman v. First Mechanics Nat. Bank of Trenton, 69 F.Supp. 739 (D.C.N.J.1947); Rooney v. First Wisconsin National Bank, 332 F.Supp. 108 (D.C.1971), and that our State courts provide the only forum in which appellant may obtain relief.

Reversed and remanded to the Chancery Court of Davidson County for proceedings consistent with this opinion. Costs of this appeal are adjudged against appellee.

COOPER, C. J., and HARBISON, J., concur.

HENRY, J., not participating.

BROCK, J., dissents — see separate opinion.

BROCK, Justice

(dissenting).

I respectfully dissent. I do so most reluctantly because the majority opinion has reached a just result. It is my view, however, that the last clause of 12 U.S.C.A., § 91, absolutely forbids the issuance by a state court of a temporary injunction or any similar process against a national bank pri- or to entry of a final judgment or decree. That clause provides:

. . ; and no attachment, injunction, or execution, shall be issued against such (national banking) association or its property before final judgment in any suit, action, or proceeding, in any State, county, or municipal court.”

As acknowledged in the majority opinion, the Supreme Court of the United States has construed this provision to apply not only to insolvent national banks but to solvent ones as well. That Court has said that “The remedy is taken away altogether and cannot be used under any circumstances.” Pacific National Bank of Boston v. Mixter, 124 U.S. 721, 8 S.Ct. 718, 31 L.Ed. 567 (1888). The opinion in the Mixter case traces the legislative history of § 91 and makes clear that the intent of Congress was to protect all national banks from all pre-judgment injunctions, attachments, etc., issuing from state courts. The distinction made in the majority opinion between state court actions brought by debtors of a national bank and those brought by creditors of a national bank is, in my opinion, not a valid one because the harm to the national bank defendant is the same whether the injunction is sought by a debtor or by a creditor. See First National Bank of Oakland v. Superior Court, 240 Cal.App.2d 109, 49 Cal.Rptr. 358 (1966), cert. den. 385 U.S. 829, 87 S.Ct. 65, 17 L.Ed.2d 65 (1966); Miller v. Mercantile National Bank of Hammond, 234 Ind. 202, 125 N.E.2d 720 (1955); Kemple v. Security First National Bank of Los Angeles, 249 Cal.App.2d 719, 57 Cal.Rptr. 838 (1967); Freeman Mfg. Co. v. National Bank of Republic, 160 Mass. 398, 35 N.E. 865 (1894). A temporary injunction by a debtor restraining foreclosure of a deed of trust belonging to the bank constitutes interference with the assets of the bank in the same way as does an attachment by a creditor of the same deed of trust. Accordingly, I would hold that the Chancellor was correct.


author: FONES, Justice. HARBISON, Justice.

text:
    Albert Gene BANKS, Appellant, v. CITY OF MASON, Tennessee, Appellee.
    Supreme Court of Tennessee.
    Aug. 16, 1976.

      Marshall Gerber, Gerber, Bernstein, Gerber & Winestone, Memphis, for appellant.
    John S. Wilder, Sr., J. S. Wilder & Associate, Somerville, for appellee.
   OPINION

FONES, Justice.

This case arises under T.C.A. § 6-640, which requires local governments to indemnify policemen and firemen in their employ from judgments against them predicated upon negligent acts committed in the course of their employment.

On April 2, 1973, appellant obtained a $40,000 judgment against Arnell Freeman, a police officer employed by appellee. The judgment did not specify whether the award was based upon negligent or willful actions of Freeman. Appellant attempted to collect his judgment from Freeman, but was unable to do so. He then requested that appellee satisfy the judgment pursuant to T.C.A. § 6-640, but it refused.

On August 30,1973, Freeman filed a petition in bankruptcy. On November 15,1973, appellant commenced the lawsuit at bar against appellee in the Circuit Court of Tipton County to collect his $40,000 judgment. On March 6, 1974, Freeman was adjudicated a bankrupt and released from all dischargeable debts. On March 12, 1974, because of lack of notice to appellant, discharge on the $40,000 judgment was set aside until a proper hearing could be had on the motion for discharge. It does not appear from the record what disposition, if any, the Bankruptcy Court has made of this debt. Under the view we take of the case, however, any action taken by the Bankruptcy Court as to Freeman is irrelevant when considering the liability of appellee.

On August 5, 1975, the Circuit Court of Tipton County dismissed appellant’s cause of action. We reverse.

Tennessee Code Annotated § 6-640 provides in pertinent part as follows:

“Whenever any county sheriff and his deputies or any employee member of a fire or police department of a municipal corporation or other political subdivision of the state of Tennessee shall be sued for damages arising out of the performance of his official duties and while engaged in the course of his employment by such governmental agency, such governmental agency shall be authorized and required to provide defense counsel for such employee in such suit and to indemnify him from any judgment rendered against him in such suit; provided, however, that such indemnity shall not extend to any judgment for punitive damages or for damages arising out of any willful wrongdoing by said employee and; provided, further, that such municipal corporation or other political subdivision shall have notice of such suit.” (Emphasis added.)

This appeal is governed by City of Memphis v. Roberts, 528 S.W.2d 201 (Tenn.1975), which was decided the month after the action of the trial court in dismissing appellant’s cause.

In support of its position that the trial court was correct in dismissing the complaint, appellee relies on two cases decided by this Court prior to the decision in Roberts. It maintains that City of Chattanooga v. Harris, 223 Tenn. 51, 442 S.W.2d 602 (1969) and Cunningham v. Metropolitan Government, 476 S.W.2d 641 (Tenn.1972) require a holding that T.C.A. § 6-640 was enacted for the sole benefit for policemen and firemen employed by local governments.

Appellee’s reliance on Harris is misplaced. There the Court was considering the constitutionality of the act; and in discussing the public purpose served by the Statute, found that the Statute could be construed as providing a fringe benefit: “At the very least it makes employment in these departments more attractive for both the veteran and the recruit, just as other ‘fringe benefits’ do.” 223 Tenn. at 61, 442 S.W.2d at 606.

In Cunningham v. Metropolitan Government, supra, the Court looked to the technical meaning of the word “indemnify” and to T.C.A. § 6-641 to determine legislative intent. That Code section merely authorizes local governments to obtain liability insurance “to protect employees in the course of their employment.”

We noted in Roberts that the Cunningham Court expressly limited its opinion to the facts presented in that case, and refused to consider the obligation of a municipality under the statute where a policeman or fireman faced the prospect of repeated garnishment of his wages or execution and sale of his property to satisfy a judgment.

We answered the question that the Cunningham Court reserved for another day, as follows:

“We recoil at any suggestion that a policeman or fireman, or any other wage-earner during this era of inflation is required to submit to the hurt, humiliation and financial detriment of having his wages garnisheed, or of having to deplete his meager savings, or perhaps of having to sell his equity in his home in order to pay a judgment against him, and then, but only then, recover the money so paid. We cannot believe the Legislature intended any such absurd result.” 528 S.W.2d at 205.

We made it clear in Roberts that not only does the statute provide “fringe benefits” to employees, it also provides “[A] form of public insurance against therefore immune activities . . . ” (Emphasis added) 528 S.W.2d at 203. We relied upon comments made by Senator Stanley Snod-grass, the sponsor of the bill in the Senate, and quoted his comments in full as preserved on record in the State Library and Archives, Number SB-196, May 18, 1967. 528 S.W.2d 204, 205.

Appellee attacks Roberts and our reliance on these comments by Senator Snodgrass. It maintains that there is nothing to indicate at what stage of the proceedings these comments were made; and that the views of only one individual were represented, while the General Assembly, at that time, was composed of one hundred thirty-four (134) members. The answer to that contention is that the comments by Senator Snod-grass were made following the third and final reading of the bill, just prior to its being passed by a majority of the Senate.

Appellee contends that our decision in Roberts was erroneous because it denies municipalities the right and the opportunity to litigate the defense of willfulness on the part of an employee. This contention is based on the fact that in a tort suit against an employee, the municipality’s obligation to provide counsel creates a conflict of interest between it and its employee on the issue of willful negligence, if asserted by the injured plaintiff; or, if not asserted, it fixes the liability of the municipality upon rendition of judgment for ordinary negligence without opportunity to litigate the issue.

That issue was not present in Roberts, and we made no adjudication therein adverse to a municipality’s right to litigate the factual issue in a suit after judgment obtained by the injured party. Nor was the issue adjudicated in Cunningham. In our opinion the problem presented by the conflict of interest with its employee in the tort suit on the issue of willfulness is identical, whether the statute be construed as in Cunningham or Roberts.

Appellant was not awarded punitive damages in his tort action in Federal Court. Appellee was not a party to that action, but provided defense counsel for its employee, as required by T.C.A. § 6-640. If appellant had asserted willful misconduct on the part of Freeman, the result would not have been binding upon appellee because it was not a party and was of course precluded from taking a position, through counsel, provided for Freeman, adverse to Freeman’s interest.

It is elementary that a municipality must be provided the right to deny liability for a judgment against the employee on the basis of the statutory defense of willful misconduct, and the courts must be open to the assertion of that defense in a suit brought subsequent to the tort action. This is necessarily true whether or not willfulness is asserted or adjudicated in the tort action.

The cause is reversed and remanded to the Circuit Court of Tipton County for proceedings not inconsistent with this opinion. Costs are adjudged against appellee, City of Mason.

HENRY and BROCK, JJ.

COOPER, C. J., and HARBISON, J., dissent.

HARBISON, Justice.

I respectfully dissent from the majority opinion in this case. I do not disagree with the interpretation of the statute in question, T.C.A. § 6-640, nor do I think that any modification of the opinion of the Court in the case of City of Memphis v. Roberts, 528 S.W.2d 201 (Tenn.1975), is in order.

In the Roberts case, however, the affected employee himself was demanding indemnification from the municipal corporation. At the outset of the opinion, the Court stressed that:

“Plaintiff-appellee has made demand on the City of Memphis that these judgments be paid but the city has refused to do so. The Chancellor found that plaintiff-appellee was entitled to a judgment as a matter of law and ordered the city to pay all judgments.” 528 S.W.2d at 202.

Further, in the Roberts case, the Court rejected the theory of the employee that:

“. . .a recovery may be had as soon as liability is legally imposed, i. e., when the judgment becomes final.” 528 S.W.2d at 203.

In the present case it is not the employee who has demanded indemnification or exoneration from the municipal corporation. Rather, this suit is brought by the judgment creditor of the employee in a direct action against the municipal corporation, to collect the judgment from the corporation.

I do not believé that this procedure is authorized or justified by the statute. It is the employee who is entitled to be indemnified, and, in Roberts, the Court held that he was entitled to be indemnified from liability, as well as from the actual payment of a judgment or actual loss incurred by him.

A right of indemnification is frequently a personal one, and is to be asserted by the indemnitee, not by a third party who has no such right. 41 Am.Jur.2d, Indemnity, § 41 (1968).

An insured under a contract of liability insurance is entitled to maintain an action for indemnification against his liability insurer, for failure on the part of the insurer in bad faith to settle a claim against the insured. The insured is entitled to maintain such an action, whether he has paid the judgment against him or not, since an outstanding judgment is a detriment to him. Southern Fire & Casualty Co. v. Norris, 35 Tenn.App. 657, 250 S.W.2d 785 (1952). The judgment creditor of such an insured, however, may not maintain a direct action against the insurance carrier, requiring the carrier to exonerate and thereby indemnify the insured. Dillingham v. Tri-State Insurance Co., Inc., 214 Tenn. 592, 381 S.W.2d 914 (1964); Clark v. Hartford Accident and Indemnity Co., 61 Tenn.App. 596, 457 S.W.2d 35 (1970).

The foregoing rule, with respect to claims for an excess judgment by an insured, has been modified somewhat by the adoption of T.C.A. §§ 20-624 et seq., insofar as the death or insolvency of the insured are concerned, but otherwise continues to be operative.

In cases such as the present, the municipal corporation involved may, of course, purchase general liability insurance to protect its employees. Otherwise, it may furnish counsel and indemnify its employees out of the public treasury, but it is clear, from the opinion of this Court in Roberts and from prior cases that the right of indemnification is a personal one to the employee. In the case of City of Chattanooga v. Harris, 223 Tenn. 51, 442 S.W.2d 602 (1969) the Court spoke of the right of indemnification as a “fringe benefit” to the employee.

In my view, the affected employee may demand indemnification from the municipal corporation, and, if a judgment against him is not paid, he may maintain a direct action against the municipality to require it to pay the judgment, as was done in Roberts. This, however, is a different concept and a different matter from permitting the judgment creditor himself to maintain such an action. If the employee does not demand indemnity, he may waive it; if he prefers, he may pay the judgment against him personally or suffer bankruptcy, rather than call upon his employer for exoneration.

In my opinion the trial judge was correct in sustaining the motion to dismiss in the present case, which is a suit brought directly against the municipal corporation by the judgment creditor. I do not find this result in any way inconsistent with Roberts, or the theory of indemnification enunciated therein.

I am authorized to state that Chief Justice COOPER joins in this dissenting opinion.


author: BROCK, Justice.

text:
    HERMITAGE MEMORIAL GARDENS MAUSOLEUM AND MEMORIAL CHAPEL, INC., Appellant, v. Winfield DUNN, etc., et al., Appellees.
    Supreme Court of Tennessee.
    Aug. 30, 1976.

      Joel H. Moseley, Nashville, for appellant.
    William J. Haynes, Jr., Asst. Atty. Gen., Nashville, for appellees; R. A. Ashley, Jr., Atty. Gen., Nashville, of counsel.
   OPINION

BROCK, Justice.

The plaintiff taxpayer, under protest, paid taxes assessed and collected by the defendants and sues to recover them back. The alleged tax liability arises under the Business Tax Act, T.C.A. § 67-5801 et seq., the pertinent provisions of which are to-wit:

“67-5802. Privileges affected for local taxation. — . . . the making of sales by engaging in any vocation, occupation, business or business activity enumerated, described or referred to in § 67-5805, classification 1, classification 2, and classification 3 is declared to be a privilege upon which each county . . . may levy a privilege tax .
******
“67-5804. Definitions. — The following words, terms, and phrases, where used in this chapter, shall have the meanings ascribed to them in this section, except when the context clearly indicates a different meaning:
“(b) . . . ‘Sale’ includes the furnishing of any of the things or services taxable under this act.
* * * * * *
“(i) ‘Tangible personal property’ means and includes personal property which may be seen, weighed, measured, felt or touched, or is in any other manner perceptible to the senses. .
******
“(1) ‘Dominant business activity’ means the business activity which is the major and principal source of gross sales at retail and the major and principal source of gross sales at wholesale of the business.
******
“(p) The term ‘services’ means and includes every activity, function, or work engaged in by a person for profit or monetary gain except as otherwise provided in this chapter. The term ‘services’ shall not include sales of tangible personal property.
“67-5805. Classifications. — Businesses, vocations and occupations which are taxable are set forth in the following classifications: Provided, however, that each person shall be classified according to the dominant business activity.
******
“CLASSIFICATION 2.
“Each person engaged in the business of making sales of the following:
******
“(f) Tangible personal property not specifically enumerated or described elsewhere in this chapter.
******
“CLASSIFICATION 3.
“Each person engaged in the business of making sales of the following:
******
“(k) . . . Each person making sales of services or engaging in the business of furnishing or rendering services, except those described below.

Subsequent sections of the Act, in prescribing which of several rates of taxation shall apply to a particular business, and, in prescribing which of several due dates for payment of the tax shall apply to a business, make such allocations in accordance to the classifications set out in T.C.A. § 67-5805.

The plaintiff taxpayer is engaged in the business of operating memorial gardens and cemeteries and in the course of this business sells burial plots, services, markers, crypts, mausoleums and other items of personalty. More than half of plaintiff’s revenue is derived from sales of burial lots, an activity which all parties to this litigation have stipulated is not included within the taxing provisions of the Act. Nevertheless, a very substantial portion of plaintiff’s revenue is derived from sales of personal property and services, e. g., for the year ending December 31, 1973, plaintiff’s revenue from sales of personalty exceeded $260,000.00.

Defendants assessed taxes under the Act for plaintiff’s sales of services and items of personal property, and it is these taxes for the period from May 1, 1973, to April 30, 1974, which are the object of this suit.

Plaintiff contends that only business enterprises whose “dominant business activity” is one defined in the Act are subject to its provisions; and, since its “dominant business activity,” the sale of lots of realty, is not one defined by the Act, that it is not subject to the tax even with respect to the sales of services and personal property.

Defendants contend that all business enterprises who engage in the privilege of making sales of personal property or services are subject to the Act and that the rate of the tax to be applied to such sales of personalty or services shall be determined by classifying the taxpayer according to its “dominant business activity” which is taxable. The Chancellor agreed with this construction of the Act and dismissed plaintiff’s complaint. We affirm.

Our task, of course, is to ascertain the legislative intent. The taxpayer relies upon the rule that in determining whether one is included within or excluded from the ambit of a tax statute doubt should be resolved in favor of the taxpayer and against the taxing authority. Gallagher v. Butler, 214 Tenn. 129, 378 S.W.2d 161 (1964); Young Sales Corp. v. Benson, 224 Tenn. 88, 450 S.W.2d 574 (1970). But resort is had to such rules of construction only when the import of the statutory language is doubtful and uncertain. In this case we find the language of the statute to be clear and free from doubt; hence, the rule cited has no application.

The incidence of this tax is specified in T.C.A. § 67-5802, and its language is most comprehensive, viz., “. . . the making of sales by engaging in any . business activity enumerated, described or referred to in § 67—5805 ... is declared to be a privilege upon which each county . . . may levy a privilege tax . .” There is no language limiting the incidence of the tax to those entities whose dominant business activity is one of the activities enumerated in § 67-5805, no language excluding entities whose dominant business activity is one not enumerated in § 67-5805. All entities who make sales by engaging in any of the business activities enumerated in § 67—5805 are subject to the tax. The dominant business activity of a taxpayer is relevant only in determining which of the classifications specified in § 67—5805 applies to him, which, in turn, determines the rate of tax applicable to him and the particular due date of the tax.

There is no doubt that the taxpayer has made sales by engaging in business activities enumerated in § 67—5805, viz., (1) sales of tangible personal property [§ 67-5805, Classification 2(f)] and (2) sales of services [§ 67-5805, Classification 3(k)]. These activities are clearly taxable, and it is only these activities of the taxpayer which were taxed by the defendants.

Accordingly, we affirm the decree of the Chancellor. Appellant will pay costs incurred upon this appeal.

COOPER, C. J., and FONES, HENRY and HARBISON, JJ., concur.


text:
    INTERNATIONAL YARN CORP., Appellant, v. Gay Lynn CASSON, Appellee.
    Supreme Court of Tennessee.
    Aug. 30, 1976.
    Donald G. Dietrich, Leonard M. Caputo, Fillauer, Dietrich, Whitson, Webb & Capu-to, Cleveland, for appellant.
    Conrad Finnell, James S. Thompson, Fin-nell, Thompson, Scott & Logan, Cleveland, for appellee.
   OPINION

BROCK, Justice.

The employer in this Workmen’s Compensation case appeals the Chancellor’s finding that the claimant suffered a 35% permanent partial disability to the body as a whole as the result of an accident arising out of and in the course of her employment. The principal question is whether or not there is any evidence to support the finding that the employee sustained a disability which is permanent.

The evidence shows that Gay Lynn Cas-son was an employee of International Yarn Corporation and was working on the night of March 16, 1973, when the roof of the defendant’s plant collapsed during a rainstorm. At the time of the accident she was sufficiently oriented to get out of the building and to a place of safety and to express concern about a relative who was also working in the building. By the time she reached the parking lot she was nervous and crying and she fainted in the arms of her aunt, who was waiting in the parking lot. She was taken to Bradley Memorial Hospital and admitted with a diagnosis of hysteria. She remained overnight for observation and was dismissed in an improved condition. No symptoms of physical injury were detected, but it was observed that she could not speak well.

The claimant returned to the plant a few days after the occurrence and told the manager she was able to go back to work. She did go back when the plant re-opened in April and continued working until July when she was laid off along with a number of other persons.

Miss Casson testified that she was knocked down by a rush of falling water and hit her head on a piece of equipment. She remembered running out of the building, but could recall nothing further until sometime after she was admitted to the hospital, where she attempted to communicate and found herself unable to speak. After the incident she began to stutter, never having done so before, and the problem continued up until the time of the trial. She also complained of physical pain, especially headaches and back pains, dating from the time of the accident. Her most serious complaint, however, is that, since the accident she has experienced chronic nervousness, irritability and anger.

Other witnesses observed a marked change in the claimant’s personality. An aunt described her as “moody and hateful and gripey . . . not like herself.” Her mother testified that she changed from a cheerful, sociable person into a near-recluse, that she began stuttering shortly after the accident, that she was sick and complained of being in pain much of the time, and that she spends most of her time sleeping and moping in her room. She denied having any reason to think that the failure of Miss Casson’s brief marriage following the accident had anything to do with her complaints and testified that even during the time that the claimant continued to work following the accident she was unwell.

This lay testimony is sufficient to support the finding of the Chancellor that Miss Casson’s difficulties began with the occurrence at the plant, although there were other possible traumatic episodes in her life between the time of the accident and the trial.

The appellant characterizes the rainstorm which caused the collapse of the building as a hazard common to the neighborhood and not peculiar to plaintiff’s employment. Cf. Jackson v. Clark & Fay, Inc., 197 Tenn. 135, 270 S.W.2d 389 (1954); Hill v. St. Paul Fire & Marine Ins. Co., 512 S.W.2d 560 (Tenn.1974). Certainly the rain itself was a hazard common to the. neighborhood, but Miss Casson’s presence in a building that could not withstand the force of ordinary rainfall was a circumstance directly related to the employment. The contention that she must prove the defendant knew of the dangerous condition is not sustainable. This assignment is overruled.

The testimony of Dr. Spalding, a psychiatrist, establishes that the accident caused the employee to develop a traumatic neurosis, described as an hysterical neurosis, with conversion reactions of pain in her head, back, legs and other parts of her body and with dissociative reactions of amnesia, inability to talk and irritability and anger.

The most serious question presented is whether there is material evidence that the disability, assuming that it exists, is permanent. The testimony of Dr. Spalding on the point is equivocal and self-contradictory. At one point, he said that Miss Casson could handle “a simple kind of mill job, probably very similar to what she was doing” before the accident. However, he made a similar remark shortly afterward and prefaced it with the comment that “this is pure speculation.” But immediately following he said that it was “probable” she could go back to work after this litigation is concluded. He also said that work would have therapeutic value for her.

He stated that her ability to return to work would depend upon certain hypothetical future events, such as a simple, undemanding job, an understanding supervisor, a protective husband, professional help, a sense of being believed. He questioned her ability to make use of psychiatric help. He replied affirmatively to counsel’s suggestion that Miss Casson’s complaints “may be with her for the rest of her life, or they may not be, depending on what the future holds.” He also testified that her pain, and especially her irritability and nervousness, would interfere with her ability to work, that this would be a continuing problem, and that he would expect her to be more susceptible to hysterical reaction in the future. But, he also stated that he “couldn’t answer” the question whether or not the neurosis would disappear, nor the question whether or not the accident had diminished the appellee’s ability to work.

We conclude that there is no material evidence in this record to support the finding of the Chancellor that the appellee’s disability of traumatic neurosis will be permanent. Traumatic neurosis, when established, is a compensable injury, Buck & Simmons Auto and Electric Supply Co. v. Kesterson, 194 Tenn. 115, 250 S.W.2d 39 (1952); but, that it is a permanent injury in a given case must be established by medical evidence. Minton v. Leonard, 219 Tenn. 642, 412 S.W.2d 886 (1967). In our view, the testimony of Dr. Spalding, the only medical witness who testified concerning the nature and effects of the traumatic neurosis, is so self-contradictory and speculative that it has no probative value upon the issue of the permanency of the appel-lee’s disability. Isolated portions of the testimony of a witness cannot be relied upon to sustain a finding of fact; the testimony of the witness must be considered in its entirety, and, if so considered, it is so contradictory that one part destroys the other it amounts to nothing and cannot sustain a finding. See Cincinnati, N. O. & T. Ry. Co. v. Denton, 24 Tenn.App. 81, 140 S.W.2d 796 (1940); Pashea v. Terminal R. Ass’n of St. Louis, 350 Mo. 132, 165 S.W.2d 691 (1942). We think Dr. Spalding’s testimony, insofar as it relates to permanency of appellee’s disability, falls into this category. As we did in similar situations in American Insurance Co. v. Ison, Tenn., 519 S.W.2d 778 (1975) and Security Ins. Co., Inc. v. Hughes, Tenn., 529 S.W.2d 719 (1975) and others, we reverse the decree of the trial court and remand this cause for a new trial of the issues of the permanent or temporary nature of appellee’s disability and the extent thereof.

Costs of this appeal are taxed against appellee.

COOPER, C. J., and FONES, HENRY and HARBISON, JJ., concur.


author: HARBISON, Justice. FONES, Justice

text:
    Joe C. CARR, Secretary of State, and Jayne Ann Woods, Commissioner of Revenue of the State of Tennessee, Appellants-Defendants, v. CHRYSLER CREDIT CORPORATION, Appellee-Plaintiff.
    Supreme Court of Tennessee.
    Aug. 30, 1976.

      Everett H. Falk, Deputy Atty. Gen., Nashville, for appellants-defendants; R. A. Ashley, Jr., Atty. Gen., Nashville, of counsel.
    Charles K. Wray, Jay S. Bowen, Nashville, for appellee-plaintiff; Bass, Berry & Sims, Nashville, of counsel.
   OPINION

HARBISON, Justice.

This case presents for decision the scope of an exemption from the state transfer tax on the recording of mortgages, deeds of trust and other evidences of indebtedness.

The transfer or recordation tax is authorized by T.C.A. § 67 — 4102, Item S(b).

The question at issue is whether or not financing statements on inventories of automobiles, financed under a “floor-plan” arrangement, are exempt from the recordation tax. The chancellor held the exemption applicable, and permitted appellee a recovery of transfer taxes which it had paid under protest upon the recordation of a number of financing statements in the office of the Secretary of State. The State officials charged with the collection and administration of the tax in question have appealed, and the parties have stipulated that the determinative question is whether the language of the statute exempts from taxation financing statements contemplated by the Uniform Commercial Code covering motor vehicle inventory as collateral.

Since 1937 the State has levied a privilege tax upon the recordation of any instrument evidencing a security interest in real or personal property. Prior to 1967 there was no specific reference to instruments evidencing a lien on motor vehicles and, apparently, not until an amendment of the taxing statute in 1968 was there ever any question but that the tax was due and payable upon the recording of an instrument evidencing a security interest in motor vehicles, whether in an individual automobile or in an inventory of automobiles.

In 1967 the statute was substantially rewritten, and there appears to be no dispute between the parties but under the language of the 1967 statute both financing statements on inventory and evidences of indebtedness against individual automobiles were subject to the transfer tax. The 1967 statute contained no exemptions or exceptions with respect to motor vehicles, and it expressly provided:

“This tax shall be paid to and collected by County registers, the Secretary of State, the division of motor vehicles of the department of revenue, and any other official who may receive the instrument for recordation in accordance with the laws of the state . . . ” Tenn.Pub. Acts 1967, ch. 178.

By Chapter 483 of the Public Acts of 1968, certain exemptions from the tax were provided, and it is the scope of one of these exemptions which is involved here.

Following the 1968 amendment, insofar as here pertinent, the taxing statute provided:

“Prior to the public recordation of any instrument evidencing an indebtedness, including but not limited to mortgages, deeds of trust, conditional sales contracts, financing statements contemplated by the uniform commercial code and liens on personalty, other than on motor vehicles, there shall be paid a tax, for state purposes only, of ten cents (10<p) on each one hundred dollars ($100) or major fraction thereof of the indebtedness so evidenced.
. This tax shall be paid to and collected by county registers, the secretary of state, and any other official who may receive any instrument, other than for liens on motor vehicles in accordance with the motor vehicle title law of this state, for recordation in accordance with the laws of this state, and registration is forbidden until such tax has been paid. The incidence of the tax herein provided is declared to be upon the holder or owner of the indebtedness, evidenced by the instrument offered for recordation. It shall not however apply with respect to the first two thousand dollars ($2,000) of the indebtedness.” T.C.A. § 67-4102, Item S(b) (emphasis added).

It is stipulated between the parties that from the time of the enactment of the 1968 amendment until June 1974:

“ . . .it was the position of Defendant Joe C. Carr and the predecessor in office of Jayne Ann Woods that recor-dation of financing statements covering the floor-planning of motor vehicles was not subject to the tax imposed by T.C.A. § 67-4102, Item S(b).”

It is further stipulated between the parties:

“Since at least October 8, 1974, it has been the position of Defendants Joe C. Carr and Jayne Ann Woods, or her predecessor in office, that the public recordation of financing statements covering the floor-planning of motor vehicles is subject to the tax provided in T.C.A. § 67-4102, Item S(b), and defendant Joe C. Carr has insisted on the payment of such tax as a condition to the recordation of such financing statements.”

It is further stipulated between the parties that the altered position of the taxing authorities did not result from any change in the wording of the statute, but constituted a change in the construction and interpretation of the officials based upon legal advice and later supported by an opinion of the State Attorney General, a copy of which is in the record.

It is undisputed between the parties that the 1968 amendment clearly contemplated the exemption of certain types of instruments of indebtedness covering motor vehicles as collateral. There can be no question, from the .wording used, that documents evidencing security interests in individual automobiles as consumer goods, which are filed with the Division of Motor Vehicles, are now exempt, whereas they were not exempt prior to the 1968 amendment. It is the insistence of the appellants that it was the intention of the General Assembly to limit the exemption to documents indicating liens on individual automobiles, and not to embrace within the exemption financing statements covering motor vehicles as inventory, which are filed with the Secretary of State and which are defined as inventory in the Uniform Commercial Code.

The case has been briefed and argued before the Court in an unusually thorough manner on behalf of both parties. Each of the parties points to the language used in the statute, the punctuation, and to rules of statutory interpretation or construction, supporting their respective contentions.

On behalf of the appellee, it is urged that taxing statutes should be liberally construed in favor of the taxpayer and all doubt should be resolved against the taxing authority. It is further urged that the scope of taxation should not be extended by implication beyond the clear meaning of the language used. The taxpayer particularly insists that if the statute be deemed ambiguous, then the administrative construction and interpretation thereof, under which the exemption was deemed to include financing statements for a period of some six years, should be given great, and indeed almost controlling, weight.

On the other hand, appellants point out that the exemption in question is set off by commas, apparently having as its antecedent the words “liens on personalty”, and that the second sentence quoted above clearly provides that the tax shall be paid to and collected by officials on all instruments received for recording “other than for liens on motor vehicles in accordance with the motor vehicle law of this state . . . .”

Appellants further point to many cases reported in this state to the effect that exemptions from taxation are to be narrowly construed, and that the scope of an exemption is at issue here, rather than the scope of taxation. They further point to many cases holding that taxing authorities and other public officials are not subject to rules of estoppel, and that, in the discharge of their public duties and in carrying out the public business, they are free to make further studies and reinterpretations of the statutes which they are called upon to administer.

The taxpayer cites and relies heavily upon language used by this Court in the case of Gallagher v. Butler, 214 Tenn. 129, 378 S.W.2d 161 (1963), in which great weight was given to the administrative interpretation of a taxing statute, and the Court pointed out the necessity for uniformity in administration of tax laws. In the course of its opinion, the Court stated:

“Members of the bar, the accounting profession, and the general public have relied upon these rulings as being correct. To effect a change without affirmative legislative action appears to us to be inequitable and against the established policy of this State.” 214 Tenn. at 142, 378 S.W.2d at 166.

We are in general agreement with this statement and with the cases cited in support thereof. Nevertheless, it is possible for officials charged with the interpretation and administration of revenue laws to change their interpretations and to re-examine them, despite previous interpretation and construction extending over a period of many years.

A recent example of this principle is found in the case of Book Agents of the Methodist Episcopal Church, South, v. State Board of Equalization, 513 S.W.2d 514 (Tenn.1974). There, the Supreme Court, in three separate opinions, held at least partially taxable the properties of two religious publishing houses which had enjoyed almost complete exemption from taxation over a period of many decades. One of the institutions had been established in 1854, and its property had been deemed substantially exempt through the year 1969. The language of the statutes granting the exemptions had not been changed for more than thirty years prior to the assessment year in question, and in previous legal proceedings it had been stipulated by taxing authorities that the operations of at least one of the institutions entitled it to the exemption. Nevertheless, in only one of the three opinions filed by this Court was the previous construction and interpretation of the statute given any consideration whatever. In a concurring opinion by Special Justice Leech, Gallagher v. Butler, supra, and its supporting authorities were cited and relied upon. Two members of the Court, however, deemed the statute in question to be “unambiguous”, so that prior interpretation was not held to be entitled to any weight, and these members, together with the concurring justice, reversed an interpretation by the Court of Appeals and reinstated the decision of the chancellor, granting a partial exemption. Two other members of the Court felt that the operations of the two institutions in question were taxable under the statute, and felt that legislative intent, rather than prior interpretation or construction, was controlling. These members of the Court felt that the exemption should be denied entirely, despite the fact that it had been recognized and allowed for much longer than the six-year period involved in the present case.

We, therefore, feel that we are obligated to construe the statute in question according to the legislative intent, as best it can be ascertained from the words used. Prior administrative interpretations and rules of statutory construction are merely aids in attempting to arrive at the legislative intent, and no one of them is controlling.

It is obvious from the fact that the taxing officials themselves have reached two different interpretations of the identical statute, that the statute cannot be said to be free from doubt or ambiguity. In the first sentence of the amended statute, the exemption is phrased in the words “other than on motor vehicles.” This certainly could be construed to include financing statements as well as lien documents pertaining to individual automobiles. In the second sentence, however, the exemption is again referred to and more clearly defined in connection with the directions given to collecting officials. This sentence is as follows:

“This tax shall be paid to and collected by county registers, the secretary of state, and any other official who may receive any instrument, other than for liens on motor vehicles in accordance with the motor vehicle title law of this state . .” (Emphasis added).

The Secretary of State, of course, does not receive for recordation liens on certificates of titles on individual motor vehicles. These are filed with the Division of Motor Vehicles, under the motor vehicle title law. Financing statements covering inventories of vehicles, like other inventories, are filed with the Secretary of State, and inventories of automobiles are not governed by or controlled by the motor vehicle title law of the state.

We, therefore, are constrained to the view that the current interpretation of the taxing law made by the state officials is the correct one, and that the exemption should not be extended to include financing statements on automobile inventories.

The taxpayer cites and relies upon the case of International Harvester Co. v. Carr, 225 Tenn. 244, 466 S.W.2d 207 (1970), in which continuation statements of security interests were held to fall within the purview of the recordation tax. In the course of that opinion the Court referred to the then current interpretation of the exemption in question, which included financing statements on automobiles but did not exempt financing statements on inventories of farm equipment and other kinds of equipment. The Court indicated that the exemption of financing statements on automobiles probably would be constitutionally permissible, but indicated that even if not, and if such an exemption were deemed unconstitutional, the exemption would be merely elided, rather than having the effect of destroying the taxing statute in its entirety.

Other than illustrating the prior interpretation of the statute in question, which prior interpretation is readily admitted and indeed is stipulated by the taxing authorities, the International Harvester case is not authority for any question at issue in the present case, nor does it present any controlling interpretation of the statutory language here in issue.

The judgment of the trial court, allowing recovery of the taxes paid under protest, is reversed and the suit is dismissed at the cost of appellees.

COOPER, C. J., and HENRY and BROCK, JJ., concur.

FONES, J., dissents.

FONES, Justice

(dissenting).

I would affirm the learned Chancellor.

I have no difficulty interpreting the statute, on its face, to exclude motor vehicles, whether the lien be noted on a certificate of title or a UCC financing statement.

The reasoning process that strips a motor vehicle of its identity, as such, for the purpose of the exemption in T.C.A. § 67 — 4102, Item S(b) because by UCC definition it becomes inventory if held by a dealer and is described on a financing statement instead of a certificate of title, does not, in my opinion, lend any support for the statutory interpretation urged by the Commissioner of Revenue.

The majority opinion says that in the second sentence of the statute the exemption is more clearly defined in connection with the directions given to collecting officials. Again, this observation is based on a reasoning process with which I do not agree. The excluded official is the person in charge of recording motor vehicle certificates of title as he clearly should be. The Secretary of State receives for recording all financing statements and could not be excluded regardless of the status of inventories of automobiles.

I agree with the comment in the majority opinión found in the paragraph immediately following the quotation from Gallagher v. Butler, supra, but I do not agree that the decision in Book Agents of the Methodist Episcopal Church, South, v. State Board of Equalization, supra, has any significance whatever on the decision of this case. Previous construction and interpretation of the statute there involved, and more specifically the application of the statute administratively and judicially, simply does not compare with stipulated fact, in this case, that the Commissioner of Revenue of Tennessee and the Secretary of State took the position, for the first six (6) years immediately following the 1968 amendment of the statute, “ . . . that recordation of financing statements covering floor planning of motor vehicles was not subject to the tax imposed by T.C.A. § 67-4102 Item S(b).” Furthermore, as I read the opinions, four (4) members of that Court did not consider the principle of Gallagher v. Butler, supra, as having any significance in the determination of the issues in that case.

      . T.C.A. §§ 59-324 et seq.

      . T.C.A. § 47-9-401.

      .T.C.A. § 47-9-109(4).

      . Memphis Peabody Corp. v. MacFarland, 211 Tenn. 384, 365 S.W.2d 241 (1963).

      . Sloan v. City of Columbia, 144 Tenn. 197, 232 S.W. 663 (1920).

      . New England Mut. Life Ins. Co. v. Reece, 169 Tenn. 84, 83 S.W.2d 238 (1935).

      . Tennessee Blacktop, Inc. v. Benson, 494 S.W.2d 760 (Tenn.1973); Phillips & Buttorff Mfg. Co. v. Carson, 188 Tenn. 132, 217 S.W.2d 1 (1949).

      . Ownbey v. Butler, 211 Tenn. 366, 377, 365 S.W.2d 33 (1963); Esso Standard Oil Co. v. Evans, 194 Tenn. 377, 250 S.W.2d 569 (1952).

      . For similar holdings see the cases cited in note 8, supra.

      . T.C.A. §§ 59-324, et seq. A reason suggested by the State for exempting lien filings on individual vehicles is that these generated little revenue compared to the cost of administration, since the first $2,000.00 of indebtedness is not taxed. There is nothing in the stipulations establishing this contention, however, so that we can only regard it as argument rather than as proven fact.


text:
    Larry D. ANTHONY et al., Appellants, v. Carl R. CARTER and William V. Mallozzi, Appellees.
    Supreme Court of Tennessee.
    Sept. 7, 1976.

      William C. Koch, Jr., Asst. Atty. Gen., Nashville, for appellants; R. A. Ashley, Jr., Atty. Gen., Nashville, of counsel.
    Frierson M. Graves, Jr., Michael F. Pleas-ants, Memphis, for appellees; Heiskell, Do-nelson, Adams, Williams & Kirsch, Memphis, of counsel.
   OPINION

BROCK, Justice.

This is a direct appeal from a decision of the Circuit Court for Shelby County, Division II, holding that portions of the Tennessee Obscenity Act, T.C.A. §§ 39-3010 et seq., relating to search and seizure are unconstitutional and that the search warrants employed in this case were general warrants prohibited by the Fourth Amendment to the U.S. Constitution. We affirm the judgment of the Circuit Court.

The appellees in this case are connected with a commercial operation which distributes magazines and movie films which the State contends are legally obscene. On April 1, 1975, the Criminal Court of Shelby County issued two search warrants authorizing the search of premises at two locations and certain automobiles in which the alleged obscene material was being stored or from which it was being distributed. The record contains copies of an “Affidavit for Probable Cause,” signed by appellant Larry D. Anthony, in which the affiant summarizes information received from an informant who was formerly employed by appellees. This information generally describes the materials in the buildings as magazines and films “depicting sexual conduct and ultimate sexual acts.” It also describes the method of distribution used by the appellees and describes an eyewitness account of the filming of an obscene motion picture in Memphis.

The warrants were executed on April 1, 1975. They authorized law enforcement personnel to search the premises and seize the following property:

“books and records of Carl R. Carter pertaining to interstate and intrastate shipment of adult films; 8 mm and 16 mm adult films depicting sexual activity; and magazines depicting sexual activity in violation of Tennessee Code Annotated, Sections 39-3010, et seq.”

The statutory authority for such a warrant is T.C.A. § 39-3016 which purports to authorize law enforcement officers to “take into custody one (1) example of each piece of matter which is obscene in the opinion of the district attorney general or his designated representative.” T.C.A. § 39-3016(A). It is this portion of the obscenity statute which the court below held to be unconstitutional.

Upon execution of the warrants, the officers seized “about 40 or 50” movie films and a large quantity of business records pertaining to shipment of the films by appellees to “adult” theaters. The contention of the State that the two locations contained a total of about 300 films is apparently uncontested by appellees. There is no evidence in the record whether or not any of the remaining films were duplicates of each other or duplicates of those seized. The seizure also included two 16 mm movie projectors and a briefcase which, among other things, contained the personal checkbook of one of the appellees.

On April 14, 1975, the appellees filed a motion in the Circuit Court seeking a return of the items seized, as authorized by T.C.A. § 39-3016(B). On April 21,1975, the court ordered the immediate return of the two projectors and the briefcase and checkbook; all other materials remained in the State’s custody.

The court then held a hearing on the motion and determined that (1) the search warrants were constitutionally invalid “general warrants” and that (2) the above-mentioned portion of 39-3016(A), which allows the district attorney general or his representative “the power to make an on-the-spot determination whether or not material is obscene,” and, therefore, subject to seizure, was unconstitutional. The court then ordered the return of all items seized in the April 1 action.

On July 8, 1975, upon appellants’ motion, Mr. Chief Justice Fones issued a writ of supersedeas to stay the Circuit Court’s order pending outcome of this appeal. The seized materials thus remain in the custody of the district attorney general.

The Circuit Court, in holding the above quoted portion of 39-3016(A) to be unconstitutional, relied upon Marcus v. Search Warrant, 367 U.S. 717, 81 S.Ct. 1708, 6 L.Ed.2d 1127 (1961) and A Quantity of Copies of Books v. Kansas, 378 U.S. 205, 84 S.Ct. 1723, 12 L.Ed.2d 809 (1964).

The Marcus case involved a wholesale distributor of allegedly pornographic books and magazines. A police lieutenant visited the defendant as part of a vice squad investigation and determined that he distributed certain specified publications. Upon this information, a warrant was issued authorizing officers to seize obscene materials. A search and seizure followed that netted 11,-000 copies of 280 publications, only 100 of which were later found to be legally obscene. The Supreme Court held this action to be unconstitutional, saying:

“. . . the warrants issued on the strength of the conclusory assertions of a single police officer, without any scrutiny by the judge of any materials considered by the complainant to be obscene. The warrants gave the broadest discretion to the executing officers; they merely repeated the language of the statute and the complaints, specified no publications, and left to the individual judgment of each of the many police officers involved the selection of such magazines as in his view constituted ‘obscene * * * publications.’
* * * * * *
“They were provided with no guide to the exercise of informed discretion, because there was no step in the procedure before seizure designed to focus searchingly on the question of obscenity.” 81 S.Ct. at 1716. (Emphasis added.)

The Marcus decision was following in A Quantity of Copies of Books v. Kansas, which also involved a “massive” seizure of publications designed to permanently restrain their distribution. See also Lee Art Theatre v. Virginia, 392 U.S. 636, 88 S.Ct. 2103, 20 L.Ed.2d 1313 (1968).

It is too well settled to require citation of authority that the Fourth Amendment requires that an impartial magistrate, rather than the prosecutor or a police officer, make the determination, not only whether or not a warrant shall issue, but also the specification of the articles to be seized and the place to be searched. Clearly, then, T.C.A. § 39-3016(A), insofar as it purports to authorize police officers to seize such articles as are obscene in the opinion of the attorney general or his designated representative violates the Fourth Amendment and is void.

Likewise, the warrants in this case in describing the articles to be seized use language markedly lacking in the specificity required by the Fourth Amendment mandate that “no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”

Since the Supreme Court’s 1965 decision in Stanford v. Texas, 379 U.S. 476, 85 S.Ct. 506, 13 L.Ed.2d 431, it is clear that more specificity is required when the object of the seizure involves the First Amendment. As the Court said in Stanford:

“In short, what this history indispensably teaches is that the constitutional requirement that warrants must particularly describe the ‘things to be seized’ is to be accorded the most scrupulous exactitude when the ‘things’ are books, and the basis for their seizure is the ideas which they contain. (Citing Marcus v. Search Warrant, supra, and A Quantity of Copies of Books v. Kansas, supra.) No less a standard could be faithful to First Amendment freedoms.
******
“ ‘The requirement that warrants shall particularly describe the things to be seized makes general searches under them impossible and prevents the seizure of one thing under a warrant describing another. As to what is to be taken, nothing is left to the discretion of the officer executing the warrant.’ ” 85 S.Ct. at 511-512.

We, therefore, hold that the warrants in this case were unconstitutional general warrants and that the portion of T.C.A. § 39-3016(A) reading “in the opinion of the district attorney general or his designated representative” is unconstitutional under the authorities previously cited. Furthermore, the statute, the warrants and the seizures also violate Article 1, Sec. 7, Constitution of Tennessee, in the same particulars as above discussed with reference to the Fourth Amendment. However, we think the doctrine of elision can be applied in this instance to strike only the phrase quoted above in order to preserve the continuity of the statute and spare it from constitutional infirmity. See Armistead v. Karsch, 192 Tenn. 137, 237 S.W.2d 960 (1951). Both parties agree in their briefs to the elision. The judgment of the Circuit Court is affirmed. Appellants will pay the costs on appeal.

COOPER, C. J., and FONES, HENRY and HARBISON, JJ., concur.

      . “39-3016. Search warrant — Seized material retained by district attorney general — Hearing. —(A) Upon a showing of probable cause that the obscenity laws of this state are being violated, any judge or magistrate shall be empowered to issue a search warrant in accordance with the general law pertaining to searches and seizures in this state which warrant shall authorize or designate a law enforcement officer to enter upon the premises where alleged violations of the obscenity laws are being carried on and take into custody one (1) example of each piece of matter which is obscene in the opinion of the district attorney general or his designated representative. Return on the search shall be in the manner prescribed generally for searches and seizures in the state of Tennessee, except that matter that is seized shall be retained by the district attorney general to be used as evidence in any legal proceeding in which said matter is in issue or involved.
      “(B) When a search and seizure takes place in accordance with this section, any person aggrieved by said search and seizure or claiming ownership of the matter seized, may file a motion in writing with a court of record in the jurisdiction in which the search and seizure took place, contesting the legality of the search and seizure and/or the fact of the obscenity of the matter seized. Said court shall set a hearing within one (1) day after the request therefor, or at such time as the requesting party might agree. In the event the court finds that the search and seizure was illegal or if the court or any other court of competent jurisdiction shall determine that the matter is not obscene, said matter shall be forthwith returned to the person and to the place from which it was taken.”

      . Article 1, Sec. 7, Constitution of Tennessee, provides:
      “That the people shall be secure in their persons, houses, papers and possessions, from unreasonable searches and seizures; and that general warrants, whereby an officer may be commanded to search suspected places, without evidence of the fact committed, or to seize any person or persons not named, whose offenses are not particularly described and supported by evidence, are dangerous to liberty and ought not to be granted.”