ÿWPCv( ’Œ8òªÖÞØ«K8%×ÁƒîÀF¢I\èKŽ¥ÍF´ûC-r P‹©•(骄^Ä&FS¹ºíTñ®P¿Ø±›eƒ«Ý?½Åú˜N­Á7Д„ÑÁó®O…\z_ô~µí¥…±¾ôÿ´7ÈïºÕÛˆŽ<ÿ®/Îá/¡7à·üy:C<ÿØô5X"YèÞãU’SÝ©\-æ2˯П¥!i‘ŠœLïXz[“Dõè&"SVè‹Ï©«!àfŽ«ÙàY5±û¡Ëz-S/ÿWëTËòËwvÞ°ÊGÂbY±þãÿ¶º wšû·,”÷ÌË"ܘž–rʳ‹‰m“;Ñ(ÝõVTËÿ‹õjù† Xb×eú\f˜¬A Kéó‡ùÉ~ïp§…é+“]BD˜‡n¦K°ï:¨ÞË.ÕfflõNaÚ°Þ]ÍÀÀ-•¯‰ê™F‡j«]¨f̯ÌvçN§îÇÅ=•TÅ·€*SB%Ãʧ«C¤ 5ad°qqg^›WÑ&óÞ7”$[8Иï–©-ñì‹DµøäJë ¶:AÿߘÞÐ}ÐÔᇈåM±sÂT,‘sZéu™'ö·¼ÁQ¦Ú³ –]ÿÀÊ6܈ÓËΦP•B g—ºL'w ã†øF4ºb %\UNb 0¹°U.NiN·¾¹±w z(Ò¢¯tä#ú 0 DÆEÆ ÆÑÆ—k]NÈÔÊ!žE¿^ ÁwÍ4Ñåô mö#É bÖ"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö"Ö" 0 Þ"Þ"Þ"Þ" Bú#ú# 0Õ$ D5ì$ D-!% 0KN%N% AS™%Æì% 0Õ²& 0D‡' A«Ë'»(@øÐ Z‹6Times New Roman Regular(‘Ÿ_$¡¡Ñ€..ÑÑ8€Ê)»»d»»d8ÑÑ ýý ÑÓ  ÓÔ€¬‚G¬»»ÔÓôÿÓ(í€"  Z6Times New Roman Regular ´Ý ƒRjé$ÝÓ  ÓÔ€¬ô³¬»»ÔÓôÿÓà  àòòÚ  Ú2Ú  ÚóóÔ€ô±Íò¬¬ô³ÔÝ  ÝÔ_Ô€On€October€24,€1989,€Johns€executed€a€promissory€note€in€which€he€promised€to€repay€$54,000.00€to€Ô_ÔGraysonÔ_ÔÐ ° ÐSmith.€€The€interest€rate€on€the€Smith€Loan€was€15.0%.€€The€Smith€Loan€was€only€for€twenty„one€(21)€days.€€It€maturedÐ sà Ðon€November€14,€1989.€€The€deed€of€trust€for€the€Smith€Loan€(the€ð ðSmith€Deed€of€Trustðð)€was€recorded€on€NovemberÐ 6† Ð2,€1989,€as€Instrument€No.€BJ€2888,€in€the€Registerððs€Office€of€Shelby€County. §Ý ƒRjé$ÝÓ  ÓÔ€¬ô³¬»»ÔÓôÿÓà  àòòÚ  Ú3Ú  ÚóóÔ€ô±Íò¬¬ô³ÔÝ  ÝÔ_Ô€Shelby€Bankððs€successor€in€interest€is€Ô_ÔBankcorpSouthÔ_Ô€Bank,€formerly€known€as€Volunteer€Bank.Ð ° ÐÔ_ÔBankcorpSouthÔ_Ô€acquired€certain€of€the€assets€and€interests€of€Shelby€Bank€and€assumed€certain€potential€liabilities€ofÐ sà ÐShelby€Bank,€including€any€liability€in€this€action.€For€purposes€of€this€Opinion,€and€for€the€sake€of€clarity,€we€will€referÐ 6† Ðto€the€Appellee€herein€as€Shelby€Bank. ˜C:\PROGRA~1\COREL\WORDPE~1\TEMPLATE\CUSTOM~1\REVISE~1.WPTC:\Program Files\Corel\WordPerfect Office 2000\Template\Custom WP Templates\revised standard opinion.wpt ¥Ý ƒRjé$ÝÓ  ÓÔ€¬ô³¬»»ÔÓôÿÓà  àòòÚ  Ú4Ú  ÚóóÔ€ô±Íò¬¬ô³ÔÝ  ÝÔ_Ô€The€indebtedness€of€Johns€to€Citicorp€was€discharged€pursuant€to€an€Order€of€the€United€States€BankruptcyÐ ° ÐCourt€for€the€Western€District€of€Tennessee.€€As€a€result,€Citicorp€no€longer€has€a€claim€against€Johns€in€this€action. ÚÝ ƒRjé$ÝÓ  ÓÔ€¬ô³¬»»ÔÓôÿÓà  àòòÚ  Ú1Ú  ÚóóÔ€ô±Íò¬¬ô³ÔÝ  ÝÔ_Ô€On€October€19,€1989,€Johns€had€executed€a€promissory€note€in€which€he€promised€to€repay€$187,600.00€toÐ ° ÐEmpire.€€The€interest€rate€on€the€Empire€Loan€was€10.5%.€€The€term€of€the€Empire€Loan€was€thirty€(30)€years.€€The€deedÐ sà Ðof€trust€securing€the€Empire€Loan€(the€ð ðEmpire€Deed€of€Trustðð)€was€originally€recorded€on€October€30,€1989€asÐ 6† ÐInstrument€No.€BH€4119.€€It€was€re„recorded€on€November€13,€1989€as€Instrument€No.€BH€9547€in€the€Registerððs€OfficeÐ ùI Ðof€Shelby€County. ðÝ ƒRjé$ÝÓ  ÓÔ€¬ô³¬»»ÔÓôÿÓà  àòòÚ  Ú7Ú  ÚóóÔ€ô±Íò¬¬ô³ÔÝ  ÝÔ_Ô€Equity€aids€the€vigilant,€not€those€who€sleep€upon€their€rights.(#Ã$òòÚ  Ú0Ú  ÚóóLevel 1Level 2Level 3Level 4Level 5‚Level 1Level 2Level 3Level 4Level 5„Level 1Level 2Level 3Level 4Level 5…Level 1Level 2Level 3Level 4Level 5 aÝ ƒRjé$ÝÓ  ÓÔ€¬ô³¬»»ÔÓôÿÓà  àòòÚ  Ú5Ú  ÚóóÔ€ô±Íò¬¬ô³ÔÝ  ÝÔ_Ô€The€Amended€Complaint€also€asserts€€claims€against€Maddoxððs€firm,€Maddox€&€Roberts,€and€againstÐ ° ÐMaddoxððs€business€partner,€John€P.€Roberts.€€A€Judgment€by€Default€was€entered€against€Maddox.€€His€currentÐ sà Ðwhereabouts€are€unknown,€but€he€is€last€believed€to€have€been€in€Bolivia,€South€America.€€Pursuant€to€an€Order€of€theÐ 6† ÐChancery€Court€of€Shelby€County,€which€was€affirmed€by€the€Supreme€Court€of€Tennessee,€Citicorpððs€claims€againstÐ ùI ÐRoberts€in€his€individual€and€partnership€capacities€are€barred€under€the€applicable€statute€of€limitations.€€As€a€result,Ð ¼  ÐCiticorp€no€longer€has€a€claim€against€Roberts€in€this€action.€Defendant,€Maddox€&€Roberts€is€a€partnership€organizedÐ Ï Ðand€existing€under€the€laws€of€the€State€of€Tennessee€with€its€principal€place€of€business€in€Shelby€County,€Tennessee.€Ð B ’ ÐPursuant€to€an€Order€of€the€Chancery€Court€of€Shelby€County,€which€was€affirmed€by€the€Supreme€Court€of€Tennessee,Ð  U ÐCiticorpððs€claims€against€Roberts€in€his€partnership€capacity€are€barred€under€the€applicable€statute€of€limitations. ÊÝ ƒRjé$ÝÓ  ÓÔ€¬ô³¬»»ÔÓôÿÓà  àòòÚ  Ú6Ú  ÚóóÔ€ô±Íò¬¬ô³ÔÝ  ÝÔ_Ô€Stipulated€fact€Number€63. Ý ƒRjé$ÝÓ  ÓÔ€¬ô³¬»»ÔÓôÿÓà  àòòÚ  Ú8Ú  ÚóóÔ€ô±Íò¬¬ô³ÔÝ  ÝÔ_Ô€Where€one€of€two€persons€must€suffer€loss€he€should€suffer€whose€act€or€negligence€occasioned€the€loss.~1, #ÔÔ#†¼­»IK?Ô#ÔÔ‡K?I»¼­ÔÌÓ2ÓÌò òTenn.€R.€App.€P.€3;€Appeal€as€of€Right;€Judgment€of€the€Chancery€Court€Affirmedó óÐ l¼ ÐÌòòÓ  ÓÔ#†¼­»ÔK?‡#ÔÔ‡Ö7s Ô.¼­ÔW.€Frank€Crawford,€Ô_ÔP.J.Ô_Ô,€Ô_ÔW.S.Ô_Ôóó,€delivered€the€opinion€of€the€court,€in€which€òòDavid€R.€Farmer,€J.óó€and€òòHolly€M.€Kirby,€J.óó,Ð 4„ Ðjoined.Ð ë; ÐÌMichael€C.€Patton€and€Thomas€F.€Barnett€of€Memphis€for€Appellant,€Citicorp€Mortgage,€Inc.Ð Y© ÐÌJohn€B.€Philip€of€Memphis€for€Appellee,€Ô_ÔBancorpsouthÔ_Ô€BankÐ Ç ÐÓ&ÓÌò òOPINIONó óÔ#†¼­» ÔÖ7sU#ÔÔ‡K?I»¼­ÔÐ 5… ÐÌòòóóÔ#†¼­»IK?Š #ÔÔ‡K?I»¼­ÔÓ  ÓÑ8€AAXXdìXXdì8Ñà  àIn€December,€1989,€Ô_ÔWilburnÔ_Ô€W.€Johns€(ð ðJohnsðð)€owned€property€at€4262€Poplar€Avenue€inÐ Ï! ÐMemphis,€Tennessee€(the€ð ðPropertyðð).€€At€that€time,€Johns€decided€to€refinance€the€indebtedness€thatÐ ´ " Ðwas€secured€by€liens€on€the€Property.€€On€December€6,€1989,€Johns€submitted€a€Residential€LoanÐ ™!é# ÐApplication€(the€ð ðLoan€Applicationðð)€to€Ô_ÔMcSwainÔ_Ô€Realtors,€which€was€a€member€of€CiticorpÐ ~"Î$ ÐMortgage,€Inc.ððs€(ð ðCiticorp,ðð€ð ðPlaintiff,ðð€or€ð ðAppellantðð)€Mortgage€Power€Program.€€Johns€sought€aÐ c#³% Ðloan€from€Citicorp€in€the€amount€of€$253,700.00€and€indicated€that€he€wanted€to€refinance€the€securedÐ H$˜& Ðindebtedness€to€obtain€a€lower€interest€rate€with€a€shorter€term€of€repayment.€€On€the€LoanÐ -%} ' Ðâ âApplication,€Johns€listed€two€loans,€one€from€Empire€of€America€Realty€Credit€Corp.€in€the€amountÐ &b!(ý ÐÔ_Ôof€$187,600.00€(the€ð ðEmpire€Loanðð)׃ ×Ý ƒ #ÃÝòòÚ  Ú1Ú  ÚóóÝ  Ý×  ×€and€another€from€Grayson€Smith€in€the€amount€of€$54,000.00Ð ° Ð(the€ð ðSmith€Loanðð).׃`×Ý ƒ #ÃÝòòÚ  Ú2Ú  ÚóóÝ  Ý×  ׀Р•å Ðâ âÌà  àJohns€owned€and€operated€a€company€called€National€Auto€Leasing,€Inc.€(ð ðNationalðð).€Ð _¯ ÐNational€was€an€automobile€wholesale€business€in€Shelby€County.€€Since€June,€1988,€Shelby€BankÐ D” Ð(ð ðDefendant,ðð€ð ðAppelleeðð)׃5 ×Ý ƒ #ÃÝòòÚ  Ú3Ú  ÚóóÝ  Ý×  ×€had€provided€financing€to€National€through€a€line€of€credit.€€In€December,Ð ) y Ð1989,€Nationalððs€line€of€credit€was€in€the€amount€of€$200,000.00€and€had€become€a€troubled€loan.€Ð  ^ ÐShelby€Bank€sought€additional€security€and€Johns€agreed€to€give€Shelby€Bank€a€deed€of€trust€on€theÐ ó C ÐProperty€as€additional€security€on€the€line€of€credit.Ð Ø ( ÐÌà  àOn€December€1,€1989,€Johns€executed€a€deed€of€trust€in€favor€of€Shelby€Bank€(the€ð ðShelbyÐ ¢ ò  ÐBank€Deed€of€Trustðð).€€On€December€6,€1989,€the€Shelby€Bank€Deed€of€Trust€was€recorded€asÐ ‡×  ÐInstrument€No.€BJ€8669€in€the€Registerððs€Office€of€Shelby€County.€€The€Shelby€Bank€Deed€of€TrustÐ l¼  Ðconstituted€a€third€lien€on€the€Property.€€On€his€Loan€Application€to€Citicorp,€Johns€failed€to€discloseÐ Q¡  Ðthe€indebtedness€secured€by€the€Shelby€Bank€Deed€of€Trust.Ð 6†  ÐÌà  àMcSwain€Realtors€submitted€the€Loan€Application€to€Citicorp.€€As€part€of€the€processing€ofÐ P Ðthe€Loan€Application,€Citicorp€required€an€appraisal€of€the€Property.€€On€December€7,€1989,€MelanieÐ å5 ÐL.€Martin€and€James€F.€Gates€executed€a€Uniform€Residential€Appraisal€Report€as€to€the€Property,Ð Ê Ðwhich€estimated€the€value€of€the€Property€to€be€$320,000.00.€€On€or€about€December€28,€1989,Ð ¯ÿ ÐCiticorp€conditionally€approved€a€loan€to€Johns€in€the€amount€of€$253,700.00.€€One€of€the€conditionsÐ ”ä Ðof€the€loan€was€that€ð ð[a]ll€lien€loans€on€subject€property€[were]€to€be€paid€in€full€with€the€proceeds€ofÐ yÉ Ðthis€loan.ðð€€Another€condition€was€that€Citicorp€receive€a€title€insurance€commitment€showing€it€ð ðinÐ ^® Ðfirst€lien€position.ððÐ C“ ÐÌà  àJohns€selected€attorney€Michael€G.€Maddox€(ð ðMaddoxðð)€to€close€the€loan.€€On€or€beforeÐ  ] ÐDecember€13,€1989,€Maddox€examined€the€title€history€of€the€Property€and€discovered€the€ShelbyÐ òB ÐBank€Deed€of€Trust.€€Maddox€then€prepared€and€issued€a€ð ðCommitment€for€Title€Insuranceðð€(theÐ ×' Ðð ðCommitmentðð)€as€to€the€lien€of€the€deed€of€trust€that€would€secure€the€loan€from€Citicorp€to€JohnsÐ ¼  Ðin€the€amount€of€$253,700.00€(the€ð ðCiticorp€Deed€of€Trustðð).€€The€requirements€section€of€theÐ ¡ñ ÐCommitment€states€that€the€Empire€Deed€of€Trust€and€the€Smith€Deed€of€Trust€must€be€released.€€ItÐ ° Ðfurther€states€that€the€Shelby€Bank€Deed€of€Trust€must€be€released€or€subordinated€to€the€lien€of€theÐ •å ÐCiticorp€Deed€of€Trust.€€Citicorp,€however,€would€not€agree€to€the€subordination€of€the€lien€of€theÐ zÊ ÐShelby€Bank€Deed€of€Trust€to€the€lien€of€the€Citicorp€Deed€of€Trust.€€Instead,€Citicorp€required€thatÐ _¯ Ðthe€Shelby€Bank€Deed€of€Trust€be€released.€€Since€Citicorp€required€all€of€the€liens€on€the€Property€toÐ D” Ðbe€released,€Maddox€contacted€Shelby€Bank€about€the€release€of€its€deed€of€trust.€€On€or€about€JanuaryÐ ) y Ð9,€1990,€Danny€O.€Eaton,€the€president€of€Shelby€Bank,€sent€a€letter€concerning€Nationalððs€line€ofÐ  ^ Ðcredit.€€The€letter€states:Ð ó C ÐÌà8  àà8` Ð Ð àWill€Johns€DBA€National€Auto€Leasing,€Inc.€has€been€doing€businessÐ ½   Ðwith€Shelby€Bank€since€June€11,€1988.€€A€$200,000.00€line€of€creditÐ ¢ ò  Ðis€set€up€and€renewed€on€a€yearly€basis.€€All€payments€are€made€byÐ ‡×  ÐNational€Auto€Leasing,€Inc.€and€have€been€bonded€in€a€satisfactoryÐ l¼  Ðmanor€[sic].ÐQ¡ ` x` x ÐÌThe€Board€of€Directors€of€Shelby€Bank€ultimately€refused€to€subordinate€or€release€the€Shelby€BankÐ k  ÐDeed€of€Trust.Ð P ÐÌà  àSometime€prior€to€January€10,€1990,€Citicorp€sent€closing€instructions€to€Maddox.€€One€of€theÐ Ê Ðclosing€instructions€to€Maddox€was€that€Citicorp€would€be€in€a€ð ðclear€first€lien€position.ðð€€AnÐ ¯ÿ Ðadditional€instruction€required€that€ð ð[a]ll€lien€loans€on€subject€property€to€be€paid€in€full€[with]Ð ”ä Ðproceeds.ðð€€Johns€was€not€to€receive€any€of€the€proceeds€of€the€loan.€The€closing€instructions€fromÐ yÉ ÐCiticorp€required€that€the€line€of€credit€secured€by€the€Shelby€Deed€of€Trust€be€paid€in€full.Ð ^® ÐÌà  àOn€January€10,€1990,€Citicorp€loaned€$253,700.00€to€Johns.€€At€the€closing,€Johns€executedÐ (x Ða€Rapid€Equity€Mortgage€Note€and€the€Citicorp€Deed€of€Trust.€€The€property€described€in€the€CiticorpÐ  ] ÐDeed€of€Trust€is€the€same€property€described€in€the€Shelby€Bank€Deed€of€Trust,€the€Empire€Deed€ofÐ òB ÐTrust,€and€the€Smith€Deed€of€Trust.€€Despite€the€explicit€instructions€from€Citicorp€as€to€release€of€theÐ ×' ÐShelby€Bank€Deed€of€Trust,€Maddox€subsequently€disbursed€the€loan€proceeds€to€pay€the€indebtednessÐ ¼  Ðowed€under€the€Empire€Loan€and€the€Smith€Loan.€€The€Empire€Deed€of€Trust€and€the€Smith€Deed€ofÐ ¡ñ ÐTrust€were€subsequently€released.€€No€funds€from€the€Citicorp€loan€were€used€to€pay€JohnsððÐ †Ö Ðindebtedness€with€Shelby€Bank€and€Shelby€Bank€never€executed€a€Release€of€the€Shelby€Deed€ofÐ k » ÐTrust.Ð P!   ÐÌà  àOn€or€about€January€26,€1990,€Maddox€submitted€the€closing€documents€to€Citicorp.€€TheÐ #j" Ðclosing€documents€included€the€closing€instructions€to€Maddox.€€On€the€closing€instructions,€MaddoxÐ ÿ#O# Ðsigned€the€acknowledgment€that€he€had€insured€that€all€of€the€instructions€had€been€followed.€€In€theÐ ä$4 $ Ðpost„closing€document€review€process,€Citicorp€did€not€discover€that€the€Shelby€Bank€Deed€of€TrustÐ É%!% Ðhad€not€been€released.Ð ®&þ!& ÐÌà  àIn€1991,€Johns€defaulted€on€his€payment€obligation€to€Citicorp.€€At€the€time€of€the€default,€theÐ x(È#( Ðâ âoutstanding€indebtedness€was€$253,691.92.€€Interest€continued€to€accrue€on€the€outstanding€principal.€Ð ])­$) ÐIn€September,€1991,€counsel€for€Citicorp€initiated€foreclosure€proceedings€against€the€Property.׃ ×Ý ƒ #ÃÝòòÚ  Ú4Ú  ÚóóÝ  Ý×  ׀Р° Ðâ âDuring€a€title€search€made€in€conjunction€with€the€foreclosure,€counsel€for€Citicorp€discovered€thatÐ •å Ðthe€Shelby€Bank€Deed€of€Trust€had€not€been€released.€€When€David€Cocke,€as€counsel€for€Citicorp,Ð zÊ Ðcontacted€Maddox€about€the€unreleased€Shelby€Bank€Deed€of€Trust,€Maddox€claimed€that€a€releaseÐ _¯ Ðexisted.€€Maddox,€however,€never€produced€the€trust€deed€release.Ð D” ÐÌà  àIn€the€fall€of€1991,€National€defaulted€on€its€obligations€to€Shelby€Bank.€€Thereafter,€counselÐ  ^ Ðfor€Shelby€Bank€initiated€foreclosure€proceedings€against€the€Property.€€On€November€15,€1991,Ð ó C Ðcounsel€for€Shelby€Bank€sent€a€letter€to€Citicorp€notifying€it€of€the€pending€foreclosure€on€DecemberÐ Ø ( Ð17,€1991.€€On€December€17,€1991,€Shelby€Bank€foreclosed€upon€the€Shelby€Bank€Deed€of€Trust€andÐ ½   Ðpurchased€the€Property€at€the€foreclosure€sale€for€$225,000.00.€€Citicorp€did€not€take€any€action€to€stopÐ ¢ ò  Ðthe€foreclosure€from€occurring€on€December€17,€1991.€€Citicorp€did€not€bid€on€the€Property€at€theÐ ‡×  Ðforeclosure€sale€on€December€17,€1991.€€Shelby€Bank€subsequently€conveyed€the€Property€to€aÐ l¼  Ðpurchaser.Ð Q¡  ÐÌà  àOn€August€14,€1992,€Citicorp€filed€this€action.€€On€August€17,€1992,€Citicorp€recorded€anÐ k  ÐAbstract€of€Suit€(Lien€Lis€Pendes)€as€Instrument€No.€CZ€9920€in€the€Registerððs€Office€of€ShelbyÐ P ÐCounty.€€On€November€17,€1998,€Citicorp€filed€its€ð ðAmended€Complaint€for€Money€Damages,Ð å5 ÐSubrogation€of€Lien€and€Other€Appropriate€Reliefðð€(the€ð ðAmended€Complaintðð)€against€Shelby€BankÐ Ê Ðand€Maddox.׃×Ý ƒ #ÃÝòòÚ  Ú5Ú  ÚóóÝ  Ý×  ×€€The€Amended€Complaint€sets€forth€Citicorpððs€claim€for€equitable€subrogation€of€its€lienÐ ¯ÿ Ðto€the€first€lien€position.€€On€May€9,€2001,€Shelby€Bank€filed€its€Answer.€€Shelby€Bank€filed€anÐ ”ä ÐAmended€Answer€on€August€12,€2003.€€A€joint€Stipulation€of€Facts€was€filed€by€the€parties€onÐ yÉ ÐSeptember€10,€2003.€€Ð ^® ÐÌà  àThe€case€was€heard€on€December€11,€2003.€€The€trial€court€entered€is€ð ðOrder€of€FinalÐ (x ÐJudgmentðð€(the€ð ðOrderðð)€on€January€12,€2004.€€The€Order€reads,€in€relevant€part,€as€follows:Ð  ] ÐÌà8  àà8` Ð Ð à1)€Michael€G.€Maddox€(hereinafter€referred€to€as€ð ðMaddoxðð)€requestedÐ ×' Ðthat€Shelby€Bank€subordinate€or€release€the€lien€of€its€deed€of€trust€soÐ ¼  Ðthat€the€lien€of€the€deed€of€trust€benefitting€Citicorp€Mortgage,€Inc.Ð ¡ñ Ð(hereinafter€referred€to€as€ð ðCiticorpðð)€would€be€the€first€lien€on€theÐ †Ö Ðsubject€property.Ðk »` x` x ÐÐ P!   Ðà8  àà8` Ð Ð à2)€The€Board€of€Directors€of€Shelby€Bank€declined€to€do€so.а` x` x ÐÌà8  àà8` Ð Ð à3)€Because€of€the€decision€of€the€Board€of€Directors€of€Shelby€Bank,Ð zÊ Ðthe€loan€from€Citicorp€to€Wilburn€W.€Johns€should€not€have€beenÐ _¯ Ðfunded.ÐD”` x` x ÐÌà8  àà8` Ð Ð à4)€As€a€result,€as€to€Citicorpððs€claim€for€equitable€subrogation,€theÐ  ^ Ðequities€favor€Shelby€Bank,€and€therefore,€Citicorp€is€not€entitled€toÐ ó C Ðequitable€subrogation.ÐØ (` x` x ÐÌCiticorp€appeals€and€raises€one€issue€for€review€as€stated€in€its€brief:€Whether€Citicorp€Mortgage,€Inc.Ð ¢ ò  Ðshould€be€equitably€subrogated€to€the€lien€position€of€the€creditors€whose€loans€were€satisfied€with€theÐ ‡×  Ðproceeds€of€a€refinancing€loan€which€Citicorp€Mortgage,€Inc.€made?Ð l¼  ÐÌà  àSince€this€case€was€tried€by€the€court€sitting€without€a€jury,€we€review€the€case€ò òòòde€novoó óóó€uponÐ 6†  Ðthe€record€with€a€presumption€of€correctness€of€the€findings€of€fact€by€the€trial€court.€€Unless€theÐ m  Ðevidence€preponderates€against€the€findings,€we€must€affirm,€absent€error€of€law.€€ò òòòSeeó óóó€Tenn.€R.€App.Ð R ÐP.€13(d).Ð é9 ÐÌà  àGenerally,€liens€are€given€priority€based€on€the€order€in€which€they€are€recorded;€liens€recordedÐ ³ Ðfirst€typically€have€priority€over€those€recorded€at€a€later€date.òòò ò€Seeó óóó€T.C.A..€ðð€66-26-105€(2004).Ð ˜è ÐSubrogation€is€the€substitution€of€a€party€in€the€place€of€a€creditor,€so€that€the€party€in€whose€favorÐ Ï Ðsubrogation€is€exercised€succeeds€the€creditor€in€relation€to€the€debt.€òòò òCastleman€Constr.€Co.€v.Ð d´ ÐPenningtonó óóó,€432€S.W.2d€669,€674€(Tenn.1968).€Subrogation€is€a€creature€of€equity;€its€purpose€is€toÐ K› Ðprovide€an€equitable€adjustment€between€the€parties,€based€on€the€facts€and€circumstances€of€the€case.Ð 2‚ Ðòòò òIdó óóó.€at€675;€òòò òLawyers€Title€Ins.€Corp.€v.€United€American€Bankó óóó,€21€F.Supp.2d€785,€792€n€.2Ð g Ð(W.D.Tenn.1998).€It€is€not€a€right,€but€a€remedy€whose€application€depends€on€a€balancing€of€theÐ þN Ðequities€involved.€òòò òSee€Lawyer's€Titleó óóó,€21€F.Supp.2d€at€792;€òòò òCastleman€Constró óóó.,€432€S.W.2d€at€676.Ð ã3 ÐSubrogation€is€not€appropriate€where€the€equities€of€the€parties€are€equal,€where€the€parties'€rights€areÐ Ê Ðnot€clear,€or€where€it€would€prejudice€the€legal€or€equitable€rights€of€another.€òòò òLawyer's€Titleó óóó,€21Ð ¯ÿ ÐF.Supp.2d€at€792.€Relevant€to€this€balancing€of€equities€is€the€degree€of€negligence€of€the€party€seekingÐ –æ Ðsubrogation.€òòò òIdó óóó.€While€ordinary€negligence€or€mistake€alone€is€usually€not€a€bar€to€subrogation,Ð { Ë Ðespecially€where€the€equities€weigh€in€the€favor€of€the€party€seeking€subrogation,€culpable€negligenceÐ b!²  Ðwill€generally€bar€such€a€remedy.€òòò òSee€Dixon€v..€Morganó óóó,€285€S.W.€558,€562€(Tenn.1926).Ð G"—! ÐÌà  àThis€case€was€tried€on€stipulated€facts.€€The€stipulated€facts€indicate€that€Citicorp€had€actualÐ $c# Ðknowledge€of€the€Shelby€Bank€Deed€of€Trust€prior€to€the€closing€of€the€Citicorp€loan:Ð ø$H $ ÐÌà8  àà8` Ð Ð à61.€€Citicorp€had€actual€notice€of€the€existence€of€the€Shelby€Deed€ofÐ Â&"& ÐTrust€because€it€is€listed€in€the€Commitment€for€Title€Insurance€whichÐ §'÷"' ÐMaddox€prepared€and€forwarded€to€Citicorp.ÐŒ(Ü#(` x` x ÐÌà8  àà8` Ð Ð à62.€€The€notes€in€the€Transmittal€Summary€dated€December€21,€1989Ð V*¦%* Ðâ âas€well€as€other€documents€in€Citicorpððs€file€indicate€that€Citicorp€wasÐ ;+‹&+ Ðaware€of€the€existence€of€the€Shelby€Deed€of€Trust€prior€to€the€closingÐ ° Ðon€January€10,€1990....Еå` x` x Ðâ âÌCiticorpððs€actual€knowledge€of€the€Shelby€Deed€of€Trust€is€also€reflected€in€the€notes€of€Citicorpððs€loanÐ _¯ Ðprocessors,€which€were€made€prior€to€the€January€10,€1990€closing.€€The€note,€dated€January€8,€1990,Ð D” Ðand€attached€as€Exhibit€X€to€the€stipulated€facts,€states:Ð ) y ÐÌà8  àà8` Ð Ð àThis€line€of€credit€[from€Shelby€Bank]€MUST€be€closed,€paid€in€full€&Ð ó C Ðreleased€of€record.€€The€borrower€could€release€this€of€record€but€couldÐ Ø ( Ðstill€have€a[n]€open€line€of€credit€(this€is€unacceptable!)€€Thatððs€whyÐ ½   Ðweððd€need€evidence€of€payment€in€full€&€closed.Т ò ` x` x ÐÌ€à  à€The€facts€indicate€that€Citicorp€wanted€to€be€the€only€lienholder€on€the€Property€and€thatÐ l¼  ÐCiticorp€would€not€agree€to€subordination€of€the€Shelby€Bank€Deed€of€Trust:Ð Q¡  ÐÌà8  àà8` Ð Ð à62.€...Citicorp€required€that€the€Shelby€Bank€Deed€of€Trust€be€released.Ðk ` x` x ÐÌà8  àà8` Ð Ð à*€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€*€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€*Ðå5` x` x ÐÌà8  àà8` Ð Ð à64.€€Citicorp€would€not€agree€to€the€subordination€of€the€lien€of€theÐ ¯ÿ ÐShelby€Deed€of€Trust€to€the€lien€of€Citicorp€Deed€of€Trust,€andÐ ”ä ÐCiticorp€required€that€the€Shelby€Bank€Deed€of€Trust€be€released.ÐyÉ` x` x ÐÌà8  àà8` Ð Ð à65.€€Citicorp€required€that€all€existing€indebtedness€secured€by€theÐ C“ ÐSubject€Property€be€paid€in€full€and€extinguished€in€conjunction€withÐ (x Ðits€loan€to€Johns.Ð ]` x` x ÐÌà  àIn€response€to€a€request€that€Citicorp€agree€to€a€subordination€agreement€with€Shelby€Bank,Ð ×' ÐCiticorpððs€ð ðResubmission€Sheet,ðð€dated€January€8,€1990,€and€attached€as€€Exhibit€Y€to€the€stipulatedÐ ¼  Ðfacts,€reads,€in€relevant€part,€as€follows:Ð ¡ñ ÐÌà8  àà8` Ð Ð àREASON€FOR€RESUBMISSION:Ðk »` x` x ÐÌà8  àà8` Ð Ð àWill€we€ok€a€subordination€agreement€to€Shelby€Bank.€€Title€work€à8@ö` x` xàà8@ö¸ ¸ àÐ 5"…! Ðshows€200,000€lien€against€property€(itððs€a€line€of€credit€on€[Johnsðð]Ð #j" Ðbusiness.€€The€bank€will€subordinate€if€weððll€ok€it.€€Attached€is€[a]Ð ÿ#O# Ðcopy€of€title€work€&€deed€to€Shelby€Bank....Ðä$4 $` x` x ÐÌà8  àà8` Ð Ð àRESPONSE€NEEDED€BY:Ю&þ!&` x` x ÐÌà8  àà8` Ð Ð àASAPð!ðtoday€if€at€all€poss[ible].€€Closing€Wednesday€[January€10,Ð x(È#( Ð1990].Ð])­$)` x` x ÐÌâ âà8  àà8` Ð Ð àRESPONSE€AND€REASON€IF€DENIED:Ð'+w&+` x` x Ðà8  àà8` Ð Ð àSub[ordination]€agreement€is€not€ok;€combined€LTV€exceeds€100%Ð ° Ðâ âLTV€(141.78%)€and€also€borrower€will€not€qualify€with€pmt.€mustÐ •å Ðcalculate€on€the€entire€line€of€credit.ÐzÊ` x` x Ðà8  àÐ Ð Ð  ÐWhether€there€was€ever€an€offer€of€subrogation€on€the€table,€it€is€clear€from€Citicorpððs€internalÐ D” Ðmemoranda€that€Citicorp€was€not€willing€to€accept€such€an€offer€from€Shelby€Bank.€Ultimately,Ð ) y Ðhowever,€Shelby€Bankððs€Board€of€Directors€refused€to€either€subordinate€or€to€release€the€Shelby€DeedÐ  ^ Ðof€Trust.€€In€the€face€of€this€knowledge,€Citicorp€could€have€done€one€of€at€least€two€things€to€stop€theÐ ó C Ðloss€that€actually€occurred.€€Since€Citicorp€had€knowledge€of€the€Shelby€Bank€Deed€of€Trust€prior€toÐ Ø ( Ðthe€January€10,€1990€closing,€Citicorp€could€have€simply€declined€to€loan€money€to€Johns.€€In€theÐ ½   Ðalternative,€Citicorp€could€have€loaned€Johns€sufficient€funds€to€pay€off€not€only€the€Empire€Loan€andÐ ¢ ò  Ðthe€Smith€Loan€but€also€enough€to€pay€off€the€National€line€of€credit€with€Shelby€Bank.€€Shelby€BankÐ ‡×  Ðcould€then€have€closed€the€line€of€credit,€which€it€would€likely€have€been€glad€to€do€given€its€concernÐ l¼  Ðð ðabout€the€amount€of€Johnsðð€level€of€existing€indebtedness€if€the€Shelby€Line€of€Credit€remainedÐ Q¡  Ðopen.ðð׃×Ý ƒ #ÃÝòòÚ  Ú6Ú  ÚóóÝ  Ý×  ×€€€Once€the€line€of€credit€was€closed,€Shelby€Bank€would€have€been€obligated€to€release€theÐ 6†  ÐShelby€Bank€Deed€of€Trust,€thus€moving€Citicorp€into€first€position.€Ð k  ÐÌà  àCiticorp€argues€that€its€loan€to€Johns€worked€a€benefit€to€Shelby€Bank.€€Specifically,€the€moneyÐ å5 ÐCiticorp€loaned€to€Johns€was€used€to€pay€off€the€Empire€Loan€and€the€Smith€Loan€and€the€EmpireÐ Ê ÐDeed€of€Trust€and€the€Smith€Deed€of€Trust€were€subsequently€released,€which€resulted€in€the€ShelbyÐ ¯ÿ ÐBank€Deed€of€Trust€being€moved€into€the€first€position€without€Shelby€Bank€taking€any€action.€Ð ”ä ÐConsequently,€Citicorp€asserts€that€the€Shelby€Bank€Deed€of€Trust€should€be€subrogated€to€its€ownÐ yÉ Ðlien.€€This€argument€is€tenuous€at€best.€€While€it€is€true€that,€where€one€creditor€mistakenly€pays€theÐ ^® Ðdebt€of€another,€Tennessee€courts€have€approved€equitable€subrogation,€ò òòòsee€Dixon€v.€Morganó óóó,€285Ð C“ ÐS.W.€558,€560€(Tenn.€1926),€the€facts€of€this€case,€as€outlined€above,€show€that€Citicorp€knew€aboutÐ *z Ðthe€Shelby€Bank€Deed€of€Trust€prior€to€closing€on€its€loan€to€Johns.€€Yet,€in€the€face€of€this€knowledge,Ð _ ÐCiticorp€proceeded€to€disperse€the€funds.€€Under€the€principles€of€equity,€Citicorp€cannot€now€relyÐ ôD Ðupon€this€Court€to€undo€what€it€could€have€prevented€by€either€refusing€to€make€a€loan€to€Johns€in€theÐ Ù) Ðface€of€unsettled€lien€position,€or€by€advancing€sufficient€funds€to€pay€off€the€Shelby€BankÐ ¾ Ðindebtedness,€thereby€securing€the€first€lien€position.€òòò òSeeó óóó€òòGibson's€Suits€in€Chancery€óó(Seventh€Ed.)Ð £ó ÐMaxims€and€Principles€of€Equity€ðððð€25,׃ T×Ý ƒ #ÃÝòòÚ  Ú7Ú  ÚóóÝ  Ý×  ×€28.׃à×Ý ƒ #ÃÝòòÚ  Ú8Ú  ÚóóÝ  Ý×  ×Ð ŠÚ ÐÌà  àFor€the€foregoing€reasons,€we€affirm€the€Order€of€the€trial€court.€€Costs€of€this€appeal€areÐ T!¤  Ðassessed€against€the€Appellant,€Citicorp€Mortgage,€Inc.,€and€its€surety.Ð 9"‰! Ðà8  àÐ Ð Ð  ÐÌÌÔ#†¼­»IK?è #ÔÔ€K?I»¼­ÔÌÐ ²&"& ЇÌà  àà ` àà ¸ àà  àà h àà À à__________________________________________Ð •å Ðà  àà ` àà ¸ àà  àà h àà À àW.€FRANK€CRAWFORD,€PRESIDING€JUDGE,€W.S.