                               FILED
                               December 17, 1999

                               Cecil Crowson, Jr.
                              Appellate Court Clerk
RICHARD D. MINTON and                 )
KATHLEEN MINTON,                      )
                                      )
     Plaintiffs/Appellees,            )       Appeal No.
                                      )       M1998-00491-COA-R3-CV
v.                                    )
                                      )       Davidson Chancery
WILLIAM R. LONG, et al,               )       No. 97-1985-III
                                      )
     Defendants/Appellants.           )




                    COURT OF APPEALS OF TENNESSEE


     APPEAL FROM THE DAVIDSON COUNTY CHANCERY COURT
                         AT NASHVILLE, TENNESSEE


         THE HONORABLE ELLEN HOBBS LYLE, CHANCELLOR




C. BENNETT HARRISON, JR.
Cornelius & Collins
Nashville City Center, Suite 2700
511 Union Street
P. O. Box 190695
Nashville, Tennessee 37219
      ATTORNEY FOR PLAINTIFFS/APPELLEES




                                                                      Page 1
WINSTON S. EVANS
Evans, Jones & Reynolds
1810 First Union Tower
150 Fourth Avenue, North
Nashville, Tennessee 37219-2424
      ATTORNEY FOR DEFENDANTS/APPELLANTS



                          REVERSED AND REMANDED


                                                        WILLIAM B. CAIN, JUDGE
                                  OPINION

        This case involves a parking easement over and upon a piece of commercial
property located in Nashville. The property with the easement, the servient estate,
was the subject of a mortgage foreclosure sale. We primarily consider two issues
here: first, whether the easement continued to exist after the foreclosure and, second,
whether the post-foreclosure purchasers of the servient estate are now estopped by
deed from asserting that the foreclosure extinguished the easement.


        The trial court granted summary judgment to the owners of the property
which benefits from the easement, the dominant estate owners, holding as a matter of
law that the foreclosure sale did not extinguish the parking easement. The court also
held that since the trustee’s deed, subsequent to foreclosure, recognized the
existence of the parking easement as did the post-foreclosure deeds of all
subsequent grantees of the servient estate, the defendant and present owner of the
servient estate was estopped by deed to deny the continued existence of the
easement. We reverse the trial court’s grant of summary judgment as we find that
the foreclosure sale did terminate the Parking and Access Easement. Furthermore,
we find that this case must be remanded for a determination of the factual issues
including the issue of what intent was evinced by the transfer of the deed of the
servient estate subject to the easement.


I.      FACTS


                                                                                          Page 2
        Prior to October 8, 1984, both pieces of adjacent property involved in this
case, a dominant and a servient tract of land, were owned by Tropics Properties, a
Tennessee general partnership. On October 8, 1984, Tropics Properties sold what
was to become the servient estate to Lon F. Raby, Trustee. Contemporaneous with
this sale, Raby granted a written and recorded Parking and Access Easement to
Tropics Properties.    By this instrument, Raby granted to Tropics Properties a
nonexclusive easement for parking and access on the property contemporaneously
transferred to him by Tropics Properties, said easement being in favor of the
adjacent properties still retained by Tropics Properties and upon which it was then
operating the Steeple Chase restaurant.        This Parking and Access Easement
contained the following provision:
        All parking and access rights granted by this instrument shall at all
        times and at any given time be subordinate to any existing first
        mortgage(s) on either or both properties affected h[e]reby, whether
        such mortgage(s) now exist or may be hereafter imposed; and such
        subordination shall occur and be operative and effective by the fact
        of the existence of such mortgage(s) of public record, it being the
        intent hereof that no subordination agreement or acknowledgment of
        subordinate status shall be necessary in order to effect such
        subordinate status, and that the release and satisfaction of a first
        mortgage or first mortgages, followed at any interval by the creation
        of a new first mortgage or first mortgages shall automatically confer
        priority on the new mortgage(s).

        On February 28, 1985, Lon F. Raby, Trustee, executed a deed of trust in
favor of Third National Bank conveying the servient estate in trust to J. M. Grissim,
Trustee, to secure a promissory note in the amount of $3,750,000.00. This trust
deed provided in part that “[b]orrower covenants that borrower is lawfully seized of
said property and that the same is free and clear of all taxes, liens and encumbrances
whatsoever, except as set out in Exhibit “B” attached hereto and incorporated herein
by reference.” Exhibit “B” provides in pertinent part as follows: “9. Parking and
access easement of record in book 6399, page 533, said Register’s Office
(subordinate to the deed of trust to which this exhibit is attached).”


        Raby defaulted and Third National Bank foreclosed on the servient estate.



                                                                                         Page 3
At the October 5, 1990 foreclosure sale, Third National Bank was the highest bidder
at $2,949,263.00.     On that same date, W. Fred Williams, Successor Trustee,
conveyed to Third National Bank by deed the servient estate and other property
encumbered by the trust deed. The deed from the trustee to the bank provided that
the sale was subject to certain easements, restrictions, and liens, including the
following: “10. Parking and access easement of record in book 6399, page 533, said
Register’s Office.”


        On September 18, 1991, the Steeple Chase restaurant having closed,
Tropics Properties leased the dominant estate to plaintiffs in this action, Richard and
Kathleen Minton, who operated thereon Illusions Salon and Day Spa, a beauty and
health care salon.     This lease agreement specifically provided that the leased
premises included parking rights as set forth in the Parking and Access Easement
previously executed by Raby, Trustee, on October 8, 1984. This lease also gave the
Mintons the option to purchase the dominant estate upon certain terms and
conditions.


        On June 22, 1993, Third National Bank sold the servient estate to Belle
Meade Galleria I, a limited partnership.     The deed of conveyance from Third
National Bank to Belle Meade Galleria I was made subject to the Parking and Access
Easement favoring the dominant estate.


        On January 27, 1994, the Mintons exercised their option and purchased the
dominant estate from Tropics Properties by deed specifically providing that the
conveyance was made: “Together with and subject to all of grantors rights in and to
the nonexclusive parking and access easement of record in book 6399, page 533,
said Register’s Office, subject to the terms and conditions therein, including but not
limited to automatic subordination of rights to any recorded first mortgage(s).”


        By deed dated September 30, 1996, Belle Meade Galleria I sold the servient
estate, by special warranty deed, to the defendant in this case, William R. Long “



                                                                                          Page 4
subject to the following: ...6. Parking and access easement of record in book 6399,
page 533, said Register’s Office.” On or about October 22, 1996, Long caused to
be constructed a fence between the dominant and servient estates effectively
preventing the Mintons from exercising any rights under the Parking and Access
Easement.     On June 13, 1997, the Mintons filed suit against Long seeking a
declaration by the court of the validity of the Parking and Access Easement and a
mandatory injunction for removal of the fence.


         On August 25, 1997, Belle Meade Galleria I, by special warranty deed of
correction, reconveyed the servient estate to Long, deleting any reference to the
Parking and Access Easement in favor of the Minton property. On September 2,
1997, Long answered the complaint and by counter-claim joined W. Fred Williams,
Trustee and SunTrust Bank of Tennessee as successor by merger of Third National
Bank, seeking to quiet title to the servient estate and reform all deeds in Long’s chain
of title so as to delete all exceptions and reservations concerning the Parking and
Access Easement.


         The trial court granted summary judgment to plaintiffs holding that the
Parking and Access Easement survived the foreclosure sale of the servient estate and
further that the defendants were estopped by deed to deny the continued existence
of the Parking and Access Easement, the trial court granted summary judgment to
plaintiffs. The trial court further sua sponte dismissed the counter claim of Long
against the Mintons, the bank and the trustee seeking to reform the deeds in the chain
of title to the servient estate.


II.      ISSUES
         In his first issue, Long challenges the trial court’s holding that the Parking
and Access Easement survived the foreclosure sale. There is little doubt that in
cases where a properly recorded deed of trust predates the establishment of an
easement or encumbrance, foreclosure and sale under the deed of trust terminates
such easement or encumbrance. In Parker, Flenniken & Claiborne v. Thacker, 15



                                                                                           Page 5
Tenn. App. 553 (1932), it was held that foreclosure and sale of a first mortgage
effectively cut off a subsequent mortgage and the purchaser of the property at
foreclosure sale took it free and clear of the encumbrance of a second mortgage. In
the same context this court has held that “[i]t is in the nature of the infirmity of a
junior mortgage or lien that it may be extinguished in the enforcement of a superior
mortgage or lien.” Third Nat’l Bank v. McCord, 688 S.W.2d 446, 450 (Tenn. App.
1985).


           That the same rule applies when the post-mortgage encumbrance is an
easement appears to be settled.
           The only dispute in this case is over the easement granted [the
           defendant] over the second tract. The Government correctly states
           that the issue before the Court is whether an easement created over
           lands subject to a mortgage has priority or survives the foreclosure
           of the mortgage by the mortgagee. The government cites Kling v.
           Ghilarducci, 3 Ill.2d 454, 121 N.E.2d 752 (1954) for the
           proposition that an easement created subsequent to the execution of
           a mortgage is eliminated by foreclosure of the mortgage.

           The holding in Kling was cited with approval in Bush v. Duff, 754
           P.2d 159 (Wyo. 1988). The Bush court faced a similar situation
           involving the granting of a mortgage followed by the establishment
           of a way of necessity over a servient estate previously mortgaged.
           Even though the court recognized the existence of a common-law
           way of necessity to the owner of a landlocked tract, the court
           concluded that the foreclosure of the mortgage extinguished the way
           of necessity.
                                            ...
           The government is correct in stating that [the defendant’s] easement
           is extinguished upon foreclosure of the subject mortgage.

United States v. Roberts, 788 F.Supp. 555, 556-57 (S.D. Fla. 1991).

           Particularly enlightening is the following discussion by the Court of Appeals
of Utah:
           A mortgage that antedates a lease is a superior security interest to
           that lease. “If the sale of the landlord’s interest is forced by one
           having a paramount title to that of the tenant, such as a mortgagee
           whose interest existed at the time the lease was made, the tenant’s
           interest will be defeated by the sale.” Restatement (Second) of


                                                                                           Page 6
        Property § 15.1 (1981).
            Whether the lease addresses the matter or not, the estate for
            years cannot last longer than the estate from which it is
            carved. Thus a term of years ends whenever the landlord’s
            estate ends . . . . [T]he subordinate tenant, while losing the
            right to possession in favor of the paramount titleholder, may
            nevertheless have a cause of action against his or her landlord
            for breach.
        2 Richard R. Powell, Powell on Real Property § 16.03(7)(d) at
        16-85 (1996). See also Evershed v. Berry, 20 Utah 2d 203, 205-6,
        436 P.2d 438, 439-40 (1968) (“The rights and liabilities of the
        parties under a lease made after the mortgage are very different from
        those which exist when the mortgage is made after the lease . . . . A
        mortgagor cannot make a lease . . . which will be binding upon the
        mortgagee.”) (citations omitted); 4 Thompson on Property §
        39.06(b)(1) (David A. Thomas ed. 1994) (“As with other forms of
        tenancy, the tenant’s rights under the lease no longer exist if the
        landlord’s estate comes to an end in any way other than a voluntary
        transfer to a successor . . . . [A] mortgage foreclosure in which the
        landlord’s interest is involuntarily relinquished to satisfy a debt
        obligation which was secured by the landlord’s property prior to
        creation of the lease results in termination of the tenant’s interest in
        the property”).

Consolidated Realty Group v. Sizzling Platter, Inc., 930 P.2d 268, 272 (Utah Ct.
App. 1996).


        In this case, the grant by Raby of the Parking and Access Easement over the
servient estate predates the mortgage of the servient estate to Third National Bank.
The instrument granting the Parking and Access Easement contains a provision
automatically subordinating all parking and access rights to any first mortgage, either
existing or thereafter imposed. The deed of trust by Raby to Third National Bank
provides that the property conveyed in trust (the servient estate) is encumbered by
the Parking and Access Easement but shows such encumbrance with the following
caveat: “9. Parking and Access Easement of record in book 6399 page 533, said
Register’s Office (subordinate to the deed of trust to which this exhibit is attached).”
(emphasis added).


        The effect of such a subordinating provision is addressed by the Court of


                                                                                           Page 7
Appeals of California in Dover Mobile Estates v. Fiber Form Products, Inc., 270
Cal.Rptr. 183 (Cal. Ct. App. 1990). In the Dover case, Fiber Form was a tenant of
Old Town Properties, Inc. under a five year lease beginning in 1985. This lease
contained the following subordination clause:
        Subordination of Lease to Loans. Tenant agrees that this Lease
        shall be subordinate to any mortgages or deeds of trust in the nature
        of mortgages that may hereafter be placed upon the premises, to
        any and all advances made or to be made under them, to the interest
        on all obligations secured by them, and to all renewals,
        replacements, and extensions of them; provided, that if any
        mortgage or beneficiary elects to have this Lease superior to its
        mortgage or deed of trust and gives notice of its election to Tenant,
        then this Lease shall be superior to the lien of any such mortgage or
        deed of trust and all renewals, replacements and extensions thereof,
        whether this Lease is dated or recorded before or after the mortgage
        or deed of trust.

Id. at 184 n. 1. Subsequent to the Fiber Form Lease, Old Town encumbered the
property by a second deed of trust to Saratoga Savings and Loan Association. Old
Town defaulted and at the foreclosure sale, the property was purchased by the
predecessor in interest to Dover Mobile Estates. Fiber Form, the tenant, suffered a
downturn in business and advised Dover that the foreclosure sale had extinguished
their lease and that thereafter Fiber Form was only a month to month tenant. Fiber
Form vacated the premises and Dover sued to enforce the lease.


        Holding that the title conveyed by a trustee’s deed relates back to the date
when the deed of trust was executed and that the trustee’s deed therefore passes the
title held by the trustee at the time of such execution, the court then addressed the
subordination provisions:
        A lease may also be deemed subordinate by virtue of a
        subordination agreement. “Subordination agreements are often
        used to adjust the priorities between commercial tenants and the
        mortgagee of the real estate, ... Absent such an adjustment,
        priorities will be governed by the recording acts and related
        common law principles.”

        A lease which is subordinate to the deed of trust is extinguished by
        the foreclosure sale. A foreclosure proceeding destroys a lease


                                                                                        Page 8
         junior to the deed of trust, as well as the lessee’s rights and
         obligations under the lease. As stated in section 15.1 of the
         Restatement Second of Property, Landlord and Tenant (1977), “[i]f
         the sale of the landlord’s interest is forced by one having a
         paramount title to that of the tenant, such as a mortgagee whose
         interest existed at the time the lease was made, the tenant’s interest
         will be defeated by the sale.”

         In this case the lease itself provides that it is subordinate to the deed
         of trust. Section 21.1 provides, “[t]enant agrees that this Lease
         shall be subordinate to any mortgages or deeds of trust ... that may
         hereafter be placed upon the premises, ...” Although section 21.1
         does give the mortgagee or beneficiary the option to elect “to have
         this Lease superior to its mortgage or deed of trust ...”, that option
         was never exercised. Accordingly, it is clear that the lease is
         subordinate to the deed of trust and was therefore extinguished by
         the trustee’s sale.

Dover, 270 Cal.Rptr. at 185-86 (citations omitted).


         In the instant case, the Parking and Access Easement encumbering the
servient estate contained a subordination agreement much akin to that contained in
the Dover lease. The deed of trust by Raby to Third National Bank contained a
specific provision that the Parking and Access Easement was subordinate to the
deed of trust. Upon default by Raby, this deed of trust was foreclosed and thus sale
at foreclosure by the trustee terminated the Parking and Access Easement. We
therefore find that the trial court erred in granting summary judgment to the Mintons.



         Turning to the next issue, we note that the cross-motion for summary
judgment by Long would be well taken were it not for the fact that the trustee
conveyed the property to Third National Bank as purchaser at the foreclosure sale
by a deed purporting to make the servient estate subject to rather than free of the
Parking and Access Easement. In granting summary judgment to the Mintons, the
trial court held as follows:
         While the foreclosure sale ordinarily would have extinguished the
         easement because the easement, when created, was made
         subordinate to the first mortgage, the foreclosure sale in this case


                                                                                         Page 9
        did not extinguish the easement. The deed conveying the servient
        tenement in connection with the foreclosure sale specifically recited
        that the property was subject to the easement. That recitation is a
        binding expression of intent as to the parameters of the servient
        tenement.

        Dr. Long is estopped by the deeds in his chain of title to deny the
        existence of the easement. The plaintiff’s predecessor was
        conveyed the easement by a special warranty deed. The easement
        deed is referenced in Dr. Long’s chain of title as well as the
        quitclaim deed the plaintiff’s received from their lessor. The
        plaintiffs, then, are not strangers to the chain of title as to the
        easement.

The trial court errs in holding as a matter of law that the recitation in the trustee’s
deed to Third National Bank is conclusive as to intent. The sale at foreclosure
terminated the Parking and Access Easement. The record is devoid of any evidence
as to why the trustee included in his deed the language purporting to make the
servient estate still subject to the easement. The record is likewise devoid of any
evidence as to why Third National Bank, predecessor in interest of Long and
purchaser at the foreclosure sale, accepted the trustee’s deed which purported to
convey less than the full fee simple estate held by the trustee. Whether this involves
a mistake as asserted by Long or was an intentional act as asserted by the Mintons
and found by the trial court involves issues of fact and not issues of law.


        Long asserts that none of the reservations as to this easement contained in
his chain of title, including the deed from the trustee to Third National Bank, can
create any rights in the Mintons since they were strangers to all of the transactions in
Long’s chain of title. Long relies on Pitman v. Sweeney, 661 P.2d 153 (Wash. Ct.
App. 1983), which is based on the much disputed common law rule that a
reservation or exception in a deed cannot create rights in strangers to the instrument.
See W.W. Allen, Annotation, Reservation or Exception in Deed in Favor of
Stranger, 88 A.L.R.2d 1199 (1963). The common law rule is well articulated by the
Supreme Court of Wyoming:
           “No interest or estate in land may be created in favor of the
           stranger to the title by means of a reservation or exception in



                                                                                           Page 10
            the conveyance thereof.” “...[I]n a deed neither a reservation
            nor an exception in favor of a stranger to the instrument can,
            by force of ordinary words of exception or reservation,
            create in the stranger any title, right or interest in or respecting
            the land conveyed.”

Simpson v. Kistler Inv. Co., 713 P.2d 751, 754 (Wyo. 1986) (citations omitted).


         In abandoning prior cases which had supported the common law rule, the
Wyoming Supreme Court applied the rule that the intention of the grantor should
prevail relying on the rationale of a law review article:
         After a comprehensive review of the case law then existent, the
         author of the Oklahoma law journal article in 1953 concluded:
            “Numerically speaking, where the interest involved amounts
            to an estate in land, the cases which hold the reservation
            operative far outweigh those which refuse to give it operative
            effect. This is the quantitative analysis. But what about the
            comparative logic of the two rules–the qualitative analysis?
            As was intimated earlier, the considerations which originally
            gave birth to the common-law rule, particularly those of
            public policy, are no longer persuasive. The common-law
            rule was founded on the major premise that it was more
            desirable from society’s standpoint to have uniformity in its
            deeds of conveyance than it was to give effect to an
            individual grantor’s intention. The ‘Rule of Intention,’ which
            is the guiding light for our modern courts in interpreting
            deeds, is founded on the converse of this major premise.” ...

            “That a rule so incongruous with our modern social and legal
            philosophy has survived in even a modified form is in itself
            something of a mystery. Certainly any rule which can only
            operate to defeat a grantor’s intention is undesirable and
            should be discarded unless some overriding public policy
            requires its retention. It is difficult to perceive any overriding
            public policy to support the common-law rule because, as
            pointed out earlier, the rule condemns only the method of
            transferring title rather than the transfer itself. ... It is
            submitted that the common-law rule is an oppressive thorn
            which has ceased to justify its existence.”

Simpson, 713 P.2d at 759.

         Clearly, the modern trend is toward abandonment of the common law rule.


                                                                                   Page 11
See, e.g., Willard v. First Church of Christ, Scientist, Pacifica, 498 P.2d 987 (Cal.
1972); Blair v. City of Pikeville, 384 S.W.2d 65 (Ky. 1964); Townsend v. Cable,
378 S.W.2d 806 (Ky. 1964); Holland v. Holland, 509 S.W.2d 91 (Mo. 1974).
Long before this modern trend, Tennessee had declined to apply the “stranger to the
deed” rule. In 1926, the court held that “[t]he courts have most wisely abandoned
technical rules in the construction of conveyances in this state, and look to the
intention of the instrument alone for their guide; that intention to be arrived at from
the language of the instrument read in the light of the surrounding circumstances.”
Dalton v. Eller, 153 Tenn. 418, 423, 284 S.W. 68, 70 (1926).


        The rationale for adhering to the common law rule has been articulated by a
New York court as follows:
        The long-accepted rule in this State holds that a deed with a
        reservation or exception by the grantor in favor of a third party, a
        so-called “stranger to the deed”, does not create a valid interest in
        favor of that third party. Plaintiff invites us to abandon this rule and
        adopt the minority view which would recognize an interest reserved
        or excepted in favor of a stranger to the deed, if such was the
        clearly discernible intent of the grantor.

        Although application of the stranger-to-the-deed rule may, at times,
        frustrate a grantor’s intent, any such frustration can readily be
        avoided by the direct conveyance of an easement of record from
        the grantor to the third party. The overriding considerations of the
        “public policy favoring certainty in title to real property, both to
        protect bona fide purchasers and to avoid conflicts of ownership,
        which may engender needless litigation,” persuade us to decline to
        depart from our settled rule. We have previously noted that in this
        area of law, “where it can reasonably be assumed that settled rules
        are necessary and necessarily relied upon, stability and adherence to
        precedent are generally more important than a better or even a ‘
        correct’ rule of law.” Consequently, we hold here that any
        right-of-way reserved to plaintiff’s predecessor-in-interest in the
        defendant’s deed was ineffective to create an express easement in
        plaintiff’s favor.

Estate of Thomson v. Wade, 509 N.E.2d 309 (N.Y. 1987) (citations omitted).

        In a case analogous to the case at bar, the Supreme Court of Alaska, never



                                                                                          Page 12
having recognized the common law rule, affirmatively repudiated it. In Aszmus v.
Nelson, 743 P.2d 377 (Alaska 1987), both parties traced their title to non-adjacent
portions of government lot 32 to one Charles Swoboda.           Nelson owned the
northeast corner of lot 32 and Aszmus owned the southeast part of the same lot.
Nelson acquired his property in 1965 and Aszmus acquired his property in 1968.
Nelson was using an access route called Swoboda Avenue, which ran along the east
edge of lot 32 and provided occupants of the southern portion of the lot with access
to a road on the north. Nelson blocked the road and Aszmus sued asserting that the
original deed, executed by Swoboda’s estate to Nelson’s predecessor in title,
created an easement over Nelson’s land for their benefit. This deed had conveyed
the Nelson property “subject to” among other encumbrances “a fifteen feet [sic]
easement for an access roadway along the east boundary line of said Lot Thirty-two
(32).” Id. at 378. Subsequent deeds in Nelson’s chain of title provided that the
property was sold subject to easements of record.


        Nelson moved for summary judgment asserting that the “subject to”
language of the Swoboda deed did not contain words of grant and so was
ineffective to create an easement. The trial court granted summary judgment to
Nelson and Aszmus appealed. The Supreme Court of Alaska reversed holding that
the intent of the Swoboda estate in its conveyance to Nelson’s predecessor in title
presented unresolved issues of material fact precluding summary judgment. The
court reasoned as follows:
        Nelson’s argument is based upon the common law rule that a
        reservation or exception in a deed cannot create rights in third
        parties. . . .
        Since a stranger to the deed had no interest in the property
        conveyed, common law decreed that he could have no interest to be
        excepted from the grant, and none from which a reservation could
        be carved. Willard v. First Church of Christ, Scientist, 7 Cal.3d
        473, 102 Cal.Rptr. 739, 741, 498 P.2d 987, 989 (1972); see 88
        A.L.R.2d at 1202. “While a reservation could theoretically vest an
        interest in a third party, the early common law courts vigorously
        rejected this possibility, apparently because they mistrusted and
        wished to limit conveyance by deed as a substitute for livery by
        seisin.” Willard, 102 Cal.Rptr. at 741, 498 P.2d at 989. The



                                                                                       Page 13
        Willard court termed the rule’s foundation “an inapposite feudal
        schackle;” it found the rule in conflict with the goal of effecting the
        grantor’s intent, and it asserted that the rule produced an inequitable
        result because grantees paid less for encumbered property. Id.
        Accordingly, the court rejected the rule. Id., 102 Cal.Rptr. at 743,
        498 P.2d at 991.

        The New York Court of Appeals recently upheld the rule on the
        grounds that the rule protects bona fide purchasers and avoids
        conflicts of ownership. Estate of Thomson v. Wade, 69 N.Y.2d
        570, 516 N.Y.S.2d 614, 509 N.E.2d 309 (1987). The court stated
        that, in the area of property law, “‘stability and adherence to
        precedent are generally more important than a better or even a ‘
        correct’ rule of law . . . .’” Id., 516 N.Y.S.2d at 615, 509 N.E.2d at
        310. We believe the view expressed by the California court in
        Willard represents the preferred position and therefore join the
        other jurisdictions which have similarly rejected the rule. The rule
        clearly conflicts with our general view that a deed should be
        construed to effect the intent of the grantor. We find the
        justification for the rule articulated by the New York court
        unpersuasive. The rule has never been part of our case law and we
        perceive no policy reason for adopting it now.

        Therefore, even if the Aszmuses acquired their property (or it was
        otherwise separated from the Swoboda property) before the
        Swoboda deed was executed, the Swoboda deed may have
        effectively created an easement across the Nelson lot for the benefit
        of the Aszmuses’ lot.

Aszmus v. Nelson, 743 P.2d 377, 379-380 (Alaska 1987) (citations omitted).


        Following Dalton v. Eller, 153 Tenn. 418, 284 S.W. 68 (1926), and the
cases disavowing the common law rule, we hold, like Aszmus v. Nelson held, that
what the trustee intended in conveyance to Third National Bank and what Third
National Bank intended in accepting the trustee’s deed and conveying the property
to Long’s predecessors in title are unresolved issues of fact that cannot be
determined on summary judgment.
        Having determined that a grantor may, without words of grant, vest rights in
a third party stranger to the deed, the remainder of this case turns on issues of fact.
Unquestionably, the trustee executed and delivered and Third National Bank



                                                                                          Page 14
accepted a deed making what is now the Long property servient to the Parking and
Access Easement of record in book 6399 page 533 of the Register’s Office of
Davidson County. Did the parties to this deed intend thereby to reimpose on the
servient estate the Parking and Access Easement in favor of the dominant estate?
Conversely, was the inclusion of the language recognizing the easement a mistake on
the part of the trustee and the bank as asserted by Long? Did the bank acknowledge
and agree to the continued existent of the easement? Did the Mintons rely upon the
purported lease of the parking easement by Tropic Properties? Did the Mintons rely
upon the conveyance of the parking easement from Tropic Properties? What was
the effect of the bank continuing to allow the Mintons the use of the easement prior
to its conveyance of the property to Belle Meade Galleria? Why did the bank
recognize the purported easement in its conveyance to Belle Meade Galleria? Was
alleged reliance by the Mintons on recorded instruments justified?        All of the
foregoing questions involve factual determinations that can not be determined on
summary judgment under principles set forth in Byrd v. Hall, 847 S.W.2d 208
(Tenn. 1993), and Evco Corp. v. Ross, 528 S.W.2d 20 (Tenn. 1975).


        For the same reasons, estoppel by deed can not be determined on summary
judgment in this case:   “Before a party can claim an estoppel, there must be on the
part of the claiming party; (a) lack of knowledge without fault of the true facts, (b)
reliance upon the untrue facts, and (c) action based on the untrue statement or
misrepresentation.” Smith v. Sovran Bank Cent. S., 792 S.W.2d 928 (Tenn. App.
1990). It can not be said that the Mintons have established knowledge without fault,
reliance or action when this record is considered in the light most favorable to Long
as must be done on summary judgment motion. See Burgess v. Harley, 934 S.W.2d
58 (Tenn. App. 1996).


        Appellant asserts that estoppel by deed can not be asserted by the Mintons
as they were strangers to the transactions involved in the trustee’s deed to the bank,
the deed from the bank to Belle Meade Galleria, and the deed from Belle Meade
Galleria to Dr. Long. The Mintons are not, however, strangers to the trustee’s deed



                                                                                         Page 15
to the bank but rather the beneficiary of the Parking and Access Easement reserved
therein, at least at the summary judgment stage. This too involves questions of fact.


          Long next asserts that while the law suit was pending, Belle Meade Galleria
delivered to him a deed of correction removing the parking easement exception.
This exception is not a property right vested in Belle Meade Galleria but rather on its
face an encumbrance upon the property in favor of the dominant estate. The deed
of correction thus accomplishes nothing that affects either the Mintons or Long.


          Finally, Long asserts that the trial court erred in dismissing sua sponte his
counter-claim seeking to reform the trustee’s deed and to quiet his title to the Parking
and Access Easement.        Had the trial judge been correct in granting summary
judgment to the Mintons on the basis that the foreclosure sale did not terminate the
easement and that the intent of the trustee in the deed to Third National Bank was to
transfer the property subject to the easement as a matter of law, then it would have
logically followed that the dismissal of the counter-claim, whether sua sponte or
otherwise, was also a correct action. Since, however, we hold that the foreclosure
sale terminated the easement and that the intent of the trustee in the conveyance of
the property to the bank involves questions of fact, the dismissal of the
counter-claim is error. As a remote grantee of the trustee and the bank, Long is in
privity of estate with both and has standing to sue for reformation of the trustee’s
deed. Jackson v. Thompson, 166 Tenn. 174, 61 S.W.2d 470 (1932); Modica v.
Combs, 249 S.W. 567 (Ark. 1923); 66 Am.Jur.2d Reformation of Instruments, § 61
(1973).


          Reformation of a deed for mutual mistake is an action in equity and will not
lie if it affects intervening rights of third persons who actually and justifiably rely
upon recorded instruments. M.R. Bldg. Corp. v. Bayou Utilities, Inc., 637 S.2d
614 (La. Ct. App. 1994). Whether or not the Mintons actually and justifiably relied
on instruments of record in the Register’s Office of Davidson County involves
questions of fact.



                                                                                           Page 16
III.    CONCLUSION
        For the following reasons, we hold as follows:
        1. That the trial court erred in granting summary judgment to the
        Mintons on the basis that the foreclosure sale did not terminate the
        Parking and Access Easement. In fact, this easement was
        terminated by the sale at foreclosure.

        2. The intent of the trustee in delivering and the intent of Third
        National Bank in accepting the deed to the servient estate subject to
        rather than free of the easement is not established as a matter of law
        but is a question of fact for the trier of fact.

        3. The intent of Third National Bank in its deed of the property to
        Belle Meade Galleria is a question of fact.

        4. The question of estoppel by deed is not established as a matter
        of law but must be determined on the facts developed at trial.

        5. The correction deed from Belle Meade Galleria to Long is a
        nullity as far as the rights, if any, of the Mintons are concerned.

        6. Long is entitled to pursue his counter-claim for reformation of the
        trustee’s deed and to quiet title.

The judgment of the trial court granting summary judgment to the Mintons is
reversed and the case is remanded for trial on the factual issues drawn between the
parties. Costs of appeal are assessed to the appellees.



                                   ___________________________________
                                   WILLIAM B. CAIN, JUDGE


CONCUR:


__________________________________
BEN H. CANTRELL, P.J., M.S.


__________________________________
PATRICIA J. COTTRELL, JUDGE Yí D8+&$ DC _ nH!_ nH!Cßj



                                                                                      Page 17
        Following Dalton v. Eller, 153 Tenn. 418, 284 S.W. 68 (1926), and the
cases disavowing the common law rule, we hold, like Aszmus v. Nelson held, that
what the trustee intended in conveyance to Third National Bank and what Third
National Bank intended in accepting the trustee’s deed and conveying the property
to Long’s predecessors in title are unresolved issues of fact that cannot be
determined on summary judgment.


        Having determined that a grantor may, without words of grant, vest rights in
a third party stranger to the deed, the remainder of this case turns on issues of fact.
Unquestionably, the trustee executed and delivered and Third National Bank
accepted a deed making what is now the Long property servient to the Parking and
Access Easement of record in book 6399 page 533 of the Register’s Office of
Davidson County. Did the parties to this deed intend thereby to reimpose on the
servient estate the Parking and Access Easement in favor of the dominant estate?
Conversely, was the inclusion of the language recognizing the easement a mistake on
the part of the trustee and the bank as asserted by Long? Did the bank acknowledge
and agree to the continued existent of the easement? Did the Mintons rely upon the
purported lease of the parking easement by Tropic Properties? Did the Mintons rely
upon the conveyance of the parking easement from Tropic Properties? What was
the effect of the bank continuing to allow the Mintons the use of the easement prior
to its conveyance of the property to Belle Meade Galleria? Why did the bank
recognize the purported easement in its conveyance to Belle Meade Galleria? Was
alleged reliance by the Mintons on recorded instruments justified?          All of the
foregoing questions involve factual determinations that can not be determined on
summary judgment under principles set forth in Byrd v. Hall, 847 S.W.2d 208
(Tenn. 1993), and Evco Corp. v. Ross, 528 S.W.2d 20 (Tenn. 1975).


        For the same reasons, estoppel by deed can not be determined on summary
judgment in this case:   “Before a party can claim an estoppel, there must be on the
part of the claiming party; (a) lack of knowledge without fault of the true facts, (b)



                                                                                          Page 18
reliance upon the untrue facts, and (c) action based on the untrue statement or
misrepresentation.” Smith v. Sovran Bank Cent. S., 792 S.W.2d 928 (Tenn. App.
1990). It can not be said that the Mintons have established knowledge without fault,
reliance or action when this record is considered in the light most favorable to Long
as must be done on summary judgment motion. See Burgess v. Harley, 934 S.W.2d
58 (Tenn. App. 1996).


        Appellant asserts that estoppel by deed can not be asserted by the Mintons
as they were strangers to the transactions involved in the trustee’s deed to the bank,
the deed from the bank to Belle Meade Galleria, and the deed from Belle Meade
Galleria to Dr. Long. The Mintons are not, however, strangers to the trustee’s deed
to the bank but rather the beneficiary of the Parking and Access Easement reserved
therein, at least at the summary judgment stage. This too involves questions of fact.


        Long next asserts that while the law suit was pending, Belle Meade Galleria
delivered to him a deed of correction removing the parking easement exception.
This exception is not a property right vested in Belle Meade Galleria but rather on its
face an encumbrance upon the property in favor of the dominant estate. The deed
of correction thus accomplishes nothing that affects either the Mintons or Long.


        Finally, Long asserts that the trial court erred in dismissing sua sponte his
counter-claim seeking to reform the trustee’s deed and to quiet his title to the Parking
and Access Easement.       Had the trial judge been correct in granting summary
judgment to the Mintons on the basis that the foreclosure sale did not terminate the
easement and that the intent of the trustee in the deed to Third National Bank was to
transfer the property subject to the easement as a matter of law, then it would have
logically followed that the dismissal of the counter-claim, whether sua sponte or
otherwise, was also a correct action. Since, however, we hold that the foreclosure
sale terminated the easement and that the intent of the trustee in the conveyance of
the property to the bank involves questions of fact, the dismissal of the
counter-claim is error. As a remote grantee of the trustee and the bank, Long is in



                                                                                           Page 19
privity of estate with both and has standing to sue for reformation of the trustee’s
deed. Jackson v. Thompson, 166 Tenn. 174, 61 S.W.2d 470 (1932); Modica v.
Combs, 249 S.W. 567 (Ark. 1923); 66 Am.Jur.2d Reformation of Instruments, § 61
(1973).


          Reformation of a deed for mutual mistake is an action in equity and will not
lie if it affects intervening rights of third persons who actually and justifiably rely
upon recorded instruments. M.R. Bldg. Corp. v. Bayou Utilities, Inc., 637 S.2d
614 (La. Ct. App. 1994). Whether or not the Mintons actually and justifiably relied
on instruments of record in the Register’s Office of Davidson County involves
questions of fact.


III.      CONCLUSION
          For the following reasons, we hold as follows:
          1. That the trial court erred in granting summary judgment to the
          Mintons on the basis that the foreclosure sale did not terminate the
          Parking and Access Easement. In fact, this easement was
          terminated by the sale at foreclosure.

          2. The intent of the trustee in delivering and the intent of Third
          National Bank in accepting the deed to the servient estate subject to
          rather than free of the easement is not established as a matter of law
          but is a question of fact for the trier of fact.

          3. The intent of Third National Bank in its deed of the property to
          Belle Meade Galleria is a question of fact.

          4. The question of estoppel by deed is not established as a matter
          of law but must be determined on the facts developed at trial.

          5. The correction deed from Belle Meade Galleria to Long is a
          nullity as far as the rights, if any, of the Mintons are concerned.

          6. Long is entitled to pursue his counter-claim for reformation of the
          trustee’s deed and to quiet title.

The judgment of the trial court granting summary judgment to the Mintons is
reversed and the case is remanded for trial on the factual issues drawn between the



                                                                                          Page 20
parties. Costs of appeal are assessed to the appellees.



                                   ___________________________________
                                   WILLIAM B. CAIN, JUDGE


CONCUR:

__________________________________
BEN H. CANTRELL, P.J., M.S.


__________________________________
PATRICIA J. COTTRELL, JUDGE




                                                                         Page 21
