In re: RICHARD GLENN BIGGS and KATHY JEAN BIGGS, a/k/a KATHY JEAN MELTON v. Ocwen Federal Bank

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RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2004 FED App. 0250P (6th Cir.)
File Name: 04a0250p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
In re: RICHARD GLENN BIGGS
and KATHY JEAN BIGGS, a/k/a
KATHY JEAN MELTON,
Debtors.
________________________
JEANNE BURTON GREGORY,
Trustee,
Plaintiff-Appellee,
v.
OCWEN FEDERAL BANK,
Defendant-Appellant.
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No. 03-5626
Appeal from the United States District Court
for the Middle District of Tennessee at Nashville.
No. 02-00904—Aleta A. Trauger, District Judge.
Argued: June 16, 2004
Decided and Filed: July 29, 2004
Before: SILER, DAUGHTREY, and SUTTON, Circuit
Judges.
2 In re Biggs No. 03-5626
_________________
COUNSEL
ARGUED: Frank H. Reeves, HIX & GRAY, Nashville,
Tennessee, for Appellant. Jeanne Burton Gregory, GIBSON,
GREGORY & GWYN, Nashville, Tennessee, for Appellee.
ON BRIEF: Thomas W. Lawless, WILSON &
ASSOCIATES, Nashville, Tennessee, for Appellant. Jeanne
Burton Gregory, GIBSON, GREGORY & GWYN, Nashville,
Tennessee, for Appellee.
_________________
OPINION
_________________
SUTTON, Circuit Judge. In this bankruptcy case, Ocwen
Federal Bank claims that a deed of trust is valid against
subsequent purchasers of the property, even though the
required acknowledgment omits the names of the individuals
purporting to acknowledge their signatures on the deed. The
bankruptcy and district courts each held that a deed of trust
omitting this information was invalid under Tennessee law,
and so do we. We affirm.
I.
On November 6, 1997, Richard and Kathy Biggs (the
“debtors”) executed a deed of trust on their Tennessee home,
securing a $65,000 loan and naming Seacoast Equities, Inc.
as the beneficiary. The deed of trust consisted of four pages
and contained the following partially completed, standard
acknowledgment form on the last page:

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No. 03-5626 In re Biggs 3
STATE OF TENNESSEE County ss: Davidson
On this 6 day of November 1997, before me
personally appeared
[blank]
to me known to be the person(s) described in and who
executed the foregoing instrument, and who
acknowledged the execution of the same to be [blank]
free act and deed. Witness my hand and official seal.
My Commission Expires: Indefinite
(illegible signature and notary seal)
Notary Public
JA 24 (emphasis added to handwritten words). On
January 12, 1998, Seacoast Equities recorded the deed of
trust, then sold its interest in the deed to Ocwen Federal Bank.
On April 9, 2001, the debtors filed a bankruptcy petition
under Chapter 7, after which the bankruptcy court assigned
Jeanne Burton Gregory to be the trustee. As trustee, Gregory
obtained the rights of “a bona fide purchaser of real property
. . . from the debtor [who] has perfected such transfer at the
time of the commencement of the case, whether or not such
a purchaser exists.” 11 U.S.C. § 544(a)(3). Believing that the
acknowledgment was defective and that her status as a bona
fide purchaser gave her a superior interest in the debtors’
home under Tennessee law, Gregory filed a complaint in the
bankruptcy court to avoid the deed of trust held by Ocwen.
The parties moved for summary judgment, and the
bankruptcy court granted Gregory’s motion. In the absence
of the debtors’ names, the bankruptcy court reasoned, the
acknowledgment was “not in substantial compliance [with
Tennessee law] and that in order for a notarization to be
effective, it must include the names of the people who appear
4 In re Biggs No. 03-5626
before the notary.” Bankr. Ct. Order Avoiding Lien. Ocwen
appealed the decision to the district court, which affirmed.
“The omission of the names in the acknowledgment,” the
district court determined, “cannot be viewed . . . as [a]
harmless or minor deviation[] from the standard form
language set out in the statutes. It is at the core of what an
acknowledgment is meant to do.” D. Ct. Op. at 5.
II.
In reviewing a bankruptcy decision appealed to the district
court, “[w]e accord no deference to the district court’s
decision [and] review de novo the bankruptcy court’s
conclusions of law.” In re Kenneth Allen Knight Trust, 303
F.3d 671, 676 (6th Cir. 2002).
A.
Commonly referred to as the “strong-arm clause,” section
544(a) of the Bankruptcy Code allows the trustee to “avoid
any transfer of property of the debtor or any obligation
incurred by the debtor that is voidable by . . . a bona fide
purchaser of real property . . . from the debtor, against whom
applicable law permits such transfer to be perfected, that
obtains the status of a bona fide purchaser and has perfected
such transfer at the time of the commencement of the case,
whether or not such a purchaser exists.” 11 U.S.C. § 544(a).
More simply, the trustee hypothetically purchases the debtor’s
property at the commencement of the bankruptcy case, then
determines whether it is subject to any valid prior interests.
Here, then, the question is whether Ocwen’s deed of trust
amounts to a valid prior interest.
To be valid under Tennessee law, a deed of trust must be
registered and acknowledged:
Any of such instruments [including deeds of trust] not so
. . . acknowledged and registered, or noted for
registration, shall be null and void as to existing or

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No. 03-5626 In re Biggs 5
subsequent creditors of, or bona fide purchasers from, the
makers without notice.
Tenn. Code Ann. § 66-26-103 (emphasis added). “[A]n
acknowledgment . . . is the formal statement of the person
signing the document that his [or her] signature was freely
done.” In re Marsh, 12 S.W.3d 449, 453 (Tenn. 2000)
(quotation omitted).
To facilitate real-estate transactions, the Tennessee
legislature has provided statutory forms that fulfill the
acknowledgment requirement, and all of the forms require the
notary to include the names of the individuals acknowledging
their signatures. See Tenn. Code Ann. §§ 66-22-107
(individuals), -108 (corporations and partnerships), & -114
(agency relationships). While adherence to the statutory
forms guarantees that an acknowledgment will be treated as
valid, the Tennessee legislature has said that “no specific
form or wording [is] required in such certificate and [] the
ownership of property, or the determination of any other right
or obligation, shall not be affected by the inclusion or
omission of any specific words.” Id. § 66-22-114(b). On top
of this general relaxation of the acknowledgment requirement,
Tennessee specifically forgives defective acknowledgments
that in either “substance” or “intent” comply with the
requirement. The first statute, the “substantial compliance”
savings statute, reads:
The unintentional omission by the clerk or other officer
of any words in a certificate of an acknowledgment, or
probate of any deed or other instrument, shall in nowise
vitiate the validity of such deed, but the same shall be
good and valid to all intents and purposes, if the
substance of the authentication required by law is in the
certificate.
Id. § 66-26-113; see also In re Akins, 87 S.W.3d 488, 492
(Tenn. 2002) (emphasis added). The second statute, the
“intent” savings statute, reads:
6 In re Biggs No. 03-5626
Any certificate clearly evidencing intent to authenticate,
acknowledge or verify a document shall constitute a
valid certificate of acknowledgment for purposes of this
chapter and for any other purpose for which such
certificate may be used under the law. It is the legislative
intent that no specific form or wording be required in
such certificate and that the ownership of property, or the
determination of any other right or obligation, shall not
be affected by the inclusion or omission of any specific
words.
Tenn. Code Ann. § 66-22-114(b) (emphasis added). We
consider each savings statute in turn.
B.
Two recent decisions by the Tennessee Supreme Court, In
re Marsh, 12 S.W.3d 449 (Tenn. 2000), and In re Crim, 81
S.W.3d 764 (Tenn. 2002), point the way in explaining why
Ocwen fails to satisfy the “substantial compliance” test. In re
Marsh involved a missing notary seal on an acknowledgment
to a deed of trust. In holding that the missing seal rendered
the deed of trust void against subsequent purchasers of the
property, the court explained the significance of
acknowledgments. An acknowledgment “authenticates the
due execution of a document and is the formal statement of
the person signing the document that his [or her] signature
was freely done,” and “aids in ensuring that the instrument
was not fraudulently executed.” In re Marsh, 12 S.W.3d at
453 (quotation omitted). A missing notary seal, the court
concluded, “is more substantial than the simple omission of
statutory language or the use of a different, yet equivalent
word . . . . [A] seal is either affixed or not affixed; this
requirement is not subject to substantial-compliance
analysis.” Id. at 454.
In re Crim emphasized the importance of identifying the
parties who acknowledge the deed. Using a power of
attorney, a wife attempted to sign a deed of trust on behalf of

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No. 03-5626 In re Biggs 7
her husband, but the notary used an acknowledgment form
saying that both the husband and wife personally appeared
before him and acknowledged their signatures. 81 S.W.3d at
766. Building on In re Marsh, the court held that “the
discrepancy in this case between the certificate of
acknowledgment and the signatures on the deed of trust lends
uncertainty about the legal effectiveness of the instrument.”
Id. at 768; see also In re Marsh, 12 S.W.3d at 453 (“A
creditor or purchaser who examines a deed of trust should be
able to assume that if it contains an acknowledgment . . . then
it has been properly authenticated and is valid, that is, free
from apparent forgery or fraud.”). “Substantial-compliance
analysis is not proper” in a setting like this one, the court
reasoned, because “the notary failed to use the prescribed
statutory form of acknowledgment, with the result that the
certificate of acknowledgment contains false statements and
indicates a lack of compliance [with Tennessee law].” In re
Crim, 81 S.W.3d at 769–70.
As In re Marsh and In re Crim indicate and as earlier
decisions confirm, the authentication of a deed of trust is not
a purposeless formality. The procedure serves to verify the
identity of the individual signing the instrument and to
establish a fraud-free system for recording the ownership of
real property—a necessary prerequisite to any free market.
See Figuers v. Fly, 193 S.W. 117, 120 (Tenn. 1917) (“A
certificate of acknowledgment is an act which must in the
nature of things be relied on with confidence” by buyers and
sellers.). In this instance, the integrity of the acknowledgment
is placed in doubt because it omits the most important
information on the acknowledgment form: who, if anyone, is
doing the acknowledging? Failing to name the individuals
who signed the deed of trust bears directly on the ability of a
subsequent purchaser of real property to verify that the
instrument was signed by the true property owners. Without
it, a purchaser is left to wonder who appeared before the
notary, if indeed anyone appeared before the notary, to
acknowledge their signatures. In this sense, the missing
names “lend[] uncertainty about the legal effectiveness of the
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instrument,” In re Crim, 81 S.W.3d at 768, and for that reason
alone the acknowledgment fails substantially to comply with
Tennessee law. The “substantial compliance” test “addresses
the unintentional omission of words by the officer taking an
acknowledgment,” In re Akins, 87 S.W.3d at 493 (emphasis
added), not the unintentional omission of the names of the
acknowledging individuals.
Ocwen’s arguments to the contrary do not hold. In re
Akins, for example, did not involve the omission of names
from the acknowledgment. It involved a failure by the notary
to indicate that she was personally familiar with the
individual acknowledging the signature. This omission was
not fatal, the Tennessee Supreme Court held, because the
word “unmarried” next to the individual’s name in the
acknowledgment indicated that the notary had some
familiarity with the grantor. 87 S.W.3d at 495. That In re
Akins says Tennessee has “relaxed the requirements regarding
the extent of a notary’s knowledge of the identity of an
individual” acknowledging a signature, id. at 494, does not
mean that Tennessee has relaxed the requirement that the
name of the individual appear on the acknowledgment. This
further step, in our view, would not relax the acknowledgment
requirement but remove it altogether.
Chronology alone makes In re Grable, 8 B.R. 363 (Bankr.
E.D. Tenn. 1980), a suspect basis for reversal. The case
predates several recent decisions by the Tennessee Supreme
Court on this topic, including In re Marsh and In re Crim.
Even if that were not the case, however, we would not follow
the trail marked by the decision. In holding that the omission
of names from the acknowledgment was not fatal to the deed
of trust, the court relied on the fact that the acknowledgment
mentioned “the within named bargainor[s]” and indicated that
“they” executed the deed of trust. Id. at 365–66. The deed of
trust in turn described the debtors, the court held, and that
sufficed to establish that the notary adequately identified the
individuals acknowledging their signatures. Id. at 366.
Similarly, Ocwen argues, the form-printed phrase in this

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No. 03-5626 In re Biggs 9
acknowledgment—“to me known to be the person(s)
described in and who executed the foregoing
instrument”—adequately identifies the debtors as the people
whose names can be found on the deed of trust and excuses
the failure to include their names on the acknowledgment.
In re Grable, however, misapprehends the role of an
acknowledgment. To permit the names in the deed of trust to
satisfy the names-in-the-acknowledgment requirement is to
eliminate the acknowledgment requirement. No one doubts
that the names of the individuals on the deed of trust are the
names of the individuals who should appear on the
acknowledgment. The very point of the acknowledgment is
to have their signatures confirmed in the presence of a notary.
When notaries, however, merely take pre-printed forms and
purport to notarize them without stating whose signatures
they have notarized and who, if anyone, appeared before
them, they not only undermine the Tennessee legislature’s
salutary purpose in creating statutorily-approved forms but
also fail to accomplish the signal reason for having an
acknowledgment in the first place. Under Ocwen’s reading
of Tennessee law, a notary merely could notarize a
statutorily-approved form—without filling in a single blank
space—and that alone would suffice to satisfy the
requirement. Far from being a finicky exaltation of form over
substance, the requirement that the grantors’ names appear on
the acknowledgment is essential to giving the
acknowledgment statute the modest substance that the
Tennessee legislature thought it deserved.
Nor does it change matters that this pre-printed form not
only has a notary’s signature on it but a date as well. That
date no more establishes that the debtors truthfully and
willfully signed the deed of trust than it establishes the date
that a real-estate fraud occurred.
The “presumption that a sworn public official has acted
lawfully,” Manis v. Farmers Bank of Sullivan County, 98
S.W.2d 313, 314 (Tenn. 1936), also does not advance
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Ocwen’s argument. As the Tennessee Supreme Court
recognized in In re Marsh, the failure to affix a notary seal
renders the acknowledgment invalid, even when the parties do
not dispute the notary’s authority, 12 S.W.3d at 451 n.2, and
even though “[t]he acts of a notary public are [] presumed to
be performed correctly,” id. at 453. The presumption applies,
in short, when notaries perform the core functions of their job,
not when they fail to perform them.
C.
Ocwen fares no better under the “intent” test. For many of
the same reasons that it cannot satisfy the “substantial
compliance” test, it fails to satisfy this one as well.
The “intent” test looks to “the intent of the person signing
a document to properly acknowledge his or her signature.” In
re Akins, 87 S.W.3d at 493 (emphasis added). As In re Akins
indicates, the statute “requires only that a certificate of
acknowledgment clearly evidence the signer’s intent to
authenticate, acknowledge or verify a document,” and the
acknowledgment in that case “clearly show[ed] Ronald L.
Akins’ intent to acknowledge his signature on the deed of
trust.” Id. at 495 (emphasis added; quotations omitted). The
intent at issue, then, goes to the person or persons named in
the acknowledgment. Because the notary in this instance
named no one in the certificate of acknowledgment and we
cannot determine who, if anyone, intended to acknowledge
the signatures on the deed of trust, Ocwen cannot satisfy this
test.
Conceding that “naming [the individuals] in the
acknowledgment is a sufficient—indeed, the best—means of
identifying the signers,” Appellant Br. at 12, Ocwen repeats
its argument that the phrase “the person(s) described in and
who executed the foregoing instrument” adequately
establishes the debtors’ intent to acknowledge their
signatures. Other than In re Grable, however, Ocwen offers
no case support for this argument, and in this setting the

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No. 03-5626 In re Biggs 11
argument has even less to recommend it than it does in the
“substantial compliance” setting. Words from a pre-printed
form, even words purporting to incorporate a document that
the debtors have signed (namely, the deed of trust), do not
establish an intent to acknowledge their signatures when their
names nowhere appear on the acknowledgment.
No more persuasive is Ocwen’s reference to signature
guarantees for investment securities under the Uniform
Commercial Code. See Tenn. Code Ann. § 47-8-306
(describing the warranties made by “a person who guarantees
a signature” under various circumstances involving
investment securities). Relying on the fact statement of an
unpublished Texas Court of Appeals case, Holmes v.
Nationsbank of Texas, N.A., No. 05-95-00525-CV, 1996 WL
479640, at *2 (Tex. Ct. App. Aug. 15, 1996), a less than
formidable invocation of precedent, Ocwen claims that it is
“customary” to omit the name of the person signing the
document and merely stamp “signature guaranteed” beneath
the signature. But Ocwen offers no explanation why this
practice under the Uniform Commercial Code, if indeed it
exists, has any bearing on acknowledgment requirements.
The Tennessee legislature addresses real estate transfers and
investment securities in separate statutory provisions, which
not surprisingly contain separate requirements. Compare
Tenn. Code Ann. § 66-22-107 (prescribing the statutory
acknowledgment form for “natural persons acting in their
own right,” which includes a blank space for the person’s
name) with Tenn. Code Ann. § 47-8-306 (describing various
warranties for signature guarantees but failing to provide a
statutory form). And the Tennessee Supreme Court has never
looked to the requirements of Tennessee Code § 47-8-306 in
determining the requirements of an acknowledgment. At all
events, if we were to look to decisions involving other States’
requirements in this and other areas, we would look to a
recent holding from this Court involving Kentucky law and
acknowledgments. See In re Vance, No. 02-6537, 2004 WL
771484, at *2 (6th Cir. Apr. 8, 2004) (per curiam) (“The
notary failed to include [the individuals’ names] in the
12 In re Biggs No. 03-5626
certification. Therefore, the district court was correct in
finding that the acknowledgment failed to comport with
Kentucky law.”).
III.
For the foregoing reasons, we affirm.

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