Alger v. Anderson

• Decision Date: 11 February 1897
• Parties: ALGER v. ANDERSON et al.
• Court: U.S. District Court — Middle District of Tennessee

78 F. 729

ALGER v. ANDERSON et al.

United States Circuit Court, M.D. Tennessee.

February 11, 1897

Granbery & Marks and Estill & Lynch, for plaintiff.

W. H Brannan, W. J. Clift, A. S. Colyar, Banks & Embrey, and Vertrees & Vertrees, for defendants.

CLARK District Judge.

The bill is filed for the purpose of rescinding and setting aside as fraudulent a deed and sale of land made by John F Anderson, of Franklin county, Tenn., ancestor of the defendants, to R. A. Alger, of Detroit, Mich. The deed was executed March 4, 1889, conveying 14,804 acres of land, in consideration of $103,628, being at the rate of seven dollars per acre, as the proof fully shows the sale was. The bill was filed August 28, 1894. In the latter part of 1888 this body of land was listed for sale by John F. Anderson, deceased, with a real-estate firm in the city of Chattanooga, Tenn.,-- Sheridan, Green & Co.,-- whose business was that of selling land on commission for others, and it was no part of their business to buy and sell land on their own account. After some modifications of the terms under which the real estate agents were to handle the land, it was finally agreed that they might have such profits as could be made over and above four dollars per acre, that being the amount to be paid to Anderson for the land. The real-estate agents at once sent abroad printed circulars, descriptive of the lands, in which they were represented as possessing great value on account of the timber and mineral interests, such as coal. These circulars attracted attention, among others from Alger, and the negotiations which resulted finally in the sale and conveyance in question thus had their origin. During the progress of the negotiations, Sheridan, Green & Co. became impressed with the belief that they would be able to effect a sale with complainant, Alger; and, for some reason or other they became apprehensive that Anderson might finally refuse to convey, or embarrass them towards the close in the effort to make the sale. This was probably due to the fact that the price put upon the lands to Alger was seven dollars per acre, and it was thought that so large a profit, if it became known, would create dissatisfaction on Anderson's part. So, under the advice of counsel, in order to guard against such contingency as this, the real-estate firm procured Anderson to give an option and title bond, and paid him down a small sum, in order to make certain that the sale, if made, would be allowed to go through without obstruction by Anderson. The real estate firm had no means with which to have purchased the land on their own account, and did not contemplate doing so, and it is certain that Anderson did not so understand the effect of what was done. The part which Anderson took in regard to the sale was just the same after as before the execution of the title bond. The deed was, in the end, executed by him directly to Alger, and the money paid by Alger directly to him.

Included in the lands sold and conveyed by Anderson was a tract containing about 4,800 acres, jointly owned by him and his grandson, the defendant Gonce; Gonce being the owner of a three-fourths, and Anderson a one-fourth, undivided interest therein. It is insisted that Anderson was merely the equitable owner of this one-fourth interest, and not the legal owner, and that the relation of tenants in common between Gonce and Anderson did not for that reason exist in law. This view cannot, in my opinion, be successfully maintained. The fact that Anderson had listed the property with the real-estate firm before mentioned, for sale, became known to Gonce, who agreed that the land might be sold, but he desired for some reason to give the transaction the form of a sale by him to his grandfather, Anderson, instead of direct to the complainant, Alger. The body of land had been purchased by Gonce at a judicial sale in the state court, and he finally gave the clerk of the court, who was empowered to make a deed, a direction to make the deed direct to complainant, Alger, instead of Gonce; but the agreement between him and his grandfather, as it is insisted, was for a quitclaim, and the direction by which the deed was made direct to Alger by the clerk was in a quitclaim, and to Anderson; and Gonce received therefor from Alger the sum of $15,572, the deed to Anderson having been placed in the bank in escrow, to be delivered only when this sum was paid by Alger to the bank for his (Gonce's) account. For the purpose of determining whether the lands were as represented by Sheridan Green & Co., complainant, Alger, sent one A. J. Freer, called a 'land looker,' to Tennessee, for the purpose of investigating the lands, and making a report to him. This man had been engaged for similar purposes, and had in that sense been the trusted agent of complainant for many years. About the same time, another gentleman from Detroit, well acquainted with complainant, Alger, by the name of Lynn, appeared upon the ground, as he says, as a result of having seen this circular of Sheridan, Green & Co.; and he in some way became interested in the sale of the land with Sheridan, Green & Co. Freer went upon the lands, and made the usual examination, being attended by a representative of the firm of Sheridan, Green & Co., made measurements of the coal veins, examined as to timber, the location and quality of the land, and all other facts which would go to settle the question of whether the purchase would be desirable and profitable to complainant, Alger. During the time of such examination, various letters were written in regard to these matters. After his examination of the land, and on his way back to Detroit, he came to the city of Chattanooga, but did not call upon the firm of Sheridan, Green & Co., and this was regarded by members of the firm as an unfavorable indication. Thereupon a member of that firm called to see Freer at the hotel, but obtained no satisfactory statement from him as to what report he would make on reaching complainant, Alger. Just as he was boarding the train for Detroit, he stated, however, to this representative of the real-estate firm, that the firm would hear from him through Mr. Lynn. Accordingly, Mr. Lynn was interviewed at the first opportunity, and made known to the firm the importance of sending a telegram to the Griffin House, in Detroit, in order that it might reach Freer in due time; and this telegram was accordingly sent. Thereafter Freer called upon complainant, Alger, and made his report in regard to the land, using for that purpose a memorandum book in which was contained some of the facts of his examination. Complainant, Alger, says that the verbal report thus made was more favorable in some respects than such report as was made by letter from time to time written from Tennessee. Thereupon complainant, Alger, sent a coal expert by the name of Shipman to Tennessee, for the purpose of making a more particular examination in regard to the coal, although Freer had made measurements and reports in regard to the size of the coal veins, the number, etc. Freer returned with Shipman, and attended him during his examination. The proof develops many curious facts relating to Shipman's trip and examination of the coal entries, which it is not now deemed necessary to set out in detail. It is sufficient to say that Shipman made his report. Freer went to the real-estate firm, and demanded of the firma distinct obligation to pay him one-third of the profits which that firm was to make on the sale, accompanied with the threat that, unless this was done, he would send a telegram which would break up the sale. It is reasonable to suppose that this one-third of the profits was the indispensable condition about which the telegram was sent to Freer, though this fact is a matter of inference. Without further detail, Freer's demand was agreed to, and the trade was closed, and Freer receipted for and was paid by the firm March 16, 1889, in the city of Chattanooga, and a receipt given therefor, which reads as follows:

'Chattanooga, Tenn., March 16th, 1889.

'Settlement with A. J. Freer between the said Freer and Sheridan, Green & Co. for his, the said Freer's, interest in the profits of the sale of land, formerly owned by John F. Anderson, and sold by Sheridan, Green & Co., through his, the said Freer's, recommendation, to Gen. Russell A. Alger, of Detroit, Michigan, in full of all accounts due from the said Sheridan, Green & Co. to the said A. J. Freer, as his interest in the profits of the sale.

A. J. Freer.'

In point of fact, by the verbal direction of Freer, $1,620 of this sum was paid to Edward J. Lynn, the other friend and neighbor of complainant, Alger. It is probably just to say that Sheridan was personally sincerely opposed to the arrangement made with Freer, and only consented finally under pressure of the fact that otherwise the labor and expected profits on the large sale would be lost. Just how many or how few, in presence of such a condition, would have sufficiently weighed the deeper consequences, is a question which admits of only a speculative answer. The full amount of the purchase price has been paid. Rescission of the contract is sought in the bill, and in argument, upon three distinct grounds First. Upon the ground that the coal entries had, by the real-estate firm, with the assistance of Anderson, been so manipulated as to produce a false appearance, and thereby to mislead both Freer and Shipman into the belief that the coal veins were more than twice as large and valuable as was the fact. This was done by what is called 'blowing up,' 'facing,' etc. Second. Another ground on which the case proceeds is that Anderson included in the deed of conveyance and represented the title as being good to more than 5,000...