Cummings v. Patterson

• Decision Date: 22 January 1964
• Citation: 54 Tenn.App. 75,388 S.W.2d 157
• Parties: WILL CUMMINGS v. Ramon G. PATTERSON. 54 Tenn.App. 75, 388 S.W.2d 157
• Court: Tennessee Court of Appeals

Page 157

388 S.W.2d 157

WILL CUMMINGS v. Ramon G. PATTERSON.

54 Tenn.App. 75, 388 S.W.2d 157

Court of Appeals of Tennessee, Eastern Section.

Jan. 22, 1964.

Certiorari Denied by Supreme Court Dec. 9, 1964.

[54 TENNAPP 77]

Swafford, Jahn & Taylor, Chattanooga, for Will Cummings.

John C. Stophel, Eugene Collins, Chattanooga, for Ramson G. Patterson.

SHRIVER, Judge.

I THE CASE

We have for consideration a petition for writs of certiorari, supersedeas and mandamus filed by Richard P. Jahn, attorney of the Chattanooga Bar, as a next friend of Will Cummings, an incompetent, who was represented in the cause by the said Richard P. Jahn prior to the time he, Cummings, was declared to be incapable of managing his own affairs by decree of the Chancery Court entered on November 29, 1963. In this same decree the Chancellor appointed Lilliam Cummings, wife of the incompetent, as next friend to further prosecute the action.

On December 12, 1963 a proposed compromise and settlement of the case for $300,000.00, which was agreed to and accepted by Lillian Cummings as next friend of Will Cummings, was approved, ratified and confirmed by the Chancellor over the protest and objection of Richard P. Jahn, solicitor of record for complainant Cummings. It is to seek a review of this decree of December 23, 1963, entered nunc pro tunc for December 12, 1963, that the petition herein was filed.

It is alleged that the petitioner, Richard P. Jahn, prayed an appeal from the aforesaid decree but that the Chancellor took the position that Mr. Jahn was not a party in interest who had a right to appeal and, therefore, denied same.

[54 TENNAPP 78] The petition further sets out that a stenographic transcript of the evidence introduced in this case was presented to the Chancellor for authentication as a Bill of Exceptions to be filed with the petition for certiorari and supersedeas, but that the Chancellor refused to sign same, hence a mandamus is prayed to require the Chancellor to authenticate the Bill of Exceptions.

II THE PLEADINGS AND RECORD

The petition herein asserts that petitioner was engaged by Will Cummings to act as his attorney in the above captioned cause and that he has done so throughout the proceedings. And he asserts that he sincerely believes that a miscarriage of justice is about to occur unless this Court intervenes of its own motion or otherwise to review this proceeding and take appropriate steps to protect the best interests of Will Cummings, who was adjudged mentally incompetent by the Chancellor, and who is shown by the record to be a very old and infirm man, having reached his eightieth birthday in 1950.

The cause in question was filed by Judge Cummings seeking to establish a constructive trust in favor of the complainant in the proceeds of the resale of stock purchased from complainant by the defendant. The basis for the action is the contention that the defendant breached a fiduciary duty to complainant in failing to inform him of facts known to defendant but unknown to complainant whereby defendant well knew at the time he agreed to acquire complainant's 50% stock interest in Mountain City Television, Inc., for $87,881.92 and other considerations, that a 30% stock interest in said company could be sold to certain New York interests for $300,000.00 which, [54 TENNAPP 79] in fact, occurred on January 8, 1957, one day after the closing of the agreement with complainant.

Petitioner avers that, on May 25, 1962, Chancellor Curry orally rendered a sweeping decision in favor of complainant at the conclusion of a lengthy trial of the cause; that in this decision he found that Ramon Patterson had breach a fiduciary duty to Will Cummings when he acquired his 50% stock interest in Mountain City Television, Inc. as above set out.

The petition asserts that the following events occurred, some of which are admitted in defendant's answer and some of which are explained and amplified therein but which, generally, are admitted to be the sequence of events involved.

(1) On January 7, 1957 defendant Patterson acquired Cummings' 50% stock interest in Mountain City Television, Inc. for $87,881.92 plus an additional consideration of $144,386.03 as repayment of certain loans made by Cummings to the corporation and defendant:

(2) On January 8, 1957, Ramon Patterson sold 30% of the stock in the company, traceable to shares that he had originally held and not to shares as acquired from Judge Cummings, for the sum of $300,000.00.

(3) On January 6, 1960, defendant Patterson, along with his wife to whom he had conveyed 116 shares of stock, sold jointly to WSTV, Inc., their remaining 70% interest in the Mountain City Television, Inc., for a principal net sum of $1,426,782.93 payable $431,767.05 cash and the balance in semi-annual installments with interest.

(4) The Clerk and Master after taking proof ruled that Helen Patterson, wife of the defendant, was not an [54 TENNAPP 80] innocent purchaser for value of the stock she had acquired from her husband and that the claim of complainant Cummings was entitled to priority over her claim. However, no decree was entered by the Chancellor confirming this report or disposing of exceptions thereto.

(5) No decree was entered by the Chancellor implementing his oral opinion announced from the bench on May 25, 1962, although counsel for both parties passed in one or more proposed drafts of such opinion and decree and sought diligently to have it entered. This is also true with respect to several motions filed in the case, action on which were not recorded by decree.

(6) The Court did, however, at the conclusion of the oral opinion of May 25, 1962, enjoin any further disposition of the then outstanding notes for the deferred balance in the hands of Ramon Patterson or anyone in his behalf due from the sale of the stock, without prior Court approval, and this was reduced to a formal decree on November 7, 1962. Each note as it became due was, thereafter, paid into the hands of the Clerk and Master and a balance of approximately $400,000.00 has accumulated as a result of this order, with another approximately $400,000.00 remaining to be collected, the next installment being due July 6, 1964.

(7) As hereinabove asserted, on December 12, 1963, the Chancellor approved a settlement of the cause on motion of the defendant, concurred in by Linnian Cummings, next friend of the complainant, for the sum of $300,000.00.

It is asserted by the petitioner that it is his sincere belief that the best interests of complainant, Will Cummings, has not been served by this action of the Court [54 TENNAPP 81] and that an abuse of discretion has occurred which should be called to the attention of this Court for whatever action it may deem appropriate in fulfilling its historic function of properly protecting the conserving the estates of incompetent persons.

The answer to the petition herein points out that the petitioner, Richard P. Jahn, does not file same as attorney for the duly appointed next friend of Will Cummings but he files same because he objects to the settlement which was agreed to by the next friend Lillian Cummings and which the Court thought was in the best interests of the incompetent.

As was shown by the original bill and answer, together with the various orders in the technical record, and as asserted in the reply of respondent to the petition, certain propositions of fact are said to be true, which facts are in addition to those asserted in the petition as set out hereinabove:

(1) On May 28, 1956 about twenty-two days after the TV station owned by Mountain City Television, Inc., went on the air, Will Cummings who then owned 50% of the stock, wrote a letter to defendant Patterson, who owned the other 50%, stating, in substance, that he would not invest any more money nor extend any more credit, although the new business needed operating capital desperately.

(2) In March 1956 the business lost $3,370.48; in April 1956, its losses were $7,746.93; in May 1956 (the month the company went on the air), the losses were $29,106.55; in June 1956, its losses were $6,711.63; in July 1963, its losses were $14,081.02, in August 1956, its losses were $5,266.22; and in September 1956, its losses were $24,056.73.

[54 TENNAPP 82] (3) In June 1956, Cummings gave Patterson as option for a time certain within which to buy Cummings' stock for a return or all the money that Cummings had invested in the enterprise, plus 5% interest, plus $10,000.00, which was substantially the subsequent formal agreement went Patterson bought Cummings' 50% of the stock.

(4) In October 1956, pursuant to said June agreement, Patterson bought Cummings 50% stock interest and Cummings was to receive for his stock $87,881.92, for his interest in the land $8,889.21; for his loans to Patterson, $3,111.66; for his investment in equipment $29,791.41; and for his loans to the company $102,593.75, or a total of $232,267.95.

The transaction was finally closed on January 7, 1957, when Cummings received from Mountain City Television, Inc., and Patterson $195,267.95 and a note from Patterson for $37,000.00 payable $500.00 a month plus 5% interest.

(5) Patterson then sold 30% of the stock for $300,000.00, out of which he immediately paid $291,000.00 on the outstanding debts of the Company, and realized only $9,000.00 personally.

(6) By said sale, Cummings realized a return of $232,267.95 on an investment of $194,941.37 without further risk to his investment. When the $300,000.00 settlement approved by the Court is added, Cummings will have received $532,267.95 on his investment.

It is averred in the answer that Cummings should not be allowed to recover any of the profits made subsequent to the sale by Patterson as a result of the continued risk of Patterson's money and of his efforts, managerial skill, ingenuity and hard work.

[54 TENNAPP 83]

III THE DECREE COMPLAINED OF

The decree of the Chancellor which is sought to be reviewed and...