Fine v. Stuart

• Decision Date: 30 April 1898
• Citation: 48 S.W. 371
• Parties: FINE et al. v. STUART et al. DAWSON et al. v. SAME.
• Court: Tennessee Supreme Court

48 S.W. 371

FINE et al. v. STUART et al.

DAWSON et al. v. SAME.

Court of Chancery Appeals of Tennessee.

April 30, 1898.

Appeal from chancery court, Cocke county; John P. Smith, Chancellor.

Bills by W. R. Fine and others and by Isaac Dawson and others, severally, against J. M. Stuart and others, were consolidated. There was a decree for complainants, and defendants appeal. Affirmed, and a petition for rehearing dismissed.

W. H. Jones, for appellants J. S. Susong & Co. W. J. McSween, for appellees.

BARTON, J.

These two cases, while involving separate and distinct causes of action, were in the court below consolidated and heard together, and there was an agreement that the proof taken in each case should be used interchangeably in the other because the questions involved in both were practically the same, the defendants being the same in both cases, though the parties complainant are different. The original bills in both cases were filed to enjoin and prevent the payment of certain warrants issued by the commissioners of the Third and Seventh school districts of Cocke county, respectively, on the county trustee, for certain school supplies. Both bills aver that the warrants in question were procured through fraud, misrepresentation, forgery, etc. While this is a general statement of the outlines of the two cases, it will be proper and necessary to separately set out the state of the pleadings in each case.

In the first case above named, W. R. Fine, Joseph Rutherford, and John Barnes, as citizens and school directors of the Seventh school district of Cocke county, Tenn., on June 8, 1896, filed their original bill against L. S. Smith, a citizen of Cocke county, and John Stuart, trustee of Cocke county, in which, in substance, they alleged that they were the school directors of the Seventh school district of Cocke county; that about April 10, 1896, a party claiming to be an agent of the Congress Publishing Company passed through Cocke county selling school charts, which he claimed were for the benefit of all the public schools of the county; that this agent visited the complainants, as directors of the Seventh school district, and entered into a contract with two of the directors to the effect that for the sum of $37.50 he would furnish six charts, or one chart for each school in the district; that he prepared an order, and represented to the complainants Rutherford and Barnes that it was for the sum of $37.50, and that this was all they would have to pay for the six charts, and that he procured an order on the trustee of Cocke county for the money for the charts on this representation, but afterwards, instead of filling it up for the sum of $37.50, he filled it up for the sum of $225; that he then took the order to the complainant Fine, and tried to sell the charts, but that Fine told him he would not buy, nor consent to have his district money used for that purpose; that the agent then asked Fine to recommend his charts, and presented to Fine a paper purporting to be a recommendation, and that at the instance of this agent Fine signed several papers, which he understood were recommendations, but which he subsequently discovered were orders for money, and that said Fine at once repudiated the act, and directed the agent to destroy the papers, but the agent then hurried to Newport, and sold the orders to the defendant L. S. Smith, but before he left he agreed with Fine that all of the directors should meet in Newport on the following Monday, and that then, if they would agree to take the charts, the transaction should become completed, and not otherwise; that Fine came to Newport, but the agent did not, but in the meantime sold the warrants to the defendant Smith. It is alleged that the orders were secured by fraud, and without consideration, and were a forgery; that the school directors never at any time agreed to give more than $37.50 for the six charts, and it was distinctly agreed between Rutherford, Barnes, and the agent that only $37.50 was to be paid for the six charts, one-half to be paid out of the school money for the year 1896, and one-half out of the school money for the year 1897; but that, as a matter of fact, the agent changed the contract, and made it for the sum of $225, payable out of the school money for the year 1896-97. Therefore the bill was filed to enjoin the payment of the warrants as being void for fraud. The trustee answered, substantially admitting the equities and charges of the original bill. The Congress Publishing Company was also made a party to this suit by publication, and against it a pro confesso was taken. By agreement J. S. Susong & Co., composed of J. S. Susong, the defendant L. S. Smith, and W. H. Jones, were made parties defendant, it being stated and agreed that this firm had made the purchase, and owned the warrants in question. As to this the same course was also pursued in the Third district case against Dawson and others. These defendants filed a demurrer, which was overruled. They then filed an answer, in which they denied that there was any fraud or misrepresentation in the procurement of the warrants, that they were issued for value, and also averred that they were the purchasers of the warrants in due course of trade for value, and were innocent purchasers without notice.

In the case of Dawson and others — the second case above named — the bill was filed by Isaac Dawson, John A. Balch, and H. J. Robeson, alleging that they were school directors of the Third school district of Cocke county, against the same parties as above named. This bill alleged that about April 11, 1896, a party claiming to be an agent of the Congress Publishing Company, above named, passed through Cocke county selling what he termed school charts, and, as he claimed, for the benefit of the common schools of Cocke county; that this agent visited the complainants Dawson and Robeson as school directors, and entered into an agreement with them by which he agreed to furnish five charts for the common schools of their district at the sum of $37.50 per chart, the orders for the same to be paid, respectively, in 1896, 1897, and 1898; that the complainant Dawson agreed to take five of these charts, provided he visited the other directors, and got them to sign the order. The complainant Dawson, being a man of advanced years, not being able to see well, and not having his eyeglasses with him at the time, signed what the agent termed and read to him as their contract, with the understanding that it was to be submitted to the other two directors for their signature before it should become valid and binding; that the agent at once took the papers to the complainant Robeson, representing that Dawson had signed the same with the full understanding of its contents; that thereupon the complainant Robeson signed the same with the understanding that it was to be for five charts, payable as above stated, and only to become valid when signed by the other director, John A. Balch; that immediately after procuring these signatures the agent changed the contract or agreement, or, if he did not, he fraudulently misrepresented what it contained, and that he had a contract so as to provide that the school orders should be paid out of the moneys for the year 1896, and, instead of having the order for five charts, he made them for seven; that he immediately brought the orders to town, and sold them to the defendant L. S. Smith. It is alleged that these orders were obtained by fraud and misrepresentation, and were illegal and void, and the bill is filed to enjoin their payment. To this bill the defendant Susong & Co. filed an answer as in the other case. They also filed a cross bill against the defendants J. M. Stuart, trustee, Isaac Dawson, and H. J. Robeson, in which they sought to collect the amount of the warrants from the trustee, and also to hold the defendants Robeson and Dawson personally liable, on the ground that, if their statements contained in the original bill were true, they were guilty of gross negligence, by reason of which the complainants in the cross bill had been injured. This cross bill was filed August 27, 1896, and was made returnable to the first Monday in December. At the January rules a pro confesso was taken, which was set aside by the clerk and master on the affidavit of W. J. McSween, which, in substance, stated that he was employed by the defendants to the cross bill just on the eve of his starting to a court in another county, and that by a mistake and oversight he misunderstood the time of the return day; and he presented an answer, which was not sworn to, and upon this answer, without terms, the pro confesso was set aside. This action was excepted to, but was confirmed by the chancellor.

Proof was taken in both causes. The causes were heard by the chancellor, who dismissed the cross bill in the last-named case, and granted the relief prayed under the original bill, holding and decreeing that the warrants in question were not negotiable, and that they were obtained through fraud and misrepresentation. From this decree the defendants Susong & Co. prayed an appeal, and assign errors here.

It would be sufficient to say that we have no hesitation in finding as facts that the school warrants involved in this case were procured to be signed by the directors through gross fraud and misrepresentations, and, inasmuch as such warrants are not negotiable, but, as decided in the case of Bank v. Barber, 6 Lea, 274, were simple prima facie authentications of the claims for which they were given, and vouchers to the disbursing officer for their payment, being neither a bill, note, check, nor a liquidated and settled account signed by the debtor, nor a satisfaction of the original indebtedness, it would result that the complainants in both of the bills are entitled to the relief sought, that the decree of the chancellor should be affirmed in both cases, and the injunctions made perpetual. Such...