Johnson v. Ford

• Decision Date: 13 December 1922
• Parties: JOHNSON ET AL. v. FORD ET AL.
• Court: Tennessee Supreme Court

245 S.W. 531

147 Tenn. 63

JOHNSON ET AL. v. FORD ET AL.

Supreme Court of Tennessee.

December 13, 1922

Appeal from Chancery Court, Sullivan County; Hal H. Haynes Chancellor.

Suit by J. Fred Johnson and others against J. D. Ford and others. From decree for complainants, defendants appeal. Affirmed.

McKINNEY J.

The original bill in this cause was filed on August 21, 1920, by the Tennessee Eastman Corporation and J. Fred Johnson, in his own right and for the use and benefit of the Tennessee Eastman Corporation, against J. D. Ford, Mattie E. Ford, his wife, Mabel Todd, only child of J. D. and Mattie E. Ford, and J. C. Todd, her husband, for the purpose of recovering the sum of $15,000, with interest, which the bill alleged was paid to the defendants without considertion and under duress of property.

The controversy grew out of the following state of facts, to wit J. Fred Johnson, as president of the Kingsport Improvement Corporation, was interested in procuring the location of industrial plants at Kingsport, and after several months of negotiation with the Eastman Kodak Company of Rochester, N Y., induced it to take over an abandoned war plant at Kingsport, Tenn., and to operate therein a plant for the manufacture of wood alcohol, necessary in its business of manufacturing photographic supplies, and that to this end the Tennessee Eastman Corporation, one of the complainants, was later formed. The purchase of the war plant was consummated on May 26, 1920, by deed from the United States of America to James S. Havens, who acted as agent for the purchasers, and who, pursuant to his agency, by deed dated August 28, 1920, conveyed the said property to the said Tennessee Eastman Corporation, being a corporation which was organized under the laws of Virginia on July 20, 1920, and domesticated in Tennessee on July 29, 1920.

At the time the testimony was taken in the cause under consideration the amount which the company had invested in said alcohol plant was approximately $1,000,000.

In the summer of 1920, after the wood alcohol plant had been purchased, the same parties became very much interested in the construction of another plant at Kingsport, for the manufacture of gelatin, a product which up to that time had only been manufactured successfully in Germany, and which product is used in the manufacture of photographic goods, particularly films. This plant was to be much larger than the wood alcohol plant, and was to involve, together with a power plant therewith, an expenditure of $3,500,000. The complainant corporation purchased more than 300 acres of land for the gelatin plant.

Pending the consideration of the establishment of this gelatin plant, engineers and experts were sent to Kingsport for the purpose of investigating the proposition. They were favorably impressed with the natural resources in East Tennessee and with the location of the new development at Kingsport. They reported, however, that before the proposition could go through it would be absolutely necessary to procure the water from Kendrick's creek, about five miles east of Kingsport, the water from this creek being the only suitable supply found.

Thereupon the complainant J. Fred Johnson was requested by the representatives of the Tennessee Eastman Corporation to procure the necessary water rights on Kendrick's creek; and in an effort to comply with this request he called to his assistance Mr. J. D. Ford, one of the defendants, who, he then thought, was an important riparian owner on Kendrick's creek, but who, it later developed, was not the sole owner of the property on which he lived, but was interested in same along with the members of his family. The water rights of defendants were at the mouth of the creek, below all others, and were absolutely essential to the proposed development. Mr. Johnson took Mr. Ford into his confidence, explaining to him fully the plans of the Tennessee Eastman Corporation with respect to the proposed new development, and the purpose for which the water from Kendrick's creek was desired.

The said Ford accepted the confidence reposed, and agreed for consideration to assist complainants in procuring options covering the necessary water rights, and did, in pursuance of this agreement, take the lead in conducting these negotiations, and procured contracts from most of the riparian owners.

While the said Ford was engaged in this behalf, Johnson requested him to put a price upon his own rights, and, according to the testimony of Mr. Johnson and Mr. Dobyns, the substance of his reply was:

"You will not be hurt, it will not cost you over $10,000, and if we have to pay more than I think we should for the others, I may make it $7,500.00."

About this time, to wit, on July 13, 1920, upon request from Mr. Johnson, Mr. Ford went to the office of complainants' attorney, Mr. Kelly, at Kingsport, and had an option prepared covering the Ford rights. This option was drawn upon information given by Mr. Ford, who stated to the said attorney that the consideration would be $10,000, and that it would be necessary for the option to be signed by himself, his wife, Mrs. Mattie E. Ford, his daughter, Mrs. Mabel Todd, and her husband, J. C. Todd. The said attorney thereupon prepared the said option, which, by its terms, was to continue in force "for the period of thirty (30) days from this date," but the date was left blank; Mr. Kelly testifying that the purpose was to have the blank filled in when the last signature of the last of the parties was affixed.

Defendant J. D. Ford signed this option on July 13, 1920, without filling in the date, and acknowledged same, and on the next day the same was executed and acknowleded by Mrs. Mattie E. Ford and daughter, Mrs. Mabel Todd, without either of them filling in the date, and at that time the consideration of $10, evidenced by check, was turned over to and received by Mrs. Ford. The signature and acknowledgment of J. C. Todd was had on July 17th. All of the acknowledgments were taken by Miss Mamie Stephenson, and on July 17th she attached her certificate, certifying that the execution of said option had been acknowledged before her by all the parties. It should be stated that Miss Stephenson presented said option to Mr. Todd for his signature on July 16th, but he refused to sign it at that time, stating that Mrs. Ford had requested him not to do so. According to the evidence, he stated that he considered that the price was all right, but that he desired to see Mrs. Ford before signing it.

At the time Mr. Todd signed the option the day of the month was still omitted, and all of the parties interested on both sides overlooked this matter, and failed to insert the date. The date of July 17th was, after said certificate had been attached, inserted by Mr. Gilmer, stenographer for Mr. Kelly, but without authority, and said option was taken by Mr. Gilmer to Blountville, on the afternoon of the 17th, for registration.

It further appears from the record that Mr. J. W. Dobyns, who had been working with Mr. Ford in procuring options for these water rights, spent the night at the Ford home on July 14th, the day that Mrs. Ford and her daughter signed said option, and that while there he told Mr. and Mrs. Ford that one R. T. Kinchelow, another riparian owner on Kendrick's creek just above them, had just signed an option for his water rights for the consideration of $24,000.

On July 15th, the morning after Mrs. Ford had been advised as to the price Kinchelow was to receive for his water rights, she sent word to her son-in-law, Mr. Todd, not to sign the option.

It further appears from the record that on July 17th, before Mr. Todd had signed the option, Mr. Ford told complainant Johnson, according to the latter's testimony, that he did not believe his wife would execute a deed in pursuance of the option.

On July 19th, Mrs. Ford came to the office of Mr. Johnson in Kingsport, and, according to the testimony of Mr. Johnson, objected to signing the deed pursuant to the option, and stated to him that, if the rights of Kinchelow were worth $24,000, her rights worth that much or more, and she requested Johnson to give her his personal check for more money to be used in the event the option was exercised.

On July 21st, both J. D. Ford and his wife told complainant Johnson that they would not execute a deed under the option.

By July 15, 1920, options covering all of the necessary water rights on Kendrick's creek had been procured, except that the said J. C. Todd had not signed the Ford option. On this date, Mr. Johnson advised Mr. Eastman, who was then in Kingsport, that the necessary water rights were covered by options, and on this date, July 15th, Mr. Eastman carefully reviewed the whole situation with reference to the feasibility of building a gelatin plant, personally visited the proposed water supply on Kendrick's creek, and just before leaving Kingsport on July 15th or 16th he told Mr. Johnson to go ahead with the arrangements to purchase the water supply, and that the Eastman interests would purchase the property for the site of the gelatin plant, which was subsequently consummated, of a plant site from Kingsport Farms, Incorporated, of which Mr. Johnson was president, at a cost of $55,528, being a tract of 277.64 acres.

Relying upon the fact that options had been taken covering the necessary water rights, the plans for the gelatin plant were carried forward, and instructions were given that the necessary examinations be made of the titles, and that deeds be taken for the water rights.

On August 13th, 1920, pursuant to instructions from Mr. George Eastman, as above shown, Mr. Johnson proceeded to take deeds from the parties on Kendrick's creek. Later and on the same day, notice was given and...