Sparkman v. Phillips

• Decision Date: 13 November 1962
• Citation: 51 Tenn.App. 645,371 S.W.2d 162
• Parties: Robert Jackson SPARKMAN, a Minor b/n/f Henry R. Sparkman v. E. Cecil PHILLIPS, Trustee, Chattanooga Federal Savings & Loan Assn., and Unknown Heirs of Mattie P. Cowart and Lucy Ann Sparkman. 51 Tenn.App. 645, 371 S.W.2d 162
• Court: Tennessee Court of Appeals

Page 162

371 S.W.2d 162

Robert Jackson SPARKMAN, a Minor b/n/f Henry R. Sparkman v. E. Cecil PHILLIPS, Trustee, Chattanooga Federal Savings &amp Loan Assn., and Unknown Heirs of Mattie P. Cowart and Lucy Ann Sparkman.

51 Tenn.App. 645, 371 S.W.2d 162

Court of Appeals of Tennessee, Eastern Section.

Nov. 13, 1962.

Certiorari Denied April 3, 1963.

[51 TENNAPP 646] Moon, Harris & Dineen, Chattanooga, for appellant.

Tanner & Thrasher, and French B. Frazier, Chattanooga, guardian ad litem, for appellee.

BEJACH, Judge.

This cause involves an appeal by the Title Guaranty & Trust Company of Chattanooga from a decree of the Chancery Court of Hamilton County holding it liable on a bid of $14,000 for property belonging to the appellee, Robert Jackson Sparkman, a minor, and entering judgment against it for that amount, plus interest. The decree of the Chancellor also denied to appellant the right to intervene as a defendant in this cause and file a cross bill against its principal, Dr. J. E. Kimball.

The original bill in this cause was filed April 17, 1961 by Robert Jackson Sparkman, a minor, by next friend, Henry R. Sparkman, against E. Cecil Phillips, Trustee, [51 TENNAPP 647] Chattanooga Federal Savings & Loan Assoc., and the unknown heirs of Mattie P. Cowart and Lucy Ann Sparkman. The bill alleges that complainant, through his mother, Lucy Ann Cowart Sparkman, inherited property from his grandmother, Mattie P. Cowart, a widow who died about February 9, 1960; that the property in question is known as 820 McCallie Avenue, Chattanooga, Tennessee; and that same is encumbered by a trust deed in favor of the Chattanooga Federal Savings & Loan Assoc., securing a loan made by it, the unpaid balance of which was alleged to be approximately $2,601.04. The bill alleged that E. Cecil Phillips, Trustee, under the trust deed encumbering said property was about to foreclose same; but that if the property were properly managed, sufficient income should be obtained to pay the installments due. The bill prayed for an injunction against the foreclosure sale and for the appointment of a custodian or curator for management of said property. In the alternative, the bill prayed for sale of the property for manifest interest of the minor complainant. The defendants, E. Cecil Phillips, Trustee, and the Chattanooga Federal Savings & Loan Assoc., filed a joint answer which sets out that the balance due on their loan, together with the interest thereon, amounted to $3,040.79. The answer avers that said defendants have no objection to a sale of the property by the court, so long as the priority of their indebtedness is maintained. Said answer was filed for said defendants by Frazier and Frazier, by French B. Frazier, as solicitors.

By order entered April 28, 1961, the Chancellor granted an injunction against the foreclosure, appointed E. Cecil Phillips as agent to manage the property, and appointed French B. Frazier as guardian ad litem.

[51 TENNAPP 648] Thereafter, on June 26, 1961, an offer to purchase the real estate here involved was filed. This offer to purchase is labeled 'CONTRACT FOR THE PURCHASE OF REAL ESTATE', and same is dated April 19, 1961. This contract or offer is the subject matter of the present appeal. It is addressed to E. Cecil Phillips Agency, Realtor, and offers to buy the real estate involved in this cause for the sum of $14,000. It recites that it is to be open for 90 days, and that proper warranty deed and evidence of title are to be tendered within 15 days after acceptance. It recites that a deposit of $500.00 was tendered with the offer, to be refunded if the offer were not accepted, but the record discloses that this deposit of $500.00 was never made. The offer, as filed, is signed 'Title Guaranty & Tr. Co., Trustee (For J. E. Kimball) Buyer, by Charles O. Hon, Jr., Pres.' The instrument has a blank which is unfilled, showing that the offer is accepted and the seller agrees to pay a 5% commission, but these blanks have not been filled in nor executed. Beneath that is written:

'June 26, 1961

'This offer was made in behalf of Dr. J. E. Kimball and withdrawn upon his order. He does not desire to make the offer at this time. The court asked that this copy be filed by Title Guaranty & Trust Co., Trustee and such offer is tendered only because of such order of the court.

'Title Guaranty & Trust Co. Trustee for Dr. J. E. Kimball

'by C. O. Hon. Jr., Pres.'

The record shows that the property was appraised as being worth $12,500.

[51 TENNAPP 649] From the memorandum opinion of the Chancellor which was incorporated in the decree entered October 27, 1961, we quote as follows:

'On July 26, 1961, the Title Guaranty & Trust Co. of Chattanooga, Trustee, filed the following motion

"Comes the Title Guaranty & Trust Co., Trustee, by its solicitors, and moves the court for leave to intervene in this cause as a party defendant, and for further leave to file answer filed as cross bill, hereto attached and made a part of this motion.'

'Attached to the motion was an 'Answer Filed as Cross Bill for the Title Guaranty & Trust Co. of Chattanooga.' In support of the motion, Mr. Charles O. Hon, Jr. filed an affidavit that stated that he as president of the Title Guaranty & Trust Co. of Chattanooga, which is engaged in the business of insuring real estate titled and related transactions, and that, as such president, on April 19, 1961 he was authorized by Dr. J. E. Kimball to execute an offer to purchase the minor's real estate; that on the date the offer was made it was originally typed for $16,000.00, but was changed to $14,000.00 by Dr. Kimball, whose initials appear opposite the change; that the offer was then submitted to realtor E. Cecil Phillips, and that, although the offer recites $500.00 was tendered as earnest money, the $500.00 was never paid over to the agent. Mr. Hon then said under oath that he was later informed by Dr. Kimball that the offer was to be withdrawn and affiant secured all executed copies of the contract from the realtor. He acknowledges that, after the cause came on to be heard on motion to confirm the sale, he was [51 TENNAPP 650] informed by complainant's solicitor that the Court ruled from the bench, after hearing the proof in the case, that it was to the manifest best interest of the minor that the sale be confirmed, but it developed that the offer to purchase the real estate was not in the file, and the Court ordered that the offer be filed with the Clerk and Master. Mr. Hon says that he thereafter wrote on the face of the offer that the Title Guaranty & Trust Company was 'Trustee (for J. E. Kimball)' and wrote on the back of the offer,

"June 26, 1961

"This offer was made in behalf of Dr. J. E. Kimball and withdrawn upon his order. He does not desire to make the offer at this time. The Court asked that this copy be filed by Title Guaranty & Trust Co., Trustee and such offer is tendered only because of such order of the Court.'

and that this notation was written 'so that the Court might not be misled into action that might result in additional cost and delay to the parties to the suit and for the further reason of preventing a loss to the corporation.' (Italics supplied.)

'The answer and cross-bill submitted by Title Guaranty & Trust Company along with its motion was not allowed to be filed because material facts were omitted from the answer and cross-bill and also from the supporting affidavit.

'Mr. C. O. Hon, Jr., in addition to being President of the Title Guaranty and Trust Company, was enrolled on the roster of solicitors of this Court on December 10, 1949. He made no appearance before the Court in connection with producing the offer to [51 TENNAPP 651] purchase before being ordered to do so, but he did, however, before the written offer was withdrawn from the agent, in a casual manner inform the Chancellor at a public eating place where both were eating lunch at the same table that his corporation had made an offer to purchase the real estate as Trustee for Dr. Kimball and that the Doctor for health reasons wanted to withdraw the offer. He was then informed that no one but the Court has the power and authority to permit an offer made for the purchase of an infant's or incompetent's property to be withdrawn. Whereupon, he said, 'I will then have to file a petition to be permitted to withdraw the offer.' Instead of filing such a petition, Mr. Hon procured the return of the written offer from the realtor. On the occasion above referred to Mr. Hon was also informed by the Chancellor that any time a Trustee makes an offer in writing to purchase real estate as Trustee, without disclosing for whom he is acting or setting out the purpose of the trust, the word 'Trustee' is surplusage and that the agency rule applies, which binds an agent as principal where the name of the principal is not disclosed.

'After June 26, 1961, when the Court learned about the offer having been withdrawn, Mr. Hon was personally ordered to appear in Chambers and was severely reprimanded for his unethical conduct.

'There are some additional facts, which the record does not disclose. Sometime after the offer was made by Mr. Hon for the Title Guaranty and Trust Company, Trustee, a salesman in the office of E. Cecil Phillips appeared in Chambers, submitted the offer to the Court and stated that Mr. Phillips [51 TENNAPP 652] strongly recommended its acceptance. Mr. Phillips is related to the complainant, either by affinity or consanguinity. The salesman stated that the purchaser desired to purchase the property involved and the adjoining vacant lot and that the owner of the vacant lot had agreed to sell at a price that the purchaser had agreed to pay. The salesman was informed of the impropriety of personally presenting an offer to the Court for acceptance and was advised to submit it to the attorney of record. It was assumed that this procedure was followed. There was no disclosure made at that time that the $500.00 earnest money...