Williams v. Title Guar. & Trust Co.

• Decision Date: 09 March 1948
• Parties: WILLIAMS v. TITLE GUARANTY & TRUST CO. et al.
• Court: Tennessee Court of Appeals

212 S.W.2d 897

31 Tenn.App. 128

WILLIAMS v. TITLE GUARANTY & TRUST CO. et al.

Court of Appeals of Tennessee, Eastern Section.

March 9, 1948

Certiorari Denied by Supreme Court June 12, 1948.

Appeal from Chancery Court, Hamilton County; Peabody Howard Chancellor.

Suit by Joe V. Williams, Jr., against the Title Guaranty & Trust Co. and others to enjoin them from selling, conveying, assigning or otherwise encumbering certain realty, and to have the named defendant declared a trustee for complainant, and to require it to clear the realty of encumbrances and to execute a proper deed to complainant therefor. A. H. Dunlap filed a petition for adjudication of his commission as real estate agent. From a decree in favor of the complainant and in favor of A. H. Dunlap, the defendants appeal.

Decree affirmed as to the complainant, and cause remanded as to the petition of A. H. Dunlap.

Charles C. Moore, of Chattanooga, for appellee.

GOODMAN Judge.

This suit was filed by Joe V. Williams, Jr., seeking an injunction against the defendants, restraining them from selling conveying, assigning or otherwise encumbering certain property located in the City of Chattanooga, and seeking to have the defendant, Title Guaranty & Trust Company, declared trustee for complainant, requiring it to clear the property of encumbrances and to execute a proper deed of conveyance to complainant therefor. The defendants, by their respective answers, in substance join issue upon all the material allegations of the bill; the defendant, Title Guaranty & Trust Company, in effect taking the position of an interpleader and the defendant, Sol Klaus, asserting paramount title to that of the complainant.

It is contended by the complainant that he, by virtue of a contract to purchase the property from one Shuttles, a resident of North Carolina, and against whom a pro confesso was entered, is entitled to performance of such contract as against the Title Guaranty & Trust Company, holding the legal title to said property as trustee and the defendant, Sol Klaus, beneficiary of such trusteeship, on the ground that both of the defendants had notice of the preexisting contract of sale and were not innocent purchasers for value of the real estate.

The Chancellor found in favor of the complainant and held that the defendants had knowledge of circumstances which put them upon particular inquiry concerning complainant's contract; that they were not entitled to protection as bona fide purchasers and that the complainant was entitled to the relief prayed for in the bill. A petition for a rehearing was filed on behalf of the defendants but the same was overruled and a decree was entered in accordance with the previous memorandum opinion of the Chancellor, making perpetual the injunction therefore granted the complainant, divesting the Title Guaranty & Trust Company, Trustee, of the title to said property and vesting the same in the complainant, and directing said defendant to execute, acknowledge and deliver to the complainant, a proper deed of conveyance for registration and muniment of title. It was decreed that the complainant recover of the defendant, Sol Klaus, reasonable rents on said property from August 24, 1946, with said defendant afforded credit against same by way of interest at 6% on $10,000, from September 24, 1946, to April 22, 1947, the date the complainant tendered said amount, representing the purchase price of said property, into the registry of the Court. Provision was made for the payment of the judgment and costs and the payment over to the defendant, Sol Klaus, of the balance of said tender. A reference to the Master was ordered to determine and report the amount of reasonable rents decreed as aforesaid. The defendants excepted and prayed an appeal to this Court, pursuant to which errors are here assigned.

Following the filing of the memorandum opinion of the Chancellor, but prior to the entry of the final decree in the cause, a petition was filed by A. H. Dunlap seeking to have adjudicated his commission as real estate agent in the transaction whereby the contract of sale was entered into between the defendant, Shuttles, and the complainant. Answer was filed thereto by the defendant, Sol Klaus, denying the petitioner's right to have a commission paid out of the funds in Court, but this matter was not included in the adjudication as reflected by the final decree of the Chancellor. Subsequently and following the entry of the final decree and perfection of appeal by the defendants, a supplemental decree was entered awarding the petitioner the sum of $500 as commission in said transaction. From this decree, the defendants have likewise appealed. Amended assignments of error were filed predicated upon the action of the Chancellor with respect to said petition.

The assignments of error filed by the respective defendants present two principal propositions, (1) the validity of the complainant's contract with Shuttles at the time of the execution of the deed by the latter to the Title Guaranty & Trust Company, as Trustee for the defendant, Klaus; and (2) the bona fides of the transaction between Shuttles, the Title Guaranty and Trust Company and Klaus.

We are of the opinion that the record supports the decree of the Chancellor; that there was in effect at the time of the execution of the deed to the Title Guaranty & Trust Company, as Trustee for Sol Klaus, a valid and outstanding contract between Shuttles and the complainant; and that both defendants had sufficient knowledge of such contract as to put them upon inquiry with respect thereto.

The contract between Shuttles and Williams, as finally consummated August 24, 1946, contained an offer of the latter to purchase the property of the former, described as '501 Cherry Street, being approximately 26.5 X 101 1/2 feet known as the Ida Ischopik property,' for the sum of $10,000. Therewith there was deposited with A. H. Dunlap agent, a check payable to his order in the amount of $250 as a credit on the purchase price if the sale was consummated. The contract provided, 'Should this offer be accepted by the owner, I (we) agree to close the purchase within 30 days from the date notification of acceptance is given.' This contract and the check for the deposit, unindorsed, were left with the Title Guaranty & Trust Company on the same date for title examination, and, though there is some dispute as to the scope of the latter's function in the transaction, a deed was forwarded by the Company's title attorney and examiner to Shuttles and wife for execution on August 31, 1946. This deed was never returned. During September 1946, the defendant, Sol Klaus, entered into a transaction for the purchase of the same property, through another agent, James R. Chamberlin, of Chattanooga. As a result of these negotiations, and for a consideration of $11,000, a deed, acknowledged September 21, 1946, was executed by Harold Shuttles and wife, Patricia P. Shuttles to the defendant, Title Guaranty & Trust Company, Trustee. This deed was delivered to the latter and recorded. The proof shows the defendant, Sol Klaus, to be the intended beneficiary of this trust. Considering this state of the proof with respect to the divergent interests of the parties, together with other proven facts pertaining to the status of complainant's purchase contract, we are unable to agree with appellant's contention that such instrument was not valid and enforceable at the time the deed was executed. Complainant stood ready to perform. He did not breach the contract and was not responsible for the delay in carrying out the provisions thereof. On the other hand, the owner, Shuttles, through acceptance of complainant's offer became obligated to execute and deliver a deed for the premises contemporaneous with payment of the purchase price. The obligations of the parties were reciprocal; and either, in order to compel the performance of the other, was bound to comply or exhibit a readiness to comply with his own contractual undertaking. Smith's Heirs v. Christmas, 15 Tenn. 565; 55...