Woodard v. Bird

• Decision Date: 13 October 1900
• Citation: 59 S.W. 143,105 Tenn. 671
• Parties: WOODARD v. BIRD et al.
• Court: Tennessee Supreme Court

59 S.W. 143

105 Tenn. 671

WOODARD v. BIRD et al.

Supreme Court of Tennessee.

October 13, 1900

Appeal from chancery court, Hamilton county; T. M. McConnell Chancellor.

Bill by R. P. Woodard, guardian, etc., against S. H. Bird and others for the foreclosure of a trust deed, in which Isabel Doescher and others, minors, file a cross bill for affirmative relief. From a decree for complainant, and dismissing the cross bill affirmed by the court of chancery appeals, defendants and the minors appeal. Reversed.

Upon review of a cause appealed from the court of chancery appeals, this court cannot look behind the report and opinion of that court for the facts of the case.

R. L. Bright, for appellants Bird and others. M. H. Clift, for appellants Doescher and others. Frazier & Coleman, for appellant Mrs. Wisdom. Cooke, Swaney & Cooke, for appellant F. T. Hampton. Robt. P. Woodard and Pritchard & Sizer, for appellee.

BEARD J.

The original bill in this cause was filed, asking for the foreclosure of a trust deed made by S. H. and Gus Bird to J. B. Frazier, trustee, in December, 1888, conveying a valuable tract, to secure Lewis Shepherd in the payment of a note for $10,666.55 executed by the Birds, and due 12 months after date. It is alleged in the bill that before its maturity, and for a valuable consideration, the payee of this note had assigned it to A. J. Wisdom, executor of the estate of Lewis Owen and Julia Owen, deceased, and that subsequently he negotiated a sale of it to Catherine Doescher, guardian of her minor wards, Arthur, Isabel, and Harry Doescher, for the purchase price of $11,619.42, of which amount she paid at the time the sum of $5,000, and agreed to pay the balance in the future. To secure this balance, instead of delivering the note to the then purchaser, an agreement was entered into by which it was placed in the hands of one Wiehl, who was to hold the same for the security of the transferror. This agreement is embodied in the instrument of writing executed by Wisdom at the time, and which, after formally assigning this note to Mrs. Doescher, as guardian of the minors, without recourse, and reciting that, after the payment by her as above stated, there remained a balance due of $6,619.42, which was to bear interest until paid, then closes with the following recitals, viz.: "Said note is to be held by F. F. Wiehl until said balance is paid to me, or until the foreclosure of the deed of trust hereinafter named. Said note is secured by a deed of trust executed on the same date of the note by S. H. and Gus Bird to J. B. Frazier, trustee. Upon the foreclosure of said deed of trust it is agreed by said Mrs. Doescher that the balance then due on said note shall be first paid out of the proceeds of said foreclosure sale, before anything is paid to said Catherine Doescher. *** [Signed] A. J. Wisdom, Executor." The bill alleged that certain payments had been subsequently made by Mrs. Doescher, either to Wisdom, or to Wiehl for him, which, when credited to said balance, reduced the claim of Wisdom on said note to about $4,000, and that Wisdom had assigned this balance to complainant, as the guardian of his ward. It is insisted by complainant that out of the proceeds of the foreclosure sale he, for his ward, should be first paid the balance of his claim and interest, and that whatever remained should be applied, as far as necessary, to that of the Doeschers. To this bill the two Birds, Frazier, trustee, Wiehl, Isabel, Harry, and Arthur Doescher, and Mrs. Catherine Doescher, in her own right and as guardian, were made defendants. Arthur and Isabel and Harry Doescher filed a general answer to the bill. Isabel and Harry, being minors, but over 14 years of age, answered in person and by M. H. Clift, their guardian ad litem. In their answer they admit that the contract was made by their guardian with Wisdom to purchase this note, and that at the date of the contract there was paid to Wisdom $5,000; and they allege that subsequently various large sums were paid by her to Wisdom on account of the contract, all of which came from their estate in the hands of their guardian. They deny the right, however, of their guardian to enter into this contract and make this investment, and insist that in so doing there was an abuse of her trust, in which Wisdom, her vendor, was an active participant.

With their answer they file a cross bill, in which, after repeating these averments of the answer, they charge that the contract made by Wisdom with their guardian was made in his own right, and not as executor, and that, in receiving the payments made by Mrs. Doescher on this illegal contract, he had knowledge of her misappropriation; and they allege that they have a right to hold his estate (he being then dead) liable for the sums received by him, as well as for a claim of $2,500 belonging to their estate, put into his hands for collection, the proceeds of which were to go to the credit of the contract, and interest upon these various amounts. They ask, among other things, therefore, that the contract of purchase of this note by their guardian be declared illegal, and that they have a decree against his estate for the sums received by him in money, as well as what he should have received on the $2,500 note and interest. They also pray for general relief. To this cross bill Mrs. Wisdom, as executrix of A. J. Wisdom and in her own right, made answer, in which she alleged that her testate made the contract of sale to, and received the purchase money in question from, Mrs. Doescher as executor, and not as an individual, and denied that his estate could be held liable, even if there had been misappropriation of the funds of his wards as charged, inasmuch as before his death he had paid out all of the funds so received by him to the legatees of the estate of his testate, and had made a full and final settlement of their estates. The answer also denied that the guardian of cross complainant was without authority in law to make the instrument in this note.

An order pro confesso in the original bill was taken against S. H. and Gus Bird. Subsequently an application was made and granted to set aside this order as to these defendants, upon terms imposed by the chancellor. S. H. Bird availed himself of these terms or conditions, and filed an answer. Gus Bird did not. In the answer of S. H. Bird it is alleged that the real estate covered by the trust deed to Frazier came to himself and his brother Gus as devisees under their father's will, and at that time was involved in litigation, which was subsequently compromised by an agreement on their part to pay $2,000, which sum they borrowed from their attorney; that, beginning with this, their transactions were quite numerous, so that by December, 1885, he claimed a balance of $10,666.55, and required them to execute the note and mortgage involved in this litigation. He enters with much detail into the various transactions, and charges that in many and various respects they were taken advantage of by him, and were induced to execute the present note, when in fact there was nothing due to him, or, if anything, only a trifling sum of money. They admit the transfer of this note by its payee to A. J. Wisdom, but they allege that he took it after maturity, or, if before, that he was not a purchaser for value, in due course of trade, and that it was subject in his hands and that of the present holder to all equitable defenses that existed while in the hands of the original payee. It is further alleged that in 1891 respondent and his brother borrowed from Catherine Doescher $1,700, and gave her their joint note, secured by a trust deed on this same tract of land; that thereafter the two brothers partitioned the tract between them, save a small part of it, which was left in common; that after the maturity and nonpayment of this note the property was advertised for sale under this last-mentioned trust deed, during which time its makers were engaged in raising money to discharge it, when, by false promises made by Catherine Doescher and the attorney who had before this represented them, but who now represented her, they were induced to forbear and submit to the foreclosure; that after this was effected this agreement was repudiated, and Mrs. Doescher, the purchaser, instituted proceedings to obtain possession, pending which she negotiated a trade with Gus Bird, by which, in consideration of his conveyance to her of the portion of the property which he held under the partition, as well as his half interest in the undivided part of this property, she was to release him from all liability on the $1,700 note, as well as the note for $10,666.55 executed to Lewis Shepherd, which she claimed to hold, and also to reconvey to himself and wife 100 acres out of the property, all of which, it is alleged, was done. This transaction so carried out, it is averred, was, by operation of law, a release of respondent personally, and of his interest in the land, from the two notes and mortgages, and, if not, that it was a fraudulent scheme designed by the parties to throw the burden of these debts and the mortgages on him and his land. Subsequently S. H. Bird presented to the chancellor a cross bill, and asked leave to file it in the cause. This was declined, but by a proper order it was preserved in the record. On examining it, we find that it is simply a restatement of the allegations of this answer.

On the final hearing of the cause it was decreed that Shepherd, the payee, transferred the note of $10,666.55 to A. J. Wisdom as executor, before maturity, for full value, and in due course of trade, and Wisdom, as executor, afterwards assigned the note to Catherine Doescher, as guardian of her minor children, for value, and without any taint of...