Why was charlie upset after hearing Bella and Edwards engagement?

She doesn't! Charlie visits the Collin's one day, after Renesmee is born and after Bella is changed, and he sees her. Edward tells Charlie that she is his niece, but Charlie sees Bella's eyes in Renesmee, and realises that she is their daughter. They have a "need to know" only policy going on, so Charlie never gets the whole story, but knows that she is special and that he needs to keep his mouth shut!

P.S. YOU PEOPLE STINK!