Wootten v. Wootten
Decision Date | 25 January 1947 |
Docket Number | 3365.,No. 3364,3364 |
Citation | 159 F.2d 567 |
Parties | WOOTTEN v. WOOTTEN (two cases). |
Court | U.S. Court of Appeals — Tenth Circuit |
Harry Hammerly, of Chickasha, Okl. (Seth and Montgomery, of Santa Fe, N. M., on the brief), for appellants.
H. A. Kiker, of Santa Fe, N. M., for appellee.
Before PHILLIPS, HUXMAN, and MURRAH, Circuit Judges.
Carl E. Wootten brought an action against John B. Wootten to establish a constructive trust in 53.6 shares of stock in the Red River Ranch, Inc.,1 a New Mexico corporation. Vendla E. Wootten brought an action against John B. Wootten to establish a constructive trust in 53.6 of such shares. The actions were consolidated. The trial court held the complaints failed to state claims upon which relief could be granted, and dismissed the actions. On a former appeal, we reversed the judgments of dismissal with instructions to overrule the motions to dismiss. See Wootten v. Wootten, 10 Cir., 151 F.2d 147, 149.
In our opinion on the former appeal we said:
On remand, issues were joined and evidence was adduced. The material facts are not in dispute.
On July 30, 1936, R. K. Wootten was the owner of certain ranch properties situated in Mora, Colfax, and Harding Counties, New Mexico, consisting of deeded land, land held under purchase contracts from the State of New Mexico, leased land, range cattle, horses, milk cows, and ranch equipment. On that date, R. K. Wootten sold and transferred to his brother, John B. Wootten, an undivided one-half interest in the properties and, thereafter, until the death of R. K. Wootten, the brothers were equal partners in the ownership and operation of the ranch. On July 30, 1936, R. K. Wootten and John B. Wootten entered into a contract with W. R. Ferguson under which Ferguson was to operate and manage the ranch for a term of six years. The contract recited that the ranch properties, other than cattle, had a value of $88,000, and that the cattle had a value of $57,587.50. It provided that Ferguson would manage and superintend the ranch and its operations for a period of six years from January 1, 1936; that the Woottens would pay him a salary of $100 per month and provide funds for the economical operation of the ranch; that the net profits or losses sustained in the conduct and operation of the ranch, excluding increases in the value of the lands, should be determined annually; that, in the event the net operating profit for the full term of six years should equal 100 per cent of the total investment during such period, including the fixed value of the lands and leases, Ferguson should be entitled to an undivided one-third interest in the ranch lands, leases, livestock, and equipment, and that such interest, at the end of six years, would be transferred to Ferguson; and that, in the event the net operating profit should not equal 100 per cent, an interest in the ranch properties on the basis of the net profits earned would be transferred to Ferguson at the end of the six-year period.
It further provided that, in computing the expenses of operation, 5 per cent per annum on the agreed value of the properties should be charged as expense.
R. K. Wootten died testate January 3, 1938. John B. Wootten was named executor in the will of R. K. Wootten; he duly qualified, and continued to act as such executor until October, 1944. Vendla E. Wootten is the widow of R. K. Wootten, and Carl E. Wootten is the son of R. K. Wootten. Under the terms of his will, R. K. Wootten devised and bequeathed all of his property to Vendla E. Wootten and their four children in equal shares. The will directed that, after payment of debts, taxes, and administration expense, the executor should distribute to Vendla E. Wootten her share of the property and should distribute the remainder to himself as trustee for the four children; it provided that the share of each child should constitute a separate trust, that the trustee should have full power and authority to sell, transfer, assign, convey, and dispose of any property of any of the trusts, and to invest and reinvest the money and funds of each separate trust in the exercise of his judgment and discretion, that all income and profits of each of such trusts should become a part of the corpus thereof, and that the trustee should distribute and deliver to each child all of the property in his or her respective trust when he or she arrived at the age of 25 years; it directed the executor to make final distribution of the estate to Vendla E. Wootten and John B. Wootten, as trustee, within five years after the death of R. K. Wootten; and it authorized John B. Wootten, as executor, during the period of administration, in the exercise of his discretion, "to sell, transfer, assign, convey, and dispose" of any and all property, funds, and assets in the estate upon such terms and for such considerations as he should deem proper, and expressly authorized him to invest and reinvest any and all moneys coming into his possession, as executor, in such securities as, in his judgment and discretion, he should deem proper.
After the death of R. K. Wootten, John B. Wootten formulated a plan to create a corporation under the laws of New Mexico, and to transfer all of the ranch properties to such corporation. In December, 1939, John B. Wootten, acting for himself individually, and as executor of the estate of R. K. Wootten, deceased, and as trustee for the children, and Vendla E. Wootten and Ferguson entered into a contract whereby they agreed to create such corporation with an authorized capital stock of 2500 shares, each of the par value of $100; to transfer the ranch properties to the corporation; to deliver two-thirds of such stock to John B. Wootten individually, and as trustee for the children, and Vendla E. Wootten, and to retain as treasury stock for the fulfillment of the Ferguson contract, one-third of the authorized capital stock, and on the expiration of the term fixed in such contract, to issue to Ferguson one-third of the shares retained in the treasury, or such portion thereof as Ferguson might be entitled to receive.
The corporation was duly created. Six hundred and ten shares of the capital stock were issued to John B. Wootten individually, 122 shares to Vendla E. Wootten, and 488 shares to John B. Wootten, as trustee for the children. The remaining shares, except one share issued to Ferguson, were held in the treasury. Vendla E. Wootten's stock was not delivered to her until January 15, 1944.
A controversy arose between John B. Wootten and Ferguson as to the interest in the ranch properties that Ferguson was entitled to receive under his contract. Ferguson brought an action in the District Court of the Eighth Judicial District of New Mexico against the corporation and others. On December 4, 1942, a decree was entered in that case. It adjudged that Ferguson was entitled to receive 570 shares of such stock, including the one share theretofore issued to him; that John B. Wootten was entitled to receive 20 additional shares individually, and 16 additional shares as trustee, and that Vendla E. Wootten was entitled to receive 4 additional shares.
Following the entry of such decree, John B. Wootten discontinued the services and employment of Ferguson and took over the sole and exclusive operation and management of the corporation and its ranch properties.
Prior to January 15, 1944, John B. Wootten began negotiations with Ferguson to purchase the latter's corporate stock. Ferguson had disposed of 34 shares of the stock issued to him. John B. Wootten consummated the purchase of the remaining 536 shares of the Ferguson stock on January 15, 1944, for $87.50 per share.
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