Lucas v. Lucas

Decision Date31 October 1991
Docket NumberNos. 90-1287,90-1287,s. 90-1287
Citation946 F.2d 1318
CourtU.S. Court of Appeals — Eighth Circuit
PartiesRuth Houck LUCAS, individually and as assignee of the Estate of Wilder Lucas, Appellee, v. Wilder George LUCAS, Appellee, Oppenheimer & Co., Inc., Appellant. Ruth Houck LUCAS, individually and as assignee of the Estate of Wilder Lucas, Appellee, v. Wilder George LUCAS, Appellant. Oppenheimer & Co., Inc.

No. 90-1288 was submitted as a no argument case.

Lindsey Miller-Lerman, Omaha, Neb., argued (Curt Roy Hineline and Ronald R. Massumi, Omaha, Neb., and P. Terence Crebs, St. Louis, Mo., on brief), for appellant in No. 90-1287.

Anthony S. Bruning, St. Louis, Mo., argued (Edward M. Roth, on brief), for appellees.

Before JOHN R. GIBSON and BOWMAN, Circuit Judges, and SACHS, * District Judge.

JOHN R. GIBSON, Circuit Judge.

Oppenheimer & Company, Inc., and Wilder George Lucas appeal from a judgment based on a jury verdict in favor of Ruth Houck Lucas, individually and as assignee of the claims of the estate of her husband, Wilder Lucas. Ruth Lucas brought this diversity action against Oppenheimer & Company, Inc., and her son Wilder George Lucas for the conversion of securities from her husband's estate. On appeal, both Oppenheimer and Wilder George Lucas make essentially the same arguments: (1) that Ruth Lucas lacked standing to bring this action, (2) that she failed to make a submissible claim for conversion, (3) that the district court erred in instructing the jury on affirmative defenses, and (4) that the jury instructions regarding a power of attorney and damages were in error. Oppenheimer asserts an additional claim that the district court erred in failing to direct a verdict against Wilder George Lucas on its cross-claim. We affirm judgment in favor of Ruth Lucas, and the award of punitive damages, but remand for retrial of the actual damage issue under proper evidence and instructions in accordance with this opinion.

Wilder Lucas died on November 2, 1983. His will named his wife, Ruth Lucas, as executrix of his estate. Mrs. Lucas authorized her son, Wilder George Lucas, to assist in the administration of the estate. Wilder George Lucas lives in Tennessee, and during the two years after his father's death he made between 50 and 60 trips to St. Louis to work on estate matters.

At his death, Wilder Lucas owned various securities worth approximately $360,000. It was his practice to store the certificates of ownership randomly throughout his business office. Ruth and Wilder George Lucas began locating and consolidating those securities in order to close out the estate. Wilder George Lucas hired the secretary who had worked for his father and an accountant to assist him, and conducted affairs out of his father's office.

In December 1983, Mrs. Lucas executed a "durable power of attorney" giving Wilder George Lucas authority to act on her behalf. The drafting attorney testified that the purpose of this general power of attorney was to enable Wilder George Lucas to handle Mrs. Lucas's personal affairs. Wilder George Lucas testified that he believed the power of attorney also authorized him to act for his mother in her role as executrix.

Wilder George Lucas set to work administering his father's estate. He placed his father's investments in accounts at the brokerage firms of Newhard, Cook & Co., Inc. and Merrill, Lynch, Pierce, Fenner & Smith, Inc. Using the power of attorney and other forms signed by his mother, Wilder George Lucas directed the brokerage firms to transfer his father's securities first into the name of the estate, and then into street name so that the stock certificates would be held in trust at the Depository Trust Company.

At various times, Wilder George Lucas traded the securities in these accounts, and in the summer of 1984 he instructed Newhard Cook and Merrill Lynch to transfer all remaining securities to accounts at Oppenheimer, 1 where he continued active trading. There is little evidence regarding whether Oppenheimer obtained, or tried to obtain, Mrs. Lucas's authority to open these accounts on behalf of the estate.

Periodically, Wilder George Lucas would instruct Oppenheimer to transfer the proceeds from the sale of securities to an estate checking account at Centerre Bank. 2 Oppenheimer claims that it wired funds totalling $231,000 to this account. It also claims that Wilder George Lucas instructed the brokerage firm to wire approximately $119,000 to E & W, Inc., a Tennessee textile company that his wife owns, and of which he is president and CEO. Additionally, it is undisputed that $81,000 was wired back from the estate checking account to Oppenheimer.

In November 1985, anxious to close the Wilder Lucas estate, the estate attorneys asked Wilder George Lucas to provide a list of all receipts and disbursements of the estate, along with a list of the estate's remaining assets. Wilder George Lucas informed the attorneys that the estate's assets consisted of about $50,000 and a note from him to the estate for several hundred thousand dollars.

The attorneys subsequently discovered that Wilder George Lucas had used Oppenheimer to liquidate the estate securities and to transfer the money to the estate checking account. He had then used blank checks that his mother had signed to pay most of the money from the estate checking account to himself or E & W. 3

When she learned what her son had done, Mrs. Lucas revoked the durable power of attorney and wrote a letter dated April 4, 1986, notifying Oppenheimer that the power of attorney under which her son had been purporting to act was no longer in force.

The estate attorneys advised Mrs. Lucas that the co-trustee of the estate, Boatmen's Bank, would probably seek to hold her liable for the value of the securities missing from the estate. In response, Mrs. Lucas transferred approximately $341,000 4 worth of her own securities to the estate, and in exchange for this payment, Mrs. Lucas, acting as executrix, assigned herself, personally, the estate's right to recover the value of the missing securities. 5

Mrs. Lucas then filed this diversity action against Oppenheimer and Wilder George Lucas. At the close of the thirteen day trial, the court instructed the jury members that they should find for plaintiff if Oppenheimer "came into possession and control of an interest in stock certificates of the estate of Wilder Lucas without the authority of plaintiff," and the estate was thereby damaged. The court also instructed the jury that as a matter of law, the power of attorney in evidence could not "authorize anyone to do anything on behalf of the estate of Wilder Lucas," and that the jury was "not to consider the power of attorney as evidence of defendant Wilder George Lucas's alleged authority to act on behalf of the Estate." The district court refused Oppenheimer's requested instructions on the defenses of ratification, acquiescence, waiver, estoppel and inherent authority, but did give an instruction on apparent authority. The jury returned a verdict against George Wilder Lucas for $610,000 in actual damages, and against Oppenheimer for $510,000 in actual damages and $510,000 in punitive damages.

I.

Oppenheimer claims, for the first time on appeal, that Mrs. Lucas lacked standing to bring this conversion claim because she did not sue in her role as executrix. Mrs. Lucas answers that she brought the suit in her personal capacity because while acting as executrix she assigned the cause of action to herself.

We do not believe this is a standing problem, but rather one of identifying whether the real party in interest is Mrs. Lucas as executrix, or Mrs. Lucas in her personal capacity. 6 If Oppenheimer was concerned that Ruth Lucas, individually, was not the correct party to raise the conversion claim, it should have raised the issue before or during trial. We have often stated that we will not consider issues raised for the first time on appeal, and this case does not present grounds for an exception to the general rule. Morrow v. Greyhound Lines, Inc., 541 F.2d 713, 724 (8th Cir.1976) ("It is old and well settled law that issues not raised in the trial court cannot be considered by this court."); see Gogolin & Stelter v. Karn's Auto Imports, Inc., 886 F.2d 100, 102 (5th Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 1480, 108 L.Ed.2d 617 (1990) (real party in interest defense is waived if not timely asserted).

II.

Oppenheimer next argues that Ruth Lucas failed to make a submissible claim of conversion. Our standard of review on this claim is narrow. This being a diversity case, we must examine issues of Missouri law de novo. Salve Regina College v. Russell, --- U.S. ----, 111 S.Ct. 1217, 1221, 113 L.Ed.2d 190 (1991). On the other hand, we must assume as true all facts in Mrs. Lucas's favor that the evidence tends to prove, and, giving her the benefit of all reasonable inferences, we must resolve direct factual conflicts in favor of Mrs. Lucas. Craft v. Metromedia, Inc., 766 F.2d 1205, 1218 (8th Cir.1985), cert. denied, 475 U.S. 1058, 106 S.Ct. 1285, 89 L.Ed.2d 592 (1986).

In Missouri, a plaintiff can prove conversion "in one of three ways: (1) by tortious taking; (2) by any use or appropriation to the use of the person in possession indicating a claim of right in opposition to the rights of the owner; or (3) by refusal to give up possession to the owner on demand." Lacks v. R. Rowland & Co., 718 S.W.2d 513, 521 (Mo.Ct.App.1986) (emphasis removed). Mrs. Lucas alleged conversion by tortious taking.

A.

Oppenheimer argues that Ruth Lucas did not prove a submissible claim for conversion of securities because the securities in question had been transferred into street name. Oppenheimer contends that an action for conversion is only appropriate where the converted property is chattel capable of being specifically...

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