Amator v. Amator, 12663

• Decision Date: 26 January 1977
• Docket Number: No. 12663,12663
• Citation: 560 P.2d 410,114 Ariz. 226
• Parties: Eugene Lee AMATOR and Betty Jean Amator, husband and wife Individually, and Eugene Lee Amator as Executor of the Estate of Bert Amator, Appellants and Cross-Appellees, v. William L. AMATOR, Bert V. Amator, Ernestine Shahan and Eva Martin, Appellees and Cross-Appellants.
• Court: Arizona Supreme Court

Page 410

560 P.2d 410

114 Ariz. 226

Eugene Lee AMATOR and Betty Jean Amator, husband and wife Individually, and Eugene Lee Amator as Executor of the Estate of Bert Amator, Appellants and Cross-Appellees, v. William L. AMATOR, Bert V. Amator, Ernestine Shahan and Eva Martin, Appellees and Cross-Appellants.

No. 12663.

Supreme Court of Arizona, In Division.

Jan. 26, 1977.

Hill & Savoy by John E. Savoy, Cheryl E. Hendrix, Phoenix, for appellants and cross-appellees.

Donald J. Kenney, Ltd. by Donald J. Kenney, William B. DeMars, Phoenix, for appellees and cross-appellants.

HAYS, Justice.

This action stems from the distribution of the assets of a family farm. After Bert Amator, Sr., died in November, 1971, four of the sons and daughters brought this action against another son, Eugene, and his wife in an attempt to retrieve to the estate of their mother certain personal property given to Bert, Sr., for life, the remainder to go to the children. It was alleged that a sale of a certain part of the property, to wit, a dairy herd and milk base, was improper and beyond the authority of Bert, as life tenant and in contravention to the rights and interests of the remaindermen. The plaintiffs sought an accounting or in the alternative the imposition of a constructive trust on the defendants, Eugene and his wife, who purchased the life estate property from Bert.

The case is on appeal to this court after a trial without a jury in which judgment was had in favor of the plaintiffs in the sum of $12,500. We have jurisdiction pursuant to 17A A.R.S. Rules of the Supreme Court, rule 47(e). The facts and history of the family which gave rise to this litigation are as follows.

In 1917 a dairy farm was started by Bert and Alice Amator southwest of Phoenix. In 1949 the farm became known as Amator and Sons, operating in a partnership format between Bert, Glen and Eugene, though without any formal partnership agreement. Before long, Glen left the partnership with William, another brother, taking his place. Under the informal arrangement, the profits of the dairy operation were equally divided amongst the three but the capital assets of the farm remained owned by Bert and Alice.

In 1953, the mother, Alice Amator, died leaving, by her will, her one-half interest in the community property, comprised primarily of the assets of the farm, to Bert Amator, for his lifetime; and upon his death the farm was to be divided equally among the couple's six children. The probate proceedings of Alice's will recognized the dairy farm to consist of the real property, various items of farm machinery, 55 cows and 40 heifers. The proceedings concluded that a life estate was created in one-half of the property in Bert, with the remainder to the children upon his death.

In 1959, the United Dairymen of Arizona established a so-called milk base which is a marketing right that a dairyman needs in order to market milk through that particular organization. Amator and Sons, as a partnership, purchased 4,129 pounds of milk base from 1959 through 1963.

In 1966, William left the business, selling several cows and heifers and 1300 pounds of milk base comprising his interest in the farm to Eugene. Later that same year, Bert had a stroke and as a result, he was unable to continue running the farm. Pursuant to a family agreement, Eugene assumed management of the farm and agreed to pay Bert $150 a month, keeping any other profits.

In 1968, Eugene and his wife personally purchased 1000 pounds of milk base for $12,500, which purchase was financed through the Amator and Sons' account at Production Credit Association (hereinafter referred to as P.C.A.).

In 1971, Eugene arranged to buy Bert's entire interest in the dairy farm. Pursuant to their informal agreement, Eugene was to pay Bert $150 to $200 a month for the 1377 pounds of milk base and was to assume all the dairy farm's current debts at P.C.A. which totalled $47,167 in return for the 40 cows and some 20 or 25 heifers then owned by Bert.

Later that year Bert died. Soon thereafter Eugene paid to Bert's estate the balance still outstanding on the sale of the milk base.

Suit was brought to obtain an accounting from the defendants, Eugene and his wife, for the dairy herd or any profits derived from its sale to a third person; to obtain an accounting for any increase or decrease in the value of the milk base; and to void the transfer to Eugene of the milk base on the grounds that the sale was the product of coercion and unfair persuasion and was for inadequate consideration.

The court below found that Bert, as life tenant, had the power to consume or sell any of the property subject only to the duty not to waste the property and that the milk base never constituted a part of the life estate. The court further found that there were no unfair dealings on the milk base sale; that the agreed upon sales price of the herd was $47,167; and that Bert, Sr., had received $12,500 less in the transaction than that amount for the herd. Accordingly, the court held for the plaintiffs in the sum of $12,500. The defendants took an appeal on the grounds that the evidence did not support the trial court's conclusion that the sale price of the cows was $47,167 and therefore they argued the judgment of $12,500 was erroneous. The plaintiffs cross-appealed from the portion of the judgment that sanctioned Bert's sale of his life interest and that concluded that sufficient consideration was given for the milk base.

We shall initially meet the defendant's contentions concerning the lower court's determination that the sale price was $47,167. In 1971, Eugene acquired Bert's interest in the dairy herd by assuming the farm's obligations at P.C.A. The Amator and Son account at P.C.A. at that time showed an indebtedness in the sum of $47,167. The court found, however, that a portion of that indebtedness, to wit, $12,500, was an indebtedness personally incurred by Eugene when he had purchased 1000 pounds of milk base in 1968. From that finding it followed that Eugene had assumed a debt of Bert's of only $34,667 which was $12,500 less than the agreed upon sale price of the cows and, thus, that Eugene was liable to the estate of Bert in that amount. On appeal it is argued that the record is devoid of any evidence that the sale price was actually agreed upon to be $47,167.

We cannot agree. We have reviewed the entire record and have found several instances where Eugene himself testified that he assumed all of the mortgages at P.C.A. totalling what he believed to be around $46,000 in exchange for the cows. That $46,000 figure was later refined by subsequent testimony and evidence to be $47,167. This court will not disturb the trial court's determination when it is supported by any reasonable evidence. O'Hern v. Bowling, 109 Ariz. 90, 505 P.2d 550 (1973). We accordingly affirm the trial court's finding that the sale price of the cows was $47,167.

The plaintiffs, as cross-appellants, present issues of a more substantial nature. They claim on appeal that Bert, as life tenant of the herd, was merely a 'trustee' of the life estate property and as such he was without authority to sell the dairy herd outright. They further argue that Eugene, having purchased the herd, became a 'successive trustee' of the herd and was thereby responsible as a fiduciary to the 'co-beneficiaries' of the alleged trust, namely, the remaindermen of the life estate, for an accounting of the profits received from the sale of the herd by Eugene to a third party in 1972 and 1973. It is also maintained that the milk base was a part of the dairy operation and hence was property in which Bert had only a life estate and, as such, was not subject to disposal by the life tenant pursuant to the plaintiff's interpretation of Alice's will.

Preliminary to our consideration of the life tenant's authority to dispose of the property, we need first meet the defendant's contentions that the assets here at issue were not subject to the life estate but rather were Bert's free and clear from the constraints of the life estate to do with as he pleased.

It is undisputed that a life estate was indeed bestowed upon Bert in an undivided one-half of the 40 heifers, 55 cows and certain farm machinery. It is argued by the plaintiffs that, in addition, Bert had only a life estate in the milk base. The court below found that the milk base was not subject to Bert's life estate and we agree with that determination. Alice died in 1953 and the life estate was established through her will in Bert at that time. The concept of a milk base was not developed until six years later at which time the farm made its purchases thereof as a partnership using partnership profits. Since there was no evidence to show that the milk base was purchased with life tenancy assets or that it represented a change in the form of any life tenancy property and since it did not exist until six years after the life estate was created, we cannot see how the milk base could possibly constitute a part of the life estate. Accordingly, we hold that the milk base was not life estate property and, therefore, is now now subject to the claims of the remaindermen. As concerns the farm machinery devised to Bert, it was found to have a value of zero in the final decree of distribution of Bert which determination is undisputed and it is therefore not involved in this litigation. The real estate of the farm is not involved, having been partitioned pursuant to an out-of-court settlement.

We are thus left to consider the 95 cows and heifers, one-half of which Alice left to Bert for life in 1953. Our determination of whether any part of the herd owned and sold by Bert in 1971 was a life estate asset must be guided by the Uniform Principal and Income Act, A.R.S. §§ 14--7401 et seq. (formerly 14-- 1081 et seq., renumbered and amended, not here in material part, in 1973). Section 14--7403(C) reiterates the common-law rule applicable to the...