Buder v. Fiske

• Decision Date: 19 April 1949
• Docket Number: No. 13595.,13595.
• Citation: 174 F.2d 260
• Parties: BUDER et al. v. FISKE et al.
• Court: U.S. Court of Appeals — Eighth Circuit

174 F.2d 260 (1949)

BUDER et al. v. FISKE et al.

No. 13595.

United States Court of Appeals Eighth Circuit.

April 19, 1949.

COPYRIGHT MATERIAL OMITTED

Harry C. Blanton, of Sikeston, Mo. (G. A. Buder, Jr., of St. Louis, Mo. on the brief), for appellants.

Jesse T. Friday, of St. Louis, Mo. (E. J. Doerner, of Tulsa, Okl., on the brief), for appellees Johanna F. Fiske, Amanda F. Wheeler, Otto B. Franz, Henrietta A. Holdoway, Adelaide M. Zimmerman, and Ehrhardt W. Franz.

Samuel H. Liberman, of St. Louis, Mo., for appellees Mississippi Valley Trust Co., administrator C.T.A. of estates of Ernst H. Franz and Walter G. Franz.

Before SANBORN, JOHNSEN, and STONE, Circuit Judges.

STONE, Circuit Judge.

This is an appeal by G. A. Buder (surviving trustee) and Arthur U. Simmons, administrator, C.T.A. of the estate of Gustav A. Franz (deceased co-trustee) from a judgment surcharging the trustees for several items in the total sum of $421,425.73. This judgment was predicated upon exceptions filed to an accounting of the administration of the trust prepared by Ernst & Ernst, accountants appointed by the Court.

This appeal is the latest appearance in this Court of the long litigation concerning the estate of Ehrhardt D. Franz.¹ To understand what the present appeal is about, it is advisable to set forth some matters from this prolonged series of contests in the courts.

Ehrhardt D. Franz died in February, 1898, testate, leaving a widow (Sophie) and ten children (Gustav A. Franz, Minna Franz Kleinschmidt, Walter G. Franz, Ernst H. Franz, Amanda Franz Wheeler, Henrietta Franz Holdoway, Johanna Franz Fiske, Adelaide Franz Zimmerman, Ehrhardt W. Franz, and Otto B. Franz). His will devised the residue of his property to Sophie for life and thereafter to the ten children, their heirs and assigns in equal shares.

A daughter, Minna Franz Kleinschmidt, died several years later leaving as heirs her husband Sherman H. Kleinschmidt and two daughters, Helen and Eleanor (a minor). Thereafter, January 30, 1909, this trust was created by Sophie. The trustees were G. A. Buder and Gustav A. Franz. The trust estate consisted of all of Sophie's right, title and interest, whether owned as her absolute property or as life tenant under the above will, to certain described bonds and stocks and to "any and all other assets, securities," etc. "received, acquired, held or owned" by her under the above will. The trustees were given broad powers in handling the estate. From the income, the trustees were to pay Sophie $1000 quarterly and, thereafter, pay each of the children $625.00 quarterly — the payment to Sherman H. Kleinschmidt to be made "in behalf and for account of Helen and Eleanor Kleinschmidt." On the death of Sophie, the trustees were to hold the trust estate "for account of the estate of said Sophie Franz, to be administered by the Probate Court of the City of St. Louis, Missouri, in accordance with the last will and testament of said Sophie Franz * * *." The trustees were required to employ the firm of Buder & Buder as counsel and attorneys. The trustees were empowered to pay from the trust funds all "attorneys' fees, outlays, compensation, charges and costs of administration." Semi-annual statements from the trustees to Sophie were required.

Thereafter, Ehrhardt W. Franz (a son of Ehrhardt D. Franz) brought a suit in the state court against the other beneficiaries (under the will of Ehrhardt D. Franz) and G. A. Buder. By a decree (June 16, 1910), that Court determined that Sophie had conveyed to the trust merely a life estate in the property coming from her husband and the absolute estate in such property as she owned outright; that the beneficiaries had ratified the trust; and that the trustees should continue administration of the trust property in accordance with the trust instrument. See Franz v. Buder, 8 Cir., 11 F.2d 854, 855.

Thereafter, Ehrhardt W. Franz (a son of Ehrhardt D. Franz) brought a suit in the state court against the other beneficiaries (under the will of Ehrhardt D. Franz) and G. A. Buder. By a decree (June 16, 1910), that Court determined that Sophie had conveyed to the trust merely a life estate in the property coming from her husband and the absolute estate in such property as she owned outright; that the beneficiaries had ratified the trust; and that the trustees should continue administration of the trust property in accordance with the trust instrument. See Franz v. Buder, 8 Cir., 11 F.2d 854, 855.

March 5, 1924, Ehrhardt W. Franz brought against G. A. Buder a suit, in which, the present controversy is the most recent eruption. In that action, Ehrhardt alleged that these trustees had exclusive possession, management and control of the property in which he and the other children of his father held an estate in remainder; that he had demanded of the trustees information concerning, and an account of, the nature, condition, extent, and value of the property; that the trustees had refused; and that they asserted that he no longer had any remainder interest in such property. Three results of this litigation were (1) to bring in both trustees, Sophie, and all of the children (or their heirs) of Ehrhardt D. Franz; (2) to establish the rights of the remaindermen; and (3) to retain, in the District Court, control of the administration of the trust.

The Mississippi Valley Trust Company, as administrator of the estates of two of the children (Ernst H. Franz and Walter G. Franz), and Earl F. Nelson, as guardian ad litem of Eleanor (the minor child of Minna Franz Kleinschmidt) intervened praying much the same relief as the plaintiff. The plaintiff and the interveners represented three and one-third of the interests of the ten children (remaindermen) of Ehrhardt D. Franz. The other six living children and two of the three heirs of Mrs. Kleinschmidt (Sherman H. Kleinschmidt and Helen Kleinschmidt) made up the remaining six and two-thirds of such interests. The six and two-thirds interests, Sophie, and the trustees opposed the action. Buder & Buder represented the trustees, Sophie and the six and two-thirds interests in this litigation up to 1935 — when five of the six and two-thirds interests employed other counsel.

Sophie died April 14, 1930, leaving a will bequeathing her estate, in equal parts, to nine of her children or their representatives — the child excluded being Walter G. Franz who had theretofore died without children.

In May, 1930, the six and two-thirds interests filed petitions for distribution of the trust estate. June 1, 1930, the Court ordered a "final" accounting by the trustees. On June 22, 1931, such report was filed, prepared by Cornell & Company. No exceptions were filed by any of the six and two-thirds interests. Exceptions were filed by Ehrhardt W. Franz, the Mississippi Valley Trust Company (in behalf of the estates of Ernst H. Franz and of Walter G. Franz, both deceased), and by Nelson as guardian ad litem for the minor, Eleanor. The Court ruled these exceptions in an order, April 1, 1932, which adjudged distribution of one-tenth of the "net estate" of the "property and assets comprising the corpus of the estate of E. D. Franz in the possession" of the trustees to Ehrhardt W. Franz (less an item not pertinent here), one-tenth to the Trust Company as administrator of Walter G. Franz, one-tenth to the Trust Company as administrator of Ernst H. Franz, one-thirtieth to Eleanor Kleinschmidt Berger, and the remaining six and two-thirds to Gustavus A. Buder, Sr. as executor of the estate of Sophie Franz.

Distribution was made to Ehrhardt W. Franz and the Trust Company under the order. The six and two-thirds interests appealed from that part of the judgment requiring their interests to be turned over to the executor of the estate of Sophie instead of being turned over to each of them directly. This appeal was dismissed to await the outcome of litigation in Missouri courts as to liability of these interests to state inheritance taxes as part of the estate of Sophie. Fiske et al. v. State of Missouri, 8 Cir., 69 F.2d 683. The Supreme Court of Missouri determined that the six and two-thirds interests in the remainder of the Ehrhardt D. Franz estate were not parts of the estate of Sophie, deceased, and therefore not subject to state inheritance taxes. In re Franz' Estate, 344 Mo. 510, 127 S.W. 2d 401. Rehearing was denied by that Court on April 20, 1939. In this State action, only one and two-thirds (G. A. Franz, Sherman H. and Helen Kleinschmidt) of the six and two-thirds interests had been represented by Buder & Buder — employment of Buder & Buder by the other five interests having been terminated in 1935 or 1936.

May 12, 1939, these five interests filed a motion attacking the allowance of five per centum to the trustees as commissions against the six and two-thirds entire remainder interests as contained in paragraph "5" of the foregoing order of distribution of April 1, 1932. After full hearing, the motion was denied December 17, 1940. An appeal resulted in reversal "with directions to enter an order sustaining appellants' motion." Fiske et al. v. Buder et al., 8 Cir., 125 F.2d 841, 849.

About two months after such determination by this Court, the trial court, "of its own motion," entered an order directing the surviving trustee to employ Ernst & Ernst, as accountants, to prepare and file an audit and final accounting of the estate of Ehrhardt D. Franz "from June 22, 1931, to the date of filing the same." The report of these accountants was filed August 25, 1942. To this report, exceptions were filed by the five interests and by Ehrhardt W. Franz. July 23, 1946, the Court ruled upon the exceptions after full hearing. Findings of fact and conclusions of law were filed and an order entered upon that date, D.C., 82 F.Supp. 388. June 5, 1947, nunc pro tunc modifications affecting the figures of several items, were made in the findings, conclusions and order. Some of the exceptions were denied....