Butler v. Butler

CourtUnited States State Supreme Court of Iowa
Writing for the CourtPETERSON; All Justices concur except HAYS
Citation253 Iowa 1084,114 N.W.2d 595
PartiesEdward Earle BUTLER, Appellant, v. Robert Sheldon BUTLER, Executor of the Estate of Robert Spring Butler, Deceased, Robert Sheldon Butler, John C. Butler and Margaret B. Grieve, Trustees of the R. S. Butler Trust, and Robert Sheldon Butler, John C. Butler and Margaret B. Grieve, Trustees of the Janes Property Trust, Appellees. Margaret S. BUTLER, Appellant, v. Robert Sheldon BUTLER, Executor of the Estate of Robert Spring Butler, Deceased, Robert Sheldon Butler, John C. Butler and Margaret B. Grieve, Trustees of the R. S. Butler Trust, and Robert Sheldon Butler, John C. Butler and Margaret B. Grieve, Trustees of the Janes Property Trust, Appellees. Edward Earle BUTLER, Appellant, v. Robert Sheldon BUTLER, Executor of the Estate of Robert Spring Butler, Deceased, Appellee. Margaret S. BUTLER, Appellant, v. Robert Sheldon BUTLER, Executor of the Estate of Robert Spring Butler, Deceased, Appellee. 50434.
Decision Date03 April 1962

Parrish, Guthrie, Colflesh & O'Brien, Des Moines, for appellant, Edward Earle Butler.

Steward, Crouch & Kelly, and James L. Bennett, Des Moines, for appellant, Margaret S. Butler.

Herrick & Langdon, and Walter R. Brown, Des Moines, for appellees.

PETERSON, Justice.

This is an equity action involving two cases, consolidated for trial. Plaintiffs pray for the establishment of a trust as to real and personal property, deeded and assigned by Eugene K. Butler and wife, Sarah, to their son, Robert S. Butler on December 2, 1929. The property had a book value of $969,821.79. They had three sons; Hubert, Robert and Earle. Eugene, Sarah, Hubert and Robert all died prior to the action.

In this case Margaret sued for Hubert's share as the sole beneficiary under his will, and alleged Hubert's share was held in trust by Robert. Earle sued, also alleging Robert held his 1/3rd share in trust. Both parties filed claims for their respective demands in Robert's estate. Appellees claim the transfer was an outright gift to Robert.

The case is not an accounting action between the parties. This question was settled in connection with settlement of law points, and was accepted by all parties during the trial. Only one question of whether or not a trust existed was tried, and will be settled herein. If a trust exists as to one or both plaintiffs, the accounting will be settled later, either by agreement of the parties, or by trial in an equity proceeding.

The District Court dismissed both petitions and claims, holding the existence of a trust had not been established by clear, convincing and satisfactory evidence. Both plaintiffs appeal.

I. A general statement of the facts is essential in this case for the purpose of creating the proper background as to the issues involved. We will outline the family history without paying too much attention at this time to the technical objections raised by defendants. We will give them attention, infra, as we consider the legal questions. The story of Eugene K. Butler, one of the settlors in this case, is a typical American Horatio Alger story. The active business life of the three generations involved in this proceeding extends for almost one hundred years.

Eugene K. Butler was born in 1843. His wife Sarah was born in 1846. They became residents of Chicago shortly after the Civil War. Mr. Butler worked for many years for McCormick Harvester Company. He was an executive in the company and some years after he commenced his work, by reason of his energy and intelligence, he reached the point where his salary was $50,000 per year. Based partly on receiving such a fine salary and partly by careful investments in Chicago and other property he acquired great wealth.

By 1900 he had accumulated (including substantial gifts made to his three sons from time to time) a fortune of over two and one-half million dollars. He retired from the Harvester Company in 1900 and thereafter devoted his full time to maintenance and development of his investments. He had one very valuable tract of ground in the Chicago loop on which a lessee, under a ninety-nine year lease, erected what was known as the Butler Building. He also had a smaller property in Chicago known as the Clark Street property. The annual rental on the ninety-nine year lease was $30,000. He had made very extensive investments in buildings in Des Moines and some land adjacent to the city. He purchased a farm in Oklahoma and a valuable tract of land near Brownsville, Texas.

There were four sons born to the marriage, but one died in infancy. The eldest son, Hubert W. Butler, was born in 1868. The second son was Robert Spring Butler. He was born in 1882. The youngest son was Edward Earle Butler, one of the plaintiffs in this action. He was born in 1885.

Hubert died in 1943 at the age of seventy-five. His widow Margaret was born in 1890. She married Hubert in 1925. It was her first and only marriage. Hubert had been married twice before and had two children, one by each of his former wives. His first wife secured a divorce and his second wife died. Margaret is the other plaintiff in this action.

The Butler family all erected and lived in beautiful and expensive homes. Eugene K. Butler had a very large family home on Greenwood Avenue in Chicago. In 1925 Hubert built a $45,000 home on one of his real estate developments at Glencoe, a suburb of Chicago. In 1929 he built a new $75,000 home on his Skokie development near Winnetka, Illinois. In about 1925 Robert built an $80,000 home at 4507 Grand Avenue in Des Moines, and Earle built a home costing approximately $150,000 on or near Fleur Drive in Des Moines.

Hubert graduated from the Yale Law School in 1888, but he devoted most of his life to real estate development in Chicago and its suburbs. His father had given him from time to time, on the basis of book value, property valued at $517,874.95. These gifts started shortly after he was graduated from college and continued until 1929. In spite of this substantial fortune he became deeply indebted and financially embarrassed in the 1920's and 1930's. This was for two reasons; First--he did not have the ability that his father had to properly preserve and maintain his properties. Second--he was the unfortunate victim of the depression years in the two decades above mentioned.

Robert graduated from the University of Chicago in 1904, and came to Des Moines in 1906 at the age of twenty-four, to manage his father's properties, and in later years his own properties.

Earle attended the University of Chicago, but left the university when Robert graduated. He came to Des Moines in 1908 at the age of twenty-three to assist in the management of his father's properties and to manage his own property, which he received from his father.

Robert and Earle were very close in their childhood and as they matured through their teens. There were many rooms in the Eugene K. Butler mansion, but the boys insisted on rooming together because of their affection for each other. They officed together in the K. P. Block in Des Moines for over forty years.

Both Robert and Earle entered World War I. Earle had some military experience in Culver Military Academy and enlisted early. He was promoted from time to time and was a Major when the war ended. When they came back from the service their father made them very substantial gifts, of Des Moines property in addition to former gifts. The book value of the properties, real and personal, which the father, Eugene K. Butler, made to his three sons throughout the years and prior to December 2, 1929, was as follows: Hubert $517,874.95; Robert $914,302.93; Earle $310,102.95.

In 1916 the parents sold their large Greenwood Avenue home in Chicago and for the next ten years divided their time between Chicago, Des Moines and Brownsville, Texas. In 1926, when Mr. Butler, Sr., was 83 years of age and Mrs. Sarah Butler was 80 years of age, they decided to move to Des Moines and make their home with their son Robert.

In 1929 Eugene K. Butler and wife Sarah decided they could not physically properly maintain the approximately one million dollars worth of real estate and personal property of which Mr. Butler was still the owner.

Accordingly, on December 2, 1929, Mr. and Mrs. Eugene K. Butler called Clinton Nourse, a prominent lawyer of Des Moines, to Robert's home and explained to him they desired to deed all of their real estate, and transfer all of their personal property to their son Robert S. Butler. Robert was present at this conference. The deeds and the assignment of all personal property were duly prepared by Mr. Nourse.

In accordance with the provisions made as stated by Mrs. Sarah Butler and as stated in the documents given by Robert to Earle, Robert proceeded in the following years to carry out the verbally agreed provisions as to the property.

Eugene K. Butler died in 1931, and Sarah Butler in 1940. In carrying out the instructions which were given to Robert and assumed by him, he paid to and for his father and mother from December 2, 1929 to the date of their death the sum of $52,258.59.

He also paid to Hubert and Margaret in accordance with instructions, and the agreement shown in the statements of Mrs. Sarah Butler, the sum of about $80,000, between December 2, 1929, and March 1st, 1940, when the mother died. In order that Earle might have a more comprehensive and definite statement as to his rights in the property transferred to Robert of December 2, 1929, Robert had his attorney prepare a written agreement between him and Earle. The agreement was duly signed by Robert and Earle May 18, 1932, and is Exhibit 52 in this action. For brevity we will use the Exhibit number at times hereafter. Since this agreement is the principal basis and crux of this action, as far as Earle is concerned, we will show it in full, infra, in connection with the testimony of Earle.

In 1941, after Robert had refused to send any more...

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