Butterworth v. Mississippi Valley Trust Co.

• Citation: 362 Mo. 133,240 S.W.2d 676
• Decision Date: 11 June 1951
• Docket Number: No. 1,No. 42079,42079,1
• Parties: , 30 A.L.R.2d 1298 BUTTERWORTH et al. v. MISSISSIPPI VALLEY TRUST CO. et al
• Court: Missouri Supreme Court

Page 676

240 S.W.2d 676

362 Mo. 133, 30 A.L.R.2d 1298

BUTTERWORTH et al. v. MISSISSIPPI VALLEY TRUST CO. et al.

No. 42079.

Supreme Court of Missouri, Division No. 1.

June 11, 1951.

Donald E. Fahey, Robert L. Brown, St. Louis, for appellants.

Coburn, Storckman & Croft, Richmond C. Coburn and Rexford H. Caruthers, all of St. Louis, for respondents.

CONKLING, Presiding Judge.

In their action for accounting of the proceeds collected on a life insurance policy ($100,207.18) plaintiffs-appellants, Frances H. Butterworth and M. E. Turner, have appealed from the decree entered below after a trial, wherein the chancellor entered judgment in favor of the defendants and dismissed plaintiff's petition with prejudice. Plaintiffs are co-trustees, and, with the Mississippi Valley Trust Company (hereinafter called 'the Trust Company'), are all the trustees under a written instrument of trust executed December 9, 1939, by Asa C. Butterworth for the benefit of Frances H. Butterworth and others. That trust is hereinafter referred to as the 'Butterworth Trust.'

For five years prior to Feb. 8, 1935 Asa C. Butterworth had a certain policy of term life insurance upon his life in the sum of $100,000, which had been issued by Fidelity Mutual Life Insurance Company. On February 8, 1935, by agreement between Butterworth and the company that policy was converted to the ordinary life policy, the proceeds of which are here in issue. At the time of the conversion of the policy the insurer paid Butterworth $404.00, 'the cash surrender value of the earlier (term) policy at the time it was converted.' The insurance policy now in question (face value $100,000.00) was an ordinary life policy issued February 8, 1935, upon the life of Asa C. Butterworth; that policy, numbered 524,437, was also issued by Fidelity Mutual Life Insurance Company, the annual premium was $4,757 less dividends; and the beneficiary was 'G. Locke Tarlton, Creditor of the Insured.' On March 13, 1935 Asa C. Butterworth assigned that policy to the named beneficiary, G. Locke Tarlton.

That written 'Assignment-Absolute', made upon a printed form of the insurer, signed and acknowledged under oath before a notary and witnessed by the insurer's general agent, is attached as an exhibit to the 'Stipulation of Facts' introduced in evidence, and is now before us. It transferred the policy and the ownership thereof to Tarlton, is without reservation or exception, is absolute in nature and effect, conveyed all of Butterworth's 'right, title and interest in and to the policy' to Tarlton and the latter's assigns, and authorized the insurance company to pay all sums due under the policy to Tarlton, or his assigns, without notice to Butterworth. On February 10, 1936, G. Locke Tarlton irrevocably (and by a similar assignment) assigned the policy to himself, O. E. Schaefer and the Trust Company as the trustees under an irrevocable trust created by G. Locke Tarlton by written instrument of trust on December 26, 1935. That trust is hereinafter referred to as the 'Tarlton Trust'. On May 6, 1943, G. Locke Tarlton died testate in Illinois. On June 16, 1944, Asa C. Butterworth purported to assign his interest in the policy to the Trust Company and M. E. Turner, as trustees of the Butterworth Trust. On November 5, 1947, Asa C. Butterworth died testate and the policy become payable. On December 15, 1947, the Trust Company, as co-trustee of the Tarlton Trust, collected the amount of the policy and accrued dividends, $100,207.18. That sum was credited by the Trust Company to the Tarlton Trust.

Defendants are the Trust Company, individually, and as a co-trustee of the Butterworth Trust; O. E. Schaefer, Mrs. George L. Tarlton (who is Leota M. Tarlton, widow of G. Locke Tarlton) and the Trust Company, all executors of the estate of G. Locke Tarlton under the latter's will, as co-trustees of the Tarlton Trust. Those executors were duly appointed as such by the probate court of St. Clair County, Illinois on May 18, 1943, and were discharged by that court on June 21, 1948. The Trust Company was appointed executor of the Tarlton estate in ancillary proceedings by the probate court in the City of St. Louis, Missouri, on May 25, 1943, and was discharged by said court on June 8, 1948. Under the provisions of the Tarlton Trust, defendant Leota M. Tarlton (Mrs. Geo. L. Tarlton), upon the death of G. Locke Tarlton, became successor co-trustee of said Tarlton Trust. Defendants Betty Jane Williams (nee Betty Jane Tarlton) and Leota M. Tarlton are the principal beneficiaries of the Tarlton Trust. Under the terms of the Butterworth Trust, Frances H. Butterworth, upon the death of Asa C. Butterworth, became successor co-trustee of the Butterworth Trust.

It appears that the business affairs of Tarlton and Butterworth were closely interrelated and interdependent. Tarlton was a general contractor, and about 1925 became acquainted with Butterworth when Tarlton was doing road work in Arkansas. Shortly thereafter, Butterworth moved to St. Louis from Little Rock and formed a partnership with Tarlton. They operated as the General Material Company. The principal business of that Company was the production and delivery of ready-mix concrete. They operated in the St. Louis metropolitan area, having offices in the Buder Building in St. Louis. Butterworth and Tarlton were pioneers in that business. The General Material Company was incorporated late in 1927, at which time Butterworth became President and Treasurer, a position he held until his death in 1947. Butterworth and Tarlton each had a one-fourth stock interest in the General Material Company. In March, 1935 Butterworth and Tarlton each had that one-fourth interest. Butterworth was the active head of the General Material Company.

The Missouri-Illinois Material Company, a corporation, was engaged in producing sand and gravel obtained by dredging operations on the Mississippi and Meramec Rivers. Tarlton was the active head of the Missouri-Illinois Material Company. Tarlton owned seventy-five per cent of the shares of stock of the Missouri-Illinois Material Company and Butterworth owned twenty-five per cent of the shares of stock therein. Both Butterworth and Tarlton were officers and directors of the company until Tarlton's death in 1943. The General Material Company in producing ready-mix concrete required large quantities of sand and gravel. The General Material Company was the largest single purchaser of sand and gravel from the Missouri-Illinois Material Company from 1927 until Tarlton's death in 1943.

Tarlton's contracting business bore the corporate name of G. L. Tarlton Contractor, Inc. This company specialized in municipal contracting, which was largely paving work. It did an active and extensive business. The offices of G. L. Tarlton Contractor, Inc., and the Missouri-Illinois Material Company were housed together, and Tarlton was the active head of both companies. G. L. Tarlton Contractor, Inc., was engaged in doing business with the General Material Company, and whenever the contracting company used ready-mix concrete, it purchased the same from the General Material Company. Through the years large purchases of ready-mix concrete were made by the contracting company from General Material Company. Whenever practical the contracting company used large quantities of ready-mix concrete. Upon the trial plaintiffs conceded 'that Mr. Tarlton had an insurable interest in the life of Mr. Butterworth at the date the policy was converted and assignments made.'

The oral testimony further established that neither Butterworth nor his assignees paid any premiums on the policy of insurance numbered 524,437 but Tarlton and his assignee paid $57,955 as premiums on the policy beginning in 1935 and ending with Butterworth's death in 1947. Tarlton personally paid the premiums due in 1935, 1936, 1937, 1938, 1939 and 1940 in a total amount of $26,940. The Tarlton Trust thereafter paid the premiums to and including 1947 in a total amount of $31,015.00. After Tarlton's death, Butterworth purchased from Tarlton's estate through the defendant Schaefer (an executor of Tarlton's estate and a brother-in-law and confidential business advisor of Tarlton during the latter's lifetime) the shares of stock which had been owned by Tarlton in the General Materials Company. In that deal the Tarlton estate purchased Butterworth's shares in the Missouri-Illinois Company, and in the two transfers Butterworth paid the Tarlton estate $42,320.00. That deal was 'to clean up all business relations between the two men' (Butterworth and Tarlton) and neither during that deal, nor thereafter, did Butterworth make any claim to any interest in policy number 524,437. After Tarlton's death Butterworth made no claim to Mrs. Tarlton (or to anyone) that he had or claimed any interest in the policy in question.

The testimony further established that Paul Clerk, a practicing lawyer of the St. Louis Bar rendered Tarlton certain legal services; Clerk drew the Tarlton Trust instrument dated December 26, 1935; Tarlton discussed with Clerk the assets which Tarlton contemplated placing in the Tarlton Trust, among them, policy number 524,437 on the life of Butterworth. Tarlton told Clerk that policy number 524,437 was originally issued to him as a creditor of Butterworth; that thereafter there was a 'settlement of all (financial) obligations between the two men' (Butterworth and Tarlton); that 'as a part of that settlement this policy (number 524,437) was assigned (On March 13, 1935) by Mr. Butterworth to Mr. Tarlton absolutely'; that thereupon 'Mr. Tarlton * * * owned the policy fully'. There is no evidence that until after the death of Butterworth any other trustees of the Butterworth Trust (and particularly the Trust Company) knew that Butterworth had executed the purported assignment of his purported interest in the policy to the Butterworth trustees on June 16, 1944.

Plaintiffs' theory of their right...