Christie v. Dold

• Decision Date: 14 September 1994
• Docket Number: Nos. 18608,18627,s. 18608
• Parties: Carolyn CHRISTIE, Administratrix with Will Annexed of the Estate of Judson S. Berry, Deceased, Plaintiff and Appellant, v. Paul J. DOLD, Defendant, and Cyril D. Miller and Phyllis J. Miller, Defendants and Appellees. . Considered on Briefs
• Court: South Dakota Supreme Court

Page 866

524 N.W.2d 866

Carolyn CHRISTIE, Administratrix with Will Annexed of the Estate of Judson S. Berry, Deceased, Plaintiff and Appellant, v. Paul J. DOLD, Defendant, and Cyril D. Miller and Phyllis J. Miller, Defendants and Appellees.

Nos. 18608, 18627.

Supreme Court of South Dakota.

Considered on Briefs Sept. 14, 1994.

Decided Dec. 7, 1994.

Rehearing Denied Jan. 3, 1995.

Jerome B. Lammers and Ryker J. Lammers of Lammers, Lammers, Kleibacker & Parent, Madison, for appellant.

T.R. Pardy and Gregory A. Protsch of Mumford, Protsch & Pardy, Howard, for appellees.

RUSCH, Circuit Judge.

Carolyn Christie (Christie) is the administratrix with will annexed of the estate of Judson S. Berry. She was appointed to that position on July 7, 1992. Thereafter she filed this lawsuit against Cyril and Phyllis Miller (Millers), the former executors of the Berry estate, and against Paul J. Dold (Dold), an attorney. Dold represented Millers while they were the executors of the Berry estate. Christie's lawsuit was to recover money embezzled by Dold. It is undisputed that Millers had no part in or knowledge of the embezzlement. The suit against Millers is based upon their alleged negligence in employing and supervising Dold. Dold, who is presently an inmate of the State Penitentiary, allowed a default judgment to be taken against him in the amount of $331,886.35. ¹

Millers denied any liability and a trial was had to a jury, which returned a verdict for Millers. Christie appeals from that verdict and from the trial court's denial of her motions for a directed verdict and for judgment notwithstanding the verdict. Millers appeal from the trial court's decision that they were not entitled to a jury trial on the issue of negligence, the failure of the trial court to instruct the jury on contributory negligence and the refusal of the trial court to receive Exhibit D into evidence. ²

FACTS

Judson S. Berry (Berry), a resident of Howard, died on August 6, 1977. He left a will naming the Millers and Alvin Sukut (Sukut), all of Sioux Falls, as co-executors. Phyllis Miller is a cousin of Berry and Millers had acted as executors of Berry's parents' estate. Sukut is a personal friend of Berry. Dold, who was Berry's personal attorney since 1974, was hired as the attorney for the co-executors. There was no clear discussion with Dold about his employment, as the co-executors assumed that, since Dold had been Berry's attorney, he was entitled to act as their attorney in probating the estate.

At the time of his death, Berry owned real and personal property, which has no connection with this lawsuit, and a parcel of real estate located on West 41st Street in Sioux Falls which was leased to General Growth Properties. As to that property, the will provided for a trust as follows:

I hereby give, devise and bequeath that real property which I have leased to General Growth Properties, and the said lease thereon, to my good friend Alvin E. Sukut, of Sioux Falls, South Dakota, not for his own use and benefit, but in Trust upon the following terms and conditions:

1. The name of the Trust hereby created is to be known as "The Judson S. Berry Trust."

2. The Income from said Trust shall first be used to pay any of my remaining and lawful debts. Thereafter, I direct that my sister, Carolyn Christie, shall receive five hundred and 00/100 dollars ($500.00) of the monthly income from said Trust. If Carolyn Christie fails to survive me, or upon her death, said $500.00 shall be distributed equally among her lawful issue and thereafter to their successive issue by right of representation.

The remaining income from said Trust shall accumulate until an additional $5000.00 is available for distribution over and above the $500.00 monthly income which Carolyn Christie is to receive. Said $5000.00 accumulation shall be distributed as follows:

(a) The Berry School of Mount Berry, Georgia, $1000.00;

(b) The Peace Lutheran Church of Sioux Falls, South Dakota, $500.00;

(c) The Golden Valley Lutheran College of Minneapolis, Minnesota $1000.00;

(d) The Bethany Lutheran Church of Howard, South Dakota, $500.00;

(e) My friend, Alvin E. Sukut, of Sioux Falls, South Dakota, $1000.00; and

(f) My sister, Suzanne Flanigan, $1000.00.

Sukut began serving as a co-executor but resigned after it appeared that he improperly disposed of some of the estate assets. From that time on, Millers served as the only co-executors. The probate process was lengthy. ³

From 1977 to 1983, Millers and Dold were in frequent contact. Millers sent Dold at least thirty letters and notes prodding him to take action to complete various parts of the probate. After 1983 there were no further contacts between Millers and Dold.

On November 2, 1983, Millers signed a Final Accounting and Petition for Distribution of the Berry Estate which was prepared by Dold. This petition requested that the 41st Street real estate and the General Growth Properties' lease and all other property of the estate be transferred to the Judson S. Berry Trust and that Millers be discharged from any further duties and liability for the estate. On November 14, 1983, Lynn Kalvig, Clerk of Courts of Miner County, signed a notice of hearing which gave notice that a hearing on the petition for distribution would be held in Howard on December 6, 1983, at 10:00 a.m. before Judge Thomas Anderst. On November 21, 1983, Donna Koop, Dold's secretary, signed an affidavit of mailing stating that on that date she mailed copies of the accounting and petition and of the notice of hearing to all interested parties, including Christie and Millers. Both Christie and Millers admitted receiving notice of the hearing but neither of them appeared at the hearing.

Dold testified that at this hearing on December 6, 1983, Judge Anderst authorized the closing of the estate, the distribution of the assets of the estate to the trust, and the discharge of Millers as co-executors. However, the court records of Miner County do not contain any written order from the court closing the estate, distributing the assets, or discharging the Millers. Dold claimed that after the hearing, he prepared and mailed an order to Judge Anderst to close the estate and discharge the Millers. Dold testified that he assumed that the order was signed and filed, that he never checked or had any reason to check whether the order was filed, and that he could provide no explanation as to what had happened to the original order.

Also on November 2, 1983, Millers signed a petition for Judicial Supervision of Trust and Construction Thereof and Appointment of a Trustee of the Judson S. Berry Trust which was also prepared by Dold. This petition requested that the Minnehaha County Circuit Court assume supervision of the trust and that Dold be appointed as trustee of the Berry Trust. ⁴ On November 16, 1983, Circuit Judge Richard Hurd, signed a notice of hearing which gave notice that a hearing on the petition for judicial supervision would be held in Sioux Falls on November 30, 1983, at 1:30 p.m. before Judge Hurd. On November 16, 1983, Dold's secretary signed an affidavit of mailing stating that on that date she mailed copies of the notice of hearing to all of the interested parties. Christie and Millers admitted receiving notice of that hearing but, again, neither of them appeared.

Dold also testified that at this hearing on November 30, 1983, Judge Hurd authorized the establishment of the trust and appointed him as trustee. Absent from the court records in Minnehaha County is any order creating the trust and naming Dold as its trustee. However, Dold testified that after the hearing, Judge Hurd signed an order creating the trust and naming him as trustee and that he then filed the signed order with the Clerk of Courts of Minnehaha County. Dold further testified that he obtained a certified copy of that order at the same time that he filed it. A photocopy of the certified copy of the order establishing the trust was located but the certified copy of the order can not be found. The photocopy of the certified copy was offered at trial as Exhibit D but was refused by the trial court. The Clerk of Courts of Minnehaha County testified that they can not locate the original of that order and that there are certain aspects of the photocopy of the certified copy which differ from normal certified copies issued by their office.

Following this hearing Dold opened a bank account at the Security State Bank of Canova in the name "Judson S. Berry Trust, Paul J. Dold, Trustee, P.O. Box 336, Howard, SD 57349." He also obtained checks bearing that name and address.

As pointed out above, the land which was the subject of the trust was encumbered by a long-term lease to General Growth Properties. The rent paid by General Growth began in 1977 at $1,000 per month. The lease also contained provisions by which the amount of the rent would increase over time. By November of 1993, the rent had increased to $2,517 per month.

For several years after Berry's death, the rent payments went to pay off a mortgage which he had placed on the 41st Street property with the National Bank of South Dakota, which later became the First Bank of South Dakota. That mortgage was paid off in 1983. After the loan was paid off, General Growth continued to send its rent payments to First Bank of South Dakota which then sent Dold a cashier's check made payable to the Judson Berry Estate. Dold deposited some of the rent checks into the Canova account. Others were deposited directly into Dold's accounts. In addition, Dold wrote checks on the Canova account payable to himself and also transferred money from the Canova account to himself using other accounts. Dold admitted embezzling approximately $186,000 from this "trust" account from 1985 to 1992. There is no evidence that Dold took any money prior to December 6, 1983, when the estate was supposedly terminated and the trust established.

Dold wrote monthly checks to...