Coble Wall Trust Co., Inc. v. Palmer

• Decision Date: 31 October 1991
• Docket Number: No. 04-90-00063-CV,04-90-00063-CV
• Citation: 848 S.W.2d 696
• Parties: The COBLE WALL TRUST COMPANY, INC. & Elwood Cluck, Appellants, v. William PALMER, as Independent Administrator, et al., Appellees.
• Court: Texas Court of Appeals

Page 696

848 S.W.2d 696

The COBLE WALL TRUST COMPANY, INC. & Elwood Cluck, Appellants, v. William PALMER, as Independent Administrator, et al., Appellees.

No. 04-90-00063-CV.

Court of Appeals of Texas,

San Antonio.

Oct. 31, 1991.

Barry A. McClenahan, Pape, Murray, McClenahan & Sparr, Inc., San Antonio, for appellants.

Thomas C. Hall, Law Office of Tom Hall, P.C., San Antonio, for appellees.

Before BUTTS, CARR and GARCIA, JJ.

OPINION

BUTTS, Justice.

Coble Wall Trust Company, Inc. (Coble Wall) and Elwood Cluck appeal from a judgment after a jury verdict in favor of plaintiff, William Palmer, independent administrator of the estate of Booney Moore and independent administrator of the estate of Marie M. Davis, and plaintiffs, Robert E. Dardeman and Helen Marie Garner, nephew and niece of Moore.

On April 12, 1985, the statutory probate court appointed Coble Wall guardian of the estate of Booney M. Moore (Moore), an elderly incompetent person. In November, Cluck, an attorney and president, as well as sole stockholder, of Coble Wall, filed an Application For Order Authorizing The Establishment Of An Estate Plan. The application recited that Moore was ninety-three years old, in poor health, with a life expectancy of less than thirty days. Marie M. Davis, Moore's sister (since deceased) was listed as the only heir at law. Robert E. Dardeman, Sr. and Helen Marie Garner, were listed as expectant devisees.

The application also set out the assets of Moore's estate, listing $387,454 cash and personal property valued at $19,400. The application further estimated the value of approximately 187 acres off Bandera Road at $5,332,950 and two lots located in Guadalupe County at $8,000. It recited that Coble Wall had employed appraisers to appraise the noted acreage, and that figure would be substituted at the hearing to approve the estate plan. The application projected that the total estate tax liability upon Moore's death would amount to approximately $2,712,167.

The estate plan was approved by order of the probate court on November 22. The order substituted the figure of $9,000,000 as the appraised value of the real property and the figure of $4,503,700 as estimated estate taxes. In addition to certain cash gifts to be made in discharge of the bequests in Moore's will, Davis, Dardeman, and Garner were each to receive $10,000 cash.

The plan further provided for Coble Wall to organize a corporation, Estate of Booney M. Moore, Inc., which would acquire by conveyance all the real property owned by Moore in exchange for 10,000 shares of preferred stock having a par value of $10 per share, 1,000 shares of no par common stock, and $2,500,000 general mortgage bonds issued by the corporation for sale to the general public to be secured by a deed of trust on the Bexar County property. The 10,000 shares of preferred stock were to be placed in the Booney M. Moore Trust. The plan also provided that 1,000 shares of the common stock would be offered for sale to the heirs first, and then to the general public.

The plan further provided for the following remunerations to be paid Coble Wall: a fee of $75,000 or ten percent of the reduction in federal taxes; one and one half percent of the amount of a letter of credit to be obtained; five percent of the net proceeds from the sale of the mortgage bonds; five percent of the gross sales price of the real estate when sold; and five percent of the gross sales price of the common stock when sold.

The purpose of the plan was to provide a cash flow for the estate as well as to reduce the substantial estate and inheritance taxes. Present in court with their attorneys, who had advised them concerning the estate plan, were Davis, Dardeman, and Garner. The estate plan was approved by the probate court pursuant to sections 230(b)(2)(A) of the Probate Code. Each of the plaintiffs expressly agreed to the estate plan before the probate court approved it on November 22, 1985.

Instead of selling the bonds to the public, as called for in the initial order, the guardian was authorized to sell the mortgage bonds to SASA for $2,400,000.00 cash by subsequent order of the court. Thus both the purchaser and the price were determined in advance as part of the order approving the estate plan. In the final account of the guardian, the entire transaction concerning the mortgage bonds and lien on the property were set out. The probate court approved the account for final settlement on April 9, 1986. In San Antonio Sav. Ass'n. v. Palmer, 780 S.W.2d 803, 809 (Tex.App.--San Antonio 1989, writ denied) this court held that

"the order of the probate court approving the guardian's final account constitutes a de facto confirmation of the transfer of the Bandera Road property by the guardian to the corporation. The transfer of the Bandera Road property, the execution by the corporation of the deed of trust to secure the payment of the general mortgage bonds, and the sale of the bonds to SASA are valid under the provisions of the Code."

Moore died on December 12, 1985. Coble Wall was appointed temporary administrator of the estate. One of the specific powers given to the temporary administrator in the probate court's order was the power to complete the estate plan previously approved by the probate court in the guardianship proceeding. The probate court authorized the sale of the mortgage bonds to SASA by its order entered December 26, 1985.

Coble Wall (with Cluck) served until removed in March 1986. William Palmer was thereafter appointed independent administrator.

On November 25, 1987, Palmer, as independent administrator, filed suit against Coble Wall and Elwood Cluck, joining Davis, Dardeman, and Garner as plaintiffs. A few days later the previously mentioned suit against San Antonio Savings Association was also instituted. ¹ That case was tried first. The suit against San Antonio Savings Association sought unsuccessfully to set aside the foreclosure on the property and restore title in the estate. That opinion sets out fully the probate proceedings regarding the estate plan.

San Antonio Savings Association purchased the mortgage bonds for $2,400,000, taking a lien upon the acreage. The money was placed in escrow to pay the estate taxes. Eventually the present administrator, Palmer, paid the estate taxes, the sum being under $1,800,000. The evidence shows that the remaining proceeds were disbursed.

The evidence further shows that the plaintiffs sold the acreage to a corporation (River Center International) in 1986, but the purchaser defaulted on payments and the plaintiffs took back the land in 1987. After that time, San Antonio Savings Association foreclosed on the acreage because the corporation defaulted. At the time of the sale to River Center, its default, and the subsequent foreclosure on the acreage by SASA, Coble Wall was no longer administering the estate.

In addition the evidence shows that on September 6, 1986, Cluck, representing Coble Wall, appeared in probate court for approval of the final accounting of that temporary administrator. Present in court were these same plaintiffs. After hearing objections to the final accounting, the probate court approved the final accounting and discharged Coble Wall.

The Trial

Trial began in the present case in September 1989. Although alleging several causes of action, plaintiffs went to trial on alleged violations of the deceptive trade practices act (DTPA), TEX.BUS. & COM.CODE ANN. §§ 17.41 et seq. (Vernon 1987 and Supp.1991). They based the cause on breach of fiduciary duty, negligence, and unconscionable action. The plaintiffs contended that the estate plan devised by Cluck was ineffective in accomplishing its stated purpose of reducing taxes, was exorbitant and needlessly complex, and resulted in the estate paying useless and excessive fees. The jury found in favor of the plaintiffs, assessing actual and punitive damages pursuant to the DTPA and additional punitive damages based on "gross negligence."

Points of Error

Coble Wall and Cluck present fifty-four points of error, summarized in eleven groups, alleging that the probate court erred in: setting the trial without proper notice (1-4); overruling appellants' motion for continuance (5-6); refusing to consider appellant's special exceptions and ordering them to proceed to trial without a ruling (7-20); refusing to consider, act upon, and sustain appellants plea of res judicata (21-23); denying appellants' trial amendment of the affirmative defense of time bar by limitations (24); refusing to submit requested jury instructions and definitions of the standard of care imposed upon Coble Wall by the Probate Code (25-31); submitting questions regarding Cluck's duty to the plaintiffs because there is no evidence that he owed any duty to them or was in privity of contract with them (32-36); submitting questions whether Cluck breached a fiduciary duty owed to the plaintiffs, was negligent, and whether the plaintiffs incurred damages therefrom, because there was no evidence to support the issues and the cause of action was barred by the statute of limitations and the doctrine of res judicata (38-49); submitting questions on a DTPA cause of action which would not apply to guardians and administrators and, further, because the plaintiffs failed to prove that they were consumers or engaged in trade or commerce as defined in the Act (50-51); and in submitting questions whether Cluck misrepresented the characteristics of the estate plan, acted unconscionably, and engaged in actions that were a producing cause of such damages because there was no evidence to support such issues, and the evidence regarding damages was insufficient.

Point of error thirty-seven is that the acts of Coble Wall were authorized, approved, and ordered by the probate court, and that plaintiffs failed to establish that Coble Wall breached a duty which resulted in damages to plaintiffs. Points fifty-two, fifty-three, and fifty-four...