Colbert v. Hennessey

• Decision Date: 15 June 1966
• Citation: 217 N.E.2d 914,351 Mass. 131
• Parties: Thomas J. COLBERT, Executor, v. Patrick J. HENNESSEY et al. 1 (and a companion case 2 ).
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 914

217 N.E.2d 914

351 Mass. 131

Thomas J. COLBERT, Executor,

v.

Patrick J. HENNESSEY et al. ¹ (and a companion case ²).

Supreme Judicial Court of Massachusetts, Middlesex.

Argued Jan. 5, 6, 1966.

Decided June 15, 1966.

Calvin P. Bartlett, Boston, stated the case in the proceeding for instructions.

Calvin P. Bartlett, Boston (Henry S. Healy, Boston, with him) for Thomas J. Colbert, executor, respondent in the petition for removal.

Harold B. Dondis, Boston (Oliver S. Sughrue, Jr., Boston, with him) for Patrick J. Hennessey.

Gerald Gillerman, Boston (Charles M. Goldman and John M. Reed, Boston, with him) for Elias M. Loew.

Edward R. Bonitz, Belmont, for May E. O'Neill joined in a brief.

Before WILKINS, C.J., and WHITTEMORE, CUTTER, KIRK, and REARDON, JJ.

KIRK, Justice.

The issues later to be stated and considered in the two cases arise from decrees entered in the Middlesex Probate Court in the course of litigation concerning the estate of Paul F. Bowser. The cases were heard and decided by different judges. Thomas J. Colbert is executor under the will of Bowser. In case No. 6716, which was heard and decided first, Patrick J. Hennessey and Elias M. Loew appeal from the decree entered by the judge on Colbert's petition for instructions. In case No. 6715, Loew appeals from a decree dismissing his petition for the removal of Thomas J. Colbert as executor.

In both cases the evidence is reported. In neither case did the judge make a report of material facts. No request was made by any party under G.L. c. 215, § 11, that the judge report the facts found by him. The evidence in both cases consists of a mass of documents and voluminous transcripts of testimony, much of it conflicting. On this state of the record, we apply to a probate case the same standard of review we apply to an appeal in equity. Wright v. Wright, 13 Allen, 207, 209; Swift v. Hiscock, 344 Mass. 691, 693--694, 183 N.E.2d 875; Adoption of a Minor, 345 Mass. 663, 669, 189 N.E.2d 194. All questions of law and fact, including those of discretion, are open for our determination. Long v. George, 296 Mass. 574, 579, 7 N.E.2d 149; Lowell Bar Assn. v. Loeb, 315 Mass. 176, 178, 52 N.E.2d 27; Jones v. Jones, 349 Mass. 259, 262, 207 N.E.2d 922. In proceeding to a determination we are mindful of the guideposts established in our decisions. The entry of the decree may be said necessarily to import 'a finding of every fact essential to sustain it within the scope of the pleadings and supported by the evidence,' and we may not 'reverse the findings of the judge, express or implied, unless we are satisfied that they are plainly wrong.' McMahon v. Monarch Life Ins. Co., 345 Mass. 261, 262--263, 186 N.E.2d 827, 829, and cases cited. Also, because the evidence is both documentary and oral, we are in the position described in Murphy v. Hanlon, 322 Mass. 683, 685, 79 N.E.2d 292, 293: 'In so far as the evidence consists of depositions and exhibits we are in the same position to judge its weight as was the trial judge, but in so far as it consists of testimony which he heard orally he had the advantage of observing the witnesses in person. We can therefore reverse his findings only if we are satisfied that, giving to the oral testimony all the weight the judge could justifiably give to it, the findings are nevertheless plainly wrong.'

Although the relief sought in the two cases is markedly different and although the issues of law raised by them are separate and distinct, they have much in common by way of background, participants and evidence. In so far as relevant to our consideration of both cases, we set out the substance of the documents, the undisputed evidence which may be treated as fact, and, where disputed, the evidence which, in contemplation of the decrees, the judge must have believed. In order to avoid repetition we deal with the two cases in a single opinion.

Bowser died on July 17, 1960. Colbert began his duties as executor the following month. Although some of Bowser's debts have been paid from the estate, a variety of events contributed to delay the final distribution of the estate. A large part of the estate consists of stock in the Bay State Harness Horse Racing and Breeding Association, Inc. (Bay State), which runs a racetrack in Foxboro, and in Norfolk County Concessionaires, Inc. (Norfolk), a corporation supplying food and drink at the track. The stock ³ was left by the residuary clause of the will to ten of Bowser's nieces and nephews.

Before his death, Bowser had been a director and president of Bay State. (Colbert succeeded him in both positions in August, 1960.) Bowser had initiated the formation of the corporation in 1946 with others, including Hennessey, the late James J. O'Neill, whose widow is a party to the litigation, and Colbert who thereafter, until Bowser's death, acted as counsel to Bay State and as Bowser's personal counsel. In 1947, Bay State, through Bowser, approached Loew for a loan. Loew advanced more than $600,000 to Bay State in two transactions Thereby supplying the corporation with enough funds to complete construction of the track. Loew received as security for the loans two mortgages on the track property, notes from Bay State indorsed individually by Bowser, an outright transfer of about twenty-five per cent of the Bay State and Norfolk stock to Loew, and a pledge of all of Bowser's stock (now thirty-five per cent of the total number of shares in Bay State). A voting trust agreement due to expire in July, 1967, affecting all the Bay State and Norfolk stock was also part of the loan transaction.

The articles of organization and by-laws of Bay State required any stockholder, including his heirs, assigns, executors, or administrators, who desired to sell or transfer his stock, to offer it first to the corporation by written notice to the directors stating the selling price and nominating an arbitrator. If the directors did not, within thirty days, accept the offer of the stockholder or the price fixed by the arbitrators, the holder was free to sell as he wished.

Under the voting trust agreement, all shares of stock in Bay State were deposited with the voting trustees. Voting trust certificates were issued to the depositing stockholders. The voting trustees were required to elect four directors nominated by Loew and four nominated by Bowser and Colbert.

In 1958, Bowser made an agreement, unknown to Loew, with two minority Bay State stockholders, Hennessey and Mrs. O'Neill. This tripartite agreement, which provided that no one of the parties or their heirs, executors, administrators or assigns would transfer or sell his stock without the consent of the others, was designed to achieve for its participants voting control of Bay State, subject to the voting trust agreement. Colbert acted as counsel for Bowser and Mrs. O'Neill in the making of the tripartite agreement.

After Bowser's death, his ten residuary legatees were informed of the terms of the will. They gave some indication that they wished to retain the stock, even if they might have to advance funds to pay some of the debts of the estate, taxes, or specific legacies in the will which the liquid assets of the estate, exclusive of the stock, could not then satisfy.

The evidence shows that Colbert, with reasonable promptness, undertook to settle the estate. This involved the sale of the extensive real estate holdings and of the personal property such as horses and jewelry, belonging to Bowser. In August, 1961, Colbert drew a check for $6,000 against the estate for legal services rendered to Bowser for the six years prior to his death. Colbert conferred with counsel for the residuary legatees over a period of two years about the fate of the stock. Finally, on July 23, 1962, while the stock remained unsold, the legatees assigned their entire residuary interest in the estate to Loew. Loew thereupon demanded of Colbert that he be kept informed of all aspects of the administration of the estate, that Colbert pay out no money for any purpose, including taxes, and that Colbert resign as executor. Colbert did not resign, and, through counsel, advised Loew that the administration of the estate was within his charge under the supervision of the court.

Early in 1963, Colbert filed a petition under G.L. c. 197, § 6, for arbitration of his claim against the estate for legal services to Bowser from 1947 to 1960. In April, 1963, Colbert brought the petition for instructions. The decree on the petition was entered May 28, 1964, Loew and Hennessey have appealed.

THE PETITION FOR INSTRUCTIONS.

In his petition for instructions Colbert sought guidance from the Probate Court regarding the course of action he should follow in attempting to dispose of Bay State stock, represented by voting trust certificates, standing in Bowser's name, but in the physical possession of Loew under the terms of the 1947 loan agreement. He also sought instructions as to what extent, if at all, he was obliged to permit Loew to participate in the administration of the estate.

Specifically placed in issue were: (1) the validity of the 1958 tripartite agreement among Bowser, Hennessey and Mrs. O'Neill, and (2) the validity of the first option provision in the articles of incorporation and by-laws of Bay State, as applied to the voting trust certificates.

The decree provided that Colbert, 'as executor, is obliged, as soon as reasonably possible and feasible, to dispose of said shares of stock for the best interests of said estate, subject to the three party agreement and any restrictions of said Corporation now applicable and capable of being performed; and that the entire administration of said estate as to payments of charges of administration, taxes, debts and legacies is the sole duty, responsibility and obligation of said executor, subject only to review and final approval of said Court.'

The pledge which was part of the 1947 loan agreement is not mentioned in the decree. It...