Cordes v. Williams

• Court: Missouri Court of Appeals
• Writing for the Court: Robert G. Ulrich
• Citation: Cordes v. Williams, 201 S.W.3d 122 (Mo. App. 2006)
• Decision Date: 26 September 2006
• Docket Number: No. WD 65297.,No. WD 65257.,WD 65257.,WD 65297.
• Parties: Jeanette CORDES, Appellant-Respondent, v. Jack D. WILLIAMS; Respondent-Appellant, and Andrew H. Williams, Respondent.

Page 122

201 S.W.3d 122

Jeanette CORDES, Appellant-Respondent, v. Jack D. WILLIAMS; Respondent-Appellant, and Andrew H. Williams, Respondent.

No. WD 65257.

No. WD 65297.

Missouri Court of Appeals, Western District.

September 26, 2006.

COPYRIGHT MATERIAL OMITTED

Michael L. McDorman, Versailles, MO, for appellant-respondent.

Virgil D. Rodgers, II, Tipton, MO, for respondent-appellant.

William E. Quirk, Kansas City, MO, for respondent, Andrew Williams.

Charles E. McElyea, Camdenton, MO, for respondent, Carrie Williams.

Before RONALD R. HOLLIGER, P.J., HAROLD L. LOWENSTEIN, and ROBERT G. ULRICH, JJ.

ROBERT G. ULRICH, Judge.

Two petitions were filed in the underlying probate case, ultimately seeking determination of the amount eleven living siblings will receive from the estate of their deceased mother. The petitions were consolidated for trial. Both petitions were filed by Jeanette Cordes, the first seeking the court's judgment removing brother, Jack Williams, as personal representative of the estate of Carrie C. Williams, deceased. The second petition named both Jack Williams and Andrew Williams as parties Respondent and was entitled Amended Petition for Discovery of Assets. This petition sought production of a promissory note Jeanette Cordes claims is owed the estate. Jeanette Cordes appeals, and Jack Williams cross appeals the judgment of the Probate Division removing Jack as personal representative of the estate of Carrie C. Williams, deceased, and ordering that Jack's share of the estate as an heir be offset by the unpaid balance of a promissory note signed by Jack, Andrew Williams, and their spouses, which the court declared is owed to the estate. The trial court found that Andrew's obligation to the estate on the note was extinguished before the death of the decedent with her knowledge. Jeanette asserts one point on appeal, Jack asserts six points, and Andrew rebuts Jeanette's claims without posturing a cross appeal. The judgment is affirmed in part, and the case is remanded.

Facts

Carrie Williams¹ died on January 22, 2000, at the age of 94 years. On March 29, 2000, Jeanette applied for letters of administration, asserting that no Last Will and Testament had been produced. Jack submitted Carrie's Last Will and Testament (Will) to the court, however, and Jack applied for letters testamentary or of administration on March 31, 2000. The Will identified Jack as Carrie's choice to be personal representative. The Will was ordered admitted to probate as the Last Will and Testament of Carrie Williams on April 19, 2000, and letters testamentary were granted to Jack, appointing him personal representative.

Carrie had twelve children, one of whom was deceased when Carrie died. Carrie's Will divided her estate equally between her eleven living children. Jeanette Cordes, Jack Williams, and Andrew Williams are three of Carrie's eleven surviving children and are heirs of the estate.

On June 13, 2002, pursuant to section 473.140, Jeanette filed a Petition for Removal of Personal Representative, naming Jack as Respondent, and later filed a First Amended Petition.² The petition alleged that Jack failed to execute his duties as personal representative and listed a number of alleged deficiencies in Jack's performance. The allegations related to, among other things, Jack's failure to inventory or collect on a promissory note.

On August 22, 2002, Jeanette filed a Petition for Discovery of Assets, naming Jack and Andrew as Respondents. Jeanette filed an Amended Petition for Discovery of Assets on January 6, 2003. The petition alleged that Carrie owned certain property at the time of her death, including a promissory note, which was being withheld from the estate.

A contract was executed on November 24, 1970, whereby Carrie agreed to sell R.V. Williams Lumber and Building Materials Company, Inc., the family business, to Jack and Andrew for $117,447.87. Jack, Andrew, and Jack and Andrew's wives, signed the promissory note referenced by Carrie's petition, payable to Carrie as a mechanism to finance the purchase of the business. On August 1, 1971, Jack, Jack's wife, Andrew, and Andrew's wife executed the promissory note in favor of Carrie in the amount of $117,447.87. The promissory note states the following:

For Value Received we Promise to Pay to the Order of Carrie C. Williams One Hundred Seventeen Thousand Four Hundred Fifty-Seven Dollars and 87/100 DOLLARS in 19 consecutive annual Installments of $6,000.00 DOLLARS each on the 1st day of each and every August beginning with August 1, 1971 and a final installment of $3,457.87 due on August 1, 1990, with interest at the rate of 6 percent per annum from date payable after maturity on the unpaid balance from time to time due. The Interest is not included in the Installments.

The Petition for Discovery of Assets alleged that Jack and Andrew remain obligated under the promissory note and are adversely withholding and concealing the promissory note from Carrie's estate. The petition also alleged that Jack has utilized estate assets for his personal benefit and that he has sold estate property without accounting for the proceeds of the sales. Jeanette sought discovery of the personal and real property belonging to Carrie at the time of her death and asked the court to determine the title and right of possession thereto, determine the persons who have an interest in the property together with the nature and extent of such interest, direct transfer of estate property to an Administrator Ad Litem, and render judgment in favor of Carrie's heirs against Jack and Andrew for all losses, expenses, and damages.

Jack filed an answer to the Amended Petition for Discovery of Assets and a cross complaint on January 14, 2003. The cross complaint alleged that Jeanette converted $15,000 in jewelry that belongs to the estate. Andrew filed an answer on March 25, 2003, denying Jeanette's allegations.

Trial was had on January 25, 2005.³ Jeanette had requested that the trial court make findings of fact and conclusions of law. The Probate Division rendered its judgment on March 3, 2005. The trial court made the following relevant findings of fact:

On August 1, 1971, Jack and Andrew, along with their wives, executed a promissory note for the principal sum of $117,447.87 in favor of Carrie for the purchase of R.V. Williams Lumber and Building Materials Company, Inc.

The principal balance of the promissory note accrued interest from August 1, 1971, at the rate of 6% per annum and that interest was payable after maturity of the promissory note on August 1, 1990.

The unpaid principal balance remaining on the note at the time of Carrie's death was $20,660.42.

No interest payments were made on the promissory note, and the total amount of interest due and owing as of the date of Carrie's death was $79,919.71.

The total value of the note on the date of Carrie's death was $100,580.13.

Any obligation Andrew had on the promissory note executed in favor of Carrie was extinguished upon the transfer by Andrew of all of his ownership interest in R.V. Williams Lumber and Building Materials Company, Inc. to Jack and the transfer occurred with the knowledge of Carrie many years prior to her death.

As recently as March 31, 2004, the promissory note owed to Carrie was still listed as a liability with a principal value of $20,660.42 on the balance sheet of R.V. Williams Lumber and Building Materials Company, Inc., and since 1998, no further payments have been made on the principal balance of the note.

Jack, in his capacity as personal representative of Carrie's estate, failed to inventory the promissory note or to make any attempt to collect the promissory note on behalf of the estate.

An action to collect on the note could have been brought on behalf of the estate prior to August 1, 2000; however, after that date an action to collect on the note would be barred by the applicable statute of limitations.

The total value of the property owned by Carrie at the date of her death including the value of the promissory note exceeded $675,000.

Jack, in his capacity as personal representative of Carrie's estate, failed to file federal and state estate tax returns in a timely manner and further failed to file a request for an extension of time to file federal and state estate tax returns on behalf of the estate.

The trial court made the following relevant conclusions of law:

The share of Carrie's estate to which Jack is entitled is subject to offset for the amount of the indebtedness owed under the promissory note pursuant to the doctrine of equitable retainer as codified by section 473.630, which provides that when a distributee of an estate is indebted to the estate, the amount of indebtedness may be treated as an offset against any property of the estate to which the distributee is entitled; this is true even if the note is later barred by the running of the statute of limitations to collect on the note.

Pursuant to section 473.270, Jack, acting in his capacity as personal representative for Carrie's estate, had a duty to collect all money and debts of every kind due to the decedent.

Pursuant to IRS Code section 2010(c), estates of decedents dying during the year 2000 valued at greater than $675,000.00 were required to file a Federal and State Estate Tax Return.

An estate that fails to file Estate Tax Returns timely or to file requests for an extension of time is subject to penalties and interest on any tax which is subsequently due from the estate.

Jack breached his duty to act as personal representative and is subject to removal as personal representative of Carrie's estate pursuant to section 473.140 for failing to discharge his official duties, in that: (a) he failed to inventory the promissory note or to take any steps to collect the money due and owing under the promissory note and (b) he failed to timely file Federal and State Estate Tax Returns required to be filed by law, subjecting the...