Estate of Hutchison v. Massood
| Decision Date | 28 June 2016 |
| Docket Number | WD 78826 |
| Citation | 494 S.W.3d 595 |
| Parties | The Estate of Donald Elmo Hutchison, Respondent, and George Massood, Interstate Signs, Inc., and Lynn Oak Court Company, L.P., Appellants, v. Lester G. Massood, Respondent. |
| Court | Missouri Court of Appeals |
Anthony L. Gosserand, Kansas City, MO, Attorney for Respondent Estate,
Duane J. Fox and Christopher M. McHugh, Kansas City, MO, Attorneys for Appellants,
Greg T. Spies and Adam J. Gasper, Kansas City, MO, Attorneys for Respondent Lester G. Massood.
Before Division Two: Victor C. Howard, Presiding Judge, and Thomas H. Newton and Karen King Mitchell, Judges
George Massood, Interstate Signs, Inc., and Lynn Oak Court Company, L.P., appeal the trial court's judgment ordering the trustees of the Donald E. Hutchison Trust (“the Trust”) and the Estate of Donald Hutchison (“the Estate”) to transfer all of their interest in Interstate Sign and Lynn Oak to Lester Massood.1 We reverse and remand.
George and Hutchison were business associates, and both owned interests in two businesses: Interstate Signs and Lynn Oak. George and Hutchison were the sole and equal general partners of Lynn Oak. They were also limited partners, of which there were several others. George and Hutchison were also the sole and equal stockholders of Interstate Signs. Both businesses were subject to agreements setting forth the manner in which an owner could transfer his interest in the business.
The partnership agreement for Lynn Oak requires that “[a]ny transfer ... of the interest of any [p]artner ..., other than upon the death or adjudication of incompetency of [the p]artner ... shall be made only in compliance with the” agreement's provisions. Specifically, for the transfer of general partnership interests, the partner must first obtain the prior written consent of the partners owning an aggregate two-thirds of the partnership; and for the transfer of limited partnership interests, the limited partner must first tender an offer to the general and limited partners to purchase the interest.
The stockholders' agreement for Interstate Signs contained the following limitation on the transfer of interest:
No shares of Stock and no interest in any shares of Stock shall be voluntarily transferred by a Stockholder except in accordance with this Agreement, unless all of the parties hereto consent in writing to such transfer. Any transfer not in accordance with this Agreement or without such consent shall be and void.
The agreement gives Interstate Signs and the remaining shareholder the right to purchase the stock before either shareholder transfers any interest.
On November 24, 2008, Hutchison created the Trust. The parties agree for purposes of appeal that Hutchison purported to transfer all of his interests in Interstate Signs and Lynn Oak to the Trust. In May of 2009, Hutchison amended the Trust to transfer, upon Hutchison's death, all of his interest in Interstate Signs and Lynn Oak held in the Trust to Massood. Hutchison died in November of 2013. On January 15, 2015, George created and signed a notarized statement indicating that: “I George Massood want the shares from Don Hutchison to transfer to Lester Massood as per Don Hutchison's will [3 ]and desires.” Approximately a month later, George executed a second notarized document, this time stating that “I, George Massood, do hereby declare and state that I approve of the transfer of all business assets of Don Hutchison in whatever state of ownership they are currently in to Lester G. Massood.”
Upon Hutchison's death, Massood began receiving Hutchison's half of the monthly proceeds from Interstate Signs and was made a signatory of the business's checking account.4 In September or October of 2014, Interstate Signs stopped payment on Massood's monthly distribution check and moved the business's funds to a new account, over which Massood was not a signatory.
In April of 2014, John and Shirley Aaron, as personal representatives of the Estate, filed suit against Massood for unjust enrichment and conversion and against Lynn Oak and Interstate Signs for accounting, alleging, inter alia, that in the years before his death, Hutchison did not receive all distributions from the businesses to which he was entitled, and that the distributions went to Massood when they should have gone to the Estate. Massood counterclaimed against the Aarons in their capacity as trustees of the Trust,5 alleging that they had failed to transfer Massood's interest in Lynn Oak and Interstate Signs to him upon Hutchison's death, in accordance with the terms of the Trust. Massood sought relief in the form of compensatory and punitive damages.
In November of 2014, Massood filed an application for temporary restraining order and petition for preliminary injunction, alleging that the Aarons were dissipating the assets of the Trust and requesting that the trial court order them to “immediately release [to Massood] all shares of stock in Interstate Signs, Inc. and any interest in Lynn Oak” held by the Trust. George, Interstate Signs, and Lynn Oak6 then moved to intervene as plaintiffs. Attached to the Intervenors' motion was a petition for declaratory judgment. Intervenors claimed that Hutchison's attempt, during his life, to transfer his shares in Interstate Signs and his partnership interest in Lynn Oak into the Trust was and void because the transfer was inconsistent with the terms of the shareholder and partnership agreements. They sought intervention as of right and alternatively, permissive intervention, arguing that Massood could not represent their interests. The trial court granted the motion to intervene.
The trial court set the hearing on the request for preliminary injunction for June 4, 2015, and set the trial on the merits for September 18, 2015. At the preliminary injunction hearing, Massood, the Estate, and the Aarons (as trustees) announced that they had reached an agreement settling the various issues between them, and that they wished “to present evidence both on the preliminary injunction and on the settlement that's been reached.” They also requested that the trial court approve the settlement. Counsel for Intervenors objected to the trial court holding a hearing on “ultimate issues,” when a preliminary injunction hearing had been scheduled; they also objected to what they deemed an effort to “circumvent [the preliminary injunction] process through some settlement agreement which obviously isn't binding upon the” Intervenors. After acknowledging that the hearing was to address the preliminary injunction and stating that the court did not intend to approve the settlement, the trial court determined that it would “go ahead and proceed,” noting that, if Intervenors “feel that [the trial court] has no power to go forward, they certainly have the ability to file a writ of prohibition.” Intervenors responded that there was “no such intent.”
Massood testified regarding the background of the dispute generally, as well as the details of the settlement, which included the Estate and Trust transferring to Massood all interest they had in Interstate Signs and Lynn Oak. Massood's evidence included the Lynn Oak partnership agreement, the Interstate Signs stockholders' agreement, Hutchison's will, the amendment to the Trust granting Massood the interests in Lynn Oak and Interstate Sign, and the two approval documents signed by George. Massood also testified, without objection, that George had never expressed any objection to Massood receiving the interests and that, at a hearing on a different matter several weeks earlier, George had specifically testified that he had no objection to Massood receiving Hutchison's interests in both companies.
During cross-examination of Massood, counsel for Intervenors handed Massood a document, titled Revocation of Declarations and Statements, in which George purportedly revoked the prior “approvals, declarations and consents of George Massood” as they pertained to the transfer of interest in Interstate Signs and Lynn Oak. The document was dated the same day as the hearing and was purportedly signed by George on behalf of himself, Interstate Signs, and Lynn Oak. When questioned about the signature, Massood testified, George did not testify, and Intervenors offered no other testimony.
Following the hearing, the trial court determined that the limitations on transfer contained in the Lynn Oak partnership agreement did not apply to prohibit transfers out of the Trust because the restrictions were inapplicable when the transfer was due to the death of the partner, and the transfer that Massood sought here was “caused by the death of Don Hutchison.”7 The court also found that, in any event, George's consent to the transfers to Massood met the conditions for transferring a partner's interests under the partnership agreement. Additionally, the court found that George, the only other shareholder of Interstate Signs, had consented in writing to the transfer out of the Trust to Massood, in accordance with the conditions of the stockholder's agreement. Finally, the trial court found Intervenors' objections to be “invalid and not lawful objections,” and that Intervenors “have agreed that they have presented their claims here in open court ... and that [Intervenors] agree that the judgment of the court shall be binding on [Intervenors] and that [Intervenors] will follow any ruling ... with respect to the alleged restrictions of the transfer of the interest in Interstate Signs” and Lynn Oak. The trial court entered judgment in accordance with the settlement agreement,8 ordering, inter alia, that the Estate9 and Trust transfer all interests in Lynn Oak and Interstate Signs to Massood and that Interstate Signs “show in its official stock transfer book that [Massood] is now the owner of 725 shares.”
Intervenors timely filed this appeal.
To continue reading
Request your trial