Gwaltney v. Russell

• Decision Date: 26 October 2007
• Docket Number: 1060743.
• Citation: 984 So.2d 1125
• Parties: Nancy Russell GWALTNEY et al. v. Benjamin RUSSELL.
• Court: Alabama Supreme Court

984 So.2d 1125

Nancy Russell GWALTNEY et al. v. Benjamin RUSSELL.

1060743.

Supreme Court of Alabama.

October 26, 2007.

Richard J. Gill of Copeland, Franco, Screws & Gill, P.A., Montgomery, for appellants.

Samuel H. Franklin and John G. Thompson of Lightfoot, Franklin & White, L.L.C., Birmingham; and W. Larkin Radney III of Barnes & Radney, P.C., Alexander City, for appellee.

LYONS, Justice.

Nancy Russell Gwaltney ("Nancy"); her three children, Eugene C. Gwaltney III ("Eugene"), Nancy Gwaltney Klopman ("Klopman"), and George Walker Gwaltney ("George"); and two family partnerships, Gwaltney Investment, Ltd. ("GIL"), and Gwaltney-Baird Investments, Ltd. ("GBIL"), appeal from a summary judgment in favor of Benjamin Russell ("Benjamin") on Benjamin's complaint seeking specific performance of a 1985 contract. We affirm.

I. Facts and Procedural History

The late Benjamin C. Russell (hereinafter referred to as "the testator"), who had no children, created in his will the Russell Trust, naming his wife Edith as the beneficiary thereof during her lifetime or until she remarried. The assets of the Russell Trust included shares of Russell Lands, Inc. Upon either Edith's death or remarriage, the trust would terminate and the trust assets would be distributed to the testator's three siblings—Elizabeth R. Alison, Robert A. Russell, and Thomas D. Russell. Edith and the testator's three siblings were the original trustees of the Russell Trust. The testator died in 1948. If none of his three siblings were living at the time of Edith's death or remarriage, the trust assets would be distributed to their respective issue. Edith died without remarrying, over 50 years after the death of the testator. All the testator's siblings predeceased Edith.

The appellee in this case, Benjamin, is the son of Robert A. Russell, the deceased brother of the testator, and a nephew of the testator. The principal appellant in this case, Nancy, is the daughter of Thomas D. Russell, another deceased brother of the testator, and a niece of the testator. In 1985, Nancy and Benjamin, who are first cousins, were appointed by the Tallapoosa Circuit Court, along with another cousin, as cotrustees of the Russell Trust. At that time, Benjamin desired to purchase as many outstanding shares of Russell Lands, Inc., as necessary to consolidate ownership of Russell Lands in himself. Specifically, in 1985 Benjamin entered into numerous contracts with other members of the family of his deceased uncle, Thomas D. Russell. Benjamin says he did so in order to obtain all of their then owned shares of Russell Lands, Inc., as well as any future shares they stood to receive as a distribution from the Russell Trust.

One of these transactions was with Nancy. Nancy and Benjamin entered into the following agreement (hereinafter referred to as "the 1985 contract"), pursuant to which Nancy agreed to sell her then owned shares of Russell Lands, Inc., as well as any future shares she stood to receive as a contingent remainder beneficiary under the Russell Trust:

"RECITALS:

"WHEREAS, the Undersigned, by virtue of being one of the issue of Thomas D. Russell, has a contingent future or remainder interest (i) under and in a trust established pursuant to Item Three of the Will of Benjamin C. Russell, deceased (the `Trust') and (ii) in the property of the Trust; and

"WHEREAS, under the terms of the Trust, the Trust will terminate upon the remarriage or death of Edith L. Russell and at that time assets will be distributed to various beneficiaries, including certain of the issue of Thomas D. Russell living at the date of termination of the Trust; and

"WHEREAS, The Trust presently owns, in addition to other assets, shares of common stock of Russell Lands, Inc.; and

"WHEREAS, if [Nancy] is living at the time of the termination of the Trust and if the Trust owns shares of common stock of Russell Lands, Inc. at the time of the termination of the Trust, [Nancy] will receive a distribution of shares of common stock of Russell Lands, Inc.; and

". . . .

"WHEREAS, [Benjamin] has agreed to purchase ... the shares of common stock of Russell Lands, Inc. presently owned by [Nancy] only if [Nancy] enters into an agreement to sell any shares of common stock of Russell Lands, Inc. [Nancy] might receive from the Trust upon its termination; [and]

"WHEREAS, if [Nancy] receives shares of common stock of Russell Lands, Inc., upon the termination of the Trust, [Benjamin] has agreed to purchase from [Nancy], and [Nancy] has agreed to sell to [Benjamin], all such shares received by [Nancy]....; and

"WHEREAS, [Nancy] is aware that at the time of the termination of the Trust, the value of a share of common stock ... may be substantially higher than the sales price provided for in this Agreement; however, [Nancy] is also aware that the value ... may be lower than the sales price provided in this Agreement and [Nancy] does not wish to take the risk of a decline in the value per share; and

". . . .

"WHEREAS, [Nancy] further recognizes that if [Benjamin] purchases the shares of common stock of Russell Lands, Inc., owned by [Nancy] and other shareholders of Russell Lands, Inc., pursuant to Purchase Agreements in form as that attached as Exhibit A, [Benjamin] will own a majority of the shares of outstanding common stock of Russell Lands, Inc., and [Nancy], by virtue of the receipts of any shares of Russell Lands, Inc., upon termination of the Trust, would be in the position of a minority shareholder in Russell Lands, Inc., a position [Nancy] wishes to avoid; and

". . . .

"NOW, THEREFORE, in consideration of the premises and in consideration of the mutual agreements of the parties set forth hereafter concerning the purchase and sale of the stock received upon the termination of the Trust ..., it is agreed as follows:

"1. Upon the termination of the Trust, [Nancy] will sell to [Benjamin], and [Benjamin] will purchase from [Nancy] all shares of common stock of Russell Lands, Inc. which [Nancy] receives from the Trustees of the Trust upon the termination of the Trust. . . .

". . . .

"3. The closing of the purchase and sale of shares under this Agreement shall take place on the first business day after the date of the distribution of shares ... by the Trust to [Nancy].

"4. [Nancy] represents and warrants to [Benjamin] that, if [Nancy] receives shares of Russell Lands, Inc. common stock upon the termination of the Trust, [Nancy] will transfer to [Benjamin] good and valid title to the shares received by [Nancy], free and clear of all liens and encumbrances of any nature.

"5. The parties recognize that [Benjamin] may not be living at the time of the termination of the Trust. If [Benjamin] is not living ... the obligation hereunder shall be binding upon the executors or administrators of the estate of [Benjamin]. . . .

"6. If [Nancy] is not living at the time of the termination of the Trust, [Nancy] agrees that the obligation of [Nancy] ... to sell shares of Russell Lands, Inc. common stock upon termination of the Trust shall ... be binding upon [her heirs].

"7. [Nancy] acknowledges that shares of common stock of Russell Lands, Inc. covered by this Agreement cannot be readily purchased or sold in the open market, that such shares are unique property, that it will be impossible to measure in money the damage to [Benjamin] if [Nancy] fails to comply with any of the obligations imposed by this Agreement ... and that, in the event of any such failure, [Benjamin] will not have an adequate remedy at law or in damages. Accordingly, [Nancy] consents ... to the issuance of an injunction for specific performance or the enforcement of other equitable remedies against [Nancy]. . . ."

(Emphasis added.)

In 1992, Nancy assigned her contingent remainder interest in the Russell Trust to GIL, a family partnership. Nancy's late husband, Gene Gwaltney, and her three children — Eugene, Klopman, and George—were the general partners of GIL; Nancy was a limited partner. Nancy's estate-tax attorney sent Benjamin, as one of the trustees of the Russell Trust, a letter informing him of the assignment. GIL subsequently conveyed four percent of its assets to GBIL, another family partnership; Nancy and her stepdaughter are the general partners of GBIL.

In June 2004, Edith died and the trust terminated. Pursuant to the 1985 contract, Benjamin asserted the right to purchase Nancy's shares of Russell Lands, Inc. Nancy, in turn, sent Benjamin a letter stating that she had assigned her contingent remainder interest in the Russell Trust to GIL in 1992 and subsequently, to small degree, to GBIL; that her husband and children were the general partners of GIL; and that the general partners of GIL intended to retain ownership of the shares of Russell Lands, Inc., and were not interested in selling them for the price proposed in the 1985 contract. Benjamin sued, naming as defendants Nancy, her three children, and the two family partnerships (hereinafter referred to collectively as "the Gwaltneys"), seeking specific performance of the 1985 contract.

The Gwaltneys and Benjamin each filed a motion for a summary judgment. Benjamin argued, among other things, that he was entitled to a summary judgment because, he says, the 1985 contract contained only two conditions precedent, both of which had been met: (1) that the Russell Trust, upon its termination, contain shares of Russell Lands, Inc., and (2) that Nancy be alive when the Russell Trust terminated. Benjamin relies on a recital in the contract referring to the circumstance of Nancy's then being entitled to a distribution of shares of stock in Russell Lands upon the occurrence of the two conditions. Benjamin contended that the facts and circumstances surrounding the 1985 contract show that the parties did not intend for Nancy to be able to void the contract by assigning her contingent remainder interest in the Russell Trust prior to Edith's death. The Gwaltneys, on the other hand,...