Heisserer, Matter of

• Court: Missouri Court of Appeals
• Writing for the Court: HOGAN; FLANIGAN, P.J., and MAUS; SHRUM
• Citation: Heisserer, Matter of, 797 S.W.2d 864 (Mo. App. 1990)
• Decision Date: 24 October 1990
• Docket Number: No. 16306,16306
• Parties: In the Matter of Rosalinda HEISSERER, an Incapacitated and Disabled Person. JACKSON EXCHANGE BANK AND TRUST COMPANY and Gary Spinks,Co-Trustees, Plaintiffs-Appellants, v. Harl FRIEDRICH, Co-Trustee and Individually, Defendant-Respondent.

Page 864

797 S.W.2d 864

In the Matter of Rosalinda HEISSERER, an Incapacitated and Disabled Person JACKSON EXCHANGE BANK AND TRUST COMPANY and Gary Spinks,Co-Trustees, Plaintiffs-Appellants, v. Harl FRIEDRICH, Co-Trustee and Individually, Defendant-Respondent.

No. 16306.

Missouri Court of Appeals,

Southern District,

Division Two.

Oct. 24, 1990.

Tom K. O'Loughlin II, Kathleen A. Wolz, O'Loughlin, O'Loughlin & McManaman, Cape Girardeau, for plaintiffs-appellants.

Michael L. Jackson, Buerkle, Beeson & Ludwig, Jackson, for defendant-respondent.

HOGAN, Judge.

This appeal is taken from a judgment of the Probate Division of the Circuit Court of Scott County construing an inter vivos trust. The background facts as found by the trial court and as reflected by the record are that Rosalinda Heisserer and her husband Zeno owned a 180-acre farm in Cape Girardeau County. They became the parents of one child, Cathrine. Cathrine is fifty-five years old and is retarded. She is unable to speak but can communicate with her mother.

In March 1983, Zeno Heisserer drowned near his farm. Rosalinda and Cathrine moved to Scott City a short time after his death. In July 1983, Rosalinda executed a revocable inter vivos trust. Nominating herself as sole trustee, she specifically provided that should she become incapacitated or disabled plaintiffs and the defendant would become successor trustees. Spinks is a residuary beneficiary of the trust; as such he receives seventy per cent of all remaining trust assets upon the death of the survivor of Rosalinda and Cathrine. Also named as residuary beneficiaries of the trust are the Immaculate Conception Catholic Church of Jackson, Missouri and St. Joseph's Catholic Church of Scott City, Missouri, each of which is to receive five per cent of the residuary estate. William Heuring, Rosalinda's brother, is to receive five per cent of the residuary estate and Patricia Chapman, Rosalinda's niece, is to receive fifteen per cent. The settlor's reasons for nominating defendant Friedrich as a successor trustee appear, in part, in Article VII, paragraph 15, of the trust instrument, which provides:

"I have appointed Harl Friedrich as Co-Successor Trustee because he is familiar with and has farmed the Zeno Heisserer farm land. I specifically direct that he be given the first right to continue farming the land and that his decisions with respect to the operation of the farm be followed by the other Co-Successor Trustees."

It is significant that both Spinks and Friedrich have a species of expectancy in the residuary estate. As noted, the trust instrument provides that all remaining trust property shall be distributed to the named beneficiaries upon the death of Rosalinda and Cathrine Heisserer. It is provided, however, in Article III, paragraph 2, of the trust instrument, that that distribution "is specifically subject to the following provisions:

(i) Gary Spinks shall have the right to take as part of his share my personal residence, in the event it is part of this trust, located at 1403 Broadway, Scott City, Missouri, at the fair market value thereof as either determined by the value as finally determined by the Internal Revenue Service for Federal Estate Tax Purposes or, in the event of no such value, by the appraisers of the estate and trust assets.

(ii) Harl Friedrich shall have the right, provided he or his family is farming the Zeno Heisserer farm, described hereafter, to purchase that farm at 2/3 of the fair market value determined by the same method set out in paragraph (i)."

It is inferable from the record and the trial court found that Friedrich and the Heisserer family had developed a warm friendship during the time Friedrich operated the Heisserer farm. Friedrich described his relationship with the Heisserers as being "[p]retty much like my own family." When the Heisserer farm flooded, as it sometimes did, Friedrich and Fred Propst would assist the Heisserers in moving their personal effects, farm machinery, livestock and grain from the flooded property. Friedrich also kept and fed the Heisserer livestock on his own property while the Heisserer farm was flooded. He neither expected nor received compensation for such personal services. The trial court concluded, and we find it to be a reasonable conclusion, that Rosalinda reposed considerable trust in defendant Friedrich.

On September 16, 1986, plaintiff Spinks petitioned the Probate Division of the Circuit Court of Scott County, requesting the appointment of a guardian of the person and conservator of the estate of Rosalinda Heisserer. Spinks further requested that he be appointed guardian and conservator. On February 9, 1987, Rosalinda was declared to be totally disabled within the meaning of § 475.078.2, RSMo 1986. ¹ Spinks was appointed conservator of Rosalinda's estate. As provided by the trust instrument, Spinks, Friedrich and the Jackson Exchange Bank and Trust Company (the bank) became successor trustees. ² At the time of trial, the guardianship estate had approximately $25,000 in assets; the trust had assets valued at "a little over $800,000"; $212,000 of this amount was attributed to the value of the farm.

The controversy is focused upon the proper disposition of the Heisserer farm and defendant Friedrich's contingent interest therein. The farm is a 180-acre farm. According to one witness who inspected and appraised the farm, it consisted of 154.5 "crop acres," 23.5 acres in timber and two acres in farmstead. This witness, testifying as an expert, stated that the farm was composed of fertile, productive soil, although it is subject to being flooded when there is a great deal of rain and the [Mississippi] river rises.

Friedrich and one Fred Propst leased the Heisserer farm in 1973. They farmed the property together, as Propst put it, until 1982, when Propst retired from the farming operation. The rental agreement was a sharecrop or "crop-share" agreement; the landlord received one-third of the crop and paid for one-third of the hay baling. Friedrich testified that the terms of the rental agreement had not changed substantially at the time of trial.

The trial court found and specifically recited that the Heisserer farm is located in close proximity to the Mississippi River and is subject to flooding. The farm was flooded in 1982, 1983, 1985 and 1986. During periods of high water, the Heisserer farm is sometimes completely submerged, subjecting both the tenant and the landlord to a total loss of their crop. Crop insurance is available, but such insurance covers only the farmer's expense and does not compensate him for his loss of income. The obvious conclusion is that although the Heisserer farm is productive, its operation is inherently risky.

The record indicates, and the trial court found, that Friedrich nonetheless operated the Heisserer farm quite successfully from 1983 to 1988, after Propst retired. The lessor's income from the operation of the farm increased steadily from 1983 to 1988. Including what are called "government assistance payments," the net income from the farm in 1983 was $3,808; in 1984, $4,797; in 1985, $6,712; in 1986, $7,436; in 1987, $10,108, and in 1988, $10,378. These figures, of course, represent one-third of the farm income.

During the time he was operating the farm, Friedrich improved it substantially. Specifically, the trial court found that Friedrich cleared, scraped and leveled the land, filled unproductive sloughs and combined small fields into larger, more productive fields, all to the benefit of the trust estate.

In late August or early September of 1987, within eight months of the time the successor trustees took over administration of the trust, the bank took the view that Friedrich should be required to pay his rent in cash. The basis of the bank's dissatisfaction with Friedrich's sharecrop agreement is not entirely clear; Mrs. Karen Grebing, the bank's assistant trust officer, testified that the bank's counsel recommended a written lease and that the farm be rented on a "cash basis, which is how [the bank] rents other farms that we administer the trust." On October 19, 1987, the bank's trust officer addressed a letter to Friedrich, which read as follows:

"On behalf of the Rosalinda Heisserer Trust you are hereby notified that your tenancy of the Heisserer Farm located approximately one mile south of Dutchtown, Missouri, Cape Girardeau County, is terminated at the end of the crop year 1987.

This notice is sent to you pursuant to the Missouri Revised Statutes before November 1, 1987. You are further notified not to sow any crops including winter wheat."

Apparently some kind of discussion or communication preceded this letter, for in another letter dated October 19, 1987, the bank advised Friedrich it "would again" outline "the terms of the proposed lease on the Heisserer Farm." The bank proposed, among other things, that Friedrich execute a three-year lease; that in the event of a flood the lessee would assume the loss but cash rent would still be payable; that the rent per acre would be $80, and this figure was considered to be a concession to Friedrich. Friedrich was instructed to reply in writing. Friedrich replied through his attorney, in effect stating that he considered the bank's action to be in excess of its authority, and suggesting a conference of the trustees.

Thereafter, the trustees held several meetings. The minutes of several conferences were received in evidence as defendant's exhibit L. The trial court accurately found that the conferences reflect a continuing dispute among the trustees and their attorneys concerning the proper construction of the trust instrument. The minutes of a meeting held November 25, 1987 show that Friedrich indicated he would be interested in buying the farm at a "fair market price." The minutes of which we are speaking do not reflect any agreement on a method by which to determine the fair market value of the farm nor any agreement...