Hillyard v. Leonard, 50705
| Decision Date | 10 May 1965 |
| Docket Number | No. 2,No. 50705,50705,2 |
| Citation | 391 S.W.2d 211 |
| Parties | Patricia Leonard HILLYARD (now Bowlin), Barbara Leonard Pipher, and Robert S. Leonard, Jr., Respondents, v. Gordon McLeish LEONARD and Arthur H. Leonard, Trustees of the George E. Leonard Land Trust, and the Leonard Land Company, a Missouri corporation, Appellants |
| Court | Missouri Supreme Court |
Paul Van Osdol, Jr., Richard M. Erickson, Terrell, Hess, Van Osdol & Magruder, of counsel, Kansas City, for respondents.
Gordon McLeish Leonard, in pro per.
Robert B. Langworthy, Linde, Thomson, VanDyke, Fairchild & Langworthy, Kansas City, for appellants Leonard Land Co. and Arthur H. Leonard.
PRITCHARD, Commissioner.
The trustees of a 1932 inter vivos trust, the principal asset of which on its termination date, December 31, 1950, was a business building situated on real estate in West Kansas City, Missouri, formed a corporation to which the real estate was transferred in exchange for all of the capital stock of the corporation. The stock was then distributed by the trustees to all beneficiaries in accordance with their interests in the trust. Plaintiffs' shares were later purchased by the trustees, except 75 common shares of Patricia Leonard Bowlin. The 1932 trust provided specifically that the trustees should on the termination date set aside a sufficient portion of the trust property to insure the continuation of the payment of $150.00 per month to the grantor's widow for her lifetime. The widow, Mrs. Harriet M. Leonard, died on April 11, 1959, after which this suit was filed.
Plaintiffs are the three children of a deceased son, Robert Souter Leonard, who died in 1947 and who was one of six original beneficiaries of the 1932 trust. They ask for a declaratory judgment of the interests of the beneficiaries of the trust. Plaintiffs' basic theory is that there was no power in the trustees without plaintiffs' consent, which was not given, to convert the real estate assets of the trust into corporate assets; that the distribution of corporate stock to all beneficiaries of the trust in proportion to their respective interests therein (the corporation having agreed to pay the widow her monthly income for her lifetime) did not constitute a distribution of the trust assets on its specific termination date; and that by reason thereof, the trust did not cease. Plaintiffs say the fiduciary obligations of fair dealing continued after formation of the corporation, and that the trustees had no right to acquire the corporate stock issued to plaintiffs without full disclosure of its actual value.
Plaintiffs' prayer was for an accounting and damages by reason of defendants' failure to make distribution and failure to fulfill their fiduciary obligations, and to surcharge the individual defendants therefor in the amount of money by which defendants failed to pay plaintiffs the true and pro rata value of their shares in the Leonard Land Company. There was a further prayer for attorneys' fees and expenses and that such sums be charged against the proceeds and corpus of the trust.
Defendants' claim is that the transfer of the real estate of the trust to the corporation in exchange for its shares was valid and did terminate the trust; and was the only method by which the trust could be terminated in view of the provision to pay the widow her lifetime income. Defendants pleaded waiver, estoppel, ratification and laches as barring plaintiffs' claim. Defendants also pleaded, and here contend, that plaintiffs forfeited their rights in the trust by bringing this suit contrary to a 'no contest' clause in the trust instrument. A counterclaim was asserted against plaintiff Patricia Leonard Hillyard (now Bowlin) for specific performance of an alleged contract to sell her remaining common stock to the corporation.
The trial court's decree covered the following matters, and complete findings of fact were made: The formation of the corporation and the exchange and transfer of trust assets for its capital stock, in turn distributed to the trust beneficiaries, did not terminate the trust or release the defendant trustees from their obligations to plaintiffs, who did not consent to the transfer; that said transaction was not a sale within the terms of the trust agreement, and that plaintiffs put defendants on notice of their objections to such transfer, and have not waived their right to object to the trustees' actions in these respects; that the trust did not terminate until the death of the widow on April 11, 1959, when the obligation to pay her $150.00 per month ended, and that it then became the duty of the trustees to terminate the trust and to render a final accounting to plaintiffs; that plaintiffs did not waive (nor are they estopped from asserting) their right to their full share of the trust assets by endorsing and delivering certain of the shares of the corporation which had been issued to them; that the evidence before the court was insufficient for a determination of the value of the plaintiffs' interests, and the trustees were ordered to render a final account; and the counterclaims (against all three plaintiffs and separately against Patricia Leonard Hillyard) of defendant Leonard Land Company were denied.
The matters covered in the decree were ordered to be final for purposes of appeal, but jurisdiction was retained for the purpose of determining and approving the trustees' final account; whether they have permitted or suffered a loss or losses to the assets of the trust; and a determination of whether plaintiffs shall be entitled to attorneys' fees payable from the corpus of the trust.
Defendants have appealed from the decree against them on plaintiffs' claim, and defendant Leonard Land Company appealed on the decree against it upon its counterclaim for specific performance of a contract to sell her stock against Patricia Leonard Hillyard (now Bowlin). The realty of the corporation, claimed still to be in trust, was appraised at the trial at $197,500. Plaintiffs claim they are entitled to 1/6 of that amount, which, with a proper accounting and distribution by the trustees, will be in excess of $30,000. For their preferred and common stock plaintiffs were paid $9,500. The difference in these amounts exceeds $15,000, hence our appellate jurisdiction. Const.Mo.1945, Art. V, Sec. 3, V.A.M.S.
Our review in this suit for declaratory judgment is in nature de novo, as in other equity cases, by which we rule both upon the law and the evidence, but also by which we give due deference to the findings of the trial court where the credibility of witnesses and the weight of the testimony are involved. Mashak v. Poelker, Mo.App., 356 S.W.2d 713, 715[1, 2]; J. E. Blank, Inc. v. Lennox Land Co., 351 Mo. 932, 174 S.W.2d 862, 865[1, 2].
By a written trust instrument dated January 2, 1932, grantor, George E. Leonard, conveyed in trust certain property (including real estate here in question) to Robert Souter Leonard, George Edward Leonard and Gordon McLeish Leonard, for the benefit of grantor's six beneficiaries: Robert Souter Leonard; Dixie Lee Moore (now Peterson); George Edward Leonard, Jr.; Tracy Aikin Leonard; Gordon McLeish Leonard; and Arthur Hoyt Leonard, to whom the net income was to be paid during the life of each of them in convenient installments. All of said persons are sons of grantor, except Dixie Lee Peterson who is a granddaughter. It was first provided (Article VI of the trust instrument) that the trustees should pay to grantor's widow, Harriet McLeish Leonard, $150.00 per month for her lifetime. Further provisions of the trust instrument as are here pertinent are as follows: In Article III it was provided, By Article V it was provided:
By Article VII of the trust instrument, among other things, it was provided:
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... ... Hillyard v. Leonard, 391 S.W.2d 211, 223(7-10) (Mo.1965); Kuhn v. Zepp, 355 Mo. 295, 196 S.W.2d 249, 253(5) ... ...
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...cited in footnote 2 therein. This rule, of course, applies in declaratory judgment actions tried without a jury. Hillyard v. Leonard, 391 S.W.2d 211, 215(1) (Mo.1965). Wes. Cas. & Sur. Co. of Ft. Scott, Kan. v. Wunderlich, 447 S.W.2d 1, 4(2) The burden was on plaintiff to prove facts which ......
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Russell v. Russell
...the life tenant trustee (also a director of the corporation) at the expense of other beneficiaries. Plaintiff also cites Hillyard v. Leonard, Mo.Sup., 391 S.W.2d 211, and Garesche v. Levering Investment Co., 146 Mo. 436, 48 S.W. 653, in both of which formed a corporation to hold trust asset......
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American Cancer Soc., St. Louis Division v. Hammerstein
...trusts that a trustee must act solely in the interest of the beneficiary and refrain from self-dealing or duplicity. Hillyard v. Leonard, 391 S.W.2d 211, 223-24 (Mo.1965); Whan v. Whan, 542 S.W.2d 7, 12 (Mo.App.1976). And, in determining whether a trustee has acted from improper motivation,......