In re Buder

• Decision Date: 07 January 1949
• Docket Number: No. 40277.,40277.
• Parties: In re G.A. BUDER and OSCAR E. BUDER.
• Court: Missouri Supreme Court

217 S.W.2d 563

In re G.A. BUDER and OSCAR E. BUDER.

No. 40277.

Supreme Court of Missouri.

Court en Banc, January 7, 1949.

Rehearing Denied, February 14, 1949.

Disbarment.

LICENSES OF RESPONDENTS SUSPENDED.

Thos. B. Curtis for informant.

(1) The Missouri Supreme Court in considering a Special Commissioner's Report upon exceptions goes into the entire matter to reach its own conclusions and does not limit its consideration to those matters in the report to which the specific exception has been taken. (2) G.A. Buder and Oscar E. Buder were guilty of unethical conduct in giving fraudulent advice and fraudulent misrepresentation to their clients in the "Trustees Commission" matter. Buder v. Franz, 27 Fed. (2d) 101; Fiske v. Buder, 125 Fed. (2d) 841. (3) G.A. Buder and Oscar E. Buder were guilty of unethical conduct in representing conflicting interests without fully disclosing to their clients all the material facts in the "Trustees Commission" transaction in which their interests were adverse. Rule 4.06, Supreme Court of Missouri; Fiske v. Buder, 125 Fed. (2d) 841. (4) Oscar E. Buder was guilty of unethical conduct in making false representation known to him to be false with the intent to deceive the Denver National Bank. Buder v. Denver National Bank, 151 Fed. (2d) 520. (5) G.A. Buder was guilty of unethical conduct in improperly and unlawfully and without order of the Probate Court, as Executor of the Estate of Sophie Franz, removing from the assets of such estate, money and personal property amounting to $124,912.70, and substituting therefor claims of practically no value and applying said assets to his own use.

Taylor Sandison for respondent G.A. Buder.

(1) There was neither conflict of interest or representation of conflicting interests by Respondent G.A. Buder, one of the trustees, in connection with the trustees' commissions. Trustees are entitled to reasonable compensation for their services, even where the trust instrument does not provide for it, and even where the trust is completely void, whereas here the trust instrument does specifically provide that the trustees should be compensated. Pennsylvania Co. for Ins. v. Picher, 206 Mo. App. 325, 227 S.W. 863; Loud v. St. Louis Union Trust Co., 313 Mo. 552, 281 S.W. 744; In re McKinney's Estate, 351 Mo. 718, 173 S.W. (2d) 898; Commerce Trust Co. v. Aylward, 145 Fed. (2d) 113; Bogert, Trusts and Trustees, secs. 974, 975; Scott on Trusts, sec. 242, pp. 1383-84; Restatement of the Law, Trusts, sec. 242, p. 741. (2) Trustees may contract with the cestui que trustents. The contract of May, 1909, for computing the trustees' commissions at the rate of 5% on the whole property, stipulated to be usual, customary and reasonable, was fully binding on all parties, and many times ratified and approved and followed thereafter. Kuhn v. Zepp, 355 Mo. 295, 196 S.W. (2d) 249; Ladd v. Piggott, 215 Mo. 361, 114 S.W. 984; Marshall v. St. Louis Union Trust Co., 209 Mo. App. 13, 236 S.W. 692; In re McKinney's Estate, 351 Mo. 718, 173 S.W. (2d) 898; Bogert, Trusts and Trustees, sec. 975, p. 374; Scott on Trusts, sec. 242.7, p. 1395; Restatement of the Law, Trusts, sec. 242 (i), p. 747. (3) The trustees were entitled under the law to compensation for services based upon the entire trust property; and each interest in the trust property, including the remainder interest, was chargeable with its proportion of the total compensation of the trustees, in this instance with 5% of the value of each remainder interest. Loud v. St. Louis Union Trust Co., 313 Mo. 552, 281 S.W. 744; In re McKinney's Estate, 351 Mo. 718, 173 S.W. (2d) 898; Ladd v. Piggott, 215 Mo. 361, 114 S.W. 984; Caldwell v. Hopkins, 265 Fed. 972; Estey v. Commerce Trust Co., 333 Mo. 977, 64 S.W. (2d) 608; Bush Construction Co. v. Withnell, 190 Mo. App. 33, 175 S.W. 260; Restatement of the Law, Trusts, sec. 233 (h), p. 686. (4) A fiduciary does not represent a beneficiary in negotiations and contract between them, and each represents his own interest and it is so understood. There could be no conflict of interest in respondent agreeing with the beneficiaries of the trust upon the amount or method of computing the compensation of himself and his co-trustees. (5) Rule 4.06 of the Rules of this Court does not prohibit representation of conflicting interests under such circumstances. Many situations exist where technically there may be a representation of conflicting interests where it is held that the conduct of the lawyer is entirely proper. Such representation is improper only if the attorney acts from corrupt motives or with evil intent for adverse and antagonistic interests. Stone v. Slattery's Adm., 71 Mo. App. 442; Goldsmith v. Wamsganz, 86 Mo. App. 1; In re Pfiffner's Guardianship, 194 S.W. (2d) 233; Moffett Brothers Partnership Estate v. Moffett, 345 Mo. 741, 137 S.W. (2d) 507; Hoffman v. Hogan, 345 Mo. 903, 137 S.W. (2d) 441; Rochester v. Gonterman, 49 S.W. (2d) 71; Fanchon & Marco v. Leahy, 351 Mo. 428, 173 S.W. (2d) 417; 7 C.J.S., Sec. 23, p. 746. (6) Rule 4.06 does not apply to agreements for fees between lawyer and client. The relationship is contractual and the rule applies only to the business for which the lawyer is employed. Remmers v. Bromschwig, 18 S.W. (2d) 115; Henderson v. Cap Trading Co., 316 Mo. 384, 289 S.W. 332; Ex parte Schneider, 294 S.W. 736; National Hollow Brake Beam Co. v. Bakewell, 224 Mo. 203, 123 S.W. 561. (7) The law concerning contracts and transactions between fiduciary and beneficiary is the same whether relationship is of trustee and cestui, lawyer and client, or other fiduciary and beneficiary. It requires fair dealing and fair contact. The 5% commission to the trustees here is stipulated to be usual, customary and reasonable. The mere existence of a fiduciary relationship is not enough — it must have existed with respect to the particular business. In re Conrad, 340 Mo. 582, 105 S.W. (2d) 1; Hamilton v. Steininger, 350 Mo. 698, 168 S.W. (2d) 59; Hedrick v. Hedrick, 350 Mo. 716, 168 S.W. (2d) 69; Shaw v. Butler, 78 S.W. (2d) 420; Loehr v. Starke, 332 Mo. 113, 156 S.W. (2d) 772; Patton v. Shelton, 328 Mo. 631, 40 S.W. (2d) 706; Hershey v. Horton, 322 Mo. 484, 15 S.W. (2d) 801. (8) Evidence of excellent reputation and character must be considered and weighed with all of the evidence in finding facts and drawing inferences. The Commissioner erred is not observing and following such rule, and in considering such evidence as limited to mitigation. In re Mason, 203 S.W. (2d) 750; In re Lyons, 145 S.W. 844; In re Hardy, 217 Ind. 159, 26 N.E. (2d) 921; In re McGarry, 380 Ill. 359, 44 N.E. (2d) 2. (9) The law presumes innocence, honesty, good faith, and good intentions; and when acts or transactions are attributable to either good or bad motives, the good must be presumed and inferred. The Commissioner erred in not observing and following such rule. Ray County Savings Bank v. Hutton, 224 Mo. 42, 123 S.W. 47; Chapman v. McIlwreath, 77 Mo. 38; In re Parkinson, 344 Mo. 715, 128 S.W. (2d) 1023; Hendricks v. Calloway, 211 Mo. 536, 111 S.W. 60; Missouri-Lincoln Trust Co. v. Third Natl. Bank, 154 Mo. App. 89, 133 S.W. 357; Fidelity & Deposit Co. v. Grand Natl. Bank, 69 Fed. (2d) 177. (10) The burden of proof was upon Informants to prove facts sufficient to sustain the charges in the Information by evidence that is "clear, cogent and convincing," and "in case of fair and reasonable doubt as to the intent and motive of the person so charged, such should be resolved in his favor." That burden never shifts but remains with Informants throughout. The Commissioner erred in failing to observe and follow such rule of law. In re Conner, 207 S.W. (2d) 492; In re Parkinson, 344 Mo. 715, 128 S.W. (2d) 1023; Clapper v. Lakin, 343 Mo. 710, 123 S.W. (2d) 27; Horn v. Owens, 171 S.W. (2d) 585; McCloskey v. Koplar, 329 Mo. 527, 46 S.W. (2d) 557; Reeves v. Pierce, 26 S.W. (2d) 611. (11) The 14th settlement of respondent as Executor of the estate of Sophie Franz must under the law be construed as a whole to determine its meaning and effect; the intent, gathered from the instrument, the circumstances attending and leading up to its execution, and the surrounding circumstances are entitled to great weight; and so construed it shows that nothing was removed and nothing substituted. The Commissioner erred in not so construing said settlement. Leeper v. Leeper, 347 Mo. 442, 147 S.W. (2d) 660; Petty v. Griffith, 165 S.W. (2d) 412; Paisley v. Lucas, 346 Mo. 827, 143 S.W. (2d) 262; In re Collins Trust Estate, 354 Mo. 614, 190 S.W. (2d) 259; Granneman v. Granneman, 210 S.W. (2d) 105. (12) The five promissory notes (introduced by Informants to sustain the allegation of substitution of allowed claims having practically no value) of the principal amount of $124,954.74, and allowed for the total sum of $172,616.12 by the Probate Court of St. Louis County in the estate of G.A. Franz, deceased, and secured by 7500 shares of Burroughs Adding Machine Company stock, were prima facie of the value of the principal amount and interest as promissory notes, and were prima facie of the value of the amount for which allowed as claims. There being no other evidence of their value, the Commissioner erred in not holding as a matter of law that they were of a value greater than $124,914.70. Menkens v. Menkens, 23 Mo. 252; O'Donoghue v. Corby, 22 Mo. 393; Abbott v. Miller, 226 Mo. App. 277, 41 S.W. (2d) 898; Pierce v. Natl. Bank of Commerce, 13 Fed. (2d) 40; Good Roads Machinery Co. v. Broadway Bank, 267 S.W. 40; Kansas City Casualty Co. v. Westport Avenue Bank, 191 Mo. App. 287, 177 S.W. 1092; Brinkerhoff-Faris Trust Co. v. Home Lumber Co., 118 Mo. 447, 24 S.W. 129. (13) The Commissioner erred in concluding that the purchase of United States Bonds of the value of $125,000 with funds of the estate of Sophie Franz in April, 1943 was "restitution," or was any evidence of prior removal of any money or property of said estate. The purchase...