In re Estate of Talty
| Decision Date | 29 October 2007 |
| Docket Number | No. 3-06-0669.,3-06-0669. |
| Parties | In re ESTATE OF Thomas TALTY, Deceased (Helen Talty, Petitioner-Appellee v. William Talty, Respondent-Appellant). |
| Court | United States Appellate Court of Illinois |
Respondent, William Talty, appeals from multiple orders and judgments entered by the circuit court of Will County with regard to the probate estate of Thomas Talty, deceased. We affirm.
Respondent, William Talty, and his brother, Thomas Talty, operated an incorporated automobile dealership in Morris, Illinois, for over 25 years. Thomas and William each owned 50% of the corporate stock. The dealership is located on two parcels of land: a 2.98-acre parcel owned by Thomas and William, and a 6.21-acre parcel held in a land trust owned by Thomas and William. The 2.98-acre parcel contains the dealership buildings and primary parking lot, and the 6.21-acre parcel is vacant except for approximately 18,600 square feet used for a dealership parking lot.
In December 1999, Thomas learned he was ill. On July 13, 2000, Thomas executed a will naming his brother, William as executor. The will made specific bequests of farmland to William and a sister, and named Thomas's wife, Helen, as the sole residuary beneficiary of the estate. Thomas's estate included his ownership interests in the dealership and the real estate. Thomas's will gave William the right to purchase all of his shares of stock in the dealership, subject to certain conditions, which included:
The will also gave William the right to purchase Thomas's interest in the 2.98-acre parcel and also in the land trust holding title to the 6.21-acre parcel, providing: "The purchase price of these parcels shall be the fair market value as determined by an appraiser approved by the Probate Court having jurisdiction over my estate."
On January 3, 2001, Thomas and William entered into a corporate stock redemption agreement, which provided, in relevant part:
5. PURCHASE OF SHARES UPON DEATH OF SHAREHOLDER. Upon the death of a shareholder (the deceased shareholder), the Company shall purchase, and the personal representative of the deceased shareholder shall sell, all of the shares of the deceased shareholder as follows:
5.1 The price (the "purchase price") for the shares of a deceased shareholder shall be computed by dividing the value, determined in accordance with subsections 5.2 and 5.3, by all the outstanding shares of the Company and multiplying the quotient thereby obtained by the number of shares held by the deceased shareholder on the date of death.
5.2 * * * [T]he fair market value of all shares outstanding on the Company records as of the date of the deceased shareholders's death shall be determined in accordance with generally accepted accounting principles by a certified public accountant agreed upon by the Company and the personal representative of the deceased shareholder's estate. In the event that they are unable to agree upon a CPA, a disinterested CPA shall be appointed by the probate court having jurisdiction over the deceased shareholder's estate. The computation of fair market value by the CPA under this paragraph shall be final and binding on all parties 5.4 * * *, the remaining shareholder agrees to purchase, and the executor of the deceased shareholder shall sell, all of the deceased shareholder's interest in the commercial real estate, consisting of 9.19 acres, more or less, upon which the Company dealership is located in Morris, Illinois. * * * The purchase price shall be fair market value as determined by an impartial appraiser agreed upon by the executor and the purchasing shareholder. * * *
* * *
13. Notice. * * * Notwithstanding anything to the contrary in this Agreement, any notice, exercise of option, request or other communication required or desired shall be given to the spouse, heirs or legatees of a deceased shareholder shall be deemed to have been delivered when * * * addressed to either (i) the personal representative or successor of the deceased shareholder or (ii) the deceased shareholder at his address as shown on the books of the company.
Thomas died on May 27, 2001. The will was filed and a probate proceeding was opened in Will County on June 1, 2001. Letters of office issued to William.
On July 5, 2001, William, as executor of Thomas's will, entered into a memorandum of agreement with the corporation appointing Robert E. Gordon, CPA, to value the corporate shares of stock. Gordon served as both the corporation's accountant since 1974 and the personal accountant for Thomas and his wife, Helen Talty. Gordon was also the cousin of Thomas and William Talty. Gordon valued Thomas's 50% interest in the corporation at $628,900.
The same memorandum of agreement appointed Stanley D. Twait to appraise the real estate as recommended to William by his attorney, Robert White, who is now deceased. Twait valued Thomas's ownership interest in the real estate at $603,101.
By letter dated August 23, 2001, William's attorney notified Helen's attorney of the appraised values of the corporate stock by Gordon, the appraised value of the real estate by Twait, and the purchase prices for Thomas's shares in the corporation and real estate. The letter further notified Helen's counsel of an August 30, 2001, anticipated closing date for the sale of the stock and real estate. Helen's counsel received the letter on August 24, 2001, but did not read it until August 28, 2001, because he was away from the office.
On August 28, 2001, Helen's counsel immediately filed an emergency motion with the probate court seeking an order to restrain the closing of the corporate stock and the land. The motion included a comment that Helen's counsel previously contacted William's attorney regarding the status of the appraisals, but no imminent proposed closing date was disclosed.
On August 29, 2001, William received a letter via facsimile from General Motors stating the corporation's franchise agreement would terminate on August 31, 2001. The letter referenced a potential request for an 18-month extension, but the deadline to request an extension predated the letter by approximately four weeks.
On August 30, 2001, by agreement of the parties, the circuit court denied Helen's emergency motion, ordered the redemption of the corporate stock, and ordered the sale of the real estate to proceed on August 30, 2001, at the agreed appraised values. Pursuant to the agreed order, the stock redemption and real estate sales occurred and the proceeds were submitted to the probate estate.
On December 19, 2001, Helen filed a three-count petition to set aside the August 30, 2001, sales of the corporate stock and the real estate, and requested an order to remove and surcharge William as the executor. On June 28, 2005, a three-day trial on Helen's petition commenced. On July 12, 2005, the circuit court issued a written opinion and order finding Thomas knowingly waived any conflict of interest when Thomas appointed William as executor of his estate, but finding that William's actions as executor constituted bad faith and an abuse of discretion. As a result of these findings, the court removed William as executor, vacated the sale of Thomas's stock to the corporation, appointed appraisers for the stock and land, and awarded Helen attorney fees, costs, and expert witness fees for William's violation of his fiduciary duty. The court also ordered William forfeit all executor fees.
By order dated June 29, 2006, the court determined the fair market value of the real estate, as of the date of Thomas's death, as $2,700,100, and entered judgment in favor of the estate of Thomas Talty and against William in the amount of $769,562. The court further found the fair market value of Thomas's 50% share of the corporate stock as of the date of his death to be $1,154,100, and entered judgment in favor of the estate of Thomas Talty and against William in the sum of $525,100, with credit given for $628,000 paid.
By order dated July 31, 2006, the circuit court ordered William to repay the estate for attorney fees and appraisal fees related to the litigation. The court also entered judgment against William in favor of the estate for lost rents from Thomas's share of the real estate for $547,006.14 as of July 20, 2006, and in the amount of $222,491.46 for Thomas's share of lost profits from the corporation.
The circuit court denied William's motion to reconsider on August 23, 2006. William timely appealed. We will include additional facts where relevant to our analysis of the issues raised on appeal.
Respondent, William Talty, raises some 22 issues and subissues on appeal, most unsupported by citation to authority. Those issues and subissues can be organized and more efficiently discussed as five general contentions of error. First, William argues the circuit court erroneously granted Helen Talty's petition to set aside the sales of the corporate stock and the real estate. Second, William claims the circuit court erred in appointing new appraisers. Third, William submits the circuit court improperly removed him as executor. Fourth, William asserts the circuit court erroneously entered judgments against him for the difference between the sale prices received and the fair market values of the real estate and corporate stock, plus associated costs and attorney fees. Fifth, William argues the circuit...
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