Moore v. Smith

• Decision Date: 10 October 1910
• Docket Number: 1,830.
• Citation: 182 F. 540
• Parties: MOORE v. SMITH et al.
• Court: U.S. Court of Appeals — Ninth Circuit

182 F. 540

MOORE v. SMITH et al.

No. 1,830.

United States Court of Appeals, Ninth Circuit.

October 10, 1910

T. J Hoolan, William Scallon, and Walsh & Nolan, for appellant.

R. Lee Word and William Wallace, Jr., for appellees.

Before GILBERT and ROSS, Circuit Judges, and WOLVERTON, District Judge.

The record shows that for many years John M. Smith and William A Smith, who were brothers, were the owners of a large amount of land in the state of Montana, upon which they carried on the sheep, cattle, and horse business. At first they managed the business themselves, but in 1890 they organized a corporation under the laws of Montana, under the name of Smith Bros. Sheep Company, to which corporation they conveyed all of their property. Each of them was married, and to the wife of each was given 5,000 shares of the capital stock of the company, which amounted to 250,000 shares. The remainder of the stock was divided equally between the brothers. The wife of William A. Smith deserted him in 1891, leaving three small children-- the oldest a boy then seven years old, and two younger girls, the older of whom was the complainant in this case and is the appellant here. These children William A. Smith subsequently sent to live with their aunt, a Mrs. Reynolds, in Ohio, who was a sister of the two brothers. Napoleon B. Smith, who was their nephew, was an attorney at law residing at White Sulphur Springs, Meagher county, Mont., in which county most of the property of the brothers was situated, and in which they both resided. William A. Smith died there on February 13, 1897 and on his deathbed made his will, which was drawn by Napoleon B. Smith, by which will he left all of his estate to his three children and appointed his said nephew executor thereof.

During the course of his examination as a witness, John M. Smith was asked what, if any, request his brother William made of him in his last illness regarding his children, and answered: 'A. The last words that he said to me was 'N. B. Smith is my administrator, and he will attend to the affairs in that way, and I want you to look after the interests of my children.' Those were the dying words that he said. Q. And did you say you would? A. I said I would, and I have, faithfully. ' At the time of his death William A. Smith was the owner of 122,950 shares of the stock of the Smith Bros. Sheep Company-- John M. Smith then owning a majority of the stock.

The case shows that John M. Smith was himself then in poor health, as was his wife, and that in consequence he spent much of his time at Pasadena, Cal., where he was at the time of much of the correspondence hereinafter referred to. Some time after the business was incorporated one McNaught, who was a brother-in-law of John M. Smith, became manager of the property under the supervision and direction of the latter. The will of William A. Smith was admitted to probate, and Napoleon B. Smith became executor of his estate. After the death of William A. Smith, and because of the age and poor health of John M. Smith, and perhaps for other reasons, both John M. Smith and the executor became desirous of selling the whole property. A sale by John M. Smith of his majority of the stock to a stranger might have worked to the injury of the minority interest of the children of the deceased William A. Smith, so that both John M. Smith and the executor of the estate of William A. Smith became desirous that both interests be sold together. Repeated efforts in that behalf failed of accomplishment.

On the 23d of November, 1897, McNaught asked for an option of purchase, to run until the end of the year, on all of the property, free of debts, except future payments on certain railroad land contracts, on which application J. M. Smith endorsed this:

'My figuers is two hunderd and twenty thousend $220000 Subject to the aprovel of Mary Smith (wife of John M. Smith) & N. B. Smith to date from Jan 1' 1892 time to complete sale about to the 10 of Jan. 1898. J. M. Smith.'

The executor of the estate of William A. Smith indorsed thereon the following:

'In case a buyer can be found for the property at the amount above stated I will immediately make application to the District Court of Meagher County, Montana, to sell the interest of the Estate of W. A. Smith, deceased, in said property at the rate above stated. (Signed) N. B. Smith.'

The evidence shows that the executor regarded the estimate of John M. Smith as to the value of the property at the time too high, as did others.

On the 14th of December, 1897, John M. Smith wrote a letter from Martinsdale, Mont., to the executor, which reads in part as follows:

'N. B. Smith Der Sir & Nefue. * * * Mr. McNaught is back from Helena he could not get a party to take hold of the property, but I think the chance will be better next sommer I want to sell out so as to go some plase that I can be with my famley & can send Stanely (his son) to school as long as I hold it I can't be sadesfied away from it & I dont want to sell out & leave the childrens interest in it I think the coming year will be the time to let gow of the intire plant you can at the next turm get a permit to sell wills intrest at anney time that we can get fair value for it then we can go ahead with it when the opertunity Shows up I think it will be well to arange that the next turm of Court I dont think that we will sell much befoar next July or Auges but I dew want to sell as soon as we can to advantage if I was yong I would not cair to sell for it is a good property well managed at what I ask for it.' The record shows that on the 24th day of January, 1898, the judge of the probate court made an order based upon the application of the executor, authorizing him to sell all of the 122,950 shares of the stock of the company belonging to the estate of William A. Smith, deceased, 'at private sale, and without previous notice, provided that said personal property be sold at a sum not less than seventy-five thousand dollars, and may indorse said stock for the purpose of said sale, and may do all other acts and things requisite and necessary to transfer all of the interest of said estate in and to said stock and the property represented by said stock. That said stock be present at the time of said sale, and that said executor present to this court at the next term thereof after such sale, an account of sale, verified by his affidavit.'

On the 19th of the following March, John M. Smith wrote a letter from Helena, Mont., to the executor, which is in part as follows:

'Mr. N. B. Smith Dear Nefue I wish to get the least price that you can excep for the children stalk (stock) I may have to dew some figuering to sell the Plant & in case I knawd fest how much I could drop and pay all debts it would give me a chance to handel my self what would you give me a opten on the Stock after the debts is payed I think you said the order was for you to sell for $75,000 but we think we can dew better then that I think I can get them 80 or 85000 out it clear for them now can you name enney price that would soat you to give a opchen on so I might have a maregen to mark (work) on think the matter over & let me know . . . (signed) J. M. Smith.'

On March 25th, 1898, the executor replied as follows:

'Office of N. B. Smith, County Attorney, Meagher County.

'White Sulphur Springs, Mont. March 25th, 1898.

'Dear Uncle: Your letter in regard to the stock of the estate came to hand. I have been thinking over the matter. I think rather than see a sale go bye I would be willing to take eighty-five thousand dollars for the stock. I want to do what is fair by the estate and also by you. I want to see a sale go through in some shape, but at the same time I want to do the best I can for the estate. I would want the eighty-five thousand dollars alone for the stock, and the party who gets the stock to pay all the debts of the Company, and also that the sheep company cancel whatever debts it might have against the Alice or Blackhawk Mining Companies. Yours truly, (Signed) N. M. Smith.'

July 2, 1898, John M. Smith wrote to the executor as follows:

'Smiths Ranch July 2 1898.

'N. B. Smith Dear Nefue

'I have bin figerin Since you laft on this Sheep Sale you know that our Judgment difers as to the value of the property you being willen to take less then would sadesfy me & thaught that you would rether than miss a sail would take $80000 for the pert you represent rether then miss a sail it was on that bases that I made my offer to Mc My offer gave me a maregen that would sadesfy me but if I dont have a small margen it cuts me down so low that I dont feal sadesfiged if I had made my figers with the intent of giving you the benefit of my Judgement I should have plase my figers higer then I did so you can see that your estemate throwd me off in my calculation & will bring me out with less money then is sadesfactery to me & Mary I told her as you was willing to take less then I thought the stock worth & I was willing to take 80000 that I would have a margin to work on & bost my offer acorded now under theas circumstances I think you can afoard to take $84000 as your figers estemate 85000 now if I can have a small margen to work on as I dont know jest what it will take to Squair all debts but I think if I can get yours at 84,000 that I will still have a Small margein to work on if this deel goes but I would not be sadesfied to take the offer & devide equel as our Judgement difered as to value I made the offer below what I should have done if I had not had some aserence that you would take 80000 for the interst now if you think you can take 84000 I think that will be be very close to to it if the sail goes if you cant aford to take that Mary may not sell her stock & that will spoil...