Parker v. Pine

• Decision Date: 04 May 1981
• Docket Number: No. WD,WD
• Parties: Bobby Lee PARKER, Appellant, v. Gayles R. PINE and Betty Pine Lockard, Respondents. 31267.
• Court: Missouri Court of Appeals

Page 536

617 S.W.2d 536

Bobby Lee PARKER, Appellant, v. Gayles R. PINE and Betty Pine Lockard, Respondents.

No. WD 31267.

Missouri Court of Appeals, Western District.

May 4, 1981.

Motion for Rehearing and/or Transfer to Supreme Court Denied

June 2, 1981.

Application to Transfer Denied July 14, 1981.

J. Kirk Rahm, Warrensburg, for appellant.

Tom R. Williams, Warrensburg, for respondent Gayles R. Pine.

C. B. Fitzgerald, Warrensburg, for respondent Betty Pine Lockard.

Before PRITCHARD, P. J., and TURNAGE and CLARK, JJ.

CLARK, Judge.

Appellant Bobby Lee Parker brought this suit against respondents Pine and Lockard for damages alleged to have resulted from the failure of respondents to execute their duties as trustees under the will of John M. Pfeffer, Sr. Although not separated into counts, the claims were divided between two time periods: March 22, 1973, the date of Pfeffer's death, to June 4, 1975, and from the latter date to the date of trial. A jury returned verdicts in favor of appellant and against Pine and Lockard as to the first time period, but awarded no damages. As to the second period, the verdict was in favor of appellant and against Pine only with damages of $5000. The court entered judgment for appellant against Pine and on post-trial motion granted judgment n.o.v. in favor of Lockard. Pine has not appealed and the judgment against him for the second time period is not in controversy. Parker's appeal contests only the issue of damages sustained between March 22, 1973 and June 4, 1975 which, he contends, should have been allowed consistent with the verdict of liability.

Parker's eight points on appeal may be grouped for disposition into three principal subjects: Entitlement of Parker to damages as a matter of law upon the jury's verdict determining liability; erroneous admission of evidence on affirmative defenses not pleaded; and erroneous refusal of withdrawal instructions required to dispel false issues. Collateral and included points complain of irrelevant and prejudicial evidence admitted on cross-examination of Parker's witness and improper limitation of Parker's closing jury argument.

Some evidence in the case was disputed, but in broad outline the background of Parker's claims is uncontroverted, suffering more on this record from deficiencies rather than disagreements.

John M. Pfeffer, Sr. died testate March 22, 1973, leaving as a bequest to appellant, then 17 years of age, a 357-acre farm in Johnson County. Under the terms of the will, appellant's inheritance was deferred until he attained age 25. As trustees, Pine and Lockard were instructed the manage the farm for appellant's account, pay the expenses and provide for appellant's needs as in their judgment would be in his best interests.

Pfeffer was also survived by a son, John Pfeffer, Jr., who, prior to his father's death, had been conducting the actual farming operations on the Pfeffer holdings. The will named Pfeffer, Jr. as executor and devised to him another farm property. Pine was the attorney who drew the will and was a long time acquaintance of the family. Pfeffer, Jr. qualified as executor and employed Pine to represent the estate.

Apparently, some arrangement had previously existed between the Pfeffers, Jr. and Sr., as to crop shares and cash rent for farming operations on the land titled in the name of Pfeffer, Sr. After the death of Pfeffer, Sr., his son continued to occupy the farms planting crops and pasturing livestock much in the manner as he had done before his father's death. No order was obtained from the probate court authorizing Pfeffer, Jr. to take charge of any real estate as executor.

Some evidence indicated that in the spring or early summer of 1973, following the death of Pfeffer, Sr., an informal agreement was made between Pine and Pfeffer, Jr. for the latter to continue farming the lands which Pfeffer, Sr. had owned. No distinction was noted or observed as to segregation of the trust property, the income it generated or the expenses incurred. Income from the trust property was deposited by Pfeffer, Jr. to his account as executor and expenses were similarly paid from that account. Presumably, these transactions were recorded in Pfeffer, Jr.'s settlements with the probate court. That information, however, is not before this court because the probate files, although introduced as exhibits at trial, have not been deposited here. Thus, under Rule 81.15, they must be regarded as immaterial.

In effect, by the arrangement with Pfeffer, Jr., Pine delegated his responsibility as trustee to manage the trust farm and account for income and expenses. Fred Parker, Bobby Lee's father, ¹ was aware of the understanding and had no complaint as to the manner in which Pfeffer, Jr. worked the farm nor was there any claim that obligations for taxes, insurance and mortgage installments were not paid as they became due. The arrangement with Pfeffer, Jr. terminated in 1975. Pine thereafter let the farm to other tenants, collected rents and paid expenses, but limitation of this appeal to the judgment attributable to the first claim period ending June 4, 1975 eliminates the necessity for consideration of events after that date.

Respondent Lockard is Pine's daughter and is herself a lawyer. It was her testimony that during the relevant time period, she was either unaware of her designation as trustee or relied on her father's advice that she had no duties to perform. At no time did Lockard take any action as trustee and resigned the position November 11, 1975.

The gist of appellant's claim was that the trust property had the capacity to produce and did produce income between March 1973 and June 1975; that Pine and Lockard, because of their failure to execute the trust, have not accounted for the income; and that they are therefore liable to appellant for such income as appellant's evidence showed the trust property capable of producing if properly managed. In defense, Pine and Lockard contended that appellant or his representative were aware of and concurred in the arrangement with Pfeffer, Jr. and that all income was applied to defray expenses of the trust property even though such funds were not technically administered by the trustees.

Before each of appellant's points is considered individually, some statement of general rules applicable to trustees and pertinent to this case as a whole will serve to place the particular points in their appropriate perspective.

A testamentary trustee is bound to administer the trust in the same manner as the testator would have done, the trustee being the alter ego of the testator. Bakewell v. Mercantile Trust Co., 319 S.W.2d 600, 605 (Mo.banc 1958). The duty of the trustee is to exercise the care, skill and diligence a person of ordinary prudence would exercise. Jarvis v. Boatmen's National Bank of St. Louis, 478 S.W.2d 266, 273 (Mo.1972); Fairleigh v. Fidelity National Bank & Trust Co., 335 Mo. 360, 73 S.W.2d 248 (1934). A trustee is required to reduce to possession and conserve the trust assets and to protect the trust estate from loss and injury. Baker v. Dale, 123 F.Supp. 364, 368 (W.D.Mo.1954); Covey v. Pierce, 229 Mo.App. 424, 82 S.W.2d 592 (1935); Morrison v. Asher, 361 S.W.2d 844, 850 (Mo.App.1962).

The presumption is that the trustee has acted in good faith and the burden of proof is on one questioning his action and seeking to establish a breach of trust. Jarvis v. Boatmen's National Bank of St. Louis, supra; First National Bank of Kansas City v. Hyde, 363 S.W.2d 647, 655 (Mo.1962). The claim against a trustee for breach of trust is in the nature of a general demand for damages and depends on a showing by the cestui que trust that he has been deprived of a benefit or sustained an injury in consequence of the breach. 90 C.J.S. Trusts § 253 (1955). If the trustee breaches his trust, the beneficiary is entitled to recover (a) loss in value of the trust property attributable to the breach, (b) profit inuring to the trustee from the breach, or (c) loss of profit to the trust which would otherwise have accrued but for the breach. Estate of Luyties v. Scudder, 432 S.W.2d 210, 216 (Mo.1968).

I

As to the issue of damages here, appellant contends alternatively that his motion for directed verdict awarding damages should have been sustained, or, failing that, he was entitled to a new trial because the jury verdict for zero damages was presumptively inadequate on the evidence. The argument proceeds on the following theory: Appellant's evidence conclusively showed that the trust property had an income productive value in pasture rent and crop shares; that actual cash income was received in addition by way of crop insurance loss and federal crop subsidy proceeds; that the trustees neither received nor accounted for that income and paid no expenses; therefore, as a matter of law on undisputed evidence, appellant is entitled to judgment against the trustees for the gross income which the trust property produced or should have produced during the period March 22, 1973 to June 4, 1975.

While the factual basis is present in this record to support the foregoing assertions that the trust property was or should have been income producing and that the trustees themselves collected no income and paid no expenses, the assertion of a conclusion that appellant must thereby be entitled to a recovery in damages ignores additional evidence also undisputed and materially affecting the decision.

According to Pine's evidence, which was not controverted by appellant, the trust property was burdened during the years in question with various debts including real estate taxes, both current and delinquent; federal estate taxes and debts of the decedent, the personal estate being insufficient to pay these obligations; installments on a mortgage loan debt secured by a deed of trust on both farms and current expenses for farming operations. At the conclusion of the period in question, all of the...