Prince v. Sheffield
| Decision Date | 17 June 1969 |
| Citation | 158 Conn. 286,259 A.2d 621 |
| Court | Connecticut Supreme Court |
| Parties | S. Victor PRINCE, Guardian ad litem, et al. v. Ina B. SHEFFIELD et al., Executors (ESTATE of Lucius T. SHEFFIELD). |
David Hartfield, Jr., New York City, of the New York bar, with whom was Robert W. Marrion, New London, for appellants (plaintiffs).
Francis F. McGuire, New London, for appellees (defendants).
Before KING, C.J., and ALCORN, HOUSE, THIM and RYAN, JJ.
Lucius Tracy Sheffield died on April 28, 1966, a resident of New London, leaving a will dated May 31, 1961, which was admitted to probate on May 23, 1966. Under the will, as amended by a codicil, the testator's widow, Ina B. Sheffield, and Leonard B. Johnson were named executors and were also named trustees under a testamentary trust comprising the residue of the estate. Johnson is a director of each of the two Sheffield companies, hereinafter more particularly described, and is a partner in an accounting firm which is auditor, accountant and tax consultant of each company.
Under the will, Mrs. Sheffield was given a legacy of $50,000 and the income, for life, of the trust except for an allowance, not exceeding a total of $5000 apiece, for the education of four of the testator's grandchirdren. Upon the death of Mrs. Sheffield, the corpus of the trust was given to five of the testator's grandchildren, 3/23 to Ina Rebecca Sheffield and 5/23 to each of the other four, Thomas C. Sheffield, Jr., Tracy Kyle Sheffield, Stephen Frederick Sheffield, and Chaney Morgan Sheffield. It does not appear that any child of the decedent survived him.
In article 7 of the will, the testator authorized the executors 'to sell, mortgage, lease and convey any real and personal property that may at any time form a part of my estate upon such terms and conditions as to them shall seem advisable'. Broad powers of sale and investment were also given the trustees, as such, in subsections (a) and (d) of article 4 of the will.
The appraised value of the estate was somewhat over $1,600,000. Of this, nearly $350,000 was in the form of generally marketable securities. In addition, the estate owned one-half of the entire capital stock of each of two family corporations, The Sheffield Tube Corporation and The Sheffield Company. The stock in these two corporations, together, was appraised at a total value of $1,300,000.
Claims allowed against the estate amounted to over $118,000, the Connecticut succession tax amounts to about $125,000, and the federal estate tax amounts to over $371,000. Both taxes became due and payable nearly two years ago. The administration expenses amount to about $130,000. Thus, the total obligations of the estate, exclusive of any interest accrued thereon, amount to about $750,000.
The testator owned 1250 shares (one-half) of the capital stock of The Sheffield Tube Corporation and fifty shares (one-half) of the capital stock of The Sheffield Company. The decedent's brother, Washington Kyle Sheffield, owns the other half of the stock of The Sheffield Tube Corporation, and his son, Peter Kyle Sheffield, owns the other half of the stock of The Sheffield Company.
The Sheffield Tube Corporation principally manufactures metal container tubes for products such as toothpaste and cosmetics, while The Sheffield Company is primarily a sales organization for The Sheffield Tube Corporation. As far as facilities and personnel are concerned, both companies are integrated with each other. Included in the assets of The Sheffield Tube Corporation are shares of generally marketable stock of various corporations.
It is obvious that the executors were faced not only with a frozen estate grossly deficient in liquid assets but with the necessity for disposition of at least some of the stock of the Sheffield companies in order to raise the necessary funds for the payment of the debts, charges and taxes. In fact, the estate receives no income from the shares of stock it holds in either of the Sheffield companies. No provision of the will indicated an awareness on the part of the testator that this critical situation was practically certain to arise. The obvious difficulty in the way of selling a one-half stock ownership in even a successful family business corporation, especially when the entire other half is owned by what amounts to one individual, needs no comment. Any purchaser except the owner of the other one-half interest, or one intimately allied with him, would be purchasing litigation in a contest for ultimate control. It is in this setting that the action of the Probate Court in approving the proposed sale must be judged.
One of the plaintiffs is S. Victor Prince, as guardian ad litem of Stephen Frederick Sheffield and Chaney Morgan Sheffield, both of whom were minors at the date of the institution of this action and each of whom, as already pointed out, was one of the five remainder beneficiaries of the trust. Stephen Frederick Sheffield reached his majority, and was added as an individual party plaintiff, on April 6, 1968. The other three remainder befeficiaries apparently did not join the two plaintiffs in this appeal. See 1 Locke & Kohn, Conn. Probate Practice § 206.
The defendant executors, after about a year of negotiations, finally entered into agreements, on August 18, 1967, between the estate and each of the Sheffield companies, providing for the sale of all of the estate's stock in both corporations for an aggregate price of $1,300,000, part of the purchase price to be payable over a period of fifteen years. Each agreement contained a provision which would permit the estate to withdraw from it if an appeal from probate, such as that of the plaintiffs, was taken.
On August 21, 1967, the executors filed the agreements sale in the Probate Court with an application for approval under the provisions of General Statutes § 45-236. On August 22, 1967, copies of the agreements of sale were sent to the plaintiffs' counsel. On August 24, pursuant to the court's order, notice of the time and place of hearing on the application was given to the plaintiffs and all other remaindermen. The probate hearing was continued from time to time for about two months until November 3, 1967, when all parties appeared in court. After due hearing, the Probate Court ordered that the executors be authorized and empowered to sell the 1250 shares of stock in The Sheffield Tube Corporation and the fifty shares of stock in The Sheffield Company in accordance with the terms of the agreements of sale as on file in the Probate Court. From this order the plaintiffs appealed to the Superior Court, and the matter was referred to a state referee, who, pursuant to § 6 of article fifth of the Connecticut constitution and §§ 52-434 and 52-434a of the General Statutes (Rev. to 1968), is given the same powers as those possessed by the referring (superior) court and who consequently will hereinafter be referred to as the court.
From a decision affirming the decree of the Probate Court approving the sale and dismissing the plaintiffs' appeal therefrom, the plaintiffs have appealed to this court.
The main claim of the plaintiffs is that the court applied an erroneous rule of law in deciding the appeal from probate. We find this claim dispositive of this appeal in the plaintiffs' favor. The appeal from probate was not, of course, an appeal from the allowance of a probate account, as such, as in cases such as Reiley v. Healey, 122 Conn. 64, 79, 187 A. 661, Id., 124 Conn. 216, 221, 198 A. 570, and French v. Oberreuter, 157 Conn. 181, 193, 251 A.2d 67. Rather, the appeal was taken from an order of the Probate Court approving, under the provisions of General Statutes § 45-236, the sale of the estate's Sheffield stock to the Sheffield companies in accordance with the agreements of sale. Section 45-236 authorizes the provate court to approve a sale of stock or other personal property if the sale is found to be 'for the interest of such estate'. Since the sale in question was in part on credit, it is doubtful, at least apart from the power of sale in the will which does not appear to have been relied upon by the court below, that the sale could have been safely made without approval of the probate court. See cases such as Foster v. Thomas, 21 Conn. 285 290. Our case law allows the sale of personal property for cash without a specific order, subject to any applicable provisions of General Statutes §§ 45-175 and 45-180. Of course any sale would be subject to general fiduciary obligations of fair dealing. Williams v. Taylor, 81 Conn. 90, 95, 70 A. 643; Connor v. Hart, 157 Conn. 265, 274, 253 A.2d 9. But § 45-236 permits the approval of a sale of personal property even though, as here, it involves credit. The wisdom of utilizing the statute is apparent in this particular case in which the present plaintiffs, constituting but two of the five remainder beneficiaries of the trust, have raised numerous objections to the terms of the proposed sale, although significantly they seem not yet to have come forward with any customer for the estate's stock or with any workable alternative plan other than to suggest that the defendants threaten the Sheffield companies with a receivership in the hope of exacting better terms of sale or that they actually institute an action for a receivership and dissolution and a resulting court sale of each of the Sheffield companies.
While the wording of § 45-238 authorizing approval by the probate court of the sale of real estate differs widely from that of § 45-236 involving approval of the sale of personal property, we find no significant difference so far as the power and finality of the decision of the probate court is concerned, or the scope and effect of an appeal therefrom. See Oles v. Furlong, 134 Conn. 334, 339, 57 A.2d 405. In Crane v. Manchester, 143 Conn. 716, 719, 126 A.2d 567, it was expressly held that an order for the sale of real estate under § 45-238 lay...
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