Reed v. Robilio
| Decision Date | 21 December 1965 |
| Docket Number | Civ. A. No. 4404. |
| Citation | 248 F. Supp. 602 |
| Parties | Martha Cuneo REED, Plaintiff, v. Albert F. ROBILIO, Mrs. Jennie G. Robilio, John S. Robilio, Rose Ann Robilio, Florence Rita Robilio Radogna, Union Planters National Bank of Memphis, Tennessee, and Roane Waring, Jr., Defendants. |
| Court | U.S. District Court — Western District of Tennessee |
Robert Fiske, Jr., of Davis, Polk, Wardwell, Sunderland & Kiendl, Leo Kissam, of Kissam & Halpin, New York City, and Walter Chandler, of Chandler, Manire & Chandler, Memphis, Tenn., for plaintiff.
Jack Petree of Evans, Petree, Cobb & Edwards, Memphis, Tenn., for defendants Robilios & Radogna.
Marion S. Boyd, of Canada, Russell & Turner, Memphis, Tenn., for defendant-executor, Union Planters Nat. Bank.
W. B. Rosenfield, of Rosenfield, Borod, Fones & Bogatin, Memphis, Tenn., for defendant-executor, Roane Waring, Jr. WILLIAM E. MILLER, District Judge.
This is an action brought by the daughter of a deceased partner on behalf of the executor of her father's estate to impose a constructive trust upon the purchase of her father's interest in the partnership, and to have that interest reconveyed to the executor with an accounting for profits. The purchasers were the surviving partner, and a sister and two brothers of the surviving partner. The action is based on an alleged breach of the fiduciary duty which a surviving partner owes to the estate of the deceased partner to disclose facts pertinent to the valuation of the deceased partner's interest.
For a second cause of action, the plaintiff sues on behalf of the executor of her mother's estate to cancel and rescind a subsequent partnership agreement entered into between her mother and the purchasers referred to above. This cause of action is based upon allegations that (1) the agreement unfairly restricts the class of persons to whom the mother's interest in the partnership could be transferred; (2) the agreement gives the defendant purchasers, upon attempted transfer outside the restricted class, the option to purchase her mother's interest at the allegedly inadequate price of book value plus 10%, with no value ascribed to good will; and (3) the agreement was executed at a time when her mother was critically ill and unable to understand the nature and significance of her acts.
The parties are the plaintiff, Martha Cuneo Reed (the beneficiary of a trust established by her father's last will and testament); the defendant purchasers Albert F. Robilio, John S. Robilio, Jr., Rose Ann Robilio, and Florence Rita Robilio Radogna; the defendant Jennie G. Robilio (who was not a purchaser, but who endorsed the promissory notes given by three of the purchasers, and who entered into the subsequent partnership agreement); the defendant Union Planters National Bank of Memphis, Tennessee, (the executor of the estate of the deceased partner, Thomas A. Cuneo); and the defendant Roane Waring, Jr., (the executor of the estate of plaintiff's mother, Zadie S. Cuneo).
Jurisdiction is based on alleged diversity of citizenship. Before ruling on the Court's jurisdiction, it may be well to summarize the history of the action.
In 1910, John S. Robilio, Sr. established a single proprietorship in Memphis, Tennessee. In 1920, he became associated with Thomas A. Cuneo to form the partnership of Robilio & Cuneo. At its inception, and continuing up until 1929, the firm operated as a wholesale and retail seller of Italian foods, including macaroni products, cheeses, olive oils and other imported and domestic grocery items. Upon the death of John S. Robilio, Sr. in 1929, his wife Jennie G. Robilio succeeded to his 50% interest in the firm. In that year, the firm expanded its business by beginning to manufacture and sell its own products under the trade name "Ronco." Thomas A. Cuneo was active in military service from 1942 through July, 1945. During that time, Albert F. Robilio managed the business with full responsibility for every aspect of the firm's operations.
In 1943, Jennie G. Robilio conveyed a 12.50% interest in the partnership to Albert F. Robilio, and Thomas A. Cuneo conveyed a 19.34% interest to his wife Zadie S. Cuneo. A partnership agreement was then executed fixing the interests of the four partners and providing that the partnership should terminate upon the death of either of the partners. Upon such termination paragraph X of the agreement directed that all debts of the firm be paid and the remaining assets be divided "in specie" in proportion to the partners' respective interests. The ownership of the partnership remained in the names and percentages fixed in the 1943 agreement until the death of Thomas A. Cuneo on September 30, 1959.
By that time, the principal business of the firm had become the sale of its own manufactured products under the "Ronco" trade name. Thomas A. Cuneo left a will which created a marital trust in favor of his wife, Zadie S. Cuneo, and a residuary trust in favor of his daughter, Martha Cuneo Reed. With respect to the 30.66% interest in the partnership held by Mr. Cuneo, the will contained this provision:
The will was admitted to probate on October 4, 1959 and the Union Planters National Bank qualified as executor under the will. Postell Hebert, the Trust Officer of the bank, undertook to act for the executor.
Prior to November 4, 1959, Mrs. Cuneo decided not to purchase her deceased husband's 30.66% interest. She also decided to retain her own 19.34% interest. At approximately this same time, negotiations began between Albert Robilio and Hebert looking to the sale of the 30.66% Cuneo interest. At the outset of the negotiations, Hebert asked Albert Robilio to make an offer for the 30.66% interest. Robilio declined to do so, and requested the executor to make the first offer. On November 24, 1959, Hebert offered to sell the 30.66% interest to the Robilio family for a price of $350,000, to be paid $150,000 in cash and $200,000 in eight annual installments of $25,000. This offer was neither accepted nor rejected at that time.
On the 4th or the 6th of January, 1960, Albert Robilio made a counter-offer of $317,000 to be paid $149,000 in cash and the balance in twelve annual installments of $14,000. The sale on these terms was to be made effective as of October 1, 1959, with the purchasers receiving the profits on the interest accrued since that date, and paying 6% interest on the unpaid balance from that date. The purchasers were also given the right to accelerate. The 30.66% interest was to be allocated individually to members of the Robilio family as follows:
Albert F. Robilio 10.68%
John S. Robilio, Jr. 6.66%
Rose Ann Robilio 6.66%
Florence Rita Robilio
Radogna 6.66%
Each of the purchasers was to make a down payment and execute a promissory note for the balance. The notes of the purchasers other than Albert F. Robilio were to be endorsed by their mother, Jennie G. Robilio. Hebert accepted this offer, conditioned upon the following approvals:
Being satisfied that these conditions had been fulfilled, the executor, on either March 3rd or 7th, 1960, executed a bill of sale to the Robilios reciting the terms set forth above.
Following the execution of the bill of sale, the Robilios entered into negotiations with Mrs. Cuneo for a new partnership agreement. Throughout these negotiations, Mrs. Cuneo was represented by her attorney, Roane Waring, Jr. On September 9, 1960, the partnership agreement was signed. On November 1, 1960, Mrs. Cuneo died. Her will was admitted to probate on November 4, 1960, and her attorney, Roane Waring, Jr., and the plaintiff, Mrs. Reed, were qualified as co-executors. By her will, she bequeathed her 19.34% interest in the firm to her daughter, Mrs. Reed. She also exercised a power of appointment given to her by the will of her deceased husband so that her interest in the remaining corpus of the marital trust was transferred to Mrs. Reed free of trust.
Following Mrs. Cuneo's death, the plaintiff began an investigation into the above matters, and made demand on the executors to bring suit on behalf of their respective estates against the defendant purchasers to compel a reconveyance of the 30.66% interest, and to reform or set aside the subsequent partnership agreement. These demands were refused, and on December 13, 1961, plaintiff filed suit in the Federal District Court for the Western District of Tennessee.
The plaintiff is a citizen of New York. The Robilio defendants are citizens of Tennessee. The Union Planters National Bank, the executor of the estate of Mr. Cuneo, is chartered by the United States Government. Since its principal place of business is in Memphis, it must be deemed to be a citizen of Tennessee. See 1 Moore's Federal Practice, § 0.77 2. — 4. This fact is not challenged by the plaintiff. The bank is named as a nominal defendant because of its refusal to institute suit on behalf of Mr. Cuneo's estate. Roane Waring, Jr., the executor of Mr. Cuneo's estate, is a citizen of Tennessee. He is named as a nominal defendant because he has declined to bring suit on behalf of her estate. No relief is sought from either executor.
After studying the record in this case, the Court concludes that the...
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Southland Royalty Co. v. US
...(1970), requires us to apply the origin-of-the-claim test to the expenses arising out of the first cause of action in Reed v. Robilio 248 F.Supp. 602 (W.D.Tenn.1965). This, in turn, requires a decision for the respondent. In that first cause of action the petitioners were attempting to obta......
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Reed v. Robilio, Civ. A. No. 4404.
...December 21, 1965, the action was dismissed for want of diversity between the executors and the individual defendants. Reed v. Robilio, 248 F.Supp. 602 (W.D. Tenn. 1965). On appeal, the United States Court of Appeals for the Sixth Circuit reversed and remanded the case for a decision on the......
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