Rippey v. Denver United States National Bank

Decision Date16 October 1967
Docket NumberCiv. A. No. 66-C-359.
Citation273 F. Supp. 718
PartiesBruce R. RIPPEY and A. Gordon Rippey, Plaintiffs, v. DENVER UNITED STATES NATIONAL BANK, a national banking association, Helen Bonfils Davis, and the Denver Post, Inc., a Colorado corporation, Defendants.
CourtU.S. District Court — District of Colorado




Dawson, Nagel, Sherman & Howard, by Samuel S. Sherman, Jr., Raymond J. Turner, Winner, Berge, Martin & Camfield, by Fred M. Winner, Denver, Colo., for plaintiffs.

Akolt, Shepherd & Dick, by J. H. Shepherd, Lawrence W. DeMuth, Jr., Davis, Graham & Stubbs, by Richard M. Davis, Robert H. Harry, Thomas S. Nichols, Richard P. Holme, Denver, Colo., for defendant Denver United States Natl. Bank.

Holland & Hart, by J. G. Holland, William C. McClearn, Edwin S. Kahn, Denver, Colo., for defendants Helen Bonfils Davis and Denver Post, Inc.


WILLIAM E. DOYLE, District Judge.

This case was tried to the court without a jury commencing on July 24, 1967 and concluding on August 8, 1967. Thereafter briefs were submitted; the final brief having been filed on September 25, 1967, and the cause now stands submitted. The evidence herein is voluminous and although it will not be described in minute detail much of it will be considered and treated so as to furnish a basis for decision. The facts which are herein narrated are to be regarded as findings unless otherwise indicated. Separate formal findings as to the more important facts are appended hereto.

Description of the Contentions and Issues

The action is brought by two of several beneficiaries of the Agnes Reid Tammen Trust which for convenience will be referred to as the "Tammen Trust." They attack the sale by the trustee, defendant Denver United States National Bank of 17,705 shares of stock of The Denver Post, Inc. to the defendant Helen G. Bonfils for the sum of $300.00 per share. They assert that this sale was for various reasons in breach of trust—that had the market been tested in accordance with orthodox trust practice the trust would have received $500.00 per share; that S. I. Newhouse was a potential purchaser known to the Bank as such and that the Bank's failure to explore this source of purchase together with other attendant circumstances subjects it to surcharge for the amount which could have been realized had it followed out the demands of good trustee practice. A further count of the complaint alleges the existence of an unlawful conspiracy between the Bank, The Denver Post, Inc. and Miss Bonfils to sell the stock to Miss Bonfils to the exclusion of S. I. Newhouse in breach of the Bank's fiduciary duty.

Plaintiffs alternatively seek rescission of the entire transaction and the resale of the stock at public auction. It is alleged that Miss Bonfils purchased with knowledge that the stock was sold in breach of trust and that consequently she is not a bona fide purchaser; that she is subject to a rescission decree.

The Bank's position is a vehement denial that it acted pursuant to an illegal plan or scheme or in breach of trust. It denies that it committed any breach of trust; it maintains that it exercised the utmost good faith in all of its dealings and that the result was favorable— that the price realized was far in excess of any price ever paid at any previous sale; that it exceeded actual value and was highly beneficial to the trust.

Helen Bonfils and The Denver Post, Inc. deny any scheme or device to injure or defraud the plaintiffs—Miss Bonfils alleges that as a daughter of the co-founder of The Post she had a valid interest in purchasing the stock and in preventing any other adverse interest from coming into it. The claim is that Miss Bonfils paid a fair price for the stock and purchased it following hard bargaining. Her further contention is that she was not a party to any breach of trust—that she was a good faith purchaser entitled to seek a favorable bargain and is not subject to a decree of rescission.

Although the stock which has given rise to this case is a minority interest ownership of which could not vest control, nevertheless, it is the competition for control of The Denver Post which has furnished the incentive for purchase by Miss Bonfils and the Post management group so as to prevent S. I. Newhouse, the owner of a publications chain, from gaining this block as a stepping stone toward control. Thus, a struggle for control is an underlying factor present and apparent in the case.

Summary of the Events which Preceded the Filing of this Action

The stock of The Denver Post, Inc. has always been closely held. Originally it was all owned equally by the founders of The Denver Post newspaper, H. H. Tammen and F. G. Bonfils. When Tammen died in 1924 he left one-half of his estate including a large block of Denver Post stock to his wife and the remaining one-half to The Denver National Bank in trust for the Childrens Hospital. The H. H. Tammen Trust held the Post shares (about 20%) until 1960 at which time it sold them to The Denver Post, Inc. for $260.00 per share.

Agnes Reid Tammen died in 1942. Her will created a testamentary trust naming E. Ray Campbell, a prominent lawyer, and Sadie Schultz as trustees and the defendant Bank as successor trustee. Under the terms of her will the income was to be paid to certain life beneficiaries and the remainder to the descendants of Helen Crabbs Rippey. Mrs. Rippey is the only surviving life beneficiary. This trust was the holder of the stock (some 17,705 shares or 22%) which is the subject of the present litigation.

The will contains extremely broad powers of sale of the specific stock here in question together with all other assets held in trust. The trustees are authorized to retain and sell at their own discretion and without consulting the beneficiaries or "without regard to the opinion or desire or judgment of the beneficiaries." It further empowers the trustees:

"1. To vote said stock and exercise all rights pertaining thereto, with full control and dominion over the same, and to enter into any lawful voting trust or agreement or agreements with other stockholders of said company or companies for the holding or sale of all or any part of said stock of said company or companies, which in the sole judgment of the said Trustee will promote the best interest of the said company or companies and the beneficiaries in this Article named, and procure the best price for said stock in the event of the sale thereof.
"2. To sell at private sale, without advertisement or notice to any one, and without the aid or necessity of any court order, and without any obligation on the part of the purchaser or purchasers to see to the disposition of the proceeds of the sale, all or any part of said stock, at such price and upon such terms as to credit or otherwise as the Trustee shall determine."

A further provision (Article XV) expounds additionally the authority of the trustees to retain or sell at private sale without notice and without consent of any beneficiary and without any court order or approval and further provides that the trustees "shall be free from liability for depreciation or loss through errors of judgment; * * *" It then goes on to provide in the same article but in a new sub-paragraph an exculpatory clause as follows:

"My Executors and Trustees shall only be liable hereunder each for his own fraudulent acts. They shall be permitted to employ and compensate, out of the principal or income of the estate or trust estate funds, agents, bookkeepers, brokers, attorneys and assistants as deemed necessary by them for the proper administration of the estate or trust estates, as the case may be, and without liability for neglect, omission, misconduct or default of any such person so employed with reasonable care."

During the tenure of E. Ray Campbell there was no threat of sale of the Agnes Reid Tammen stock.1 Mr. Campbell was for many years president and general counsel of The Denver Post, Inc. and he took the position that the stock was not for sale at any price—this despite the fact that the beneficiaries, the Rippeys, were continuously urging sale because the dividends were low in relation to the value as indicated by potential sale price. The Agnes Reid Tammen trust instrument which was drafted by E. Ray Campbell provided that upon the death or resignation of the trustees, the Denver National Bank, predecessor of the defendant Bank, would become the successor trustee.

The Rippeys, although for many years dissatisfied with the earnings of The Denver Post, Inc., did not take legal action so long as E. Ray Campbell continued as trustee. However, he resigned as trustee and as an officer of The Denver Post, Inc. on May 19, 1966, and this occurrence precipitated the flurry of events which culminated in the filing of this action.

About this time representatives of the Defendant Bank met with the Post management group and were persuaded to accept the trust and simultaneously were told of the desire of Helen Bonfils or of the Post to purchase the stock held by the Trust and were told also of her not wishing to become embroiled in a bidding competition with S. I. Newhouse in order to obtain it.

On May 25, 1966, the Bank became the successor trustee. It decided at the outset that the stock had to be sold and also decided to sell to Miss Bonfils exclusively. It then proceeded to negotiate a sale to Helen Bonfils and finally concluded it on June 22, 1966. There were intense negotiations as to price prior to reaching an agreement to sell (on or about June 20, 1966) for $300.00 per share. The Bank made no effort to sell or to offer the stock to Newhouse. Indeed on June 7, 1966, it entered into a minority shareholders' agreement with Miss Bonfils and the F. G. Bonfils Trust which precluded any such effort for a period of one year.2 On learning of this Newhouse sent a telegram to the Bank in which he offered to...

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