Roberts v. Anderson, Civ. A. No. 88-2167.

• Decision Date: 29 January 1990
• Docket Number: Civ. A. No. 88-2167.
• Citation: 733 F. Supp. 1040
• Parties: Katharine Ferguson ROBERTS v. Phoebe Ferguson ANDERSON, et al.
• Court: U.S. District Court — Eastern District of Louisiana

733 F. Supp. 1040

Katharine Ferguson ROBERTS v. Phoebe Ferguson ANDERSON, et al.

Civ. A. No. 88-2167.

United States District Court, E.D. Louisiana.

January 29, 1990.

Steeg & O'Connor, Robert M. Steeg, Stephen D. Marx, New Orleans, La., for plaintiff.

Eneid A. Francis, Asst. U.S. Atty., New Orleans, La., for I.R.S. of the U.S.

Guste, Barnett & Shushan, Barry E. Pike, New Orleans, La., for Dr. Ted Reveley.

Hebert, Mouledoux & Bland, Georges M. Legrand, Alan G. Brackett, Trial Atty., New Orleans, La., for Stotler & Co.

Healy & Kohnke, George W. Healy, IV, New Orleans, La., for Thomas A. Ogg, III.

Jones, Walker, Waechter, Poitevent, Carrere & Denegre, Andrew A. Braun, New Orleans, La., for George Denegre and Richard B. Fox.

Wegmann and Wegmann, Edward F. Wegmann, Cynthia Anne Wegmann, New Orleans, La., for Commanders Palace.

R. Douglas Wynne, New Orleans, La., for Galatoire's Restaurant, Inc.

Mark H. Kaplinsky, New Orleans, La., for Thompson-McKinnon Securities, Inc.

Sessions, Fishman, Boisfontaine, Nathan, Winn, Butler & Barkley, Camilo K. Salas, III, Trial Atty., New Orleans, La., for William Loring Ferguson, III.

ORDER AND REASONS

PATRICK E. CARR, District Judge.

This matter is before the Court on (1) the motion of Stotler and Company to withdraw funds from the registry of the Court; (2) the motion of the trustees of the William Loring Ferguson III trust to withdraw funds from the registry of the Court; and (3) the motion of Ogg for creditors to be paid in order of rank.

For the following reasons, the Court now determines that half of the remaining proceeds in the registry should be disbursed to the trustees and the remaining half should be disbursed to Loring Ferguson's creditors in the order of rank as determined by the dates they recorded their judicial mortgages in the parish mortgage records office and that the related state court case in which Loring, his trustees, and one of his creditors were parties does not bar this Court from recognizing that creditor's claim or any other creditor's claim to the instant registry proceeds.

I.

In June 1966, William Loring Ferguson, Jr. executed his last will and testament, wherein he left all his property to separate trusts set up for each of his three children, Katharine, Loring III, and Phoebe. The will contains in pertinent part:

Each beneficiary shall receive one-half of the corpus and accumulated income of the trust when he shall reach the age of twenty-five (25) years and shall receive the remaining one-half when he shall reach the age of thirty-five (35) years, at which time his trust shall terminate.

....

The interest of the beneficiaries in the trusts shall not be subject to voluntary or involuntary alienation by such beneficiaries.

The will named Mr. Ferguson's mother and two others as cotrustees for each of the three trusts.

In 1970, Mr. Ferguson died. Among the property in his estate was his naked ownership, subject to his surviving mother's usufruct, in a family home in New Orleans. On April 8, 1970, pursuant to a judgment of possession recognizing the will, an undivided one-third interest in this naked ownership of the home passed to the trustees for each of the three trusts. Apparently, neither this judgment of possession nor the will was ever recorded in the Orleans Parish conveyance records.

On November 5, 1980, Loring reached the age of 25 and "requested that one-half of the trust's principal be distributed to him in accordance with this partial termination" under the terms of the trust. In accordance with his request and pursuant to a sworn receipt and release signed by Loring, the trustees then distributed to Loring certain shares of stock and a certain amount of cash; the trustees did not, however, expressly transfer to Loring in writing any interest in the home.

In 1984, the children's grandmother died and thus her usufruct over the home terminated. As each of the three children had attained the age of 25 by this time, each was entitled to receive from the two remaining trustees for his/her trust one-half of the trust's undivided one-third full interest in the home. According to the trustees:

One-half of each trust's one-third interest in the House was not distributed to the three children at that time because the Trustees and each of the beneficiaries desired to list the House for sale, and because they believed it would be easier to sell the House as a whole rather than attempting to arrange the sale among a number of different owners. Once the House was sold, the Trustees and the beneficiaries agreed that one-third of the proceeds from the sale would be deposited in each of the trusts, and that each trust would then distribute one-half of its respective interest in the sale proceeds (one-sixth of the total sale proceeds) to each beneficiary. Thereafter, each trust would distribute the remaining one-sixth interest in the sale proceeds to the trust's beneficiary when the beneficiary attained the age of 35, in accordance with the terms of the Will.

The record does not reveal whether any written documents were executed by either the trustees or any of the three children to memorialize this apparent understanding. For whatever reason, the home was not sold.

By March 1988, Loring's sister Katharine reached the age of 35 and thus her trust terminated in its entirety. By a written "Conveyance of Property," Katharine and the trustees "acknowledged and confirmed" the termination of her trust and the trustees conveyed to Katharine her trust's now undivided one-third full ownership interest in the home; this document was then recorded in the Orleans Parish conveyance records.

In April 1988, Katharine filed a petition in the Civil District Court for the Parish of Orleans for a definitive judicial partition of the home by licitation pursuant to Louisiana Civil Code articles 1289 et seq. Named as defendants were the trustees for the remaining two trusts, her brother and sister individually, and seven persons who "appear to be creditors claiming liens or judicial mortgages against the interest, if any, of defendant William Loring Ferguson III in the" home and "whose claims have been made known on the public records of Orleans Parish." These seven persons are specifically the United States, on behalf of the Internal Revenue Service; Commander's Palace, Inc.; Galatoire's Restaurant, Inc.; Thomas A. Ogg III; Stotler and Company; Thomson-McKinnon Securities, Inc.; and Dr. Ted Reveley.

The United States removed the action to this Court pursuant to 28 U.S.C. §§ 1441(a), 1444, and 2410(a)(3). On October 14, 1988, the Court granted unopposed summary judgment for a partition by licitation and ordered that the U.S. Marshal seize and sell the property and then deposit the proceeds into the registry for subsequent distribution by the Court. On March 30, 1989, the Marshal sold the home by auction for $185,000. On May 2, 1989, after deducting his costs, the Marshal deposited $182,210 into the registry. By separate unopposed motions, the Court has permitted Katharine on the one hand and the trustees for the benefit of Phoebe on the other to withdraw their respective undisputed one-third interest in these proceeds from the registry (viz., $60,736.67, plus accrued interest thereon).

Remaining in the registry is the final one-third interest for the benefit of Loring (viz., $60,736.66, plus accrued interest). Loring's trustees on the one hand and his creditors on the other are making competing claims to these proceeds. The trustees and two of the creditors have now moved the Court to determine the competing parties' respective right to the remaining proceeds and to distribute the proceeds accordingly.

II.

By Minute Entry dated December 6, 1989, the Court ordered each of the creditors to submit various documents and sworn statements and advised the parties that the Court would treat failure to comply timely "as a voluntary abandonment by that person of his/its claim to any of the proceeds remaining in the registry."¹

The record reveals the following about each creditor's claims against Loring.

1. The United States: The IRS filed notices of federal tax liens for unpaid taxes for the years 1982-1985. According to the government's answer to certain interrogatories propounded by another creditor, these tax liabilities have now been paid in full. Further, the government did not respond to the Court's December Minute Entry. Thus, the Court deems the United States to be making no remaining claim to any of the remaining proceeds.

2. Galatoire's Restaurant, Inc.: By an unsworn answer filed on September 25, 1989 in response to similar interrogatories, Galatoire's states that it obtained judgment in the First City Court of the City of New Orleans for the principal amount of $279.85 and that it is owed a total sum of $508.85 ($279.85 for principal, $100 for attorney's fees, $91 for court costs, and $38 for interest). It further appears that this judgment was recorded in the Orleans Parish Mortgage Records on January 23, 1984. Yet no formal appearance has been made by Galatoire's, nor is there a copy of its judgment in the record, nor does the record indicate whether any or all of this judgment has been satisfied, nor has Galatoire's responded to the Court's December Minute Entry. Thus, the Court likewise deems Galatoire's to be making no remaining claim to any of the remaining proceeds.

3. Commander's Palace, Inc.: On January 18, 1984, Commander's obtained judgment in the First City Court of the City of New Orleans:

in the full sum of ... $1,080.20, plus interest at the legal rate from the date of judicial demand until paid, reasonable attorney's fees in the amount of ONE-THIRD (33 1/3 %), and all costs of these proceedings.

This judgment was recorded in the Orleans Parish Mortgage Records on May 30, 1985. By affidavit, Commander's states that no portion of its judgment has been satisfied. Commander's computes the total amount due it as of December 31,...