Ryan v. Spiegelhalter

• Citation: 64 S.W.3d 302
• Decision Date: 08 January 2002
• Docket Number: No. SC 83805.,SC 83805.
• Parties: Beverly Sue RYAN, P.A., Conservator for the Estate of Ruth Spiegelhalter, Respondent, v. William SPIEGELHALTER, et al., Respondents, and Gary and Teresa Gabel, Appellants.
• Court: United States State Supreme Court of Missouri

64 S.W.3d 302

Beverly Sue RYAN, P.A., Conservator for the Estate of Ruth Spiegelhalter, Respondent, v. William SPIEGELHALTER, et al., Respondents, and Gary and Teresa Gabel, Appellants.

No. SC 83805.

Supreme Court of Missouri, En Banc.

January 8, 2002.

Joseph Y. DeCuyper, Jr., Joseph Y. DeCuyper, Sr., Kansas City, for Appellants.

Steven M. Petry, Kansas City, Teresa M. Terry, Liberty, for Respondents.

William Spiegelhalter, Satellite Beach, FL, pro se.

John Spiegelhalter, Overland Park, KS, pro se.

Mary A. Wilson, Coronado, CA, pro se.

Albert Spiegelhalter, Kansas City, pro se.

Albert T. Spiegelhalter, Sr., Olathe, KS, pro se.

JOHN C. HOLSTEIN, Judge.

Gary and Teresa Gabel, the son-in-law and daughter of Ruth Spiegelhalter, appeal from a judgment in an action to discover assets, section 473.340,¹ awarding Mrs. Spiegelhalter's guardian and conservator a judgment of $36,382.53. In Count X of her petition,² the conservator alleged that the Gabels sold Mrs. Spiegelhalter a condominium in 1988, failed to deliver a deed to her, and then resold the condominium after Mrs. Spiegelhalter had paid them a substantial sum of money. Following opinion by the court of appeals, this Court granted transfer. Mo. Const. art. V, sec. 10. The judgment is affirmed.

Facts

Gary and Teresa Gabel were engaged in the construction and land development business in Clay County, Missouri. They did business as Gabel Construction Company or, as a joint venture, using the name Kingston Court Development Company. Their partner in the joint venture was Ronald Topham who, along with his wife, held legal title to the property known as Kingston Court Condominiums. It is undisputed that Gary and Teresa Gabel each had the power to enter into contracts to sell property on behalf of the artificial entities.

In 1988, the Gabels sold Mrs. Spiegelhalter a condominium in the Kingston Court project. Mrs. Spiegelhalter paid $49,000 as a down payment and, between January of 1989 and at least March of 1996, routinely made monthly payments of $235 to the Gabels.³ The contract offered into evidence by the conservator at trial, and the one apparently relied on by the trial judge, was a document dated December 3, 1988.⁴ It is styled a "contract for the sale of real estate." It provides for a $49,000 down payment and for either an additional $11,000 cash or financing of the $11,000 at ten percent interest in installments over fifteen years. From this document it is impossible to tell whether the parties intended an outright sale or a contract for deed. At the hearing on his motion to dismiss, Mr. Gabel characterized the arrangement as "owner financing."

In early 1996, some of Mrs. Spiegelhalter's other children discovered that the Gabels had never transferred legal title to the condominium to Mrs. Spiegelhalter. In addition, they found that the Gabels had, since the transaction with Mrs. Spiegelhalter, placed a $35,000 mortgage on the property. In an apparent effort to protect his mother's interest in the property, a son, John Spiegelhalter, purchased the property from the Gabels in April of 1996 for $85,000, which included payment of the $35,000 indebtedness. In order to raise the $35,000 needed to pay the Gabels' debt on the property, John Spiegelhalter took out a second deed of trust on his own home. The remaining $50,000 was unpaid until February 27, 1998, when John Spiegelhalter sold the property for $101,000. The net proceeds from the sale amounted to $91,702.53. John Spiegelhalter paid the Conservator $55,320 and reimbursed himself for the Gabels' $35,000 mortgage he had paid in 1996 and other expenses. Ruth lived in the condominium from December of 1988 until she was unable to care for herself in late 1997.

In December of 1997, a petition for guardianship was filed and an emergency order entered appointing John Spiegelhalter as his mother's guardian ad litem. The sale had yet to formally close when Mrs. Spiegelhalter was declared legally disabled and incapacitated on February 6, 1998. The public administrator of Clay County was appointed her guardian and conservator. The present action was filed December 11, 1998. After trial, the probate division of the circuit court reached the $36,382.53 judgment against the Gabels by subtracting the $55,320 paid to the estate by John Spiegelhalter from the $91,702.53 net sale proceeds. Essentially, the probate division found that the Gabels owe the estate money that was paid on their debt in 1996, because title should have been in the hands of Mrs. Spiegelhalter at the time the debt was paid.

The standard of review is clear. "The decree or judgment of the trial court will be sustained by the appellate court unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law." Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976).

Probate Jurisdiction

The Gabels challenge the jurisdiction of the probate division of the circuit court to hear this action; they claim that the discovery of assets mechanism in this case disguises what is actually a breach of contract or fraud claim that does not belong in the probate division.

The probate division of the circuit court has original and exclusive jurisdiction over a proceeding to discover assets pursuant to section 473.340. Estate of Williams v. Williams, 12 S.W.3d 302, 305 (Mo. banc 2000). In a discovery of assets proceeding, the court's role is to determine whether specific property has been adversely withheld or claimed. Sec. 473.340.1. "The statute is not intended as a device to test general fiduciary conduct, improper administration of the estate, or general disputes [among] heirs." In re Goldenberg's Estate, 601 S.W.2d 637, 639 (Mo.App.1980). "A discovery of assets action, as its name implies, is a search for assets." State ex rel. Knight v. Harman, 961 S.W.2d 951, 954 (Mo.App.1998).

A proceeding under section 473.340 is similar to common law actions of trover or conversion. Harman, 961 S.W.2d at 954; Estate of Goslee, 807 S.W.2d 552, 554 (Mo.App.1991). Modern amendments to the probate code, however, have expanded the jurisdiction of the probate division so that today a discovery of assets proceeding extends to all species of property, including real estate. Estate of Goslee, 807 S.W.2d at 554. Moreover, the probate division in such a proceeding is now afforded inherent power of the circuit court to adjust equities between the parties without rigid adherence to any form and may shape the remedy to meet the demands of justice. Id.; Estate of Cantonia v. Sindel, 684 S.W.2d 592, 595 (Mo. App.1985); sec. 472.030. By virtue of its equitable jurisdiction, the probate division is not limited to questions of legal title, but it may determine both legal and equitable claims of an estate to title in an asset. In this case, the estate's claim is based on Mrs. Spiegelhalter's equitable ownership interest in the condominium.

Here there is clearly an asset at issue that the conservator claims is or should be part of the estate—the condominium. The condominium is "claimed to be an asset of [the] estate or ... should be an asset of [the] estate ...." Sec. 473.340.1. Normally, the court would, upon finding an asset was properly a part of the estate, direct the delivery or transfer of the title or possession of the property "to the person entitled thereto." Sec. 473.340.3. In this case, however, the Gabels have sold the property at issue. "If the party found to have adversely withheld the title .... of said property has transferred or otherwise disposed of the same, the court shall render a money judgment for the value thereof with interest from the date the property... was adversely withheld." Id.

Courts of this state have sometimes reached the conclusion that certain claims ostensibly brought under section 473.340 do not in actuality fall under the probate division's jurisdiction. Generally, this is found to be the case when conservators have failed to allege that any specific assets were wrongfully withheld or transferred. For example, in the companion cases of State ex rel. Abele v. Harman, 962 S.W.2d 945 (Mo.App.1998) and State ex rel. Knight v. Harman, 961 S.W.2d 951 (Mo. App.1998), the conservator claimed that the disabled child's father and a law firm mishandled the child's personal injury action by agreeing to settle claims for less than their value. The claims were breach of fiduciary duty and legal malpractice. The court of appeals held that the claims were not for the discovery of any specific "piece of property," as is required by the statute, but were instead clearly tort claims. State ex rel. Knight, at 954. See also Ryan ex rel. Estate of Reece v. Reece, 31 S.W.3d 82 (Mo.App.2000). Similarly, in Matter of Estate of Woodrum, 859 S.W.2d 259 (Mo.App.1993), the conservator sought an adjudication that a surety company was liable on a bond due to the misfeasance of a prior conservator. Again, it was held that an action to recover on a surety bond is not an action for the recovery of any specific asset; that it is purely a contract action. Id. at 262. In the present case, of course, a specific asset—the condominium—is claimed to rightly be part of the estate. The probate division had jurisdiction.

Substantial Evidence

The Gabels' next claim is that the court's judgment was not supported by substantial and competent evidence, because neither they nor Mrs. Spiegelhalter had an interest in the property when Mrs. Spiegelhalter was adjudicated as incapacitated. The argument seizes on language found in State ex rel. Knight v. Harman, that the purpose of a discovery of assets proceeding is to determine whether "the decedent [or incapacitated person] held title at the time of his death [or incapacitation] to certain described property...." 961 S.W.2d at 954 (emph. added). The argument is flawed for at least two reasons.

First, contrary to the...