Sebree v. Rosen

• Decision Date: 13 September 1965
• Docket Number: No. 50688,No. 1,50688,1
• Citation: 393 S.W.2d 590
• Parties: Frank P. SEBREE, Administrator With Will Annexed of the Estate of Sarah Rosen, Deceased, et al., Respondents, v. Jacob ROSEN, as Executor of the Estate of Pete Rosen, Deceased, Betty Rosen, Sue Hyken, Carl R. Hyken, Mary Bodney, Bernard Bodney, and Sam Rosen, Appellants
• Court: Missouri Supreme Court

Page 590

393 S.W.2d 590

Frank P. SEBREE, Administrator With Will Annexed of the Estate of Sarah Rosen, Deceased, et al., Respondents, v. Jacob ROSEN, as Executor of the Estate of Pete Rosen,

Deceased, Betty Rosen, Sue Hyken, Carl R. Hyken,

Mary Bodney, Bernard Bodney, and Sam

Rosen, Appellants.

No. 50688.

Supreme Court of Missouri, Division No. 1.

Sept. 13, 1965.

Terence M. O'Brien, Daniel S. Millman, Hoskins, King, Springer & McGannon, Kansas City, respondents pro se.

Arthur J. Kase, Kansas City, for appellants.

WALTER H. BOHLING, Special Commissioner.

This is an appeal from a judgment awarding $25,000 to Daniel S. Millman and Terence M. O'Brien for legal services to the 'Rosen Trust' from September 12, 1961, through July 19, 1963, other than Tax Court service; and $4,175 to Hoskins, King, Springer and McGannon, and said Millman and O'Brien for legal services to said trust in certain Tax Court cases from January 1, 1962, through May 25, 1962. This appeal, the third involving Rosen property (Sebree v. Rosen, Mo., 349 S.W.2d 865, and 374 S.W.2d 132), was taken by Jacob Rosen, Betty Rosen (Jacob's wife), Sue Hyken, Carl S. Hyken (Sue's husband), Mary Bodney, Bernard Bodney (Mary's husband), and Sam Rosen. An outline of the background of this litigation may be helpful in understanding the issues.

Pete Rosen and Sarah, his wife, created the Rosen trust May 22, 1952, and thereafter added thereto. It consisted of real property vested in the settlors by the entirety. Their name, originally Rosenwasser, had been changed to Rosen. They were the parents of Meyer (who retained the family name), Rose, Morris, Jacob, Sue, Mary and Samuel, being all of the surviving children (heirs at law and primary beneficiaries of said trust) and parties plaintiff or defendant herein.

The net income of the trust estate was reserved to the settlors for their joint lives, passed to the surviving settlor for life, and then, first, said income for twenty years and thereafter the corpus was to be distributed to the settlors' children as follows: Jacob, 30%; Morris, 15%; Sue, 15%; Mary, 15%; Meyer, 10%; Samuel, 5%; and Rose, 10%. The trust instrument named Pete and Jacob joint trustees; the survivor, sole trustee; and City National Bank and Trust Company, of Kansas City, Missouri, successor trustee. Pete died June 14, 1954, aged 71 years, and Sarah, 74, died November 17, 1954. See 349 S.W.2d 870, 871.

In 1955 Morris, Rose, who had married Morris Silverman, Meyer (known as plaintiff-beneficiaries) and Frank P. Sebree, Administrator with will annexed of the Estate of Sarah Rosen, Deceased, instituted a suit in fourteen counts involving said trust estate and transactions between said settlors and their children. The principal defendants were Jacob, Sue, Mary and Sam, who had a 65% interest in the net income and residue of said trust and were represented by attorneys Arthur J. Kase and Walter Raymond. The plaintiff-beneficiaries, having the remaining 35% interest in said income and residue, and Frank P. Sebree, as administrator aforesaid, were represented by O'Brien and Millman. Other parties to the litigation need not be specifically mentioned.

Count III of the original suit, in the alternative if the Rosen trust be held valid, sought, briefly stated, among other things, an accounting covering the actions of the trustees and the removal of the survivor trustee, Jacob Rosen. The decree, entered October 6, 1958, among other things, upheld the trust, removed Jacob as survivor trustee on the ground his administration of the trust had resulted in a bitter schism within the family and, in accord with the trust instrument, named City National Bank and Trust Company, of Kansas City, Missouri, successor trustee. We affirmed; and, in addition, considered Jacob had breached his trust in several respects, and any compensation allowed him as trustee should be conditioned upon his making good all losses he caused the trust. 349 S.W.2d l. c. 885 (III). The decree on Count III was stayed pending appeal under supersedeas order and bond.

The City National Bank and Trust Company, herein also referred to interchangeably as Bank or Successor Trustee, through its trust officers, was hesitant to accept said appointment as trustee. It wanted to know fully what was involved, questioned many things, and wanted to be clear of all problems created by the Removed Trustee. Its general counsel advised against accepting said trust prior to the completion of the Removed Trustee's accounting. The Bank knew of Millman's and O'Brien's activities in the Rosen property litigation and wanted the benefit of their knowledge of the situations as its representative in the Removed Trustee's accounting. Millman and O'Brien knew the Bank had been named successor trustee by the settlors and the trial court, and considered it important that the Bank be prevailed upon to accept the appointment. There is an indication of record that defendant beneficiaries and counsel preferred another bank for the successor trusteeship. Our opinion in Sebree v. Rosen, supra, was handed down September 11, 1961, and became final October 11, 1961. Beginning September 12, 1961, or soon thereafter Millman and O'Brien had many conferences with officials of the Bank, went over the pleadings, the exhibits and the various issues involved in the Sebree v. Rosen litigation, and discussed and explained the situations to said officials. They assured the Bank that if it accepted the trusteeship they would review the Sebree v. Rosen issues, and would secure a definite and final adjudication of the assets and liabilities as of the time the bank took over to the end that it would not be troubled with what had happened theretofore.

The Bank addressed a letter, dated October 26, 1961, to the attorneys for the defendants, Mr. Raymond and Mr. Kase, and for the plaintiffs, Mr. Millman and Mr. O'Brien, and forwarded a copy to Judge J. Donald Murphy, who had retained jurisdiction over the proceedings. The letter set forth certain conditions under which the Bank was willing to accept the Successor Trusteeship. It stated: '* * * it is necessary that the instant court proceedings result in a full and final judicial settlement of all accounts and transactions of the predecessor Trustee.' This, we understand, contemplated a final adjudication as to the liability of the Removed Trustee; what the assets and liabilities of the trust were, each separated as to principal and income; and what, if any, undistributed income the trust owed and to whom. The letter also stated the Bank desired to confer with all of the adult beneficiaries of the trust; believed 'that the Court proceedings and other matters pertaining to the accounting to be made by' the Removed Trustee should be handled by the attorneys participating in the original suit, and desired an agreement between all the beneficiaries on the attorney to represent it after the conclusion of the accounting and matters pertaining to the litigation.

Representatives of the Bank met with the attorneys for the plaintiffs and for the defendants and also with the beneficiaries personally. All the beneficiaries, plaintiffs and defendants, agreed through their attorneys to the Bank becoming Successor Trustee and to the conditions it imposed.

I. At a conference with the Bank sometime after its letter of October 26 and prior to the hereinafter mentioned decree of December 22, 1961, attended by Kase and Raymond for the defendants and Millman and O'Brien for the plaintiffs, it was agreed that Millman and O'Brien would represent the Successor Trustee until the accounting and the exceptions thereto were completed; and thereafter A. E. Margolin would represent said Trustee. No restrictions were placed on Millman's and O'Brien's representation of said trustee during the completion of the accounting. This agreement was never reduced to writing. O'Brien and Millman testified to the above effect, and were supported by statements by Mr. Margolin, who appeared on behalf of the Successor Trustee at the hearing.

There was a conflict between respondents' and Mr. Kase's testimony. He testified the Bank was unwilling to act as trustee unless the attorneys in the original suit would work together for a successful accounting; that under the agreement it would use Millman and O'Brien to represent it only for the purpose of the accounting; and that all the attorneys would receive compensation from the trust for their services in and their activities would be limited to the accounting. Mr. Margolin, for the Successor Trustee, offered no witness at the hearing. Mr. Raymond, an attorney for the defendant-beneficiaries with Mr. Kase, was not called to testify. This failure to call witnesses connected with the Successor Trustee or defendant-beneficiaries who knew about the agreement and respondents' activities 'raises a strong presumption and inference that the evidence of such persons' would have been unfavorable to the defense. Ewing v. McIntosh, 359 Mo. 625, 222 S.W.2d 738, 741; Irle v. Irle, Mo.App., 284 S.W.2d 44, 47[3, 4]. The trial Chancellor was familiar with and had personal knowledge of many of the facts involved and due deference is to be given his findings. The preponderance of the evidence is in favor of respondents, and additional factual situations sustain this conclusion.

Millman and O'Brien continued their conferences with officials of the Bank and their efforts to have it act as Successor Trustee. They drafted the 'Separate Supplemental Judgment and Decree on Count III' that the original decree of 1958 might conform with the holdings in 349 S.W.2d 865 on said Count. Said decree was drafted and redrafted before it met the approval of everybody, and was entered December 22, 1961, and had the approval of the attorneys for the defendants and the plaintiffs.

The Bank accepted its appointment as Successor Trustee on December 22, 1961, the accounting to be completed later.

This supplemental...