Spilios v. Papps

• Decision Date: 22 September 1934
• Citation: 192 N.E. 155,288 Mass. 23
• Parties: SPILIOS v. PAPPS et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

288 Mass. 23

192 N.E. 155

SPILIOS

v.PAPPS et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Sept. 22, 1934.

Appeal from Probate Court, Suffolk County; Poland, Judge.

Proceeding in the matter of the estate of John C. Papps, deceased, in which Athans Spilios and another, as executors of the will of the named decedent, appealed from decrees of the probate court.

Decree in accordance with opinion.S. D. Elmore and T. E. Shasta, both of Boston, for petitioners.

M. Witte, of Boston, for respondents.

LUMMUS, Justice.

This case comes here upon the appeal of Athans Spilios and George Gabriel, executors of the will of John C. Papps, from a decree of the probate court allowing an account which that court substituted for the account filed by the executors, and from other interlocutory decrees. The facts were found by an auditor whose findings of fact, by the terms of the reference, were to be final. G. L. (Ter. Ed.) c. 221, § 57.

The main cause of contention is the charging of the executors with a gain of $4,097.50 over the inventory value of sixty shares of stock of Hub Laundry Company owned by the testator. The remainder of the stock was owned by James H. Connors, Charles A. Connors, and Athans Spilios, each owning sixty shares. Athans Spilios owned or controlled several companies supplying coats, napkins and other laundered articles, and they provided about forty per cent. of the business of Hub Laundry Company. Athans Spilios and Papps had a written agreement, to expire March 14, 1935, by which their stock was to be held and voted as a unit, in order to balance the stock holdings of the Connors brothers, and to prevent the domination of the corporation by the latter.

When Papps died, and Athans Spilios became one of the executors, it was important to Spilios that the Papps stock should be disposed of in such a way as to prevent domination of the corporation by the Connors brothers. The co-executor, Gabriel, was a Greek baker, spoke little English, knew nothing about the laundry business, and left everything to Spilios. With the design of protecting his own interests and not of cheating the estate, Athans Spilios arranged with the Connors brothers that his son, Angelos A. Spilios, should buy the Papps stock for $15,000, to be paid in part by cash and in part by notes, and should be elected a director in the place of Papps. This arrangement was known to the legatees under the will of Papps, and upon the advice of their counsel they consented to a petition for authority to the executors to sell the stock to Angelos A. Spilios on those terms.

Shortly afterwards, about December 11, 1930, before the decree authorizing the sale had been obtained, a dispute arose, and the Connors brothers refused to carry out the arrangement to make Angelos A. Spilios a director. Athans Spilios, fearing a loss of his equality in the corporation, wished to rescind as executor his acceptance of the offer of his son for the stock, but was advised by his counsel that the consent which the legatees had given, and his own guaranty of performance by his son which he had given, would involve him in trouble if he should try to rescind. So he carried out the sale to his son. A decree for sale having been obtained, on December 16, 1930 the old agreement between the testator and Athans Spilios was cancelled, and the executors transferred the Papps stock to Angelos A. Spilios, who paid $3,750 in cash and $11,250 in notes to the executors as agreed. If this had been the entire transaction, no charge of fraud or other misconduct on the part of either executor could have been sustained.

The fact was, however, that ever since the dispute had arisen, about December 11, 1930, Athans Spilios had been trying to convince the Connors brothers that they must either sell their stock or buy out the other stockholders, and finally succeeded. The facts about the dispute and the subsequent negotiations with the Connors brothers were not communicated to the legatees or to the probate court. Athans Spilios reached an oral agreement with the Connors brothers before the decree was entered on December 16, 1930. On December 17, 1930, Athans Spilios entered into a written agreement with the Connors brothers to sell them his own sixty shares and the sixty Papps shares then apparently owned by his son, for a net price of $43,195, and this agreement was carried out. The auditor finds as follows: ‘No actual sale was made of the estate's stock in the Hub Laundry Company to Angelos A. Spilios. The authority secured by the decree of the court and the acts of the parties immediately following by which they purported to sell the stock to Angelos A. Spilios was a mere form through which they went for the purpose of enabling Athans Spilios to carry out his settlement with Connors brothers.’ It appears that the price obtained for the stock was largely due to the control which Athans Spilios had over forty per cent. of the patronage of the corporation, which he agreed in writing to continue, without entering into the laundry business himself; but nevertheless the net sum named was obtained for the stock, and no separate price was fixed for entering into the contract to continue the patronage. The auditor's finding is explicit: ‘I find that Athans Spilios received $43,195 for the 120 shares of stock of the Hub Laundry Company described in the agreement’ with the Connors brothers.

The inventory value of the sixty shares belonging to the estate was $17,500, and the probate court charged the executors with a gain of $4,097.50, the difference between the inventory value and $21,597.50, which last sum was half the net price at which one hundred and twenty shares were sold to the Connors brothers.

Some of the findings already recited were made by the auditor after the original report, made under a rule directing the auditor to ‘hear the parties interested, examine vouchers and evidence, and report upon the same to the court,’ had been recommitted to him ‘to hear such legal evidence as may be offered to show what the transaction really was between the parties to the sale and to the contract with Connors brothers, and what consideration the accountants and Athans Spilios as an individual respectively received in the transaction.’ The executors contend that some of the findings so made went beyond the matters recommitted, and even beyond the matters referred originally. Everything open under the account was included in the original reference, and we find nothing in the auditor's reports that goes beyond it. As to the recommittal, since the probate court had power to recommit for any and every purpose within the proceeding, it is hard to see how a party can complain of the interpretation by the probate court of the scope of its own order, unless he can show that he was misled and thereby deprived of adequate hearing. See Carleton & Hovey Co. v. Burns, 285 Mass. 479, 483, 484, 189 N. E. 612. But if the point is open, we fail to see that on recommittal the auditor heard any matters beyond the scope of the order of recommittal.

The executors further contest the validity of some of the findings already recited, on the ground that in making them the auditor erred by excluding certain evidence offered by the executor as to what part of the sum received from the Connors brothers ought to be deemed the selling price of the Papps stock. Objections to the report, such as were filed by the executors in considerable number and volume, are unknown to practice in the case of auditors except as they have recently been provided for by rule 89 of the superior court (1932) which has not been adopted by the probate courts. Apart from that rule, questions of the admission or exclusion of evidence by an auditor whose findings of fact are final, are presented to the judge by motion to recommit, without formal objections to the report. W. R. Grace & Co. v. National Wholesale Grocery Co., Inc., 251 Mass. 251, 253, 146 N. E. 908, and cases cited. McClintic-Marshall Co. v. Freedman, 274 Mass. 558, 561, 175 N. E. 55. See, also, Epstein v. Epstein (Mass.) 191 N. E. 418. Ordinarily the action of a judge upon such a motion is reviewed by this court on exceptions under G. L. (Ter. Ed.) c. 231, § 113. But bills of exceptions are unknown in probate courts, and the only mode of appellate review is by appeal in the nature of an equity appeal. Mackintosh, Petitioner, 246 Mass. 482, 141 N. E. 496. We assume in favor of the executors that the points of evidence, improperly included in the voluminous ‘objections,’ were also properly incorporated in the motion to recommit which was denied subject to the appeal of the executors, and that they are presented by that appeal. The motion of the executors to amend their...