Sturdevant v. SAE Warehouse, Inc.

• Decision Date: 29 September 1978
• Docket Number: No. 9432,9432
• Citation: 270 N.W.2d 794
• Parties: Glen A. STURDEVANT, Plaintiff and Appellee, v. SAE WAREHOUSE, INC., a North Dakota Corporation, Richard Sturdevant, James Sturdevant, Terry Sturdevant, Individually and as Executors of the Estate of Virgil Sturdevant, Deceased, and Trustees of the "Lucylle Trust" and"Residuary Trust" of the Virgil Sturdevant Estate, Defendants and Appellants. Glen A. STURDEVANT, Plaintiff and Appellee, v. Richard STURDEVANT, James Sturdevant, Terry Sturdevant, Individually and as Executors of the Estate of Virgil Sturdevant, Deceased, and Trustees of the"Lucylle Trust" and "Residuary Trust" of the Virgil Sturdevant Estate, Defendants and Appellants. Glen A. STURDEVANT, Plaintiff and Appellee, v. STURDEVANT's AUTO PARTS, INC. of Oakes, a North Dakota Corporation, Richard Sturdevant, James Sturdevant, and Terry Sturdevant, Individually and as Executors of the Estate of Virgil Sturdevant, Deceased, and Trustees of the"Lucylle Trust" and"Residuary Trust" of the Virgil Sturdevant Estate, Defendants and Appellants. Glen A. STURDEVANT, Plaintiff and Appellee, v. Lucylle STURDEVANT, Intervening Defendant. Glen A. STURDEVANT, Plaintiff and Appellee, v. Robert STURDEVANT, Intervening Defendant. Civ.
• Court: North Dakota Supreme Court

Page 794

270 N.W.2d 794

Glen A. STURDEVANT, Plaintiff and Appellee, v. SAE WAREHOUSE, INC., a North Dakota Corporation, Richard

Sturdevant, James Sturdevant, Terry Sturdevant, Individually

and as Executors of the Estate of Virgil Sturdevant,

Deceased, and Trustees of the "Lucylle Trust" and"Residuary

Trust" of the Virgil Sturdevant Estate, Defendants and

Appellants.

Glen A. STURDEVANT, Plaintiff and Appellee, v. Richard STURDEVANT, James Sturdevant, Terry Sturdevant,

Individually and as Executors of the Estate of Virgil

Sturdevant, Deceased, and Trustees of the"Lucylle Trust" and

"Residuary Trust" of the Virgil Sturdevant Estate,

Defendants and Appellants.

Glen A. STURDEVANT, Plaintiff and Appellee, v. STURDEVANT's AUTO PARTS, INC. of Oakes, a North Dakota

Corporation, Richard Sturdevant, James Sturdevant, and Terry

Sturdevant, Individually and as Executors of the Estate of

Virgil Sturdevant, Deceased, and Trustees of the"Lucylle

Trust" and"Residuary Trust" of the Virgil Sturdevant Estate,

Defendants and Appellants.

Glen A. STURDEVANT, Plaintiff and Appellee, v. Lucylle STURDEVANT, Intervening Defendant.

Glen A. STURDEVANT, Plaintiff and Appellee, v. Robert STURDEVANT, Intervening Defendant.

Civ. No. 9432.

Supreme Court of North Dakota.

Sept. 29, 1978.

Rehearing Denied Oct. 31, 1978.

Waldron, Kenner, Halvorson & Sturdevant, Minot, for plaintiff and appellee; argued by Michael G. Sturdevant, Minot.

Johnson, Milloy, Johnson, Stokes & Robinson, Ltd., Wahpeton, for defendants and appellants; argued by Rauleigh D. Robinson, Wahpeton.

ERICKSTAD, Chief Justice.

James and Terry Sturdevant, executors of the last will and testament, and trustees of certain trusts of their deceased father, Virgil Sturdevant, appeal from a judgment entered in district court in which their uncle, Glen Sturdevant, was granted the right, Inter alia, to purchase shares of stock in numerous Sturdevant businesses from the Lucylle and Residuary Trusts that were established by Virgil's last will and testament. We affirm the judgment.

In 1946, Virgil and Glen assumed control of the family automobile repair business that had been started by their parents. They expanded from a garage to an operation consisting of the garage, a warehouse, a building company, a number of wholesale parts stores, and a Kentucky Fried Chicken franchise. During the course of this expansion, a number of Virgil's children became involved in the businesses.

On January 17, 1970, Virgil died and his will was admitted to probate shortly thereafter. The will provided, among other things, for the establishment of two trusts, I. e. the Lucylle Trust, in which Virgil's wife, Lucylle, is the sole beneficiary, and the Residuary Trust, in which Lucylle and the children of Lucylle and Virgil are beneficiaries. Generally, the Lucylle and Residuary Trusts consist of stock in the various Sturdevant companies. Three of Virgil's sons, Richard, James, and Terry were appointed as executors and trustees. ¹

The administration of Virgil's estate was complicated by a clause in the will that reads:

"TENTH: It is my intention and wish and directive to the Trustees of the trusts hereinabove created, that insofar as possible, they carry out the following objectives with reference to the handling and management of the family businesses in which I have an interest relating to the auto parts and related lines:

"A. That it be kept intact as long as possible.

"B. That my brother, Glen, and my sons, Richard and James shall have the right to buy additional interests in the family business to the fullest extent of their ability. I specifically grant this right to my sons, Richard and James, notwithstanding that they are co-trustees.

"C. That any other of my children who demonstrate an interest in becoming active in the family business shall also have the right to buy in, subject to the approval of my brother, Glen, and my co-trustees, and in case of any dispute, or disagreement, the co-trustees shall be the sole judges and final arbiters in such dispute.

"D. For the purpose of carrying out this directive, I would urge that when a distributive share is about to be made under the terms of the Residuary Trust, if at all possible such distributive share be made in cash, retaining insofar as possible, the family business intact."

In August, 1971, Richard, James, and Terry purchased all of Virgil's stock in SAE Warehouse, Inc., from the estate. This purchase was allegedly made with Glen's consent and pursuant to a stock purchase agreement. In February, 1972, Glen discovered that he was named in his brother's will and that he might have some interest in the estate. He thereafter attempted to purchase shares of stock in the various Sturdevant businesses from his nephews pursuant to subsection B. of the tenth part of the will, but was unsuccessful. The nephews refused to sell, contending that the relevant parts of the will were not mandatory, and that any sale of stock in the Sturdevant businesses was within their discretion. A Final Decree of Distribution was entered and the executors were discharged on September 3, 1975. Glen was not served with a notice of the petition for the proof and probate of the will, nor was he served with notice of any other phase of the probate proceedings.

In January, 1976, Glen initiated lawsuits in which he sought to force the nephew-executor-trustees to return to the Residuary Trust the stock that they had purchased and to allow him to purchase stock in the various Sturdevant businesses pursuant to the will and certain stock purchase agreements. ² Lucylle Sturdevant, the widow of Virgil, and Robert Sturdevant, a son and recipient of a residuary interest in Virgil's will, intervened in the lawsuit and also opposed the purchase.

The actions were consolidated and a trial was held on April 25 and 26, 1977. By judgment issued October 26, 1977, Glen was declared to have the right to purchase stock in the Sturdevant companies from the Lucylle and Residuary Trusts by virtue of the Tenth Clause of the decedent's will, and the trustees were ordered to convey to the Residuary Trust all of the stock in SAE Warehouse Inc., purchased by them from the Virgil Sturdevant Estate.

The appellants, whom we shall hereinafter refer to as the Trustees, appeal from that decision to this court.

Before we reach the merits of this appeal, we must decide whether or not the merits of this case have been finally and unalterably determined by the county court's decree of distribution issued September 3, 1975.

Trustees argue that the actions brought by Glen in district court are a collateral attack upon the county court's judgment and should not be allowed. They contend that the county court has exclusive original jurisdiction over the questions raised by Glen in district court and refer this court to In re Estate of Brudevig, 175 N.W.2d 574 (N.D.1970). The Trustees also rely on Manikowske v. Manikowske, 136 N.W.2d 465 (N.D.1965) for the following proposition: "If the county court made a mistake in a matter over which it had exclusive jurisdiction and no appeal was taken, its decision has become final. The mistake cannot be corrected in a collateral action in the district court." 136 N.W.2d at 477.

The Trustees are apparently arguing that as the county court has already decided the disposition of Virgil's estate by the final decree of distribution, this decision cannot be collaterally attacked in district court even if the disposition was in error. Although the Trustees did not raise this question at the trial level, they argue that they are now estopped from raising the issue because it is jurisdictional and can be raised at any time.

It is undisputed that subject matter jurisdiction cannot be waived and that decisions made by a court without subject matter jurisdiction are void. In re Estate of Brudevig, supra at 577. Thus, if the district court had no jurisdiction of the subject matter in this case, jurisdiction could not be conferred upon this court by appeal from the district court's judgment.

Generally, a county court's final decree is of equal rank with judgments entered by other courts of record in this state. See authorities collected in Manikowske v. Manikowske, supra at 477. The county court has exclusive jurisdiction over probate and testamentary matters and a final decree of distribution entered by county court is not subject to collateral attack if the court had jurisdiction and no fraud or collusion was claimed or shown. Schultz v. Saeman, 150 N.W.2d 67, 70 (N.D.1967).

Furthermore, if the county court makes a mistake in a matter over which it has exclusive jurisdiction and no appeal is taken, the county court's decision becomes final. Manikowske v. Manikowske, supra at 477.

As Glen was not made a party to the probate proceedings in county court nor served with a notice of the proceedings, he argues that he is not bound by the county court's final decree of distribution.

As a general rule, the doctrine of Res judicata "binds only parties to the action in which the judgment was rendered and their privies and does not affect strangers to the judgment who are neither parties nor in privity with a party to the action." Armstrong v. Miller, 200 N.W.2d 282, 284 (N.D.1972); Stockman v. Anderson, 184 N.W.2d 53, 56 (N.D.1971); and Feather v. Krause, 91 N.W.2d 1, 7 (N.D.1958).

In In re Anderson's Estate, 76 N.D. 163, 34 N.W.2d 413 (1948), this court acknowledged that county court decrees are entitled to the same faith and credit as judgments of other courts of record, but it also noted that the county court must have jurisdiction of the parties and subject matter if its decrees are to be valid. Id. 34 N.W.2d at 413, Syl. para. 2.

As Glen was not made a party and served notice of the probate proceedings, we hold that the final decree of distribution of the county court is not Res judicata and that therefore Glen is not estopped from bringing these suits in district court.

In so...