Tobias v. Korman, ED 83010.

• Decision Date: 24 August 2004
• Docket Number: No. ED 83010.,ED 83010.
• Citation: 141 S.W.3d 468
• Parties: Elizabeth TOBIAS, et al., Plaintiffs/Appellants, v. Joseph KORMAN, et al., Defendants/Respondents.
• Court: Missouri Court of Appeals

141 S.W.3d 468

Elizabeth TOBIAS, et al., Plaintiffs/Appellants, v. Joseph KORMAN, et al., Defendants/Respondents.

No. ED 83010.

Missouri Court of Appeals, Eastern District, Division Three.

August 24, 2004.

Appeal from the Circuit Court, St. Louis County, Michael D. Burton, J Stephen Nangle, St. Louis, MO, for appellant.

Howard Shalowitz, St. Louis, MO, for respondent.

WILLIAM H. CRANDALL, JR., Judge.

Plaintiffs, Elizabeth Tobias, et al., beneficiaries of the Amended Trust of Henry H. Tobias (hereinafter "the trust"), appeal from the judgment of the trial court, entered in a court-tried case, in their action against defendants, Joseph Korman, trustee of the trust, and Deborah Korman, his wife. Plaintiffs also appeal from the trial court's judgment on Korman's¹ counterclaims. The court granted a directed verdict in favor of Korman on plaintiffs' claim for an accounting. The court found in favor of Korman on claims pertaining to reformation of the trust, discharge of Korman as fiduciary, damages for amounts taken by him in excess of that allowed by the trust, damages for constructive fraud, and damages for breach of fiduciary duty. The court also found that it did not have jurisdiction to entertain plaintiffs' claim to determine heirship. On Korman's counterclaims, the court enforced the in terrorem clause in the trust as to some plaintiffs and ordered some plaintiffs to return advance distributions under the trust. We affirm.

Henry H. Tobias and his wife had numerous nieces and nephews, but no children. After his wife's death in 1988, Henry determined to establish a trust. Some family members encouraged him to get his affairs in order. When various family members declined to serve as trustee, Henry offered the position to Korman, who had prepared Henry's taxes since 1972. Korman accepted the position. In January 1991, Henry executed an initial trust and a will which poured over into this trust.

In August 1996, Henry amended the original trust and that amended trust is the trust at issue. Although Korman prepared the trust at Henry's direction and arranged for Henry to sign the documents before the necessary parties, he neither suggested the terms of the trust nor urged Henry to sign it. Henry was named as the income beneficiary of the trust. The trust directed that at his death specific amounts were to be distributed to certain beneficiaries, including plaintiffs; and that the remaining trust assets were to go to Korman. Some plaintiffs received less money under the amended trust than they had received under the first trust. The trust included an in terrorem clause, which provided that any beneficiary who challenged the validity of the trust in court would automatically forfeit his or her share.

From 1991 to the time of Henry's death in November 1998, Korman deposited Henry's monthly social security, military disability, and retirement checks into the trust. Throughout this time, Korman became increasingly involved not only in overseeing Henry's financial affairs, but also in providing for Henry's personal care and keeping up Henry's home. He did the grocery shopping and drove Henry where he needed to go. He arranged for in-home nursing care as Henry's health deteriorated. With Henry's approval, Korman borrowed $385,000.00 from the trust. Under the terms of the trust, loans to Korman were interest-free.

During that same time period, plaintiffs maintained limited and sporadic contact with Henry. The most any plaintiff visited was about three times per year and then only for a few hours at a time. Henry occasionally sent cards and small monetary gifts to some plaintiffs on their birthdays and at Christmas. Plaintiff, Paul Tobias, borrowed $3,265.00 from the trust and that amount was not repaid at the time of Henry's death.

After Henry's death in 1998, plaintiffs, Richard Tobias, Elizabeth Tobias, Paul Tobias, and Laura Pickett, received personal property which they agreed constituted advances on their distributions under the trust. The advances were valued at $7,010.00, $2,805.00, $850.00, and $3,575.00, respectively. Some of the plaintiffs sought an accounting of the trust assets from Korman, but he refused because Henry did not want one beneficiary to know the amount another beneficiary received under the trust. Korman did, however, provide information regarding a plaintiff's individual share under the trust if that plaintiff requested it.

Plaintiffs brought the present action. Plaintiffs consisted of some of Henry's nieces and nephews; namely, Elizabeth Tobias, Paul Tobias, Richard Tobias, Laura Pickett, Karen Wachter, Patricia Bostron, Madonna Morley, Helen McCormick, Margaret Cox, Ronald Volk, James Hussey, Margie Hussey, and James Hussey, Jr. The named defendants were Korman, his wife Deborah, Presentation Church, Joan Garrison, Constance Windshiegl, and Mary Boulware.² Plaintiffs' petition was in six counts and sought an accounting (Count I), a reformation of the trust on the basis that Korman exercised undue influence over Henry (Count II), a discharge of Korman as fiduciary and damages for amounts taken by him in excess of that allowed by the trust (Count III), damages for constructive fraud (Count IV), damages for breach of fiduciary duty (Count V), and determination of heirship (Count VI). Korman counterclaimed, seeking not only a declaratory judgment that the in terrorem clause in the trust should be enforced against plaintiffs (Count I) but also a recoupment of any advances from the trust received by plaintiffs (Count II).

The case was tried to the court. Under Count I for an accounting, the trial court entered a directed verdict in favor of Korman. Under Count II for reformation, the court found there was no undue influence of Henry by Korman. Under Count III for discharge and return of certain funds, the court found that Korman did not engage in a breach of trust, although Korman did owe the trust $385,000.00 in unpaid loans. The court, however, found that because Korman was receiving the residual amount under the trust, his repayment of the loans would be a "sham." Under Counts IV and V for damages for constructive fraud and for breach of fiduciary duty under a durable power of attorney, the court found in favor of Korman. Under Count VI for determination of heirship, the court found that it did not have jurisdiction to proceed on that claim. Regarding Count I of Korman's counterclaim, the court determined that the in terrorem clause should be enforced against some plaintiffs (Elizabeth Tobias, Laura Pickett Margaret Cox, Ronald Volk, James Hussey, Madonna Morley, Richard Tobias, and Paul Tobias) because the evidence established that they were aware of the existence and the significance of the in terrorem clause prior to trial. The trial court, however, did not enforce the in terrorem clause against other plaintiffs (Karen Wachter, Patricia Bostron, Helen McCormick, Margie Hussey, and James Hussey, Jr.) because there was no evidence that they were cognizant of the risk associated with challenging the trust in light of the in terrorem clause. As to Count II of Korman's counterclaim, the court found that Richard Tobias, Elizabeth Tobias, Paul Tobias, and Laura Pickett, the plaintiffs who took advancements under the trust, must return the money or the value of the property to the trust. The court also ordered that Paul Tobias pay Korman, as trustee of the trust, the $3,265.00 borrowed from the trust, plus accrued interest of $2,024.30. The court lifted a freeze on the trust assets and released the assets to Korman. The court also permitted the attorney's fees to be paid out of the trust. Plaintiffs appeal from that judgment.

Our review is guided by the principles enunciated in Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976). We will affirm the decision of the trial court unless there is no substantial evidence to support it, unless it is against the weight of the evidence, or unless it erroneously declares or applies the law. Id. at 32. The appellate court accepts as true the evidence and inferences favorable to the judgment and disregards contrary evidence, mindful that the credibility of witnesses and the weight to be given their testimony is a matter for the trial court, which is free to believe none, part, or all of any witness's testimony. Morris v. National Refractories & Minerals, 21 S.W.3d 866, 868 (Mo.App. E.D.2000).

In their first point, plaintiffs contend that the trial court erred in refusing to admit four exhibits offered into evidence. Plaintiffs describe the exhibits as follows: Henry's tax returns for 1990 through 1998 (Exhibit EE); Korman's "pro se Response with his records arising out of [his] deposition" (Exhibit GG); Henry's bank statements pertaining to the trust (Exhibit XX); and Henry's 1099 forms for 1990 through 1998 (Exhibit S). These exhibits consisted of photocopies.

The terms of a document must generally be proven by production of the original of that document. Redpath v. Highway and Transp. Com'n, 783 S.W.2d 429, 431 (Mo.App.W.D.1989). A copy reproduced by a photographic duplicating process is not admissible under the best evidence rule. City of Peculiar v. Dorflinger, 723 S.W.2d 424, 427 (Mo.App. W.D.1986). Secondary evidence may, however, be admitted if the offering party demonstrates that the primary evidence is lost or destroyed, is outside the jurisdiction, is in the possession or control of an adversary, or is otherwise unavailable or inaccessible. Schnucks Twenty-Five, Inc. v. Bettendorf, 595 S.W.2d 279, 283 (Mo.App. E.D.1979). The trial court is vested with wide discretion in determining the sufficiency of a foundation for the introduction of secondary evidence. Walsh v. St. Louis Nat. Baseball Club, Inc., 822 S.W.2d 559, 565 (Mo.App. E.D.1992).

In the instant action, there was no explanation about the whereabouts of the originals and why they were unavailable for trial. There was no evidence that the originals were lost, stolen,...