Vredenburgh v. Jones

• Decision Date: 26 November 1975
• Citation: 349 A.2d 22
• Parties: Faith VREDENBURGH, Plaintiff, v. E. Russell JONES et al., Defendants. Alexis I. duPont deBIE, Plaintiff, v. E. Russell JONES et al., Defendants. In the Matter of the ESTATE of Alexia duPont Ortiz deBIE, Deceased.
• Court: Court of Chancery of Delaware

Page 22

349 A.2d 22

Faith VREDENBURGH, Plaintiff, v. E. Russell JONES et al., Defendants.

Alexis I. duPont deBIE, Plaintiff, v. E. Russell JONES et al., Defendants.

In the Matter of the ESTATE of Alexia duPont Ortiz deBIE, Deceased.

Court of Chancery of Delaware, New Castle County.

Submitted April 18, 1975.

Decided Nov. 26, 1975.

Henry A. Wise, Jr., Wilmington, for plaintiff Faith Vredenburgh.

David Roeberg, Roeberg & Agostini, Wilmington, for plaintiff Alexis I. duPont deBie.

David A. Drexler, Morris, Nichols, Arsht & Tunnell, Wilmington, for exceptants.

Rodman Ward, Jr., and Mason E. Turner, Prickett, Ward, Burt & Sanders, Wilmington, for defendant and third-party plaintiff E. Russell Jones, and others.

Bruce M. Stargatt, Young, Conaway, Stargatt & Taylor and Victor F. Battaglia, Biggs & Battaglia, Wilmington, for defendant and third-party defendant Howard L. Williams.

Andrew G. T. Moore, Killoran & VanBrunt, Wilmington, for defendant Arundel Mining Co., Inc.

BROWN, Vice Chancellor.

This cause, as it came on the be heard, derives from the consolidation of three separate but overlapping actions arising from the administration of the estate of Alexia dePont Ortiz deBie by her executor, E. Russell Jones. The initial action (O.C.No. 1133--A) was initiated many years ago on behalf of Faith Vredenburgh and Alexis deBie, the two children of the decedent. This action is in the form of exceptions taken to the first and subsequent annual accounts of the executor filed with the Register of Wills for New Castle County. Subsequently, through separate counsel, Faith (C.A. No. 4037) and Alexis (C.A. No. 4153) brought suit against Jones, as executor, against the defendant Howard L. Williams, Esquire, as attorney for the estate, against Arundel Mining Co., Inc., and others mentioned with more particularity hereafter. By third party complaint, Jones and other individual defendants seek contribution or indemnity from Williams on account of alleged professional negligence in representing the estate. The separate actions of Faith and Alexis primarily seek recovery against the executor and the defendant Williams for certain specific property interests bequeathed to them by their mother which they surrendered to the executor in return for cash, and which the executor, in turn, sold to himself and others closely affiliated with him. The exceptions action deals with this aspect also, as well as with certain other claims of misconduct for which surcharge is demanded against Jones in his capacity as executor. This is a decision after trial on the various issues presented as I have interpreted them.

The crux of the matter involves the handling by the executor and other named individual defendants of mining interests owned by the decedent at the time of her death in property located near Marysvale, Utah. The detailed facts presented by the evidence are voluminous. The highlights recited hereafter appear to be without dispute and will suffice for the purpose of this decision.

Alexia duPont Ortiz deBic was a woman of strong will and purpose, no matter how unconventional the latter might happen to be. She was also very wealthy, being the beneficiary of trusts created by her mother exceeding $20 million. She also possessed a power of appointment as to such trust funds. At her death she owned a large residential estate in the Wilmington area known as 'Valmy' and a tract of valuable farmland known as 'Arundel Farm' as well as certain real estate in Nevada.

During the latter 1940's she was persuaded by an itinerant peddler of mining stock to invest in mining operations in Utah, and as a result took an active interest in mining. By 1953 she became the lessee and thereby the exclusive investor in a mine owned by a company called Deer Trial Mines, Inc. She chose to do business under the name of Arundel Mining Co. and found that under then existing tax laws she could write off most of her mining investment against her substantial income.

The defendant Jones, now some 75 years of age, was a man of humble beginnings and limited formal education who had once worked in the cashier's cage in a local stock brokerage as well as for a large Wilmington mington munitions corporation. Due to a decline in the munitions industry after World War II he found himself unemployed and with dim prospects for a new start because of his age. In addition, he had worked on a part-time basis for Mr. deBie's mother, keeping books on her farming operations and other matters from 1927 through her death in 1940, and thereafter he stayed on to perform similar tasks and act as business agent for Mrs. deBie, eventually making this his primary occupation. In this capacity he over-saw the management of the mining operation for her, hired employees, negotiated contracts, etc.

The defendant Treseder was the geologist-engineer who actually operated the mine, but who had virtually no direct contact with Mrs. deBie. The defendant Hunt was a certified public accountant with his office in Utah and acted as accountant for the mine as a part of his general practice. Jay Sylvester was the superintendent for the mine. Also one Clyde Randall, since deceased, who was Dean of the School of Business at the University of Utah among his several avocations, acted as attorney and tax consultant for Mrs. deBie, and latter her estate, in Utah. The defendant Williams served as Delaware attorney for Mrs. deBie and later her estate.

The first lease executed by Mrs. deBie covering the period from 1954--56 contained a provision which required her to expend a minimum of $50,000 per year in development and operations work. Later, a third lease executed by her in 1959 covering a five-year period through the end of 1963 increased this yearly expenditure requirement to $80,000. It also contained an option which would have permitted her to extend the lease through 1966.

By 1962, Mrs. deBie was suffering from cancer and it was known that her health was not good. In June of 1962, through Jones, she caused Williams to prepare a codicil to her will which she executed with full knowledge of the unusual powers it would give her executor with regard to her mining interests. She had made provision for her children, Faith and Alexis, by a separate exercise of her power of appointment over her mother's trusts. The codicil to a large extent forms a basis for this controversy and, because of its unusual nature, it is set forth at length hereafter:

'(b) At the present time, I have under lease certain mining properties situated in Mt. Baldy and Ohio Mining District, County of Piute, State of Utah. Under the terms of that lease, it is provided that upon my death, the Executor of my estate shall have the option of continuing or terminating the lease. I wish at this time to confirm the fact that my Executor shall have complete and unquestioned discretion as to whether or not operations under the lease shall be continued or terminated. This discretion shall exist not only under the present lease but any extention of that lease or any new lease to which I may hereafter become a party. Furthermore, I specifically authorize my Executor, in his sole discretion, to expend funds from my estate for the purpose of developing or operating the aforementioned mining properties. I further provide that if at the time of my death the lease still stands in my name, then I give, devise and bequeath a twenty percent (20%) interest in the lease unto each of my children and unto E Russell Jones, and five percent (5%) unto Quillen F. Treseder, of Salt Lake City, Utah. The remaining thirty-five percent (35%) interest shall be held by my Executor for the purposes mentioned hereinafter. In the event my Executor shall determine, in his sole discretion, that the lease should be assigned to a corporation, then upon such assignment the stock of that corporation shall be issued twenty percent (20%) to each of my children and twenty percent (20%) to E. Russell Jones, and five percent (5%) to Quillen F. Treseder. The remaining thirty-five percent (35%) of the stock shall be held by my Executor and he, in his sole discretion, shall have the authority to sell any or all of such thirty-five (35%) for the purpose of raising development or operating capital or raising monies necessary in order to complete the administration of my estate, including, but not limited to, the payment of taxes. Whether unincorporated or incorporated, if my Executor should conclude some or all of the thirty-five percent (35%) interest need not be sold then the portion not sold shall be divided equally between my children.

'As is apparent, I have given my Executor extremely broad discretion as to the making of decisions in connection with the development and operation of Arundel Mine and the sale of stock if the lease is held by a corporation. This is done with the full understanding of the broad powers which I have conferred. It is my intention that in the exercise of those powers, the decisions of my Executor shall not be questioned and he shall incur to liability whatsoever as the result of any decisions he makes. Furthermore, if any question is raised, any expenses incurred by my Executor in defending his actions shall be borne by my estate and if any liability should be assessed against my Executor, he shall be indemnified from my estate.'

It must thus be noted that Mrs. deBie bequeathed her interests in the mining lease as follows: 20% To Faith Vredenburgh, her daughter; 20% To Alexis deBie, her son; 20% To E. Russell Jones, her executor and business agent; 5% To Quillen Treseder, her mining engineer; and 35% To her residuary estate. Her will bequeathed some $40,000 to twenty-seven other named legatees, but her residuary legatees were also her two children, Faith and Alexis.

Subsequent to the execution of this codicil, Jones and Williams went to Utah to renegotiate the mining lease even though, with the option, it could have been continued on the same...