Wallace v. Fiske

• Citation: 80 F.2d 897,107 ALR 726
• Decision Date: 05 February 1936
• Docket Number: No. 10060.,10060.
• Parties: WALLACE v. FISKE et al.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

107 ALR 726, 80 F.2d 897 (1935)

WALLACE v. FISKE et al.

No. 10060.

Circuit Court of Appeals, Eighth Circuit.

April 24, 1935.

On Rehearing January 13, 1936.

Further Rehearing Denied February 5, 1936.

Lon O. Hocker, of St. Louis, Mo. (Jones, Hocker, Gladney & Jones, of St. Louis, Mo., on the brief), for appellant.

G. A. Buder, Jr., of St. Louis, Mo. (James A. Reed, of Kansas City, Mo., and Oscar E. Buder, of St. Louis, Mo., on the brief), for appellees.

Before GARDNER, SANBORN, and VAN VALKENBURGH, Circuit Judges.

VAN VALKENBURGH, Circuit Judge.

The matters involved in this appeal have their origin in litigation which had its beginning in the District Court for the Eastern District of Missouri in 1924, and has continued in some phase until the present. Its history is to be found in decisions of this court recorded in eleven volumes of the Federal Reporter, Second Series,¹ and, on two occasions, it has received attention from the Supreme Court of the United States. Buder v. Franz, 273 U. S. 756, 47 S. Ct. 459, 71 L. Ed. 876, and State of Missouri v. Fiske, 290 U. S. 18, 54 S. Ct. 18, 78 L. Ed. 145. The entire substance of the controversies must be gathered from an examination of these decisions — too extended to be considered in detail within the scope of this opinion — but enough must be here stated to insure understanding of the questions presented for our answer and determination.

Ehrhardt D. Franz, a resident of St. Louis, Mo., died testate February 11, 1898. Among the assets of his estate were 210 shares of the capital stock of the American Arithmometer Company, to which, after the death of the testator, the Burroughs Adding Machine Company became successor. By his will Ehrhardt D. Franz gave all of his property, real and personal, to his wife, Sophie Franz, for life, with remainder over to his ten children in equal shares. January 30, 1909, Sophie Franz by trust agreement transferred certain stocks, and other property and securities, to G. A. Franz and G. A. Buder, as trustees, to hold the same during her life. These trustees were empowered to collect the income and profits from the trust property, and were directed out of such income and profits to pay to Sophie Franz $4,000 per annum, and to pay each of her nine surviving children, and to the guardian of a deceased daughter, $2,500 per annum. In 1910, a decree of a state court confirmed this trust agreement and undertook to interpret it in accordance with the wishes of the testator as expressed in his will. At the time of the execution of this trust agreement the shares of stock of the estate in the Arithmometer Company had been increased by a stock dividend to 420 shares, which were transferred to the trustees under the trust agreement. In lieu of these 420 shares, the Adding Machine Company issued 4,200 shares of its capital stock. By March 5, 1924, these had been increased by stock dividends to 15,750 shares in the said Burroughs Adding Machine Company. On that date Ehrhardt W. Franz, son of Ehrhardt D. Franz, brought suit against trustee G. A. Buder, alleging that the trust estate which had been in exclusive possession of the trustees had greatly increased in value by reason of the stock dividends declared by the Adding Machine Company; that information concerning the condition, extent, and value of the property, in which plaintiff with others had an estate in remainder, had been refused, the trustees contending that plaintiff no longer had any remainder interest in the property. The bill prayed for discovery and accounting, and that plaintiff's vested remainder interest in and to 1/10 of the properties be adjudged and quieted. The Mississippi Valley Trust Company, as administrator of the estates of two deceased children of Ehrhardt D. Franz, filed intervening petitions setting up substantially the same facts and praying the same relief. Defendant Buder by answer contended that the stock dividends which had accrued belonged, as income, to the life tenant, and that any remainder interest which plaintiff may have had had been released by payments and advances made to him by his mother, Sophie Franz. The trial court dismissed the bill for want of indispensable parties. Neither the life tenant, the other heirs in remainder, nor the cotrustee had been made parties. It appearing that a final decree granting to plaintiff-appellant the relief prayed could not be entered without directly affecting the interests of these indispensable parties, this court modified the decree of the lower court by directing that the dismissal should be without prejudice to any other suit on the merits. Franz v. Buder (C. C. A.) 11 F.(2d) 854, 858. On motion to modify, this decree was changed to permit an amendment in the same suit, supplying such parties as were indispensable to the action, and such other particulars as might be necessary to confer jurisdiction. 11 F.(2d) 858, 860. Passing by some intermediate litigation with which we need not be here concerned Franz v. Franz (C. C. A.) 15 F. (2d) 797, the trial court entered its decree May 5, 1927, in which it found the issues upon the amended bill and answers thereto in favor of the plaintiff Ehrhardt W. Franz, and upon the several cross-bills and answers thereto in favor of the Mississippi Valley Trust Company as administrator for the estates of Walter G. Franz and Ernst H. Franz, deceased sons of Ehrhardt D. Franz, also in favor of certain infant defendants, and against all other defendants to the litigation. The net result was a finding that:

"Said plaintiff and said estates will be entitled to the possession of their said several remainders upon the death of Sophie Franz as life tenant of the said properties; and that the titles of the said plaintiff and of the said estates, in and to their said several remainder interests, be and the same are hereby thus adjudged, determined and quieted."

This adjudication also included the interest and estate of Eleanor Kleinschmidt as one of the heirs of Minna F. Kleinschmidt, deceased, daughter of Ehrhardt D. Franz, and entitled under his will to the extent of a 1/10 remainder interest. The decree thus favored remaindermen holding 3 1/3 interests in the corpus of the Franz estate and was against the contentions of the holders of 6 2/3 interests. This decree, in the particulars referred to, was affirmed by this court Buder v. Franz, 27 F.(2d) 101 holding that stock dividends on stock held in the trust estate are part of the corpus and not income from the estate, and that the remainders in question became vested under the will of Ehrhardt D. Franz. It is to be noted, while the necessary effect of the decree of May 5, 1927, was to hold that all the children of Ehrhardt D. Franz were remaindermen under his will, precisely as was the plaintiff Ehrhardt W. Franz, nevertheless the holders of the 6 2/3 interests, as found by the District Court, "appeared herein by their own solicitors, asked for no affirmative relief, filed no cross-bills, but contented themselves with denial of the existence of the remainder interest in dividends of stock. * * *

"For reasons best known to them, they did not see fit anywhere to ask for a formal decree in their favors, and so none was entered."

It has twice been held by this court that "the fundamental questions of fact and law which would determine the extent of the plaintiff's Ehrhardt W. Franz' remainder interest would likewise determine and affect the other remainder interests." Franz v. Franz, 15 F.(2d) 797, 800; Fiske v. State of Missouri, 62 F.(2d) 150, 153.

Sophie Franz, widow of Ehrhardt D. Franz, and life tenant under his will, died April 14, 1930. May 17, 1930, the surviving remaindermen, comprising the 6 2/3 interests, petitioned the District Court for distribution to them of their remainder estates under the will, thereby claiming and accepting the effect of the decree of May 5, 1927, affirmed by this court. Buder v. Franz, 27 F.(2d) 101. Their petition was denied by the trial court April 1, 1932, and, on the same day, the trustees were directed to deliver these remainder interests to G. A. Buder, as executor of the estate of Sophie Franz.

May 31, 1930, Ehrhardt W. Franz, through counsel other than the appellant herein, petitioned the trial court against the owners of the 6 2/3 remainder interests for contribution proportionately to the payment of reasonable attorneys' fees of his counsel, including this appellant, and other necessary expenses incurred in the litigation; or, in the alternative, to direct the trustees to deliver to the executor of the estate of Sophie Franz, deceased, all of the property in their possession belonging to such remainder interests. April 1, 1932, the prayer for contribution was denied.

Appellant, because of the apparently unfriendly attitude of his late client Ehrhardt W. Franz, felt compelled to proceed in the District Court to enforce his solicitor's lien for services rendered. He was awarded the sum of $26,000. On appeal this award was affirmed by this court. Wallace v. Franz, 66 F.(2d) 457, 459. Appellant later, because of the greatly increased market value of the Burroughs stock involved, sought permission to file a bill of review to revise the amount of this award. This leave was denied by this court. Wallace v. Franz, 68 F.(2d) 313.

After the death of Sophie Franz, her executor, in view of the decrees of the federal court to the effect that stock dividends were corpus of the estate of Ehrhardt D. Franz and not income to the life tenant, did not include the shares of the 6 2/3 remainder interests in his inventory of her estate. Claiming that these interests in the Burroughs stock held in the trust estate were subject to inheritance taxes as part of the estate of Sophie Franz, the state of Missouri sought and was given leave to intervene in the federal court. In that court the state set forth a citation issued in the probate court in St. Louis, Mo., to compel the executor to inventory these...