Wilkinson v. McCall, 6 Div. 322.

• Decision Date: 30 June 1945
• Docket Number: 6 Div. 322.
• Court: Alabama Supreme Court
• Parties: WILKINSON v. McCALL.

23 So.2d 577

247 Ala. 225

WILKINSON v. McCALL.

6 Div. 322.

Supreme Court of Alabama

June 30, 1945

Bradley, Baldwin, All & White, of Birmingham for appellant.

Sadler & Sadler, of Birmingham, for appellee.

STAKELY, Justice.

This proceeding involves the allowance of an attorney's fee from the estate of a decedent. It was begun by a petition of Bethea McCall, as coexecutor and cotrustee, which was filed in a cause in equity styled 'In the Matter of the Estate of Edward Wilkinson, deceased.' The appellant, Edward Wilkinson Jr., is one of the executors and trustees named in the will of the decedent. Bethea McCall, appellee, was appointed as successor to the appellant's sister, Mrs. Elizabeth Lanier, by decree entered on November 16, 1942. She was the other executor and trustee named in the will. After being appointed as such coexecutor and cotrustee, Bethea McCall was authorized by the court to employ W. H. Sadler, as one of the attorneys for the executors and trustees.

On January 21, 1943, payment of $1,000 as a retainer fee to Mr Sadler was authorized by the court, over the objection of appellant. On September 5, 1944, on petition of Bethea McCall, as coexecutor, over the objection of appellant a decree was entered by the court authorizing and directing the executors to pay an additional $1,500 to Mr. Sadler out of the assets of the estate for services rendered as an attorney. The petition alleges in detail the services claimed to have been rendered. This appeal is from that decree.

This particular proceeding appears to be an incident of a bitter family dispute which has produced much litigation. Appeals involving other phases of the litigation have been submitted to this court. The testimony is voluminous on all these matters. It would be utterly impractical to set it all out but some understanding of the general situation is necessary in order to understand this particular case. So we shall proceed to outline in substance the relevant events.

Edward Wilkinson died on November 6, 1941, at the age of seventy-seven, leaving surviving him his widow, Grace Wilkinson, aged seventy-five, who is non compos mentis, and four children, Mrs. Marguerite Mudd, wife of J. P. Mudd; Mrs. Elizabeth Lanier, wife of Sterling Lanier; Mrs. Dimmis Riley, wife of E. W. Riley; and Edward Wilkinson, Jr.

The estate of the decedent consisted principally of 151 shares of common stock of the Western Grain Company, an Alabama corporation. There were also a few shares of stock in other corporations, valued at about $13,000. The decedent left a will which was probated in the Probate Court of Jefferson County on November 14, 1941. Pursuant to the directions of the will, Edward Wilkinson, Jr., and Mrs. Lanier were appointed co-executors.

During the life of Edward Wilkinson he created five separate trusts for the benefit respectively of his wife and four children. He named himself trustee in each of the trusts and named Edward Wilkinson, Jr., and Mrs. Lanier as successor cotrustees. The property in each of the trusts consisted only of shares of common stock in the Western Grain Company, divided as follows: Mrs. Grace Wilkinson, 30 shares; Mrs. Dimmis Riley, 30 shares; Mrs. Marguerite Mudd, 20 shares; Mrs. Elizabeth Lanier, 20 shares; and Mr. Edward Wilkinson, Jr., 20 shares; a total of 120 shares. At the time of his death there were outstanding 500 shares of common stock and 150 shares of preferred stock in the Western Grain Company.

On December 10, 1941, the Western Grain Company issued its stock certificate No. 71 for the 151 shares standing in the name of Edward Wilkinson, Sr., to Edward Wilkinson, Jr., and Elizabeth Lanier, as coexecutors, and the company also issued its five other separate certificates to them as trustees under the five trusts.

On December 17, 1941, a meeting of the stockholders was called, at which it was proposed to elect Edward Wilkinson, Jr., as president of the company. Mr. and Mrs. Mudd objected on the grounds that he was neither capable nor fit for the office. The voting resulted in the election of Edward Wilkinson, Jr. Edward Wilkinson, Jr., and Mrs. Lanier voted for Edward Wilkinson, Jr., their individual stock, also the 151 shares belonging to the estate and also the 120 shares of trust stock. They were joined by Mr. Lanier and Mr. McCall. Mr. and Mrs. Mudd voted for Bethea McCall. The salary was fixed at $12,000, and Edward Wilkinson, Jr., was voted a bonus and other benefits.

On December 22, 1941, Mr. and Mrs. J. P. Mudd and Mrs. Grace Wilkinson, by Mr. Mudd as next friend, filed a bill in equity, praying for the removal of Edward Wilkinson, Jr., as president of Western Grain Company, and the removal of Edward Wilkinson and Elizabeth Lanier as executors and trustees. That was cause No. 53,010. On May 25, 1942, the suit was settled by agreement, which also dealt with a matter which J. P. Mudd had in the meantime brought up. This was the alleged lien of the Western Grain Company on the stock of the decedent for $148,000 alleged to be an amount owing to the company by the decedent for overdrafts. Among other things the decree settling the litigation enjoined Edward Wilkinson and Mrs. Lanier from voting any stock standing in their names in a representative capacity for the benefit of any executor in the estate of Edward Wilkinson or trustee in the trusts created by him, as a salaried officer in Western Grain. The decree also provided for the resignation of Edward Wilkinson, Jr., as president of Western Grain Company and for the resignation of Mrs. Elizabeth Lanier as co-executor and co-trustee. It also provided that the appointment of a successor co-executor and co-trustee would be made exclusively by the court. The decree also provided for recovery by J. P. Mudd of the sum of $15,000 against Western Grain Company, to be satisfied by the issuance to J. P. Mudd, all common stockholders concurring, of 150 shares of the preferred stock in Western Grain Company.

At the conclusion of the foregoing litigation, Bethea McCall reluctantly agreed to be made general manager of the company at a salary of $12,000 and to become president at a nominal salary of $1.00 per year. Under the management of Bethea McCall the business of the company increased from four million dollars a year to a volume of thirteen million dollars a year in 1943 and 1944.

The prosperity of the company, however, produced new difficulties and disagreements among the stockholders. The company had moved into the 80% income tax bracket. The differences among the stockholders grew out of differences in opinion as to how taxes could be saved by increase in salaries or otherwise. Nothing, however, was accomplished and there was talk of instituting litigation to set aside the settlement of May 25, 1942. Mr. McCall was opposed to the suggestion.

In the meantime Judge Bailes, who had entered the decree of May 25, 1942, was doing his best to secure a suitable person to serve as coexecutor and cotrustee. Both Mr. Karl Landgrebe and Mr. John Frye declined the appointment. Likewise the Birmingham Trust & Savings Company and also the First National Bank or Birmingham refused to serve. Finally Judge Bailes asked Bethea McCall to serve, stating that he would perhaps be able to render a service to all concerned. He agreed, provided no one objected. No objection was made and he was appointed on November 16, 1942.

Being aware of the disputes of the parties, the threats of receivership, dissolution and litigation to set aside the settlement, he felt the need for independent legal advice, since the attorney for the executors and trustees also represented the Laniers and Edward Wilkinson, Jr. Accordingly, as stated, he obtained the authority through decree of the court to employ W. H. Sadler to represent the co-executors and cotrustees.

There was a great deal of discussion of the possibility that the decree of May 25, 1942, would be attacked and one of the first matters to which Messrs. McCall and Sadler gave their attention was to determine what attitude Mr. McCall should take with reference to such litigation and to the election of directors of the company at the annual meeting to be held December 16, 1942. On December 15, 1942, a preliminary injunction was granted, preventing J. P. Mudd from voting the 150 shares of preferred stock of the Company issued pursuant to the consent decree. Mr. Sadler had advised Mr. McCall that the preferred stock had voting privilege and to vote for the directors nominated by Mr. Mudd. Edward Wilkinson, Jr., did not attend the meeting. Accordingly the stock of the estate and the living trusts could not be voted and so, there being no quorum, no action was taken for the election of directors. It is insisted that Mr. Sadler gave erroneous advice as to the voting power of the preferred stock.

The bill filed in the new cause, No. 55708, in which the preliminary injunction was issued, attacked, among other things, the decree in cause No. 53,010 as being fraudulent, and took the position that the decree awarding J. P. Mudd the sum of $15,000 was erroneous and the 150 shares of preferred stock wrongfully issued in satisfaction thereof.

In the meantime the matter of the estate tax was becoming a matter of growing importance. In the early part of 1943 the estate tax return was filed, the stock in Western Grain being valued at $854.76 a share. All of the stock in the trusts was excluded from the return. However, during the summer of 1943 the tax agent, one Benefield, gave notice that he intended to propose a deficiency estate tax assessment on the basis of a higher valuation of the stock and also upon inclusion in...