Harp v. Pryor

Supreme Court of Georgia

Harp v. Pryor

578 S.E.2d 424, 276 Ga. 478, 2003 Fulton County D. Rep. 972, 2003 Ga. LEXIS 284

CourtSupreme Court of Georgia

DecidedMarch 24, 2003

DocketS02A1474

StatusPublished

Cited by7 cases

This text of 578 S.E.2d 424 (Harp v. Pryor) is published on Counsel Stack Legal Research, covering Supreme Court of Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Harp v. Pryor, 578 S.E.2d 424, 276 Ga. 478, 2003 Fulton County D. Rep. 972, 2003 Ga. LEXIS 284 (Ga. 2003).

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Opinions

Hines, Justice.

Douglas Harp appeals from an order on his “Petition for Executor to Distribute Estate Property.” For the reasons that follow, we reverse.

Doris Landers Harp died on February 6, 2000. Under her will dated April 12, 1999, the three residual beneficiaries are her sons, Frank J. Pryor III, who is also the executor, Douglas Raymond Harp, and Stephen G. Harp.¹ Section 4.02 of the will states that the residual estate is to be distributed to the residual beneficiaries “in equal shares.” The residuary estate consisted of cash and 9,244 shares of stock in a family company, Glenn Harp & Sons, Inc. Section 5.04 of the will authorizes the executor to “make distributions either in cash or in kind” and provides that “[distributions in kind may be made at the discretion of my personal representative.”

Douglas Harp filed a “Petition for Executor to Distribute Estate Property” on August 20, 2001. As part of his answer, Pryor attached a letter dated August 31, 2001, which set forth Pryor’s proposed distribution, under which Douglas Harp would receive 262 shares of common stock, whereas Stephen G. Harp and Pryor would each receive 4,491 shares of stock.² At the time of the decedent’s death, Douglas Harp owned 4,299 more shares of common stock of Glenn Harp & Sons, Inc., than did his brothers. If the stock was divided equally among the three brothers, Douglas Harp would be the controlling shareholder in the company; under Pryor’s proposed distribution, each of the three brothers would hold an equal number of shares. Pryor, to compensate for the disproportionate stock distribution, sent a check payable to Douglas Harp for $21,370.52, which Harp rejected. It is not disputed that Pryor’s proposed distribution gives an equal dollar value to each legatee. The probate court found that the distribution proposed by Pryor did not violate the terms of the will, and it is from this order that Douglas Harp appeals.

In support of his authority to make the distribution that he proposed, Pryor points to the will’s provision that “[d]istributions in kind may be made at the discretion of [the] personal representative.” But that discretion is not unfettered. The applicable statute does not declare the executor to be a fiduciary, but the executor is bound by the “rules generally applicable to fiduciaries to act in the best interests of all persons who are interested in the estate and with due regard for their respective rights.” OCGA § 53-7-1 (a). And Douglas [479]*479Harp contends that in manipulating the distribution so that he does not gain control of the family company, Pryor is elevating his own interests over that of Harp, in violation of the duty imposed by OCGA § 53-7-1 (a). We agree.

At this point in the administration of the estate, there are three brothers, each with equal interests and rights in the remainder of the estate. One brother, Stephen Harp, is not part of this dispute, and is presumed to be neutral as to its outcome. Thus, his “best interests” cannot be considered to be served by either of the distributions advocated by his brothers. Therefore, only the two brothers remaining can be considered to have differing interests in the estate. Generally, it is not permitted for a fiduciary to be in a position where his interests might conflict with that of a beneficiary. Ringer v. Lockhart, 240 Ga. 82, 84 (239 SE2d 349) (1977). Here, control of the family company is at stake, and Pryor’s proposed distribution makes it clear that his interest is inimical to that of Douglas Harp.

In most cases, distributions in kind from different classes of property that result in equal beneficiaries receiving equal value would not show a violation of the executor’s duty. But under the peculiar facts of this case, such does.

Judgment reversed.

All the Justices concur, except Sears, P. J, Hunstein and Carley, JJ, who dissent.

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Hines, Justice.

Douglas Harp appeals from an order on his “Petition for Executor to Distribute Estate Property.” For the reasons that follow, we reverse.

Doris Landers Harp died on February 6, 2000. Under her will dated April 12, 1999, the three residual beneficiaries are her sons, Frank J. Pryor III, who is also the executor, Douglas Raymond Harp, and Stephen G. Harp.¹ Section 4.02 of the will states that the residual estate is to be distributed to the residual beneficiaries “in equal shares.” The residuary estate consisted of cash and 9,244 shares of stock in a family company, Glenn Harp & Sons, Inc. Section 5.04 of the will authorizes the executor to “make distributions either in cash or in kind” and provides that “[distributions in kind may be made at the discretion of my personal representative.”

Douglas Harp filed a “Petition for Executor to Distribute Estate Property” on August 20, 2001. As part of his answer, Pryor attached a letter dated August 31, 2001, which set forth Pryor’s proposed distribution, under which Douglas Harp would receive 262 shares of common stock, whereas Stephen G. Harp and Pryor would each receive 4,491 shares of stock.² At the time of the decedent’s death, Douglas Harp owned 4,299 more shares of common stock of Glenn Harp & Sons, Inc., than did his brothers. If the stock was divided equally among the three brothers, Douglas Harp would be the controlling shareholder in the company; under Pryor’s proposed distribution, each of the three brothers would hold an equal number of shares. Pryor, to compensate for the disproportionate stock distribution, sent a check payable to Douglas Harp for $21,370.52, which Harp rejected. It is not disputed that Pryor’s proposed distribution gives an equal dollar value to each legatee. The probate court found that the distribution proposed by Pryor did not violate the terms of the will, and it is from this order that Douglas Harp appeals.

In support of his authority to make the distribution that he proposed, Pryor points to the will’s provision that “[d]istributions in kind may be made at the discretion of [the] personal representative.” But that discretion is not unfettered. The applicable statute does not declare the executor to be a fiduciary, but the executor is bound by the “rules generally applicable to fiduciaries to act in the best interests of all persons who are interested in the estate and with due regard for their respective rights.” OCGA § 53-7-1 (a). And Douglas [479]*479Harp contends that in manipulating the distribution so that he does not gain control of the family company, Pryor is elevating his own interests over that of Harp, in violation of the duty imposed by OCGA § 53-7-1 (a). We agree.

At this point in the administration of the estate, there are three brothers, each with equal interests and rights in the remainder of the estate. One brother, Stephen Harp, is not part of this dispute, and is presumed to be neutral as to its outcome. Thus, his “best interests” cannot be considered to be served by either of the distributions advocated by his brothers. Therefore, only the two brothers remaining can be considered to have differing interests in the estate. Generally, it is not permitted for a fiduciary to be in a position where his interests might conflict with that of a beneficiary. Ringer v. Lockhart, 240 Ga. 82, 84 (239 SE2d 349) (1977). Here, control of the family company is at stake, and Pryor’s proposed distribution makes it clear that his interest is inimical to that of Douglas Harp.

In most cases, distributions in kind from different classes of property that result in equal beneficiaries receiving equal value would not show a violation of the executor’s duty. But under the peculiar facts of this case, such does.

Judgment reversed.

All the Justices concur, except Sears, P. J, Hunstein and Carley, JJ, who dissent.

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578 S.E.2d 424, 276 Ga. 478, 2003 Fulton County D. Rep. 972, 2003 Ga. LEXIS 284, Counsel Stack Legal Research, https://law.counselstack.com/opinion/harp-v-pryor-ga-2003.

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