In re Estate of McCool

553 A.2d 761, 131 N.H. 340, 1988 N.H. LEXIS 135
CourtSupreme Court of New Hampshire
DecidedDecember 30, 1988
DocketNo. 87-117
StatusPublished
Cited by10 cases

This text of 553 A.2d 761 (In re Estate of McCool) is published on Counsel Stack Legal Research, covering Supreme Court of New Hampshire primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Estate of McCool, 553 A.2d 761, 131 N.H. 340, 1988 N.H. LEXIS 135 (N.H. 1988).

Opinion

Johnson, J.

The petitioners, Paul McCool and Barbara Pitts, brother and sister of Charles McCool and beneficiaries of the estate of Charles McCool (the Estate), appeal from a decree of the Hillsborough County Probate Court (Cloutier, J.) disposing of their objections to the first account filed by the Estate’s original executor, the present petitionee, Attorney Robert Bossie. They ask that we reverse the probate court’s decisions: first, to impose no surcharge upon Attorney Bossie, who served as the Estate’s executor and legal counsel from January through November 1984; and second, to award partial executor’s and legal fees to him and to his firm. They argue that these requests are justified because the executor’s actions were tainted by incompetence and conflicts of interest. For reasons stated below, we reverse and remand the probate court’s decision on the issue of surcharge, and reverse its decision as to executor’s and legal fees.

The alleged instances of misconduct or lack of competence of which the petitioners complain on appeal arose in the following factual setting. In December 1983, Charles McCool was killed when the light airplane he was piloting crashed in New Mexico. Mr. McCool’s only passengers, his live-in companion Cheryl Hendrickson and their two children, Sean and Devin McCool, also died in the crash. Attorney Bossie, who had prepared Mr. McCool’s will, was appointed executor of the Estate in accordance with the terms of that will in January 1984. Following his appointment, Attorney Bossie hired his law firm, Bossie, Kelly & Hodes, to act as the Estate’s legal counsel. Soon afterwards, the probate court made [342]*342Cheryl Hendrickson’s father executor of her estate and petitioner Paul McCool administrator of the estates of Sean and Devin McCool. Bossie, Kelly & Hodes then agreed to represent these estates as well as the estate of Charles McCool.

Within a short time after the December airplane crash, it became evident that the probable cause of that accident had been Charles McCool’s negligence. In light of this, Attorney Bossie and his firm recognized that wrongful death actions should be brought against Charles McCool’s estate on behalf of the estates of Ms. Hendrickson and each of the two children. In pursuit of these claims, Attorney Bossie and the members of his firm shared information among themselves and on behalf of the several estates regarding the nature and extent of available insurance coverage and other issues relevant to the various wrongful death actions. Attorney Bossie, moreover, drafted insurance claim letters against himself as executor of Charles McCool’s estate for execution by Mr. Hendrickson as executor of his daughter’s estate and by Paul McCool as administrator of the children’s estates. The conflicts of interest evident in these multiple representations and exchanges of information among members of the same firm, and the conflicts of interest, discussed below, in relation to representation of Eric Frey and Frey Associates, Inc., underlie the petitioners’ appeal on the issue of executor’s and attorney’s fees.

The other major ground for petitioners’ objection to the account, relevant to this appeal, arises from Attorney Bossie’s failure to dispose of the Estate’s principal asset. This asset consisted of 488,400 shares of stock in Frey Associates, Inc. (Frey Associates), a corporation specializing in developing and marketing computer equipment and artificial intelligence software. Charles McCool, who acted as head of marketing and sales for the corporation, owned approximately one-third of its outstanding shares. Eric Frey, the corporation’s president, owned slightly more than one-third of those shares. The corporation had issued the remaining shares to the public via registration and public sale in accordance with federal law in autumn 1983.

Soon after Charles McCool’s death, Eric Frey notified Attorney Bossie that he claimed the right to purchase the Estate’s Frey Associates shares at “current equity value,” in accordance with the terms of two stock purchase agreements into which Mr. Frey and Frey Associates had entered with Mr. McCool. The agreements in question specifically provided:

[343]*343“In the event that [Charles] McCool, for whatever reason, terminates his employment with Frey Associates, Inc., he agrees to permit Frey Associates, Inc. and/or Eric Frey, individually, to repurchase all of the stock then owned by McCool at its then current equity value . . . .”

In this and subsequent conversations with Attorney Bossie, Mr. Frey contended that Mr. McCool’s death terminated his employment with Frey Associates and triggered Mr. Frey’s right to purchase the Estate’s stock under the agreements. Despite the fact that a member of his law firm had drafted one of the documents, and the firm had reviewed the other and advised Mr. Frey and the corporation that these agreements provided adequate protection against an offering of the McCool stock to third parties, Attorney Bossie took the position that Mr. McCool’s death did not trigger a right of purchase. All parties agree that “current equity value” is the equivalent of “book value,” which was $1.80 per share at the time of Mr. McCool’s death. During the time in question, the company’s registered shares were selling on the over-the-counter market in the range of $11-$13 per share. However, the probate court found that neither Mr. Frey nor the corporation ever made “an offer” to purchase the McCool block of stock at book or any other value.

Since Attorney Bossie disagreed with Mr. Frey’s claim and resisted selling the shares at “current equity value” in accordance with the agreements, it can be inferred that he hoped to sell McCool’s shares to Mr. Frey, or to Frey Associates, at a higher price. Because he was also encountering many other difficulties in disposing of the stock, Attorney Bossie testified he retained the Boston law firm of Hale & Dorr, in late January 1984, to assist him in this task. The probate court determined that disposition of the Estate’s shares was complicated not only by the ambiguity inherent in the agreements’ provisions, but by Frey Associates’ failure to disclose those agreements, as required by federal law, when the corporation “went public” in 1983. As a result of this failure, the stock purchase agreements were subject to the charge that they no longer had any force or effect. In addition, the Estate’s shares of Frey Associates stock were unregistered, and thus subject to SEC Rule 144, which prohibits sale to the public of more than one percent of outstanding stock (in this case 15,000 shares) per quarter. Finally, the corporation was experiencing financial difficulties, the life expectancy of its product in the market was short, and its stock was thinly traded. The probate court ultimately found, and all parties now agree, that, except for the small [344]*344quarterly sales made to the public pursuant to Rule 144, these factors meant that Eric Frey and Frey Associates were the only potential buyers for the Estate’s shares. The question was at what price the executor could reasonably sell those shares and whether Mr. Frey or Frey Associates could or would buy them at that or any other price.

As noted above, although there were discussions between Attorney Bossie and Mr. Frey between January and September, 1984, they never agreed on terms acceptable to both sides. The probate court found that during this time Attorney Bossie dealt with Mr. Frey without benefit of a valuation of the Estate’s shares.

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Bluebook (online)
553 A.2d 761, 131 N.H. 340, 1988 N.H. LEXIS 135, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-estate-of-mccool-nh-1988.