Moran v. Sutter

228 S.W.2d 682, 360 Mo. 304, 1950 Mo. LEXIS 594
CourtSupreme Court of Missouri
DecidedMarch 13, 1950
DocketNo. 41480
StatusPublished
Cited by6 cases

This text of 228 S.W.2d 682 (Moran v. Sutter) is published on Counsel Stack Legal Research, covering Supreme Court of Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Moran v. Sutter, 228 S.W.2d 682, 360 Mo. 304, 1950 Mo. LEXIS 594 (Mo. 1950).

Opinion

ELLISON, P. J.

The defendant-appellant Orval C. Sutter, curator of the estate of Mary Catherine Reardon, a minor, appeals from a decree of the circuit court of St. Louis county construing the will of her father, J. Vincent Reardon, deceased, as creating an existing valid testamentary trust in her favor covering the corporate stock designated therein as represented by the substituted net proceeds from an intervening probate sale thereof, and accumulated net dividends therefrom. The decree further directs a severance of said trust corpus and income from the testator’s estate, and a delivery thereof to the plaintiff-respondent David H. Moran and defendant Leona E. Reardon, as trustees of that trust. The defendant-appellant Sutter contends the trust is nonexistent or terminated and dry; that the attempted probate sale of the corpus was void; and that said minor owns the stock and net proceeds therefrom’ absolutely, or “in fee simple” as appellant’s brief says. Whether that view is correct is the dominating’ issue on this appeal. The suit arises on Article III of the will, which provided:

“Article three. I gii^e, bequeath and demise to my dearly beloved wife, Leona E. Reardon, all of my personal effects and property, whether real or mixed, except my stock holdings in The Reardon Company, a Missouri corporation, which stock I direct be distributed as follows:
“To my wife, Leona E. Reardon, 50/100%. To my beloved daughter, Mary Catherine Reardon, 40/100%, which is to be held in trust for her by my executors, with power to sell or otherwise dispose of as they may see fit, but retain the proceeds or invest same for her sole benefit either before or after she becomes of age, as they may deem advisable or necessary. [Italics ours].
‘! To my surviving brothers and sisters, to be divided equally among them, 10/100%.”

An agreed statement of facts shows the testator was hot a lawyer and wrote his own will in March, 1940, when his daughter, an only [310]*310child, was 7 years old. He died in February, 1947, owning 139,416-2/3 shares of the capital stock of the Reardon Company, of which he was president. The corporation had a total outstanding capitalization of 233,750 shares, and he therefore owned a controlling interest of 59.64% in the Company. The 50% of his interest bequeathed to his widow was 69,708-1/3 shares, and the 40% bequeathed in trust to his daughter was 55,766-2/3 shares. These two interests totaled 125,475 shares. Together they also constituted a controlling interest of 53-1/2% of the outstanding capitalization. The 10% bequeathed to the testator’s brother and sisters was 13,941-,2/3 shares. The Reardon estate received $83,560 in dividends in 1947 on testator’s stock in The Reardon Company, but none thereafter. Aside from that stock the remainder of the estate consisted of other corporate stock, money and chattels, worth only about $15,000.

The petition in this suit was filed in the circuit court in .April, 1947.. Thereafter, in December, 1947, while this case was pending the plaintiff-respondent Moran, as executor of the will, filed a petition in the probate court of St. Louis county to sell 70,000 shares of the capital stock of The Reardon Company to pay the debts and expenses of administration of the testator’s estate under Sec’s 111, 112, R. S. 1939, Mo. R. S. A. The petition estimated these outlays would amount to about $400,000, including Federal estate and State inheritance taxes, income taxes, debts of the decedent, Widow’s allowances, executor’s commission, attorney fees, etc. The value of the whole estate was estimated at $900,000.

The probate court held it would be improvident to sell only 70,000 shares of The Reardon Company stock because that would be less than 30% of the total capitalization and would not carry control of the corporation, whereas a substantial part of the value of the testator’s stock lay in the fact that it was a controlling interest. And it was obvious that the required funds must come from a sale of the stock since the other estate assets were of comparatively insignificant value. The book value of the stock was figured at $3.24 per share, but the sale value of the whole stock was estimated at $6 per share.

The probate court ordered the sale of 90% of the testator’s stock at a minimum price of $7.00 per share. This exactly covered the controlling 125,475 shares held by the mother and minor daughter, and omitted the 10% non-controlling stock bequeathed to the testator’s brother and sisters. After considerable jockeying and competitive bidding with another company The Reardon Company bought the stock for $942,062.50, which was $1000 more than $7.50 per share, and the Probate Court approved the sale. Two of the minor stockholders appealed to the circuit court from that order, but both dismissed their appeals and the judgment and order became final. The trial court rejected this evidence, except the agreed fact that such a [311]*311sale was' made, but preserved the evidence in the record under Sec. 114 of the Civil Code, Laws Mo. 1943, p. 387, Sec. 847.114, Mo. R. S. A.

The trial chancellor’s decree held that the testator by Article III' of his will intended to and did [quoting substantially] : create a trust whereby 40 % of his stock in The Reardon Company, or the proceeds of sale thereof, would be held by his widow and plaintiff-respondent Moran as trustees for the sole benefit of his minor daughter, Mary Catherine; that he intended to and did confer upon the trustees full power to manage, control and administer said trust property, and to sell the same and reinvest the proceeds according to their sound discretion; that it was the testator’s intention to clothe the trustees with power to use and apply so much of the net income of the trust as the trustees might deem advisable or necessary for the proper education,' maintenance and support of his daughter during the continuance of the trust; that he intended to and did confer upon the trustees the power to terminate the trust, and to distribute the corpus and any accumulated income thereof to the daughter, free of the trust, at any time following her majority, when in their sound discretion to trustees deemed she had acquired sufficient experience and knowledge to hold, manage aiid control the same personally.

The chancellor’s decretal order was that the net proceeds from the probate sale of the 90 % of the testator’s stock in The Reardon Company, after deducting its proportional share of the taxes, costs and expenses of administration, including the costs of this suit, be distributed to the widow and the trustees of the minor daughter in proportion to their respective interests therein, and that the remaining 10% of’the stock be distributed in kind to the testator’s brother and sisters, subject proportionately to the same expenses.

But with respect to the daughter’s interest the order further provided that the two trustees should “hold, manage, control, invest and reinvest the same for the sole benefit of (the daughter) until she shall have reached her majority and until such time thereafter when in the sound discretion of said Trustees she shall have acquired sufficient experience and knowledge to personally hold, manage and control the same, at which time the Trustees shall distribute to her, free of the trust, the corpus of the trust property and any undistributed income thereof.”

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Bluebook (online)
228 S.W.2d 682, 360 Mo. 304, 1950 Mo. LEXIS 594, Counsel Stack Legal Research, https://law.counselstack.com/opinion/moran-v-sutter-mo-1950.