Summary
In St. Norbert, the defendant informed the president of St. Norbert College that he intended to gift a total of $1,500,000 to the College in two separate stock transfers to be made in accordance with a trust and two buy-sell agreements.
Summary of this case from In re First Phoenix-Weston, LLCOpinion
No. 75-657.
Argued September 2, 1977. —
Decided January 3, 1978.
APPEAL from a judgment of the circuit court for Brown county: PETER G. PAPPAS, Circuit Judge of the Sixth Judicial Circuit, Presiding. Affirmed.
For the appellant there were briefs by Kaftan, Kaftan, Kaftan, Kuehne Van Egeren, S.C. and oral argument by J. Robert Kaftan, all of Green Bay.
For the respondent there was a brief by Lester S. Clemons, Frank J. Daily and Quarles Brady, and oral argument by Messrs. Clemons and Daily, all of Milwaukee.
FACTS.
Following a trial to the court a judgment was entered requiring the defendant-appellant, Victor McCormick, individually and as trustee of the Mary Minahan McCormick Memorial Trust, to transfer to the plaintiff-respondent, St. Norbert College Foundation, Inc., 14,000 shares of Proctor and Gamble Company common stock worth over $1,000,000, plus $106,000 of dividends, interest and costs. The third-party complaint against the third-party defendant-respondent, The Premonstratensian Fathers, a corporation, was dismissed on its merits.
Dates and facts relevant to the controversy between the litigants include the following:
The plaintiff, St. Norbert College Foundation, Inc., is a tax exempt Wisconsin corporation, organized in 1965 without stock and not for profit under ch. 181, Stats., in anticipation of a donation from the defendant McCormick.
On June 29, 1965, McCormick informed Father Dennis M. Burke, then president of St. Norbert College, that he had decided to make a gift of $1,000,000 to the Premonstratensian Fathers for the benefit of St. Norbert College. Defendant signed a pledge card stating that the form and time of the gift would be determined in the future.
On August 6, 1965, McCormick advised Father Burke of his decision to make a second gift of $500,000 to the college to memorialize his deceased mother, Mary Minahan McCormick. The form and time of that gift was also to be determined in the future.
Between August 6th and August 17th, 1965, McCormick conferred frequently with Mr. David Fountain, his accountant and personal tax advisor, as to how to implement these gifts to maximize his tax benefits. These consultations led to the preparation of a memorandum by Fountain concerning the form of the gift.
On August 17, 1965, McCormick and Father Burke discussed and approved Fountain's memorandum, referred to hereafter as the Fountain Plan. Fountain and E. L. Everson, a Green Bay attorney, were present at this meeting.
The Fountain Plan was implemented by a series of documents drafted by Attorney Everson and approved by Fountain. The two stock transfers were to be made by the terms of a trust and two buy-sell agreements. On September 17, 1965, McCormick and the Foundation executed the first buy-sell agreement. By the terms of that agreement McCormick agreed to transfer 14,000 shares of Proctor and Gamble stock, at the time worth $1,013,250, to the Foundation. The Foundation agreed to pay McCormick $20,000 upon transfer and $10,000 per year for life. This agreement was carried out by both parties.
On either October 7th or 8th, 1965, both the trust and the second buy-sell agreement were executed. The trust was executed first. It was an agreement between Victor McCormick as grantor and Victor McCormick as trustee of the Mary Minahan McCormick Memorial Trust. McCormick as grantor was to transfer 7,000 shares of Proctor and Gamble stock valued in 1965 in excess of $500,000, to himself as trustee to be held in a revocable trust under the conditions set forth in the agreement. In the trust agreement the grantor was specifically given the power to transfer the stock according to a second buy-sell agreement, dated October 8, 1965.
The second buy-sell agreement was between McCormick as trustee of the above trust and the Foundation. Under it McCormick agreed to sell the Foundation the 7,000 shares of stock in the trust for $5,000 to be paid annually to the defendant for life. The sale was to take place on January 2, 1971. Both the trust agreement and the October 8 buy-sell agreement were executed in triplicate by McCormick as trustee and by Father Burke for the Foundation in the presence of both Attorney Everson and Fountain.
On October 3, 1965, the College dedicated a six-story women's dormitory to Mary Minahan McCormick's memory.
McCormick claims that on February 21, 1969, he executed, from himself as an individual to himself as trustee, two signed notices of revocation of the trust. The terms of the trust allowed it to be revoked by the grantor, McCormick, by filing a signed notice of revocation with the trustee, who was also McCormick. The defendant's exhibits included two such signed notices — an original with the signatures torn off and a copy with signatures conformed by the defendant. The copy showed Alex Wilmer, a retired attorney, and Agnes Hujet, defendant's one-time secretary, as witnesses. Neither of the witnesses remember seeing the documents or witnessing them, but the exhibits were admitted into evidence.
On September 16, 1969, McCormick, in a letter to Father Burke, stated that he intended eventually to make three times the donation to the College called for in the first buy-sell agreement. But on October 1, 1969, McCormick wrote to the vice-president of the college, that he had ". . . `taken a walk' permanently so far as St. Norbert's is concerned." On February 6, 1970, he met with Father Burke but said nothing about revoking the trust or not delivering the shares of stock. Again on December 12th or 13th, 1970, he met with Father Burke and told him that he would not be transferring any more stock and that he, McCormick, had the right to revoke the trust.
On February 4, 1971, McCormick met with Father Burke and Abbot Killeen of the Premonstratensian Fathers and told them that he had complied with the second pledge because in April, 1970, the Proctor and Gamble stock split two for one so that the shares already transferred were worth more than the combined amount of the two pledges and buy-sell agreements. McCormick asked for the return of the October 8 buy-sell agreement. Father Burke informed the directors of plaintiff Foundation-corporation that defendant wanted the agreement back in order to make a codicil to his will. Plaintiff's directors sent defendant one duplicate-original of the buy-sell agreement but retained another. When McCormick received the copy of the buy-sell agreement, he tore the signatures off.
On November 4, 1971, the Foundation commenced this suit against McCormick, alleging that McCormick never transferred the 7,000 shares (following the stock split, 14,000 shares) of Proctor and Gamble stock, as provided in the October 8 buy-sell agreement.
On January 2, 1976, judgment was entered requiring McCormick to specifically perform the October 8 buy-sell agreement, including the transfer of the stock, plus payment of dividends, interest and costs. From this judgment, the defendant appeals.
While the defendant in his brief on appeal lists eight issues, the last one of which he subdivides into six separate challenges to the judgment, we find the following to be dispositive.
LACK OF CONSIDERATION.
The agreement of the parties challenged here is their buy-sell agreement of October 8, 1965. By the terms of that contract, defendant agreed to sell and plaintiff agreed to buy certain shares of Proctor and Gamble stock. Defendant contends that such sales contract is not enforceable because it lacks consideration. The contract was under seal, so consideration is presumed. However, the presence of consideration is clear from the document. Defendant agreed to sell the stock. Plaintiff agreed to pay the stipulated price — $5,000 per year for life to the defendant. It is not the amount of consideration that determines the validity of a contract. As our court has held, ". . . a valuable consideration however small is sufficient to support any contract; . . . inadequacy of consideration alone is not a fatal defect." The law concerns itself only with the existence of legal consideration because "`[t]he adequacy in fact, as distinguished from value in law, is for the parties to judge for themselves.'" A consideration of even an indeterminate value, incapable of being reduced to a fixed sum, can be sufficient to constitute legal consideration. However, in the case before us, the dollar amounts to be paid annually for the life of the defendant were fixed by contract, and the attack upon the contract for lack of legal consideration fails.
Sec. 891.27, Stats. See also: Farley v. Salow, 67 Wis.2d 393, 402, 227 N.W.2d 76 (1975).
Rust v. Fitzhugh, 132 Wis. 549, 557, 112 N.W. 508 (1907), quoted with approval in Estate of Hatten, 233 Wis. 199, 216, 288 N.W. 278 (1940).
Estate of Hatten, supra, at 216, quoting from 7 Am. Jur., Bills and Notes, page 927, sec. 234.
Id. at 216.
EXISTENCE OF AN ENFORCEABLE CONTRACT BETWEEN THE PARTIES.
In the defendant's view, the October 8 buy-sell agreement between the parties was not a contract at all, but "overall a promise to make a gift in the future, which is unenforceable." In support of that contention the defendant asks this court to consider "the conduct of all of the parties and all of the writings." The invitation to look at all the writings and all previous charitable transactions between the parties is declined. The written sales contract between the parties is full and complete, clear and unambiguous. As our court has held in such a situation, "It is presumed that after the parties negotiate the terms of a contract the negotiations are merged therein when written and signed." Prior writings or promises not embodied in a written contract ". . . are deemed to have been abandoned, unless it appears that the parties did not intend that the writing should express the whole contract." Since no ambiguity is claimed to be present in the written contract of the parties, there is neither right nor reason to resort to prior transactions between the parties to erase the written contract of the parties and substitute a promise to make a gift in the future in its stead. REFORMATION OF CONTRACT. Having held that the October 8 buy-sell agreement between the plaintiff and the defendant to be a valid contract, we reach the defendant's contention that the contract should be reformed to comply with the basic intentions of the parties. A contract is not to be reformed unless there is a mutual mistake or a mistake by one party and fraud by the other. For reformation there must be "`. . . the most positive and satisfactory evidence showing either fraud or mistake in committing an agreement to writing. . . .'" The mistake, if fraud is not claimed, must be mutual. "`Mere mistake of a party as to the legal meaning, scope, or effect of an instrument does not vitiate it; and a mistake of law made by one party to a contract does not excuse him from the obligations thereof. . . .'" There is no basis in the record for finding that the Foundation was mistaken either as to the factual basis or the legal effect of the buy-sell contract. The record establishes a change of heart on the part of the defendant after the buy-sell contract was executed. But the defendant's testimony that he relied upon the interpretation of the contract given him by Everson, his attorney and friend (an assertion denied by Everson himself) is no basis for a claim of mistake. The mistake claimed is not mutual. Even if McCormick was mistaken, there is no evidence whatsoever that the Foundation's intentions varied from the terms of the written contract. Therefore there is no basis in the record of this case for reformation of the buy-sell contract entered into by this plaintiff and this defendant.REVOCATION OF THE TRUST.
Focusing upon the trust agreement between himself as grantor and himself as trustee, the defendant argues that he "revoked the trust agreement and pledge, notified plaintiff and made them a nullity." Under the trust agreement the defendant as grantor was to transfer to himself as trustee 7,000 shares of Proctor and Gamble stock to be held in a revocable trust under the conditions set forth in the agreement. Under the subsequent buy-sell agreement the defendant as trustee agreed to sell to the plaintiff the 7,000 shares of stock on January 2, 1971. Thus, as to the defendant's claim that the entire transaction was revoked, the first question is whether the trust was revoked before the sale date of January 2, 1971.
Appellant's Brief at 34.
The trial court found that the trust was not revoked by the defendant grantor until after January 4, 1971. The defendant offered evidence of an earlier revocation of the trust agreement in compliance with its requirements for revocation. It is enough here to note that the trial court did not believe the evidence offered and its reasons for rejection of the claim of a trust revocation prior to January 2, 1971, were clearly stated in its memorandum decision. The trial court was not required to accept the claim that a trust revocation notice was executed on February 21, 1969. The test on review is not whether this court would have accepted the testimony as to a timely revocation of the trust. The test as to the finding of fact made by the trial court is whether or not it is contrary to the great weight and clear preponderance of the evidence. It is not. It follows that the factual determination made by the trial court must be accepted by this court on review.
Stueck v. Le Duc, 57 Wis.2d 735, 741, 205 N.W.2d 139 (1973), citing Milbauer v. Transport Employes' Mut. Benefit Society, 56 Wis.2d 860, 862, 203 N.W.2d 135 (1973); Resseguie v. American Mut. Liability Ins. Co., 51 Wis.2d 92, 105, 186 N.W.2d 236 (1971); Weed v. Lepianka, 30 Wis.2d 198, 205, 140 N.W.2d 305 (1966); Mitchell v. Western Casualty Surety Co., 30 Wis.2d 419, 141 N.W.2d 212 (1966).
Our upholding the trial court's finding of fact that the trust agreement was not revoked until after the date of sale, January 2, 1971, makes it unnecessary to consider what effect a timely revocation of the trust agreement would have on either the validity of the October 8 buy-sell agreement or the personal liability of McCormick on the agreement which he entered into as trustee. RESCISSION OF THE CONTRACT.
See: Gates v. Avery, 112 Wis. 271, 276, 277, 87 N.W. 1091 (1901), quoted with approval in Arnold v. Randall, 121 Wis. 462, 468, 98 N.W. 239 (1904). See also: Taylor v. Davis, 110 U.S. 330, 334, 335 (1884); Bogert, Trusts and Trustees (2d ed. 1960), sec. 712, page 445; 3 Scott on Trusts (3d ed. 1967), sec. 262, pages 2221-2223.
For the sake of completeness, we note the defendant's objections to the trial court's finding concerning the role and the testimony of Fountain, the defendant's tax advisor, and Everson, the attorney present at the time of execution of the buy-sell agreement. On all issues raised, we affirm the trial court's findings of fact and conclusions of law. It follows that the judgment appealed from is affirmed.
By the Court. — Judgment affirmed.
BEILFUSS, C.J., and HEFFERNAN, J., took no part.
The trial court looked at each instrument and each isolated event in the history of the dealings between the parties and concluded that McCormick had a contractual commitment which he failed to keep. The trial court's analysis is sound on its face, and the trial court's conclusion inevitably follows from the analysis. I dissent, however, because upon reading the entire record and looking at the case in its entirety — instead of as a series of isolated events — the conclusion I reach is that the parties intended a gift — not a binding agreement.