# Clayton v. James B. Clow & Sons

> District Court, N.D. Illinois · December 10, 1962 · 212 F. Supp. 482

URL: https://www.frixlaw.com/law-library/cases/2253253

## Case

- **Full name:** Joanna Gwin Clow CLAYTON and Joanna Gwin Clow, a Minor, by Hugh A. Clayton, Her Next Friend, Plaintiffs, v. JAMES B. CLOW & SONS, a Corporation Et Al., Defendants
- **Court:** District Court, N.D. Illinois
- **Decided:** December 10, 1962
- **Citations:** 212 F. Supp. 482; 1962 U.S. Dist. LEXIS 4505
- **Precedential status:** Published
- **Opinion:** Opinion by Robson
- **Judges:** Robson
- **Cited by:** 5 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/2253253

## How later opinions describe it (automated extraction)

- finding that a fiduciary is not always precluded from self-dealing with trust property where settlor did not so intend, especially where testator knowingly placed his trustee in a position which he knew might conflict with interest of trust

## Opinion text

ROBSON, District Judge.
Plaintiffs, by Complaint filed June 27, 1955,
1
seek restitution of 91,200 shares of common stock of James B. Clow & Sons, a corporation,
2
as a part of the testamentary trust of the late Charles R. Clow, Sr.
3
These 91,200
4
shares were the result of numerous stock splits,
5
from the 2,850 shares which had been transferred to the Company by Charles, Sr.’s widow, Hattie
6
(trustee under the testamentary trust), in these four transactions :
1,250 shares at $25 on January 15, 1935 500 shares at $30 on December 24, 1935 600 shares at $50 on April 28, 1938 500 shares at $50 on July 1, 1938
These shares were derived from the 437% shares
7
which had originally constituted the testamentary trust corpus. The 1,250 shares involved in the first transaction were used by the Company to effect a merger; the 1,600 shares involved in the last three transactions were later transferred to William E. Clow, Sr.,
8
brother of Charles, Sr. and an officer and director of the Company.
The very narrow, and principal, issue in this enormously complicated controversy is whether William, Sr., procured the transfers from Mrs. Pryor of the 2,850 shares of common stock in the Company at inadequate prices, in breach of his fiduciary relations, either express or implied.
The physical proportions of this record and the problems involved are clearly demonstrated by an outline of its statistics. There are some 3,023 pages of transcript of the trial testimony; plaintiffs’ exhibits number 2,993 (No. 2992 alone has 230 pages); defendants have 241 exhibits. The total number of pages of these exhibits runs about 6,000. There are additionally some 2,663 pages of depositions; 189 pages of excerpts from William, Sr.’s diary, along with a thick volume, unpaged, of summaries therefrom; about ten court envelopes of pleadings, interrogatories, requests for admissions, rulings, and miscellany. The proposed findings of fact and conclusions of law and objections thereto aggregate 334 pages, and the briefs after trial total 856 pages.
The testamentary trust had been created by the will, executed February 17, 1908, of Charles, Sr. who died on May 7, 1910. The will provided, in part, as follows:
(e) “ * * * [Mrs. Pryor] is hereby given the right at any time to sell, assign, transfer and dispose of the whole or any part of said capital stock upon consent thereto given in writing by William E. Clow,
*486
Harry B. Clow and James C. Clow, or in ease of the death of any of them, then upon the like consent in writing of the survivor or survivors of them and the heirs, devisees, executors and administrators of the deceased.”
(d) “ * * * [The proceeds] shall be invested and reinvested from time to time in such securities or in such loans as m-y said Trustee shall elect with the consent in writing of said William E. Clow, Harry B. Clow and James C. Clow, or any two of them. * * *”
In addition to seeking recovery of the shares of stock, plaintiffs seek a monetary recovery of $2,755,071.90, which sum constitutes dividends through December 31, 1959, plus five per cent interest thereon, and the amount of a 1936 dividend note, and interest, which Mrs. Pryor sold at discount to William, Sr. They point out that the defendant Delaware corporation has 294,624 treasury shares and 417,120 authorized unissued shares so it has “ample” shares to provide for the return of 92,112 shares “wrongfully acquired” of the trust corpus. If William, Sr.’s successor-defendants restore the stock for which they are allegedly liable, to the trust corpus, liability of the Company would be accordingly reduced. As to defendant Johnson, plaintiffs suggest that the exact extent of his liability abide determination of recovery from William, Sr.’s successor-defendants and the Company.
Plaintiffs assert the right to recover on behalf of the trust estate of Charles, Sr. any shares or dividends which belong to the trust estate whether or not such trust property is distributable to them or to other persons as the beneficial owners thereof, because the trustee has failed to sue therefor.
9
Charles, Sr. left an only child, Charles R. Clow, Jr.,
10
who first married Linda, by whom he had a child, Charles III. Charles, Jr. procured a California divorce, and remarried to Ella, before the expiration of a year from the divorce. The marriage to Ella was annulled and Charles, Jr. later married the present plaintiff, Joanna Gwin Clow [Clayton], by whom he had a daughter, Joanna Gwin Clow, also a plaintiff.
11
Charles, Jr. died in a plane accident in service on March 1, 1943.
Mrs. Pryor, subsequent to Charles, Sr.’s death, married three times: first to Mr. Lawrence Peters, then Mr. Charles O. Pfeil, and later, Mr. Lawrence Pryor, who survived her. Mrs. Pryor was living at the time of the institution of this suit, but she declined to bring it or join in the suit.
12
*487
Defendants are the Company, the executor of the estate of Mrs. Pryor (the testamentary trustee of Charles, Sr.), Earle F. Johnson,
13
and numerous others,
14
as transferees of this Clow common stock and trustees of trusts or executors of estates to which the stock has been traced.
When Charles, Sr.’s will was executed the corporate by-laws restricted stock sales to nonshareholders by requiring that such stock be first offered to existing shareholders under the same terms. The only common stockholders at that time were his three brothers: William, Sr., Harry B. and James C., and James M. Johnson, who owned ten shares.
Charles, Sr. at the time of his death owed the Company $14,930.
The principal business of the Company since 1910 has been the manufacture of cast iron pressure pipes and fittings. It had pipe plants at Birmingham, Alabama, Coshocton, Ohio, and Newcomers-town, Ohio. Its stock has never been listed or traded on any exchange or over the counter. There had been only seven transfers of the stock up to the time of the transactions here involved.
15
The ancestor, James B. Clow, in his will of January 5, 1904, bequeathed all his property equally to his four sons, William, Sr., Harry B., James C. and-Charles, Sr., except the stock in the Clow Company, which he gave equally to the three sons, excepting William, Sr., but' he went on to explain the reason he was-excluded
16
was because he already possessed a large block of the stock. The-four brothers, sons of James B. Clow,' by agreement dated January 30, 1908, agreed that the provision in the father’s will “shall be disregarded, and all the capital stock (both preferred and common) * * * shall be divided equally between” them, one-fourth to each. Plaintiffs cite, even this 1904 agreement as indicative of William, Sr.’s overwhelming drive to procure control of the Company.
On April 28, 1932, a document executed by Mrs. Pryor, Charles, Jr. and Linda, and witnessed by Mr. Pryor, followed a suggestion by Mr. Sidney Murray, attorney for the Company. It arose out of the financial necessities of Mrs. Pryor. The Company had suspended common stock dividends in that month and she had borrowed $27,500 on a ninety-day note from a bank. Also, Charles, Jr. had left his first wife, Linda, in August, 1931, and she too had gone to William, Sr. about her financial problems in April, 1932. The advances from time to time were made by Clow Company on Company
*488
checks and were charged to the personal account of William, Sr. They bore interest at 6%; 1,812% shares of Clow stock had been assigned by Mrs. Pryor, Charles, Jr. and Linda as collateral.
On November 18, 1935, Charles, Jr. transferred to his mother, Mrs. Pryor, his remainder interest under the testamentary trust, whereupon the Company issued new certificates.
17
Later, on July 26, 1940, this November 18, 1935, transaction was rescinded. These two transactions are important to the respective parties’ contentions and the conclusion of this case, as affecting the right or power of Mrs. Pryor to make the challenged transfers to the Company in the interval between the two documents, and as barring a cause of action in plaintiffs.
Also of importance in the solution of this cause is a Mississippi court decree, by consent, entered December 14, 1953, construing Charles, Sr.’s will, as resulting in an intestacy of the remainder interest lodged by the will in Charles, Jr. The will made no specific provision for Charles, Jr.’s predeceasing his mother, the eventuality which actually occurred. As a concomitant to the consent decree, there were executed by the plaintiffs covenants not to sue Mrs. Pryor. All these documents are covered in greater detail later herein.
In ruling
18
upon various motions, including that for summary judgment, Judge Julius J. Hoffman of this Court set out with meticulous detail the facts of the controversy and legal contentions of the respective parties. He concluded that it could not be determined at that time as a matter of law that no genuine issue of fact was involved, and therefore denied the motions. He held the Illinois statute of limitations was inapplicable because this was in essence an equitable cause of action to which the doctrine of laches must be applied, but again, concluded a factual issue was involved preventing disposition of the issue.
While the Court has deep respect for the monumental and magnificent research task the plaintiffs have performed, it nevertheless remains completely unconvinced of the soundness of their premise that William, Sr. engineered a “campaign” to purloin the trust stock from Mrs. Pryor or that the Company, or he, paid less than its full value,
as it was then known or knowable.
19
Plaintiffs repeatedly stress statistics and statements by William, Sr. and others which they deem overwhelmingly indicative of fraud, concealment, misrepresentation, chicanery, and a campaign to procure the trust shares from Mrs. Pryor so William, Sr. might have complete control of the Company. They assert that if she had been fully apprised by William, Sr. of all the details of the Company’s finances and its mode of operation, he could not have swindled the shares from her at such low values.
The Court believes that if such were the true state of facts, and Mrs. Pryor and her husband honestly believed plaintiffs’ theories, she as trustee (and as grandmother), had a duty to protect, and in fact would have fulfilled that duty, to her descendant and would have participated fully and wholeheartedly in the suit for recovery. She was the one, other than William, Sr., who knew the real “pulse” of the transactions. Yet she declined to participate in this cause with a
*489
stupendous sum at stake. That very declination, informed as ostensibly it later was, carries extreme weight with the Court. It is not convinced that either age or state of health deterred her, rather a reluctance to turn against the only source of succor she had in her long interval of financial distress.
20
Plaintiffs state: “At their deposition in this action Mr. and Mrs. Pryor still believed that William, Sr. had not taken advantage of them or done anything improper.” The Court accords great weight to that belief as based on the actualities of the case, not on a masterful fabrication of figures infinitely illuminated by hindsight.
Furthermore, in reaching its conclusion that the Company, and thereafter, William, Sr., breached no possible fiduciary relation and treated Mrs. Pryor with absolute integrity, the Court is deeply influenced by the findings
21
of value of this stock by the Federal Government when confronted with the same problem at the time of imposition of estate taxes on two estates, and the State of Illinois when imposing inheritance taxes. These governmental agencies charged with this task are experts in the field of evaluation of the stock of closed corporations. They have the duty of imposing taxes on a basis which is just to the taxpayer and to the governments — an ascertainment made on accounting facts fully presented at a time fairly contemporaneous with the determination. Yet the values of Clow common stock at which the taxes were levied were below those paid by the Company and by William, Sr.
The Court cannot see how it can be claimed that William, Sr. “exaggerated” the personal problems of Charles, Jr., or deprecated his financial wisdom. Charles, Jr. was a thrice married man, deserted a wife and infant child, was unable to hold a position, and was continually borrowing from his mother. It seems to the Court that William, Sr. ex-ercised extreme patience and resourceful-*ness in wrestling with Charles, Jr.’S' problems. Nor is the Court unaware" of the favorable aspects of Charles’ life — his service to country and death in service; his charm of personality. But it remained for someone with business acumen or funds to seek a way to support his mother, wives, and children.
Charles, Jr.’s first wife, Linda, went to Greenville, Mississippi, in April, 1936, and had him arrested. Mr. Pryor and Attorney Hafter secured Charles, Jr.’s release. Linda’s divorce proceedings against Charles, Jr. were settled on April 27, 1936, by Mr. Pryor and Attorney Hafter who came to Chicago. They also saw William, Sr. and Attorney Murray. Mr. Pryor and Mr. Hafter had a Clow stock certificate for 500 shares with them and a letter signed by Mrs. Pryor and Charles, Jr. asking that the certificate be cancelled and new ones issued: 200 shares to Linda, 200 shares to a trustee for Charles III and 100 shares for Mrs. Pryor. The divorce decree was entered May 4, 1936, and the stock transferred as requested.
Charles, Jr. at the age of twenty-one was employed by the Company, on May 3, 1926, in the shipping and receiving section. A supervisor reported that Charles, Jr. was not only “no good but a detriment.” He went back to work for the Company about April 15, 1930, shortly after his marriage to Linda, but he became ill and was hospitalized and returned to work in the Fall. He left the Company June 24, 1931, to work for the Chicago World’s Fair. There was some assertion that Charles, Jr. was not as well treated as others of the younger Clow generation, but the evidence showed that he had no predisposition to hard, consistent work, or regular hours. However, he was at one time paid $24 a week
*490
when other employees doing comparable work were earning $14 or $15 a week.
William, Sr.’s conscientious handling of the problem of Charles, Jr. is exemplified by this letter of March 17,1938, to Mrs. Pryor:
“I was under the impression that you had paid all of Charles’ debts. The boy has no realization of penalties for breaking the law. * * * I am told you know that he gave a check to his doctor for $190.00 for services rendered when he had nothing in the bank. Now that means that unless it is paid Charles cannot come into the state of Illinois without being arrested. * * * Assuming that you know all about it and intend to pay the bill, if you will authorize us to make the payment, I think in all probability we can have the doctor accept the amount v/ithout any interest and give a receipt to Charles for his debt in full. So far as I know, this is the last debt that Charles has in this part of the country. I hope so, for honestly, Hattie, I do not really need Charles’ troubles — I have got enough of mine. * * * ”
Evidently there was no reply to this letter because on March 29 William, Sr. wrote a strongly worded letter seeking a reply and received a wire authorizing settlement of the bill, and word of appreciation.
A chronology of events here involved is set forth below.
22
*491
Outline of Plaintiffs’ Contentions
Plaintiffs predicate their cause of action on these four bases:
(1) The existence of breaches of an
express trust
under the “consent” provisions (Article Third, Clauses (c) and' (d) quoted above) of Charles, Sr.’s will' through (a) self-dealing by William, Sr. and the other advisory trustees, and (b>the lack of written consents of all re
*492
quired persons to the purported sales by the trustee.
(2) The presumption of fraud arising out of the purchase of property by or for the benefit of William, Sr. as the dominant party in his
confidential relationship
with Mrs. Pryor as trustee, and her son, as the servient parties in that relationship, and the failure of defendants to overcome such presumption of fraud by an affirmative showing that the transactions were fair, including full and frank disclosure of all the material facts and the payment of a fair and adequate price on each of the four acquisitions of trust stock.
(3) The
actual fraud
on the part of William, Sr. and the Company through concealment and misrepresentations of material facts on each of the four acquisitions of trust stock, and through William, Sr.’s calculated, persistent campaign to acquire the trust stock for himself.
(4) The breaches of
fiduciary duty owed by William, Sr. in his capacity as the principal officer, director and controlling stockholder
of the Company to Mrs. Pryor as trustee, in her capacity as a stockholder of the Company, requiring him to make full disclosure to her of all material facts before purchasing stock from her, purportedly for the Company.
More specifically, as to the first contention, plaintiffs maintain that in requiring the brothers’ or their heirs’ consents to the sale of the Clow stock by Mrs. Pryor as trustee, and the reinvestment of the proceeds, it was Charles, Sr.’s intent expressly to make the eonsenters trustees for the benefit of his young and inexperienced wife and infant child. They contend that the sales without such consents were beyond the power of Mrs. Pryor as trustee to make, and ineffective because all the required persons
23
did not consent. Plaintiffs predicate the liability of the Company and Mr. John
*493
son on their alleged participation in the asserted breaches of express trust and confidential relationship having full knowledge thereof.
24
Plaintiffs do not predicate their claim upon unjust enrichment, but solely upon tracing trust property. While they have no objection to these defendants’ proving the amounts they have paid for income tax on the dividends on the disputed shares, they deem such evidence irrelevant because it could not reduce their liability to plaintiffs, and “if any defendants paid taxes on property or income that does not belong to them, they should apply for tax refunds.”
25
The plaintiffs assert that the consents of Charles, Jr. and Mrs. Pryor to the four transfers of trust stock to the Company were ineffective because they were executed without knowledge of the material facts relating to the transactions, the consents being prepared by some of defendants and given with the inference that they were approved by the Company’s counsel, Mr. Sidney Murray.
Plaintiffs maintain that prohibited self-dealing in the trust property, by an advisory trustee expressly named in the will, in itself requires that the acquisitions be set aside, without regard to their fairness or the adequacy of the prices paid. They predicate this position on the rule “unyielding and inflexible” against self-dealing, stated in Bennett v. Weber, 323 Ill. 283, 294 , 154 N.E. 105, 109 , where it was said:
“A trustee cannot purchase from
himself
or at his own sale. The law does not stop to inquire into the fairness of the sale or the adequacy of the price, but stamps its disapproval upon a transaction which creates a conflict between the self-interest and integrity of the trustee.” (Italics supplied.)
Laches, plaintiffs claim, do not bar their suit because they had no knowledge of any of the material facts on which the cause of action is based until shortly before the filing of the complaint and until after discovery herein, or knowledge, even, that William, Sr. had purchased all 1600 shares involved in the last three transactions. They state there was no lack of diligence on their part, nor was there even a duty of diligence, because of the confidential relation. Furthermore, since Charles, Jr. had only an equitable reversionary interest, it did not come into possession until after Mrs. Pryor’s death on June 1, 1959, and there has been no prejudice because the suit was not brought earlier.
Plaintiffs also maintain that the covenants not to sue, given Mrs. Pryor in settling the 1953 Mississippi litigation did not release her or any of the defendants as to the subject matter of this action for making the sales, but only as to
*494
the money received by Mrs. Pryor in these transactions. Furthermore, the covenants were executed in Mississippi where the release of one joint obligor does not release others unless there is clear intent so to do.
Secondarily, plaintiffs contend that there was a confidential relationship between William, Sr. and Mrs. Pryor, her husband, and her son, from which a presumption of fraud arises, which presumption was not overcome by evidence adduced by defendants. The confidential relationship was the result of many aspects of the dominant-servient relationship between them. Thus plaintiffs state that “The development of a sense of absolute confidence in him by Mrs. Pryor was the cornerstone of William, Sr.’s success in obtaining Mrs. Pryor’s trust stock. He played skillfully and in harmony upon each of his separate relationships with her, weaving them into a single strong tie of unshakable trust and confidence in him. He used to the maximum the family relation, the express trust relation under Charles, Sr.’s will, his relations as an officer and director to her as a stockholder, his professed solicitude for her welfare and his repeated assurances that he always put her interest ahead of his own as a trustee should. Thus he won her absolute trust and confidence. Without it he could never have succeeded in his campaign to obtain her trust stock.”
Plaintiffs go on to assert that Mrs. Pryor had no independent advice, other than from her husband and son, neither of whom had more information than she, and there was a duty on the part of defendants to inform them all of the material facts.
The fourth position of plaintiffs is predicated on the premise that William, Sr. and his brother’s sons, Harry, Jr. and Beach, held a total of
82.5%
stock interest in the Company and William, Sr., as a trustee “violates his duty if he sells trust property to * * * a corporation in which he has a controlling or substantial interest.” (Restatement, Second, Trusts, § 170(i); Kinney v. Lindgren, 373 Ill. 415, 422 , 26 N.E.2d 471 (1940))
In the margin are set forth briefly some of the many alleged facts plaintiffs deem indicative of William, Sr.’s motive to acquire a controlling interest in the Company.
26
*495
They believe those facts, with others, conclusively prove William, Sr.’s overwhelming desire to control the Company at any cost, and that he went to very great lengths to defraud Mrs. Pryor and to delude her and her son and others into parting with their stock when they had no alternative in their financial distress.
Outline of Defendants’ Contentions
The Court will consolidate for consideration both branches of the defendants, the individuals and the Company. It is the defendants’ position that:
1. Plaintiffs have no standing because under the will of Charles, Sr., Mrs. Pryor became entitled to the corpus of the trust if Charles, Jr. predeceased her, as he did.
27
2. Plaintiffs have no standing because . Charles, Jr., through whom they claim, transferred his interest to his mother by agreement of November 18,
*496
1935, and also because he approved each sale.
28
3. Plaintiffs’ claims are barred by the five-year statute of limitations and by laches.
29
4. The shares plaintiffs seek were received by Mrs. Pryor as dividends and
she was entitled to keep them, and had the right to dispose of them.
5. The “consent” clause (c) of Charles, Sr.’s will was made solely for the benefit of the other members of the Clow family, and only they can complain, and failure to object was equivalent to
*497
assent.
30
It is a question of fact
31
whether “eonsentors” are fiduciaries, and even if they are, courts have refused to apply the rule against self-dealing when the evidence indicated the creator of the trust did not intend to prevent him from purchasing trust property.
32
6. The Mississippi decree construing Charles, Sr.’s will was by consent and pertained only to the shares then in the trust, and it was by the Clow Company’s consent that the stock was placed in Mrs. Pryor’s name.
7. William, Sr. was not a trustee and Attorney Murray’s calling him one did not invest him with that stature. Mrs. Pryor was the only trustee.
8. The July 26, 1940, rescission document did not void
ab initio
the prior executed sales and affected only the 2,000 shares mentioned therein, and did not cover the 3,250 shares theretofore transferred.
9. Defendants deny there was self-dealing, actual fraud, or presumed fraud arising from a confidential relation or nondisclosure.
10. The stock which Mrs. Pryor sold, she had received as dividends and she therefore had an absolute right to use dividends.
11. Defendants deny the inadequacy of valuation by the Company or William, Sr., or the invalidity of advances and loans to others, officers or employees of the Company or their close relatives.
Many are the alleged facts which defendants deem indicative of a lack of fraud on the part of William, Sr.
33
*498
Mrs. Pryor’s Financial Condition
The very fount of this litigation arose from the continued desperate financial condition of Mrs. Pryor during the depths of the depression. Her’s was not a unique position. She had requested and received a loan from the Company for $5,000 in November, 1938, to be repaid from anticipated dividends. A dividend of $5 a share in cash and $6 in note, due in 1941 and carrying 3'%' interest, was declared in December,
34
with Mrs. Pryor receiving cash of $15,500 (not excepting the $5,000 loan) and an $18,600 note. In April, 1937, Mrs. Pryor borrowed $5,000 from William, Sr. against her dividend note, and in July, 1937, she took up the matter of discounting her dividend note with William, Sr. He wrote her back July 8 that the value of her $18,600 note, after deducting the $5,000 was $10,309, and on July 13 she wired him she would sell it for that price. The note was discounted at 4%-.
35
In October, 1937, Mrs. Pryor was hospitalized and went to Florida to recuperate, and Mr. Pryor wrote William, Sr. at that time:
“It is quite true that Hattie has received some handsome dividends but we haye used them in helping Charles to equip his place and in making permanent improvements here. I do not feel that a dollar has been spent unwisely but it makes it difficult at this time when we are netting about $30 from a bale of cotton whereas the same bale netted about $90 last year.
“If within the next sixty days there is a possibility of her receiv
*499
mg any more dividends it would certainly be a wonderful thing if she could be sent some portion at this time. * * * ”
William, Sr. wrote asking the amount he needed and he would try to secure it as a debit against the next dividend. He received a reply from Mrs. Pryor telling of her debts, including one for a new car for Charles, Jr., and asking for $5,000 to pay her’s and Charles, Jr.’s debts. The Company advanced the sum and charged it to William, Sr.’s account.
36
Defendants’ Exhibit 91, a memorandum as to Mrs. Pryor (Pfeil), would indicate that she was indebted for $24,500 secured by 1,500 shares of Texas Corporation.
37
A letter of January 25, 1938, from Attorney Wynn to Mrs. Pryor indicated that she had some $34,000 debts to two local institutions and it was intimated that Mrs. Pryor did not want to go to the Clows again for money, and on February 1 he wrote her “Larry (Mr. Pryor) went to Chicago and I am glad he did not offer to sell any stock.” The records of the Southern Credit Company revealed that L. B. Pryor had a balance due them of $23,851.88, secured in part by 1,000 shares of Clow stock, valued at $50 (a valuation requested by them in a letter to Clow Company, although the lender thought the stock possibly had a value of $100 at the time). In a financial statement of L. B. Pryor for a loan of $7,500 made April 11, 1938, there was listed 3,100 shares of common Clow stock at a value of $310,000. Liabilities at that time totaled $78,800, including $34,650 notes payable, and mortgages totaling $41,400. In an application for a $13,300 loan January 25, 1939, there were listed as assets 2,000 shares of Clow common and 200 shares U. P. Nat. Bank, for a total of $205,600. Liabilities listed totaled $47,600.
One undated letter from Mrs. Pryor to William, Sr. stated her debt to him as $13,565.89 and it was to be paid by deduction of 500 shares from the 4,000 shares the Company held and the proceeds for same should be paid $13,565.89 to William, Sr. and the balance of $1,434.11 to her, the stock being sold for $15,000 or $30 a share.
The Pryors’ necessities for the 1938 sales arose out of their crop loss and the need for payment of the crop loan which on April 8, 1938, was approximately $21,409
38
to Southern Credit Corporation, which plaintiffs say “was vigorously pressing her for payment” and she sought to borrow $20,000 against future dividends which William, Sr. refused
39
offering to buy the stock instead.
Plaintiffs complain that the Company declared, prior to September 12, 1938, only a one dollar dividend in March, 1938, while having earnings in the first quarter of $158,933 and $263,364 for the first month, which would have warranted, they claim, a several dollar dividend, but instead in June, 1938, the Company prepaid $145,600 of dividend notes
40
not due until December, 1941, which would be
*500
equal to $4.85 a share on the common stock. Plaintiffs seem to forget that defendants were denying themselves, as well, of these possible common stock dividends and that the dividend note payment inured to the Company’s financial benefit to have this interest-bearing indebtedness off its books.
Nor is there any doubt of Mrs. Pryor’s earlier need for money. In a letter of June 3, 1935, she itemized 51 bills totaling $4,024.89, and additional items of taxes and insurance of $1,285.65. In a wire dated June 20, 1935, she stated: “Have not received papers; urgent I have money Saturday morning; people pressing and doubting my promise. * * * ” A letter from Greenville Bank & Trust Co. (Greenville, Miss.) to William, Sr., dated December 12,1935, stated that Mr. Hafter was authorized to settle Mrs. Pryor’s and Charles, Jr.’s debt, approximating $13,000, for which were to be returned 4,000 shares of Clow Company common stock and 1,542 shares of U. S. Pipe & Foundry Co. William, Sr., however, was so alarmed over the situation he wrote her he would not turn a share of the stock over to any one but her; that she had no chance of realizing enough money to satisfy a loan she would make, giving the stock as security therefor. Mrs. Pryor then wrote that her chief idea was to protect Charles, Jr. and get the stock out of Illinois.
A very long letter of January 19, 1937, from William, Sr. to Mr. Pryor concerned a $295 debt of Mrs. Pryor for which judgment had been allegedly procured by a creditor who approached the Clows for payment, and William, Sr. was fearful of adverse newspaper publicity and requested authority to pay the debt as against future dividends in case the last dividend had been used up in payment of the Kansas City mortgage. The letter also intimated that Mr. Pryor had been apprised of the Clow Company finances on a visit to Chicago, and William, Sr. further outlined its condition at the time of writing. William, Sr. got a wire back that Mrs. Pryor thought the bill was $125 and that she had paid it the previous December. William, Sr. communicated the wire to the creditor and wrote the results to Mrs. Pryor
41
*501
It seems to the Court that this letter clearly reveals the characters of the two principal actors in this controversy, to which deduction this Court must attach importance since the plaintiffs or their predecessors did not see fit to bring the suit until after the decease of William, Sr., and Mrs. Pryor herself refused to bring suit or participate therein.
A letter of April 16, 1937, from Kent to Mrs. Pryor reveals the sending of a $5,000 check to her with the understanding she would send the dividend note she had received, as security, with interest of 3%'%, stated to be the same as the dividend bore. He added stern admonitions against speculating in commodities.
In June, Mrs. Pryor wired as to the dividend she then expected in order to pay her income tax, to which William, Sr. replied by letter that due to strikes they felt they should buy materials for the future and business had not been as good as expected so it was considered prudent not to declare a dividend at that time.
The patience of the Clow Company is epitomized in this letter from E. F. Johnson, to Mrs. Pryor, dated
December 2, 1933:
“We
are today paying a bill of our customer * * * for $40.04, for work he did for Charlie in September of 1931. * * * This is the only bill of Charlie’s that we have paid, but we felt that we just could-n’t have an old customer of our company lose because of having given credit to the grandson of Captain Clow. We are, if you have no objections, going to charge this against future dividends payable to you on your Clow stock.”
Mrs. Pryor’s income in earlier years had been very substantial. According to a May 18, 1932, memorandum re Mrs. Pryor, it was stated that until recently a dividend had been paid of $1,600 a month; another memorandum of May 30, 1932, stated she had received monthly dividends of $1,312.50 and an extra dividend of 10
%■
at the end of the year. A letter to a banker, evidently from Attorney Wynn, dated March 25,1938, stated that Mrs. Pryor had received $32,000 in dividends for the year 1935, and $20,000 for the year 1936. But her income tax return stated she had received $34,100 for 1936 from the Clow Company. Her income tax return for 1938 took advantage of a $25,000 loss on the capital sale of the 500 shares, taking a 1913 valuation therefor of $50,000. She took a similar $25,000 loss in 1938 for the 500 shares of Clow stock sold to the Company in that year.
On February 29, 1936, the first preferred stock of U. S. Pipe and Foundry Company was retired and Mrs. Pryor received therefor $32,382, on which she paid income taxes on the capital gain. There is no evidence she asked the Clow family as to its mode of reinvestment under the will of Charles, Sr., nor what disposition she made of the proceeds.
Trustee under express trust
One facet of defendants’ liability is predicated, as above stated, upon William, Sr.’s liability for breaches of an alleged express trust by virtue of his being named in clauses (c) and (d) of Article Third of the will of 'Charles, Sr. By clause (c) William, Sr.’s, his brothers’ and their heirs’-consent to sale of the trust’s Clow stock was required, and by clause (d) William; Sr.’s and his brothers’ consent to the reinvestment of the proceeds of a sale of such stock was required.
Plaintiffs interpret provision (c) not for the benefit of other stockholders, because a Company by-law already so provided.
42
*502
The proposed findings of plaintiffs also infer that Charles, Sr.’s will arose out of an awareness from the brothers’ agreement, shortly after the father’s death, of William, Sr.’s “strong and aggressive” interest in acquiring more stock of the Corporation, and therefore Charles, Sr. could not have intended by the consent provision to confer additional power upon William, Sr. to veto sales of trust stock for his own purposes in derogation of the interest of the trust estate, but rather for the exclusive benefit of his trust estate.
43
In respect to plaintiffs’ contention that the transfers by Mrs. Pryor were invalid because not all of the required consents by members of the Clow family or their heirs were procured approving the transfers, the Court concludes that the fallacy of this contention inheres in the untenable position that the consent provision was for the benefit of the
cestuis
rather than of the consenters. In line with the conclusion that it was for the benefit of the other stockholders of this closely held stock, it follows that only they for whose benefit the provision was intended have the right to challenge its omission or breach.
44
Plaintiffs’ further contention that the consents which were actually procured were ineffective because the consenters lacked necessary information to wise exercise of their right must fail for similar reason.
Plaintiffs have conjured up what seems to the Court a completely tortured construction of the “consent” provision (Article Third (c)). This was a close family corporation with by-laws providing against transfer to others without prior offer to other stockholders — a not unusual:
*503
provision in this kind of situation. The fact that the testamentary trust contained other provisions solely for the benefit of the
cestuis
does not render an interpretation favorable to
other family members,
of the “consent provision” insupportable, inconsistent or illogical.
The formulators of the by-law and, the testator necessarily contemplated “self-dealing” by officers and- directors, it being inherent in the purchase of stock in their family corporation.
The Court is strongly of the opinion that William, Sr. was not a trustee
45
under the provisions of clauses (c) and (d) of the will of Charles, Sr.
He was not so denominated in the instrument while the widow was so called.
The Court has no doubt in its conclusion that the “consent” provision of clause (c) was
solely
for the benefit of the other members of the Clow family in their common endeavor to keep the Company family-owned. The Company bylaw protected the rights of family stockholders so the testator was fully aware that
self-dealing
was
necessarily
contemplated.
It is noteworthy that the scrivener of Charles, Sr.’s will used the word “trustee” in both clauses (c) and (d) when speaking of the widow named to handle the trust estate. Inferentially his failure to so describe the brothers and their heirs in those very same clauses should have significance as indicative of an intent
not
to charge them as trustees.
Plaintiffs claim that since it is a rule of law that wherever possible the Court should harmonize the provisions of a will to avoid conflict (36 Illinois Law and Practice, Wills, Sec. 218, p. 315), the two consent clauses of Charles, Sr.’s will should both be construed as for the beneficiaries’ benefit and the brothers trustees under both provisions, otherwise there would be created an irreconcilable conflict. This the Court feels is a slurring of ideas — one could well be a trustee under only one provision without conflict arising as to the remaining portions. Be that as it may, however, since the Court has concluded clause (c) requiring consent for sale of the Clow stock was for the benefit of Clow family members and not the testator’s heirs, therefore there need be no carry-over of interpretation of trusteeship to all other clauses, but on the contrary there could be a carry-over of the idea of non-trusteeship under the remaining provisions.
The Court believes that one weakness in plaintiffs’ case is revealed when they assert (p. 84 of Plaintiffs’ Reply to Defendants’ Brief after Trial, filed July 17, 1961):
“As we have already pointed out with respect to the breach of the express trust by William, Sr., since he was an admitted fiduciary with a standard of conduct ‘similar to that of a trustee,’
he was bound to act as a trustee in all matters relating to the trust estate. William, Sr.’s fiduciary duties were not limited to his functions under clause (d), i. e., the reinvestment of trust funds. He did not represent himself as a limited trustee.
He told her he was ‘trustee of the estate’ and that his approval of sales of trust stock was required as ‘trustee.’ ” (Italics supplied.)
If clause (c) be construed as for the benefit of William, Sr. and his brothers, there would be a very substantial basis for the holding of a limited trusteeship, if any, pertaining solely to reinvestments under clause (d).
Plaintiffs preclude defendants’ interpretation of Charles, Sr.’s will from “surrounding circumstances” because such circumstances may be used only when the language of the will is uncertain or ambiguous, but never to estab
*504
lish an intention of the testator not found in the will itself.
46
Since the will does not refer to the by-law, nor does the evidence show the lawyer who drafted the will knew of its existence, it may not be used to show an intent to benefit the consenters personally when the will itself shows the contrary — that they were fiduciaries or advisory trustees. However, it is apparent from a reading of clause (c) alone that it was meant only for the benefit of the other members of the Clow family.
Furthermore, plaintiffs claim no gift to or intention to benefit the consenters can be inferred from silence in the will
47
Nor will the will be construed in favor of the testator’s more remote relatives, his brothers, as against his closest relatives, his widow and only child.
48
They say the construction contended for would cut down the value of the trust property held for the testator’s widow and child by creating an absolute veto power on the sale of the Clow stock in favor of the testator’s brothers and their successors. This would go directly contrary to the fundamental presumption of the law favoring the closest relatives and conforming most nearly to the general law of inheritance. And the presumption is particularly strong here since the trust stock constituted the testator’s sole property, so the absolute veto power would be applicable to the entire trust property. Again, the Court feels plaintiffs are citing general rules of will interpretation inapplicable in view of the exceptional fact situation of a close family corporation.
Plaintiffs point to the alleged subterfuge employed by William, Sr., on the-advice of Attorney Murray, that the Company purchase Mrs. Pryor’s stock, and' after an interval, William, Sr. purchasing-the stock himself. There can be no* question that the indirect sales were utilized as a protective means deemed appropriate to make sales from Mrs. Pryor legal. Plaintiffs lose sight of the fact, that William, Sr. and his attorney were* seeking a means to
help
Mrs. Pryor divest herself of stock for which there was no market and to obtain funds of which she was in dire need. The device was employed not to take advantage of her, but to assist her in solving her very pressing and real financial necessities.
The Court is sympathetic to defendants’ construction of the will that there was an implied grant by the testator to the defendants of the right to purchase the Clow Company stock. Plaintiffs state this is squarely contrary to the law of Illinois which permits a trustee to buy trust assets only if expressly authorized to do so.
49
They distinguish the Victor v. Hillebrecht, 405 Ill. 264 , 90 N.E.2d 751 (1950), case by pointing out that that case did not involve trust property, and the suit was brought by the beneficiary from whom the purchase was made. And in the In re Steele’s Estate, 377 Pa. 250 , 103 A.2d 409 (1954), case the trustee was put in a conflicting position by the express terms of the trust.
*505
Under the Company by-laws, persons whom plaintiffs would hold as trustees, had a specific legal right to purchase before the stock could be sold to an outsider.
Plaintiffs maintain the defendants “in effect, concede by their silence” that there were no written consents to the second transaction; no written consents by Harry, Sr.’s widow and two daughters; the ■consents actually given to the first, third and fourth transactions were invalid if ■clause (c) was for the benefit of the trust, and the “purported” consents of Beach, Pearl and Harry, Jr. were invalid by reason of their lack of information .and failure to exercise judgment in executing the written consents solicited from them by the Company and William, ■'Sr. They point out that consent without knowledge is totally ineffective.
50
'They dispute defendants’ interpretation of the word “heirs” and contend it is broad enough to encompass Harry, Sr.’s widow and daughters.
51
They maintain the consent, under clause (c) had to be in writing, so that “substantial compliance” as asserted by defendants by discussion of the sale by Harry, Jr. with his family was insufficient, and furthermore, Harry, Jr. himself had a “pathetic lack of information about each transaction.” Plaintiffs claim they are not ■estopped to assert lack of consents because their trustee failed to obtain them in that they and the trust estate are in no way bound by any breach of trust ■caused or participated in by the Company and William, Sr., who undertook to •procure for Mrs. Pryor all the necessary consents, as advised by Attorney Murray.
As to the obtaining of the requisite consents, defendants assert that under defendants’ construction of the will the appropriate consents were procured, but even under plaintiffs’ construction they were also obtained in that the widow and daughters of Harry B. Clow are not “heirs, devisees, executors and administrators” the legal title to the Clow stock having vested in Harry, Jr. as trustee and they simply having an interest in income. They claim that the will being drawn in 1908, the word “heir” must be taken as having the meaning it then had, i. e., one inheriting through intestacy.
52
Furthermore, there was substantial compliance in that Harry B. Clow, Jr., testified he discussed the matter with his mother and sisters and they had no objection to the sale. Finally, they maintain that plaintiffs are estopped because Mrs. Pryor did not seek the advice of any of the so-called consenters, leaving it to Mr. Johnson to procure those consents Mr. Murray thought necessary.
Defendants dispute that the granting of a power of consent makes the holder a fiduciary and precludes its exercise in his own favor, his status depending on “all the circumstances”
53
and the “relationship of the holder of the power to the trust, as well as the nature of the power, is an important consideration.”
54
And even a fiduciary is not always precluded from self-dealing with trust property where the settlor did not so intend,
55
especially where “tes
*506
tator knowingly placed his trustee * * * in a position which he knew might conflict with interest of the trust. * * * ”
56
It is noteworthy that on April 28, 1938, Mrs. Pryor signed a confirmation of sale of 600 shares, at $50 a share, to the Company; the document bore the consent of Charles R. Clow; and that of W. E. Clow, J. B. Clow, Pearl Clow and Harry B. Clow. A similar document, dated July 1, 1938, covering 500 shares at $50 a share was signed by Mrs. Pryor, Charles R. Clow, J. Beach Clow, Harry B. Clow, Pearl Libby Clow and W. E. Clow. Plaintiffs belittle such documents as being prepared by defendants and signed by unenlightened individuals. They were signed by educated adults,
compos mentis,
who sought no further information before signing. The defendants point out that the plaintiffs who sue are barred from raising any question regarding lack of consents because Mrs. Pryor did not seek any advice from any of the so-called consenters and did not seek any consents from them, and inasmuch as she could not claim invalidity on that ground neither can the plaintiffs.
As defendants point out, Charles, Jr., through whom plaintiffs claim, gave his written consent to each sale, the consent stating the number of shares, and the price at which sold. He had been consulted before each sale by Mrs. Pryor. These consents of Charles, Jr., therefore estop plaintiffs.
Clause (d) gives rise to a trusteeship, plaintiffs maintain, because it is the law in Illinois that persons who are given control over the actions of a trustee in the management of trust property are fiduciaries equivalent to co-trustees.
57
They further argue that because William, Sr. was a fiduciary under clause (d) requiring his consent to reinvestment, he was under a duty not to engage in self-dealing, his duty of loyalty not being limited to the reinvestment functions. They cite Wootten v. Wootten, 151 F.2d 147 (10th Cir., 1945), which holds that a trustee may not compete with his beneficiary in the acquisition of property, even though the interest purchased by the fiduciary is not the property of the beneficiary.
58
The requirement of clause (d) that the brothers or their heirs approve reinvestment was unrelated to sales under clause (c) and simply endowed the brothers with an advisory duty to the actual trustee. The evidence here adduced would amply sustain a finding that the brothers carried out the duty in a highly commendable manner, resulting in the purchase of dividend producing stocks evidently far superior to any investment the trustee herself was capable of arriving at. Mrs. Pryor failed generally, however, to utilize the brothers’ capabilities as financial advisors because her desperate financial need left no money available for decisions on reinvestment. She failed to make reinvestments at all of the trust proceeds received from later transfers of Clow stock to the Company. Was William, Sr. to police her actions? The will did not so charge him. Mrs. Pryor, furthermore, was forgiven her breaches of trust by these plaintiffs in the Mississippi consent decree, in their covenants not to sue.
The Court concludes that both under clauses (c) and (d) plaintiffs have set up plausible legal ten pins which all promptly fall when the will as a whole with the backdrop of the close family
*507
Company are viewed in their proper relationship, revealing an unquestionable intent by the testator to give to his brothers and their heirs their established right to purchase the Clow Company stock, and to assist his own widow with their counsel in her reinvestment of the proceeds of such stock should she sell it. There is no escape from such a deduction from the facts herein, meritorious as are the legal principles plaintiffs adduce to thwart such intent when applied to facts to which they more properly appertain.
Confidential Relationship Between William, Sr. and, Mrs. Pryor
Prime reliance is placed by plaintiffs on the existence of a confidential relationship between William, Sr. and Mrs.
Pryor.
They state that all that is required in Illinois to establish a fiduciary relationship is that “trust and confidence are reposed by one person in another, who, as a result thereof, gains influence and superiority over the other.”
59
Further basis is found in the Restatement, Second, Trusts, Sec. 185, which provides:
“Where under the terms of the trust a person has power to control the action of the trustee, if he holds the power as a fiduciary, he is liable for any loss resulting to the trust estate from a breach of his duty as fiduciary. His liability is similar to that of a trustee.”
Plaintiffs maintain the evidence of William, Sr.’s confidential relationship is shown by insurmountable evidence — undisputed evidence — so overwhelming that no shadow of doubt remains as to its existence. They assert that defendants “made no effort whatever to prove that any of the pertinent facts regarding any of the four transactions had been disclosed to Mrs. Pryor as trustee, or to Charles, Jr.,” so that they as servient parties had “entered into the transactions with eyes wide open and that the dominant party had no advantage through superior knowledge of the pertinent facts. Here it seems clear that none of the stock acquisitions could hav& been made if the pertinent facts had been disclosed. * * * She would have learned that the passing of the dividends by the Corporation was due in large measure to the huge unauthorized salaries and bonuses
60
taken by William, Sr. and his sons.” Plaintiffs also maintain that Mrs. Pryor would have learned she was the only one required to pay interest on loans or to put up security; that she was entitled to elect at least one director thus enabling her to have had access to all the financial and business reports of the Company. Plaintiffs also stress the lack by Mrs. Pryor of “competent and independent advice before completing the transaction.” They quote excerpts showing that she sought such advice from no one.
Further, plaintiffs say, “The rigid rule in Illinois is that where the confidential relationship exists the dominant party must show in order to sustain the transaction ‘that he made a free and frank disclosure of all the relevant information he had.’ ”
61
The nondisclosure need not be intentional, nor. need it be shown it was relied on. Of the many facts which William, Sr. did not disclose which he should have disclosed and did not, was that which they now contend, that he was not a trustee,
62
and the extent of his
*508
own self-interest in the transactions. Mrs. Pryor and Charles, Jr. were furnished none of the annual certified audits, the detailed monthly financial statements, the income tax returns, the detailed balance sheets, or the profit and loss statements. The short annual reports were insufficient to enable the recipient to determine the value of the common stock. V/illiam, Sr.’s letters contained only “fragmentary financial information.” Plaintiffs describe the fraud of William, Sr. as “deliberate, continuing and vigorous” and he was “aggressive, ambitious and skillful,” guilty of “direct falsehoods,” and the record as revealing “a depressing and sordid story of actual fraud. * * * ”
They assert that to overcome the presumption of fraud arising out of a transaction within a confidential relationship, the dominant party has the burden of proving fair-dealing, including (1) full disclosure of all material facts, (2) the payment of a fair and an adequate price, and (3) competent and independent advice.
63
Plaintiffs distinguish the applicability of the case of Harry Alter Company v. Chrysler Corporation, 285 F.2d 903 (7th Cir., 1960), which holds it “incumbent upon plaintiff to prove by a preponderance of the evidence that a false representation was made as to some material fact, that the defendant know of the falsity and intended that plaintiff should rely upon the representation, that plaintiff, in ignorance of the falsity thereof, did rely upon the false representation, and that damage to the plaintiff resulted from its reliance thereon.” Plaintiffs point out that that case involved a situation wholly independent of a fiduciary relation and did not involve a trust relation. Plaintiffs state that where there is a confidential relationship, it is wholly immaterial that no misrepresentations were made “once the confidential relationship is established between William, Sr. and Mrs. Pryor as trustee, the burden is squarely on defendants to establish that full disclosure of all material facts was made to her, that fair and adequate prices were paid, that she had competent and independent advice, and that the transactions were not improperly induced.”
Plaintiffs also distinguish the Moneta v. Hoinacki, 394 Ill. 47 , 67 N.E.2d 204 (1946) case, which would seemingly require “domination” as a prerequisite to a confidential relationship, as being said in an
obiter dictum,
with citation of a holding not supportive of the
dictum.
Furthermore, William, Sr.’s “superiority and influence over Mrs. Pryor and her son was (sic) so great that it did amount to domination of them.”
Plaintiffs dispute defendants’ derisive comments that Mrs. Pryor was no longer Charles, Sr.’s widow at the time of the transactions, with citations upholding the proposition that a wife remains a widow despite her remarriage.
64
But, irrespective of a legal relationship, the important fact is that they regarded themselves in a close family relationship. “He was the blood uncle of her son,” they say. They cite statements wherein William, Sr. said or wrote he regarded Charles, Jr. as if he were his son. They say William, Sr. “had the full advantage of this (brother-in-law) relationship, enhanced by his blandishments.” And he “played hard upon her family ties by discussing the most intimate family matters, even going to the point of discussing her death and with which of her deceased husbands’ spirits she should consort.”
65
Plaintiffs are prolific in finding other bases for lodging a trusteeship in ’William, Sr. Thus, they point out that he made numerous statements, some on the advice of his attorney
66
that he was a
*509
trustee, which statements were correct, but even if not correct, it would bear upon defendants’ being estopped to deny the trusteeship, the confidential relationship, and the actual fraud of William, Sr. through misrepresentations. Too, William, Sr.’s representations that he was a trustee also “contributed heavily to the creation of a relation of trust and confidence.” They refute the assertions were “muddled thinking” on the part of William, Sr. and were “admirably suited to disarm any suspicion.” Since Mrs. Pryor was told he was a co-trustee, she was “duty bound to follow his directions.” She could rely on his putting the interest of the trust ahead of his own. Plaintiffs label William, Sr. as “the self-appointed guardian of her welfare.”
Plaintiffs staunchly maintain that Mr. and Mrs. Pryor had no outside counsel, either legal or financial, on any of the four transactions. If their counsel were present, they were bypassed or represented others.
Defendants, on the other hand, deny there was a confidential relationship between William, Sr. and Mrs. Pryor, or a dominant-servient relationship; that although she had sought William, Sr.’s advice with regard to some permanent solution to her financial problems and he had consulted Mr. Murray and had written her a number of letters with regard to the possibility of creating a trust for herself and Charles, Jr., she consulted first with the law firm of Waring, Walker & Cox in Memphis and later with the Greenville firm of Wynn, Hafter & Lake, and completely rejected Mr. Murray’s suggestion for the creation of a trust. The relationship between Mrs. Pryor and William, Sr. during the year 1935 remained as it had been in the past. He saw her but once during the year 1935 and that was when she came with Mr. Hafter to present the assignment of November 19, 1935.
To refute factually the existence of a confidential relation, defendants point out that it was 25 years at the time of the first transaction since she had been the widow of Charles, Sr. She had married three persons thereafter, each unknown to William, Sr.; to Mr. Lawrence Peters from 1912 to 1918, with whom she lived in California; to Mr. Charles 0. Pfeil for the years 1922 to 1927, with whom she lived in Memphis, and then to Lawrence Pryor on January 1, 1932, with whom she lived in Greenville, Mississippi. William, Sr., visited her but once, in 1915, in California.
Defendants deny the imputation that William, Sr. dominated and influenced Mrs. Pryor’s decisions, and maintain that she did not to any extent entrust the handling of her affairs to him — the test mentioned in McCartney v. McCartney, 8 Ill.2d 494, 499 , 134 N.E.2d 789 (1956). She did not act in all her business affairs under his advice and direction, doing nothing contrary to his wishes (the test in Lipscomb v. Allen, 298 Ill. 537 , 132 N.E. 206 (1921)). Nor was his will imposed over hers or influence exerted upon her in making the decision. (Landau v. Landau, 20 Ill.2d 381 , 170 N.E.2d 1 (1960)) They point out there is no record of William, Sr.’s having had any part in her handling of the business transactions, connected with the settling of Charles, Sr.’s estate. Nor does the record show his having had anything to do with her business transactions during her marriage to Mr. Peters, or her marriage to Mr. Pfeil and the executorship of his estate. She had secured loans of $30,000 with a Memphis bank in 1931 and when she was trying to determine whether to sell some Texas Corporation stock held as security she consulted the President of the First National Bank of
*510
Chicago.
67
Her first business contact with William, Sr. was in April, 1932, when she arranged to borrow from the Company so that $150 payments would be made each to her and Linda, the advances to be charged to William, Sr., and bearing 6% interest. At that time she was indebted to the Union Planters Bank to the extent of approximately $27,000.
Mrs. Pryor’s independence of judgment, in opposition to any charge of domination, is demonstrated, defendants claim, by her refusal of William, Sr.’s July 30, 1934, offer to exchange some of her Clow stock for dividend paying stock he held. They insist that she had a remarkable understanding of business affairs, was mentally capable of protecting herself from any overreaching William, Sr. might have attempted. She had enough independence of judgment in 1918 to refuse to sell Clow stock to William, Sr. for $150, making a counter offer for sale at $200, which was refused. She had been named executor of two husbands’ wills. She had dealings with banks and investment houses. She owed one bank $89,950 in 1933. She had the counsel of, among others, Mr. Pryor, a college graduate, who dealt in real estate. They had a 2,060 acre plantation with some twenty to thirty families thereon. First they grew cotton; then raised beef cattle. He came with her twice to Chicago when a possible first sale of the stock was discussed. She also had the advice of her son, Charles, Jr. Mr. Pryor stated that all the sales of the stock had been discussed by the three. They read the Company’s financial statements and kept a file of them. Defendants also point out that Mrs. Pryor had the advice of Attorney Wynn, a leading lawyer of Greenville and president of the Southern Credit Corporation. The Wynn firm had represented both the Pryors and Charles, Jr. as far back as 1932.
As to the claimed fraud and duress of William, Sr., defendants, denying that there was a personal, confidential relationship between Mrs. Pryor and William, Sr., maintain there was therefore no constructive fraud or burden of rebuttal. They point out that plaintiffs have the burden of proving the existence of such a relation. They state that the concept underlying a confidential relationship is that one person is in a position to dominate and influence the actions of another and that the other, reposing special confidence and trust, is in fact servient to the will of the dominant person. In such a case, fraud is presumed and a constructive trust is imposed upon the property secured by the dominant person who then has the burden of proving that he acted fairly in the transaction.
68
The relationship does not arise as a matter of law from the fact of family relationship.
69
Defendants cite the 1960 pronouncement of the Illinois Supreme Court delineating the factors to be taken as a guide in determining the existence of a confidential relationship, thus:
“Factors to be taken into consideration are degree of kinship, if any, disparity in age, health, mental condition, education and business experience between the parties, and the extent to which the allegedly servient party entrusted the handling of his business and financial
*511
affairs to the other and reposed faith and confidence in him.”
70
They also maintain that to establish the confidential relationship the evidence must be so strong, unequivocal and unmistakable as to lead to but one conclusion,
71
by “clear and convincing evidence,”
72
“strong, unequivocal and unmistakable.”
73
In answer to the self-dealing argument of plaintiffs, defendants reply that since William, Sr. was not a trustee under the will for the trust, the principle of self-dealing was inapplicable; furthermore, the sale of the stock was to the Company and exchanged for the minority interest in the National Cast Iron Pipe Company to effect the merger, and the stock was distributed to the minority shareholders of the latter company.
Defendants state that the suggestion William, Sr. made to Mrs. Pryor that the estate be closed and a trust created was actually the idea of Mr. Murray after talking to the Northern Trust Company. In fact, he urgd her to see her own attorneys and she did see the Wynn firm and accepted their advice.
The Court has studied with great care the decisions of Illinois bearing upon the creation and incidents of the status of a confidential relationship, such as plaintiffs assert existed between William, Sr. and Mrs. Pryor. It concludes that no such legal relationship existed here. There was great cordiality, long friendship, and real interest in each other’s affairs. William, Sr. freely gave copious advice, little of which seems to have been followed. He tried to give assistance in solving pressing and perplexing financial distress. He worried about his nephew’s recurrent marital problems. But he did not “dominate” Mrs. Pryor, nor was she “servient” to him. She did as she pleased. She consulted attorneys when she felt the need therefor. She conferred with bankers. She talked over her problems with her husbands, and with her son. She was thousands of miles away from William, Sr. during almost all of these transactions, with the exception of brief, occasional visits. She was a capable adult, used to handling very large sums of money and plantations. She was well-traveled. Her expenditures were tremendous. The facts as revealed by this record do not substantiate plaintiffs’ assertion of a young and inexperienced widow with an infant child relying upon the predatory patriarch of the family of her first husband, deceased decades theretofore. There can be no question she fully understood the nature and effect of the documents she was executing. She suffered from no mental or physical impediment. She without question entered into the transactions “voluntarily, deliberately, and advisedly, knowing [their] nature and effect, and * * * her consent was not obtained by reason of the power and influence to which the relationship * * * might be supposed to give rise.” (Zeigler v. Illinois Trust and Savings Bank, 245 Ill. 180, 197 , 91 N.E. 1041, 1047 , 28 L.R.A.,N.S., 1112.)
74
*512
One of the most recent expositions of the law of fiduciary relations in the State of Illinois was in the case of Boryca v. Parry, 24 Ill.2d 320 , 181 N.E.2d 124 , decided March 23, 1962. It is very apposite here. The Court there said at pp. 327-329, 181 N.E.2d at pp. 127-129:
“It is conceded that a fiduciary relationship existed between defendant and her mother, with the former being the dominant party, thus bringing into operation familiar and well-settled principles. Where such a relationship exists,
the law presumes as fraudulent any transaction between the parties wherein the dominant party has profited, and the latter must rebut the presumption of fraud by clear and convincing proof that he has exercised good faith and has not betrayed the trust and confidence reposed in him.
If such burden of proof is not discharged by the dominant party, the transaction will be set aside in equity. (Hofert v. Latorri, 22 Ill.2d 126 , 174 N.E.2d 866 ; McFail v. Braden, 19 Ill.2d 108 , 166 N.E .2d 46.)
On the other hand, ‘if a conveyance was not procured through improper means attended with circumstances of oppression or overreaching, but was entered into by the grantor with full knowledge of its nature and effect and because of his or her deliberate, voluntary a/nd intelligent desire, the existence of a fiduciary relation does not invalidate the transaction.’
(Clark v. Clark, 398 Ill. 592, 602 , 76 N.E.2d 446, 451 ; see also: Matanic v. Krajach, 392 Ill. 547 , 64 N.E.2d 885 ; Uksas v. Zelensky, 21 Ill.2d 303 , 172 N.E.2d 359 .)
Transactions between parties to a fiduciary relation, if open, fair and deliberately made, are as valid as transactions between other parties.
Schueler v. Blomstrand, 394 Ill. 600 , 69 N.E.2d 328 ; Winkelman v. Winkelman, 307 Ill. 249 , 138 N.E. 637 .
“We are in accord with the master and chancellor that the evidence here
precludes any finding that defendant was the aggressor in the transaction,
or that the mother’s actions were prompted or induced by misrepresentation, overreaching or fraud on defendant’s part. Instead, it appears that
the deed and trust agreement under attack were executed as a result of the mother’s own volition after a full disclosure of their nature and upon competent and independent legal advice.
* * *
“Nowhere in the record does it appear that
she
.[grantor]
suffered from either mental or physical impediment which would affect her ability to know and comprehend the nature and effect of the documents
*513
she executed.
* * * [I]t appears that a full disclosure of the nature and effect of the instruments was made to her [the grantor] and that she
fully understood them.”
(Italics supplied.)
This is not a case similar to Hofert v. Latorri, 22 Ill.2d 126 , 174 N.E.2d 866 (1961), where two daughters of the deceased brought an action against their brother and his wife to impose a constructive trust upon a two-flat building conveyed by their father and his wife to the defendants in joint tenancy, the evidence disclosing that the father was 77 years of age at the time of the conveyance and had suffered at least one stroke. The father had constantly consulted with the son about the property. That evidence showed a confidential relationship between the father and son, and was held under the circumstances, sufficient to raise a presumption of fraud and undue influence on the part of the son, and a decree imposing a constructive trust upon the property in favor of the plaintiffs was affirmed where defendants declined to offer any proof before the master and there was nothing in the record to rebut the presumption of fraud and undue influence. The Illinois Supreme Court said 22 Ill.2d at pp. 131-132, 174 N.E.2d at p. 869 :
“ * * * Over the years the father had constantly consulted his son about ‘what repairs had to be done to the house, who had to do them.’ * * * Those were the circumstances that existed when he turned to his son for advice as to what should be done with the property, and they point clearly to the existence of a confidential relationship.
“ * * * What is at issue in determining whether a confidential or fiduciary relationship exists, for the purpose of establishing a constructive trust, is the state of mind of the grantor.
What is required is clear and convincing evidence that he reposed trust and confidence in the grantee.
That state of mind, like any other, can be shown circumstantially. The defendants objected to the admission of evidence that Filippi turned over his bank account to his son with directions to use it to pay the father’s bills and to divide the balance with his sisters. That evidence, however, was admissible to show the father’s mental attitude toward his son. Unmistakably it established that a confidential relationship existed * * * when the bank account was transferred. * * *
“The defendants made no effort to rebut the presumption of fraud and undue influence that arose from the proof that a confidential relationship existed and that the dominant party had gained from the transaction. * * * There was no showing of adequate consideration, and no suggestion that the grantor had received any independent advice.” (Italics supplied.)
“It has been held that a fiduciary relation exists in all cases in which there is confidence reposed on one side and a resulting superiority and influence on the other; likewise, the fiduciary relationship includes not only legal and technical relations * * * but it extends to every possible case in which a fiduciary relationship exists in fact and in which there is confidence reposed on one side and resulting domination on the other. * * * The relationship need not be legal, but it may be moral, social, domestic or merely personal. * * *” (Coppens v. Coppens, 395 Ill. 326, 335 , 70 N.E. 2d 54, 59 ) Where that fiduciary relationship exists, “the burden is upon * * * [the one in the dominant position] to establish by clear and convincing proof the fairness of the transactions between them * * ( Ibid, at p. 335, 70 N.E.2d 54 at p. 60 ) Further statement of the legal principles
75
appears in
*514
Children’s Home of Rockford v. Andress, 380 Ill. 452, 465, 466 , 44 N.E.2d 437, 444 (1942), where the Supreme Court said: “To establish a fiduciary relationship by parol evidence
the proof must be clear, convincing and so strong, unequivocal and unmistakable as to lead to but one conclusion.
* * * Such relationship being established the burden is on one benefitting by the transfer of property to show that it was procured fairly and without the exercise of undue influence. * * * [T]o establish a fiduciary relation it is not necessary to prove actual frauds.” (Italics supplied.)
The Andress case, supra, held that a stock transfer would not be set aside where the transferor had received the “fair value” therefor. In 90 C.J.S. Trusts, § 303, the rule is stated:
“One of the most familiar doctrines of the law of trusts is .that a trustee cannot purchase trust property from himself * * *. The general rule does not apply where the purchase is for the use and benefit of the
cestuis que trust,
at their request ; and a sale of the trust property by a trustee to himself for adequate consideration may be upheld where it is made with the consent of the
cestui que trust,
acting with full knowledge and independent thought, the parties being
sui juris
and dealing at arm’s length, and there being no concealment of fact or misrepresentation * *
Restatement, Second, Trusts, § 2, comment b. states the principles thus:
“Although the relation between two persons is not a fiduciary relation, it may, nevertheless, be a confidential relation. A confidential relation exists between two persons when one has gained the confidence of the other and purports to act or advise with the other’s interest in mind. A confidential relation may exist although there is no fiduciary relation; it is particularly likely to exist where there is a family relationship or one of friendship or such a relation of confidence as that which arises between physician and patient. * * *
If one person is in a confidential, but not a fiduciary, relation to another, a transaction between them will not be set aside at the instance of one of them unless in fact he placed confidence in the other and the other, by fraud or undue influence or otherwise, abused the confidence placed in him.
* * * ” (Italics supplied.)
Neither Mrs. Pryor nor Charles, Jr. was a stranger to legal counsel. On many occasions they employed attorneys to assist them in their affairs.
76
A letter dated April 24, 1936, from Mrs. Pryor and Charles, Jr. to the Company, stated the delivery of a certificate for 500 shares of Clow Company stock which was delivered to the bearer, Mr. Hafter, “our attorney,” and requesting co-operation with him. When Mrs. Pryor was having financial problems in the summer of 1931, owing the Union Planters Bank of Memphis some $30,000 she had been conferring with Attorney Walker of Memphis, and Mr. Melvin Traylor,
president
of the First National Bank of Chicago, who had advised her to sell her Texas Corporation stock. She had also consulted her father, Mr. Barth, and her son, but nothing in the record shows she consulted William, Sr. in 1931.
Plaintiffs presented evidence of the bookkeeper of Mrs. Pryor’s attorneys to refute her consultation as to any of these transactions and to prove they had been
*515
hired only occasionally and for very specific matters — they were not retained generally. While it might be said they were not hired for representation in these transactions, they were aware of some of them, and knew fully of Mrs. Pryor’s private and financial affairs. They were available to be hired if thought necessary. It is inferable they would have spoken up to protect her had they felt protection was needed. Furthermore, her failure to seek their representation or consultation might be deemed significant as indicating her lack of belief that such representation was necessary.
The purchase by the Company of Mrs. Pryor’s stock was not a hit or miss matter on her part. Her wire of April 15, 1938, to the Company states:
“Charles Larry
77
and I had Conference.
Decided Would Appreciate If You Buy Six Hundred Shares My Stock. Would Put Us Out Of Debt. * * * ” (Italics supplied.)
It is understandable that plaintiffs deem William, Sr. sustained a confidential relation with Mrs. Pryor by virtue of his own voluntary assumption of the arduous chore of keeping her and her family solvent. The Court is also in full accord that William, Sr. had the duty of full and frank disclosure of all material facts, the payment of a fair and adequate price for stock Mrs. Pryor sold, absence of undue influence, and, where there was no possibility of competent and independent advice, with the principle of law quoted by plaintiffs from the decision of the Illinois Supreme Court in Works v. McNeil, 1 Ill.2d 47, at p. 52 , 115 N.E.2d 320, at p. 322 (1953):
“Where such a relationship exists at the time of a transaction whereby the dominant party appears to gain at the expense of the dependent party, the transaction is to be deemed presumptively fraudulent and will be set aside unless the one in whom the confidence and trust is reposed establishes its fairness by clear and convincing proof. Clark v. Clark, 398 111. 592, 76 N.E.2d 446 . Important factors in determining whether a particular transaction is fair include a showing by the fiduciary: (1) that he made a free and frank disclosure of all the relevant information he had; (2) that the consideration was adequate; and, (3) that the principal had competent and independent advice before completing the transaction.”
The deposition of Mrs. Pryor revealed that she had discussed the stock transactions with her husband and with Charles, Jr. and they expressed no dissatisfaction whatsoever as to them.
It therefore seems evident that Mrs. Pryor sustained no servient relation to William, Sr. and he no dominant one to her. She conferred with others concerning the transactions. She was wise enough to consult an attorney when she felt she needed one.
78
She acted contrary to William, Sr.’s suggestions when she wished to. The degree of kinship was remote. There was no disparity in age or health. The evidence is not so strong, unequivocal and unmistakable as to lead to but one conclusion by clear and convincing evidence, that a confidential relationship existed as that legal concept has been outlined by the decisions. In fact, the evidence would indicate the very contrary.
Plaintiffs contend defendants have failed to overcome the presumption of
*516
fraud raised by William, Sr.’s confidential relation, by showing fair dealing, claiming there was no “full disclosure * * • * of all material facts with regard to these purchases of stock, and have not shown that fair and reasonable prices were paid for the stock, in any of the four acquisitions.” They state that no annual audits, monthly financial statements, income tax returns, profit and loss statements or detailed balance sheets were furnished the Pryors or Charles, Jr. However, a stockholder does not automatically receive such documentary data, absent a request therefor. Plaintiffs assert the short balance sheet was an inadequate basis on which to determine stock value, which is undoubtedly true. But there is no evidence the Pryors ever sought more or were ever refused any information sought, or misled by any information actually furnished.
Plaintiffs cite many instances
79
of William, Sr.’s contact with Mrs. Pryor and others to substantiate their allegation of a confidential relationship between them, he the dominant and she the servient. The Court, however, reads additionally into these contacts an abiding interest of William, Sr. in Mrs. Pryor, her son’s and her grandson’s welfare — which interest she needed despite an adult son, three husbands subsequent to William, Sr.’s brother, and numerous other conferees, including attorneys and bankers. It can see no reason for plaintiffs’ feeling that William, Sr., a layman, had a duty to apprise Mrs. Pryor of her responsibilities as a trustee and police her activities when she had lawyers at her beck and call and used them, frequently, and who were fully aware of her legal responsibilities.
Plaintiffs contend that Mrs. Pryor had “little or no knowledge of business affairs and demonstrated it most convincingly. * * * She was wholly naive on this— her most important business responsibility” in that she consulted no lawyer, banker, security expert or other trained advisor on any of the four trust stock acquisitions. She kept no records, or separate bank account and never filed fiduciary returns as trustee. The Court believes plaintiffs are in error in this assertion of naivete — witness the self-confident letter to President Melvin Traylor of the First National Bank of Chicago.
80
Her problem was her inability — a common defect — to keep expenditures within income. Also, she was saddled with a son with similar deficiencies.
The Court sees no reason for
penalizing defendants
because the trustee herself was, as plaintiffs called her “as unknowledgeable and improvident as a child” and possessed of “extremely poor business management.”
She
was a trustee,
their
trustee, and one plaintiff’s grandmother. Defendants should not be
*517
made to pay for her ineptitudes, irresponsibility and improvidence.
William, Sr.’s General Intent and Character
It is necessary in order to determine William, Sr.’s true intent to relate a multiplicity of detail in order to deduce the motivation for his acts. Principally the bases for the determination lay in contemporaneous documents and transactions.
Plaintiffs contend that William, Sr. was “acting solely for the personal benefit and interest of himself and his own immediate family, rather than for the purpose of helping or aiding Mrs. Pryor personally or the trust estate of Charles, Jr. * * They glean from fragmentary items an overpowering desire on the part of William, Sr. to acquire common stock of the Company. They read into isolated and innocuous instances an intense greed for this stock in the Company which he founded. Such for example is the fact that at the end of each year the diary reflects the holdings of his own and other families of common stockholders.
81
Plaintiffs ridicule defendants’ assertions that William, Sr.’s acquisition of the stock was not “inordinate or avaricious” and characterize a purchase by William, Jr. and Kent’s wife of 500 shares from the treasury stock as “plundering” and an “unauthorized raid at an inadequate price” to maintain Clow family control to prevent outsiders’ gaining control and making a quick profit to the detriment of the rest of them.
82
William, Sr. was a man in his seventies at the time of these transactions. He was a happy family man, as is evidenced by his note to Mrs. Pryor on June 10, 1939, thanking her for her wire of congratulations :
“ * * * We certainly are to be congratulated. Mighty few couples have been married fifty-seven years and had as happy a life as Margaret and I have had — for which we are both very thankful.”
Harry H. Wolf, certified public accountant for the Clow Company, stated that William, Sr.’s reputation was “excellent, the best.” He was described by the present president of the Company, John Madden, as “one of the greatest men” he had ever known, and was held in that regard by the vast majority of his employees. “He had a terrific interest in everybody. He was a hard taskmaster. * * * ”
Mr. Mannion, senior vice president of the Continental Bank, said that William, Sr.’s reputation for integrity and honesty was good. William Clow, Sr. was not a man without humor. When he had been advised by Mrs. Pryor that she had just spent seven weeks in a hospital from an insect bite, he wrote her on October 23, 1939:
“I am wondering if you realize that you are getting to an age when you have got to take care of yourself. Now suppose you do it or the first thing you know you will be in a heap of a lot of trouble, for I might suggest that at the present time you have got three spirits waiting for you, and you are going to have a terrible time choosing which one you are going to stay with. I do not suppose you have ever thought of this, but you had better do some thinking for like myself you have gotten up to an age when it is mighty easy to step off into the unknown.”
Mr. Pryor on his deposition stated that he had never, prior to the filing of this suit, had any occasion to think the Company had been unfair to Mrs. Pryor, to Charles, Jr. or himself, nor did Mrs. Pryor or Charles, Jr. so feel. Mrs. Pryor and Charles, Jr. never expressed any lack of confidence in any of them. None of them, to his knowledge, ever attended a stockholders’ meeting; they never asked for a seat on the Board of Directors; there was never a time when he asked
*518
about the Company that he did not get a full, frank answer.
83
When he was asked whether anything had occurred since the transactions to make him think they were unfair, he answered in the negative.
William, Sr.’s intent, as revealed by excerpts from his letters,
84
shows deep
*519
interest in the personal affairs and financial distress of Mrs. Pryor and Charles, Jr. They also reveal an aged man fully aware of the infirmities of life, with af
*520
fairs settled and a disinclination to disturb them by the acquisition of more Clow stock.
In response to her letter of reply Mr. Clow, Sr. wrote on May 10, 1938:
“The best news in the letter you wrote me Thursday, May 5th, was the fact you do not need the additional funds. However, I want you to appreciate the fact that if in the future you may want to dispose of some of your stock there may be no way for me to manage the transaction for you.”
A letter from William, Sr. to Mrs. Pryor, dated May 20, 1935, states:
“ * * -x- [y] ou are certainly up against it harder than either one of us anticipated. The lawyer very definitely says that I cannot safely buy the stock;
that I am a trustee of the will
and consequently even if Charles signed the papers and was agreeable to a disposition of the stock * * * in the years to come the stock became very valuable, he or
one of the future wives that he may marry, or those that he claims now to be wives of his, or their heirs, could attack the settlement and give us all kinds of trouble.”
(Italics supplied.)
How prophetic! The letter continues:
“I have not the slightest objection to buying the stock if it can be done legally. * * * I guess I have got to turn the whole thing over to you. I have done the best I could and failed. Lawyer and auditor are set against my buying the stock.
You have good lawyers in Memphis and you can tell them the situation better than I can.
* * *
You can say to your Memphis lawyer that if he can find any way by which I can legally purchase the stock by transfer of dividend paying securities in accordance with the will, I will gladly do it.
* * * I am no lawyer, but I have read that
*521
will pretty carefully. * * * I-believe that the securities now in-your possession for life can under that will and with Charles’s full consent and approval be sold to me for an agreed number of dividend bearing securities that I now hold. * * [F]cm
have plenty of time to talk it over with your attorney in Memphis and let me know definitely what you can do.”
(Italics supplied.)
Because of their invaluable aid in get' ting the true climate of these transac-tions and William, Sr.’s character, ex' cerpts from many of the communications are set forth in the margin.
85
*522
Nor was Mrs. Pryor’s evaluation of William, Sr. less generous. She testified at her deposition: “I had implicit confidence in Will Clow.” She was asked,
*523
“Has anything come to your attention since you sold that block of stock that Will Clow treated you unfairly in connection with the transaction ?” to which she-
*524
answered,
“Not at all.”
Still later she said in answer to the question as to whether she was satisfied with the price she received for the stock, “Well, as I
*525
told you this morning, Mr. Price, I felt that Will Clow would protect his brother’s widow and would do the best in his power for me. Q. Has anything come to
*526
you since that time that would change your mind? A. No. Q. Up to his death you had complete confidence in him? A. Why
certainly.”
(Italics supplied.)
*527
Mrs. Pryor’s affection for William, Sr. is expressed frequently in the documents in evidence. In one letter dated simply Tuesday, she stated: “We will send you a telegram Christmas Day. I will be with you and your dear family in spirit.” In a letter of January 3, 1936, she said: “Thanking you all for the great amount of trouble that you have been to in getting this all straight.” Her husband echoes her sentiments when he wrote on January 2, 1936, “ * * * [W]e all appreciate the great amount of trouble that you have all been to.” A letter of December 19, 1934, stated:
“There is no way for us to tell you how grateful we are for the unceasing interest you have always had, in this situation, and I am glad that you were so insistent that Hattie come there, because I know we arrived in the nick of time.”
When Mrs. Pryor wrote in respect to the turning in of a pro rata interest of stock for the merger proposal, she said:
“I know whatever the officers of our Company decide to do is best for everyone concerned.”
She wrote him again thanking him for a cheek which permitted her to procure the release of a bracelet which had been pledged two years before and said:
“It is impossible for me to express in words how grateful I am but my heart is lighter and my mind relieved. You must always know how much I appreciate your effort to help me. * * * [P] lease accept for yourself my sincere affection and
deepest admiration for your honorable self.”
(Italics supplied.)
The cordiality and affection of Mrs. Pryor and her family were returned in ■full measure by William, Sr. and his
*528
family. They were welcomed at the Clow summer place. Charles, Jr. and his wife stayed with William, Sr. after a hospitalization. When the William Clow, Srs. were unable to visit Mrs. Pryor when they were south, William, Sr. wrote Mrs. Pryor on March 2, 1939:
“I * * * regret more that we could not go to see you than you possibly could regret not seeing us. * * * I am very thankful to hear the goods news you give me and know that Charles has not turned over a new leaf — but a whole book.”
In April, 1939, he wrote: “If it gets too hot in Mississippi this Summer just come up and look in on us at Lake Forest and we will be glad to see you.” Their friendly relation is revealed in a letter of May 23, 1939, from William, Sr. to Mrs. Pry- or:
“How ridiculous of you to suggest to a young gentleman like me to ‘be good’ — when it’s a policy which you have never followed in your life yourself. * * * Sorry you had to pay some of Charles’ bills with the last dividend, although I suppose that is becoming sort of a habit, but it does seem to me that the young man ought to soon be standing on his own feet.”
In a letter of November 16, 1937, Mr. Pryor wrote William, Sr.:
“I just want you to know that we have received all of the equipment ordered from you and since it has all been installed we feel like we are now in the city. You were mighty nice to let Hattie have that money. * * *
”
William, Sr. was not devoting his sole efforts in allegedly getting Mrs. Pryor’s stock from her. She forwarded a valuable bracelet to him to sell in order to raise funds for her, in January of 1936. Also in 1936, he was involved in arranging for plumbing fixtures for the Pryor place. In the fall of 1937, he saw to their getting a light system from Kohler, also a water system pumping outfit.
In response to a letter of inquiry from Mr. Pryor as to when the next dividend might be expected because of heavy hospital bills and poor cotton proceeds, William, Sr. wrote to Mr. Pryor on October 29, 1937:
“ * * * You may have ample funds to take care of your expenses at the hospital and your going to Florida, but if you have not and will let me know the amount you need I will endeavor to take care of it as a debit against your next dividend.”
Mrs. Pryor replied:
“Thank you very much for your letter.
As always, taking an interest in me.
* * * You were kind enough to offer to send money to me, and you do not know how I appreciate your thought. * * * I do not know what plans you are making for the December dividend but if it will be around the amount we received last year, if you could let me have five thousand now I could pay Charles’ and my bills that otherwise would have to wait. * * *
Thank you, oh so much Will. God bless you and keep you.”
(Italics supplied.)
William, Sr. was bearing the constant burdens of his brother Charles’ family. Thus on October 10,1934, Linda, Charles’ first wife, wrote to him:
“Before replying to your kind note I wrote to Mrs. Pryor
with no response.
I am taking this occasion to write you again telling you we are destitute and Mother is very ill. We have not even enough money for food and I was obliged to borrow a couple of dollars for the absolute necessities ; that has run out and we have exactly twenty cents left * * * and I am on my way out to buy butter with that. * * *
Something has to be done.
[Linda’s italics.] Out of the
kindness of your
heart isn’t it possible to have a few dollars to tide us over until something can be arranged or any way so we can get some food.” [Linda’s italics.]
*529
Nor is William, Sr.’s greed for Mrs. Pryor’s stock displayed in his letter of February 2, 1936, to Mrs. Pryor:
“I am mighty thankful to have your letter
* * *
-which in effect tells me that I do not have to buy your stock.
I lost quite a lot of money in taking up your dividend note, for I took it on the basis of preferred stock while I could have invested exactly the same money in depreciated stocks that would have given me a very considerable increase in interest on the money and the absolute certainty of doubling its value within possibly three to five years. Larry told me how badly you needed the money and what a loss it would be to you not to have it. I think he said there would be a foreclosure on some of your property, but what he said appealed to me so that
I told him I -would, take the stock on the basis of the value set on the stock by our Treasurer, Mr. Johnson, and Kent for someone else a few days before. Every one of our people protested against my purchasing the stock and said I had no business to do it
— that
I have all the Clow stock I ought to carry.
For a time it looked as if I would be fined by the government if I took on any more. However, Will investigated it and told me that it would be all right if I did not take more than the 500 shares I had agreed to take.” (Italics supplied.)
And when Mr. Pryor wrote that in order to get a crop loan from Southern Credit Company in 1938, they wanted to put up the Clow stock as collateral, they had to have a definite bid therefor in order to establish its value and asked that a value of $50 be placed thereon although it was worth “possibly” $100, William, Jr. wrote a stern letter back. He pointed out that Mrs. Pryor had started out with 5,000 shares but was reduced now to 3100 shares.
It is difficult to envision one writing this letter as a glutton for power at his aged sister-in-law’s expense (letter of April 7, 1936):
“ * * * I know I feel better to think that you have plumbing fixtures at your home. The only fault I find with you is that you have not put in enough. After you have lived about a month with these fixtures, you had better look things over and you will find places to put more that will make your home a lot more attractive.
“While you are thinking about it, just remember that you have only one life to live. * * * Take my advice and have everything of this kind needed in the house, including the kitchen, and I would not stop unless I had two bath rooms. Then you can invite guests and feel that you are respectable. * * * You have had pretty hard sledding for quite a long time. The skies are brighter now and my advice to you is to enjoy life — when you can.”
Another letter of December 3, 1936:
“I am wondering if you will be any more pleased to receive the inclosed check than I am to send it to you. It has been a long hard struggle and the common stockholders have suffered plenty, but we have done what many another concern has not been able to do. We have landed on our feet with our old organization intact. They have proven their loyalty for we did not lose a single one and we went through as near whole as you can get it in this country. The maximum reduction in salaries was 60%.
“Now I am going to venture a few suggestions, because I want to see you comfortably fixed and with a backlog for the next depression. My advice to you — and it is very strongly given — is that you use the money first of all in cleaning up the mortgage on your Kansas City property. * * * After paying all your debts so that you will get rid of interest, devote enough money to give you
*530
every reasonable comfort on your plantation. I would go so far as to put in a Kohler electric machine. Then you can use many labor saving devices and give you electric light, and the cost of operation is very little. * * * Now all of this advice is sent to you because I want to see you enjoying life better than you have for some years. You have taken your share of the burden without any complaint and I want to see you enjoying what is coming to you now, and I hope you will.”
William, Sr.’s interest in Mrs. Pryor was not a perfunctory one, but of real concern for her well being physically and financially. Time and again he wrote her urging her to take more care of her health, to slow down and take less responsibility for her family, and to better her surroundings. Such is the letter of January 28, 1937, which read in part:
“After reading the nice letter you wrote me from Miami Beach, I am willing to forgive all your sins of omission or commission and love you still.
“You certainly have had a hard time of it and you have got to * * realize that you are older than you were twenty years ago. You have got to change your diet — probably eat half of what you used to eat and sleep half again as much — and in every way take care of yourself. There is a lot of responsibility resting on your shoulders.
“I am very sorry indeed to learn that you went back to the plantation with Larry * * * from my point of view you should have stayed at Miami for at least another month. * * * You cannot play with pneumonia. * * * ”
William, Sr. attempted by indirection to plant some financial wisdom in Mrs. Pryor, in a letter of November 30, 1938. He wrote:
“Now, young lady, a word of advice, just because we are going so darn strong right now don’t get it into that pretty head of yours that we are going to keep it up. In other words, what I am getting at is that you had better save a little of this money you are getting in dividends and either pay off all your debts — if you have any remaining — or invest it in good securities. * * * ”
On May 23, 1939, he wrote her:
“ * * * Also, my suggestion to you is not to put too much of your dividends or earnings from the farm —back into the farm. You have got a pretty big farm now and it’s not desirable to get all your eggs in one basket. If you have got some extra money besides what you need for your expenses, if I were you I would put it into gilt-edge securities of some kind so that you will be building up a little something outside of your Clow stock. * * * This may be gratuitous advice, but I know it’s good. * * * Incidentally, when I said ‘good securities,’ believe me I really mean
good.
If I am buying common stocks — which I am now because they are cheap — I buy nothing but stocks like U. S. Steel Common, General Electric, International Harvester, United Fruit, Atchison common, Kennicott Copper, Standard Oil of New Jersey, etc. In other words, nothing but the
bluest of blue chip common stocks.
[Mr. Clow’s italics.] They may not pay dividends for a while, but if they are bought cheap you will' make a lot of dough out of them. Then when stocks of this kind get high — which they are bound to do in the next two, three or four years — I sell them and buy absolutely nothing but government bonds. That’s my invai-iable policy and I commend it to you — and in addition I never buy on margin. * * The time to buy these blue chip stocks is when everybody is scared and the prices are low. The time to sell them is when everybody is in the ‘whoopee’ mood and prices are high. * * *«
*531
His interest in Mrs. Pryor and her family is evidenced by the letter of September 22, 1937:
“I am mighty sorry to have your telegram that Hattie is in the hospital and trust you have written me to tell me how serious is her sickness. However, I am thankful to have good news at least once in his life from Charles, and if the boy is doing well now my personal opinion is that Hattie should make his plantation home so attractive and comfortable in every way that this new wife will want to stay with him and he with her [He advised fixing up Charles’ place] * * *. If you can keep her there for a few years, the chances are that Charles will be settled for life.”
Mr. Pryor wrote William, Sr. for advice as to what course he should pursue as to Mrs. Pryor’s health, she having been hospitalized five times during the year. On October 1, 1937, Mr. Pryor wrote:
“Frankly, I am very much worried about her susceptibility to these infections. * * * I am wondering now what she should do when she is able to be up again. I would like to know what
you
think is the best course to pursue.” (Italics supplied.)
On October 7, 1937, he replied to Mr. Pryor:
“I am very greatly concerned over Hattie’s condition. Possibly there is some climatic condition that affects her, but that is a question which would have to be settled by her physician. * * * I strongly commend all that you have been doing for Charlie. From my point of view the more comfortable, and, if you please, luxurious, you malee his plantation home, the better it will be for both Charles and his wife.”
On October 13,1937, he wrote Mr. Pryor:
“ * * * I think you are making a big mistake in not ordering the pump, as well as authorizing the shipment of the electric plant. Hattie has been getting some very handsome dividends from us. I hope she is entirely out of debt and that she has paid off her Kansas City mortgage, so that that property is clear. The reasonable probabilities are that she will get an additional dividend before the end of the year. She cannot take the money away with her. She has had pretty hard sledding for the last five or six years, and my advice to her would be to put the plantations — both hers and Charles’ in just as good shape as money can put them and enjoy the returns on the stocks she holds. * * * ”
The Court has read with extreme care the entire résumé of the diary of William E. Clow, Sr., and also the correspondence between him and Mrs. Pryor and her family, throughout the years. Correspondence from his sons to the Pryors has also been studied. Briefly stated, these documents reveal an amazing continued interest by William, Sr. and his family, in the welfare of Mrs. Pryor and her descendants, and their desperate plight during the long depression. They also evince a real concern over Charles, Jr.’s recurring marital difficulties. They show an effort by William, Sr. first to mold, and then to correct the character deficiencies of Charles, Jr. There is constant admonition to Mrs. Pryor to restrict her financial overindulgence of Charles, Jr., which advice went unheeded. Despite Charles, Jr.’s shortcomings, the Clow family displayed genuine affection for his amiable, charming personality. They took him into the family business but he evidently was not inclined to business routine, and in contrast with his cousin, Beach Clow, failed to make the grade in the Company. Plaintiffs, maintain Charles, Jr. was discriminated against in his employment by the family company, salary-wise, being given a mere pittance. There is evidence, however, that he was treated even better than other comparable employees.
The Court is completely unconvinced by plaintiffs’ brilliant fabrication, their assembling of unrelated facts into a
*532
mosaic aimed at depicting William, Sr. as a despicable rogue fleecing his brother’s untutored widow and infant son solely by his lust for power in the Company he himself founded and in which he already owned, within his own family, a majority control. Why did this man, painted by plaintiffs as a greedy ogre, take all the trouble to try and sell Mrs. Pryor’s diamond bracelet to gain her funds; why did he try to save her Kansas City property so she would have income; why did he take the trouble to convert the proceeds of her transactions into a dividend paying stock; why did he try to persuade her to improve her living conditions with modern plumbing; why did he try to give her advice on the running of the plantation; and most significantly, why did he try so desperately to save Charles, Jr. and these very heirs’ fortune for them when he seemed so unmindful, as plaintiffs view it, of all save himself ?
The Court agrees with the statement of Attorney Murray made in his memorandum of October 27,1938, to Mr. Johnson that any criticism of William, Sr. in respect to the sales by the Company of the Clow stock to William, Sr. “would not be justified.”
The record is replete with concrete documentary evidence that William, Sr. was not “acting solely for the personal benefit and interest of himself and his own immediate family rather than for the purpose of helping or aiding Mrs. Pryor personally or the trust estate of Charles, Sr.” He was the one to whom she turned for assistance when her improvidence got her into financial difficulties.
She
was not here complaining she had been taken in by him and bilked of trust stock. He was her staunch and ever-dependable friend. There can be no denying he was interested in the stock —he founded and piloted the Company for decades; he wanted to maintain it intact for his and his brothers’ sons and heirs. Those sons steered the Company through the depth of the depression and made it the successful company it remained — still amply contributing to the plaintiffs’ support through the trust stock their ancestors were not forced to part with in their vicissitudes.
If William, Sr. were the greedy ogre defendants picture him to be, and “known” to be even before Charles, Sr.’s death through the incident of the agreement changing his father’s will — why didn’t Charles, Sr. expressly omit him as an ostensible fiduciary guiding his “young and inexperienced wife and infant child” rather than naming him to appraise her reinvestments ?
There is not a scintilla of doubt in the Court’s mind that William, Sr.’s intent was beneficent.
Fraud of William, Sr.
Plaintiffs variously charge William, Sr. with “strategems and devices” concealing “pertinent facts,” giving “fragmentary information likely to cause her to sell” and omitting “to tell her that which might lead her to retain the stock,” misrepresenting “material facts,” using pressure by “postponing dividend payments and denying her loans, freely made to other stockholders,” influencing “her through a show of affection for her” and her son, daughter-in-law, and grandson, exaggerating Charles, Jr.’s personal problems and deprecating his financial judgment, misstating the “law applicable to Charles, Sr.’s trust,” making “veiled threats to call the loans made to Mrs. Pryor personally,” and urging her “to spend more money for herself and son.”
With extreme earnestness and remarkable and exhaustive research, plaintiffs have presented their cause, picturing William, Sr. as a man with an unswerving desire to acquire and maintain at all costs a majority control of the Clow Company. They portray him as an outwardly beneficent man, who actually was predatory, gaining control by taking advantage of his impoverished sister-in-law who had no knowledge of the real value of the Clow stock, whereas he was in full possession of the true facts of its great value, much in excess of the prices paid
*533
her. They paint a Dr. Jekyll and Mr. Hyde portrait of William, Sr.
86
Plaintiffs maintain that the uncontradicted evidence here not only established the presumed fraud of William, Sr. but goes even further and establishes actual fraud on his part, and there is no ground on which equity jurisdiction is so readily and freely exercised as that of fraud.
87
Fraud, they say, includes anything calculated to deceive, by suggestion of false or suppression of truth, by speech or silence, and if fraud is proved it vitiates all transactions touched by it.
88
They claim that “all the many facets of William, Sr.’s improper conduct towards Mrs. Pryor” fall within the definition of fraud — he “remained silent,” “suppressed vital information,” “told half truths” or “falsehoods,” and “colored the truth.”
89
Plaintiffs assert that some of the facts, which were concealed from Mrs. Pryor with respect to actual fraud, and William, Sr.’s campaign, to acquire the trust stock, were the failure to disclose “any information about the unauthorized salaries and bonuses paid to William, Sr. and his sons and the illegal loans and advances made to them by the Corporation and the other loans and advances to other members of their families.” They say:
“* * * [I]t was the duty of William, Sr. in his capacity as controlling stockholder and principal officer of the Corporation to have disclosed all of the facts relating to the Corporation, including the misappropriation of corporate funds through illegal compensation and loans as well as all other pertinent financial information relating to the condition and trend of business of the Corporation before attempting to purchase the shares of a stockholder such as Mrs. Pryor as trustee.”
Plaintiffs staunchly maintain there is “a wholly independent basis for recovery * * * in the mass of evidence of
actual
*534
fraud
on the part of William, Sr.” (Italics theirs), the proof of which is "extensive and overwhelming,” to be found in his letters to Mrs. Pryor, his diary, the Corporation’s correspondence with the Continental Bank, and the financial records of both the Corporation and the Continental Bank. The alleged fraud falls into three “categories”: “(1) William, Sr.’s fraudulent campaign to acquire the trust stock from Mrs. Pryor as trustee; (2) his misrepresentations to Mrs. Pryor, and (3) his concealment of facts and information from her.”
Defendants on the other hand press the legal proposition that active fraud and duress require proof of intentional and relevant misrepresentation or concealment, and actionable misrepresentation in the form of a statement of fact which is made for the purpose of inducing another person to act must be untrue, be knowingly made, be believed and relied upon, and the statement must be material.
90
The Seventh Circuit Court of Appeals so held in Harry Alter Company v. Chrysler Corporation, 285 F.2d 903, 906 (7th Cir., 1961). Concealment involves intentional nondisclosure that might justifiably induce the other party to act or refrain from acting. The matter not disclosed must be material to the transaction and it must be withheld by a person who had a duty to disclose.
91
Defendants also insist that William, Sr. did not misrepresent the business and the prospects for dividends, and their proof shows that all of his prognostications were within the realm of sound business judgment. They were his honest, true opinions.
Plaintiffs point out that defendants employed no outside analyst to determine the value of the stock purchased from the trustee. The Pryors and Charles, Jr. consulted no lawyer, banker, accountant or any other person on any of the four stock acquisitions and therefore had no independent advice. But Mrs. Pryor and Charles, Jr. were not persons untutored in appropriate sources of assistance. Charles, Jr. had employed the Wynn firm in August, 1935, to represent him in his marital difficulties and his interest in the trust stock was discussed, which resulted in the November 18, 1935, document. Mrs. Pryor did not accept unquestioningly William, Sr.’s advice as is-shown once
92
by a letter of inquiry, asking enlightenment.
A very recent Illinois case, Brubaker v. Gould, 34 Ill.App.2d 421 , 180 N.E .2d 873 (1962), also involved the issue of fraudulent inducement of transfer of stock. The Court found, 34 Ill.App.2d at. p. 432, 180 N.E.2d at p. 877 :
“ * * * [W]e believe that the evidence * * * sustains the allegations that the May 9, 1951, assignment was procured by Lahman by means of false and fraudulent misrepresentations, deliberately made with the intent to defraud the Brubakers of their complete interest in the stock.”
“Lahman freely admitted that he spent months trying to persuade the Brubakers to give up their stock. * * #»
Many specific acts of fraud were enumerated, false statements, false affidavits, and collateral agreements. The Court held 34 Ill.App.2d at p. 433 , 180 N.E.2d at p. 878 :
“Fraud is established by evidence of circumstances and facts which are inconsistent with an honest purpose and which convinces the mind of the existence of fraud. The proof should be clear and convincing in its nature, so as to leave the mind well satisfied that each element has been established. (In re Estate of Baumgarth (1960), 23 Ill.App.2d 319, 326 ,
*535
163 N.E.2d 201 ; 19 I.L.P., Fraud § 47.)”
Defendants point out that Mr. Pryor, a college graduate and state legislator, had participated in these transactions with Mrs. Pryor, yet he knew nothing questionable about any of the sales, and although a party to this litigation after Mrs. Pryor’s death, did not appear. They also point out that Mr. Wynn, with a duty as executor of Charles, Jr.’s estate which was kept open for thirteen years, even after this suit was begun, made no claim that the transactions were unfair.
Mr. Kiddoo, witness for the defendants, in examining the letters of William, Sr. to Mrs. Pryor, found no misstatements of fact or any predictions that were beyond the realm of, or inconsistent with, sound business judgment. He testified that all William, Sr.’s suggestions made to Mrs. Pryor were sound financial suggestions. The proceeds of the first sale were reinvested to gain income for her to meet the necessities of life; she was in financial distress and needed income. Mr. Kiddoo felt that the suggestions of William, Sr. were made to accomplish that end. He thought it was perfectly proper to convert the Clow stock into interest bearing securities. He testified that it was his opinion that the Clow stock was sound and its position sound, but that other stock or securities would have been preferable to the Clow stock as an investment for the trust in 1935. Plaintiffs sought to assail the soundness of William, Sr.’s advice to Mrs. Pryor by minute cross-examination of his correspondence with her, tediously asking seriatim, whether each letter contained sound business advice, and always elicited an affirmative answer from Mr. Kiddoo.
Mr. Douglas, son-in-law of William, Sr., and witness for the defendants, vehemently stated that the failure of the Board of Directors to pay common stock dividends was “absolutely not” due to an attempt to embarrass Mrs. Pryor financially. He explained the reason to be that the directors were unanimous in the feeling that the security and safety of the Company were the first thing to be considered; the Company had been through an extremely dangerous and difficult time; the first mortgage was practically a stranglehold on it and they were all determined to pay off that dreádful first mortgage before they could freely indulge themselves in common stock dividends. He further testified that the January, 1935, sale of Mrs. Pryor’s stock occurred because she was very acutely pressed for money and the sale of the stock
was requested by her,
and her representatives and agents.
Mr. Douglas further stated that it had been discussed at the directors’ meeting as to what should be done with the treasury stock, and it was thought to be a good idea to resell' it and then an offer was made to the various individuals. He did not want it at that price. William, Sr. took it.
When inquiry was made of Mr. Douglas as to his corporate experience as to whether advances were charged interest, he replied they were not because they are charged against salaries and collected at the end of the year, and as a whole they were so collected by the Clow Company, with the exception of the advances to William, Jr. In commenting upon the letter of William,
Jr.
of May 18,
1942
(upon which plaintiffs place great emphasis), which included, witness said, “statements made by a man who had been and was under medical care for mental disturbances,” Mr. Douglas said that the statement “We
93
have all got to stick together” was abnormal, and “extravagant, inaccurate statements.” That letter also contained the statement:
“Incidentally I negotiated the deal with Hattie Clow to assure this control; * * * since then of course Dad has added to the control by
*536
purchases which Hattie had to make to him during the depression.”
Mr. Douglas said that to the best of his knowledge, William, Jr. did not do any “engineering at all of the affair.”
A letter of May 23, 1935, from Attorney Walker of Memphis, illustrates the pressure upon William, Sr. to procure the sale of Hattie’s stock, as well as the availability of legal counsel to her and their consultation. It stated:
“Hattie has shown me your letter of May 20th relative to the stock in James B. Clow & Sons which is held in trust for her during her lifetime.
“Hattie is in a terrible jam if she cannot get some relief out of this stock and it is very difficult for me to make any suggestions without having a little more knowledge of the situation. In your letter you speak of having consulted the Company’s lawyer and that he was very much opposed to your purchasing the stock.”
Out of all the multitudinous contemporaneous documents written by the alleged malefactor, there occur but these few fragmentary statements capable of any indication of a desire by William, Sr. to acquire the stock of Mrs. Pryor. On August 10, 1940, he wrote her:
“I wrote you a letter quite a few months ago to which you made no response. I wrote you that if you wanted to sell any portion of your stock I would be glad to take it from you at par. Under existing conditions I cannot leave that offer open.”
Two weeks later he wrote her a very friendly, chatty letter stating he approved of her creating a trust for Charles, Jr. because of his inability to hold on to money.
William, Sr.’s diary records that on December 15, 1934, he told Linda and Hattie that he would not buy the third of the stock, that instead he would advance them funds at six per cent interest against dividends on Clow stock. April 9, 1935, he wrote that he had had lunch with Attorney Murray who told him not to buy Hattie’s stock — such a purchase would be likely to be set aside. On May 25, 1935, he wrote in his diary, “Home-with Jr.; talked over Hattie’s case and I decided not to buy stock.”
The overpowering need of William, Sr., for control of the Company through the-purchase of Mrs. Pryor’s stock is not. too evident when the chart revealing the-percentage of shares voted by William,. Sr. from 1928 through 1942 is studied. In 1930, long before the first purchase in 1935 was effected, Willi

[Text truncated at 120,000 characters. The full text is on the page linked above.]

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/2253253. Public record. Not legal advice.