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In Re Estate of Gammie

OPINION FILED OCTOBER 7, 1986.

IN RE ESTATE OF RENA A. GAMMIE, DECEASED (DONALD G. GAMMIE, EX'R OF THE ESTATE OF RENA A. GAMMIE, APPELLANT; JAMES L. GAMMIE, APPELLEE).


Appeal from the Circuit Court of Cook County; the Hon. Benjamin Novoselsky, Judge, presiding.

PRESIDING JUSTICE BILANDIC DELIVERED THE OPINION OF THE COURT:

Donald G. Gammie, executor of the estate of Rena A. Gammie, appeals from an order of the trial court surcharging him for the alleged diminution of an asset of the estate.

Rena A. Gammie died testate on April 19, 1983. After making certain specific bequests, her will provided that the residue of the estate "shall be sold and converted to cash" and be distributed one-third to her son, Donald G. Gammie (the executor), one-third to the children of her deceased daughter, Jane, and one-third to her son, James L. Gammie (the objector.)

The objector, James, alleged that his brother Donald, the executor, caused an asset of the estate identified as Belden & Blake (Belden) to diminish in value and therefore should be surcharged. The trial court agreed and stated: "If Mr. Gammie, the Executor, had sold the stock to his brother according to the formula or transferred it to him, we wouldn't have that problem here today."

Between 1965 and 1969, the decedent's late husband and father of the disputants purchased an interest in certain producing-oil-well partnerships sponsored by Belden of North Canton, Ohio. On his death, these partnership interests passed on to his widow, the decedent herein. These investments were made at the suggestion of, and through, Blunt, Ellis & Loewi (Blunt) of Milwaukee, Wisconsin. The decedent and her late husband used this firm for their investments.

The decedent and her husband were pleased with the performance of Belden. In addition to tax benefits, they received cash dividends well in excess of their initial investment.

On June 8, 1983, Donald G. Gammie was duly appointed the executor. On July 10, 1983, all of the securities comprising the residuary estate, except Belden, were sold through Blunt, the decedent's investment advisor. The Belden interest was not sold because there was no market. However, Belden offered to purchase the partnership interest for $12,000 as an accommodation to the estate, although they preferred not to do so. At the same time, the objector, James L. Gammie, offered to purchase Belden for $11,343.21. This was less than Belden's offer.

The decedent's will provided that her collector plates, silver, gold pins and a picture be sold to the heir who bid the most. This was done. On October 9, 1983, the executor's attorney, Ralph O. Butz, suggested that the same bidding procedure be followed in disposing of Belden. This was rejected by the objector, who wrote to the executor on October 9, 1983, and said:

"I do not accept Butz' notion of a blind bid for the properties. * * * I urge you to accept my plan of May 14, 1983. — $11,343.21 — As far as I am concerned that is the best and only offer you will see."

On April 26, 1984, the Belden interest was converted from a partnership interest to 1,111 units of Belden & Blake Energy Company. In May of 1984 the executor contacted Blunt regarding a market for Belden and possible disposition. The firm responded that it did not know the value but would "look into it." On further inquiry, the executor did not receive "any substantive response" from the firm, but was told that the firm would "turn it over" to their attorney and that the executor "couldn't sell [the units] outright" because the asset was "something different than stock shares." The record does not explain the reason that the units could not be sold outright, but apparently the difficulty arose because the estate was holding units which had not yet been converted to registered securities which were about to be traded on the American Stock Exchange.

Through the summer of 1984, the executor contacted Blunt approximately 16 times, but was not able to determine either the value or the method of disposing the Belden interest. On September 25, 1984, the executor filed a final account proposing a distribution of Belden in kind. James L. Gammie objected.

On October 30, 1984, Donald and James met in an effort to resolve the matter. The evidence is conflicting regarding the meeting. Donald testified that now James wanted distribution in kind of the Belden interest. James disagreed. He testified that he wanted Blunt to sell the interest. Donald then directed Blunt to sell and was advised by them that the units could not be sold on the open market immediately because it would take three or four weeks to process the transaction.

Before Blunt could complete the transaction, Donald filed another accounting proposing distribution in kind. James objected again and sought a surcharge against Donald. He alleged that the value of the Belden interest dropped from $22 per share on October 30, 1984, to $14 per share on November 27, 1984.

A hearing was held on February 6 and 7, 1985. The only witnesses were James, the objector, and Donald, the executor. On February 11, 1985, the court entered its order surcharging the executor. Rehearing was ...


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