Plaintiff, Dorothy Guiri, defendant’s mother, and defendant’s brother, Jon Guiri, who is a defendant on the counterclaim, appeal judgments in a court-tried case refusing to remove defendant, James Guiri, as co-trustee of a family trust, and refusing to order defendant’s stock in a family corporation, sold to satisfy a purchase money note under a Collateral Pledge Agreement. Jon Guiri was not a party-plaintiff in the petition filed by Dorothy Guiri against James Guiri but was a named defendant in the counterclaim. Dorothy and Jon Guiri also appeal judgments, (1) ordering Dorothy Guiri to give an accounting to the family trust and removing her as co-trustee; (2) disqualifying Jon Guiri as a successor co-trustee; (3) awarding James Guiri damages from Dorothy and Jon for abuse of process in instituting and maintaining this litigation; and (4) awarding James damages from Jon for tortious interference of contract.
Defendant James cross-appeals because the trial court failed to award damages against plaintiff mother and son for prima facie tort.
This case was tried on extensive agreed facts and the testimony of the principals. The court made exhaustive findings of fact and conclusions of law. From the agreed facts and testimony, the court, as the trier of fact, could have found the facts given in this opinion.
BACKGROUND FACTS
Howard P. Guiri and Dorothy Guiri were the parents of five children, James, Jon, David, Douglas and Susan. Howard P. Guiri died on March 7, 1981. During his lifetime, he operated General Automatic Transfer Company (GAT), and established the Howard P. Guiri trust (H.P.G. trust). James was active in the operation of the company with his father.
On December 5, 1975, Howard P. and Dorothy Guiri executed a buy-sell agreement whereby if either desired to dispose of any of their GAT stock, they would first offer the shares to be sold to James N. Guiri, unless and until he had at least 51% of the issued and outstanding stock. In the event of death of either of them, the shares of the deceased were subject to the same agreement in favor of James. The agreement contained a formula for determining the price to be paid. The purchase price was payable by ten equal consecutive annual payments with interest at not more than 6%. The first payment was to be made one year after the date of death, and on the same day of each year thereafter with interest on all notes to be paid annually. Prior to payment of the installments, the purchaser was entitled to exercise all rights of ownership but was required to pledge the stock to the personal representative of the decedent as security for payment. At the time of the execution of the agreement, there were 100,000 issued and outstanding shares of GAT. The agreement was amended on December 1,1976, in order to accommodate stock transferred by Howard P. or Dorothy Guiri to trustees of their respective trusts. The amendment to the buy-sell agreement was signed by Howard P. Guiri, individually, and as trustee of his trust dated October 5, 1976, and by Dorothy Guiri, individually, and as trustee under his and her trust dated October 5, 1976.
Howard P. Guiri died on March 7, 1981. On May 8,1981, James exercised the option granted in the buy-sell agreement, and purchased 12,000 shares of GAT stock from the H.P.G. trust for the sum of $108,000, evidenced by a series of ten negotiable promissory notes in the amount of $10,800 each. The first note was due on March 7, 1982, the second on March 7, 1983, the third on March 7, 1984, and so on until the last note was payable on March 7, 1991. He secured the payment of the notes by a Collateral Security Agreement in favor of the trust. In addition to the obligation to pay the notes, James agreed that so long as any part of the indebtedness on the notes remained unpaid, he would cause GAT to comply with all governmental regulations, continue the corporation in good standing, and keep true and accurate books of account showing its business transactions. Significant to this appeal was a further agreement, Article III (c), “To not assign, transfer, mortgage, hypothecate or pledge its property, or any substantial part of it; ...” The stated intention of the Collateral Security Agreement was “to secure the payment of the principal and interest on the Notes, according to their terms and according to the terms, provisions and conditions of the instant Collateral Security Agreement, and to secure the performance of each of the covenants and conditions contained in the instant Collateral Security Agreement.” The agreement also provided that upon payment in full of the notes, the trustees were to return the shares pledged, properly endorsed to James. At the time James purchased the 12,000 shares from the H.P.G. trust, he was a co-trustee of the trust with his mother, Dorothy Guiri.
During the period of dispute between Dorothy and Jon Guiri, and James Guiri, James owned 51% of the outstanding shares of stock of GAT, was the president and a director of GAT, and a co-trustee of the H.P.G. trust. Prior to the dispute, he was a trustee on the Dorothy Guiri trust but resigned at her request. Dorothy Guiri was the secretary and a director of GAT until replaced by Jon on July 11, 1983, and a co-trustee of the H.P.G. trust, and her own trust. Jon Guiri was a shareholder of GAT, was named but did not serve as a successor trustee of the H.P.G. trust, but not an officer of GAT. He replaced his mother as a director on July 11, 1983. Pri- or to the litigation, James Guiri timely paid the first three purchase money notes. It is agreed that he was never in default on the payment of any of the notes. Plaintiff Dorothy Guiri testified that she was never concerned that the notes would be not timely paid. She believed that James would pay each note when due.
On November 8, 1983, plaintiff, Dorothy Guiri, in her capacity as a co-trustee of the H.P.G. trust attempted to declare an event of default on the stock Collateral Security Agreement, and the notes. This was done at the instance and request of Jon Guiri. Dorothy acknowledged that she did so in order to divest James from his majority stock position, and to allow other family members greater control over the operation of GAT. She did so upon the basis of her conclusion, suggested by Jon, that James had violated the provisions of the Collateral Security Agreement which prohibited him from signing, transferring, mortgaging or pledging the property of GAT (or a substantial part of it). She claimed that three acts of James individually and as president of GAT were violations of the agreement: (1) On February 8, 1982, he traded a 1976 airplane which was subject to a chattel mortgage for a 1979 airplane for which GAT gave a purchase money chattel mortgage; (2) on March 1, 1983, he executed a renewal note secured by an existing deed of trust on real estate owned by GAT; and (3) in August 1983, James as a director of GAT, increased the existing line of credit of GAT with Hampton Metro Bank from $200,000 to $300,000.
Defendant, James Guiri, denied any violation or default under the notes. He contends that none of the three claims of default were prohibited acts by the provisions of the Collateral Security Agreement. First, he contends that the three alleged violations were not violations because they
On February 3, 1984, Dorothy as trustee of the H.P.G. trust sued James, seeking (a) to remove him as a trustee of the H.P.G. trust, and (b) requesting that she be permitted to sell the 12,000 shares of stock of GAT purchased by James. James filed an answer denying breach and claimed the affirmative defenses of estoppel, laches, waiver and ratification. After the original answer, James tendered full payment of the principal and interest due on the remaining seven stock purchase money notes although they were not then due by depositing the amount unpaid into an account of the H.P.G. trust. He continued to deny breach of the security agreement but tendered full payment and asserted redemption under § 400.9-506 RSMo 1978. Dorothy Guiri, as trustee, refused to accept and returned the payment. On October 26, 1984, James, by leave and by consent, deposited the unpaid balance on the notes into the registry of the court. On October 31, 1984, James amended his answer to include additional affirmative defenses of payment, redemption of security under § 400.9-506 RSMo 1978, and failure of plaintiff, Dorothy, to act in good faith. The court found as a fact that James made a good and valid tender to plaintiff, Dorothy, as co-trustee, of all amounts of principal and interest due under the purchase money notes of May 8, 1981.
Jon Guiri assisted Dorothy in requesting the court to remove James as a co-trustee of the H.P.G. trust, and ordering a sale of 12,000 shares of stock purchased and pledged by defendant, James Guiri.
James counterclaimed individually and as co-trustee against both his mother, Dorothy, and his brother, Jon. The counterclaim sought relief for actual and punitive damages against Dorothy and Jon on the theory of prima facie tort (Count I); an accounting from Dorothy Guiri for assets of the H.P.G. trust removed in violation of the trust and without the consent of James Guiri, co-trustee (Count II); removal of Dorothy Guiri as co-trustee, and disqualification of Jon Guiri as successor trustee of the H.P.G. trust (Count III); tortious interference with contract by Jon Guiri for acts interfering with the notes and Collateral Security Agreement between the H.P.G. trust and James Guiri (Count IV); slander by Jon Guiri — (dismissed and not now relevant); abuse of process by Dorothy Guiri and Jon Guiri, acting in concert with one another to use the petition in this case and the refusal to dismiss the petition after tender of and payment in full of the stock purchase money promissory notes, for collateral purposes (gain control of defendant’s stock to their own advantage and not to collect a judgment for payment on the notes) (Count VI).
The trial court entered judgment in favor of defendant, James, on both requests for relief in plaintiff Dorothy’s petition. The trial court denied relief on Count I of the counterclaim, prima facie tort, and entered judgment for Dorothy and Jon. The trial court granted judgment for $61,317.19 (including interest) in favor of James as co-
DOROTHY AND JON’S APPEAL
Dorothy and Jon’s appeal involves: (a) claim of error in denial of relief on the petition; (b) matters involving the H.P.G. trust where the court entered a judgment in favor of the trust and against plaintiff, Dorothy Guiri, for unauthorized withdrawal of $48,812.62, removed Dorothy Guiri as a trustee, and disqualified Jon Guiri as named successor trustee; (c) judgment in favor of defendant, James Guiri, and against both Dorothy and Jon Guiri for abuse of process awarding actual damages against both, and punitive damages only against Jon; and (d) judgment against Jon Guiri for actual and punitive damages on the tort of tortious interference of the contract between defendant, James Guiri, and the H.P.G. trust.
We find no error of fact or law on the judgment in favor of defendant, James Guirl, on plaintiff, Dorothy Guirl’s petition. The evidence is clear that James did nothing with regard to the three assignments of breach of the Collateral Security Agreement to jeopardize the assets or the operation of GAT. As the trier of fact, the court was entitled to believe that the value of a share of stock of GAT increased from $9.00 a share in 1981, to $9.84 a share in 1983. Defendant, James Guirl’s actions with regard to each of the three transactions were expressly approved by plaintiff, Dorothy Guiri, and Jon Guiri testified that he did not contend that James violated the H.P.G. trust agreement. This fully disposes of the contention that James should be removed as a co-trustee of the H.P.G. trust. The power of the court to remove a trustee should be used sparingly, and before it is exercised, there should be such misconduct as to evidence of want of capacity or fidelity, which has, or might likely, put the trust in jeopardy.
Morrison v. Asher,
We find no error in the judgment removing Dorothy Guiri as a trustee, and ordering her to return the sums withdrawn without the consent, knowledge or signature of the co-trustee. She acknowledged by her testimony that between May 1981 and April 30, 1983, she withdrew sums from the trust account at a savings and loan association. She was aware that the trust permitted withdrawal only for her
The decision of the trial court to remove Dorothy Guiri, and disqualify Jon Guiri as a named successor trustee is also supported by the record. During the period of 1983 and 1984, Jon Guiri invested and lost substantial sums of money borrowed from Dorothy Guiri in what was admittedly a highly speculative commodities market. He was unemployed, and claimed to be either a woodshed engineer or a pilot on income tax returns. He was not qualified for either. He had borrowed and lost over $100,000 from his mother, Dorothy and his brother, Douglas. He had no means or hope to repay them. Further, while the trust was in possession of a collateral pledge agreement on stock of GAT, he encouraged his mother to accelerate or demand payment of a number of corporation debts in the form of promissory notes of the corporation which may have caused damage to the corporation, and in turn, to the value of the pledged stock. Dorothy Guiri, as trustee, participated in these transactions with Jon Guiri. She not only withdrew funds from the trust without authority, she participated in Jon’s loss of substantial sums of money which demonstrated, at least, a lack of prudence expected of a qualified and faithful trustee. In her testimony, she acknowledged that she felt that Jon was better qualified as a director of GAT than she. The evidence demonstrated an abundance of lack of capacity and judgment on the part of both, and the court did not err in removing Dorothy and disqualifying Jon. Though there was a conflict in the testimony regarding James’ knowledge of the unauthorized withdrawals, the trial court has the prerogative to determine the credibility of witnesses, and apparently accepted James’ testimony on this issue.
In re Marriage of Plank,
Dorothy and Jon also claim error in the judgment of the trial court in favor of James on his- counterclaim for abuse of process. Plaintiff Dorothy admitted the purpose in filing and maintaining the petition was not the recovery of the balance due on the stock purchase notes, but to use the trust and the Collateral Security Agreement to divest James from a controlling interest in GAT. The elements of a claim for abuse of process are: (1) an illegal, improper, perverted use of the process that is not warranted or authorized; (2) an improper purpose in exercising such illegal, improper or perverted use of process; and (3) resulting damages.
Stafford v. Muster,
We find no error in the judgment against Dorothy Guiri and Jon Guiri for abuse of process in maintaining the cause
Jon Guiri, also complains that the court erred in awarding punitive damages on the counterclaim for abuse of process to defendant, James Guiri. Punitive damages are recoverable upon a showing of either actual or legal malice.
Imperial Utility Corp. v. Cytron,
Applying these principles, we find no error in the discretionary award of punitive damages against Jon Guiri, but no award against plaintiff, Dorothy Guiri. The court found a willful, intentional and malicious act by both Dorothy and Jon in maintaining the petition after tender of full payment, on the notes, but elected to award punitive damages in favor of defendant, James Guiri, only against Jon Guiri. Under Riddle, the court was not obligated to assess punitive damages against both Dorothy and Jon after finding actual malice in their actions. Although not found as a fact, the evidence discloses that Dorothy Guiri deferred to the suggestion and will of Jon Guiri in instituting and continuing the litigation. He selected their lawyer, the discharge of their first lawyer, the selection and hiring of a second lawyer. They are represented by new counsel on appeal. Jon Guiri undertook to research the law, drafted pleadings, drafted demand letters for Dorothy’s signature, and was otherwise a more dominant figure. We have noted evidence that during the period of contest, Jon was unemployed, adopted claims of status as an engineer and a pilot without the benefit of training or experience in either field, borrowed large sums of money from his mother and brother, with no apparent ability to repay the loans, invested their money in highly speculative commodity markets, and lost substantial sums of money. He stood to gain by replacing James as a co-trustee, and by divesting James from the management and control of a corporation that had been and was well run by James on behalf of all the stockholders. An apparent improper motive from these actions was a continued control of his mother, Dorothy Guiri, and her property. This evidence is a basis to distinguish between the award of punitive damages against Jon Guiri, and not against Dorothy Guiri. We find no error in the judgment on defendant, James Guirl’s counterclaim for abuse of process.
The trial court found that Jon was unjustified in his actions in maintaining the petition after tender of full payment on the notes because Jon had no direct financial interest in the notes or the Collateral Security Agreement between James and H.P.G. trust. It found that Jon acted intentionally, willfully and maliciously, and encouraged Dorothy to breach the terms of the Collateral Security Agreement between James and the trust. Jon claims that he was a contingent beneficiary of the trust, and a named successor trustee, and so had an interest in enforcing the terms of the Collateral Security Agreement on behalf of the trust.
We agree that the court erred in entering the judgment on the tort of intentional interference with contract or contractual relations, but for a different reason than that asserted. The classic example of tor-tious interference arises where a third party induces buyers to breach contracts with sellers for the third parties’ economic advantage.
See Clark-Lami, Inc. v. Cord,
DEFENDANT’S APPEAL ON COUNTERCLAIM
Defendant, James Guiri, cross-appeals contending that the court erred in refusing to enter judgment in his favor against Dorothy and Jon on Count I of the counterclaim which alleged a cause of action for prima facie tort. He argues that the court erred in refusing to enter judgment “even though the court’s findings of fact found every element necessary for entry of said judgment for James” and that the court refused to enter the judgment solely because the court did not personally believe in the doctrine of prima facie tort.
In Bandag, the court refused to allow recovery under the prima facie tort doctrine because plaintiff’s case alleged a cause of action for tortious interference with contract. Id. at 554. Here, even though we have determined that James cannot recover under tortious interference with contract, he has recovered under abuse of process. James argues that although he did recover under other tort doctrines, additional facts were alleged to establish a cause of action for prima facie tort.
Our review of the records indicate that James incorporated all of Count I, the prima facie tort count, into the abuse of process count. The additional facts he speaks of were alleged in Count VI, the abuse of process count not the prima facie tort count. Since James recovered on abuse of process, he cannot recover on prima facie tort.
See Halford v. American Preferred Ins.,
We affirm the judgment in favor of defendant on the petition and on his counterclaim for abuse of process. We affirm the denial of relief on the counterclaim for prima facie tort. We reverse the judgment for defendant for tortious interference with contract.