Estate Of Baldwin

Facts

Stephen L. Baldwin, a Maine domiciliary, died in a Downeast Airlines plane crash, leaving a widow, Tracy C. Baldwin, and three minor children by a former marriage. The children, aged 13 and younger, lived in Westport, Connecticut, with their mother. The decedent divided his estate into two equal shares, one share to go to the widow and the other, to his three children. After divorcing his first wife and remarrying Baldwin bought all the assets and operating business of the Port Clyde General Store. The general store was described as a “mom and pop” operation. The Baldwins lived in an apartment over the store. The property included a wharf and also a small lunchroom operated during the summer. Its gross revenues, warranted by its prior owners to be about $260,000 per year, were heavily dependent upon the seasonal tourist business on outlying islands, including Monhegan, and on the mainland in the vicinity of Port Clyde village. Baldwin's widow continued to live in the upstairs apartment and operated the general store by herself. Baldwin bought the entire assets of the store on October 5, 1978, for approximately $145,000. The buildings were constructed in the mid- to late-1800s and were in need of repair. A tort recovery was expected, arising out of decedent's death in an air crash. Any such recovery would not be part of the estate but would be distributed to the widow and children in accordance with the provisions of 18 M.R.S.A. ss 2551-2553 (1965 & Supp.1980), now replaced by 18-A M.R.S.A. s 2-804 (1981 & Supp.1981). Baldwin nominated as executor The Connecticut National Bank (D), located in Bridgeport, Connecticut. D at first filed a declination of the appointment, but later withdrew it. D was appointed executor by the Knox County Probate Court. In the course of the following year, the children's mother and other representatives became concerned that the widow was not running the store well and repeatedly urged the Bank to supervise the store and to obtain from the widow sufficient information to evaluate the store's performance. D resisted, and no one at D ever inspected the store or audited its operation. No one at the Bank ever had any meaningful discussion with the widow about her business experience or her management of the store. D never received, or ever requested, periodic financial reports from the widow. Sometime after March 1980, D did receive a copy of the federal income tax return filed by the corporation. By late summer 1980 D got an appraisal of the real estate for the purpose of filing the probate inventory. By early summer 1980, the store was “not doing well.” On October 1, 1980, the children's guardian (P) initiated the present proceeding to give account of the operations of the Port Clyde General Store and that D be surcharged if it were found not to have met its fiduciary obligations. Two weeks later D sent the widow a letter asking her for the first time to account for her operation of the store. On October 17 D petitioned the Probate Court for a license to sell real estate, representing that the estate's liquid assets were insufficient to meet its obligations. The Probate Court appointed a guardian ad litem for the children and ordered that the widow turn over to the other parties all financial records relating to the Port Clyde General Store and Stephen L. Baldwin, Inc. On April 6, 1981, the Probate Court entered its decree, making extensive findings of fact and concluding that D had committed no breach of fiduciary duty. The Probate Court also granted D's petition for a license to sell real estate, a matter that on appeal is not contested by the children's representatives. On October 31, 1981, the Bank sold all the real estate and improvements of the Port Clyde General Store for $100,500, and on the same day Stephen L. Baldwin, Inc. sold all of its assets to the same purchaser for about $29,000. P appealed. 

Issues

Rule of Law

Holding and Decision

Legal Analysis

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