Court Opinion

ID: 9630849
Source: CourtListenerOpinion
Date Created: 2023-08-22 10:22:38.018846+00
Date Added: 2024-06-11T18:07:44.999214
License: Public Domain

BABIARZ, Judge,
dissenting:
The Court here decides that the Court of Chancery erroneously applied corporate law principles to this trust case. Applying Delaware trust law, the Court holds that the defendants breached their duties as trustees by purchasing trust assets for a corporation owned by them individually. The net effect of the ruling, with which I agree, is simply to reverse the burden of proof applied by the Court of Chancery to the central factual issue in the ease, namely, whether the trust received fair market value for the land sold to the corporation.
Consistent with its view of the law, the Court of Chancery imposed the burden on the plaintiff beneficiaries to prove that the trust did not receive fair market value. Under our ruling, the trustees have the burden to prove that fair market value was paid. Because of the misallocation of the burden of proof, the majority remands the ease for a reconsideration of the issue.
The allocation of the burden of proof is critical in a jury ease, since a reviewing tribunal has no way of knowing whether that allocation was crucial to the verdict. A jury verdict may be based on a default in evidence by the party having the burden or a judgment that the evidence presented by the non-burdened party is in fact stronger. In a non-jury case, however, the appellate court usually has the benefit of an opinion from the trial court and thus has a basis for assessing whether a misallocation of the burden of proof was outcome determinative. In a non-jury case an appellate court’s analysis should not stop with a determination that the trial court incorrectly assigned the burden of proof. It must go on to consider whether that error resulted in actual prejudice to the party erroneously assigned the burden.57
*568In the instant case the Court of Chancery-states in its opinion that the plaintiff beneficiaries failed to sustain their burden of proof. However, to focus on this statement as a basis for remand is like professing to understand War and Peace after reading its first page. In his opinion, the Vice Chancellor discusses and analyzes the evidence of valuation presented by each side and finds that the defendants’ evidence is more persuasive.
The initial valuation issue presented was whether the residential lots purchased by the corporation were improved with water and sewer lines, streets and curbs. The Vice Chancellor considered the evidence advanced by each side and was “persuaded by the defendants’ evidence that only twelve of the lots were improved and that the balance were unimproved at the time of the sale.”58 Included in the evidence which the Vice Chancellor found persuasive was the testimony of an eyewitness, Charles Allmond, the co-administrator of the estate, who this Court agrees was disinterested and independent.
On the ultimate valuation issue, the Court of Chancery considered and evaluated the testimony of real estate appraisal experts proffered by each side. It concluded that the defendants’ appraisal more accurately reflected the fair market value of the property. In this regard the majority notes:
In reviewing the opinion of an expert witness as to the value of real estate the most significant factor is the value of the comparable sales. This factor is not dependent on which party has the burden of persuasion but rather is on other factors, such as the validity of the comparable sales examples presented.59
The Vice Chancellor engaged in precisely the analysis suggested by the majority. He found that the plaintiffs’ appraisal rested on “comparable” sales of parcels of land which were “larger [than the lots involved here], developed for commercial use or improved.”60 He found no such deficiencies with regard to the defendants appraisal.
In short, the Court of Chancery found as it did not because the plaintiffs defaulted in meeting any burden of proof or because the evidence rested in a state of equipoise but because of the defendants’ evidence was more persuasive. In other words the defendants prevailed on this issue because they sustained the burden of proof which should have been imposed on them in the first instance.61 As a consequence the erroneous assignment of the burden of proof to the plaintiffs was harmless.
Regardless of the misallocation of the burden of proof, it is obvious that each side presented the Court of Chancery with the strongest evidence available to support their respective positions. That evidence was fairly and properly considered by the court which found in favor of the defendants. There is no good purpose to be served by a remand to see if the plaintiffs, who now do not have the burden of proof, can come up with some other evidence which will persuade the Court of Chancery to decide in their favor.
The Court of Chancery’s conclusion that the trust received fair market value is supported by the record and is the product of an orderly and logical deductive process. Its judgment in favor of the defendants should be affirmed. I, therefore, respectfully DISSENT.

. See, e.g., Matter of Adoption of Baby Boy Irons, 235 Kan. 540, 684 P.2d 332, 340 (1984). (‘‘[This] error does not necessarily warrant reversal as it would in a jury trial. The record must be examined to determine if the evidence shows the appellees sustained the burden of proof which should have been placed upon them at trial ."); Advance Concrete Form, Inc. v. Accu-form, Inc., 158 Wis.2d 334, 462 N.W.2d 271, 277 (1990) (“We conclude that failure to allocate the burden of proof, if error, was harmless in this case. The circuit court’s findings make clear that if the burden of proof was [appellee’s], it carried that burden.”); Waggoner v. Johnston, Okla.Supr., 408 P.2d 761, 768-769 (1965) ("This error is harmless in this case in that it is clear *568from the memorandum of the trial court ... that the ultimate finding of the court ... was based on evidence submitted by [the appellees] and not on the failure of the [appellants] to uphold the evidentiary burden originally placed on them”). See also In the Matter of P.S. v. W.S., Ind.Supr., 452 N.E.2d 969, 976-77 (1983).

.Stegemeier v. Magness, Del.Ch., C.A. No. 12845-NC, 1998 WL 8851 (Jan. 6, 1998), Mem. Op. at 12-13.

. Majority opinion p. 566 (citation omitted).

. Id. at 14.

. See, e.g., Baby Boy Irons, 684 P.2d at 340; Advance Concrete, 462 N.W.2d at 277.