Although a settlement agreement worked out between siblings included details about who would receive the comic books, the Indiana Court of Appeals ruled because the document did not specifically address the accounts receivable, one of the surviving sons would not be entitled to the money.
After George W. King Sr. died in 2001, his three children began fighting over the ownership of his many businesses. His daughter, Kay King, and her son, Christopher King, filed a complaint against her brothers, George King and Bob King, and against five of her father’s corporations and three partnerships.
In June 2003, the trial court appointed a receiver. About a year later, the receiver paid more than $2 million for the estate’s outstanding tax liabilities. He drew the bulk of the funds from one particular company, Crown Associates Inc. because that entity had more liquid assets available than the other businesses. The receiver credited Crown by creating an account receivable which in 2007 was valued at $687,278.
On Feb. 22, 2005, the siblings entered into a Term Sheet for Settlement of Litigation which represented their partial agreement on the broad outlines of asset distribution. As a part of that document, the assets and/or equity interest of Crown was conveyed to the son, George Dean King.
Concluding the accounts receivable were not part of the assets, the trial court ruled the receiver should eliminate all inter-company accounts prior to transferring Crown to George King.
On appeal, George King argued the court abused its discretion when it approved the elimination of certain Crown accounts receivable prior to conveyance. He asserted the accounts receivable were still on the books when the Term Sheet was executed in February 2005.
The COA disagreed in George Dean King v. Kay S. King, et al., 49A02-1202-MF-73. It noted the receiver initially proposed that all receivership entities be liquidated with the proceeds being divided equally between the siblings. However, that goal was altered after the siblings executed the Term Sheet which made the assets included in each receivership entity important.
While the Term Sheet divided a multitude of assets ranging from real estate to safety deposit boxes and even comic books, it did not address Crown’s accounts receivable.
“Given the level of detail embodied in the Term Sheet,” Judge Patricia Riley wrote, “the absence of a clear expression by the parties to repay the accounts receivable which had been expressly created by the Receiver during the Receivership and which existed during the execution of the Term Sheet, is evidence of intent that no such offset was bargained for.”