Family Feuds

Some of the leading American families have been forced to sell their legacies

Tweet

You can't outgrow a succession problem. Even family companies much larger than L. Vaughn Co. -- companies with substantial resources that enable them to solve problems in other areas -- find that disputes over succession are intractable.

Consider the sad story of the three Horvitz brothers. When their father died in 1956, he left plenty to go around: two newspapers, a construction company, and real-estate holdings in Florida valued at about $70 million. It was a generous pie, and relatively easy to slice. One son took primary responsibility for the newspapers, another the construction, and a third the real estate. Sounds simple, right?

Ah, but nothing is simple when siblings clash. Each son still wanted to know that he was really as talented as Dad. The most proficient asset manager, it followed, ought to control all the assets. The ugliest part of the contest didn't begin until 1977, when their mother died. The battle soon shifted from the boardroom to the courtroom when the brothers tangled themselves in a web of lawsuits. The judge decided that the brothers needed more outsiders on their board.

Nothing much changed. The Horvitz brothers returned to court two years later -- this time with their children drawn into the battle as well. Had the probate judge not decided in 1986 to liquidate the original trust, including Horvitz Enterprises Inc. and Hollywood Inc., and divide it in three, the dispute might have drained the resources of the entire U.S. judicial system.

A similar fate befell the Bingham family, which ultimately sold off its $440-million media empire. In that celebrated case, two daughters and a son inherited large portions of the Louisville concern, which had been founded by their grandfather. "They ran into the grandchildren syndrome," says David Leon Chandler, author of The Binghams of Louisville. "The heirs had multiplied, and the family was too diverse for the business." As with the Vaughns, there were too many stockholders who believed they should have a say in management.

Barry Bingham Jr. was running the business during the late 1970s when his sisters -- each of whom owned stock -- were appointed to the board by their father. They and their mother, also a new board member, constantly questioned their brother's decisions. After years of wrangling, the sisters decided they wanted to sell their stock. Finally, their exasperated father stepped in. In January 1986, Barry Bingham Sr. announced the sale of the family's embattled heirloom. "He felt that the rift was irreparable," says Chandler. "The family could never be put back together."