$1745 million “Barron v. The Nuns" battle goes to court

Press, 18 March 1986, Page 21

$1745 million “Barron v. The Nuns" battle goes to court

WILLIAM SCOBIE

reports from Los

Angeles on the final chapter in the sevenyear legal wrangle over the will of the hotel tycoon, Conrad Hilton, who left most of his fortune to charity.

After seven years of legal infighting, one of the oddest and sorriest business battles in Caliomia history goes to court this week in Los Angeles. It is known as the case of the Barron versus The Nuns. In one corner, Barron Hilton, boss of a global, $5.8 billion casino and luxury hotel empire; in the other Los Angeles’ Roman Catholic archbishop, Roger Mahony, and the mother superiors of various orders of nuns who have taken vows of poverty, and devote themselves to the care of the poor and sick. At stake is a 27.4 per cent interest in the Beverly Hillsbased Hilton Hotels Corporation, which could bring as much as $1745 million to the nuns and other charities, should they carry the day.

At issue is a single clause in the flowery, 16-page will of the legendary, much-married hotelier, Conrad Hilton, Barron’s father.

When he died in January, 1979, at the age of 91, Hilton Sen., bequeathed more than 99 per cent of a fortune valued at the time in excess of $1455 million to charity, through the Los Angeles-based Conrad N. Hilton Foundation. The will instructed the foundation’s directors to promote the cause of world peace and “shelter little children under the umbrella of your charity.” Further, they were to “give the largest part of your benefactions” to assist the work of Catholic nuns among the poor. The executor of the estate, James Bates, who was Concrad’s

personal lawyer and close friend for 35 years, says it was always the founder’s intent “to give this money to charity ... every word of the charitable disposition (in the will) came straight from Conrad’s heart.”

Barron Hilton, a plump 57-year-old who succeeded to the helm of the hotel chain, does not agree. He claims the right to buy the entire 6.8 million shares (27.4 per cent) held by the foundation, on the grounds that the stake constitutes “excessive business holdings” under federal tax laws for a private charitable organisation.

“My motivation,” he says, "is not so much economic as it is to make sure that my father’s intention to keep Hilton hotels intact is carried out.”

The dispute has grown increasingly bitter as the trial date approached. In what the archdiocese described as “a mediation effort,” Archbishop Mahony last month lunched with Barron Hilton, then invited both sides (and their lawyers) to meet with

nim at his Los Angeles archbishopric. The settlement talks collapsed after barely an hour. Bates, aged 80 — Conrad Hilton’s chosen representative on earth — declared he had no intention of attending. The Archbishop was merely compromising the position of the nuns since, even if the various orders were independent of the archdiocese, both parties were “on the charity side.” In short, there was a conflict of interest.

Barron Hilton stuck to his position that an option in his father’s will (allowing him to buy all Hilton shares found to be excessive business holdings for the foundation) gives him the right to purchase the shares for about a third of the current market value of $920 million. Archbishop Mahony then dropped his “mediation” role and agreed to back the foundation in its fight to retain the shares. The California attorneygeneral’s office, represented at the meeting, gave the state’s support to the foundation case, according to lawyers present.

As to the $1745 million question — whether Conrad Hilton truly intended his share of the

hotel business to go into good works or expansion of the empire — it seems that church, state, and Conrad’s best pal agree.

“Conrad repeatedly expressed concern that he was leaving too much money to his ex-wives and to Barron Hilton,” Bates has testified. “He drafted 35 wills in his lifetime, in each one reducing the amount to be left to his children and grandchildren.” In early wills, Bates testified, Barron was left many millions of dollars. The final will left him only $1.45 million. “Barron’s father passionately wanted his money to go to Catholic charities,” said Bates, a tall, silver-haired Montana man who has practised law in California for 56 years. “He wanted the exclusion of family members, to whom he left very modest bequests.”

Bates quoted a “typical passage” from the final document: “A natural law, a divine law, obliges you and me to relieve the suffering, the distressed, and the destitute. Charity is a supreme

virtue ... that unites men and inspires their noblest efforts ...” As part of the effort to establish the truth about Conrad Hilton's last wishes, philanthropic or otherwise, lawyers on both sides are said to be soliciting testimony from the old man’s wives, including Zsa Zsa Gabor, from whom he was divorced in the 19405.

Why is Barron Hilton, to all appearances, so desperately opposing his late father’s desires? One reason is that chief executive Barron made a serious mistake in selling off much of Hilton’s international business in recent years to concentrate on the gambling sector.

The company has staked a significant part of its future on its two vast casino/hotels in Las Vegas and its hopes for further profits from a $582 million Atlantic City venture. Those hopes were severely shaken last April when the New Jersey Casino Controls Commission denied Hilton’s application for a gambling licence.

The company’s position was weakened, making it vulnerable to a takeover bld — which promptly came from Golden Nugget, a successful rival operator in the two gambling meccas of the United States, which made an offer of $l4O a share for stock then valued at around $l2O a share.

To stave off the takover and keep papa’s empire intact, Barron was forced to raise Hilton’s bank credit lines by some $6BO million. "Hilton Hotels is more than a corporation, it is a family," he . told the company’s 32,000 employees. "Our family is not for sale.” But he — and the cash-rich predators waiting in Las Vegas and Atlantic City — know that the scenario could well be different if the verdict in this week’s probate court hearings in Los Angeles goes to his father’s beloved foundation, and to the Sisters of Mercy in whom the founder apparently saw his hope of individual salvation.

Copyright—-London Observer Service.