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Hilton Loses Ruling on His Father’s Will : Decision on Option Price of Hotel Firm’s Shares Could Give $300 Million to Charity

Times Staff Writer

In a decision that could be worth more than $300 million to charity, a Los Angeles County Superior Court judge ruled Friday that the Conrad N. Hilton Foundation is entitled to receive a block of 27.4% of the shares of Hilton Hotels, representing a controlling stake in the company.

Judge Robert I. Weil denied the claim of Barron Hilton, son of Conrad and chief executive of the Beverly Hills-based hotel chain, that he is entitled to buy the stock under an option in the late hotelier’s will.

The stock’s market value has increased from about $140 million to about $500 million since Conrad N. Hilton died Jan. 3, 1979. Barron Hilton had claimed the right to buy all of the stock at its value at the time of his father’s death.

The foundation would reap all the increased value under Friday’s ruling, which came at the close of a three-week trial.

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‘Shelter Little Children’

Conrad Hilton’s will left the bulk of the estate to the foundation. In what Weil called a “beautiful provision,” the will eloquently counseled its directors to relieve suffering, “shelter little children” and “give aid to their protectors and defenders, the (Catholic) Sisters”

For 80-year-old James Bates, executor of Conrad Hilton’s estate, the outcome was a victory after a dogged battle.

Until recently, it had pitted him and his attorney, Myron Harpole, against the president of the foundation itself, Donald H. Hubbs, who was also Barron Hilton’s attorney for some 30 years.

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Weil ruled immediately after attorneys completed two days of final arguments. The timing took by surprise the attorneys and most observers, who thought he would take the case under submission and announce his decision later.

Barron Hilton, who had attended virtually every day of the trial, first as a witness and then as an observer, was not present for the verdict. His attorney told the court at the outset Friday that he could not attend because of a meeting in New York of the board of Manufacturers Hanover, of which he is a member.

Friday’s ruling, however, will not end the legal battle. Ronald Gother, an attorney for Barron Hilton, immediately said Weil’s ruling will be appealed.

Taking note of Hubbs’ past support of Barron Hilton’s claims and charges of conflicts of interest, Judge Weil said Friday that Hubbs is “a good man” who had been put in “an intolerable position” as a friend, confidant, attorney and accountant for Barron Hilton.

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Deputy Atty. Gen. James Cordi said in his final argument in opposition to Barron’s claims that “I have had problems with his (Hubbs’) divided loyalties” but that “I do not have a problem with his honesty.”

Origins of Fight

Noting that Hubbs corroborated Bates’ testimony in several key parts, Cordi said Hubbs’ testimony “was very truthful indeed.”

Bates had launched his fight when Barron Hilton and his attorneys claimed that Barron was entitled to buy all of the hotel company shares instead of the 2% to 6% envisioned when Bates drew up Conrad Hilton’s last will in 1973.

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Although Conrad Hilton had left the bulk of his estate to his charitable foundation, his will gave Barron an option to buy those hotel shares found by the Internal Revenue Service to be “excess business holdings.” According to Bates’ testimony, Conrad Hilton expected the foundation to be allowed to keep at least a 20% holding in the hotel chain.

One of the court’s rulings was that the foundation had properly acted to reform itself, as of last March 1, into a a so-called public support organization. In February, the IRS had ruled that the new organization would be free of any “excess business holdings.”

He said that the founder was strongly against leaving unearned wealth to his family and on several occasions told him he wanted to “cut down” Barron’s bequest, which was $750,000 in the last will.

Conrad’s daughter, Francesca, who was left $100,000, contested her father’s will in a legal battle that she lost in February, 1983.

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