Hughes' Ghost v. the Wolves

What was Howard Hughes' legal residence? Was he mentally competent? Did he leave a will? Who are the rightful heirs to his estimated $2 billion estate? Last week, seven months after Hughes died of kidney failure aboard a Texas-bound private airplane, none of those questions had been answered; Howard Hughes was generating as much mystery from the grave as he had in life. In the most bizarre quest for information yet, a neuropathologist will soon examine a portion of Hughes' brain that has been pickled and preserved in a jar on a shelf in Houston's Methodist Hospital. His mission: to look for evidence of disease or damage that could have impaired Hughes' judgment; such a finding would throw into question anything that Hughes signed or said during his later years.

The legal battle now involves at least 200 lawyers, who are poring through records in half a dozen states to find clues as to what Hughes' intentions for his empire were. So complex has the case become that it is expected to take decades to settle. One enterprising attorney, Taylor Moore of Houston, is issuing a twelve-page newsletter to enable other lawyers to keep abreast of developments. Price: $200 a month. So many alleged wills have turned up that a Nevada promoter bound them together in a soft-cover book that sells for $5.

Was Hughes sane or not? This may never be known for certain, but old stories keep cropping up. In 1972, Robert Maheu, a top Hughes administrator who had been fired, told the Securities and Exchange Commission that Frank William Gay, the ranking Hughes insider, had approached him in the late 1960s to discuss the possibility of having Hughes declared mentally incompetent. It was precisely the fear that a judge might question his mental competence that caused Hughes to go to any length, even risking his fortune, to avoid appearing in court.

For now, the most important question is which state Hughes regarded as his legal residence, Texas or Nevada. The answer is crucial to the future of Summa Corp., the holding company that controls most of the Hughes assets. It stands to pay $300 million in Texas taxes unless it can be proved that Hughes did not reside in Texas. Summa lawyers, together with Hughes' legitimate heirs, argue that before leaving the U.S., Hughes lived for several years in Nevada, where there are no estate taxes. They contend that he listed so many addresses outside Nevada that none of them apply. Thus Nevada, with its large Hughes holdings (hotels, casinos, 30,000 acres of undeveloped land), should be considered his residence, and Summa should not be required to pay taxes.

Texas officials disagree. Led by Attorney General John Hill, Texas lawyers argue that Hughes always intended to return to the state of his birth. They cite Hughes tax returns listing Houston addresses, plus Hughes' death certificate, which gives Houston as his home. Hill contends that mental incompetence and isolation prevented Hughes from determining his final resting place. Therefore, Hill argues, residency should revert to his Houston birthplace.

Trials Begin. The residency issue should go before a jury in Houston next summer. In January, the first trial-by-jury of the "Mormon will" is to begin. In that will, Hughes (or someone forging his handwriting) divided his estate among the Mormon Church, the Howard Hughes Medical Institute in Miami, former wives Jean Peters and Ella Rice, Boy Scouts, orphans and a gas-station attendant in Nevada, to name a few. Ten handwriting experts have attested to its authenticity, but it is being energetically contested by lawyers for Summa, who contend that the handwriting is a poor facsimile of Hughes' scrawl. They are believed to feel that the Mormon will, even though it could reduce Summa's tax liability under federal law, would also dilute Summa's control of the empire.

Summa's stalling efforts were blunted last week when a probate judge in Houston ordered the company to produce every document it possessed relating to Hughes--his travels, taxes, living expenses and medical history, among other things. The documents could go far in shedding light on the Hughes mystery. But Summa lawyers will almost certainly appeal.

Currently, the Hughes empire is being run largely by three longtime Hughes associates: Bill Gay, Nadine Henley and Chester Davis. Emerging as a power is Will Lummis, Hughes' 47-year-old nephew, who is a Houston lawyer. He was named Summa's board chairman last August in a deal to avoid conflict between Hughes' Houston heirs and the ruling triumvirate at Summa. But the relationship is showing signs of strain. Recently, Lummis began and ended a board meeting before Davis arrived.

Summa appears to be doing well in the absence of the boss. Traffic on Hughes Airwest's Los Angeles-to-Las Vegas route is up 11% from last year. Hughes engineers are building a prototype attack helicopter in competition with Bell for a $1 billion Pentagon contract. KLAS-TV in Las Vegas is bristling with $1 million in new equipment. In October, the new $4 million Hughes Aviation Terminal opened formally in Las Vegas. Among its features: banks of slot machines, a U.S. customs station, and a liquor store that sells Coors by the case.

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