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Holzman v. Barrett.

October 22, 1951

HOLZMAN
v.
BARRETT.



Author: Major

Before MAJOR, Chief Judge, and FINNEGAN and LINDLEY, Circuit Judges.

MAJOR, Chief Judge.

The complaint by which this action was instituted sought recovery of damages resulting from an alleged conspiracy entered into by the defendants, by which, through the employment of duress, plaintiff was deprived of his property. The complaint was verified and alleged in considerable detail the nature of the conspiracy, numerous overt acts performed in its execution, a description of the property and its value acquired by the defendants, together with the acts upon which the asserted duress was predicated. Defendants, without answering the complaint, filed a motion for summary judgment, supported by the affidavit of the defendant Robert Barrett and that of the defendant Kramer, which were predicated upon the theory that the plaintiff by reason of subsequent contracts made between him and the defendants (or some of them) had ratified the manner and means by which the defendants acquired his property as alleged in the complaint, or, at any rate, that he had released the defendants or had waived any claim for damages alleged in the complaint. In response to this motion by the defendants for a summary judgment, plaintiff filed what is referred to as a motion to dismiss defendants' motion for summary judgment, supported by his affidavit.

In a memorandum directed to counsel for the respective parties, the district court stated "that no material issues of fact are raised by the pleadings, the affidavits and exhibits filed in support thereof," and, so far as the record discloses, it was upon this basis that the court allowed defendants' motion for summary judgment. The parties before this court have argued in the main questions of law, that is, whether the plaintiff, by the agreements entered into subsequent to the time the defendants acquired his property, had waived or released any right to recover damages on the cause stated in his complaint. These are questions of law because they involve the interpretation and construction, as well as the effect to be given written instruments. Notwithstanding, there lurks in this record, as in all records where summary judgment is allowed, the question as to whether there existed a "genuine issue as to any material fact", Fed.Rules Civ.Proc. rule 56(c) 28 U.S.C.A., and this court during oral argument requested that the parties file supplemental briefs on this point, which has been done.

Obviously, if such an issue existed, summary judgment was erroneously emtered and must be reversed. In such case, we shall not reach the legal questions in controversy relative to release or ratification; or, conversely, we shall only reach such legal issues if we sustain the district court in its view that there existed no "genuine issue as to any material fact".

The issue of fact is whether the conspiracy and duress alleged in the complaint, by which defendants obtained plaintiff's property, remained in effect at the time of the subsequent execution of certain written instruments by which defendants contend plaintiff ratified, affirmed or released the cause of action stated in the complaint.

Rule 56(c) provides for the rendition of summary judgment "if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."

The defendants, in arguing the question under discussion, completely ignore the serious charges contained in the complaint as to the manner and means which they employed in obtaining plaintiff's property and rely entirely upon the instruments subsequently executed and the circumstances connected therewith. In other words, the effect of their position is that there was no issue relative to conspiracy or duress at the time of the execution of these latter instruments and that the undisputed allegations of the complaint are of no consequence. This, in our view, is a misconception of the rule which requires an examination of all the pleadings, etc., in determining whether a motion for summary judgment shall be allowed.

While the facts alleged in the complaint must presently be accepted as true, we think it relevant to note briefly some of its salient allegations. It alleged that plaintiff since October 1, 1939 was chairman of the board of directors of the Prudence Life Insurance Company, an assessment legal reserve life insurance company organized under the laws of the State of Illinois, and was the owner of all its outstanding certificates, aggregating $12,000. He also owned all the capital stock of the 407 Agency Corporation, an Illinois corporation, which had a contract with the Prudence Life Insurance Company, under which it received a premium of 5% on policies in force in said Life Insurance Company. Plaintiff also at all relevant times controlled the vast majority of the proxies executed by holders of outstanding policies in the Insurance Company, and thus was in a position to nominate, elect and control the officers and directors of said company.

The complaint alleged that at all relevant times the fair and reasonable cash value of his holding, consisting of the stock of the 407 Agency Corporation and the guaranteed fund certificates of the said Prudence Life Insurance Company, was in excess of $200,000, based on sales of similar holdings in similar companies during the same period. The complaint sets forth facts concerning a controversy between certain individuals and the plaintiff relative to the Prudence Life Insurance Company, which culminated in a proceeding in the Circuit Court of Cook County, and that the defendant George F. Barrett, then and at all relevant times the Attorney General of Illinois, and his brother, the defendant Robert Barrett, also an attorney, became cognizant of such proceeding; that the Attorney General was entitled in his official capacity to institute proceedings for the rehabilitation of insurance companies and that George F. Barrett, Robert Barrett and defendant Sidney Kramer entered into a conspiracy to acquire plaintiff's property. Numerous acts are set forth which defendants are alleged to have committed in the execution of said conspiracy, which we shall only briefly notice.

It was alleged that a proceeding was instituted in the Superior Court of Cook County for the appointment of a rehabilitator of Prudence Life Insurance Company, and that plaintiff was told by George F. Barrett that he must do as directed by Robert Barrett if he wished to avoid further trouble with the state; that he was notified by the latter that the defendants would take over the Life Insurance Company by means of the State Court action unless the plaintiff turned over to Robert Barrett or his nominee a one-half interest in the 407 Agency Corporation; and that plaintiff was compelled on August 18, 1944 to execute a contract by which one-half of the stock of the Agency Corporation and the voting proxies in the Life Insurance Company were transferred to defendant Kramer. A copy of this contract was attached to the complaint, and while it shows that the plaintiff received as consideration for the transfer of such property the sum of $2,500, the complaint alleged that this was received in the form of a check from defendant Sidney Kramer, the proceeds of which plaintiff was required to deliver to Robert Barrett.

The complaint alleged that pursuant to a telephone conversation with George F. Barrett, plaintiff was required to pay from the funds of the Agency Corporation $600 monthly to one Ben Kramer, the father of the defendant Sidney Kramer, who at that time was "a hanger-on or attache" of the office of the Illinois Attorney General; that on February 2, 1946, plaintiff and his wife, Clara Holzman, were required to deliver to Robert Barrett Plaintiff's remaining stock in the Agency Corporation, all proxies controlled by plaintiff for voting in the names of policy holders of the Life Insurance Company, all lists of policy holders in plaintiff's possession and all guaranteed fund certificates of the Life Insurance Company owned by the plaintiff, on terms and conditions contained in an agreement executed on that date, a copy of which is also attached to the complaint. (This agreement recites that plaintiff is 72 years of age.) The complaint alleged that on March 2, 1946, the State Court proceeding previously instituted by the Attorney General was on his motion dismissed; that on October 16, 1947, the defendants caused to be terminated an employment contract entered into between the plaintiff and the Life Insurance Company, pursuant to the provisions of the contract of February 2, 1946, and that as a direct consequence and result of the wrongful acts of the defendants committed pursuant to such combination and conspiracy, plaintiff suffered direct pecuniary loss in the amount of $118,000.

Defendants in their motion for summary judgment recognize that they were charged in the complaint with obtaining plaintiff's property by conspiracy, compulsion and coercion, but as a defense assert that plaintiff subsequently entered into other contracts with defendant Robert E. Barrett and the Life Insurance Company, by which his cause of action is barred. The motion was supported by the affidavits of the defendants Kramer and Robert Barrett. Kramer's affidavit relates to the execution of the contract of August 18, 1944, and is presently without significance. The affidavit of Robert E. Barrett admits that an employment contract was entered into between the plaintiff and the Life Insurance Company, pursuant to the provisions of and on the same date as the contract dated February 2, 1946, that payments were made on said employment contract until October 1, 1947, and that on or about that date such contract was cancelled by the Life Insurance Company. The affidavit alleges that in January or February, 1948, plaintiff, through his attorney, Henry S. Blum, made a claim against the Life Insurance Company because of the wrongful cancellation of the employment contract, and that after negotiations between the Insurance Company and plaintiff's attorney, a contract was entered into on February 16, 1948, by which it was agreed that plaintiff should receive $15,000 additional in settlement of his claim. Also, on the same date, another contract was made between the plaintiff and his wife and the affiant (Robert E. Barrett), by which the plaintiff reaffirmed the terms of the contracts of August 18, 1944 and February 2, 1946. The affidavit further states that the plaintiff has been paid the amounts provided for in the two contracts of February 16, 1948.

Plaintiff in his motion to strike defendants' motion for summary judgment admits the execution of the 1948 agreements but alleges that he was "required to enter into said contract by threat of further action by said defendant (George F. Barrett) by means of and under color of the authority vested in him as Attorney General of the State of Illinois," and reiterates that he suffered a pecuniary loss in the amount of $118,000, after giving the defendants credit for all sums received by him in the premises. In support of his motion to dismiss, plaintiff submits his affidavit which in the main is a reiteration of facts relative to the conspiracy charge contained in his complaint. In addition, it is alleged that by the employment contract of February 2, 1946, plaintiff was to be employed by the Insurance Company at a salary of$750 per month for the first five years, and $350 per month during the second five years; that notwithstanding this contract he was directed by the defendants Kramer and Robert Barrett to make no further appearance at the office of the Insurance Company; that he ...


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