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Sullivan v. Burke

OPINION FILED SEPTEMBER 18, 1958.

CLARE A. SULLIVAN, TRUSTEE,

v.

JAMES W. BURKE ET AL. — (THOMAS E. SULLIVAN, JR., ET AL., APPELLEES,

v.

ELEANOR BELLAS ET AL., APPELLANTS.)



APPEAL from the Circuit Court of Cook County; the Hon. CHARLES S. DOUGHERTY, Judge, presiding.

MR. JUSTICE BRISTOW DELIVERED THE OPINION OF THE COURT:

Rehearing denied November 24, 1958.

This is an appeal from a decree of the circuit court of Cook County ordering the execution of the terms of a declaration of trust, directing specific performance of a contract of sale executed by the trustee and distribution of the proceeds resulting therefrom. A freehold being involved, the appeal is properly directed to this court.

In May, 1932, pursuant to the terms of a written declaration of trust, James W. Burke took title to the real estate involved herein by a trustee's deed giving him full authority to deal with the premises the same as if he were the sole legal and equitable owner thereof. There is no evidence to show what, if anything, was done to develop the trust property between the years 1932 to 1943. In 1943, Thomas E. Sullivan, Sr., a real-estate man and one of the principal beneficiaries under the trust, corresponded with the trustee and another of the beneficiaries under the trust, advising them of certain tax delinquencies against the property and suggesting that the land be sold. On July 5, 1945, he secured an exclusive agency agreement from the trustee authorizing him to arrange for the sale of the land. As a result of the efforts of Sullivan, Sr., on February 13, 1946, the trustee executed a contract for the sale of the real estate to Clarence H. Kavanagh for the sum of $12,000. Insofar as the same is pertinent to the issues herein, this contract provided:

"Said purchaser has paid $500 as earnest money, to be applied on such purchase when consummated, and agrees to pay within 60 days after the title has been examined and found good, or accepted by him, the further sum of $11,500 * * *, provided a good and sufficient trustee's deed, conveying to said purchaser a good and merchantable title * * * shall then be ready for delivery. Merchantable title guarantee policy made by Chicago, Title and Trust Company shall be furnished by the vendor within a reasonable time, * * *. The purchaser * * * shall, within 10 days after receiving such abstract, deliver to the vendor * * * a note or memorandum * * * specifying in detail the objections he makes to the title, if any; or if none, then stating in substance that the same is satisfactory. In case material defects be found in said title, and so reported, then, if such defects be not cured within 60 days after such notice thereof, this contract shall, at the purchaser's option become absolutely null and void, and said earnest money shall be returned; notice of such election to be given to the vendor; but the purchaser may nevertheless elect to take such title as it then is, and in such case the vendor shall convey, as above agreed; * * *."

The $500 earnest money referred to in the contract was actually paid by Sullivan, Sr., received by the trustee and distributed by him, in part at least, to some of the beneficiaries under the trust. Kavanagh, named as purchaser in the contract, was the agent and nominee of Thomas E. Sullivan, Jr., and Raymond Sullivan, sons of Sullivan, Sr., and on March 1, 1946, assigned the contract to them. Sullivan, Jr., was engaged in the home building and remodeling business and was interested in purchasing the property for use in his business.

On March 12, 1946 Sullivan, Sr., pursuant to the authority given him in an exclusive agency agreement, ordered, and in April, 1946, received a letter of opinion from the Chicago Title and Trust Company that referred to an application for a title guarantee policy, which letter he delivered to an attorney, Joseph Sullivan. There is no evidence that this letter of opinion was brought to the attention of the purchasers although attorney Sullivan had been representing the purchasers on other matters at or about this time. It is conceded that no note or memorandum in writing signed by purchasers or by attorney Joseph Sullivan was given to the trustee notifying him of any defect in the title or that the title was unsatisfactory.

On July 1, 1946, a suit was filed in the superior court of Cook County by one Leonard E. Steele against the trustee and Sullivan, Sr., claiming that Steele and Sullivan, Sr., were partners in the development of the real estate in question and praying for injunctive relief to prevent Sullivan, Sr., or the trustee from alienating the property and for an order protecting Steele's alleged proportionate share in the premises. During the pendency of this lawsuit, Sullivan, Sr., died in August, 1947, and his widow and heirs, including Sullivan, Jr., were substituted as parties defendant. The Steele lawsuit resulted in an order finding the issues for the defendants and dismissing the cause for want of equity. On appeal this decision was affirmed. Steele v. Sullivan, 337 Ill. App. 290.

During the pendency of the Steele lawsuit neither party to the present case took any action to consummate or cancel the contract for sale of the real estate. The attorney for Sullivan, Jr., took the position that the Steele lawsuit had the effect of clouding the title to the real estate thereby preventing the trustee from delivering good title thereto. He so informed the trustee by letter dated February 6, 1948, and further advised him that closing the contract for sale depended upon the outcome of the Steele lawsuit.

Appellees contend that the letter of opinion or application for a guarantee policy ordered by Sullivan, Sr., pursuant to his agency and option agreement was not in compliance with the contract of sale in that vendor was required to furnish a merchantable guarantee policy or abstract to the purchasers, and that there was no evidence that the letter of opinion was ever seen by purchaser, Sullivan, Jr., or by attorney Joseph Sullivan at a time when he was representing Sullivan, Jr., in the purchase of this real estate. However, the record shows that the only reason that the attorney for the purchasers ever gave for not consummating the deal was the filing of the Steele suit on July 1, 1946, which he said had the effect of clouding the title and preventing Dr. Burke from being able to deliver good title. At no time did the purchasers or their attorney give as a reason for not closing the deal the failure of the trustee to furnish an abstract or guarantee policy.

In March, 1953, Clare Sullivan, as trustee under the will of her deceased husband, Thomas E. Sullivan, Sr., filed her complaint in chancery praying for a decree ordering the sale of the real estate and distribution of the proceeds therefrom. Sullivan, Jr., who was made a party defendant because of his interest under the contract of sale, filed a counterclaim for specific performance of the contract. Proper answers and replies were filed by the respective parties and no question is raised on the pleadings. The cause was referred to the master in chancery who, after hearing evidence, recommended allowance of certain sums advanced for taxes and costs by two of the beneficiaries under the trust agreement, recommended that the counterclaim for specific performance be disallowed, and reported that the premises should be sold according to the terms of the trust and distribution made of the proceeds. Sullivan, Jr., filed exceptions to the master's report, which exceptions were sustained by the trial court and a decree entered ordering specific performance of the contract of sale. From this decree the defendant beneficiaries have appealed to this court. The answers of several of the defendants, who were owners of a beneficial interest in the trust, denied that the complaint in chancery filed in the superior court of Cook County by Leonard E. Steele against Sullivan, Sr., had the effect of clouding the title to the real estate involved, and they admitted that more than 20 years have elapsed from the date of the creation of trust No. 101 and alleged that Eileen B. Burke, as successor trustee, and these defendants are willing to sell the premises at a public or private sale. They admitted that certain monies are owing to the plaintiff for advances made by Thomas E. Sullivan during his lifetime and likewise that Eleanor Bellas, one of the owners, is entitled to reimbursement for monies advanced by her. Further answering they stated that the trust agreement provided that if any property remained in the trust 20 years from the date of the trust agreement it should be sold at public sale by the trustee on reasonable notice, that Eileen B. Burke, as trustee, has obtained offers from many persons, one of which was from the Chicago Construction Company, to purchase the real estate described in the amended complaint at a price of $80,000.

These same defendants filed a counterclaim against Sullivan, Jr., et al., defendants, and alleged that they are the beneficial owners of parcel I, that prior to February 13, 1946, Thomas E. Sullivan, one of the beneficiaries under the trust, was engaged in the business of buying and selling real estate on his own account and as agent for others, that for many years prior to said date Thomas E. Sullivan was the trusted agent and business advisor of James Burke in reference to parcel I, that Thomas E. Sullivan, Sr., knew that James Burke and the beneficial owners of said real estate all relied implicitly upon him as their agent and friend for advice and counsel and that by reason of such relationship James Burke had placed parcel I in the hands of Thomas E. Sullivan for sale as agent, that while Thomas E. Sullivan was acting as agent of James Burke, and while efforts were being made to sell parcel I at the best obtainable price, Thomas E. Sullivan stated and represented to James Burke and to the beneficial owners of parcel I that he had procured a purchaser who would pay all the property was worth, and that it would be advisable for the trustee and the beneficial owners to make such sale; that James Burke, relying on the statements of Thomas E. Sullivan, and on his advice, was induced to execute a real estate contract with Clarence Kavanagh, Jr., to sell parcel I for $12,000.

These counterclaimants further alleged that they were not informed that Thomas E. Sullivan, without the knowledge of James W. Burke, was himself the real purchaser of said property and that the said Clarence Kavanagh, Jr., was in truth the person selected by Thomas E. Sullivan to take title for the benefit of Thomas E. Sullivan; that the premises were worth and known to Thomas E. Sullivan to be worth far more than the price which the nominee agreed to pay and it was further alleged by them that Leonard E. Steele, purporting to be a joint adventurer with Thomas E. Sullivan in the property, commenced an action against him in the superior court of Cook County to enforce a so-called joint adventure or partnership arrangement in which it was charged that Thomas E. Sullivan was purchasing the property for the use and benefit of himself and Leonard E. Steele; that therefore Thomas E. Sullivan was acting dishonestly and fraudulently in obtaining the property from the beneficiaries of the trust at a price much less than he knew could be procured from other persons. It was further alleged that trust No. 101 provides that the trustee will deal with the real estate only when authorized to do so in writing by a majority of the persons as may be beneficiaries of the trust at that time; that Thomas E. Sullivan, being a beneficiary in trust No. 101, well knew the terms and provisions of the trust agreement and knew that the trustee had no authority to enter into a contract until he was so directed by a majority of the persons who were beneficiaries and that he had obtained no such directions. And it is finally alleged that the failure of Kavanagh and his assignees to perform under the contract for an unreasonable period of time constituted an abandonment of said contract and estops them from demanding performance, and that counterclaimants, being beneficiaries, offered to do equity and to return the $500 deposited with James Burke to those entitled to the same.

Sullivan, Jr., et al., filed an answer to this counterclaim, in which they stated that the contract for the sale of the real estate is a valid one and was assigned to them on March 1, 1946; that at all times they have been and are now ready, willing and able to perform and have made a tender thereunder and they prayed that the contract assigned to them be enforced. They further denied any wrongdoing on the part of their father, Thomas Sullivan, or that there was any conspiracy to defraud the beneficiaries under the trust. The record discloses that on March 12, 1946, Sullivan, Sr., under authority given him in the exclusive agency and option agreement, ordered an opinion of title from the Chicago Title and Trust Company and delivered the same to his attorney, Joseph Sullivan, in March or April of 1946. There is no positive evidence that this letter of opinion was brought to the attention of Sullivan, Jr., et al., by Joseph Sullivan, the attorney for Sullivan, Sr. However, Joseph Sullivan had been the attorney for Sullivan, Sr., in several matters, including the Steele suit and tax foreclosures in the trust property. And the same Joseph Sullivan ...


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