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Head v. Wood

JANUARY 16, 1959.




Appeal from the Circuit Court of Henry county; the Hon. DAN H. McNEAL, Judge, presiding. Judgment affirmed.


This is a suit in equity brought by Lillie Mae Head, hereinafter referred to as plaintiff, against Ernest J. Wood, hereinafter referred to as defendant, and Peoples National Bank of Kewanee, Illinois. Prior to the trial, Harper Andrews, as Conservator of the Estate of Lillie Mae Head, was joined as plaintiff. Subsequent to the trial, Lillie Mae Head died and Lyman Gustus, as administrator of her estate, was substituted as plaintiff.

The complaint alleges that on March 9, 1950, plaintiff gave the possession of certain stocks and securities to defendant upon his representation that he would keep them subject to the direction of the plaintiff and return them to her upon request; that on November 15, 1954, plaintiff requested defendant to return the stocks and securities to her which he failed and refused to do, he claiming to be the owner thereof; that some of said stocks and securities had been applied and converted to the use of defendant and that other of said stocks and securities were in a safety deposit box in the name of defendant at the Peoples National Bank of Kewanee, Illinois. The complaint prays judgment for the value of the stocks and securities converted, for an accounting and for an injunction enjoining both defendant and the bank from removing any of the contents of the safety deposit box. Defendant filed an answer denying that he converted the stocks and securities and stated that the stocks and securities were given to him as compensation for services. In a special defense, defendant alleged the transfer of the stocks and securities was a gift made by plaintiff to him for many services performed over a period of years prior to March 9, 1950, when the transfer was made to him.

Prior to trial, the court entered a temporary injunction enjoining the defendant and bank from removing the contents of the safety deposit box. The case was heard by the court without a jury and a decree entered directing defendant and the bank to deliver the securities and other contents of the safety deposit box to the plaintiff, with an assignment by defendant of all stocks and securities standing in the name of defendant, and that defendant account for and pay over all dividends received by him from the stocks and securities, with judgment for costs against defendant. Defendant appeals from this decree and judgment.

The defendant asserts the following contentions: (1) That plaintiff should not recover because there was a variance between the pleadings and proof. (2) That possession of stock certificates registered in a person's name is prima facie evidence that he is the owner and entitled to possession thereof. (3) That no confidential or fiduciary relationship existed between plaintiff and defendant, and if such did exist, there was no evidence of undue influence. (4) That the court erred in ruling defendant incompetent to testify. (5) That the court erred in the admission of evidence.

The record discloses that the defendant first became acquainted with plaintiff in the spring of 1938 when he rented a room at her house and thereafter a rather close relationship existed for a number of years. Defendant assisted plaintiff in her household chores, prepared for her a set of books for her income and expenses, assisted her in her personal bookkeeping and wrote checks on her account in payment of her bills. In 1939, defendant was the Ford dealer in Kewanee and serviced and looked after plaintiff's car without charge. Later, plaintiff inherited a life estate in a good 160 acre farm and in an apartment building. The defendant assisted plaintiff in the management of her apartment building, her farm and her savings and investments for a number of years prior to March 9, 1950, when the stocks and securities in dispute were transferred to defendant's name. In 1941 and 1942, defendant took plaintiff to doctors in Peoria, Bloomington, Galesburg and Moline. Defendant did the general maintenance work in her apartment building from 1938 to 1954. He cut the grass, cleaned the furnace, adjusted oil burner, made repairs to plumbing, repaired leaks in the roof, hauled rubbish, cooked and washed dishes at times. There are numerous other transactions and dealings between plaintiff and defendant shown by the evidence in the record before us, the recitation of which would unduly prolong this opinion and not assist in the determination of the case. There is no evidence that the defendant at any time made any charge for his many services in assisting plaintiff or that he expected to be paid therefor.

On March 9, 1950, the day the stock certificates were endorsed by plaintiff while she was sick in the hospital, the defendant brought them to the president of the defendant bank, and told him that there were certain security salesmen who had been taking advantage of plaintiff by persuading her to sell certain securities and buy other securities, and that in order to protect her interests they had decided between them it would be advisable to have the stocks and securities transferred to the defendant. Although the certificates for the various shares of stocks were put in the defendant's name, his address was shown as 116 1/2 South Tremont Street, c/o Lillie Mae Head, Kewanee, Illinois. The defendant lived at Orland Park near Chicago, but presumably the dividend checks and other papers from these companies were delivered to plaintiff's apartment. The securities were kept in a safety deposit box in defendant's name paid for by plaintiff and the dividends were placed in plaintiff's account. The safety deposit box contained many personal papers belonging to plaintiff.

Defendant contends the decree should be reversed because there is a variance between the complaint and proof, but the argument indicates that the real objection is that the complaint did not characterize the relationship between plaintiff and defendant, and did not expressly designate a trustee relationship, a fiduciary relationship or a confidential relationship. Defendant filed an answer to both counts of the complaint and introduced evidence on the issues joined. Defendant's brief does not disclose any objection to plaintiff's evidence on the grounds of variance. Under the circumstances, any ambiguity or defect in the complaint has been waived. Parties may waive formal pleadings by the introduction of evidence or form their own issues on evidence introduced and may voluntarily present issues not presented by the pleadings. Dragosvich v. Allstate Insurance Company, 2 Ill. App.2d 50, 118 N.E.2d 57. Where a party introduces evidence on a subject, or fails to object to evidence offered by the adverse party on such subject, an objection that such subject is not at issue under the pleadings may be waived. McKinney v. Nathan, 1 Ill. App.2d 536, 117 N.E.2d 886. If a party fails to object to evidence on the ground of variance and to point out such variance to the trial court, the objection is waived. The ground of variance should be raised by specific objection during the trial, pointing out the variance. Morgan v. Mixon Motor Company, 10 Ill. App.2d 323, 137 N.E.2d 504.

We are in accord with defendant's contention that possession of stock certificates registered in a person's name is prima facie evidence of ownership in the possessor, and that the burden of producing evidence on the question of ownership rests on the person disputing such ownership. We believe, however, that the plaintiff met the burden of proof and offered sufficient evidence to overcome the prima facie evidence and that the Chancellor was correct in finding that the certificates of stock were in fact the property of plaintiff.

When the entire record is considered showing the many transactions between the plaintiff and defendant over a period of several years prior to the date of the transfer of the securities, there can be no doubt that an agency relationship existed between the plaintiff and defendant at the time of the transfer of said securities. In fact the defendant concedes that an agency relationship existed but contends that the transfer of the securities was a gift or in payment for past services. This contention is not sustained by the evidence, but on the contrary, the evidence leads to only one conclusion that the defendant accepted the property as the agent of plaintiff to hold for her and by so doing a fiduciary relationship was created between the parties. In Suchy v. Hajicek, 364 Ill. 502, 509-510, 4 N.E.2d 836, 840, it was stated that courts have been reluctant to adopt a definition applicable to all possible situations involving relations of confidence:

"In general, a fiduciary or confidential relationship exists where trust and confidence are reposed by one person in another, who, as a result, gains an influence and superiority over the first. (Cases cited) In particular, where, by reason of kinship, business association, disparity in age, or physical or mental condition, or other reason, the grantee is in an especially intimate position with regard to the grantor and the latter reposes a high degree of trust and confidence in the former, a confidential relationship may be said to exist.

"Where it appears that relations of trust and confidence obtain between parties to a transaction like this, the dominant party, who has profited thereby, must rebut the presumption of fraud by clear and convincing proof that he has exercised good faith and has not betrayed the confidence reposed in him. . . . It is not essential that the undue influence vitiating the transfer be deemed fraudulent, but it is sufficient if the influence arises out of the fiduciary or confidential relations."

The rule that an agent cannot secretly benefit personally because of his relationship with his principal is not limited to defined confidential relations. Davis v. Hamlin, 108 Ill. 39. In the Davis case, supra, in a very thorough opinion, the Supreme Court of this State many years ago announced that the relationship of confidence between a principal and his agent is very similar in many respects as that of a trust relation or fiduciary relation and in reviewing the early authorities upon this subject stated at pages 48-49:

"The subject is not comprehended within any such narrowness of view as is presented on appellant's part. In applying the rule, it is the nature of the relation which is to be regarded, and not the designation of the one filling the relation. Of this principal Bispham says: `The rule under discussion applies not only to persons standing in a direct fiduciary relation towards others, such as trustees, executors, attorneys and agents, but also to those who occupy any position out of which a similar duty ought, in equity and good morals, to arise.' (Bispham's Equity, sec. 93.) In Greenlaw v. King, 5 Jur. 19, Lord Chancellor Cottenham, speaking of this doctrine, says: `The rule was one of universal application, affecting all persons who came within its principle, which was, that no party could be permitted to purchase an interest when he had a duty to perform which was inconsistent with the character of a purchaser.' `It is the duty of a trustee,' said Lord Brougham, in Hamilton v. Wright, 9 Cl. & Fin. 111, `to do nothing for the impairing or destruction of the trust, nor to place himself in a position inconsistent with the interests of the trust.' And on page 124: `Nor is it only on account of the conflict between his interests and his duty to the trust that such transactions are forbidden. The knowledge which he acquires as trustee is, of itself, sufficient ground of disqualification, and of requiring that such knowledge shall not be capable of being used for his own benefit to injure the trust.' Although this was said of a trustee, we think it may be equally said here with respect to Davis and the business which he was employed to manage. The rule we apply, as to its broadness in extent, is aptly expressed in the ...

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