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Brown v. Zimmerman

OPINION FILED NOVEMBER 18, 1959

HOWARD BROWN, APPELLANT,

v.

LOUIS ZIMMERMAN ET AL., APPELLEES.



APPEAL from the Circuit Court of Lake County; the Hon. BERNARD M. DECKER, Judge, presiding.

MR. JUSTICE KLINGBIEL DELIVERED THE OPINION OF THE COURT:

Rehearing denied January 18, 1960.

Plaintiff-appellant, Howard Brown, sued defendants in the circuit court of Lake County in an action of ejectment to recover possession of a certain lot. Defendants answered plaintiff's complaint and filed a counterclaim which sought to impress the land in question with a constructive trust in favor of defendant Hannah Goldman. Upon a hearing the chancellor found against the plaintiff on his complaint and in favor of defendants on their counterclaim and entered judgment and decree accordingly. Plaintiff appeals directly to this court because a freehold is involved.

For convenience Hannah Goldman, individually and as executrix of the estate of George M. Goldman, deceased, will hereinafter be referred to as defendant. The other defendant, not being involved in the issues in this case, will not be mentioned herein, and the real estate involved herein, for convenience, will be referred to as lot 7.

The persons principally involved in the controversy are the plaintiff Howard Brown, his father Simon Brown, and one George M. Goldman. The transaction out of which the controversy arose originated in March or April of 1951. Goldman died on March 17, 1954, and Simon Brown died sometime in November, 1955. Plaintiff filed his suit on June 8, 1956.

By the pleadings the issue presented in the trial court was whether lot 7 was bought and paid for by the plaintiff or by George Goldman, and, if paid for by Goldman, whether the lower court was correct in impressing the land with a constructive trust in favor of defendant.

The plaintiff testified that in March or April of 1951 he was invited by his father, Simon Brown, to participate in a joint venture whereby four adjoining lots, including said lot 7, were to be purchased and conveyed to a corporation which was to be formed. A building or buildings were to be constructed on the premises for approximately $60,000 and were to be rented to a separate merchandising business to be owned by George Goldman and Simon Brown. Plaintiff was to invest $20,000 for a 30 per cent interest in the land and buildings. Plaintiff testified that his father was to have a 30 per cent interest therein for the time and effort put forth by him in organizing the venture, one John McCann for constructing the buildings at cost was to have a 10 per cent interest, and that George Goldman was to have a 30 per cent interest for investing the balance of the capital required. Simon Brown was the manager of the Kelly Trading Post, a mechandising business of which George Goldman was the proprietor.

The evidence adduced by plaintiff tends to show that thereafter plaintiff delivered a check dated May 22, 1951, payable to the order of Simon Brown for $4,937.50 to his father. The record shows this check was endorsed on May 24, 1951, as follows: "Simon Brown Pay the Exchange National Bank of Chicago, or order Brown's Business Consultants." He had nothing further to do with the acquisition of lot 7. He was not present when the contract for the sale of the lot was drawn or executed. He did not sign the agreement to purchase the lot. His father Simon Brown signed Howard's name to the contract. He had nothing to do with the execution and delivery of the deed vesting the title to lot 7 in his name. All this was handled by his father and his father's lawyer. Plaintiff saw Goldman only once during the entire period of this transaction. It was in March or April of 1951, at Simon Brown's office on Roosevelt Road in Chicago. At this meeting plaintiff testified Goldman said to him "Whatever is O.K. with your dad, is O.K. with me." Thereafter, in reference to the alleged venture all conversations had and all payments claimed to have been made by plaintiff were had and made with his father, Simon Brown.

Plaintiff further testified that from May 22, 1951, to December, 1953, he made seven payments by checks to his father aggregating $19,937.50, on account of his investment in this venture. Some of these checks were never cleared at the bank. In the meantime corporation papers for Kelly Trading Post, Inc., were issued on August 20, 1951, by the Secretary of State of Illinois. Goldman was not interested in completing the organization of the corporation and it was dissolved on January 4, 1954, by decree of the superior court of Cook County for nonpayment of fees and franchise taxes.

In July, 1951, erection of the buildings on the four lots acquired for this purpose was commenced and in due course was completed. The buildings thereafter were occupied by Goldman doing business as Kelly's Trading Post and by his successors after his death.

The evidence adduced on behalf of defendant tended to prove that plaintiff knew of the continuous occupancy of the buildings by defendant from the time of their completion and voiced no objection; that defendant paid the general taxes on lot 7 as they accrued from the date of its acquisition. Plaintiff admitted on the witness stand that he, at no time, paid any of such taxes. He also admitted that at no time since his alleged investment, did he take any tax deductions in his income tax returns for any capital losses on account of his alleged investment. He did not request rent from anybody, nor did he pay for any insurance on the property. There is evidence that during the period in question a loan account existed between the plaintiff and his father and it appears that the son frequently loaned money to his father by checks payable to him and that often he exchanged his checks for those of his father. There was also proof that a loan account existed between Goldman doing business as Kelly's Trading Post and the elder Brown. Simon Brown, the evidence shows, was the principal figure in a business of his own which he called Brown's Business Associates, also known as Brown's Business Consultants.

Upon his examination on August 14, 1957, under section 60 of the Civil Practice Act, plaintiff testified, among other things, that he was presently the owner of the Gurnee Furniture Warehouse; that he had an interest in the corporation for approximately the last 2 1/2 years; and that his father, Simon Brown, had been and then still was an active stockholder and the general manager of that corporation and so continued to be to the time of death.

It further appears from the evidence offered by defendant that on June 18, 1951, a check was issued to plaintiff in the sum of $5,000 by Kelly's Trading Post. Apparently this check was issued to cover the payment which Simon Brown had made on account of the purchase of lot 7 ($2,650) and the balance of about $2,500 was credited to the account of Kelly's Trading Post. This check, however, was not paid by the bank because defendant at that time was short of funds. The amount of this check was then credited to the loan account existing between Simon Brown and George Goldman, which at the end of December, 1951, amounted to $78,237.24 in favor of Simon Brown. The witness Bernard Davis, a certified public accountant and auditor of Goldman, testified that this account was later paid in full by a transfer of the hardware inventory of Kelly's Trading Post of the value of $75,000 to Gurnee Furniture, which at the time of the hearing belonged to plaintiff Howard Brown.

The records of George Goldman doing business as the Kelly Trading Post showed no capital investment therein by the plaintiff Howard Brown. The record shows that Simon Brown was the agent of Goldman as general manager of the Kelly Trading Post and also his agent in ...


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