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Guttman v. Schiller

JANUARY 9, 1963.

MORRIS REESE GUTTMAN, INDIVIDUALLY AND AS ADMINISTRATOR OF THE WILL ANNEXED OF THE ESTATE OF BERNARD GUTTMAN, DECEASED, ETC., ET AL., PLAINTIFFS-APPELLEES,

v.

JAY A. SCHILLER, JOSEPH REESE GUTTMAN AND ELSIE GUTTMAN, ETC., ET AL., DEFENDANTS-APPELLANTS. JOSEPH REESE GUTTMAN, PETITIONER-APPELLANT,

v.

MORRIS REESE GUTTMAN, ET AL., RESPONDENT-APPELLEE.



Appeal from the Circuit Court of Cook County; the Hon. DANIEL A. ROBERTS, Judge, presiding. Judgment affirmed.

MR. PRESIDING JUSTICE DEMPSEY DELIVERED THE OPINION OF THE COURT.

Rehearing denied January 31, 1963.

The above captioned case, involving a testamentary trust, was opened in 1930. The present action arises from a petition filed in 1957 by Joseph Reese Guttman (Joseph), the trustee and a beneficiary of the testamentary trust which was created by his father and mother, Bernard and Elsie Guttman. The senior Guttmans executed their joint will in 1929 giving to each other all right, title and interest in their property for life with the provision that after the death of both the whole of their property would go in equal shares to Joseph and their other son, Morris Reese Guttman (Morris). Their daughter, who is now Mrs. Barbara Prunier (Barbara), was specifically disinherited because she married ouside of the Jewish faith.

The petition, to enforce the trust, alleged that Barbara had trust property which was given to her by the mother, and that Morris had trust property which had been retained by him as administrator of the father's estate. Both respondents filed answers and the case was referred to a master in chancery. The master's finding of fact and conclusions of law were adopted by the chancellor who, after argument and the submission of a brief by the petitioner, overruled all exceptions to the report and entered a decree in accordance with the master's recommendations. The petitioner appealed to the Supreme Court on the ground that freeholds were involved. The Supreme Court transferred the case to this court. Guttman v. Schiller, 23 Ill.2d 323, 178 N.E.2d 387.

The father died in April 1930. The joint will was admitted to probate in Cook County and Morris was appointed administrator with the will annexed. Jay A. Schiller, who was nominated in the will as trustee, resigned. This case was then opened in the Circuit Court for the purpose of naming his successor. The court in October 1930 designated Joseph as successor trustee and retained jurisdiction of the cause for any other matters which might arise in the administration of the trust.

The sons are doctors of medicine and were practicing their profession at the time of their father's death. They had resided with their parents and continued to live with their mother after the father's death. Neither functioned rigidly as administrator or trustee. They treated all the property as if it were their mother's. They may have done this in an attempted compliance with the terms of the trust which gave her a life estate in all the property, or as dutiful sons trying to keep her free from financial harassment.

In 1931 the mother renounced the will and received her statutory portion of the estate. The final account filed in the Probate Court in 1931, showed distribution of the estate to the mother and to the two sons, one-third to each. The final account was approved by Joseph, Morris and the mother. In August 1932 the three also agreed in writing to a like division of the real estate. Despite this, and despite the fact that the Circuit Court had entered an order finding that the trust had not been accelerated by the renunciation of the mother and that the trustee retained the powers given to him in the will, the two sons turned the entire estate over to their mother. All income from several pieces of property and all mortgage payments were given to her. When a sale was imminent quitclaim deeds would be signed and on occasion Joseph would petition the Circuit Court for authority to sell. During the mother's lifetime all the pieces were sold and as they were, the proceeds from the sales were also given to her. It is not clear from the record whether Joseph ever held any of the trust property as trustee; but, if he did, he never rendered an account as trustee to either his mother or brother for the property or funds held in trust or the profits, if any, realized from their use.

The mother died in 1953 in Arizona, where she had lived for many years. She and Barbara had long since been reconciled and in a will, executed a few months before her death, she named the daughter as her sole beneficiary. Most of her assets were left in a safety deposit vault in Arizona, which was in her name and Barbara's. There was serious doubt, under Arizona law, whether the sons would get anything and a will contest seemed inevitable.

Thereupon, in order to avoid a contest, Joseph and Morris, who were represented by the same Arizona attorney, and Barbara entered into a "full settlement and compromise of all their claims," which was filed in the Superior Court of Arizona in October 1953. In the signed stipulation they agreed that the mother's estate would be distributed one-third to each of them, that Barbara would retain certain savings bonds which were payable to her upon the death of her mother, and that certain silverware which had been in dispute belonged to Morris and was not an asset of the estate. In September 1955 an order was entered by the Arizona court approving the distribution of the estate in accordance with the terms of the stipulation.

During the pendency of the estate in Arizona an ancillary proceeding was opened in the Probate Court of Cook County. The ancillary administrator cited Joseph for having withdrawn funds from his mother's bank account. He defended on the ground that the funds were trust property. The Probate Court was therefore called upon to decide whether the funds belonged to the trust or the estate. It found that they belonged to the estate and Joseph was ordered to return them. Joseph filed a claim against the estate in the ancillary proceeding asserting that trust funds had been commingled with assets of the mother's estate and that Morris, as administrator of the estate of the father, had failed to turn over to him as trustee all of the proceeds of that estate but had transferred them to their mother. The claim was disallowed.

Again a settlement was reached. Two orders were entered by the Probate Court. The first, in April 1956, was approved in writing by the two brothers. A portion of this order is as follows:

"That at no time were the terms of the trust, under the will of Bernhard [Bernard] Guttman ever carried out, nor was the trust ever acted upon. It is Therefore Ordered that no trust, under the will of Bernhard Guttman existed. . . ."

On June 5, 1956, the Probate Court entered the second order, also approved by Joseph and Morris, and by Joseph's attorney, which held that "all matters heretofore in dispute have been settled"; Joseph had not misappropriated funds or property belonging to his mother's estate; the money which he had been ordered to return was taken by him through mistake as to his legal rights; all demands and actions between the brothers were to be released; they were to cooperate in the sale of the mother's home in Arizona and the proceeds of that sale and of her estate in Cook County were to be divided equally among the three heirs. The court also found that the funds of the mother had been so commingled that no trust funds could be traced and that her records did not reveal any clear intention to recognize any existing trust.

Notwithstanding the full accord reached in the Superior Court of Arizona in October 1953 and the complete settlement made in the Probate Court in June 1956, Joseph filed the present petition in January 1957. And, notwithstanding the pendency of this petition, he returned to the Probate Court in 1958 and moved to have the orders of 1956 set aside, contending that they were void because the Probate Court was without jurisdiction to enter them since they pertained to a trust. His motion was denied and he appealed to the Circuit Court. The Circuit Court found that the Probate Court did have jurisdiction. He appealed this finding to the Supreme ...


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