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In Re Estate of Hill

MAY 29, 1963.




Appeal from the Probate Court of Cook County; the Hon. CHARLES G. SEIDEL, Judge, presiding. Order reversed and cause remanded with instructions.


Harris Trust and Savings Bank, executor of the estate of Christopher J. Hill, deceased, brought a citation proceeding against decedent's widow, claiming ownership of 2000 shares of the common stock of Lakefront Realty Corporation. The certificate for those shares was issued in the name of decedent and so remained on the books of the corporation at the time of his death; it was never endorsed but was in the possession of the widow at the time of decedent's death.

This matter comes up for the second time on appeal. On the first trial the executor contended, and the court agreed, that the widow was incompetent to testify. We reversed the order of the trial court in favor of the executor and remanded the cause for a new trial (30 Ill. App.2d 243, 174 N.E.2d 233 (1961)). At the second trial the executor rested its case on a stipulation pertaining to record ownership and possession, but then was given leave to reopen its case for the purpose of examining Mrs. Hill as the court's witness. After hearing her testimony, the court found for the executor. Subsequently, pursuant to the motion of respondent, proofs were reopened for the purpose of introducing the newly discovered testimony of a corroborating witness. After considering the entire matter, the court again found for the executor, and this second appeal follows.

The salient facts disclose that all the shareholders of the Lakefront Realty Corporation are members of the Lake Shore Club of Chicago. The real estate owned by the realty corporation is occupied by the club and its members. Until recently a person could not live at the club without becoming a member and shareholder of the corporation. It further appears that Mr. Hill was very active at the club, and he and Mrs. Hill lived there for six years. After Mr. Hill became ill and required home cooking, and Mrs. Hill's mother, an invalid, required nursing care, the Hills moved from the club; but during this period it was understood between the Hills that Mrs. Hill would return to the club to live if she survived her husband and her mother, and Mr. Hill often stated to his wife that he wanted her to have the stock for her protection so that she could live at the club.

Through the years Mr. Hill acquired stock in the realty corporation as it became available upon the death or resignation of a member. He often asked Mrs. Hill to advise him when she learned of any stock's becoming available, and through her co-operation he acquired stock from people she knew of who were leaving.

On July 14, 1958, some two weeks before his death, Mr. Hill asked his wife to accompany him to the safety deposit box at the Lake Shore Bank. She had never been there before. The only time she subsequently visited the box was on September 2, 1958, following her husband's death on August 31, 1958, when she removed some of her personal effects and some other items which Mr. Hill had asked her to take. While at the bank on July 14, 1958, after explaining some matters to her, Mr. Hill gave his wife the Lakefront Realty Corporation stock which is involved in this proceeding. The certificate at that time was in his name; it was never endorsed. When he gave her the certificate, Mrs. Hill testified, he stated, "Here, Virginia, take this, it belongs to you, and keep it." Later that day he told her the reason he gave her the stock was because eventually she would be alone, and he wanted her then to move back to the club where she would be protected. She took the stock certificate from the safety deposit box that day and has had possession of it ever since.

The newly discovered evidence consisted of the testimony of Marshall Keig who has been president of the realty corporation since 1946. His signature appeared on the stock certificate. Mr. Keig had known Mr. Hill for thirty or thirty-five years. They were both interested in the club and often discussed matters concerning the stock. Mr. Hill was interested in it as an investment, and he often mentioned that he wanted his wife to have his stock so that she could live at the club after his death and perpetuate his interest in the club. Through the years he often told Mr. Keig that he was going to give the stock to Mrs. Hill, and shortly before his death, in his last conversation with Mr. Keig, he told him that he had given the stock to Mrs. Hill.

Mr. Keig testified that it was customary for a club member to give stock to his wife in the manner Mr. Hill adopted, even though the stock would not be officially transferred on the books of the corporation until after the death of the member. Mrs. Hill could not become a member of the corporation in her own right until after Mr. Hill's death. Mr. Keig, as president of the corporation, was advised of the circumstances concerning the prospective transfer and was asked to look after Mr. Hill's wife in this connection.

The executor concedes that it has the burden of proving by a preponderance of the evidence that the stock belonged to the deceased at the time of his death. We so stated in our first opinion (p 247), and it has not been disputed throughout these proceedings. Authority for this rule is found in a case which is strikingly similar to this proceeding, In re Hurd's Estate, 294 NYS 273 (Surr Ct 1937). There the court held (pp 275-276) that the circumstance that stock certificates in another party's possession were not endorsed by the registered owner was insufficient to establish the registered owner's title, since title to unendorsed certificates may pass by manual delivery and especially since the other party remained in actual possession. Actual delivery of an unendorsed instrument, said the court (p 276), carries with it an implied and irrevocable power of attorney to do the things necessary in completing the transfer, so that difficulties in effecting transfer do not affect the title. The court concluded (p 276):

"The maximum that can be said for the case of petitioner is that some shadow of a doubt might remain whether the shares are respondent's or belonged to deceased. That is not enough, since petitioner was bound on the whole case to show title in the estate by at least a preponderance of the evidence. . . ."

The same test is applied in Illinois; in In re Estate of Jones, 274 Ill. App. 616 (1934), a citation proceeding was initiated to recover stock certificates in the possession of decedent's sister, some of which were unendorsed. On review the court stated (p 624): "We think that the trial judge was correct in his holding that `the burden of proving by a preponderance of the evidence that the stocks belonged to the deceased at the time of his death was upon the estate,'" relying on Mohlke v. People ex rel. Moore, 117 Ill. App. 595 (1905), and Martin v. Martin, 174 Ill. 371, 51 N.E. 691 (1898). In the Martin case, involving the ownership of an unendorsed note, the language of the court (p 373) is relevant here:

"The law will not require one in the possession of a chattel or security, negotiable or otherwise, under claim of ownership, to deliver the same over upon the mere adverse claim of another, but will only disturb such possession upon proof of the right of such adverse claimant, — that is to say, the presumption of the law is that one so in possession is prima facie entitled to remain in possession until the contrary is made to appear by proof. Any other rule would require every citizen to yield to the mere assertion of another. It therefore became incumbent upon the petitioning executors, in order to obtain favorable action upon the part of the court, to introduce such proof as would warrant an order that the defendant in error should deliver up possession of said notes. . . ."

In our first opinion we stated the rule with respect to the facts of this case as follows (p 248):

"In the situation here involved, the introduction of the unendorsed certificate and the showing that it remained in the name of decedent on the books of the corporation, did not, of themselves, constitute sufficient evidence to show ownership in the estate. As against this scant proof is another ...

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