Appeal from the Circuit Court of Cook County; the Hon. WALKER
J. BUTLER, Judge, presiding. Judgment affirmed.
MR. PRESIDING JUSTICE BURMAN DELIVERED THE OPINION OF THE COURT.
The sole issue presented for review in this appeal is whether a Chancellor has the inherent equity power for the protection of a minor to require the posting of a bond for costs and damages in an amount fixed by the Court in the exercise of its discretion as a condition for allowing a minor's representative to maintain an action of the type involved herein.
Manuel S. Hoffman, who under the Illinois Uniform Gift to Minors Act (Ill Rev Stats 1963, c 3, § 531 et seq.) is the custodian of stock in the Bank of Niles, owned by Steven David Hoffman, a minor, brought this action in 1964 on his own behalf and on behalf of all minority stockholders similarly situated against the Central National Bank in Chicago, the Bank of Niles, individual directors of the Bank of Niles, and the Selin Corporation, a corporate holder of stock in the Bank of Niles.
It appears from the complaint that the Bank of Niles has issued ten thousand shares of $25 par value stock and that Steven David Hoffman is an original holder of ten shares. The Complaint alleges that Central National made loans to one Herman Greisdorf which enabled him to acquire the controlling interest in the Bank of Niles and the real estate upon which the banking quarters are located; that there was an improper course of conduct between Central National and Greisdorf, who was not named as a defendant; that Bank of Niles deposited substantial sums in Central National without receiving interest; that Greisdorf permitted substantial, improper loans to be made; that the directors of the Bank of Niles breached fiduciary and other obligations by permitting themselves to be dominated and controlled by Greisdorf; that the directors of the Bank of Niles rubber stamped Greisdorf's acts because they and Greisdorf were involved in many deals and transactions outside the operation of the Bank; that Central National conspired with H.M. Cavanaugh, acting through the Selin Corporation, to take control of the Bank of Niles; that Central National called its loans to Greisdorf and reduced its collateral to ownership; that Central National granted preferential treatment to Cavanaugh, who was a substantial shareholder of Central National, to enable him to obtain control of the Bank of Niles; and that Cavanaugh and the directors of the Bank of Niles held a fiduciary relationship to the Bank and all its minority shareholders which was breached. Most of the allegations in the Complaint are on "information and belief."
The Complaint seeks an injunction, the declaration of a constructive or resulting trust, the setting aside of an approved bank reorganization, punitive damages in the amount of $1,000,000, the removal of officers and directors, and other appropriate relief.
Selin, the Bank of Niles, and the other defendants moved to strike and dismiss the Complaint on the ground that Manuel S. Hoffman was without authority to institute the action as custodian because section 4 of the Illinois Uniform Gift to Minors Act (Ill Rev Stats 1963, c 3, § 534), which sets forth the duties and powers of a custodian, does not authorize a custodian to institute judicial proceedings and on the ground that the plaintiff was seeking improper relief since under section 150 of the Illinois Banking Act (Ill Rev Stats 1965, c 16 1/2, § 150) the Director of Financial Institutions through the Attorney General is the only person authorized to file a Complaint seeking to have a bank placed under court supervision.
Central National answered the Complaint, alleging inter alia that the plaintiff has made scandalous allegations which are utterly untrue and without foundation in fact or reasonable belief; that it will incur substantial costs, expenses and attorney's fees which should be paid by the plaintiff; that the plaintiff should be required to post a bond in an amount sufficient to pay the same; and that exemplary or punitive damages should be assessed against the plaintiff.
The record reveals that the plaintiff moved to amend the Complaint on March 2, 1965, to include as a plaintiff, Steven David Hoffman, a minor, acting through his natural guardian and next friend, Manuel S. Hoffman. On the same day, the plaintiff moved for an order directing the Bank of Niles to produce its corporate minute book, certain disbursement records, payroll records, certain loan files, leases for the building occupied by the bank, audit reports, etc. The defendants opposed both of the plaintiff's motions and moved to stay all discovery. Numerous grounds were advanced in support of the defendants' objections and motion. First, they argued that for the protection of the minor, the plaintiff, as next friend of the minor, should be required to post a bond for costs in accordance with section 141 of the Probate Act (Ill Rev Stats 1965, c 3, § 141) which prescribes the manner in which a minor may appear in a judicial proceeding. Second, they asserted that the court should stay all proceedings until it has ruled on the motions to dismiss and determined the sufficiency of the Complaint. Third, they alleged that the "so-called representative action on behalf of a minor against two banks and certain individuals is a spurious suit, brought to embarrass the involved Banks and to prevent a proper reorganization of the Bank of Niles and to embarrass those individuals who have sought to extricate the Bank from its difficulties." Fourth, they alleged that the plaintiff was not bringing a true representative action and noted that no other stockholder of the Bank of Niles had joined the suit. Finally, they asserted that the production of the documents requested in the plaintiff's motion to produce documents would be unreasonable, oppressive, and burdensome because the plaintiff seeks the production of over 50,000 documents which are contained in over 750 files and because the production of the documents would disrupt the operation of the bank and would result in great expense to it.
On March 25, 1965, the Court ordered (1) that the plaintiff be granted leave to amend the Complaint to include as a plaintiff, Steven David Hoffman, by his natural guardian and next friend, Manuel S. Hoffman; (2) that Manuel S. Hoffman, as next friend, post a bond for costs in the amount of $100,000 pursuant to section 141 of the Probate Act; and (3) that all discovery be stayed until the posting and approval of the bond.
On April 15, 1965, Manuel S. Hoffman opened an estate in the Probate division for the minor and obtained permission from that court to represent the minor in this litigation as the minor's duly appointed guardian. On April 21, 1965, Manuel S. Hoffman moved before the Chancellor for permission to appear and represent Steven David Hoffman as guardian of the estate and person of the minor and moved further that the order requiring the posting of a bond for costs be vacated, because, he contended, the guardian by reason of the issuance of the letters of guardianship was entitled as a matter of right to represent the minor without the filing of a bond for costs.
On October 29, 1965, the defendants obtained an order in the Probate division which provided that its previous order which authorized Manuel S. Hoffman to represent the interest of his ward, was without prejudice to the right of the Chancellor to set bond for the guardian. On May 10, 1966, the Court ordered that Manuel S. Hoffman, as guardian of the Estate and person of Steven David Hoffman, be substituted as plaintiff in lieu of Manuel S. Hoffman as natural guardian and next friend of Steven David Hoffman and further ordered that Manuel S. Hoffman, as guardian, post a bond in the amount of $100,000. The plaintiff then filed a motion in the Supreme Court for leave to file a petition in original mandamus to compel the Circuit Court to vacate its order setting the bond for costs. The motion was denied. On December 6, 1968, the plaintiff, as guardian, again moved before the Chancellor to vacate the order requiring bond. On affidavit, plaintiff's guardian stated that the estate of the minor was insufficient to permit such a bond to be posted. The motion was denied and the action was dismissed on April 9, 1969. This appeal followed.
The Court is under a duty to protect the interests of a minor when the interests of the minor are or may be affected in a judicial proceeding, and the Court has broad equitable powers to ensure that the minor's interests are protected. Tymony v. Tymony, 331 Ill. 420, 163 N.E. 393; Gibbs v. Andrews, 299 Ill. 510, 132 N.E. 544.
The power to protect the interests of a minor is explicitly preserved in Illinois by statute. Section 141 of the Probate Act provides:
The guardian of the estate of a minor shall appear for and represent his ward in all legal proceedings unless another person is appointed for that purpose as guardian or next friend. This does not impair the power of any court to appoint a guardian to defend the interests of the minor in that court, or to appoint or allow any person as the next friend of a minor to commence, prosecute or defend any suit in his behalf. Any suit or proceeding may be commenced and prosecuted by his next friend, without any previous authority or appointment by the court if ...