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In Re Estate of Nelson

MARCH 2, 1971.





Rehearing denied April 20, 1971.

This appeal is to review an order entered in a citation proceeding which was brought to recover shares of stock alleged to be the assets of a decedent's estate. Petitioner, Josephine M. Nelson, executrix, obtained the citation against respondent, Dorothy H. Nelson also known as Dorothy N. Sayre. After hearing evidence, the trial judge ruled in favor of the petitioner. A summary of the facts is necessary in order to understand the contentions of the parties.

David V.M. Nelson departed this life March 15, 1966. Petitioner became the executrix of his estate. On August 16, 1966, she filed a petition for a citation against respondent, alleging that the latter was concealing shares of stock in a street name account with Harris,, Upham & Co., a corporation. Petitioner alleged that the shares belonged to David V.M. Nelson prior to his death; and that respondent was David Nelson's "[f]iduciary agent and trustee * * *" to deliver the shares to him when he requested. On the same day, petitioner applied for a citation against an officer and an employee of Harris, Upham, alleging that they held shares of stock for respondent which belonged to petitioner and the estate. The next day a similar petition was filed against Harris, Upham & Co.

The citations issued. On November 7, 1966, Harris, Upham moved for leave to deposit a number of shares with the clerk. The company alleged it was holding the shares for respondent; that petitioner had demanded them, claiming they were owned by the estate of David V.M. Nelson; and that respondent, also claiming to be the owner, had demanded delivery of the same shares. After hearing the parties, the court entered an order which found that in the name of Dorothy N. Sayre (respondent's married name), Harris, Upham held shares which both petitioner and respondent claimed, causing doubt as to which of them was the owner. Harris, Upham was allowed to deposit the shares with the clerk of the court and was discharged from all liability, except to the person adjudged entitled to them. Petitioner and respondent were ordered to interplead and settle between them their respective claims to the property in question.

The citation against respondent was heard. She was called as a witness. In 21 hearings from October 4, 1966, to December 8, 1967, she was questioned concerning her finances, her dealings with Harris, Upham, the shares in question and her relations with her father. Seven other witnesses testified. In support of the citation, petitioner gave her version of the events in question. The court admitted 465 exhibits offered by petitioner and 19 by respondent.

From competent evidence in the record, it appears that respondent was the daughter of David V.M. Nelson by a wife he divorced in 1934 when Dorothy was 15 years of age. Shortly after his divorce, he married petitioner. For two or three years, respondent lived with her father and petitioner. She took secretarial training and later became employed in an auto parts company for $12.00 per week. From then until 1941, she worked as a secretary earning no more than $25.00 each week. It was during this period that she met Russell Sayre whom she married in 1947. Between 1941 and 1957, respondent was a secretary. From 1957 until the date of her testimony, she worked for the Hartford Fire Insurance Company earning a salary that began at $360.00 per month.

David Nelson was a building superintendent. He became acquainted with John Gary Barthell, a representative of Harris, Upham & Co., stockbrokers with offices in the same building in which he worked. In 1938, Barthell began buying and selling stocks for David Nelson. From then until his death, Nelson and petitioner had cash accounts with brokerage firms; and the shares they purchased were in joint tenancy, with the right of survivorship.

Respondent was friendly with her father, saw him often and did some secretarial work for him. On May 22, 1942, she purchased a safe deposit box. Sometime later she put in it $5,000.00 she received from her father. According to petitioner, at the beginning of 1942 she and David Nelson "[h]ad my $3,400.00 and $1,600.00 that I had saved of my husband's income; a total of $5,000.00. * * * My husband had turned them over to his daughter. * * * [i]n 1943."

February 10, 1943, respondent, on the advice of her father, saw John Gary Barthell in the offices of Harris, Upham. Although she was without previous experience in the stock market, did not have an account with any brokerage firm nor with any bank, she told Barthell that her father had recommended she open a stock account. She told him she wanted to buy Studebaker stock on margin. After signing a customer's agreement, respondent opened with Harris, Upham margin account No. 904016. With $400.00, she purchased, on margin, 100 shares of Studebaker Corporation stock. Thereafter, until May 17, 1966, on her instructions Harris, Upham bought and sold shares of stock for respondent. Cash or stock dividends and stock splits were to be credited to her account. If the account fell below margin, all demands were to be made on respondent. Only she was liable to Harris, Upham for any loss. From 1943 to 1966 checks were issued to respondent by Harris, Upham: $5,049.75 on December 30, 1960; $22,100.00 between April 10, 1961, and March 4, 1966. Respondent paid all taxes on income and capital gains from the account. Harris, Upham through its representatives, knew only of respondent as the owner of the account; and it would not have accepted instructions concerning it from any one else. All statements were issued to respondent. Until February 28, 1966, no inquiry or request was ever made by David Nelson or anyone on his behalf of Harris, Upham concerning the shares in the margin account. Although Harris, Upham's representative, John Gary Barthell, saw David Nelson many times between February 1943 and February 1966, they never discussed the shares of stock held for respondent. When account No. 904016 was closed with the deposit in court by Harris, Upham, the shares in it had a value of approximately $117,000.00.

On February 26, 1966, David Nelson and petitioner, respondent and her husband had dinner together. The stock account held for respondent by Harris, Upham was not discussed. February 27, 1966, David Nelson was hospitalized. On February 28 he called Barthell. Later, Barthell told respondent that her father told him in a telephone conversation that her shares with Harris, Upham were his. Respondent said they were not. Barthell agreed with her.

On March 3, 1966, David Nelson asked petitioner to write a document he was going to dictate. With only the two of them present in his hospital room, petitioner took down what David Nelson told her. He said the shares held by Harris, Upham for his daughter were his; that "[e]very dollar of the money that purchased this stock was provided by myself and my wife Josephine M. Nelson. Every transaction and decision was [sic] always made by my order to my daughter * * *. In the event of my death, every stock, and every dollar in this account belongs [sic] to my wife Josephine M. Nelson — not as an inheritance but as the (Survivor), the same as on my other account at Harris, Upham, where my wife Josephine M. Nelson is named as such." To the document was appended a list of 19 companies which petitioner said she first saw in 1952 when her husband brought it home and said to her "This is a list of stocks." The document was signed by Nelson and his signature witnessed by five persons who were called by petitioner at Nelson's request.

Over respondent's objections, this document and petitioner's testimony concerning it were admitted in evidence. In addition, also over respondent's hearsay objections, petitioner was allowed to detail the two telephone calls she said her husband made on February 28: one to Barthell and one to respondent claiming the shares and asking her to bring them to his hospital room. Lawrence Palmer, one of David Nelson's assistants, was allowed to repeat that Nelson told him he had to call his daughter to buy some stocks for him; that respondent had refused to deliver the shares of stock to him; and in his hospital bed, Nelson said to him, "That's a blankety-blank shame that you can't even trust your own daughter." Dr. George W. Tarry testified that when Nelson was in his office for treatment, they talked about securities; and he told Nelson he kept a margin account in a street name. Nelson told him "[h]e did the same thing." The document prepared by petitioner and the testimony concerning Nelson's oral statements were among the evidence the trial judge considered in reaching his judgment. Without any supportive findings of facts, he entered an order which concluded "[t]hat the assets in question, are the property assets [sic] of the Estate of David V.M. Nelson, Deceased, * * *"

In urging that the order be reversed, respondent contends that (1), the trial court erred in admitting evidence of oral and written statements which David Nelson allegedly made before his death, evidence which did not qualify as exceptions to the hearsay rule and which the court used to reach its decision; and (2), the evidence in the record does not support the conclusion of the trial judge that the corporate shares in margin account No. 904016 were assets of David Nelson's estate.

Petitioner meets respondent's first contention with the argument that she brought a statutory citation proceeding to discover assets of a decedent's estate, one neither at law nor in equity but which, on option, provides for a jury to determine adverse questions of title and rights of property. (In Re Estate of Baumgarth, 23 Ill. App.2d 319, 325, 163 N.E.2d 201.) The controlling case, petitioner contends, is Keshner v. Keshner, 376 Ill. 354, 360, 33 N.E.2d 877 in which it was held that a citation proceeding is anomalous; and that "[t]he peculiar nature of this kind of suit has a distinct bearing on the decision of this case." From this, petitioner insists that the written ...

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