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In Re Estate of Wayne

JULY 14, 1971.


APPEAL from the Circuit Court of Cook County; the Hon. JAMES M. CORCORAN, Judge, presiding.


This proceeding was instituted on March 27, 1967, by the Executrix of the Estate of Robert Wayne under Section 72 of the Civil Practice Act (Ill. Rev. Stat. 1967, ch. 110, par. 72), to vacate an order entered by the Probate Division of the Circuit Court on December 23, 1965, which approved an agreement dated December 1, 1965, for the sale to Dorance Enterprises, Inc., of all the assets of the Fred Astaire Dance Studios, Inc. (hereinafter referred to as the Wayne Corporation) an Illinois corporation solely owned by the Estate of Robert Wayne. After an evidentiary hearing, the petition to vacate was denied, and the Executrix appeals.

Robert Wayne died testate on March 15, 1964. He was survived by his widow, Eleanor Wayne, and by four children, three of whom were minors at the time of his death. His last Will was admitted to probate, and letters testamentary were issued to Mrs. Wayne, who was the sole beneficiary, devisee, and legatee of the estate under the provisions of the Will.

At the time of his death, Robert Wayne owned all of the outstanding shares in the Wayne Corporation, and these shares constituted the principal assets of his estate. The Wayne Corporation under an agreement executed in 1957 with the Fred Astaire Dance Studios, Inc., a New York corporation, (hereinafter referred to as the New York Corporation) held a franchise to operate dance studios in the midwest region for instruction in the Fred Astaire method of dancing. The Wayne Corporation, itself, operated a studio at 32 West Randolph Street in Chicago, Illinois, known as the Loop Studio, and in addition it granted a number of sub-franchises to operate throughout the area covered by the franchise agreement, including three sub-franchises to Gerald Rance, one of the individual respondents herein, and another to Dorothy Braun, the other individual respondent.

In February of 1965, Rance and Dorothy Braun combined their operations and incorporated under the name of Dorance Enterprises, Inc., (hereinafter referred to as Dorance). Later in the same month, Dorance acquired all the rights of the New York Corporation in the midwest region, including the right to enforce all provisions of the 1957 franchise agreement with the Wayne Corporation. Dorance then sought to purchase the assets of the Wayne Corporation, which was then being run by Mrs. Wayne; and on March 10, 1965, under an agreement signed by Mrs. Wayne, it obtained for the sum of $140,000.00, payable in monthly installments of $900.00, the Wayne Corporation's franchise interest in the midwest region except for the Loop Studio for which the Wayne Corporation received a sub-franchise. This agreement was negotiated by the parties themselves, and James Brandvik, the attorney for the estate, did not learn of the agreement until after it was executed. Approval of the agreement was never sought or obtained from the Probate Division of the Circuit Court.

In the latter part of 1965, the Wayne Corporation encountered serious financial difficulties; and as a result of certain alleged breaches of its franchise agreement with Dorance, it received a notice of termination of its right to operate as a Fred Astaire Dance Studio in a letter from Dorance's attorney, Gerald Moro, which was dated October 29, 1965. After Mrs. Wayne received this letter she secured the legal services of Mrs. Antonio Rago Herbert and according to the testimony of James Brandvik, Mrs. Wayne then informed him that he should follow Mrs. Herbert's instructions.

During the month of November, 1965, numerous meetings were held between Mrs. Wayne, her attorney, Mrs. Herbert, Dorothy Braun, Gerald Rance, and their attorney, Gerald Moro. On November 23, 1965, Mrs. Wayne, Mrs. Herbert, and Moro participated in a five hour conference in which they reached a tentative agreement on terms for the sale of the assets of the Wayne Corporation. These terms were reduced to writing in a letter dated December 1, 1965, which was signed by the parties and their respective attorneys. Under this agreement Dorance purchased all the assets of the Wayne Corporation for $10,000.00 less amounts owed to it by the Wayne Corporation. In addition, it assumed liability of teaching $52,000.00 in untaught lessons and it cancelled judgment notes of the Wayne Corporation, guaranteed by Mrs. Wayne, totaling $10,000.00. All the parties were released from any obligation or liability under the March 10, 1965, agreement.

On December 8, 1965, Mrs. Herbert Moro, and the guardian ad litem of Mrs. Wayne's children met with Judge Dunne of the Probate Division of the Circuit Court in chambers for about one hour to explain the terms of the December 1, 1965, agreement. On December 23, 1965, a petition incorporating the terms of this agreement was presented to Judge Dunne for his approval. This petition was prepared and presented by James Brandvik, the attorney for the estate, because Mrs. Herbert did not want to file an appearance and become an attorney of record for the estate. After a hearing, Judge Dunne entered an order approving the agreement.

Over fifteen months later, on March 27, 1967, Mrs. Wayne, as Executrix of the Estate, filed a petition under Section 72 of the Civil Practice Act to vacate the order approving the sale. The petition alleged that her assent to the December 1, 1965, contract, and her assent to the petition seeking its approval were procured as the result of fraud, duress, undue influence, and breaches of fiduciary duties. After an evidentiary hearing, the petition was denied.

• 1-3 Section 72 of the Civil Practice Act provides a simple method whereby a party may bring out before a court rendering an order or judgment matters of fact, not appearing of record, which if known to the court at the time the order or judgment was entered would have prevented its rendition. (Brockmeyer v. Duncan, 18 Ill.2d 502, 165 N.E.2d 294.) To be entitled to relief under Section 72, however, a party must plead and prove facts sufficient to justify relief. (Esczuk v. Chicago Transit Authority, 39 Ill.2d 464, 236 N.E.2d 719.) Where a petition and answer thereto raise material issues of fact, the trial court must conduct an evidentiary hearing to resolve the factual issues raised by the pleadings. (Wilson v. Wilson, 56 Ill. App.2d 187, 205 N.E.2d 636), and after the trial court has heard evidence and made findings, a reviewing court will not disturb those findings unless they are against the manifest weight of the evidence. See Abron v. Public Pontiac, Inc., 64 Ill. App.2d 73, 212 N.E.2d 326, Year Investments, Inc. v. Joyce, 62 Ill. App.2d 173, 210 N.E.2d 67.

In the present case, Dorance took immediate possession of the assets of the Wayne Corporation upon the approval of the sale, and commenced to operate the business. Mrs. Wayne did not file her petition to vacate until fifteen months had elapsed from the time that the order approving the sale was entered. The record contains no satisfactory explanation for this delay, and there is no indication that the delay was occasioned by the respondents, their attorney, or Mrs. Herbert.

Mrs. Wayne testified at the hearing on the Section 72 petition that she signed the December 1, 1965, agreement and the petition for the agreement's approval because Rance, Moro, and Mrs. Herbert, all threatened that she would go to jail, lose custody of her children, and lose everything if she did not sign. She said she never obtained a copy of the December 1, 1965, agreement, until December 23, 1965, and she believed that the agreement related solely to the sale of the Loop Studio. She was upset and overwrought at the time and was under the care of a physician. No medical testimony, however, was introduced relating to her physical or mental condition.

Valerie Callies, Mrs. Wayne's married daughter, testified that her mother had been distraught and upset for a period of time. In addition, she testified that she had discussed the problems of the estate with Mrs. Herbert who urged her to contest the provisions of the Will. Helen Martos, a long time employee of the Wayne Corporation, testified that Mrs. Wayne was in a state of shock, confused, forgetful, nervous and agitated, in the latter part of 1965.

Arthur Wolfson, who had been the manager of the Loop Studio in 1965, testified that Rance, Moro, and Mrs. Herbert had all threatened Mrs. Wayne in his presence. He had been present during at least five meetings in December, 1965, concerning the sale, but he was denied an opportunity to read the December 1, 1965, agreement before Mrs. Wayne signed it. He advised Mrs. Wayne against the agreement, but she did not ...

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