APPEAL from the Circuit Court of Cook County; the Hon. DANIEL
A. COVELLI, Judge, presiding.
MR. JUSTICE GOLDBERG DELIVERED THE OPINION OF THE COURT:
Charles C. Carlino (defendant) appeals from a decree granting an accounting and other relief to Stephanie Babray (plaintiff) and dismissing his counterclaim. This appeal is concerned only with three portions of the decree which will shortly be described. Plaintiff did not cross appeal from that part of the decree which denied her claim for additional relief. The decree was entered in accordance with the report and recommendations of a master in chancery.
The decree established a constructive trust in favor of plaintiff and granted her an accounting in connection with an interest in the Niles Motel. This was in accordance with recommendations of the master who found that defendant had violated his duty of loyalty to plaintiff as a co-partner. Another portion of the decree granted plaintiff an interest allowance for use of her funds by defendant. The master predicated this recommendation upon a contract relationship between the parties based upon an oral agreement for purchase of bank stock by defendant for plaintiff. The remaining portion of the decree involves a recommendation by the master that defendant be denied damages for willful and malicious prosecution of the suit by plaintiff. In this regard, the master stated that the defendant's counterclaim had not been proved. We will consider these three phases of the appeal in their stated order. First, however, a factual statement is essential.
• 1 Since proceedings before masters in chancery no longer exist, it might be wise briefly to consider the duty of the reviewing court and its relation to the findings of fact made by a master and then approved by the entry of a decree by the trial court. A master had the opportunity of observing the witnesses and of hearing their testimony in person. For this reason, the rule existed that findings of the master, particularly when approved by the trial court, are entitled to due weight on review of the cause. Kolze v. Fordtran, 412 Ill. 461, 468, 469; Englestein v. Mackie, 35 Ill. App.2d 276, 287.
• 2-4 The concurrent principle also obtains that a report by a master is advisory only. After the master's report has been filed, the facts remain open for consideration by the trial court and by the reviewing court. (Uksas v. Zelensky, 21 Ill.2d 303, 311; Vesolowski v. Vesolowski, 403 Ill. 284, 292; Miller v. Heller, 106 Ill. App.2d 383, 393.) In a chancery case, the reviewing court proceeds in accordance with equitable principles. Therefore, the facts are always open for consideration on appeal and the question to be determined here is: "Was the decree rendered by the court a proper one under the law and the evidence?" (Uksas v. Zelensky, 21 Ill.2d 303, 311.) This question is to be answered by us without regard to the finding of the master upon any particular question of fact. (Chechik v. Koletsky, 311 Ill. 433, 438. See also Miller v. Heller, 106 Ill. App.2d 383, 393-94.) With these established and salutary principles in mind, we proceed with a statement of the facts.
Defendant's business experience began in 1918. For about 19 years prior to the events here, he was Vice President of the Belmont National Bank (Bank). Plaintiff's formal education ended after one year of high school. She was first married when 19 years old. About 1946, plaintiff purchased a tavern in Chicago. She borrowed money with which to start this enterprise. She first operated the business with a partner but bought out the partner's interest. Plaintiff's husband died in July of 1953 and she sold the tavern during the following year. Plaintiff thus had some experience in financial matters such as operation of the tavern and the purchase and sale of a two-flat building in Chicago. In addition, plaintiff had made a small purchase of corporate stock before she met defendant. The adjectives "alert", "intelligent" and "articulate" appear in the record as descriptive of plaintiff.
In 1948, defendant had become acquainted with plaintiff's first husband who was a depositor in the Bank. In 1952, plaintiff accompanied her husband to the Bank and there first met defendant. In 1953, some two weeks after the death of the first husband, in response to a telephone call from plaintiff, defendant came to visit her at her home. She was still operating the tavern then and in the course of her business had occasion to visit the Bank and sometimes to see defendant.
At the time of the death of plaintiffs first husband, in July of 1953, she was assisted by her brother who was a practicing attorney. On the day after the death, accompanied by her brother, she removed cash and other items from a safety deposit box in the Bank and opened a new box. In addition, she transferred the entire amount in a joint savings account, some $7700, to a new account in her own name. Thereafter, in 1954, plaintiff removed $16,650 from a safety deposit box in the Bank and deposited it in her savings account. She testified that defendant advised her to do this; and that, at defendant's suggestion, she opened this account using her middle name and her maiden name in combination.
During 1953 and 1954, on three separate occasions, plaintiff purchased a total of $6000 in treasury bonds through the Bank. These transactions were handled by means of cashier's checks issued by the Bank. Her testimony is that defendant first talked to her about these bonds in October of 1953. At that time, she bought $3000 worth of bonds. A few days later, defendant gave plaintiff a refund of $89 representing the excess of her payment above the actual cost of the securities.
Plaintiff testified that in each instance she expressly authorized defendant to purchase United States treasury bonds for her. She owns $6000 worth of these bonds to the present day and has received all installments of interest thereon. She also asked defendant to buy her $5000 worth of these bonds in October, 1957, but she disposed of them later without consulting defendant. A finding by the master that defendant bought and sold treasury bonds without plaintiff's prior knowledge by drawing from and depositing to her bank account is completely unsupported by the evidence. In addition, after discussion, plaintiff authorized defendant to buy 241 shares of stock in the Bank for her for some $6000. She still owns this stock which has increased to 349 shares because of stock dividends. The value of the stock is now approximately doubled. In each instance, these stock investments were discussed between the parties and expressly authorized by plaintiff.
Plaintiff gave defendant possession of her bank books and various personal papers including her certificates of stock in the Bank. Defendant testified that this was done as a matter of convenience. In addition, it is certain that she gave defendant possession of a blank savings withdrawal slip signed by her for an account in the Bank in her correct name and another such withdrawal slip for the account maintained in her middle and maiden names. Both of these slips were later returned to plaintiff unused and were destroyed by plaintiff at defendant's suggestion. There is a suggestion in the master's report that defendant had possession of additional similar deposit slips. Plaintiff testified that she signed at least half a dozen such slips. However, defendant denies this and only his possession of two slips as above described is documented, as will hereinafter be shown. There is no evidence that defendant ever used any withdrawal slip signed in blank by plaintiff. The only withdrawal slip offered in evidence is entirely in plaintiff's handwriting.
During October of 1956, plaintiff visited defendant at the Bank. At that time, defendant gave her all of the documents and papers of every kind that she had previously lodged with him. Plaintiff tendered to defendant, and she signed, an itemized receipt listing the documents. More than 30 items are described in the list. The list includes an installment note and trust deed representing the third mortgage on the Niles Motel (later fully described) in the amount of $30,000 and all stock certificates. This list specifies a blank savings withdrawal slip signed by plaintiff in her proper name and one signed by her in the combination of her middle and maiden names.
The record does not clearly divulge the background or the reason for this incident. After Christmas of 1954, there was an argument between the parties in which defendant accused plaintiff of drinking too much. This incident apparently heralded the development of a rift between them. Defendant testified that, about this time and later, plaintiff would come to the Bank and insult him. In any event, new transactions between the parties virtually ceased with delivery of the documents to plaintiff. Subsequently, plaintiff engaged in certain financial transactions such as purchase of additional stock in the Bank. In these instances, she acted without advice or consultation with defendant.
We will now state the facts and consider the rights of the parties with reference to the Niles Motel transaction. This portion of plaintiff's claim is set forth in the fifth and last count of plaintiff's third amended complaint. During November of 1954, defendant was confined to the hospital. Plaintiff went to visit him and there, by chance, met Monteen Alongi who had come to the hospital for the same purpose. Plaintiff testified that prior to this time defendant had spoken to her in a general way about the possibility of investing in a motel or hotel. Plaintiff and Mrs. Alongi left together and spoke about the motel. Mrs. Alongi, plaintiff and defendant later discussed the venture together. Plaintiff testified that she was told by defendant that the price of the motel would be $250,000; that she would receive a one-third interest for putting up all the money that she could; that defendant and Mrs. Alongi would be her partners; and that Mrs. Alongi would run the motel and plaintiff would run the bar. The balance of the purchase price would come from a contribution by defendant and from mortgage financing. Prior to this time, Mrs. Alongi had taken plaintiff to see the motel.
Plaintiff invested some $30,000 in the purchase of the motel. She withdrew approximately $7000 from her savings account in the Bank. She made a loan from the Bank for $6500 collateralized by 100 shares of other stock which she owned. In addition, she borrowed some $14,000 by a mortgage on her home. She testified that defendant suggested these loans to her and that he told her that he would arrange the loan from the Bank at the lowest possible ...