APPEAL from the Circuit Court of Cook County; the Hon. WALTER
P. DAHL, Judge, presiding.
MR. PRESIDING JUSTICE DIERINGER DELIVERED THE OPINION OF THE COURT:
Rehearing denied November 22, 1972.
This suit arose from an action to foreclose a mortgage on twenty acres of land held in a land trust. This appeal is from an order of the Circuit Court of Cook County granting a motion to dismiss a counterclaim and third-party complaint by Lee Romano and his wife Barbara, two of the beneficiaries of the trust. They allege their attorney persuaded them to execute agreements substantially diminishing their interests in favor of members of his family, without adequate consideration. The issue for review is whether the allegations that the attorney used his fiduciary relationship to take advantage of his clients are sufficient to state a cause of action.
In 1961 Barbara Romano retained Robert F. Carey, Sr., and his law firm to represent her in connection with her attempt to purchase approximately twenty acres of real estate near O'Hare Airport. Carey had previously represented the Romanos in other matters. In November of 1961, she entered into an agreement which gave her the option to purchase the twenty acres by June 1, 1962, for $485,000. The option agreement required her to "cause [her] attorney, Robert F. Carey, to immediately proceed with the rezoning" of the twenty acres. In May of 1962, Shapiro, the authorized agent for the beneficiaries of Trust 20346 which owned the property, agreed to extend the date by which the option to purchase could be exercised. On May 29, 1962, Lee Romano, at Shapiro's request, procured a $200,000 loan from Carey to Trust 20346. To secure the loan Carey took a first mortgage in the amount of $200,000. On June 5, 1962, Shapiro and Barbara Romano executed an amendment to the option agreement of November 28, 1961, extending the time for the exercise of the option. The rezoning of the property was also approved.
In late August, 1962, Lee Romano, on the advice of Carey, filed for bankruptcy. Carey and his law firm acted as Romano's attorneys in the proceedings.
Prior to October 1, 1962, the Romanos allege it was understood and agreed between themselves and Carey that if the option to purchase was exercised, the person or persons who provided the money to purchase would have a 50% interest and they would retain a 50% interest in the property.
On October 1, 1962, the option agreement was exercised. It was amended to increase the purchase price to $526,000, less the mortgage indebtedness of $200,000. The sum of $50,000 was to be paid when the option was exercised, $100,000 to be paid within five days after title was shown to be good, and the $176,000 balance was to be covered by a second mortgage retained by the sellers payable in two installments of $88,000 each, the first payment due six months after closing. The amendment further provided a reduction from $176,000 to $160,000 would be allowed if both installments were paid before January 10, 1963. Carey represented Barbara Romano in the execution of the contract.
The Romanos allege it was agreed with Carey that he would receive the first $200,000 realized from the resale of the property plus 10% of the equity when he released his first mortgage; that Carey or his nominee would acquire the second mortgage, and if and when that mortgage was released, the holder would receive the next $176,000 plus 10% of the equity; that the investors, to be procured by Carey, would, for an investment of $150,000, receive the next $150,000 plus 30% of the equity; and the Romanos would be entitled to 50% of the equity. Subsequently, Carey or his nominee acquired the second mortgage.
After this agreement was reached, Carey failed to locate persons willing to invest the $150,000. Lee Romano then arranged for Barbara to put up $75,000 for 10% of the equity, and for Joseph and Anna Abbate, friends of the Romanos, to put up the other $75,000 in return for 10% of the equity. Romano took the remaining 10% of the equity for raising the money.
Thereafter, Carey advised Romano he had promised Jane Lyons Ford, his sister-in-law, that she could acquire a 6 2/3% interest in the equity for $50,000, and requested that Barbara and the Abbates accept 6 2/3% interests for $50,000. As a result of these agreements Carey had a right to 10% of the equity if he released his first mortgage; Carey or his nominee had a right to 10% if the second mortgage were released; Barbara, the Abbates, and Jane Lyons Ford each had a right to 6 2/3%, and Romano had a right to 60%.
The Romanos then allege Carey forced them to sign an agreement on November 13, 1962, by threatening to foreclose the second mortgage when it became due. The interests and amounts contributed under this agreement are as follows:
Olive Graham 6 2/3% $50,000.00 (heretofore paid) Lee N. Romano 35% $25,000.00 Joseph S. Abbate and Anna L. Abbate, as joint tenants with the right of survivorship 6 2/3% $25,000.00 Thomas F. Carey 6 5/12% 4,181.03 Jane Lyons Ford 3 1/3% 25,000.00 Helen Carey 7 1/4% 3,750.00 Robert Carey, Jr. 7 1/4% 3,750.00 Anthony Carey 7 1/4% 3,750.00 Jean O'Neil 7 1/4% 3,750.00 Judith Tharp 7 1/4% 3,750.00 Patrick S. Filter 4% 2,068.97 Barclay Graham and Olive Graham, as Trustees for Thomas F. Carey 1 2/3% The deposit hereinabove recited for Thomas F. Carey shall be deemed payment for this share as well as the share set forth opposite his name.
A majority of 51 2/3% as allotted to Thomas F. Carey, Jane Lyons Ford, Helen Carey, Robert Carey, Jr., Anthony Carey, Jean O'Neill, and Judith Tharp, who were all relatives of Carey, Sr. ...