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South Side Bank & Trust Co. v. Yorke

NOVEMBER 21, 1973.

SOUTH SIDE BANK & TRUST CO., PLAINTIFF-APPELLANT,

v.

NATHAN YORKE ET AL., DEFENDANT-APPELLEE.



APPEAL from the Circuit Court of Cook County; the Hon. NATHAN M. COHEN, Judge, presiding.

MR. JUSTICE MCNAMARA DELIVERED THE OPINION OF THE COURT:

Plaintiff, South Side Bank & Trust Co., brought this action in the circuit court of Cook County against defendant Nathan Yorke as assignee for the benefit of creditors of American Plumbing Supply Co., hereafter called American. The action was brought to determine the validity of plaintiff's claim against American in the assignment proceedings.

American, a partnership, was owned by Samuel Kaplan and his brother, Joseph Kaplan. Plaintiff had loaned $140,000 to American. The note evidencing the loan was executed by American, and also by the partners individually, their respective wives and their father. After the assignment for the benefit of creditors, plaintiff obtained a judgment by confession against American and the Kaplans in the sum of $147,300 including attorney's fees of $7,300.

Defendant accepted plaintiff's claim against American in the amount of $147,300; however, certain creditors objected to defendant's report and to plaintiff's claim being allowed in that amount. These creditors contended that plaintiff's claim should be reduced by the proceeds of the sale of the collateral pledged to plaintiff by the Kaplans individually, and by deducting the $7,300 attorney's fees included in the judgment. After hearing testimony and argument by counsel and considering memoranda of law, the trial court sustained the creditors' objections and reduced plaintiff's claim to $36,726.27. Plaintiff appeals. Although several creditors objected to plaintiff's claim in the trial court, only one creditor, Rockford Drop Forge Co., hereafter called Rockford, has filed an appearance and answering brief in this court.

The primary issue is whether plaintiff was entitled to have its claim against American allowed in full without deduction of the proceeds realized from the personal assets of the Kaplans. Plaintiff also argues that it was entitled to include in its claim against American the attorney's fees obtained in the judgment. The facts, which are undisputed, are as follows.

In 1961 Samuel Kaplan applied to plaintiff for an unsecured loan to American. Plaintiff refused, but agreed to make a secured loan. On behalf of American, Samuel then offered plaintiff the beneficial interest in two land trusts as collateral to secure the payment of the loan to American. One land trust was owned by Samuel, Joseph and their respective wives; the other trust was owned by their father, Meyer Kaplan. After receiving assignments of the beneficial interests in the land trusts from the Kaplans, plaintiff loaned American $140,000.

On September 24, 1969, a renewal note for the previous loan in the amount of $140,000 was executed. The note was signed as follows:

"Samuel Kaplan — Evelyn P. Kaplan

Joseph B. Kaplan — Sara Kaplan

Meyer Kaplan

American Plumbing Supply Co.

By: Samuel Kaplan Partner

By: Joseph B. Kaplan Partner"

The proceeds of the loan has been paid to American only, and none were received by the Kaplans individually. Neither the father nor the ...


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