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In Re Estate of Saperstein

NOVEMBER 27, 1974.

IN RE ESTATE OF ABRAHAM M. SAPERSTEIN, DECEASED. — (SYLVIA SAPERSTEIN ET AL., RESPONDENTS-APPELLANTS,

v.

MARTIN L. SILVERMAN ET AL., PETITIONERS-APPELLEES.)



APPEAL from the Circuit Court of Cook County; the Hon. ALVIN J. KVISTAD, Judge, presiding.

MR. JUSTICE BURMAN DELIVERED THE OPINION OF THE COURT:

This appeal arises from a petition filed in the Probate Division of the Circuit Court asking that court to allow a fair and reasonable sum as fees for services rendered by Allan R. Bloch as attorney for the estate of Abraham M. Saperstein, deceased. Allan R. Bloch died before the administration of the estate was completed and the petition for fees was therefore filed by the executor of Bloch's estate and by attorneys, Martin L. Silverman and Beryl A. Birndorf, former law partners of Bloch. The respondents herein whose interests comprise 88% of the estate of Abraham Saperstein, objected to the petition for fees. After a lengthy evidentiary hearing, the trial court determined $140,000 to be a fair and reasonable fee and awarded petitioner that amount. The respondents bring this appeal contending solely that the amount awarded by the trial court, in addition to other amounts totaling $123,000 previously received by attorney Bloch, is unreasonable and excessive.

During an extensive hearing on the contested petition for fees in the probate division, much evidence was adduced relating to the amount and nature of the services performed by Allan R. Bloch in regard to the administration of the Superstein estate, and whether those services supported the amount of fees awarded. Our determination necessitates a review of that evidence.

Abraham M. Saperstein (Saperstein) died testate on March 15, 1966. Named as co-executors in his will were Allan R. Bloch (Bloch) and the Continental Illinois National Bank and Trust Company of Chicago (Continental or "the bank"). The executors engaged Bloch's law firm, Bloch, Birndorf, and Silverman to represent them in the administration of the estate.

Among the assets of Superstein was the world renowned "Harlem Globetrotters" exhibition basketball team. It was originally organized in Chicago by Superstein in 1926 as the "Savoy Big Five." It was renamed the Harlem Globetrotters in 1927, and was owned and operated by Saperstein during his life as a sole proprietorship. When Superstein died, the co-executors Bloch and Continental had the obligation of managing his affairs, including operation of the Globetrotters. As will be discussed further below, they initially incorporated the enterprise on April 4, 1966, and eventually arranged for its sale in June, 1967.

Marie Linehan was Saperstein's personal secretary for more than 20 years and handled most of the operational work for the team. She testified on behalf of petitioners. She stated that at the time of Saperstein's death, the Globetrotters, who had traveled to 87 countries around the globe, were comprised of two teams of eight or nine players apiece, or a total of 19 or 20 professional players. Out of these men, there were four key players or "stars." Meadowlark Lemon was "key clown, key performer" with one unit, and Fred Neil was second on that unit. He was regarded as a "highly skilled dribbler and basketball player." On the other unit the two key men were Robert Hall and Hubert Ausbie, both comics with great basketball skill. None of these four stars was under written contract at the time of Saperstein's death.

Linehan further stated that Allan Bloch had, during Saperstein's life, continuously acted as attorney for Saperstein and the Globetrotters, and had become thoroughly familiar with the operation of the teams. He had represented Saperstein and the Globetrotters in infringement cases and handled all contractual work with television networks as well as personal legal matters for the individual team members. He traveled with the club on various occasions overseas and in this country. According to her, Bloch immediately upon Saperstein's death actively took over "responsibility" for the Globetrotters and continued to do so until it was sold. He procured the signatures of the four stars on written contracts. He visited Europe during the summer of 1966 in advance of the club to reassure the European promoters that the Globetrotters operation would continue. Bloch visited the Globetrotters' office in Chicago several times a week and Linehan called him "virtually every day."

Under cross-examination she testified that she was thoroughly familiar with the operation of the club and that she could conduct the operational work for the teams, e.g., booking games and making arrangements for special transportation. She considered herself the office manager. Other people who had done bookkeeping, scheduling, publicity and advance work, and coaching, or who acted as equipment manager, business manager, announcer, driver, prop man, and road manager for the Globetrotters organization during Saperstein's life remained with the teams after his death. Bloch, however, took over Saperstein's responsibility of making the critical decisions. During his visit to Europe in the summer of 1966, Bloch not only reassured the promoters of a continuing relationship, but he also did some scheduling. Bloch dealt with whatever problems would arise in connection with the teams or their operation. As to Bloch's signing the stars to a written contract, she was not aware of any difficulty encountered by him in that endeavor, and all the stars received an increase in salary. They had in previous years signed written contracts which contained reserve clauses.

Anthony J. Morrone, an attorney since 1957, was in charge of the Saperstein estate on behalf of Continental Bank as co-executor. He was a trust officer of Continental and had been employed by the bank for 15 years in the estate administration department, which is responsible for the bank's probate matters. He testified as a witness for the petitioners. He discussed the assets of the estate with Bloch before they were officially appointed as co-executors and was told by him that the main asset was the Globetrotters. Morrone stated that in his experience he never had occasion to operate a sole proprietorship business the nature and value of the Globetrotters and that neither he nor anyone else in the bank had any experience in the handling of a similar estate. It was, in his opinion, a highly unique and unusual estate presenting peculiar problems.

A provision in the will allowed for incorporation of the Globetrotters in the discretion of the executors, and Bloch and Morrone decided that this should be done to limit potential liability and to gain tax advantages for the estate. Accordingly, Abe Saperstein Enterprises, Inc., was formed on April 4, 1966, and the proprietorship assets were transferred to the corporation in exchange for all of its stock. The board of directors of the corporation was composed of seven people: Block, Silverman (one of Bloch's law partners), Morrone, Charles Lenz (also from Continental), Marie Linehan and William Margolis — long time employees of Saperstein — and the decedent's widow. The latter was made chairman of the board, but Bloch was chief operating officer. Legal services in creating the corporation, as well as all other legal work required in connection with the operation of the estate during the first year, were rendered by Bloch, Birndorf and Silverman. Morrone contacted them "very frequently" and Bloch "almost every day." Bloch secured written contracts for the key players.

Since Saperstein's death had come at an inopportune time in terms of cash flow and the estate was cash poor when his will was first admitted to probate, Continental borrowed $50,000 from its own commercial department on May 10, 1966, in order to get the estate started. The cash requirements of the estate tax to be paid were such that Bloch and Morrone decided that the teams would have to be sold. This was one reason why Bloch felt it important to sign the key players to written contracts, because without such contracts it would be difficult to sell the teams. The first offer of purchase came from Metromedia about 6 months after the death of Saperstein. Bloch conducted the negotiations at the outset and received an initial offer of $3 million.

The co-executors filed a petition in the probate division of the circuit court on May 29, 1967, asking that a contract between them and Metromedia for the sale of the Globetrotters at that amount be approved, or, in the event that prior to the entry of any final order authorizing sale of the Globetrotters, other offers or contracts were presented to the court for the purchase thereof, that the court approve the offer or contract which would be in the best interests of the estate. Subsequently other offers were made. A group headed by Potter Palmer made a higher cash bid, and Bloch and Morrone conducted negotiations with that group. Another offer was received from a group headed by Jack Brickhouse. Lin Broadcasting also made an offer consisting partly of cash and partly of convertible debentures and stock in the new subsidiary which would be organized to run the teams. The Potter Palmer cash bid of $3,710,000 was finally approved in open court on June 8, 1967, by Judge Dunne. Since the Saperstein family wished to retain ownership of the teams they had favored the Lin offer, and engaged independent counsel, Gottlieb and Schwartz, to represent their interests at the hearing, but the court found the Potter Palmer bid to be "the highest and best offer received by the Co-executors"

The federal estate tax return filed by the co-executors for the Saperstein estate placed the value of the Globetrotters at $2 million at date of death, and that figure was ultimately accepted by the government. Morrone felt an increase in value during the 15 months between Saperstein's death and the sale of the teams was due to the fact that the co-executors demonstrated, by using good business procedures and cutting costs, that the enterprise could be operated at a profit. The absence of key players' contracts at Saperstein's death also affected the value. During negotiations with the Potter-Palmer group, a member of that group, George Gillette, had asked Morrone and Bloch if there were contracts with the key players and they assured him that there were.

Certain fees totaling $123,000 were paid to the firm of Bloch, Birndorf, and Silverman from Abe Saperstein Enterprises, Inc., pursuant to corporate resolution during the period of February 28, 1967, ...


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