APPEAL from the Circuit Court of Cook County; the Hon. JOSEPH
M. WOSIK, Judge, presiding.
MR. JUSTICE PERLIN DELIVERED THE OPINION OF THE COURT:
The State appeals from an order of the circuit court of Cook County finding that plaintiff was the trustee of an active express trust for the benefit of the shareholders of several dissolved corporations and that since the shareholders could not be located, the trust corpus, less a trustee's fee and attorneys' fees, escheated to the State under the Uniform Disposition of Unclaimed Property Act (Ill. Rev. Stat. 1977, ch. 141, par. 101 et seq.). The sole issue for review is whether the trial court's finding that there was an active express trust is against the manifest weight of the evidence.
On July 17, 1975, plaintiff, Leslie M. Price, filed a petition for dissolution of a trust and for other equitable relief, alleging that plaintiff held a fund which consisted of the undistributed proceeds of 15 liquidated corporations and that the shareholders of the various corporations could not be found. Plaintiff requested the court to determine whether the trust should be dissolved, to determine the disposition of the fund and to set attorneys' fees and reasonable fees for plaintiff for his duties as trustee. Named as defendants were the State of Illinois, Herbert Nechin, who was an attorney and holder of the fund as a joint tenant with plaintiff, 81 named holders of stock of the various corporations and any unknown holders of such stock.
On October 17, 1975, the State filed a motion to dismiss the petition alleging that the court lacked jurisdiction over the subject matter because the monies involved were subject to the Uniform Disposition of Unclaimed Property Act (hereinafter referred to as the Act), and the Act provides for disposition of the fund without court action through the Illinois Department of Financial Institutions. Plaintiff filed a brief in opposition to the motion to dismiss, arguing that the court had jurisdiction because the Act specifically exempts active, express trusts. On June 14, 1977, the court denied the motion to dismiss on the basis that the existence of an active, express trust was sufficiently pleaded in the petition.
On January 3, 1978, plaintiff filed an affidavit for service by publication on those named defendants (the 81 shareholders) who, after diligent inquiry, could not be located. On April 12, 1978, plaintiff filed a motion to enter defaults against all the defendants named in the affidavit, who had been served by publication, and against Herbert Nechin, who had been personally served, for failure to appear or otherwise plead. The court entered defaults against the named defendants and against Herbert Nechin.
Trial was held on August 15, 1978. Plaintiff, the sole witness, testified as follows: in the early 1930's plaintiff was a member of the bondholders' committee of Capital Mortgage Corporation and Capital Trust Company. The committee was formed to take over defaulted construction bonds on 15 apartment buildings located in the city of Chicago. The committee solicited the bondholders to deposit the defaulted bonds with Chicago Title and Trust Company so that foreclosure proceedings could be commenced. After foreclosures were decreed, the committee reorganized the 15 buildings into 15 separate corporations with a building being the sole asset of each corporation, and the defaulted bonds were exchanged for shares of stock. Plaintiff was the secretary and treasurer of each corporation, and a John Ouska, who had been chairman of the committee, was the president of each corporation. The buildings were then sold and the proceeds of each were deposited into corporate bank accounts with plaintiff designated as a signatory.
All of the corporations were dissolved between January 1, 1941, and March 14, 1955, and plaintiff attempted to distribute the proceeds, but he was unable to distribute all the monies because a number of shareholders could not be located. Plaintiff testified that he was directed by the corporate officers to distribute the proceeds, and he was told he would be compensated. Plaintiff was also told by the attorneys for the corporation, the firm of Brown, Fox and Blumberg and particularly a Mr. Thane T. Schwartz, an attorney with the firm, to take care of the funds and he would be compensated. The attorneys did not say how much plaintiff would be paid. On March 14, 1955, plaintiff closed the 15 separate corporate accounts and deposited the undistributed funds (a sum of $6,629.65) into two accounts at Bell Federal Savings and Loan Association so that the money would earn interest. The two accounts were in the names of plaintiff and the attorney, Thane T. Schwartz, as joint tenants with the right of survivorship. The names of the corporations did not appear on the accounts, and plaintiff was not designated as "trustee" on either account. The funds were kept in those accounts until January 9, 1969, when plaintiff consolidated the two accounts into one interest-bearing account. The consolidated account was held in the names of plaintiff and Herbert B. Nechin as joint tenants with the right of survivorship. Herbert Nechin, an attorney with the firm of Brown and Blumberg (formerly Brown, Fox and Blumberg), was substituted for Thane Schwartz, who had died. On March 28, 1974, plaintiff again transferred the funds to a different account at Bell Savings in order to gain a higher rate of interest. This account, which remains in existence, was held by plaintiff and Herbert Nechin as joint tenants with the right of survivorship.
Between 1955 and 1975 plaintiff made distributions to 14 shareholders in the total amount of $967.61. The most recent distribution was in 1975 and it is not likely that any other shareholders will come forward. The balance in the account at the time of trial was $17,636.02.
Plaintiff testified that he never reported on his personal income tax return the interest earned on the funds since he did not own the money. Plaintiff never filed a report with the State Department of Financial Institutions. Plaintiff admitted that he had stated in a letter to the Attorney General that there were no trust agreements in effect and that he was never appointed trustee. However, plaintiff testified that he did not mean to imply to the Attorney General that he did not expect to be compensated for his work. From 1941 to the time of trial plaintiff devoted approximately 94 hours of his time to take care of the funds.
Several exhibits were presented by plaintiff and were admitted into evidence at trial, including the bank books for the four accounts at Bell Savings; a list of the shareholders who could not be found; checks which were written by plaintiff to various shareholders but which were returned to plaintiff; correspondence between plaintiff and various shareholders and attorneys; and an affidavit dated February 25, 1969, in which plaintiff stated that the funds in the savings account at Bell Savings belonged to certain shareholders of liquidated corporations and that plaintiff claimed no ownership rights to the funds.
On September 12, 1978, Daniel C. Ahern, an attorney, filed a petition for allowance of fees stating that he represented plaintiff and he expended 85 1/4 hours of his time in representing plaintiff at trial below; Ahern requested fees at a rate of $75 per hour plus reimbursement for expenses. Eugene L. Resnick, an attorney with Brown and Blumberg, also filed a petition for allowance of fees and expenses, stating that he represented plaintiff in his capacity as trustee and he expended 10 hours of his time; Resnick requested fees at a rate of $75 per hour plus reimbursement of expenses.
On September 12, 1978, the court entered its findings and order. The court found that the fund was an active, express trust; that Thane T. Schwartz designated plaintiff to assume responsibility for the fund and told plaintiff he would be compensated; that plaintiff expended 92 1/2 hours of time in caring for the funds; that a reasonable rate for plaintiff's services was $25 per hour; and that a reasonable rate for attorneys' fees was $60 per hour. The court ordered that the fund be terminated and that the balance of the fund, after the payment of attorneys' fees and fees to plaintiff, be delivered over to the director of the Illinois Department of Financial Institutions. The court entered judgment for plaintiff in the amount of $2,312.50 which was to be paid out of the fund. The court further ...