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Heller v. Jonathan Investments





Appeal from the Circuit Court of Cook County; the Hon. Richard R. Curry, Judge, presiding. JUSTICE LINN DELIVERED THE OPINION OF THE COURT:

Plaintiff brought an action for rescission of two real estate deeds and the imposition of a constructive trust, claiming that the deeds were executed under duress exerted upon him by decedent in breach of their fiduciary relationship. The action was brought subsequent to decedent's death, some four years after the execution of the deeds.

At trial, certain evidence was excluded on the basis of hearsay and the Dead Man's Act (Ill. Rev. Stat. 1981, ch. 110, par. 8-201). Defendant, decedent's corporation, moved for a directed finding at the close of plaintiff's case pursuant to section 2-1110 of the Code of Civil Procedure (Ill. Rev. Stat. 1981, ch. 110, par. 2-1110). The trial court, finding that plaintiff had failed to present such "clear and convincing" evidence as is needed to set aside a deed, granted defendant's motion. Plaintiff now appeals.

We reverse the decision of the trial court and remand for further proceedings.


In 1973, plaintiff, Theodore R. Heller, was appointed executor of his father's estate and received three parcels of property as a residuary trustee under a trust created under his father's will. Only two of those parcels are at issue here. Those two properties were appraised in 1973 at values of $85,700 and $34,500, respectively.

Pursuant to the terms of his father's will, plaintiff was to assume management of the two properties. Management duties included the collection of rents, the payment of expenses, the negotiation of leases, the arrangement for repairs, and the general maintenance of the buildings. Prior to his father's death, plaintiff, whose lifetime occupation had been that of a supervisor in the department of consumer sales, weights, and measures for the city of Chicago, had never managed commercial real estate nor performed any of the managerial duties expected of him.

Shortly after assuming management of the properties, plaintiff began having serious problems with his buildings and turned to the decedent, John Reynolds, for advice. Reynolds, at that time, was in the real estate business. Plaintiff consulted with Reynolds with increasing frequency subsequent to assuming management of the properties.

In 1975, one of the properties under plaintiff's management received a report citing it with a myriad of building code violations. At a loss as to how to handle the situation, plaintiff again turned to Reynolds for help. In reliance on Reynolds' advice, plaintiff later changed attorneys and hired a different accountant.

In 1976, plaintiff was seriously injured in an auto accident and required several operations. In December 1976, Reynolds formed Jonathan Investments, Inc., an Illinois corporation of which he was the director, president, and sole stockholder until his death in 1982. Reynolds' daughter, defendant Gerri Sue Livers, served as the corporation's secretary. After undergoing an operation in November 1977, plaintiff was permanently disabled. At that time, plaintiff turned over the control, operation, and management of the two properties to Reynolds.

Adam Bourgeois, an attorney who represented one of the lessees of the subject properties, testified that in May 1978, he entered into discussions with plaintiff and Reynolds for the purpose of negotiating a lease. Plaintiff told him to continue negotiations with Reynolds, with whom Bourgeois had further conversations. Bourgeois' testimony was corroborated by that of plaintiff, who testified that as of November 1977, Reynolds negotiated leases and gave instructions to attorneys in connection with the subject properties.

Milton Tornheim, the attorney who incorporated Jonathan Investments, Inc., in 1976, testified that he had seen plaintiff and decedent together and had heard their conversations and observed their conduct prior to the execution of the deeds in 1978. Tornheim stated that the decedent treated plaintiff, in regards to business, as if he were an incompetent.

In December 1978, plaintiff executed two quitclaim deeds, conveying the two properties at issue to defendant, Jonathan Investments, Inc. Plaintiff testified that he received no consideration for the transfer of the two properties and that he executed the deeds because the decedent had placed him "in fear of [his] life." Plaintiff stated that he had at one time considered Reynolds a friend but that he ceased considering him as such early in 1978 when Reynolds began to "beat and bulldoze" him. Plaintiff testified that Reynolds began in 1977 to advise him but that gradually the advice became more and more coercive, until Reynolds told plaintiff he was a "dumb [S.O.B.]" and took over management of the properties, telling plaintiff who to write checks to, who to hire, and how to maintain the buildings.

Subsequent to the execution of the deeds, plaintiff turned over the ledger books and the checkbook for his trust to Reynolds. Plaintiff continued to collect rents, check the premises, and do repairs on the buildings. Plaintiff testified that he was never paid by Jonathan Investments, Inc., for the services he performed.

Evidence was introduced of a check for $25,000 made out to plaintiff and signed by Reynolds. Plaintiff stated that he cashed the check, deposited $12,500 into his account, and gave the other $12,500 to Reynolds, upon his direction. Plaintiff testified to receiving various checks from defendant for expenses related to the properties. Other evidence introduced at trial included a check in the amount of $7,824.26 payable to Reynolds and dated December 8, 1978, two days after the execution of the deeds, written on plaintiff's trust account and signed by plaintiff. The check stub reads, "For merged interest on merged notes 1972 thru 1975-1976-1977 thru and including December 8, 1978, total $60,000 accrued." The trust ledger book contains a corresponding entry dated December 8, 1978, which reads, "Borrowed money interest ...

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