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06/22/87 First Midwest Bank/Joliet, v. John Riley Dempsey

June 22, 1987

NATIONAL BANK AND TRUST COMPANY OF JOLIET, PLAINTIFF AND COUNTERDEFENDANT-APPELLANT AND CROSS-APPELLEE

v.

JOHN RILEY DEMPSEY, D/B/A JODEN INDUSTRIES, A/K/A JODEN INDUSTRIES, INC., ET AL., DEFENDANTS (SALLY DEMPSEY



APPELLATE COURT OF ILLINOIS, THIRD DISTRICT

FIRST MIDWEST BANK/JOLIET, Successor in interest to Union

a/k/a Sarah Ann Dempsey, Defendant and

Counterplaintiff-Appellee and

Cross-Appellant)

No. 3-86-0536

509 N.E.2d 791, 157 Ill. App. 3d 307, 109 Ill. Dec. 130 1987.IL.867

Appeal from the Circuit Court of Will County; the Hon. Herman Haase, Judge, presiding.

APPELLATE Judges:

JUSTICE WOMBACHER delivered the opinion of the court. HEIPLE and SCOTT, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE WOMBACHER

This cause was initiated by First Midwest Bank/Joliet (bank), previously known as Union National Bank, to foreclose on real estate given as collateral to secure a loan made by the bank on a real estate development project. Sarah Ann Dempsey, a/k/a Sally Dempsey (Sally), was named as a defendant by the bank in the foreclosure action.

The foreclosure was summarily granted prior to trial. The only issues which proceeded to trial and which are the subject of this appeal involve the counterclaim of Sally against the bank. The counterclaim alleged that the bank breached certain fiduciary duties owed Sally. The case was tried in Will County and culminated in a judgment in favor of counterplaintiff Sally in the amount of $278,500. The bank appeals the trial court's decision. Sally asserts a cross-appeal. We reverse the trial court's order finding the bank liable and affirm the issues brought to appeal by Sally Dempsey. A summary of the facts is necessary to understand the issues litigated and findings made by the trial court.

Sally Dempsey was one of the beneficiaries of a testamentary trust (trust) established by the will of her grandfather, John Hopkins Riley. The bank was at all material times the trustee of that trust. The bank was to distribute approximately one-half of the trust proceeds on her twenty-fifth birthday, July 6, 1978, and distribute the remaining assets on Sally's thirtieth birthday, when the trust was to terminate.

Subsequent to Sally's twenty-fifth birthday the bank distributed one-half of the principal and accumulated income ($225,000) of the trust to an agency account established on October 5, 1978, at the bank pursuant to the agreements and documents executed by Sally and the bank. The bank continued to act as a trustee on the remaining undistributed assets in the trust.

Prior to the distribution of the trust income into the agency account, Sally Dempsey agreed in the summer of 1978 to invest $100,000 in a family real estate venture called "Joden." Joden was to purchase property in Lemont, Illinois, and sell or develop it. The real estate was owned by the mother-in-law of Sally's brother, John R. Dempsey (John).

Sally Dempsey, her brother, and her father, Dr. Raymond Dempsey (Dr. Dempsey), had previously discussed the acquisition of the property. In September of 1978 a real estate contract had been signed by John and the seller of the real estate (John's mother-in-law, Mrs. Mocny) for one million dollars. The bank made a loan dated December 14, 1978, of $650,000, secured by the real estate, ...


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