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12/10/87 In Re Estate of Virgil Robert Woodruff

December 10, 1987

IN RE ESTATE OF VIRGIL ROBERT WOODRUFF, DECEASED (WILLIAM


APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FOURTH DIVISION

L. Klaskin, Adm'r of the Estate of Virgil Robert

Woodruff, Deceased, Petitioner-Appellee, v.

Ralla Klepak, Respondent-Appellant)

518 N.E.2d 295, 164 Ill. App. 3d 791, 115 Ill. Dec. 770 1987.IL.1818

Appeal from the Circuit Court of Cook County; the Hon. Henry Budzinski, Judge, presiding.

APPELLATE Judges:

JUSTICE JOHNSON delivered the judgment of the court. LINN, J., concurs. JUSTICE JIGANTI, Dissenting.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE JOHNSON

This proceeding was instituted by petitioner William L. Klaskin, the administrator of the estate of Virgil Robert Woodruff, to recover a condominium unit which was placed in a land trust by the decedent. Respondent, Ralla Klepak, is the contingent beneficiary of the land trust, an attorney and personal friend of the decedent. After a bench trial, the trial court found that respondent had not overcome the presumption of fraud and entered an order requiring respondent to convey her interest in the condominium to the estate and to account for all profits received therefrom. Respondent appeals, raising the single issue of whether the trial court erred in finding that insufficient evidence was presented to overcome the legal presumption of fraud.

We reverse.

The record reveals that the decedent died on May 29, 1984, at the age of 54. He was a bachelor, having no issue. His only collateral heirs were two maternal aunts living in the State of Texas and one paternal cousin. Decedent resided at 175 E. Delaware Place, a condominium unit in the John Hancock building, which he purchased October 10, 1973. At the time of his death title to the condominium unit was held by the Upper Avenue National Bank, as trustee, under a land trust agreement dated September 2, 1973, known as trust number 10214. Between the time of the purchase and the present, the name of the trustee bank was changed from Upper Avenue Bank to Lake Shore Bank. The trust agreement at issue provided that decedent was the owner of the beneficial interest during his lifetime and then to Ralla Klepak, provided she was living and if not, then to his estate. Other than two collateral assignments of the beneficial interest of the trust to secure personal loans to the decedent by Lake Shore Bank, the trust was not modified or changed during its 11-year existence.

Respondent is an attorney licensed to practice law in the State of Illinois. She testified that she met the decedent in 1966 or 1967, when she represented him in a criminal misdemeanor case. They socialized on a regular basis, approximately once a month. Together they dined, attended the opera, spent weekends, and vacationed.

The law is well settled that conveyances by a client to his attorney are presumed to be fraudulent. If the relationship of attorney and client exists and the attorney received anything of benefit thereby, either by purchase from the client, gift, or by acquiring interests contrary to the interests of the client, the burden is on the attorney to show the fairness of the transaction, that it was equitable and just, and that it did not proceed from undue influence. (In re Saladino (1978), 71 Ill. 2d 263, 270, 375 N.E.2d 102, 104.) Undue influence is defined as "any improper . . . urgency of persuasion whereby the will of a person is overpowered and he is induced to do or forbear an act which he would not do or would do if left to act freely." (Powell v. Bechtel (1930), 340 Ill. 330, 338.) Although the courts closely scrutinize dealings between an attorney and his clients, an attorney is not prohibited from contracting or getting benefits from a client, where the transaction is open, fair and honest, when deliberately made and not tainted with fraud, undue influence or corruption. Saladino, 71 Ill. 2d at 270, 375 N.E.2d at 104; McFail v. Braden (1960), 19 Ill. 2d 108, 117, 166 N.E.2d 46, 52.

The supreme court clarified the rules regarding presumptions and burdens of proof in cases involving transactions between fiduciaries in Franciscan Sisters Health Care Corp. v. Dean (1983), 95 Ill. 2d 452, 448 N.E.2d 872. There, the court determined that when an attorney presents sufficient evidence to rebut the presumption, the presumption vanishes. The party seeking to set aside the transaction then bears the burden of persuading the trier of fact that the transaction sought to be set aside was brought about by fraud or undue influence. Thus, such actions require a three-tiered inquiry on review: (1) whether plaintiff established a prima facie case of undue influence; (2) if the prima facie case was established, whether defendants introduced evidence sufficient to rebut the resultant presumption; and (3) if the rebuttal evidence was sufficient, ...


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