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02/08/88 Kenneth K. Getty Et Al., v. Charleen H. Hunter

February 8, 1988





Ohio Casualty Insurance Company, Plaintiff;

Charleen H. Hunter et al., Defendants)

519 N.E.2d 1040, 166 Ill. App. 3d 453, 116 Ill. Dec. 825 1988.IL.151

Appeal from the Circuit Court of Cook County; the Hon. Albert S. Porter, Judge, presiding.


PRESIDING JUSTICE CAMPBELL delivered the opinion of the court. QUINLAN and MANNING, JJ., concur.


Plaintiffs, Kenneth K. Getty (Getty) and Kenneth K. Getty, Inc. (KKG, Inc.), appeal from the dismissal of count I of their amended complaint, which sought the imposition of a constructive trust on a three-unit apartment building, located at 1339 S. Marengo, Forest Park, Illinois (the Marengo property), which was held in a land trust by Western National Bank of Cicero (Western National). Plaintiffs filed their complaint against Western National, as trustee of the land trust; Charleen H. Hunter, as sole beneficiary of the land trust; and Fred H. Schlange, the attorney who had placed the Marengo property in the land trust. The sole issue on appeal is whether the trial court properly dismissed count I of the amended complaint. *fn1

The pleadings set forth the following events which resulted in this appeal. In 1972, Getty acquired an undivided one-half fee simple interest in the Marengo property from Mr. and Mrs. Solone. In that same year, Getty incorporated KKG, Inc., an insurance brokerage firm, and hired defendant Hunter. In January 1978, the Solones offered to convey their remaining one-half interest in the Marengo property to Getty. Defendant Schlange, Getty's attorney, advised Getty to convey the Marengo property to a land trust. Accordingly, in March 1978, Getty conveyed ownership of the Marengo property into the land trust established with Western National. In his original complaint, subsequently incorporated into the amended complaint, Getty indicated his reasons for putting title to the Marengo property in a land trust:

"[Shortly] before the conveyance . . ., a meeting was had at which [Getty] . . . [Hunter and Schlange] were present . . . and that during the course of the meeting, . . . Schlange advised [Getty] that it would be in his best interest to allow . . . Hunter to hold the entire beneficial interest in the said land trust and in this way attempt to defeat the claims of [Getty's] creditors and spouse, and further that it was agreed by and between the parties that . . . Hunter would secretly execute an undated Direction and Amendment to Trust Agreement assigning her beneficial interest in the said trust to [Getty] but that [Getty] would not present the said letter of direction to the trustee until such time as his personal financial problems were settled . . .."

Thereafter, on March 9, 1979, Getty dated the letter of direction and presented it to the trustee. On May 10, 1979, the trustee returned the letter of direction to Getty, stating that Hunter had disavowed the execution of the document. After repeated unsuccessful attempts to have Hunter acknowledge the letter of direction, on July 6, 1979, Getty filed his original complaint against Hunter and Schlange, seeking imposition of a constructive trust on the Marengo property. Getty alleged that Schlange improperly represented him in setting up the land trust and that Schlange and Hunter had entered into a conspiracy to divest him of all of his interest in the Marengo property.

On July 13, 1979, Getty amended his complaint, adding KKG, Inc., as a plaintiff as well as allegations in support of a request for an accounting and restitution of funds allegedly misappropriated from KKG, Inc., by Schlange and Hunter (count II). Count II is not a subject of this appeal. On November 1, 1978, Hunter filed her motion to dismiss count I on the grounds that the equitable doctrine of "unclean hands" estopped Getty from seeking a constructive trust on property that he had conveyed for admittedly fraudulent purposes. The record contains no ruling on this motion. On the same date, Hunter also filed a counterclaim against Getty and KKG, Inc., seeking an accounting and other relief with respect to various business dealings between the parties which are not pertinent to this appeal. Thereafter, on March 5, 1980, Ohio Casualty Company filed suit against Hunter, Getty and Schlange, alleging that they had conspired to defraud Ohio by filing a fictitious insurance claim. On Getty's motion, the Ohio Casualty suit was consolidated with Getty's suit and Hunter's counterclaim.

On March 25, 1981, Hunter moved for summary judgment or, in the alternative, for dismissal with prejudice of Getty's count I, which sought imposition of a constructive trust. Hunter's position was predicated on Getty's own admission in his complaint that his conveyance of the beneficial interest in the land trust to Hunter was purposefully done to defeat Getty's creditors and his spouse. Hunter denied that she had known of the fraudulent nature of the conveyance and claimed that the beneficial interest was conveyed to her for good and valuable consideration. On July 1, 1981, the trial court granted Hunter's motion to dismiss with prejudice count I of the amended complaint "on the ground that the plaintiff Getty is not entitled to equitable relief from the fraudulent conveyance in which he voluntarily participated, and the Court so finds that the conveyance by Getty was fraudulent and voluntary on his part."

Following numerous motions and continuances, on February 21, 1985, the trial court entered an order with respect to both count II of Getty's amended complaint and Ohio Casualty's complaint, ruling: (1) count II -- judgment entered in favor of Schlange and Hunter; and (2) Ohio Casualty's complaint -- Hunter released from liability; judgment entered ...

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