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06/08/88 Mary Elizabeth Lemp Et Al. v. Carl J. Hauptmann Et Al.

June 8, 1988





525 N.E.2d 203, 170 Ill. App. 3d 753, 121 Ill. Dec. 397 1988.IL.900

Appeal from the Circuit Court of Saline County; the Hon. David Nelson, Judge, presiding.


PRESIDING JUSTICE HARRISON delivered the opinion of the court. CALVO and LEWIS, JJ., concur.


Plaintiffs brought suit in the circuit court of Saline County to recover assets valued in excess of $200,000 which were transferred from Myrtle Hauptmann, decedent, to her son Carl Hauptmann, defendant, and his wife, Margaret. Plaintiffs, the children of William Hauptmann and the grandchildren of decedent, alleged that defendant's acquisition of a power of attorney from decedent established the existence of a fiduciary relationship, that while defendant was in this fiduciary relationship he profited from transactions with the decedent, and that these transactions were thus fraudulent. Plaintiffs asked the court to remedy the fraud in equity by creating a constructive trust over the property obtained by the defendant. Plaintiffs also sought the removal of defendant as the trustee of the decedent's trust, the appointment of a successor trustee, and an accounting from defendant for his actions as trustee.

On January 22 and 23, 1987, the circuit court of Saline County held a hearing on the issues presented in the plaintiffs' petition. At the close of the plaintiffs' case, pursuant to section 2-1110 of the Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2-1110), the circuit court granted defendant's motion for a directed verdict on the basis that the plaintiffs had presented insufficient evidence as a matter of law from which a court could find judgment in their favor.

The facts of the case as presented in the transcript of the proceedings and the common law record are as follows. Defendant was born on November 23, 1920. He married Margaret Hauptmann in 1949, and their marriage produced two children, Kathleen Hauptmann Presley and James Hauptmann. Defendant is a physician and has practiced medicine in Harrisburg, Illinois, since 1945.

Decedent was born in 1894. She married Carl Hauptmann, Sr., and their marriage produced three children: defendant, William Hauptmann, who died July 3, 1971, and John Hauptmann, who died November 9, 1977. William Hauptmann had eight children, seven girls and one son, who are the plaintiffs in this action. John Hauptmann married Dorothy Hauptmann, and their marriage produced four children, David Hauptmann, Thomas Hauptmann, Annette Prather, and Celeste Bybee, who have been added as defendants. Carl Hauptmann, Sr., died on March 18, 1957. Decedent lived in Harrisburg, Illinois, from 1915 until she moved into Styrest Nursing Home on October 27, 1975. From there she entered Finnie Good Shepard Nursing Home in Galatia, Illinois, on August 7, 1976, where she lived until her death on July 7, 1979.

On April 5, 1952, decedent and Carl Hauptmann, Sr., executed their joint will. The will provided for the creation of a trust commencing upon the death of both of the testators or upon the mental incapacitation or the expressed intent of the surviving spouse. The will authorized the trustee to distribute the net income of the Hauptmann's estate through the trust to the trust's beneficiaries. The will prescribed that the trust would terminate upon the death of all three sons and that the trustee would then distribute the corpus of the trust to the surviving grandchildren or their representatives per stirpes. On May 31, 1972, decedent executed a codicil to the joint will designating defendant as the executor of her estate and appointing defendant as trustee of the trust that would commence upon her death.

On November 12, 1975, decedent executed a power of attorney to defendant, which defendant's nephew, David Hauptmann, an attorney in Saline County, drafted and notarized. The power provided, inter alia, that defendant would have the authority to

"transact all [decedent's] ordinary bank business with the banks with which [decedent is] currently doing business; to draw checks on said bank; to endorse checks, promissory notes, drafts and bills of exchange for collection or deposit; to waive demand, notice and notice of protest of all such writings; and to enter any safe deposit boxes [decedent has] at said banks. To sign and deliver checks, drafts or other orders for the payment of money upon said bank, including checks, drafts or orders drawn to or for the account of, [decedent's] said attorney personally, and to draw money thereon; to settle and adjust [decedent's] accounts, including the power to open new accounts or withdraw from and close out any and all accounts with said bank."

Between November 12, 1976, and July 7, 1979, defendant drafted checks totaling $148,000 on decedent's account and named himself as the payee. Decedent and defendant signed the checks both alone and in combination with each other. Defendant also procured the execution of four deeds of land belonging to the decedent which conveyed real estate to himself and his wife. Defendant tendered the nominal consideration of $1 in exchange for the deeds.

The single issue on this appeal is whether the trial court's directed verdict in favor of the defendant at the close of the plaintiffs' case was in error. The plaintiffs assert that the defendant was in a fiduciary relationship with decedent by virtue of decedent's grant of the power of attorney and that the trial court failed to apply the correct legal presumption that any transaction profiting a dominant party in a fiduciary relationship is presumed to be unfair, fraudulent, and the result of undue influence. The plaintiffs contend that the defendant profited from the fiduciary relationship by writing checks on the account of the decedent and deeding land belonging to the decedent to himself, and they assert that since the presumption has shifted to the defendant because of the fiduciary relationship, the defendant must produce clear and convincing evidence showing that he exercised no fraud or undue ...

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