WILLIAM L. KLASKIN, adm'r of the estate of VIRGIL ROBERT
534 N.E.2d 971, 126 Ill. 2d 376, 128 Ill. Dec. 536
Appeal from the Appellate Court for the First District; heard in that court on appeal from the Circuit Court of Cook County, the Hon. HENRY A. BUDZINSKI, Judge, presiding. 1989.IL.117
JUSTICE WARD delivered the opinion of the court.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE WARD
William L. Klaskin, administrator of the estate of Virgil Robert Woodruff, brought a citation proceeding against Ralla Klepak to recover title to a condominium unit which the decedent held in a land trust at the time of his death. The land trust agreement specified that the decedent's beneficial interest in the trust would pass to Klepak at the time of his death. The administrator alleged that Klepak acted as the decedent's attorney when he purchased the condominium unit and established the land trust, and that she acquired an interest as successor beneficiary of the land trust by exerting undue influence over the decedent. The circuit court, following a four-day bench trial, held in the estate's favor. The circuit court concluded that Klepak and Woodruff maintained an attorney-client relationship at the time the land trust was established and that Klepak failed to present clear and convincing evidence to rebut the presumption of undue influence which arises when an attorney benefits from a transaction with a client during the existence of such a relationship. The appellate court, with one Judge Dissenting, reversed, holding that the circuit court's decision was contrary to the manifest weight of the evidence. Although the appellate court agreed that an attorney-client relationship existed, the court concluded that Klepak had produced sufficient evidence to rebut the presumption of undue influence. (164 Ill. App. 3d 791.) We allowed the administrator's petition for leave to appeal from the appellate court's judgment (107 Ill. 2d R. 315).
Because the appellate court held that the trial court's judgment was contrary to the manifest weight of the evidence, the facts and evidence adduced at trial must be discussed in detail. The decedent, Woodruff, died on May 29, 1984, at the age of 54. He was a bachelor, had never married and had no living issue. His only heirs were two maternal aunts and one paternal cousin. At the time of his death, the decedent resided in a condominium unit in the John Hancock Building in Chicago, which he had purchased in October 1973, approximately 11 years before his death. Title to the condominium unit was held by Upper Avenue National Bank (the bank) as trustee under a land trust agreement identified as trust No. 10214. (The name of the trustee bank was subsequently changed from Upper Avenue National Bank to the Lake Shore Bank.) The trust agreement provided that the beneficial interest in the real estate would remain in Woodruff for life and then pass to Ralla Klepak upon his death, or to Woodruff's estate if Klepak predeceased him. Klepak took possession of the condominium shortly after Woodruff's death and has had sole use and possession of the premises since that time.
Klepak, an attorney, met Woodruff in 1966 when she represented him in a criminal misdemeanor proceeding. Although their relationship began as attorney and client, it developed into one of friendship. They dined, attended operas and vacationed together. Klepak testified that she and Woodruff socialized about once a month until three years before Woodruff's death.
Prior to his death, Woodruff retained Klepak in her capacity as an attorney to represent his interest in various legal and personal matters. Klepak testified that she incorporated Woodruff's business in 1977 and prepared a quitclaim deed transferring certain Texas real estate from Woodruff to his cousin in 1983. The evidence also suggests that Klepak represented Woodruff in a proceeding against his former landlord in 1969.
Klepak denied, however, that she and Woodruff maintained an attorney-client relationship in October 1973, when Woodruff purchased the condominium unit. She claimed that she told Woodruff that she could not represent him in that matter because she was unqualified in real estate law. She testified that she referred Woodruff to Ralph Goren, the attorney who represented Woodruff at the closing.
Klepak's unequivocal denial that she represented Woodruff when he purchased the condominium must be evaluated in light of the evidence adduced at trial to prove that an attorney-client relationship existed. The chronology of events relating to Woodruff's purchase of the condominium is well documented by correspondence and mortgage and closing documents.
On July 23, 1973, Woodruff signed an application to purchase the condominium unit which he was then leasing in the John Hancock Building, made a $1,000 earnest money deposit with the seller, and applied for a mortgage at Upper Avenue National Bank. In the mortgage application Woodruff indicated that Klepak was his attorney.
Klepak reviewed the purchase contract for the condominium at Woodruff's request and advised him to purchase the condominium. At trial, Klepak produced a copy of the purchase contract signed by Woodruff from a file she maintained for services she rendered to Woodruff. Woodruff deposited the balance of earnest money required by the contract on August 16, 1973. On August 28, 1973, Klepak wrote the first of a series of letters regarding the land trust into which title to the condominium was transferred. In this letter, she advised the bank "that my client, Mr. Woodruff, will take title to the above referenced land trust with your bank as trustee." In this letter, Klepak made specific reference to the number of the yet-to-be-formed land trust and requested the forms needed to set up the trust. The bank sent the requested documents to Klepak on August 30.
On September 4, 1973, the seller sent Woodruff an executed copy of the purchase contract for the condominium unit. Klepak produced this executed purchase contract at trial from the file she maintained. On September 5, the bank sent Klepak the mortgage documents used in connection with the condominium purchase. On September 10, 1973, Klepak wrote a letter to the bank, stating that she found the documents in order and would "request that my client execute the same." That same day, she sent the mortgage documents to Woodruff, advising him to sign the "documents which have been prepared by the bank and which I have reviewed." She also enclosed a title company judgment affidavit for his signature with instructions for completion of the affidavit.
On September 26, 1973, the seller's attorneys wrote a letter to Klepak which described the procedure to be followed at the closing. In the letter, the attorneys stated that they were informed that Klepak represented Woodruff, that Woodruff asked the sellers to communicate with him through Klepak and to forward all documents to her. Klepak did not respond to the letter or indicate that she did not represent Woodruff.
On October 5, a $2,130.04 check from the "Ralla Klepak Client's Funds Account" was deposited in the closing escrow at Chicago Title and Trust. Klepak admitted at trial that she loaned Woodruff money for the down payment on the condominium from her client's funds account and that no ...