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12/06/89 Joseph Pedott, v. Harry Dorman Et Al.

December 6, 1989





MEYER SAMUEL PEDOTT, Deceased, Intervening, Plaintiff-Appellee; JOSEPH PEDOTT et al., Defendants-Appellees)

548 N.E.2d 541, 192 Ill. App. 3d 85, 139 Ill. Dec. 156 1989.IL.1890

Appeal from the Circuit Court of Cook County; the Hon. Kenneth L. Gillis, Judge, presiding.


PRESIDING JUSTICE FREEMAN delivered the opinion of the court. RIZZI and WHITE, JJ., concur.


Plaintiff, Joseph Pedott, sued defendants, Harry and Selma Dorman, and Central National Bank in Chicago , for, inter alia, rescission of an assignment of his beneficial interest in a land trust to defendants Dorman. The First National Bank of Chicago (Intervenor), as executor of the last will of Meyer S. Pedott, plaintiff and defendant Selma Dorman's father, intervened in the action to collect on a promissory note executed by CNB, as land trustee, and by the Dormans as guarantors. After a bench trial, the court entered judgment for plaintiff, inter alia, rescinding the assignment of beneficial interest. The court also entered judgment for intervenor on the promissory note. Harry Dorman (hereinafter defendant, Selma Dorman having deceased), appeals from the judgments for plaintiff and intervenor. Plaintiff cross-appeals the entry of judgment for intervenor against the land trust involved in this litigation.

Plaintiff's complaint contained the following allegations material to this appeal. He assigned to the Dormans his beneficial interest in a three-story brick building located at 4842 North Ridgeway in Chicago (the premises) held in trust by CNB. He did so at the Dormans' request and that of Meyer Pedott and in consideration of Meyer Pedott's promise to bequeath his estate equally to his three children and Selma Dorman's promise to share the estate equally amongst them. After Meyer Pedott executed a will to that effect, the Dormans conspired to induce him through the exercise of undue influence to disinherit plaintiff. Meyer Pedott executed codicils to his will which disinherited plaintiff when Meyer Pedott died in 1979. Pursuant to a will contest instituted by plaintiff, the codicils were not admitted to probate. The actions of the Dormans constituted a breach of their promises and resulted in a failure of consideration for the assignment of the beneficial interest in the premises.

At trial, the following facts relevant to plaintiff's action against defendants were either stipulated to or revealed by the testimony, as found by the trial court. In March 1961, Meyer Pedott purchased the premises for $36,500 and held title thereto in his name. In January 1962, Meyer Pedott conveyed the premises in trust to CNB as trustee. Plaintiff was given the beneficial interest in and power of direction over the trust. Meyer Pedott died in 1979. Selma Dorman was afflicted with multiple sclerosis. One of the purposes, if not the key purpose, of Meyer Pedott's purchase of the premises was to provide rent-free shelter for Selma and her family for as long as she lived. Selma and her family lived on the premises rent-free, collected rents and accounted for income and expenses to plaintiff from 1962 to 1977. On June 14, 1976, Meyer Pedott executed a will bequeathing his estate to his three children, equally. On June 16, 1976, plaintiff assigned his beneficial interest in the premises to the Dormans at the request of the Dormans and Meyer Pedott. Plaintiff also shared the power of direction with the Dormans. The assignment was made without consideration. Subsequently, Meyer Pedott executed a will substantially the same as the June 14, 1976, will but later added two codicils, dated May 13, 1977, and December 10, 1977, which effectively disinherited plaintiff to Selma's benefit.

Intervenor's complaint contained the following allegations material to this appeal. Intervenor came into possession in 1982 of a promissory note executed by CNB, in 1962, as land trustee of the premises. The note provided for payment by CNB from the trust estate. CNB also executed a trust deed to Chicago Title and Trust Company as security for the note. CNB executed the note and trust deed pursuant to a letter of direction from plaintiff. The Dormans executed the note as guarantors. The note evidenced an intent to create a mortgage upon the premises. The note had not been paid.

With respect to plaintiff's action for rescission, the trial court concluded that Meyer Pedott's execution of the June 14, 1976, will, and plaintiff's June 16, 1976, assignment to the Dormans of the beneficial interest in the premises had to be considered together. The court further concluded that Selma "impinged upon Meyer S. Pedott's free will" and caused him to change his will to plaintiff's detriment. It further found that Selma had "integrated the change of assignment in beneficial interest to totally and substantially change what Meyer S. Pedott had intended, a situation that totally benefitted her."

Intervenor's evidence at trial substantiated all of its factual allegations regarding the execution of the note. In addition to making factual findings in accordance therewith, the trial court expressed its opinion that one of the keys in the case was defendant's credibility. The court expressed its disbelief of defendant's inability to recall signing the note and of his contention that he paid $4,000 toward the purchase of the premises in 1961. The court noted the admissions of plaintiff, defendant and CNB that they made no payments on the note and then found intervenor's action valid, subject to the statute of limitations. The court rejected defendant's affirmative defenses of waiver and laches. The court concluded that, although the trust deed given to secure the note by a pledge of the premises as security had not been recorded, the note should stand as an equitable lien against the premises. Finally, the court found intervenor's attorney fees to be an obligation of defendant and CNB as trustee. The court entered judgment accordingly.


On appeal, defendant raises three grounds for reversal of the judgment for plaintiff. He first asserts that plaintiff failed to establish by the requisite standard of proof, viz., clear and convincing evidence, any recognized ground for rescission of the assignment of beneficial interest, which is absolute and unconditional on its face. Defendant asserts that plaintiff failed to prove the elements of a claim for fraud and deceit, i.e., misrepresentations of material facts with ...

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