The opinion of the court was delivered by: Justice Cousins
THE HONORABLE THOMAS A. HETT AND DOROTHY K. KINNAIRD JUDGES PRESIDING
APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY No. 93 CH 10972
Marcia Rubin, one of the plaintiffs in this case, is the sole beneficiary of a trust (Mitchell Trust) created under the will of her father, Mitchell Nechtow. Along with her children, she is also a beneficiary of a trust (Marion Trust) created under the will of her mother, Marion Nechtow. Jules Laser, the defendant, was the executor of both wills and the trustee for both trusts. The Mitchell Trust started with about $710,000, and the Marion Trust started with about $240,000.
In 1993, Laser resigned as trustee, and the plaintiffs, Marcia Rubin, her children Michelle and Jason Gorchow and the successor trustee, Steven Rubin, brought suit alleging multiple improprieties in Laser's administration of the trusts.
The trial court granted summary judgment for Laser on three counts of the complaint. The plaintiffs appeal the award of summary judgment on those counts, pursuant to the trial court's finding under Supreme Court Rule 304(a) (134 Ill. 2d R. 304(a)) that there was no just reason to delay an appeal.
The plaintiffs contend that the trial court erred by holding that:
(1) Laser's duty of loyalty as a trustee did not obligate him to make additional purchases for the trust of a particular stock in which Laser and the trust already had holdings; (2) the plaintiffs' claim for breach of a stock redemption agreement had been released by an agreement with Laser; and (3) the release had not been procured by duress.
The counts that form the basis of this appeal all involve Laser's investments, both personal and in his capacity as trustee, in the First State Bank and Trust Company of Park Ridge (Park Ridge Bank).
In 1975, Laser became aware of an opportunity to buy the Park Ridge Bank. He put together a group of investors, mainly from among his law partners, who could provide the $1.1 million in capital needed. He bought 7,450 shares of stock for himself and 1,603 shares for one the trusts, representing 7.11% and 1.53% of the outstanding shares, respectively. Financing for the deal was put together by Continental Bank. The plaintiffs allege that Laser used the trust assets as collateral for the loans. In any case, soon after the loans were approved, Laser moved the bulk of the trust assets to the Continental Bank.
Laser and his partners received a certain amount of stock as compensation for the services rendered in connection with the purchase of Park Ridge Bank. The amount of stock going to each individual partner was calculated on the basis of the amount of stock that the person had previously purchased. The plaintiffs allege that Laser used the stock he purchased on behalf of the trust in calculating the amount of stock to which he was entitled as compensation.
From the beginning, Laser and his partners had planned to put together a bank holding company. To get approval for this from the Federal Deposit Insurance Corporation, the investors needed more capital. The plaintiffs claim it was in consideration of Laser's deposit of the trust assets in Continental Bank that Continental Bank assisted with the financing for the holding company as well as subsequent Park Ridge Bank stock purchases by Laser.
The investors signed a voting trust agreement, which gave Laser and his law partners authority to vote on behalf of the entire group. Laser and his partners adopted a no-dividend policy in order to promote long- term growth.
The investors also signed a stock redemption agreement. This agreement provided that any shareholder who wished to sell his or her stock was required first to offer it to the other shareholders. The other shareholders could purchase a pro rata portion of the available stock based on their current holdings. In this way, the balance of power among the remaining shareholders could be maintained.
Laser acted as chairman of the board of directors of the bank and received substantial compensation for his services. His law firm handled Park Ridge Bank's normal legal work.
The Park Ridge Bank was operated as a private, closely held corporation. The plaintiffs claim that Laser controlled the market for shares. Laser bought stock from other shareholders; however, the sellers did not tell the others as mandated by the stock redemption agreement. Laser neither informed the beneficiaries of these purchases nor bought any stock for the trusts, although it is alleged that he knew the stock was worth much more than he was paying for it. It is also alleged that Laser violated the stock redemption agreement by selling stock without notifying other shareholders.
Plaintiffs allege that Laser failed to segregate the trust funds starting in the late 1970s. After 1987, they contend, he stopped filing separate tax returns for the two trusts and treated the Mitchell Trust as containing all the funds. Plaintiffs contend there has been some difficulty reconstructing where all the ...