Hanford v. Prouty

• Decision Date: 14 May 1890
• Citation: 24 N.E. 565,133 Ill. 339
• Parties: HANFORD et al. v. PROUTY et al.
• Court: Illinois Supreme Court

133 Ill. 339

24 N.E. 565

HANFORD et al.

v.PROUTY et al.¹

Supreme Court of Illinois.

May 14, 1890.

Appeal from appellate court, first district.

Petition by Charles B. Prouty, assignee of Emma E. Burgess, insolvent, and various creditors of said insolvent, to contest the validity of the lien of executions issued against said insolvent upon judgments in favor of Emma B. Hanford and Harry Eaton. Defendants appeal.

Matthew P. Brady, for appellants.

Weigley, Bulkley & Gray, Charles S. Thornton, and Bayley & Waldo, for appellees.

BAILEY, J.

On the 27th day of April, 1870, Charles A. Eaton died, leaving a last will and testament, and leaving, him surviving, his widow, Emma E. Eaton, and two children, Emma B. Eaton, then thirteen years of age, and Harry Eaton, then of the age of six years. Charles A. Eaton, at the time of his death, was a partner in the firm of Eaton & Abbey, dealers in guns, fishing tackle, etc.; his interest in the assets of the firm, as estimated in the inventory filed by his executrix, being worth $16,969.10. By his last will, he bequeathed one-third of all his property to his widow, and one-third to each of his children, and appointed his widow as his executrix. By a codicil to his will, he provided that his executrix might continue said business either in her own name or as copartner with others, and might sell or dispose of any or all of his property at public or private sale, as she might deem most for the interest of herself and children. Said will and codicil were duly admitted to probate by the county court of Cook county; and on the 6th day of May, 1870, letters testamentary were issued to said executrix. The business of said firm was continued by Mrs. Eaton and the surviving partner until August 7, 1870, at which date Mrs. Eaton purchased the interest of the surviving partner for $8,000, paying therefor $7,000 of her own money, which she had realized from certain policies of insurance on the life of her husband, and giving her individual promissory note for $1,000, due in 30 days. After such purchase, Mrs. Eaton carried on said business under the name and style of ‘E. E. Eaton,’ and continued to carry it on under that name and style for nearly 16 years; that is to say, until June 22, 1886. The stock of goods, and all other tangible property, employed in said business, were totally destroyed by the great Chicago fire of October 9, 1871; but Mrs. Eaton, having realized $17,000 from the insurance of the property destroyed, and having collected $6,000 from book-accounts, resumed business, and afterwards paid off all her then existing liabilities, which amounted to nearly or quite as much as her then existing capital. In the year 1871, Mrs. Eaton married Alonzo Burgess, who became her business manager, and continued to act in that capacity until June, 1885, when he was partially superseded by Charles B. Prouty; and on the 1st day of December, 1885, he was entirely superseded by Prouty. Burgess, during the time he managed the business, drew out a salary at the rate of about $1,200 per year, and it also appears that Mrs. Eaton, now Mrs. Burgess, drew out of said business, during the time she carried it on, at the rate of nearly $4,000 per year, making in all a little over $60,000. Both of Mrs. Burgess' children lived with their mother and step-father as members of the family, and were supported and educated by Mrs. Burgess, and at her own expense, until the date of her settlement with them as hereinafter stated. No account was kept by Mrs. Burgess with either of said children, and no payment was ever made to either of them on account of their interest in the estate of their father, or on account of the profits realized from said business; and no charge was ever made by her against either of them for their maintenance or education. The evidence renders it probable, however, that a large portion of the moneys annually withdrawn by Mrs. Burgess from her business was used for family expenses, including the expense of educating and maintaining her children.

In April, 1885, Emma B. Eaton was about to be married to Frederick C. Hanford; and then, at the instance of her intended husband, she for the first time asked her mother for a settlement, as executrix and trustee, of her interest in the estate of her father, and also notified her brother that she had applied for such settlement. Negotiations ensued, which on the 16th day of April, 1885, resulted in a settlement between Mrs. Burgess and her children upon the following terms: She agreed to pay each of them the sum of $6,000 in satisfaction and discharge of her liability to them on account of the estate of their father, and for a transfer and assignment by them to her of all their right, title, and interest in said estate. Mrs. Burgess thereupon executed and delivered to her daughter her promissory note for $6,000, dated April 16, 1885, payable three years after date, with interest at the rate of 6 per cent. per annum, and also executed a warrant of attorney authorizing the entry of judgment upon said note by confession at any time after its date. In consideration of said note and warrant of attorney, said Emma B. Eaton at the same date executed, under her hand and seal, an instrument by which she released and forever discharged Mrs. Burgess, as executor and guardian under and by virtue of the last will of Charles A. Eaton, deceased, and the codicil thereto, of and from all actions, causes of action, controversies, claims, and demands whatsoever, for, on account, or by reason of all the rights, interests, or claims of the releasor, of any kind or character, respecting or touching the personal property, assets, or estate of or belonging to her, under and by virtue of said last will and codicil. At the same time, and for the same consideration, she executed under her hand and seal, and delivered to Mrs. Burgess, another instrument, in and by which she sold, assigned, and transferred to Mrs. Burgess all her right, title, and interest in and to the assets, personal effects, and business of the store and business then and theretofore carried on under the name and style of ‘E. E. Eaton,’ and in and to all the personal property of every name and description of or belonging to the assignor under and by virtue of the last will and codicil of her father, Charles A. Eaton, deceased, and all her right, title, and interest to be derived in any form from said estate, or under and by virtue of said last will and codicil, excepting only her undivided interest of one-third in and to the real estate of or belonging to the estate of her said father, and devised to her by said last will and codicil. At the time said settlement was made, Harry Eaton was not of age, and the consummation of the settlement as to him was therefore postponed until after his twenty-first birthday; and accordingly, on the 11th day of December, 1885, he havingthen attained his majority, his mother executed to him her judgment note for $6,000, and he executed to her a release and assignment substantially identical with those previously executed by his sister. Both of said judgment notes, at the time they were executed, were placed by the payees in the hands of Charles B. Prouty for safe-keeping; and they were deposited by him in his private box in the vault of the Fidelity Safety Deposit Company, where he kept his private papers. Prouty seems to have been an old friend of Mrs. Burgess and her children, having been connected with Mr. Eaton's business from boyhood. He had then been recently given the position of manager of Mrs. Burgess' business; but the place where said notes were kept had no connection with the store or business, and they were kept there for the accommodation of the payees, and because it was considered a safe place of deposit.

It appears that Frederick C. Hanford, who had in the mean time married Emma B. Eaton, acting on behalf of his wife, made inquiries of Prouty, from time to time, as to the condition of Mrs. Burgess' business, and that on the 21st day of June 1886, in response to an inquiry of that character, Prouty exhibited to him a statement taken from the books of the concern by the book-keeper, which, in the opinion of Hanford, made an unsatisfactory showing. Hanfords, the following night, in consequence of the information derived from said statement, advised his wife to consult Grant & Brady, the attorneys who were employed by the parties on the occasion of the settlement between Mrs. Burgess and her children, and who seem to have been the regular legal advisers of Mrs. Burgess and her family, and do as they might advise. On the following morning, both Mrs. Hanford and Harry Eaton requested Prouty to place their notes in the hands of Grant & Brady, which he did in the early part of that day. Harry Eaton, at the time he made such request, does not seem to have been aware of the purpose for which his note was to be placed in Grant & Brady's hands; but he explained to Prouty that he wished to do whatever his sister did. On the same day, Mrs. Hanford and Harry Eaton went to the office of Grant & Brady; and, as the result of the consultation there had, judgments were entered up on said notes that afternoon, and executions thereon placed in the hands of the sheriff, who the same day levied said executions on the stock of goods in Mrs. Burgess' store. On the forenoon of the next day, June 23d, Mrs. Burgess executed to said Prouty, as assignee, a general assignment of her property for the benefit of her creditors; said assignment also having been drawn up by Grant & Brady, and having been executed under their advice. The assignment, on the day it was executed, was duly filed in the county court of Cook county. On the 14th day of July, 1886, the sheriff delivered possession of the property held by him under his levy to the assignee; all the parties in interest agreeing that such surrender of possession might be made without prejudice to the rights and...