Clark v. City of Chicago

• Citation: 70 F.2d 172
• Decision Date: 12 April 1934
• Docket Number: No. 5040.,5040.
• Parties: CLARK v. CITY OF CHICAGO, ILL., et al.
• Court: U.S. Court of Appeals — Seventh Circuit

70 F.2d 172 (1934)

CLARK v. CITY OF CHICAGO, ILL., et al.

No. 5040.

Circuit Court of Appeals, Seventh Circuit.

April 12, 1934.

H. S. Hicks, of Rockford, Ill., and Essington & McKibbin and Walter E. Beebe, all of Chicago, Ill., for appellant.

William H. Sexton, Corp. Counsel, and Albert H. Veeder, Sp. Asst. Corp. Counsel, both of Chicago, Ill., for appellees.

Before ALSCHULER, SPARKS, and FITZHENRY, Circuit Judges.

SPARKS, Circuit Judge.

Appellant filed a bill in equity asking that certain property in the possession of the city of Chicago be declared to be held in trust by it, that a new trustee be appointed to carry out the terms of the trust, that the city be required to account for all moneys received by it in liquidation of the indebtedness of David A. Gage to it, and that any money remaining over be paid to appellant as sole surviving heir of Gage.

The facts which gave rise to appellant's alleged cause of action began in 1873 when her father was city treasurer of the city of Chicago. Upon the expiration of his term of office, December 16, 1873, it was found that there was a deficit in his accounts amounting to approximately $500,000. This deficit arose out of certain illegal loans of the funds of the city to banks which closed during the panic of 1873. In order to liquidate the indebtedness, Gage turned over all his property in trust for the benefit of the city. The real property was conveyed by a deed of trust executed by Gage and his wife, December 27, 1873, to George Taylor as trustee. It provided that the trustee take over the possession and control of all the property, collecting the rents and paying the taxes, and, under the direction and with the concurrence of the comptroller of the city of Chicago, sell the properties as soon as possible upon whatever terms seemed best to the trustee and comptroller, applying all rents and profits as well as the proceeds of the sale to the liquidation of the indebtedness. There was a further trust provision that upon the satisfaction of the entire indebtedness, if any pieces of the real property or any proceeds derived in any way from the property remained in the possession of the trustee, he should turn them back to Gage or his heirs. The instrument also provided that if the properties should not be sold within eight months, the comptroller should have the power to order a peremptory sale on such terms as he considered best for the interests of the city, and that if for any reason Taylor should be unable to act in accordance with the terms of the trust deed, one John De Koven should become the successor in trust. The property conveyed by the deed included several parcels in the city, and one, known as the Gage farm, a 254-acre tract, outside the limits of the city.

The personal property of Gage was conveyed to the same trustee by a deed of assignment of the same date authorizing him to collect all bonds, bills, notes, accounts and choses in action or to sell them or any part of them as seemed for the best interests of the city, and apply the proceeds on the debt. The assignment also authorized the trustee, with the concurrence and consent of the comptroller, to exchange any of the securities or evidences of indebtedness for other securities, or for lands or other property, real or personal, all of which should be subject to the same provisions as the original properties conveyed by the assignment.

Taylor accepted the trust and took possession of all the properties, real and personal, conveyed to him by the two instruments. He sold part of the real estate pursuant to the terms of the trust deed. He also acquired another parcel of real property known as the Brookfield tract as the result of foreclosure proceedings based on a series of bonds which came into his possession under the assignment of personal property.

By a suit brought by the city against Gage and his sureties in 1877, the amount of the indebtedness was determined to be $507,703.

A few years after the conveyances to Taylor, Gage moved to Colorado where in 1878 he filed a voluntary petition in bankruptcy, listing as a liability, the claim of the city of Chicago in the amount of $507,703, and including in his inventory all the real property deeded in trust to Taylor, with a reference to that trust and the purpose for which it was created. The Register in Bankruptcy on October 19, 1878, executed an assignment of all property of Gage in which he had any interest on the date of September 6, 1878, to one Mason B. Carpenter who on December 13, 1878, executed a quitclaim deed on the Gage tract to one Alexis M. Lay. On May 19, 1881, Lay and his wife gave a quitclaim deed for the Gage tract to the city of Chicago. Gage was granted a discharge in bankruptcy January 28, 1879.

In July, 1880, the city of Chicago secured a tax deed to the Gage farm.

In 1881 suit was filed by the city against Taylor and Gage and others in the Superior Court of Cook County to compel Taylor to execute the terms of the trust deed. Service was had on all parties, and all were represented in the proceedings by counsel. The decree entered June 16, 1881, ordered Taylor to sell the Gage farm according to the provisions of the trust deed, and provided that the city might become a purchaser at the sale for the protection of its own interest. In accordance with this decree, on July 2, 1881, Taylor executed a deed conveying to the city the Gage tract of 254 acres for a recited consideration of $254,000, which was said in the deed to be the highest and best offer the trustee could obtain for the land and premises thereby conveyed. This value had been placed upon the tract earlier in the year as the result of an appraisement by seventeen citizens of the city of Chicago. On the same date, July 2, Taylor also executed a deed conveying to the city the sixty-five acre Brookfield property for a recited consideration of $52,000 as appraised by the same group of men. The city immediately entered into possession of both tracts and has used them ever since the conveyances. The Gage tract was rented at first for farming purposes, and later a city nursery was established there for the growing of trees and shrubs for the use of the various city parks. Some litigation followed the conveyance of the Brookfield tract. A compromise was effected which gave the city an undivided half of the entire tract. Partition proceedings were had in 1906 which resulted in the obtaining by the city of the entire interest in thirty-two acres of the tract. In 1914 the city conveyed to itself in trust for the use of the schools a seventy-five acre portion of the Gage property to be used for a school for delinquent boys. The city has paid all taxes and special assessments which have been levied on either of the properties since they came into possession of them.

In 1893, suit was filed in the Superior Court of Cook County in the name of Eliza M. Gage, widow of David A. Gage, and Clara Gage Clark, appellant in the case at bar, against the city of Chicago. The records show that the case was later dismissed for want of prosecution. The files have been lost, hence it is not possible to ascertain what was the nature of the alleged cause of action. A second suit was filed in the Circuit Court of Cook County in 1906 in the name of appellant and two nieces of her deceased stepmother, Eliza Gage. Before this latter suit was filed a demand was served upon the city signed by appellant herself. To this demand were attached copies of the deed of trust and the deed of assignment. The city of Chicago, its comptroller, and its treasurer were named parties defendant. The amended bill of complaint among other...