Block v. Block

• Decision Date: 20 May 1952
• Docket Number: No. 10536.,10536.
• Citation: 196 F.2d 930
• Parties: BLOCK v. BLOCK.
• Court: U.S. Court of Appeals — Seventh Circuit

196 F.2d 930 (1952)

BLOCK v. BLOCK.

No. 10536.

United States Court of Appeals Seventh Circuit.

May 20, 1952.

Benjamin B. Davis, Philip R. Toomin, Chicago, Ill., for appellant.

Herbert A. Friedlich, Louis A. Kohn, Chicago, Ill., Mayer, Meyer, Austrian & Platt, Chicago, Ill., Paxton & Seasongood, Cincinnati, Ohio, of counsel, for appellee.

Before KERNER, FINNEGAN, and SWAIM, Circuit Judges.

KERNER, Circuit Judge.

This is an appeal from the dismissal by the District Court, on motion of defendant, of a complaint in the nature of a bill of review, after removal on grounds of diversity of citizenship from the state court in which it was filed, and denial of plaintiff's motion to remand for lack of jurisdiction over the subject matter of her complaint. Defendant was a citizen and resident of Ohio at the time of the decree sought to be reviewed as well as of the date of the filing of this suit.

We state the facts in effect as set forth in the bill of complaint and exhibits attached thereto. The parties were married in Chicago in 1941 and lived there until July 1945, with the exception of a period when defendant was in military service. They had no children. Plaintiff filed suit for divorce in February 1946 on grounds of cruelty. Decree was entered in March 1946, dissolving the marriage and expressly barring all claims for alimony or dower except as provided for in a separate agreement which the court approved and incorporated by reference in the decree. According to the terms of this agreement defendant paid over the sum of $110,000 in cash which plaintiff accepted in full settlement of any property or support claims to which she might otherwise have been entitled. It is this portion of the divorce decree approving the property settlement which plaintiff seeks by her present complaint to set aside for fraud.

As grounds for the charge of fraud plaintiff alleges that during the period of their marriage defendant owned 1,500 shares of stock in a distillery corporation controlled by his father, and that shortly before the decree of divorce these shares had been sold in a transaction involving substantially all the shares in the corporation, resulting in the receipt by defendant of $1,600,000; that he and his father devised a plan calculated to relieve him and his property of plaintiff's claims for support and alimony; that in accordance with this plan defendant, in October 1945, shortly after his discharge from military service, executed a trust agreement and delivered to the First National Bank of Cincinnati, Ohio, as trustee, the entire proceeds of the sale of the stock, to administer in accordance with the terms of the trust agreement under which he was the sole beneficiary during his lifetime, and after his death, the assets were to go to a family charitable foundation; that shortly thereafter, defendant's attorney instituted negotiations for a property settlement, representing to plaintiff's attorneys that the trust had been created for the sole purpose of assuring defendant an income from his estate without the care and risk of custody and investment of the principal thereof, and that the trust yielded an income of less than $15,000 a year, hence his obligation for support must be measured by that income; that at the time of these negotiations, by reason of her mental and physical condition, plaintiff was required to expend large sums for treatments by doctors and psychiatrists amounting to at least $550 a month which, with her necessary living expenses, amounted to more than a fair proportion of defendant's income from the trust, and that as a result of these considerations, and not knowing that the trust agreement had not been executed in good faith, plaintiff agreed to accept defendant's offer of $110,000 in full settlement of all her claims.

The complaint further alleged that in 1950, a few years after the divorce decree and property settlement, defendant brought suit to cancel the trust agreement and obtain the return of all assets delivered to the trustee, alleging undue influence in the execution, and in May 1950, the Ohio court entered its final decree finding that the agreement had been entered into without consideration, setting it aside, and directing the reconveyance by the trustee of all the assets of the trust estate to defendant. There was no appeal from this decree. Plaintiff alleges, on the basis of these facts, that the scheme of the conveyance of all defendant's assets to the charitable trust was in order to create a fictitious straitened financial condition for defendant to enable him to obtain an unconscionable advantage in dealing with plaintiff in regard to his obligation of maintenance and support, and that the same parties collaborated in bringing the Ohio suit to avoid the conveyance to the trust after the purpose had been accomplished.

Plaintiff filed her complaint in the nature of a bill of review as a new suit in the Superior Court of Cook County, the court which had rendered the divorce decree and approved the property settlement. Service was had on defendant by publication and mailing a copy of the notice and bill of complaint to his Ohio address. He filed special appearance and petition for removal with bond in the United States District Court, together with his motion to set aside service of process and to dismiss the suit for want of jurisdiction. Plaintiff moved to remand to the Superior Court for want of jurisdiction of the subject matter.

Appellant contends that her complaint was filed to review a divorce proceeding and was for that reason not within the jurisdiction of the United States courts, hence not removable; that it was merely supplementary to and in extension of the prior proceeding, hence reviewable only by the court which had jurisdiction thereof; that,...