Hamilton v. Nielsen, 78 C 2379.

• Court: United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
• Citation: 513 F. Supp. 204
• Docket Number: No. 78 C 2379.,78 C 2379.
• Parties: Susan Kemper HAMILTON, Plaintiff, v. Arthur C. NIELSEN, Jr., and American National Bank and Trust Company of Chicago, Defendants.
• Decision Date: 13 April 1981

513 F. Supp. 204

Susan Kemper HAMILTON, Plaintiff,
v.
Arthur C. NIELSEN, Jr., and American National Bank and Trust Company of Chicago, Defendants.

No. 78 C 2379.

United States District Court, N. D. Illinois, E. D.

April 13, 1981.

Albert C. Lum, Lum & Ku, Los Angeles, Cal., Richard L. Horn, David R. Melton, Karon, Morrison & Savikas, Chicago, Ill., for plaintiff.

Lawrence W. Dam, Los Angeles, Cal., John E. Angle, Kirkland & Ellis, Chicago, Ill., for defendants.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

ASPEN, District Judge.

This cause coming on for trial without a jury and the Court having considered the sworn testimony of the witnesses, the exhibits received in evidence, argument of counsel, the relevant authorities, and being fully advised in the premises makes the following findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52:

FINDINGS OF FACT:

1. Plaintiff, Susan Kemper Hamilton ("Plaintiff"), is a citizen of California currently residing in Switzerland.

2. Defendant, Arthur C. Nielsen, Jr. ("Nielsen"), is a resident of Illinois.

3. Defendant, American National Bank and Trust Company ("the Bank"), is a national banking association with its principal place of business in Chicago, Illinois.

4. The matter in controversy, exclusive of interest and costs, exceeds the sum of $10,000.

5. Plaintiff is one of several surviving children of Milton J. Hamilton who died on October 16, 1972, a resident of Lake County, Illinois.

6. On March 9, 1961, prior to his death, Milton J. Hamilton created an insurance trust ("the Trust") naming the Bank as trustee. By a subsequent amendment, Nielsen was named advisor to the trustee. The Trust provided that after the death of Mr. Hamilton and his mother, now both deceased, the Trust would be divided equally among five beneficiaries, one of whom is the plaintiff. The Trust authorized the trustee, subject to the authority of the advisor, to retain any property it received and to sell such property at private sale.

513 F. Supp. 205

7. Mr. Hamilton's will was executed on September 20, 1972, and it was admitted to probate in Lake County, Illinois, on November 9, 1972. The will contained a "pour over" provision whereby the residue remaining after the payment of taxes, costs, claims, and specific legacies (hereinafter referred to as the "cash requirements") was to go to the Bank as trustee of the Trust. The will also authorized the executors to sell, retain, or invest property, or continue present investments upon such terms and in such manner as they deemed best, free from any limitations imposed by law and without order of any court. The will named the Bank and Nielsen as co-executors.

8. As co-executors, the Bank and Nielsen were responsible for meeting the estate's cash requirements out of the assets of the estate and funneling any residual assets to the Trust for the benefit of the five beneficiaries.

9. Among the assets of the Milton J. Hamilton estate were 58,718 shares of stock in Frank B. Hall and Company ("Hall"), 31,680 shares of Zenith United Corporation ("Zenith"), and a nontransferable option to acquire an additional 9,375 shares of Zenith at $2.72 per share on or before December 27, 1972. The executors exercised the option before it expired in December, 1972, when Zenith was trading at between $4 5/8 and $5.00 per share.

10. At the date of Mr. Hamilton's death, the 58,718 shares of Hall stock had a trading value of $1,548,687.25 at $26 3/8 per share.

11. During the administration of the estate, the executors made the following sales of Hall stock:

 NO. OF PRICE NET
                 DATE SHARES PER SHARE COMMISSIONS PROCEEDS
                 1/29/73 11,000 19 1/8 $2,750.00 $207,625.00
                 6/13/73 5,000 12 60,000.00
                 7/17/73 5,000 13¼ 66,250.00
                 9/04/73 5,000 15 75,000.00
                 2/18/75 4,700 14 5/8 775.50 67,962.00
                 2/18/75 300 14 7/8 49.50 4,413.00
                 4/21/75 4,000 (3,900) 16¼ 874.09 64,113.41
                 ( 100)
                 5/09/75 6,000 17 7/8 1,213.07 106,036.93
                 5/20/75 368 ( 300) 18 1/8 124.34 6,537.16
                 ( 68)
                 TOTALS 41,368 $5,786.50 $657,937.50
                

12. During the administration of the estate, a total of 17,350 shares of Hall stock were transferred to the Trust as follows:

 NO. OF VALUE OF STOCK AT VALUE PER SHARE AT
                 DATE SHARES TIME OF TRANSFER TIME OF TRANSFER
                 9/30/73 10,000 $150,000.00 15
                 1/22/75 1,350 16,368.75 12 1/8
                 4/16/75 1,000 17,187.50 173/16
                 5/01/75 5,000 91,250.00 18¼
                 TOTAL 17,350 $274,806.25
                

513 F. Supp. 206

13. The Trust then made the following sales of Hall stock:

 NO. OF PRICE NET
                 DATE SHARES PER SHARE COMMISSIONS PROCEEDS
                 1/17/75 4,017 11 5/8 $46,697.63
                 1/17/75 985 11 5/8 11,450.62
                 4/16/75 483 17 1/8 96.76 8,174.62
                 4/16/75 4,119 Approx. 17 1/8 unknown 69,712.38
                 4/16/75 1,373 Approx. 17 1/8 unknown 23,460.06
                 4/16/75 1,373 Approx. 17 1/8 unknown 23,259.42
                 5/02/75 5,000 17 7/8 $1,010.86 88,364.15
                 TOTALS 17,350 276,118.88
                

14. The Trust and estate received a total of $934,056.38 from the sales of the Hall stock.

15. At the date of Mr. Hamilton's death the 31,680 shares of Zenith stock had a trading value of $160,380.00 at $5 1/6 per share.

16. After the estate exercised the option to acquire an additional 9,375 shares of Zenith stock in December, 1972, the estate held a total of 41,055 shares. The estate borrowed $25,500.00 from the Trust in order to exercise the option at $2.72 per share. At the time the option was exercised, the 9,375 shares had a trading value of approximately $46,875 at $5.00 per share, representing a potential capital gain of over $20,000 for the estate.

17. The entire Zenith holding was sold by the...