De Korwin v. First National Bank of Chicago

• Decision Date: 13 October 1955
• Docket Number: No. 43 C 1043.,43 C 1043.
• Citation: 136 F. Supp. 720
• Parties: Margaret DE KORWIN, etc., Plaintiff, v. The FIRST NATIONAL BANK OF CHICAGO, etc., et al., Defendants. The FIRST NATIONAL BANK OF CHICAGO, Trustee under the Last Will of Otto Young, deceased, Petitioner, v. Samuel A. RINELLA and Marie Louise Tonella, Respondents.
• Court: U.S. District Court — Northern District of Illinois

136 F. Supp. 720

Margaret DE KORWIN, etc., Plaintiff, v. The FIRST NATIONAL BANK OF CHICAGO, etc., et al., Defendants.

The FIRST NATIONAL BANK OF CHICAGO, Trustee under the Last Will of Otto Young, deceased, Petitioner, v. Samuel A. RINELLA and Marie Louise Tonella, Respondents.

No. 43 C 1043.

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

October 13, 1955.

Charles Rivers Aiken, Chicago, Ill., for plaintiff.

William B. McIlvaine and William S. Bodman, Chicago, Ill., for petitioner.

Charles Justin Little, Chicago, Ill., for respondent Samuel A. Rinella.

Theodore C. Diller, Winfield T. Durbin, A. Bradley Eben, Thomas Dodd Healy, Lewis C. Murtaugh, Frank L. Paul, and Harold A. Smith, Chicago, Ill., for defendants.

IGOE, District Judge.

A decree was entered in this cause on December 14, 1951, approving and incorporating a family settlement and a conveyance and liquidation trust agreement, whereby this court took over the supervision and direction of the administration and liquidation and distribution of the testamentary trust estate of Otto Young, deceased; taking of the trustees' accounts which had been previously ordered for the period after March 26, 1916, was continued by agreement until the further order of court; and full and complete jurisdiction of the trust and over its administration, liquidation and distribution was expressly reserved. The complaint initiating this action, seeking a fiduciary accounting and related relief operating directly upon the trust estate, required that the court or its officer have control or constructive possession of such corpus and constituted a suit in rem or quasi in rem. The original decree herein and subsequent adjudications, particularly the settlement decree of December 14, 1951, have drawn the trust property into the custody of this court and it is now custodia legis in this proceeding, in effect is impounded herein. For a fuller discussion of this litigation and its background, see: De Korwin v. First Nat. Bank of Chicago, 7 Cir., 156 F.2d 858, certiorari denied 329 U.S. 795, 67 S.Ct. 481, 91 L.Ed. 680; Id., D.C., 84 F.Supp. 918; Id., 7 Cir., 179 F.2d 347, certiorari denied Pratt v. De Korwin, 339 U.S. 982, 70 S.Ct. 1025, 94 L.Ed. 1386; De Korwin v. First Nat. Bank of Chicago, D.C., 94 F.Supp. 577.

In this setting The First National Bank of Chicago as Trustee under the Last Will of Otto Young, deceased, filed its petition, on October 11, 1954, for the instructions of this court relative to its administration of the trust property occupied by the department store of Carson, Pirie, Scott and Company, at State and Madison Streets in Chicago. Specifically, the trustee sought to be instructed whether it had power to sell the Carson Pirie property or lease it for a long term, and if so when and how such right ought to be exercised. By decree entered February 4, 1955, the will of Otto Young was construed as authorizing a sale of the Carson Pirie property with approval by a court of competent jurisdiction, and the trustee was empowered to make such disposition immediately. On July 20, 1955, sale of the Carson Pirie property to its occupants for $7,500,000 was approved and confirmed. The instant ancillary proceeding is an outgrowth of the decrees of construction and sale.

Following authorization and direction to sell the Carson Pirie property, the trustee called upon Chicago Title and Trust Company for an opinion of title, and the pendency of a complaint for partition of the Otto Young trust assets filed in the Superior Court of Cook County in August of 1949 on behalf of Marie Louise Tonella, plaintiff, by Samuel A. Rinella as her attorney, was noted as an objection to the trustee's title. To remove that cloud upon its title, the trustee upon leave filed its instant petition in this cause for an injunction restraining Mrs. Tonella and attorney Rinella from further prosecution of the Superior Court partition proceedings. Mrs. Tonella, a grandchild of Otto Young and a beneficiary under his trust, has been a party to this proceeding from its commencement in 1943. Mr. Rinella, individually, has been brought before the court, pro hac vice, by original process.

The respondent Tonella does not oppose the injunction for reasons which will become obvious. Respondent Rinella has answered the petition by raising questions of law only, thus admitting all facts averred by the trustee. With the controversy in this posture, the trustee now moves for judgment on the pleadings. Briefs have been filed in support of and in opposition to the trustee's motion, and counsel for the plaintiff has submitted supporting suggestions.

On this branch of the case the defenses argued by respondent Rinella may be summarized as lack of jurisdiction over the trust res and to enjoin the State court suit. His claims of res judicata, estoppel and laches are rested upon an order of reinstatement procured by Rinella in the Superior Court suit. Lastly, Rinella questions the right of this court to approve any sale of the Carson Pirie property.

Rinella's first point in support of his attack upon jurisdiction over the trust res appears based on a distinction between the interest of the trustee and beneficiaries in the trust on one hand and the trust property itself on the other. In this respect he asserts "a misapprehension on the part of the trustee of what comprises a trust res". He insists that "the res * * * was the congeries of interests existing between the trustee and the various beneficiaries, and not the real estate comprising the physical assets of the trust." Under this theory he concludes: "It is accordingly clear that the res to which the jurisdiction of the District Court attached * * * is an entity entirely different and apart from the real property, or any parcel thereof, to which the trustee holds legal title." Authority cited does not sustain the proposition that there are two different trust res in the same trust property, i. e., a res comprised of the trust interests, and a res made up of the trust property. Indeed, the textwriter quoted, Professor Bogert, supporting an opposite conclusion that the two elements, interest and property, are combined in every trust res, states: "Every express trust, therefore, necessarily involves a property interest or interests and a thing or things in which those property interests exist." There is no substance to the contention that the trust res over which this court has jurisdiction is different from the trust res of the Superior Court complaint.

The main action here and the Superior Court suit are similar. The subject matter of each is the Otto Young trust estate, and the parties in both courts are the trustee and beneficiaries. Each asks relief requiring control of the trust fund and is a proceeding in rem. The jurisdiction of the District Court and that of the Superior Court are coordinate or concurrent. As has been seen, the trust res long since was drawn into the custody of this court while in the Superior Court suit, instituted some six years later, steps have not been taken as yet toward judicial possession of the trust properties. In these circumstances, jurisdiction over the trust res is exclusively in this court. The controlling principle was thus...