De Korwin v. First National Bank of Chicago

• Decision Date: 12 November 1958
• Docket Number: No. 43 C 1043.,43 C 1043.
• Citation: 170 F. Supp. 112
• Parties: Margaret DE KORWIN, etc., Plaintiff, v. FIRST NATIONAL BANK OF CHICAGO, etc., et al., Defendants. FIRST NATIONAL BANK OF CHICAGO, etc., Petitioner, v. Graveraet Young KAUFMAN, Henry N. Rapaport, et al., Respondents.
• Court: U.S. District Court — Northern District of Illinois

170 F. Supp. 112

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

FIRST NATIONAL BANK OF CHICAGO, etc., Petitioner, v. Graveraet Young KAUFMAN, Henry N. Rapaport, et al., Respondents.

No. 43 C 1043.

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

November 12, 1958.

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Charles Rivers Aiken, Richard F. Watt, Chicago, Ill., for claimant Graveraet Young Kaufman.

Thomas Hart Fisher, Norman Crawford, Hamilton Smith, Daniel M. Schuyler, Jay Stough, Jack A. Diamond, and McDermott, Will & Emery, Schuyler, Richert & Stough, Fischel, Kahn, Hart & Weinberg, Chicago, Ill., for claimants Henry N. Rapaport et al.

Weymouth Kirkland, A. Leslie Hodson, William B. McIlvaine, Clarence E. Fox, and Kirkland, Ellis, Hodson, Chaffetz & Masters, and Wilson & McIlvaine, Chicago, Ill., for trustee First Nat. Bank of Chicago.

IGOE, District Judge.

This cause now comes before the Court upon motions for summary judgment requiring disposition of another aspect of these proceedings.

The questions to be determined in this branch of the long and complex litigation relating to the Otto Young testamentary trust estate¹ arise out of certain dollar assignments made by Graveraet Young Kaufman, the settlor's oldest living grandchild. In earlier rulings of this court, Graveraet, as one of Otto Young's eighteen grandchildren, became vested under his grandfather's will with a one-eighteenth remainder interest in the corpus of the trust estate, subject to divestiture only in favor of his issue in the event he died before termination of the trust.² Time for distribution arrived when Graveraet's mother, Marie Julia Young Kaufman Pratt, the last life tenant, died on August 17, 1956. Were it not for the large number of claims that his assignees and subassignees had served upon the trustee, the First National Bank of Chicago,³ Graveraet would have been entitled to the distribution in due course of his share in all of the trust estate then remaining in the hands of the Trustee.

Upon the death of Mrs. Pratt, the Trustee petitioned this court for instructions with respect to the many questions necessarily presented for determination in winding up the fifty-year old trust. Among other things, the Trustee asked to file its accounts since the death of Otto Young's widow, in 1916;⁴ it also requested the court to determine what procedure it should follow in resolving the numerous conflicting claims to Graveraet's share. Until the Trustee's accounts had been stated and approved and unless the parties entitled to participate in Graveraet's share were judicially determined, the Trustee represented it would be impossible to carry out its obligation to divide and distribute the trust estate in equal shares among the testator's grandchildren⁵ and thus terminate the trust.

As an essential step in the orderly division, distribution and termination of the trust, this court directed the Trustee to set up a special segregated account for Graveraet and for all claimants to his share, to be held subject to the further order of court. The Trustee has made distributions of the corpus into this segregated account from time to time, and the Trustee has, therefore, been able to divide the bulk of the trust estate remaining in its hands at the death of Mrs. Pratt, in consequence of which Graveraet's share and the shares of his three sisters (who also attempted assignments) have continued under this court's control and supervision until the conflicting claims against them might be adjudicated.

A number of the assignees and subassignees asserting claims against Graveraet's share in the hands of the Trustee sought and were granted leave to intervene and press their claims in this cause. Among these was one Henry N. Rapaport, who affirmatively has asked this court to order the Trustee to distribute $247,750 to him in cash from Graveraet's share. Other claimants were brought in pursuant to this court's instructions to the Trustee;⁶ such claimants have filed pleadings (as have the Trustee and Graveraet), thus delineating the factual and legal issues necessary to be determined before disposition can be made of Graveraet's segregated share.

The claims of Rapaport are derived from five assignments, made by Graveraet in 1951 and 1952, the dollar amount of which is $321,500. In addition to Rapaport, other persons claiming portions of these five assignments, and the amounts they claim, are as follows: Abraham Silberman, $12,000; Selma Lashine, $12,000; Maurice Kreis, $5,000; Alex Cohen, $4,000; Henry Legum, $15,750; and, Donald B. Jones, $25,000. All of these claimants, other than Legum (who has filed an appearance pro se but has not pleaded), have abandoned contentions originally asserted that the court was lacking in jurisdiction. Rapaport at no time raised a question with respect to jurisdiction.

In October of 1957, shortly after being given leave to intervene and plead, Rapaport filed a motion for summary judgment accompanied by affidavit asking the court to order that he be paid by the Trustee and the Liquidation Trustees⁷ "the sum of $247,750, together with the income which has accrued thereon since August 17, 1956." By his motion Rapaport brought before the court for determination the validity and legal effect of the five assignments by Graveraet under which Rapaport took his dollar-amount subassignments. The original assignments were dated April 4, 1951, July 13, 1951, November 8, 1951, December 5, 1951, and April 4, 1952, and, as set out in the Trustees' petition of December 7, 1956, have been designated as GRAV-C, GRAV-E, GRAV-G, GRAV-H, and GRAV-I, respectively.

Thereafter, Graveraet filed his answer conceding many facts set forth in Rapaport's motion, an affidavit controverting certain facts, and a countermotion for summary judgment in his favor; Graveraet's countermotion seeks judgment not only against Rapaport but against the six other claimants mentioned. Certain matters set out in Graveraet's countermotion and supporting affidavit are the subject of counteraffidavits filed by Rapaport and other claimants.⁸ In addition to these motions and affidavits, the court also has before it rather elaborate pleadings and supporting documents, and a deposition given by Graveraet at the instance of Rapaport and other claimants.

The court has had the benefit of extensive written briefs as well as full oral argument. The parties concede there are sufficient uncontroverted facts to permit a summary judgment for Rapaport if his claim be lawful. Graveraet's counsel, in addition to urging the denial of Rapaport's motion for summary judgment as a matter of law (rather than on the ground that essential facts are controverted in good faith), has moved the court to find certain facts and to set down for trial limited factual issues in connection with Graveraet's contention that the assignment transactions are void as usurious loans, under Rule 56(d) of the Federal Rules of Civil Procedure, 28 U.S. C.A.⁹ Quite apart from these issues, which might require proof, it is conceded that the court may properly determine on the motion and countermotion whether the spendthrift provisions in the will of Otto Young would bar the enforcement of Graveraet's assignments.

By reason of the voluminous record and the important issues to be decided, it is essential that the material facts which appear without substantial controversy be specified fully.

Otto Young, a resident of Illinois, died on November 30, 1906. His will, executed on December 5, 1905, was duly admitted to probate in the Probate Court of Cook County, Illinois, on February 19, 1907. Marie Julia Kaufman Pratt, Otto Young's last surviving daughter, who was born September 8, 1877, died on August 17, 1956. Graveraet Young Kaufmann, Mrs. Pratt's first child, was born on November 1, 1900, and Graveraet's only child, Louis G. Kaufman, was born on January 3, 1931.

On April 4, 1951, July 13, 1951, November 8, 1951, December 5, 1951, and April 4, 1952, Graveraet signed writings, designated "assignments," in which he purported to grant, bargain, sell, assign, transfer, and set over to one Philip S. Rosen all of his right, title, and interest in and to the principal of the estate of Otto Young, deceased, to the extent of $62,500, $42,000, $42,000, $87,500, and $87,500, respectively. Copies of these documents are filed herein as Trustee's Exhibits GRAV-C, GRAV-E, GRAV-G, GRAV-H, and GRAV-I, respectively.

In each of these assignments, Graveraet warranted that his mother, Marie Julia Young Kaufman Pratt, was then 74 years of age, that upon his survival of her death he would become entitled to an interest in the principal of the Otto Young trust in excess of $1,000,000, and that his "assignment is intended as an outright sale and transfer absolutely and in fee simple of his interest in and to the principal of the trust estate herein assigned, and there shall be no obligation on his part personally to pay any sum beyond the application of his interest therein * * * that this sale and assignment are not made as collateral security for any price or amount, but that said sale and assignment are absolute and unqualified, and not subject to rescission and/or redemption * * * that he has not executed any promissory note or other indicia of personal liability, but that the recourse of Philip S. Rosen shall be against his interest in the aforesaid estate only." In each of the assignments Graveraet also warranted the number and amount of prior assignments made by him. The assignment dated April 4, 1951, warranted that he had made prior assignment in the sum of $187,500. The assignment dated April 4, 1952, the last involved in the motion and countermotion, warranted that he had made prior assignments in the sum of $515,250.

Contemporaneously with the execution of the assignment dated April 4, 1951, Graveraet executed and delivered to Philip S. Rosen an...