Paulman v. Kritzer

Decision Date29 September 1967
Docket NumberNo. 40267,40267
Citation38 Ill.2d 101,230 N.E.2d 262
PartiesEdith Kritzer PAULMAN, Appellee, v. Henry E. KRITZER et al., Appellants.
CourtIllinois Supreme Court

Winston, Strawn, Smith & Patterson, Chicago (George B. Christensen, Richard J. Pigott and R. Lawrence Storms, Chicago, of counsel), for appellants.

Peebles, Greenberg, Keele, Lunn & Ford, Chicago (Harold M. Keele and Halbert O. Crews, Chicago, of counsel), for appellee.

SOLFISBURG, Chief Justice.

This stockholders' derivative suit was initiated by the plaintiff, Edith Kritzer Paulman, and her sister for the benefit of the defendant Kritzer Radiant Coils, Inc., a Delaware corporation, herein called KRC, against a brother, Henry E. Kritzer, Sr. and others alleging that Kritzer violated the fiduciary duty owed by him to KRC, as an officer and director, and utilized certain corporate opportunities for his own benefit. Plaintiff's sister withdrew from this litigation before evidence was heard. Thereafter testimony was taken before a special master in the circuit court of Lake County, who recommended that defendant Kritzer be held to account for net profits from the purchase and sale of one tract of real estate, and that he be ordered to convey certain other real estate and stock to KRC, subject to certain credits. The trial court approved the findings of the master and entered a decree in accordance with his recommendations. The Appellate Court, Second Judicial District, affirmed the decree (74 Ill.App.2d 284, 219 N.E.2d 541), and we have granted leave to appeal.

Kritzer, the owner of 50% Of KRC stock, has been president and a director of KRC since 1954. The remaining shares are divided between plaintiff and her sister. KRC manufactured and sold heating equipment in its plant on Lawrence Avenue in Chicago, but was seeking a more desirable location. In 1954, Kritzer personally purchased an unimproved tract of land known as the Ebertt Tract to solve KRC's housing problem. All payments that were made on said tract were made from KRC's funds which Kritzer claimed were advances to him personally. He sold this property in 1957 while still unimproved for a substantial profit, which he personally retained. In October of 1955, Kritzer personally purchased a similar parcel of land adjoining the Ebertt Tract, known as the Bulaw Tract, ostensibly for the same purpose. The down payment and the first two installment payments were made by Kritzer from KRC funds. Kritzer still retains title to the Bulaw Tract.

In 1956, United Asbestos and Rubber Company, herein called UNARCO, approached KRC for the purpose of selling its heating division to KRC. The officers of KRC decided to purchase this division, and thereafter Kritzer organized Batavia-Kritzer, Inc., herein...

To continue reading

Request your trial
29 cases
  • Trieweiler v. Sears
    • United States
    • Nebraska Supreme Court
    • December 17, 2004
    ...Deposit Corp., 86 Md. App. 1, 585 A.2d 238 (1991); Paulman v. Kritzer, 74 Ill. App. 2d 284, 219 N.E.2d 541 (1966), affirmed 38 Ill. 2d 101, 230 N.E.2d 262 (1967). See, generally, 3 William Meade Fletcher et al., Fletcher Cyclopedia of the Law of Private Corporations § 861.10 (perm. ed., rev......
  • In re Hearthside Baking Co., Inc.
    • United States
    • U.S. Bankruptcy Court — Northern District of Illinois
    • February 27, 2009
    ...duty to their corporation. In re Dearborn Process Service, Inc., 149 B.R. 872, 880 (Bankr. N.D.Ill.1993) (citing Paulman v. Kritzer, 230 N.E.2d 262, 38 Ill.2d 101 (Ill.1967) and Unichem Corp. v. Gurtler, 148 Ill.App.3d 284, 101 Ill.Dec. 400, 498 N.E.2d 724 (1986)); see also Pepper v. Litton......
  • Pros v. Mid-America Computer Corp.
    • United States
    • United States Appellate Court of Illinois
    • April 3, 1986
    ...(1976), 40 Ill.App.3d 722, 725, 353 N.E.2d 156; Paulman v. Kritzer 1966), 74 Ill.App.2d 284, 289-95, 219 N.E.2d 541, aff'd (1967), 38 Ill.2d 101, 230 N.E.2d 262; Libco Corp. v. Roland (1981), 99 Ill.App.3d 1140, 1144, 55 Ill.Dec. 334, 426 N.E.2d 309; ABC Trans National Transport, Inc. v. Ae......
  • Ostrowski v. Avery
    • United States
    • Connecticut Supreme Court
    • December 9, 1997
    ...permit such a defense in all cases. See, e.g., Paulman v. Kritzer, 74 Ill.App.2d 284, 292-96, 219 N.E.2d 541 (1966), aff'd, 38 Ill.2d 101, 230 N.E.2d 262 (1967). Other courts limit the defense of financial inability to cases in which the defendant corporation can be proven to have been inso......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT