People ex rel. Illinois State Bar Ass'n v. People's Stock Yards State Bank

Decision Date18 June 1931
Docket NumberNo. 18801.,18801.
Citation344 Ill. 462,176 N.E. 901
PartiesPEOPLE ex rel. ILLINOIS STATE BAR ASS'N et al. v. PEOPLE'S STOCK YARDS STATE BANK.
CourtIllinois Supreme Court

OPINION TEXT STARTS HERE

Original proceeding by information in the name of the People, on the relation of the Illinois State Bar Association and another, against the People's Stock Yards State Bank, to have respondent punished for contempt of court for engaging in practice of law and to enjoin it from continuing such practice.

Respondent found guilty of contempt.John L. Fogle, of Chicago (Rush C. Butler and Carl R. Latham, both of Chicago, R. Allan Stephens, of Springfield, Herbert M. Lautmann and John F. Voigt, both of Chicago, Alonzo Hoff, of Springfield, Charles O. Loucks, of Chicago, Franklin L. Velde, of Pekin, and Sidney S. Gorham, of Chicago, of counsel), for relators.

Mitchell D. Follansbee and Robert W. Schupp, both of Chicago (Paul D. Miller, of Washington, D. C., of counsel), for respondent.

Horace Kent Tenney and Percy B. Eckhart, both of Chicago, amici curiae.

ORR, J.

This is an original proceeding instituted in this court by information in the name of the people, on the relation of the Illinois State Bar Association and the Chicago Bar Association, against the People's Stock Yards State Bank, a banking corporation of Illinois, as respondent, seeking to have respondent punished for contempt of this court for engaging the practice of law and also to enjoin it from continuing such practice. Leave to file the information having been granted, a rule was entered requiring the respondent to answer. It filed its answer, and the cause was then referred to Thomas J. Holmes, a master in chancery of the superior court of Cook county, as commissioner of this court, to take the evidence and report his conclusions of fact and law. The commissioner heard to evidence and submitted his report, recommending that relief be granted as prayed in the information. Objections of respondent to the report were overruled, and by stipulation of the parties it was agreed that those objections should stand as exceptions in this court. After the filing of the report, briefs were filed on behalf of both parties. On motion of the Corporate Fiduciaries Association of Chicago and the Illinois Bankers' Association, leave was granted to Horace Kent Tenney to file a brief as amicus curiae, and subsequently leave was also granted to Percy B. Eckhart to file a brief as amicus curiae.

In his report, the commissioner finds the facts substantially as follows: Respondent is a duly organized bank under Illinois laws, and has complied with the laws of this state with respect to trust companies. Its place of business is at South Ashland avenue and West Forty-Seventh street, in the city of Chicago. That location is a community center, mostly of citizens of foreign birth employed as industrial workers. The bank has about 2,500 checking accounts and 40,000 depositors in the savings department. About 75 per cent. of the customers of the bank are of foreign birth, and some do not speak the English language fluently. The banking institution has not only the usual commercial departments of a modern bank, but also a trust department, a real estate department, in which through duly licensed lawyers it transacted for its customers and others almost every form of legal business except the handling of divorce cases. The officers of the bank at various times conducted what they called ‘drives' in order to secure new customers for the bank. The drives were conducted through personal solicitation, by telephone, and circular letters or other forms of advertising. It was largely employees of the bank who engaged in this work of securing new business. Prizes of different values were awarded to those securing new business. Prizes were given to those securing new deposit accounts. Other prizes were given for procuring persons who by wills or other legal documents would name the bank as executor or trustee or who would employ the services of the bank in other ways. The bank performed the legal services necessary in the administration of estates in the probate court of Cook county. It acted as executor or administrator in various estates, as conservator for distracted persons, and as guardian for minors, and through its legal department performed legal services with reference to such estates, charging the usual fees for such services. In addition thereto, by the use of the name of either Edward J. Warren or Emanuel Nylin, or other attorneys in its employ, it collected and appropriated to its own use the fees which were allowed by the probate court of Cook county for such legal services. From 1924 to April, 1927, respondent had on its books, and handled, an average of about 200 estates in the probate court each year. There is no evidence relating to these matters prior to 1924, nor was the commissioner able to determine or approximate the actual amount of attorneys' fees which the bank received and appropriated for legal services from 1924 to 1927. The books of the bank would undoubtedly disclose these amounts. Although a demand was served on counsel for respondent to produce such books and records, it failed to comply with the demand except as to a single account carried under the name of Edward J. Warren, an attorney in its employ, covering a period of slightly more than the year 1925. Respondent also during the same period and through its legal department conducted a number of foreclosure proceedings in the circuit and superior courts of Cook county. In most of such proceedings it was the owner of the loans secured by the trust deeds being foreclosed, but in a number its customers or clients were the owners of the loans. In cases where the bank was the owner of the loans and the complainant in such foreclosure proceedings, through its legal department it proved up and was allowed the usual and customary solicitor's fees by the circuit and superior courts and appropriated to its own use all such solicitor's fees allowed. Such proceedings were conducted in the name of Edward J. Warren or Emanuel Nylin as the attorney for the complainant therein, but these attorneys did not receive directly any part of the fees allowed to them as such solicitors. It does not appear that the respective courts and masters in chancery thereof before whom the proofs were taken, and the parties to the litigation, were at any time informed of the foregoing facts. In cases where such foreclosure proceedings were conducted by the bank on behalf of its customers and clients, the fees allowed by the circuit and superior courts to the solicitor appearing of record on behalf of the complainant were collected and appropriated by the bank. The same conditions existed in this class of proceedings as existed with reference to such proceedings where the bank, as trustee or otherwise, was a party. Its books and records, if produced, would probably show the amounts actually allowed as solicitor's fees in such cases and received and appropriated by it to its own use, but it has failed to produce such books or information notwithstanding demand therefor was made upon it. For this reason the commissioner was unable to ascertain exactly the amounts of money so received and appropriated by respondent.

Joseph Wojnowski, an attorney employed in the bank from October 1, 1922, to December 31, 1925, was called as a witness by relators. The commissioner found him to be responsible, reliable and trustworthy, and on the basis of his testimony found that the number of foreclosure proceedings in which the bank participated during the years 1923 to 1925 was from eight to ten each month, but the witness was unable to state the total amount of attorney's fees received by respondent for such services during those years. During the same period of time respondent followed the practice, through its legal department, of drafting and attending to the execution of wills for its clients and customers. Charges were made for such services ranging from $5 to $25 or more. The number of wills so drawn amounted to 150 or 200 each year during the three-year period of Wojnowski's employment as an attorney by the bank. He testified that in performing such services he was instructed by the officers of the bank to endeavor to have the bank named as executor, and that in the event it was so named he was instructed to make no charge for his services in drafting and attending to the execution of the wills but that otherwise an appropriate charge was to be, and was, made. The bank failed to produce its books and records, and the commissioner was therefore unable to determine from the evidence the total number of wills drawn by the bank or the amount received by it as attorney's fees for such services.

Respondent also during the same period of time, through its legal department, handled and conducted for its customers and clients all the details of various real estate transactions where real estate was bought, sold, exchanged or otherwise dealt in, including not only those set out in detail in the information herein but a large number of other deals of similar character. In these real estate transactions the bank, through its legal department, would interview the parties, ascertain the figures and conclusions at which they had arrived and draft and attend to the execution of the contracts for the sale or exchange of the real estate. It would attend to the bringing down of abstracts and guaranty policies, examine such abstracts and policies and render opinions of title thereon, using the name, usually, of Edward J. Warren, on such opinions. It would attend to all the details of clearing the title to the real estate involved, either in exchange or sale, including the preparation and execution of affidavits when necessary to clear up defects, and would draft and attend to the execution and recording of all necessary deeds, mortgages, trust deeds, and other documents between the parties int...

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