Robbins v. Slavin

• Decision Date: 20 December 1937
• Docket Number: Gen. No. 39564.
• Parties: ROBBINS v. SLAVIN ET AL. SELKOWITZ v. SLAVIN ET AL. FIRST NAT. BANK OF CHICAGO ET AL. v. ROBBINS ET AL.
• Court: United States Appellate Court of Illinois

292 Ill.App. 479

11 N.E.2d 651

ROBBINS

v.SLAVIN ET AL.

SELKOWITZ

v.SLAVIN ET AL.

FIRST NAT. BANK OF CHICAGO ET AL.

v.ROBBINS ET AL.

Gen. No. 39564.

Appellate Court of Illinois, First District, First Division.

Dec. 6, 1937.

Rehearing Denied Dec. 20, 1937.

Appeal from Superior Court, Cook County; Francis B. Allegretti, Judge.

Suit by E. M. Robbins against Albert Slavin and others, wherein Hyman M. Selkowitz was appointed successor trustee and instituted foreclosure proceedings against Albert Slavin and others, wherein Ella McShane filed an intervening petition, and wherein the First National Bank of Chicago, as trustee, filed a cross-bill. From the decree, E. M. Robbins and others appeal.

Affirmed. Aaron Soble, of Chicago (Max Chill, of Chicago, of counsel), for appellants.

Oscar S. Seaver, H. Irving Ripstra, and Harold D. Huszagh, all of Chicago, for appellees.

McSURELY, Justice.

This is an appeal by E. M. Robbins, plaintiff, and others, from an amendatory decree entered in foreclosure proceedings upon the petition of Ella McShane and other intervening petitioners.

November 16, 1932, E. M. Robbins, complainant, filed a bill alleging that she was the holder of notes aggregating $9,000, being part of an issue of $35,000 secured by a trust deed on real estate in Chicago; that a vacancy existed in the office of trustee due to the resignation of the Sheridan Trust & Savings Bank, the trustee named in the deed, and the refusal to act of the Chicago Title & Trust Company, the successor-trustee; that there were defaults in the payment of interest and taxes, and the appointment of a successor-trustee was asked with instructions to foreclose the trust deed; she alleged that the owners of the remaining notes were unknown and they were made parties defendant and served by publication as “unknown owners.”

January 11, 1933, a decree was entered appointing Harry M. Selkowitz as successor-trustee. He filed a bill to foreclose, also alleging that the owners of the notes not held by E. M. Robbins were unknown and making them parties defendant as “unknown owners,” and service on them was by publication. October 9, 1933, decree was entered pursuant to the prayer of the bill.

November 28, 1933, Ella McShane by leave of court filed her petition asserting that she was the owner of one of the notes secured by the trust deed in the sum of $5,000 and alleged that she was made a party defendant to the bill of complaint of E. M. Robbins as “unknown owner,” but that her name and address were known to the complainant or could have been readily ascertained by her. She alleged in substance that the notes were executed by Albert Slavin and were unconditionally guaranteed by Sam Slavin and Philip Slavin, duly indorsed upon each of the notes; that Sam and Philip Slavin were the beneficial owners of the real estate conveyed by the trust deed; that they purchased for their own account from the receiver of the Sheridan Trust & Savings Bank the notes for $9,000 described in complainant's bill for $3,800; that they procured the filing of the Robbins bill, in which petitioner and others were made parties defendant as unknown owners, although their names and places of residence could have been readily ascertained.

The petition also alleged that E. M. Robbins was not the owner of the notes aggregating $9,000 but holds them for the use and benefit of Sam and Philip Slavin, who are the real owners and liable as guarantors for the payment of the entire indebtedness; that the suit commenced by Robbins for the appointment of a trustee and the filing of the foreclosure proceeding by Selkowitz as trustee were instituted on behalf of Sam and Philip Slavin for the purpose of sharing ratably and upon a parity with the owners of the remaining notes in the proceeds to be derived from a foreclosure sale of the mortgaged premises. Petitioner also alleged that she had no opportunity to contest the claims of Robbins nor voice in the appointment of Selkowitz as trustee; that he was not a disinterested person but an employee in the office of the solicitor for Robbins and was not a proper person to be appointed trustee.

Similar petitions were filed by other noteholders shortly after the expiration of one year from the entry of the decree appointing Selkowitz successor-trustee. The First National Bank of Chicago as trustee, holder of one of the notes in question, by leave of court filed what is called a cross-bill setting forth substantially the same facts as contained in the petition of Ella McShane; all of these petitions and the cross-bill, with answers, were referred to a master in chancery who took evidence and made his report. The only evidence introduced was that on behalf of petitioners.

An amendatory decree was entered upon the report of the master, and the appeal is from this decree. It in substance provides for the protection of the intervening petitioners and places them substantially as they would have been placed had they been made defendants to the original bill under their proper names and had been served with summons. The amendatory decree amends the prior decrees in (1) certain findings of fact relative to the appointment of Selkowitz as successor-trustee, but did not vacate the order of his appointment; (2) removes Selkowitz as successor-trustee as of the date of the entry of the amendatory decree, thus preserving the filing of the supplemental bill of foreclosure, and appoints Lee Walker as successor-trustee, substituting him as complainant in the supplemental bill to foreclose; (3) declares the notes of Robbins to be subject and subordinate to the notes of the petitioners and treats the lien of the trust deed securing their notes as a first lien on the premises and the lien securing the notes held by Robbins as a second lien; (4) provides for the payment of costs and master's fees and allows to Walker, trustee, for the use of the intervening petitioners, reasonable solicitors' and stenographer's fees, but did not allow any solicitors' fees on behalf of Selkowitz, the former successor-trustee. Certain expenses were allowed to Robbins, but subject and subordinate to the lien of the petitioners.

The decision in this case rests largely upon the facts. It was shown that Samuel Slavin, Philip Slavin, and Albert Slavin are brothers; that the last named is the signer of the trust deed and notes in question; Sam and Philip Slavin were the beneficial owners of certain real estate in Chicago, held in trust for them by the Sheridan Trust & Savings Bank. About February 1, 1929, this trustee, upon direction of the beneficiaries, conveyed the title to Albert Slavin, who thereupon executed the trust deed conveying the property to the bank as trustee to secure the notes in question, and Albert Slavin conveyed the equity in the property to the bank as trustee to hold for the benefit of and subject to the direction of Sam and Philip Slavin; about February 2, 1932, the bank as trustee, as directed by Sam and Philip Slavin, conveyed the title to Sam's daughter Perle, who has since held title for the use and benefit of her father Sam and her uncle Philip, she has turned over all rents derived from the property to them.

The notes executed by Albert Slavin and secured by the trust deed were 18 in number, aggregating $35,000, one or more of them falling due each year to and including 1936; Sam and Philip Slavin indorsed on each note an unconditional guarantee of its payment at maturity as if it were an original obligation, their liability not to be discharged until full payment with interest.

The proceeds of the loan of $35,000 were used for the erection of a building on the real estate for the sale of automobiles, which since completion has been occupied by the North Town Motor Company, a corporation. Sam and Philip Slavin received the rent from this tenant, but they are also interested in the tenant Motor Company, both having power to sign its checks--Sam Slavin as its secretary-treasurer--and they are actively engaged in carrying on its business.

The Sheridan Trust & Savings Bank sold to its customers all the notes of this issue except those aggregating $9,000 described in the Robbins bill of complaint; it kept a record of the names and addresses of the purchasers, and all of the petitioners, purchasers of these notes, reside at the same address in Chicago as shown on the bank record or may be reached through the addresses shown on the record.

The first part of 1932 the bank was closed by the state auditor and a receiver placed in charge; there came into the receiver's hands these unsold notes aggregating $9,000 and the list of names with addresses of those who had purchased the remainder of the issue. In the spring of 1932 these notes aggregating $9,000 were in default and Sam and Philip Slavin commenced negotiations with the receiver of the bank for their purchase at a discount; the interest which fell due August 1, 1932, on the other notes outstanding and in the hands of purchasers was paid by checks of the North Town Motor Company; the Slavins continued their negotiations with the receiver for the purchase of the $9,000 of notes in his possession, and finally, about November 1, 1932, through Harry Freeman, as attorney for the Slavins, the notes aggregating $9,000 were purchased from the receiver for $3,800.

When the Sheridan Trust & Savings Bank, the trustee in the trust deed, went into the hands of the receiver, there was an understanding that the receiver would resign this trust, and Freeman, acting for the Slavins, through an intermediary procured the refusal to act of the Chicago Title & Trust Company, named in the trust deed as successor-trustee. When the purchase of the notes from the receiver was closed, his resignation to act as trustee and the refusal of the Chicago Title & Trust Company to act were filed of record, this leaving vacant the office of trustee under the trust deed.

At this same time there was delivered to Mr. Freeman the entire...