Taussig v. Chicago Title & Trust Co., 9479.
| Decision Date | 22 January 1949 |
| Docket Number | No. 9479.,9479. |
| Citation | 171 F.2d 553 |
| Parties | TAUSSIG et al. v. CHICAGO TITLE & TRUST CO. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Thomas Dodd Healy, Harold Stickler, Edward Atlas, and Daniel M. Healy, all of Chicago, Ill., for appellants.
Harold L. Reeve, Elmer M. Leesman, J. L. Higley, and Charles F. Grimes, all of Chicago, Ill., for appellee.
Before KERNER and SPARKS, Circuit Judges, and SWYGERT, District Judge.
This is an appeal in a third party proceeding involving a title guaranty policy on real estate which had belonged to a group of testamentary trust estates. By the original proceeding, a beneficiary of one of the trusts, Mrs. Saxelby, asked for a declaratory judgment relating to certain transactions by which her brother, appellant Taussig, a co-trustee, became the sole beneficiary of Trust No. 4954 to which the property was conveyed, and as such, the owner of that property which had belonged to the main trusts. By her bill of complaint, Mrs. Saxelby further prayed that the American National Bank and Trust Company, trustee of Trust No. 4954, be directed to convey title to the property to a substitute trustee to be appointed by the court upon removal of Taussig and his co-trustee, also named as a defendant in the main proceeding, and for an accounting.
Prior to hearing on the main complaint, Taussig and the American Bank obtained leave to file a third-party complaint against the Chicago Title and Trust Company, appellee here, setting up the fact of execution by it of an "Owner's Title Guaranty Policy" by which it guaranteed title to the property involved in the main proceeding, and praying that, in the event the court adjudged that his title failed, the Title and Trust be held liable under the policy, and demanding judgment for any loss that might be adjudged against him and the Bank in favor of the plaintiff in the main proceeding.
After full hearing in both proceedings, the court rendered separate findings of fact and conclusions of law in both the main proceeding and the third-party proceeding on the same day. By the former he found that Taussig, a lawyer, by a complex series of transactions we need not detail here, became the owner of the property here involved without the expenditure of any funds of his own, and that the trust estates of which he was trustee were divested of the ownership which they formerly held, all of which was done without notice to the beneficiaries of the trusts; that in these dealings with the trust estates Taussig did not act in good faith, and in fact acted in positive bad faith as indicated by the facts of his knowledge of the law, his concealment of facts known to him, his use of a nominee and of the secret trust, and his failure to give notice to his beneficiaries. He concluded that the complainant was entitled to restoration of the property to the trust estate, removal of Taussig and his co-trustee, appointment of a successor trustee, conveyance by the American Bank as trustee of No. 4954 to such successor trustee of the trust property without expense to the trust estate, an accounting of all income received by Taussig on the property wrongly diverted to his own use, and a general accounting of all income received from the trust estate, disallowance of any compensation for their work as co-trustees since the beginning of their derelictions as such, and return to the successor trustee of all fees theretofore received by Taussig from 1940 to 1944, which fees were found to total $16,349 for the five-year period.
By separate findings entered simultaneously in the third-party proceeding, the court reiterated the principal findings relating to the property transactions whereby Taussig "acquired from the trusts of which he was trustee, an asset having a potential value of $25,000 to $40,000 in excess of the obligations required to be assumed to acquire it," the title to which had been guaranteed by Title and Trust, and further found that the third-party proceeding was an effort to recover on the title guaranty policy what the order of the court deprived him of because of his bad faith and breach of trust toward the beneficiaries under the trusts created by the will of his father. He therefore concluded that the...
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...of the Trust fraudulent or otherwise ineffective, in which event a different result might obtain. 31. See Taussig v. Chicago Title & Trust Co., 171 F.2d 553, 555 (7th Cir.1948) (title insurance policy exclusion barred coverage for "liens ... created, suffered, or assumed by the party guaran......
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