Vanderwater v. CITY NAT. BANK OF KANKAKEE, ILL.

• Decision Date: 29 June 1939
• Docket Number: No. 871-D.,871-D.
• Citation: 28 F. Supp. 89
• Parties: VANDERWATER v. CITY NAT. BANK OF KANKAKEE, ILL., et al.
• Court: U.S. District Court — Eastern District of Illinois

28 F. Supp. 89

VANDERWATER v. CITY NAT. BANK OF KANKAKEE, ILL., et al.

No. 871-D.

District Court, E. D. Illinois.

June 29, 1939.

Gunn, Penwell & Lindley, of Danville, Ill., for plaintiff.

Allen, Dalbey & Foreman, of Danville, Ill., and C. M. Granger and Noel A. Diamond, both of Kankakee, Ill., for defendants.

LINDLEY, District Judge.

Plaintiff sued for an accounting and other equitable relief. Defendants moved to dismiss for want of jurisdiction. The court found itself uncertain, in view of certain facts appearing in the record, as to whether jurisdiction of the entire controversy or any part thereof was properly lodged in this court. It considered the question impossible of solution except upon presentment of evidence bearing upon the issue of equitable conversion, the validity of the actions of the executor as such and as trustee and other issues involved. Accordingly, the motion to dismiss was denied.

Defendants have answered the complaint and, from the face of the pleadings, it now appears that a suit between plaintiff and the defendant executor is pending in the Circuit Court of Kankakee County, Illinois; same being an appeal from an order of the Probate (County) Court of Kankakee County determining the issues arising upon the current and final accounts of the executor and objections thereto; that said appeal, under the statutes of Illinois, effectuates no review of the record of the Probate Court but a trial de novo; that in the Probate Court it was held that it had no jurisdiction of certain of the issues involved; that in the trial upon appeal this holding will be adjudicated anew. It becomes most material, therefore, for this court to determine whether it shall permit this cause to proceed and thereby undertake the determination of not only its own jurisdiction but also that of the State Court. The cause came into being in the latter long prior to the institution of the suit here. It is not seemly or proper that the parties be subjected unnecessarily to the cost and expense of two pieces of litigation involving the same subject matter in two different courts. Accordingly, I consider it my duty in courtesy to the State Court to determine whether this suit or any part thereof shall be stayed. To make such decision a brief review of the issues involved is necessary.

This suit is brought by Richard Vanderwater, the sole surviving legatee and devisee of Walter S. Vanderwater, deceased. Plaintiff avers that he is a citizen and resident of the state of California and that more than $3,000 is involved. He asks relief in the way of accounting and recovery of damages of fraud perpetrated by the executor, another bank and four individuals, all residents and citizens of the state of Illinois. The testator died in Kankakee January 30, 1930, leaving surviving his widow and plaintiff, his son, as his only heirs. Under his will, duly probated in the County Court of Kankakee County, Illinois, the City Trust and Savings Bank of that city, named as executor, was duly appointed, qualified and is still acting as such, the estate being administered in the County Court. The will gave the executor "full authority to sell and convey" the real estate and personal property. The executor was to "use its own judgment as to the selection of the time when the sale should be made so as to get the best available price." It was provided that out of the proceeds of the sale of realty and personalty certain sums should be paid to the widow and plaintiff and the balance invested by the executor and "kept in good interest bearing securities." One-half of the net income therefrom was to be paid to the widow and the other half to the son, during the life-time of the widow. Upon her death, the executor was directed to deliver to the son, the plaintiff, all property on hand, to be his absolute property, and thereupon the estate was to be closed.

The administration continued until the death of the widow on December 17, 1936. Thereafter, the executor filed in the County Court its final account, in which it purported to account for all of its acts and doings, whether as executor or trustee. Thereupon the plaintiff filed his objections, some 91 in number, and supplemental objections, to the final report and all preceding current accounts. He objected on the grounds (1) that the executor had been negligent in disposing of certain personal property and for that reason should account for the losses thereby incurred; (2) that it had not accounted for all the personal property; (3) that certain expenditures were not justified; (4) that the executor should account for interest on the money handled; (5) that it be required to account for the money lost to the estate in the sale of 1,500 acres of land in Arkansas, for the losses incurred in settlement with one Deslauriers, in the sale of the stock of the Vanderwater Clothing Company, in the alleged wrongful investment of $3,000 in a mortgage given by one Roy; (6) that the alleged invalid lease for a five year period after the death of the life tenant, of certain property in Kankakee, should be cancelled; and (7) that the fees and expenses claimed to be due were excessive. The objector further contended that the matters contained in the so-called income account have to do with a testamentary trust created by the will, beyond the jurisdiction of the court.

The County Court found that as to the objections relative to leasing of the real estate, collection of the rents and operation of the farm lands in Arkansas, it had no jurisdiction; that the items relating to taxes, insurance and improvements on buildings were not proper charges against the probate estate and that certain other charges were not proper. The court sustained the remaining objections in part and over-ruled them in part.

Both parties appealed to the Circuit Court. The only parties to that cause are the executor and the plaintiff, and, under the statute of Illinois, that court, upon appeal from the County Court, exercises only a limited jurisdiction, that is only such as the County Court had over the probate administration. Neither the County Court or the Circuit Court upon appeal therefrom has jurisdiction of testamentary trusts.

At this stage of the proceedings plaintiff filed this suit against the executor, another bank and four individuals with all of whom it is charged the executor has had transactions. Plaintiff alleges that the executor received 110 shares of the capital stock of the Vanderwater Clothing Company, of the par and actual value of $11,000, and ten shares of the value of $1,000 which the testator had received from Deslauriers, who had agreed to buy the latter stock and had given in payment his note for $2,078; that the executor fraudulently cancelled the note and surrendered the stock; that it fraudulently accomplished a sale of the 110 shares for $1,000; that the City National Bank illegally profited; that defendants Carlson, Wisehnowski, Diamond and Mueller participated in the frauds; that the executor, purporting to act as trustee, fraudulently sold the Arkansas land for an inadequate sum; that it wrongfully purchased farm equipment and fraudulently permitted a loss thereon; that the executor violated certain statutory duties; and that it wrongfully invested in a mortgage and paid to itself excessive fees. The plaintiff sought a cancellation of the sale of the capital stock or, in the alternative, an accounting in money for its value, a recovery of the losses accruing to the estate by reason of the neglect and fraud of the executor and its acts complained of, a full accounting and such relief as would adequately protect the plaintiff.

Defendants insist that the jurisdiction of the County Court over the estate having attached, this court is without jurisdiction over any of the issues involved. They admit that the Probate Court has no jurisdiction of testamentary trusts but aver that the will worked an equitable conversion of the real estate and that all acts of the executor were performed in its capacity as such and not as trustee. They rely upon Byers v. McAuley, 149 U.S. 608, 13 S.Ct. 906, 37 L.Ed. 867; Goodrich v. Ferris, 214 U.S. 71-80, 29 S.Ct. 580, 53 L.Ed. 914; Oakley v. Taylor, C.C., 64 F. 245; Smith v. Foley, C.C., 80 F. 949; Colt v. Colt, 111 U.S. 566, 581, 4 S.Ct. 553, ...