Cohen v. Oguss

51 N.E.2d 461, 384 Ill. 353
CourtIllinois Supreme Court
DecidedNovember 16, 1943
DocketNo. 27228. Cause transferred.
StatusPublished
Cited by11 cases

This text of 51 N.E.2d 461 (Cohen v. Oguss) is published on Counsel Stack Legal Research, covering Illinois Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cohen v. Oguss, 51 N.E.2d 461, 384 Ill. 353 (Ill. 1943).

Opinion

Mr. Justice Wilson

delivered the opinion of the court:

The sole question requiring consideration on this appeal is whether a freehold is involved in the litigation.

From the pleadings and the evidence it appears that in January, 1940, Samuel T. Cohen, an attorney at law, and Benjamin Oguss, jointly purchased, for $52,000, a parcel of real estate, improved with a seven-story building, located at 900 Argyle street, Chicago. Although construction had been commenced in 1929, the building was in an uncompleted state, and the premises were encumbered with taxes, interest and penalties, aggregating approximately $65,000. Title was taken in the name of the Liberty National Bank of Chicago, as trustee, under trust No. 2865, each of the purchasers taking an undivided one-half interest. The trust agreement expressed the understanding of the parties that the interest of any beneficiary should consist solely of a power of direction to deal with the title to the property and to manage and control it, and the right to receive the proceeds from rentals and from mortgages, sales or other disposition of the premises, and that this right in the avails of the property should be deemed to be personal property, and might be assigned and transferred as such; that in case of the death of any beneficiary under the agreement, during the existence of the trust, his right and interest should pass to his executor or administrator and not to his heirs-at-law, and that no beneficiary had, or at any time should have, any right, title or interest in or to any portion of the real estate as such, either legal or equitable, but only an interest in the earnings, avails and proceeds. Of the purchase price, Oguss paid $47,000, and Cohen $5000. In addition, Cohen agreed to, and did, institute tax litigation to reduce the liability for taxes. Oguss, among other things, agreed, optionally, to advance the money for these taxes, provided a reduction to $13,000 or less be obtained. March 18, 1940, a decree was entered adjudicating the total taxes at $6544.74. On April x, 1940, Cohen sold to Joseph G. Engert half of his one-half interest. April 22, 1940, Cohen and Engert disposed of their one-half interest to Raymond Sher for $16,400, representing the return of their investment of $5000, a profit of $6500, and attorney’s fees of $4900 to Cohen incident to the tax litigation. On the day last named, Cohen and Engert assigned their interests to Oguss, who, in turn, executed a direction to the Liberty National Bank, ordering a conveyance to Sher. By deed dated May 10, 1940, the bank conveyed to Sher and his wife. June 21, 1940, Sher, joined by his wife, executed a deed to the bank, as trustee, under a new trust, No. 3047. A trust agreement then executed designated Sher as sole beneficiary. June 24, 1940, Sher gave a written direction to the bank to execute, as trustee, a note for $100,000 secured by a trust deed. August 9, Sher executed an assignment of a one-half interest in the trust to Arthur J. Kramer, which, on August 10, Kramer assigned to Oguss. October 7, 1940, Oguss delivered the assignment to the trustee bank. The building was completed, furnished and ready for occupancy by October, 1940. Cohen first asserted a claim against Oguss and Sher by letter in early October, 1940.

December 27, 1940, the plaintiff, Cohen, filed his complaint and, later, an amended complaint, in the superior court of Cook county against the defendants, Oguss, Sher, Engert and the Liberty National Bank, as trustee, alleging that by reason of the execution of an agreement describing the respective rights and duties of Oguss and himself, incorporated in the pleading as exhibit “C,” a fiduciary relationship was created, whereby each owed to the other the highest degree of loyalty, full disclosure and fair-dealing, and each was entitled to repose the utmost confidence in the other with respect to the corpus of the joint adventure ; that, subsequent to the entry of the decree adjudicating taxes, Oguss adopted an attitude of futility, claiming he had suffered financial reverses rendering him unable to advance sufficient moneys to meet the additional costs, indicated by revised increased estimates required to pay for the improvements; that Oguss stated he had concluded a joint adventure to be unwise, and, as a solution, recommended a sale of the property, suggesting Sher as a prospective purchaser of both their interests. Further allegations relate to plaintiff’s unavailing efforts to induce Oguss to not abandon the proposition and to negotiations by plaintiff and Oguss with Sher relative to the latter’s acquisition of their interests, culminating in a statement by Oguss that both he and plaintiff would benefit by selling to Sher and a further statement by Oguss’s attorney advising plaintiff partition proceedings offered the only alternative if a deal were not consummated with Sher. Additional allegations are that, relying upon the representations, believing that he was assisting Oguss and that Sher was purchasing Oguss’s interest, and to avoid a partition proceeding, plaintiff, on April 22, 1940, agreed in writing to sell to Sher for $16,400; that the transfer of his interest to Oguss was made at the suggestion of an officer of the bank to facilitate the transfer of the entire fee to Sher, and that Oguss, in plaintiff’s presence, on April 22, signed a written direction to the bank to convey full title to Sher; that Oguss’s direction in this regard was a sham; that, immediately thereafter, defendants made arrangements to complete and furnish the building, but concealed their joint operations from plaintiff, and that plaintiff did not learn of the fraud and deception perpetrated upon him until October, 1940. Concluding allegations are that since April 22, 1940, Oguss and Sher have mortgaged the property to secure an indebtedness of $100,000; that plaintiff is entitled to an accounting for this money; that the mortgage money was paid to defendants without knowledge of any fraud or deception, and that the lenders have a bona fide lien therefor on the property. The only relief sought by plaintiff, in addition to an accounting, is that the documents transferring his interest in the property be decreed void, that his one-half interest be reconveyed, and that he be shown to be a beneficiary of the trust.

By his answer, Oguss denied the material allegations of plaintiff’s complaint and, in particular, that any conspiracy existed or that any fraud or deception was practiced upon plaintiff; that he supplied any part of the $16,400 advanced by Sher, or that plaintiff owns any interest in the property. Oguss averred his willingness to proceed with completion of the building on the basis of original estimates, adding that, prior to entry of the tax decree, revised estimates disclosed an increased cost of $25,000, and that his decision to sell the property was based upon the inability of Cohen and himself to produce additional money. Answering further, Oguss stated that he intended to part with his interest until April 19 when Sher offered to finance completion of the building provided he, Oguss, remained in the venture. Oguss challenged plaintiff’s claim upon the grounds, among others, that plaintiff breached his agreement with him, Oguss, by assigning a half interest to Engerí; that he waited until completion of the building and furnishings before filing his complaint, and that he was guilty of laches. Sher’s answer is substantially to the same effect.

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Bluebook (online)
51 N.E.2d 461, 384 Ill. 353, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cohen-v-oguss-ill-1943.