Lyons v. 333 North Michigan Avenue Building Corp.

277 Ill. App. 93, 1934 Ill. App. LEXIS 108
CourtAppellate Court of Illinois
DecidedOctober 16, 1934
DocketGen. No. 37,054
StatusPublished
Cited by7 cases

This text of 277 Ill. App. 93 (Lyons v. 333 North Michigan Avenue Building Corp.) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lyons v. 333 North Michigan Avenue Building Corp., 277 Ill. App. 93, 1934 Ill. App. LEXIS 108 (Ill. Ct. App. 1934).

Opinion

Mr. Presiding Justice Gridley

delivered the opinion of the court.

Complainants’ original hill was filed on February 11, 1933. After demurrers had been filed by the 333 North Michigan Avenue Building Corporation (hereinafter called the 333 Corporation) and by other defendants, the cause came on for hearing on the demurrers, and the court sustained them, gave leave to complainants to file an amended bill, and ordered that “the decision of the motion of the Central Republic Trust Co. (hereinafter called the Trust Co.) to dismiss the bill for lack of jurisdiction in the court to entertain the same ’ ’ (by reason of the pendency of a bill to foreclose, Case No. 551,529, filed by the Trust Co., as Trustee, against said 333 Corporation and others) “be reserved until the filing of said amended bill. ’ ’

Complainants’ amended bill was filed on April 5, 1933. It is signed by a firm of solicitors in the names of Arthur Lyons, Benjamin Galperin, Becky Doppelt, Minnie Roderick, Sam Baer, Joseph Savelson, Bertha Steinhard and Charles Nider, and it is verified by said Nider, who designates himself as one of the complainants. It states in the first paragraph that “Arthur Lyons, in his own behalf and on behalf of the other bondholders who join herein as complainants, and for the benefit of all other bondholders who are equally situated and desire to join herein as complainants, respectfully shows:” Then follow many allegations, as contained in 30 paragraphs, from which the following salient facts appear: That in June, 1927, the 333 Corporation, organized under the laws of Illinois, issued a large number of first mortgage bonds (in excess of 8,400) of the total par value of $6,250,000, for the purpose of erecting a building on the real estate now known as 333 North Michigan Avenue, Chicago; that to secure the bonds, it, on June 6, 1927, executed its trust deed to the Bank of America, as trustee, conveying the premises; that by various consolidations and changes of name the trusteeship under the trust deed passed to and now is in said Central Bepublic Trust Co.; that on January 25, 1932, a certain “Deposit Agreement” was executed between the Greenebaum Sons Investment Co. (hereinafter called the Investment Co.) as Beorganization Manager, and such of the bondholders as might thereunder deposit the bonds they severally owned, in which agreement the Trust Co. was named as the depositary; that Arthur Lyons deposited his $1,000 bond under the agreement; that just prior to February 1, 1932, the Trust Co., as trustee under the trust deed, took possession of the premises and building and began, and is now, collecting the rents and profits thereof; and that on February 1, 1932, the Trust Co. accelerated the maturity of the bonds and filed a bill (case No. 551,527) in said superior court to foreclose the trust deed securing the bonds, on which no foreclosure decree has as yet been entered.

The amended bill malíes charges against defendants of fraud and misrepresentation, largely by conclusions rather than by allegations of facts, in the stated value of the premises securing the bonds, in the published advertisements concerning the value of the bonds when they were offered for sale, in the actions and doings of some of the defendants in promoting the plan of reorganization, and in procuring bondholders to deposit their several bonds with the Trust Co., as depositary, under the Deposit Agreement. A certain “Income Statement with Comparison” (erroneously called a “Balance Sheet” by complainants’ counsel) and the “Deposit Agreement” are set out in full in the bill, and three other documents are attached thereto as Exhibits “A,” “B” and “D.” The allegations of the last two paragraphs of the bill are in substance as follows :

(29) That Benjamin Galperin, who joins as a co-complainant, is the owner of one bond for $1,000, which he has deposited with the Depositary under the Deposit Agreement; that Lyons and Galperin “were not aware of the fraudulent purpose for which the deposit was sought, but, having now discovered its real object, they- repudiate the actions of the Committee, the depositary and the agreement, and do not desire to be parties to a fraudulent enterprise to cheat and defraud the other bondholders”; that they, therefore, bring this action in their names, and for the use and benefit of all other bond owners “who are equally desirous of preventing this fraudulent scheme to freeze out their co-beneficiaries, devised by the Trustee, the Reorganization Manager and the Mortgagor,” to the end that said two bonds deposited by said Lyons and Galperin, as well as the bonds deposited by the other bond owners, “be returned to them free and clear from the lien of the depositary, trustee and reorganization manager. ’ ’

(30) That Becky Doppelt (owner of two bonds of $500 each), Minnie Roderick (owner of one bond of $500), Sam Baer (owner of two bonds of par value of $1,500), Joseph Savelson (owner of $5,000 of the bonds), Bertha Steinhard (owner of one bond of $500), and Morris Rider (owner of two bonds of $1,000 each) also herein join as co-complainants; that the total amount of all of the bonds owned by Lyons and his co-complainants aggregates $12,500; that Doppelt, Roderick, Baer and Savelson “have heretofore attempted to intervene in said foreclosure proceeding, claiming adverse interests to that of the Trustee, but because of the objection by the Trustee now join herein as co-complainants”; that one Lottie Brenner (who did not join as a co-complainant) “is the owner of bonds aggregating $100,000 and is also objecting to the ‘ scheme, ’ and there are many other bond owners who object thereto ’ ’; that it would be too expensive to make all bondholders parties to the proceeding, many of whom are widely scattered and out of this court’s jurisdiction; that their interest is not in conflict with that of complainants; and that “all are interested in one common cause, namely, the protection of their rights. ’ ’

The prayer of the amended bill is substantially as follows:

That the 333 Corporation, the Trust Co. (individually and as trustee, and as depositary), the Investment Co., and said nine other named parties (individually and as officers and directors of said 333 Corporation) answer the bill, but not under oath; that they also answer 17 special interrogatories as set forth; that “the court may find and determine that there is now due the whole bond issue and interest thereon”; that “a money decree be entered against the Mortgagor (333 Corporation) and the persons who may be found to be personally liable thereon, less any funds which may be turned over in reduction of the indebtedness of the items enumerated below upon a proper accounting”; and that the court may find and decree:

1. That any funds collected from the income of the premises for the payment of taxes and interest, which were “diverted” for other purposes, be followed into the possession of the several defendants “be charged and impressed with a lien in favor of all bondholders,” and that the persons “who participated in the diversion of the funds” be ordered and decreed to refund same.

2. That the Trust Co., as trustee in the trust deed securing the bonds, and the Investment Co.

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Bluebook (online)
277 Ill. App. 93, 1934 Ill. App. LEXIS 108, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lyons-v-333-north-michigan-avenue-building-corp-illappct-1934.