Victor v. Hillebrecht

90 N.E.2d 270, 339 Ill. App. 254, 1949 Ill. App. LEXIS 390
CourtAppellate Court of Illinois
DecidedMarch 1, 1949
DocketGen. No. 43,867
StatusPublished
Cited by3 cases

This text of 90 N.E.2d 270 (Victor v. Hillebrecht) 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
Victor v. Hillebrecht, 90 N.E.2d 270, 339 Ill. App. 254, 1949 Ill. App. LEXIS 390 (Ill. Ct. App. 1949).

Opinion

Mr. Presiding Justice Sullivan

delivered the opinion of the court.

Pursuant to a reorganization plan approved in a proceeding instituted under section 77B of the Bankruptcy Act (11 USCA § 207), a liquidation trust agreement was executed on November 6, 1935, as to the property located at 7000 South Shore Drive, Chicago, Illinois, which premises are improved with a 16-story apartment hotel building, containing 31 unfurnished apartments and 148 furnished apartments. Under said agreement the Trust Company of Chicago was named liquidation trustee and Herbert Hillebreeht, Walter A. Wade and James Y. Bremner were named as trust managers.

This suit was instituted as a representative proceeding by several owners of beneficial units of the trust to compel the trust managers and the liquidation trustee to submit an offer of purchase of the trust property to the beneficiaries, to liquidate the trust estate and to distribute its assets. The complaint also asked that certain beneficial units purchased by Hillebreeht, one of the trust managers, after he had assumed his trust duties, be decreed to be trust property upon his reimbursement for his outlays in purchasing such beneficial units.

The cause was submitted on the complaint and answer and after evidence and argument were heard by the chancellor he entered a decree dismissing the complaint for want of equity. Plaintiffs appeal. There is no question raised on the pleadings.

The trust was to continue for a term of 15 years, expiring July 1,1950, but was subject to prior termination by the liquidation of the trust property. The purpose of the trust as stated in section 2 of article II of the trust agreement was “to liquidate the Trust Property” and convert same into cash and to that “end” and “purpose” the liquidation trustee and the trust managers were directed to “endeavor to make sale or other disposition of the Trust Property as soon as in the opinion of Trust Managers it can be done advantageously and to distribute the proceeds of such sale and disposition to and among the holders of Participation Certificates. ’ ’

Section 2 of article XIV of the trust agreement provides as follows:

“It is the intent hereof that Trust Managers shall by written directions to Liquidation Trustee liquidate Trust Property and in the interim supervise the management, operation, improvement, protection and maintenance thereof, all as Trust Managers in their judgment may deem advantageous to the holders of Participation Certificates issued hereunder.”

In section 3 of article III of said agreement it is provided that no sale of the trust property may be made unless the liquidation trustee “shall first give notice to the holders of Participation Certificates then outstanding, briefly describing the property and the terms and conditions of the proposed sale,” and that, “if within 20 days after the giving of such notice holders of Participation Certificates representing 33-1/3 per cent or more of the then outstanding Trust Units shall file with Liquidation Trustee written dissents from such proposed sale,” the “Liquidation Trustee shall not consummate such proposed sale.”

At the time the trust was created, one trust unit was given to bondholders in exchange for each $100 of the principal amount of bonds they owned. While acting as trust managers Hillebrecht and Wade purchased beneficial interests in the trust through the agency of G-reenebaum Investment Co., a brokerage house, which maintained an active market for such interests. In addition to 35 trust units received by Hillebrecht in exchange for $3,500 in bonds which he owned when the trust was created, he purchased from time to time, commencing during the summer of 1936, various blocks of units at prices ranging from $19 to $51.50 per unit, so that at the time of the trial he owned 1,480 units or more than one-tenth of the 14,439 outstanding trust units. He purchased for his brother, his sister and his mother an aggregate of 138 units. Wade purchased 50 trust units, for which he paid $51.50 per unit, and he purchased additional trust units for members of his family.

In 1943, the trust managers received offers of $450,000 and $550,000 for the trust property and in January 1946, they received an offer of $750,000. All of these offers were regarded by the trust managers as insufficient and they were not submitted to the beneficiaries for their consideration. On February 11, 1946, which was more than ten years after the trust had been created, the trust managers received an offer of $850,000 for the trust property, which they also refused. However, having had an appraisal made which showed the value of the property,to be $850,000 the trust managers wrote a letter to the liquidation trustee on February 15, 1946, which contained the following paragraph:

‘ ‘ The Trust Managers have concluded that they will advise the owners and holders of certificates of beneficial interest of Mr. Meier’s offer [$850,000] and certain other facts which they consider relevant. They will not recommend to the owners and holders of certificates of beneficial interest the acceptance of the Meier proposal.”

Plaintiffs ’ complaint alleged inter alia that the trust managers intended to mail a communication to the owners of the beneficial interests recommending that the $850,000 offer be rejected and that they had no authority to make any such recommendation. By way of relief in this regard the complaint asked that the trust managers be restrained from mailing any communication to the beneficiaries in connection with the submittal of said offer without the approval of the court and that “the court may approve the form of the communication and direct the defendants to mail such communication to the unit holders pertaining to the sale of the premises.”

The trust managers in their answer admitted in effect that they intended to mail a communication to the certificate holders recommending the disapproval of the $850,000 offer.

When cross-examined by plaintiffs’ counsel under section 60 of the Civil Practice Act [Ill. Rev. Stat. 1949, ch. 110, par. 184; Jones Ill. Stats. Ann. 104.060], Hillebrecht was asked the following question and he made the following answer:

“Q. How, then the offer of $850,000 was made to the trustees, the trustees instructed the Trust Company of Chicago to submit an offer but the trustees stated that they would recommend that the trust certificate holders shall dissent from the sale; is that correct?

‘ ‘ A. That is right; that is the way it was left. ’ ’

Later in his testimony, upon interrogation by the trial judge and defendants ’ attorney, he stated that the trust managers had decided, before they sent their letter of February 15, 1946 to the liquidation trustee, to submit the offer of $850,000 to the certificate holders without any recommendation.

The complaint charged that only one of the trust managers, Hillebrecht, acquired beneficial interests in the trust and that he had purchased one-third of the outstanding interests.

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In Re Will of Gleeson
124 N.E.2d 624 (Appellate Court of Illinois, 1955)
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113 N.E.2d 578 (Appellate Court of Illinois, 1953)
Stone v. Baldwin
109 N.E.2d 244 (Appellate Court of Illinois, 1952)

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90 N.E.2d 270, 339 Ill. App. 254, 1949 Ill. App. LEXIS 390, Counsel Stack Legal Research, https://law.counselstack.com/opinion/victor-v-hillebrecht-illappct-1949.