Lurie v. Sabath

Mr. Presiding Justice Ball

delivered the opinion of the court.

The alleged fundamental error here urged as ground for reversal, and the only one that need be considered by us, is that the decree of the Circuit Court is against the weight of the evidence.

The question to be considered may be further limited. To sustain this bill the complainants must show a trust agreement by which it is provided that after A. J. Sabath and Alexander have been reimbursed for their outlays and have been paid for their services, and the indebtedness of Josef Lurie, as guardian of the estate of these minors, has been liquidated, they, the complainants, were to receive the remainder of the fund arising from the sale of these goods. If they have failed to establish this condition, their suit must fail, even though they have proven a trust in other particulars; for without proof of this condition, they have no interest in the subject-matter of this suit.

The cause was heard in open court.

“The chancellor saw and heard the witnesses testify, and he was in a better position than we to judge of the truth of their statements and the'weight that should be given to their testimony, and we will not reverse in such a case except where it clearly appears that the evidence does not preponderate in favor of the decree.” VanVleet v. DeWitt, 200 Ill. 153, 156.

Among the matters that are not here in dispute are the following: Commencing in 1892, Josef Lurie, the then guardian of the estate of these minors, began to invest the moneys of this estate in merchandise, placed in the three stores described in the bill of complaint, in his own name or in the name of Max Lurie & Co., said Max Lurie being the son of Josef Lurie. That in November, 1898, Josef Lurie owed the estate at least $24,107.36. These stores had not been a financial success. It is evident that complainants were then wholly insolvent. Prior to the last date, the J. Y. Farwell Company had levied attachments, issued November 21, 1898, in two suits against the Luries pending in the Superior Court, on all these goods for an admitted indebtedness of over $22,000, and other creditors of the complainants had begun suits, or were threatening to bring suits against them. The sheriff, under and by virtue of such attachment writs, was in possession of all these goods (except a horse and wagon), and so remained in possession until he sold the same, either at retail or at auction under writs of execution issued upon judgments theretofore obtained against one or both of the complainants. It also appears that on November 23, 1898, Josef Lurie had no moneys or property with which to make good his indebtedness to the estate, other than his equity, if any, in these attached goods and two city lots worth not to exceed $750.

Under these circumstances Josef Lurie, November 23, 1898, went before the Probate Court of Cook County, wherein such estate was being administered, and presented to it his petition, report and resignation. Therein he admitted that as such guardian he was indebted to said estate in the sum of $24,107.36; that he had no property except his interest in these goods, two notes for $6,500, which he had hypothecated, and two city lots incumbered for $400. He tendered his interest in said property, “ or so much thereof as he is in possession of,” to the court, and to his successor as guardian, and asked the court to ascertain the present value of his interest in said property, to credit him with such value, to accept his resignation, and to appoint his successor. The court accepted his resignation, and appointed Joseph Sabath his successor as guardian, directed Josef Lurie to convey his interest in said property to his successor, and held the question as to the money value of such interest to be thereafter determined by the court. The order further directed the new guardian “ to take and hold said property, or so much thereof as it is possible for him to take possession of as such guardian, until the further order of this court.” Thereafter, and in the same month, Josef Lurie conveyed all his interest in all the property described in the petition to Joseph Sabath as guardian. In this bill of sale Josef Lurie vouches that he is the true and lawful owner of said goods, chattels and property, and has in himself full power, right and lawful authority to dispose of the same. It is admitted that no part of the goods thus tendered was ever put in the possession of the new guardian, nor was it then or ever after in the power of said Josef Lurie to deliver the possession thereof to any one.

A. J. Sabath, Joseph Sabath and Max Lurie and Henry Lurie, with their solicitors, attempted to come to some agreement with the Farwell Company. The proposition was that all these goods should be conveyed to E. R. Webber, agent of the Farwell Company, to be by him reduced to cash, and the net proceeds paid, one-half to Joseph S ibath as guardian, and the other half to the Farwell Company upon their claims. At this .time the Farwell Company claims stood upon the attachments levied prior to November 23, 1898. In their endeavor to come to this agreement the parties were confronted by certain hostile legal propositions and legal situations, such as the method of taking title, and the liability of the Luries to be adjudged bankrupts. For these reasons the Farwell Company, December 7, 1898, wholly abandoned the proposition and refused to further treat with the Sabaths and the Luries. The evidence does not show that during the discussion with the Farwell Company anything was said concerning the turning over of all interest which Josef Lurie had in these goods to his successor as guardian, or that any one interested in the Farwell Company was told that this had been done. Mr. Cox says that the trust agreement was not entered into while they were negotiating with the Far-well Company.

December 10, 1898, by consent of the parties, the sheriff began to sell the goods, still situate in the stores, at retail. In so doing he employed the Luries, Joseph Sabath and Sigmund Kaufman to run the business. From this sale about $8,000 was realized before the sheriff sold the remaining goods at auction. Kaufman was in the general employ of Alexander, and while engaged in these stores he made an inventory of the goods.

In order that the estate might prorate with the Farwell Company, Josef Lurie, under date of November 23, 1898, made and delivered to Joseph Sabath as guardian, his promissory note, due in one day from date, for the sum of $24,107.36. Suit was begun in the Superior Court of Cook County on this note December 1, 1898. On the same date five other suits were also begun in said court against Josef Lurie, or Josef and Max Lurie. Judgments were severally entered on each and all of said suits at the December, 1898, term of said court. The amount of these judgments, exclusive of costs, was $48,531.79.

December 9, 1898, A. J. Sabath, for himself and Alexander, as he says, with their own moneys, bought the Farwell judgments for $10,500 or $10,750, and at or about the same date A. J. Sabath and Alexander purchased other claims against the Luries. The sale of the remainder of these goods was made by the sheriff at auction December 29, 1898. At that sale, after some contest between opposing bidders, A. J. Sabath became the purchaser of these goods at the cost of $14,000. This purchase, he says, was for himself and Alexander, solely upon their personal account. After the sale the sheriff turned over the possession of the goods to A. J. Sabath and Alexander, and they continued to sell such goods at retail, at the stores before mentioned, as their own property.

December 29, 1898, said Superior Court entered an order in which it was found that the net results of the sales of said goods amounted to the sum of $18,751.45; and thereupon the court entered an order of distribution, directing the payment of $13,581.59, to A. J. Sabath as assignee of the two Farwell judgments and of the Merrick Thread Company judgment; to Adolph Levin & Co. $500.25; to Joseph Sabath as guardian $4,537.22; to M. T. Silver & Co. $114.44; and to Eisenger, Kramer & Co. $17.85; the court retaining in its control the sum of $1,000 to await the outcome of two suits then pending against said Josef Lurie.

April 26, 1900, Josef Lurie presented a petition to the Probate Court in the matter of the minors’ estate, in which he states that November 23, 1898, he filed a full report as guardian, in which he tendered all his property to be applied on the payment of what might be due said minors; and that November 25, 1898, he turned over to Joseph Sabath, his successor, all of his property; since when he has done nothing in behalf of said estate; and he maltes the report filed November 23, 1898, his final report and account, and states that the deficiency was caused by the natural loss and decline of the mercantile business, and not through any wrongful act upon his part.

Josef Lurie, June 5, 1900, filed another petition in the same estate, in said Probate Court, in which he says that the property he turned over to his successor largely exceeded in value the amount of his liability^ to the minors; and he aslcs the court to determine the amount he is to be credited therefor, and that he be discharged, and that his bonds be canceled.

It will be noted that in neither of the petitions filed in 1900 is there anything said about a trust, nor of any liability of the defendants to the estate.

The bill sets up an express oral agreement, made November 23, 1898, by Josef Lurie and Max Lurie of the one part, and Joseph Sabath as guardian, the three minors, and A. J. Sabath and Alexander of the other part, by which the parties of the first part transferred their interest in these goods to the two Sabaths and Alexander; the latter, in consideration thereof, agreed to buy up all the outstanding claims with their own money, and to sell the goods, and, after reimbursing themselves, to turn over the balance to the estate to pay the indebtedness of Josef Lurie, and to account to complainants for any sum then remaining.

This agreement is set forth in writing in the bill, but it is admitted that it was not put in writing until more than forty days after it is alleged to have been made, when Mr. Cox wrote it out from memory, aided by a few notes put down upon a card. It also appears that neither A. J. Sabath nor Alexander ever signed the same, but always refused so to do.

It also seems clear that if any such agreement was made, it was made without the authority of Joseph Sabath, the guardian, who swears that he never heard of this trust agreement until in January, 1899, when, in the Probate Court, he tried to compel Mr. Cox to turn over to him as guardian a balance of $537 due him under the order of distribution in the Superior Court; and also without the knowledge or the authorization of the Probate Court; and also without the aptual knowledge or consent of any of the Lurie heirs.

It is further apparent that this agreement was not entered into November 23, 1898, as alleged in the bill. Mr. Cox fixes the date when the agreement was made as December 8, 1898. In rehearsing that interview, after he had given the substance of the agreement, he adds:

“Somebody said that—I don’t remember who it was; I think it had also been talked of before—I am not sure of that, though.”

He further says that the agreement was made between “ A. J. Sabath and myself,” as he said, speaking for Mr. Alexander and Joseph Sabath as guardian. He does not claim that everything in the agreement as set out in the bill was discussed and agreed upon between them. The compensation of the trustees was omitted.

“ There are formal parts in there referring to litigation and other things that probably was not discussed, that would suggest themselves to a lawyer in dictating it.”

When confronted with the legal proposition that Joseph Sabath as guardian could not create trustees to act for him, unless with the approval of the Probate Court, he admits the correctness of the proposition, and says:

“ I never went to the Probate Court or consulted the judge of the Probate Court in regard to the trust agreement before drawing it up. I never had the chance to obtain the sanction of it.”

Complainant Max Lurie, in speaking of the interview in which it is asserted that the trust agreement was entered into, says:

“ I could not give any words, or any conversation that Adolph (A. J.) Sabath said at that meeting; I could not say what he said, even the substance of what he said; but I know he did not dissent from ”—“ I don’t recollect any particular words that was said. The substance would be that he said he would carry out this agreement.”

Henry Lurie says that Mr. Alexander told him that he, Alexander, would be willing to put up the money necessary to buy up the Far well attachments and open up the stores, provided A. J. Sabath would go with him as partner; that he thought that was the best way to .get out of it to save the children’s money. Julius Lurie testifies to the same effect.

Mr. Alexander explicitly denies that any such conversation took place, and says that he bought the stock for himself and not for the heirs; and that the first time he heard about the trust agreement was (in January, 1899,) when Mr. Cox called to see him.

Judge Payne testifies that he was present at the interview of December 8, 1898:

“ At that conversation it was stated that Mr. Alexander had agreed to join with Justice Sabath in making the purchase of the Farwell claims, for himself, and Mr. Alexander. Question : “You may state what, if anything, was said at that meeting about Sabath and Alexander acting on behalf of the minors?” “Mothing of that sort was stated then, or at any time within my knowledge, that is, prior to the sale.” “ The first I heard anything on that subject was about the 9th of January.” * * * “I never heard the figures $14,000 mentioned before the sale.”

A. J. Sabath swears:

“I never did, on any occasion, to Cox or to any living person, say that I expected to buy these stores for $14,000, because I did not know myself for what sum.”

He denies absolutely that at any of these interviews anything was said about buying these stores for the minors. He asserts that he never said that to any one; and that he never heard of the trust agreement until January 9, 1899.

“ I bought this stock of goods for the purpose of trying to save myself the loss that at the time I understood we would have to stand, me being on the bond.”

Joseph Sabath, the guardian, testifies that he never heard of the trust agreement until in January, 1899; and never talked with A. J. Sabath about taking an assignment from the Farwells for his benefit.

“At the time of the sale I did not know of any agreement with A, J. Sabath and Alexander that they were to buy in these stocks for my benefit as guardian of the minors, and would not consent to it if they had made such a proposition.” * * * “ 1 never saw a copy of this trust agreement. Mr. Cox never told me the contents of it, or of any trust agreement. He never asked me to sign any such trust agreement. I never asked leave of the Probate Court to enter into any trust agreement.”

We have set down the foregoing extracts from the evidence in order to show the indefinite character of the proof as to the terms of this alleged agreement, if any was ever made, and the startling contradictions of respectable, intelligent and unimpeached witnesses as to whether or not such an agreement was ever entered into.

Neither A. J. Sabath nor Alexander stood in any relation of confidence to these minors. They had a guardian and counsel to aid them and to protect their interests. The latter was present at all the important interviews, commencing with November 23, 1898. Unless this trust agreement is established, neither A. J. Sabath nor Alexander was obligated to act in the interest of the minors.

This express agreement, if made at all, was made on or after December 8, 1898. Up to that date the Far well agreement was still under discussion, and until that agreement was abandoned there existed no reason for other action.

Why was this trust agreement not put in writing before the public sale ? Twenty days elapsed after it is alleged to have been made before that sale took place. Josef Lurie was vitally interested in the payment of the $24,000 he owed the estate. If he could accomplish that he saved his good name, he exempted his sureties from financial hardship, and he kept himself outside of the prison door which opens to receive the body of a defaulting guardian. Yet he suffers this agreement, which promised to wipe out these dangers, to remain unwritten and unsigned at the time he lost all title to and equity in these goods.

The fact that the heirs and their estate were protected from ultimate loss by reason of the bonds given by Josef Lurie as guardian, which in the absence of evidence to the contrary, must be presumed to be good, does not render the alleged trust agreement invalid; nor does the fact that the permission of the Probate Court, if that could be had, was not obtained, affect the legality of such agreement; but both of such facts are arguments to be considered in the decision of the question as to whether such an agreement was or was not entered into.

The fact that A. J. Sabath bought these goods is equally explained by the trust agreement, and by his position as bondsman. In either event he was lessening his ultimate liability. In the one event by a payment, in part at least, of the debt, and in the other by obtaining a profit by means of which to meet his obligations.

To establish a trust upon parol evidence, the evidence must be very clear and satisfactory, and it ought to find support in the subsequent conduct of the parties. Crissman v. Crissman, 23 Mich. 221.

If it is intended to fasten a trust on personal property, created verbally, and dependent upon merely oral testimony, the testimony ought to be clear and explicit. Bailey v. Irwin, 72 Ala. 507.

We have carefully gone over the evidence in this case, covering over 400 pages of the printed abstract. We are not warranted in setting forth that evidence in detail, but must content ourselves by saying that we find much contradictory evidence, much that is wholly irreconcilable. Respectable witnesses clash upon almost every point which tends to prove or to disprove the making of the alleged trust agreement. The subsequent conduct of the parties preponderates against the existence of such an agreement. Under these circumstances an appellate tribunal, not having seen or heard the witnesses, has no right to override the decision of the chancellor, who had those advantages.

But it is asserted that by reason of what was said in these interviews, and the acts of Sabath and Alexander, the Luries were misled into believing that the sheriff’s sale was for the benefit of the minors, and for that reason bidders were deterred from bidding at the sale, and as a consequence the prices obtained were less than they otherwise would, have been.

There is not enough evidence in this record to impeach the sheriff’s sale, in view of the finding of the chancellor.

It seems to have been carried on as such sales usually are. There were many people present. The deputy sheriff who conducted the sale says :

“ The sale was to the highest bidder. The bidding covered a range of several thousand dollars. It began lower and went higher.”

Anton Immekus, the buyer for L. Klein, testifies that he bid upon each of the two lots into which the goods were divided; that three or four men were bidding, and that soon after he bid $8,600 upon the Max Lurie & Co. stock, his bid was raised, and he would go no further “ because we did not think the stock was worth more money.” Sol Klein, who had looked over these goods prior to the sale, said he was present at the sale; that the Pilsen goods started at 83,500; the bidding was rapid; his last bid was $4,500. “ It reached my limit, what I wanted to pay for it, and the bidding went on.” This stock brought $5,300. It is true that Edward Silha, a son of one of the bondsmen, swears that A. J. Sabath told him, the witness, that he should not bid on the stock; that he, Sabath, was bidding on it, and that he would buy it for the interest of the heirs and of the bondsmen; but A. J. Sabath explicitly denies that he ever made such statement.

Erom all the evidence we are of the opinion that the sale made was a fair and valid sale.

As to the adequacy of the prices realized at such sale, the evidence is as follows:

“ Josef Lurie, in his petition filed in the Probate Court November 23, 1898, fixes the value of these goods at $36,000. Max Lurie places their value at from $32,000 to $36,000, but he admits that the best offer he could get for them at private sale was about $18,000; from $16,000 to $19,000.’ ”

Julius Lurie says the stores were worth “ about $40,000.” These values are based upon the condition of this stock in November, 1898. Samuel Hohn had a general impression that on the day of the public sale the goods were worth from $30,000 to $35,000.

S. Kaufman, who took an inventory of these goods after the retail sale, savs the goods were worth $15,000 to $18,000.

Charles F. Harding, who represented the Farwell Company, referring to November, 1898, said in his opinion “ they could not be reduced to cash at any sale at that time at to exceed $20,000.” The nominal value was from $33,000 to $35,000.

Sol Klein says $14,000 would be a good price to pay for these stocks at the time of the public sale. Four other experienced buyers testify substantially as does the witness Klein.

Including the sales at retail there was realized from this stock the sum of $22,834.68. From what we know of the prices obtained for stocks of merchandise at judicial sales, we are of the opinion that this result is adequate and satisfactory.

The whole case being considered, we are satisfied that in dismissing this bill the chancellor did not err, and we therefore affirm the decree of the Circuit Court.