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Continental Nat. Bk. v. Art Institute

OPINION FILED MAY 24, 1951.

CONTINENTAL ILLINOIS NATIONAL BANK AND TRUST COMPANY OF CHICAGO, EXR.,

v.

ART INSTITUTE OF CHICAGO ET AL., APPELLEES. — (SHRINERS HOSPITALS FOR CRIPPLED CHILDREN ET AL., APPELLANTS.)



APPEAL from the Second Division of the Appellate Court for the First District; — heard in that court on appeal from the Circuit Court of Cook County; the Hon. LEONARD C. REID, Judge, presiding.

MR. JUSTICE THOMPSON DELIVERED THE OPINION OF THE COURT:

Rehearing denied September 17, 1951.

The Continental Illinois National Bank and Trust Company of Chicago, as trustee of a trust inter vivos established by Doctor Daniel D. Van Degrift, deceased, and as executor of Doctor Van Degrift's will, filed its complaint in the circuit court of Cook County seeking construction of the trust agreement and of the will and codicil thereto. The controversy arises on the effect of certain amendments to the trust agreement and of certain provisions of the will and codicil upon the third article of the trust agreement. The trial court held that an amendment to the trust agreement made by the trustor on February 19, 1936, which gives the residuary net income to the Art Institute of Chicago, and eliminates gifts to Homer D. Chatmon and Shriners Hospitals, was valid and controlling. The Appellate Court, on appeal by Homer Chatmon and the Shriners Hospitals, affirmed this holding. We granted leave to appeal.

The allegations of fact controlling this case reveal that on October 16, 1930, Doctor Van Degrift created an inter vivos trust naming the plaintiff bank as trustee. By the third article of the trust instrument the trustor reserved the income for life and made certain specific gifts to the Art Institute and then gave the residuum to the Art Institute for purchases of works of art. In February, 1931, the trustor, pursuant to his expressly reserved right to amend the trust instrument, cancelled the third article and substituted a new article third, which preserved the gifts to the Art Institute, but added certain gifts among which were gifts to appellants Homer D. Chatmon and the Shriners Hospitals. Other amendments were made in 1931 which do not affect the controversy here. On February 27, 1934, the trustor cancelled the third article, as amended, and substituted a new article third, which made gifts to various relatives and friends and increased the gift to Chatmon to $100 per month for life, and gave the residuary income to the Shriners Hospitals. It is this amendment which appellants contend is still in force. On February 19, 1936, the trustor made a further amendment by which he cancelled the third article and which omitted Chatmon as a beneficiary and substituted the Art Institute as beneficiary of the residuary income for the Shriners Hospitals. It is this amendment which appellee Art Institute of Chicago contends is still in force.

Thereafter, on August 12, 1943, trustor further amended the third article, canceling a gift of $5000 to one Thomas C. Van Degrift and a gift of $100 per month to one Charles R. Van Degrift. In this amendment the trustor ratified the trust agreement as dated October 16, 1930, without reference to any prior amendments thereto.

On June 25, 1945, the trustor made a further amendment in which he made reference to the trust instrument dated October 16, 1930, and the amendments dated February 6, 1931, November 11, 1931, February 27, 1934, and August 12, 1943, and ratified the trust instrument as amended on those dates. No reference was made to the amendment of February 19, 1936. In this amendment the trustor cancelled paragraph (b) and subparagraphs (1) to (6) thereof, contained in the third article of the trust agreement, and substituted specific gifts to five relatives and friends, increased a gift to one Ethel Deacon Orr, and made provision for payment of taxes upon the gifts out of the corpus. No reference was made to the disposition of the residuary income. The record shows that paragraph (b) of the third article as contained in the 1934 amendment included subparagraphs (1) to (6), but that article third as contained in the 1936 amendment included a paragraph (b) with subparagraphs (1) to (3) only.

On September 7, 1945, the trustor made a further amendment which, in its ratification clause, referred to amendments dated February 6, 1931, November 11, 1931, February 27, 1934, August 12, 1943, and June 25, 1945. No reference was made to the amendment of 1936. This last amendment also made no reference to the gift of the residuary income.

On August 12, 1943, the trustor made his will by which, in the fourth article, he gave the residuum of his estate to the trustee as a part of the corpus of the trust to be distributed as a part thereof. In this will he made reference to the trust instrument dated October 16, 1930, and to the amendment thereto dated August 12, 1943, and to no other amendments.

On September 7, 1945, the trustor executed a codicil to his will by which he cancelled the fourth article of the will and by which he substituted a new article fourth. The codicil made reference to the trust agreement dated October 16, 1930, and the amendments thereto dated February 6, 1931, November 11, 1931, February 27, 1934, August 12, 1943, June 25, 1945, and September 7, 1945. No reference was made to the 1936 amendment. The codicil gives the residuum of the estate to the trustee as part of the trust to be distributed as a part thereof. The trustor and testator, Doctor Daniel D. Van Degrift, died May 31, 1946.

The controversy here arises on the question whether the 1936 amendment controls as to the disposition of the trust and the residuary estate passing under the will and codicil thereto.

The court admitted, over objection of appellants, extrinsic evidence which tends to show that the trust agreement and amendments thereto were executed by the trustor in duplicate; that the trustee's file contained one executed copy of the agreement and all amendments thereto, which was kept in the trustee's vault under audit control; that there was made an "office file" of the various instruments, which was used in connection with the various amendments. The vault file contained all the amendments, including that of 1936. The "office file" did not include the 1936 amendment and no executed duplicate original of the 1936 amendment was produced on the trial. In making the various amendments after 1936, and in making the will and codicil, reference was had to the "office file," which did not include the 1936 amendment. One McCulloch, the attorney who prepared the various instruments executed after 1936, testified that he was notified that Van Degrift wished to take some action in regard to the trust in each instance and was furnished by the bank with its "office file," in which it appeared that the 1934 amendment had not been revoked, and that he prepared the various papers on the basis of what was contained in the "office file," which did not contain the 1936 amendment.

It appears in evidence that among the papers of Doctor Van Degrift there was found an unexecuted document containing the provisions of the 1936 amendment to the trust instrument.

Appellants assign error in the holding below that the amendment of February 19, 1936, was not revoked, and in the holding that the amendment of February 27, 1934, was not revived and readopted by reference in the amendments of June 25, 1945, and later. Error is also assigned in that extrinsic evidence was admitted on the proceedings below and in holding that the residuary estate, passing under the will and codicil, was governed by the trust instrument as amended by all the amendments thereto, including that of February 19, 1936.

The following questions are presented: (1) Was the amendment of 1936 revoked by the later amendments to the trust instrument? (2) Was the amendment of February 27, 1934, revived and readopted by reference in the later amendments? (3) Does the residuary estate passing under the will and codicil become a part of the trust and, if so, does the 1936 amendment to the trust instrument and later ...


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