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Stone v. Baldwin

OPINION FILED MAY 20, 1952

CLAUDE U. STONE, TRUSTEE AND EXECUTOR UNDER WILL OF FANNIE G. BALDWIN, DECEASED, PLAINTIFF,

v.

SIDNEY BALDWIN, HELEN BALDWIN SMITH, MARGARET BALDWIN HOLLEY ET AL., DEFENDANTS. HELEN BALDWIN SMITH ET AL., PETITIONERS-APPELLANTS,

v.

EDWIN

v.

CHAMPION, RESPONDENT-APPELLEE.



Appeal by petitioners from the Circuit Court of Peoria county; the Hon. J.T. CULBERTSON, JR., Judge, presiding. Heard in this court at the February term, 1952. Reversed and remanded with directions. Opinion filed May 20, 1952. Rehearing denied June 11, 1952. Released for publication June 12, 1952.

MR. PRESIDING JUSTICE DOVE DELIVERED THE OPINION OF THE COURT.

Rehearing denied June 11, 1952

On February 7, 1931, Fannie G. Baldwin executed her will and, thereafter, on November 29, 1935, a codicil thereto which were duly admitted to probate by the probate court of Peoria county following her death in 1938. Claude U. Stone was appointed executor and administered her estate and was discharged as such executor on December 22, 1946. The will created a trust and named Claude U. Stone and another as trustee. The codicil revoked the appointment of the additional trustee and designated Claude U. Stone as sole trustee. Claude U. Stone accepted the trusteeship and continued to act as sole trustee under the direction of the circuit court of Peoria county until he resigned on June 17, 1949. At that time, Stone, acting under the provisions of the will creating the trust, designated George Z. Barnes successor trustee, and he, Barnes, qualified and acted as such sole trustee until his death on July 16, 1951.

The principal asset of the trust created by the will of Fannie G. Baldwin is 798 shares of the outstanding 940 shares of the capital stock of the Peoria Star Company which publishes the Peoria Star, a daily newspaper. Sidney Baldwin is a daughter of said Fannie G. Baldwin, deceased. Frank Baldwin was a son of said Fannie G. Baldwin, and he predeceased his mother, leaving Margaret and Helen, his daughters. Margaret Baldwin thereafter married John M. Holley, and Helen Baldwin married Barton Smith, and they are the respective parents of Nancy Baldwin Holley, John Milton Holley, George Stockwood Holley, Stephanie Smith, Davidson Smith, Monica Smith, and Bennett P. Smith, all minors. Among other things, the will of Fannie G. Baldwin directed the trustee to pay to the daughter, Sidney Baldwin, during her lifetime, sixty per cent of all the net income from the trust estate, the same to be paid quarterly or "oftener if possible." The will also provided that upon the decease of said daughter, if she leaves surviving any child or descendant thereof, the same percentage of net income as directed to be paid to Sidney Baldwin shall be paid to her child, children or descendants per stirpes. It is then provided that if the daughter died without leaving surviving any child or descendant thereof, such portion of the net income shall be paid in equal proportions to the granddaughters of the testatrix, now Helen Baldwin Smith and Margaret Baldwin Holley, and their respective children, per stirpes. The remaining 40 per cent of the net income of the trust estate is to be paid to said granddaughters in equal proportions. Upon the death of either granddaughter leaving any child or children her surviving, her descendants divide such income per stirpes. Should both the granddaughters predecease the daughter, leaving no child or descendant thereof, then their portion of the income is to be paid to the said Sidney Baldwin during her lifetime.

The will further provided that in the event the daughter and two granddaughters of the testatrix should all die leaving surviving them no child or children or descendants thereof, then her trustee was directed to distribute the income from the trust estate to certain specified charities, and when the trust terminates, if there are no descendants of the daughter or granddaughters then living, the corpus of the trust is to be distributed to these named charities. The trust was to continue for a period of twenty years after the death of the last survivor of the daughter, Sidney Baldwin, and her granddaughters, Helen Baldwin Smith and Margaret Baldwin Holley. At the expiration of the period, the trust estate was to be distributed to the descendants of the two granddaughters per stirpes, if there were any and, if not, then to certain charities. The testatrix stated that her purpose in continuing the trust for such period was that "I most ardently desire the newspaper known as the Peoria Star, which constitutes the greater part of the property that will come to this trust estate, to be and remain strictly a Peoria institution controlled at all times by Peorians for as long a period as it is possible for me to fix under the law."

Following the death of George Z. Barnes, successor trustee and on July 20, 1951, Sidney Baldwin filed her petition in the circuit court of Peoria county suggesting the appointment of the Central National Bank and Trust Company of Peoria as successor trustee. On July 26, 1951, Helen Baldwin Smith, Margaret Baldwin Holley, Nancy Baldwin Holley, John Milton Holley, George Lockwood Holley, Stephanie Smith, Davidson Smith, Monica Smith, and Bennett P. Smith filed their petition in said proceeding requesting that Lawrence A. Welch, John M. Holley, husband of Margaret Baldwin Holley, and Barton Smith, husband of Helen Baldwin Smith, be appointed successor co-trustees. On July 29, 1951, Claude U. Stone executed a written instrument, which he filed with the Recorder of Deeds of Peoria county, in which he nominated Edwin V. Champion as trustee, and on July 30, 1951, Stone filed his petition in the circuit court in this proceeding asking that the court confirm that appointment and fix the terms and amount of the bond to be given by the successor trustee. Motions by the several beneficiaries were filed to strike the petition of Stone on the ground that Stone had exhausted his power of appointment under the will of Fannie G. Baldwin when he appointed George Z. Barnes as his successor trustee. Stone answered the petitions of Sidney Baldwin and the other beneficiaries averring that he had the power to appoint all successor trustees and suggesting that the prayers of those petitions be denied inasmuch as he had appointed Edwin V. Champion as successor trustee. The circuit court, on October 10, 1951, after a hearing, entered an order finding that Stone had no power to appoint another successor trustee and that his purported appointment of Champion was null and void and sustained the several motions of the respective beneficiaries to strike the Stone petition and it was dismissed and that order is not involved in this appeal.

An extensive hearing was had in the circuit court upon the several petitions of the various beneficiaries for the appointment of a successor trustee or trustees. At that hearing, the beneficiaries were present and represented by counsel and, at the conclusion of the hearing, the chancellor took the matter under advisement and on December 13, 1951, entered an order appointing Lawrence A. Welch and Edwin V. Champion co-trustees, fixed the amount of their bond at $75,000, and directed that upon their filing a written acceptance of the trust and upon the approval of their bond, said trustees should enter upon the discharge of their duties as such co-trustees. Thereafter written acceptances of the trust were filed by Champion and Welch, together with their bond, as provided in the order of December 13, 1951, and on December 24, 1951, an order was entered so finding and approving the bond of these trustees. Margaret Baldwin Holley, Helen Baldwin Smith, and Patrick F. Crowley, guardian ad litem for the minor children and trustee for the unborn heirs, prosecute this appeal to reverse that portion of the order appointing Edwin V. Champion co-trustee.

Upon the hearing before the chancellor, John M. Holley testified that his wife is thirty-three years of age and that they have three minor children and make their home in Roswell, New Mexico; that Mrs. Holley has not lived in Peoria since she was a very young girl; that he and his wife had made an extensive investigation and had determined that Lawrence A. Welch was familiar with the Peoria Star and its management; that he, Welch, enjoyed a most excellent reputation and that they were satisfied that he was highly qualified to act as a trustee; that they objected to the Central National Bank of Peoria being appointed trustee because they were of the opinion that a natural person was better qualified to look after the interests of this trust and that the trust would get more thorough and unselfish attention and consideration by an individual trustee than by a corporate trustee. Barton K. Smith testified that he was the husband of Helen Baldwin Smith and that he and his wife and four children live in Wilmette, Illinois; that there was a lack of cordiality between Mrs. Smith, Mrs. Holley, and Sidney Baldwin, and that Sidney Baldwin declined to cooperate in any way with Mrs. Holley and Mrs. Smith, and that they had been unable to reach any understanding with reference to the appointment of a trustee. Both Mr. Holley and Mr. Smith testified they would accept an appointment as trustee and would serve without compensation.

The record discloses that Lawrence A. Welch is fifty-five years of age and has been a resident of Peoria for twenty-two years. In March, 1950, he became vice-president of the Peoria Star, is familiar with its operation, and in July 1951, became president and manager. He had been vice-president of the board of directors of Peoria Newspapers, Inc., and the representative of the Star on that board and, following the death of Mr. Barnes, became chairman of that board of directors and is a director of the Commercial National Bank of Peoria. He is one of the outstanding business men of Peoria, whose reputation for integrity, independence, and courage is unsurpassed, and he enjoys the confidence, respect, and esteem of those who know him. He was suggested by appellants for appointment as a co-trustee, and Sidney Baldwin is satisfied with his appointment. We can well understand why his appointment by the chancellor was acceptable to all interested parties.

Counsel for appellants call our attention to the fact that from the time of the death of the testatrix in 1938 until this appointment of Welch and Champion as co-trustees was made in 1951, this trust was administered by one trustee; that the sole asset of this trust is a majority of the capital stock of the Peoria Star Company; that the duties devolving upon the trustee are relatively simple and consist of voting the stock at the annual meeting of the corporation for the election of directors and to receive and distribute dividends when paid. Counsel argue that there are no duties other than these and the making out and filing income tax returns. Counsel state that they do not contend that the chancellor, under his general equity powers, could not appoint more than one trustee, but insist that in the absence of evidence showing a clear need for a different number of trustees, the chancellor should have appointed a sole trustee.

Here then, we have this situation: Sidney Baldwin, one of the beneficiaries, had suggested to the court the appointment of a corporate trustee. The other two adult beneficiaries opposed such an appointment. Sidney Baldwin, who suggested the appointment of a corporate trustee, was represented by separate counsel in the trial court and in this court and has filed her brief in which she states that her purpose in so doing is to advise the court that she has not appealed and has no objection to the decision of the chancellor and has never questioned the integrity, ability, or qualifications of Edwin V. Champion and agrees with the findings of the chancellor that Mr. Champion "has all the qualifications that should make him a good trustee." Appellants, who opposed the appointment of a corporate trustee, suggested the appointment of three individual trustees and now insist (since the chancellor appointed two individuals to act as co-trustees) that one trustee can perform the duties of trustee better than two and that any number of trustees more than one will be a burden and an unwarranted expense to the trust.

It is true that the testatrix designated a sole trustee, but she also provided for the appointment of a successor trustee, or trustees, in the event of Mr. Stone's death or resignation. Mr. Stone was expressly given the power to appoint a trustee or trustees if he resigned. The record shows that on May 17, 1943, Mr. Stone invoked the jurisdiction of the circuit court of Peoria county in connection with the administration of this trust, and the chancellor who entered the order from which this appeal is prosecuted is and has been familiar with this trust and its operation from that time. After giving the matter of the appointment of a successor trustee or trustees his considered judgment, the chancellor entered the order appointing Mr. Welch and Mr. Champion trustees and this order recited: "In evaluating the various recommendations as made, it seems entirely proper to me that such direction as is contained in the language employed by the creator of this trust should be accorded that consideration to which it is entitled, and a resort to the Will of the late Fannie G. Baldwin discloses therein, among other language, the following: `My object and purpose in continuing this trust for the period indicated is for the reason I most ardently desire the newspaper known as the Peoria Star, which constitutes the greater part of the property that will come to this trust estate, to be and remain strictly a Peoria institution controlled at all times by Peorians for as long a period as it is possible for me to fix under the law.' I do not find any language in the will or codicil of Mrs. Baldwin that would indicate any desire on her part that a corporate trustee should administer this trust in whole or in part. I find that the duties and responsibilities incident to the carrying out of this trust are of such magnitude that, in my opinion, one person should not be asked to assume a responsibility of such proportions. I therefore find that it is to the best interests of this trust and of each and every party interested therein that this trust should be administered by individual co-trustees. I further find that the individuals designated by this order as co-trustees of this trust are men of ability and of the highest integrity, and that they are abundantly qualified to discharge the duties of co-trustees of this trust, and that it is to the best interests of the trust and of each and every party interested therein that they be appointed."

The instrument creating this trust provided for the appointment of a successor or successors to Mr. Stone under two different sets of circumstances. First, in the event of the death of Stone without Stone having previously named his successor and, second, in the event of Stone's resignation. In the event of his death without having previously named his successor, the sitting judges of the circuit court of Peoria county were authorized to fill the vacancy. In the event of Stone's resignation, he, Stone, was given the power to select and appoint his successor. In both events, the will provided that the appointing power should have the right to appoint "a suitable person or persons" to fill the vacancy. The appointment challenged by this appeal was not made under either of these provisions but was made by the chancellor under his inherent equity powers. All the authorities are to the effect that in making appointments of this character the chancellor exercises a very broad and a very wide discretion.

[2-4] The jurisdiction of a court of equity to appoint trustees, as one phase of its jurisdiction over trusts, extends to the appointment of successor trustees (54 Am. Jur. Trusts, sec. 134, p. 114). In making such appointments the chancellor, on a petition to appoint one trustee, may appoint another, may appoint a trust company in place of an individual trustee, or may appoint a sole trustee instead of several trustees, or may appoint several trustees in place of one or otherwise increase or decrease the number of trustees (Bogert Trusts and Trustees, Vol. 3, sec. 532, and cases cited). In Steger v. Northen, 229 Ill. App. 529, at pages 539, 540, the court quotes from 39 Cyc. 283 to the effect that the appointment of a fit and proper ...


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