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Murphy v. Graham

OPINION FILED DECEMBER 30, 1952

CHARLES F. MURPHY, SIGURD E. NAESS, AND ARTHUR H. WELLS, AS TRUSTEES UNDER LAST WILL AND TESTAMENT OF ERNEST R. GRAHAM, DECEASED,

v.

RUBY LEFFINGWELL GRAHAM, WILLIAM GRAHAM, HERBERT E. GRAHAM, GRACE G. ALLEN, GREGSTEN ALLEN, INDIVIDUALLY AND AS TRUSTEE UNDER WILL OF WILLIAM O. THOMPSON, FREDERICK G. ALLEN, JR., WILLIAM H. ALLEN, ELEANOR F. ALLEN, MYRTIS S. GRAHAM, AN INCOMPETENT PERSON BY DANIEL J. LAMONT, HER GUARDIAN AD LITEM, DEFENDANTS-APPELLANTS, AMERICAN SCHOOL OF FINE ARTS, DEFENDANT-APPELLEE, FRANK GRAHAM AND WILBER E. POST, DEFENDANTS-APPELLEES.



Appeal by defendants from the Superior Court of Cook county; the Hon. JOSEPH A. GRABER, Judge, presiding. Heard in the second division of this court for the first district at the December term, 1951. Decree affirmed. Opinion filed December 30, 1952. Rehearing denied January 28, 1953. Released for publication January 28, 1953.

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

Rehearing denied January 28, 1953

This is an appeal from a decree of the superior court of Cook county construing the will of Ernest R. Graham, deceased, and particularly the Fifth Article thereof. The action was brought by the trustees for instructions as to the proper administration of a trust created by the will.

The will after providing for the payment of debts, claims and taxes, left testator's personal effects to his wife, Ruby Graham; gave her a life estate in the family residence in Chicago, with remainder to the American School of Fine Arts, an Illinois corporation, hereinafter called "School," gave his wife the use for her lifetime of a portrait of him by Orpen with remainder to the School, and gave to the School his Architectural Library and his collection of reproductions of old masters. Then follows the controversial article, the relevant portions of which are as follows:

"FIFTH: I direct my executors, hereinafter named, to set aside and retain in their hands as trustees such an amount in value of the personal property constituting part of my estate at the time of my death as they may select and deem sufficient, so that at all times during the life of the trust by this article created the net amount in each year derived therefrom will be sufficient to provide for the payment of the several annuities from time to time payable under this article of my will, so that the principal of the trust fund hereunder shall at all times during the life of this trust remain intact in the hands of my said trustees, except as the same may be reduced by reason of the death of the beneficiaries hereunder, as hereinafter provided.

"Said fund shall be held by my said trustees, and the survivors and survivor of them, and their successors in trust, for the uses and purposes and with the powers hereinafter set forth:

"In each year from and after my death, I direct my said trustees to make the following payments out of the net income derived from said trust estate:"

The payments so directed are as follows:

To his wife, Ruby Graham, $30,000 To his son, William Graham, 6,000 To his sister, Myrtis S. Graham, 2,000 To his brother, Herbert E. Graham, 2,000 To his half-brother, Frank Graham, 2,000 To Wilber E. Post, 2,000 To William O. Thompson, 2,000 To Katie Wilson, 800

After so providing, the will directs as follows:

"All of the net income remaining in the hands of my said trustees at the end of each year, after paying the foregoing annuities in full, shall be paid over to said American School of Fine Arts."

It then directs that as and when the several beneficiaries die the trustees should transfer to the School the proportionate part of the trust estate previously held by them for the purpose of paying the annuity of the beneficiary who had died; that upon the death of the last beneficiary the trust should terminate and all of the trust estate then remaining transferred to the School; that all the payments of income to the beneficiaries should be made at least quarterly in each year and deemed to accrue from the date of decedent's death to the date of death of said beneficiaries respectively. Beneficiaries Katie Wilson and William O. Thompson died prior to institution of this action. The other beneficiaries are living.

The controversy arises between the School and the beneficiaries because during the years 1942 to 1946, both inclusive, the net income from the trust was insufficient to make the payments provided for in the Fifth Article. There was an aggregate deficiency of $197,350.91. The net income of the trust for the years 1947 to 1950, inclusive, exceeded the aggregate amounts provided to be paid under the Article by $166,365.13. Such excess income was paid to the School, subject to the terms of certain agreements, under which the School agreed to pay to the trustees such amount or amounts as any court of competent jurisdiction or the interested parties by agreement in writing should determine was to be paid to the beneficiaries by the trustees to make up or settle the deficiencies claimed by them for the years 1942 to 1946, both inclusive.

The trial court held that under the provisions of the Fifth Article of the will, it was not the intention of the testator to make any of the payments from the net income cumulative so that a deficiency occurring in any year or years would be a charge against future surplus income. The beneficiaries contend that the testator in using the language, "after paying the foregoing annuities in full," intended that the excess net income received from any year over and above the aggregate amount payable to the beneficiaries, ...


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