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Farkas v. Williams

OPINION FILED FEBRUARY 16, 1955

REGINA FARKAS ET AL., ADMRS., APPELLEES,

v.

RICHARD J. WILLIAMS ET AL., APPELLANTS.



APPEAL from the Third Division of the Appellate Court for the First District; — heard in that court on appeal from the Circuit Court of Cook County; the Hon. ELMER J. SCHNACKENBERG, Judge, presiding.

MR. JUSTICE HERSHEY DELIVERED THE OPINION OF THE COURT:

Rehearing denied April 15, 1955.

This is an appeal from a decision of the Appellate Court, First District, which affirmed a decree of the circuit court of Cook County finding that certain declarations of trust executed by Albert B. Farkas and naming Richard J. Williams as beneficiary were invalid and that Regina Farkas and Victor Farkas, as coadministrators of the estate of said Albert B. Farkas, were the owners of the property referred to in said trust instruments, being certain shares of capital stock of Investors Mutual, Inc.

Said coadministrators, herein referred to as plaintiffs, filed a complaint in the circuit court of Cook County for a declaratory decree and other relief against said Richard J. Williams and Investors Mutual, Inc., herein referred to as defendants. The plaintiffs asked the court to declare their legal rights, as coadministrators, in four stock certificates issued by Investors Mutual Inc. in the name of "Albert B. Farkas, as trustee for Richard J. Williams" and which were issued pursuant to written declarations of trust. The decree of the circuit court found that said declarations were testamentary in character, and not having been executed with the formalities of a will, were invalid, and directed that the stock be awarded to the plaintiffs as an asset of the estate of said Albert B. Farkas. Upon appeal to the Appellate Court, the decree was affirmed. (See 3 Ill. App.2d 248.) We allowed defendants' petition for leave to appeal.

Albert B. Farkas died intestate at the age of sixty-seven years, a resident of Chicago, leaving as his only heirs-at-law brothers, sisters, a nephew and a niece. Although retired at the time of his death, he had for many years practiced veterinary medicine and operated a veterinarian establishment in Chicago. During a considerable portion of that time, he employed the defendant Williams, who was not related to him.

On four occasions (December 8, 1948; February 7, 1949; February 14, 1950; and March 1, 1950) Farkas purchased stock of Investors Mutual, Inc. At the time of each purchase he executed a written application to Investors Mutual, Inc., instructing them to issue the stock in his name "as trustee for Richard J. Williams." Investors Mutual, Inc., by its agent, accepted each of these applications in writing by signature on the face of the application. Coincident with the execution of these applications, Farkas signed separate declarations of trust, all of which were identical except as to dates. The terms of said trust instruments are as follows:

"DECLARATION OF TRUST — REVOCABLE. I, the undersigned, having purchased or declared my intention to purchase certain shares of capital stock of Investors Mutual, Inc. (the Company), and having directed that the certificate for said stock be issued in my name as trustee for Richard J. Williams as beneficiary, whose address is 1704 W. North Ave. Chicago, Ill., under this Declaration of Trust Do HEREBY DECLARE that the terms and conditions upon which I shall hold said stock in trust and any additional stock resulting from reinvestments of cash dividends upon such original or additional shares are as follows:

(1) During my lifetime all cash dividends are to be paid to me individually for my own personal account and use; provided, however, that any such additional stock purchased under an authorized reinvestment of cash dividends shall become a part of and subject to this trust.

(2) Upon my death the title to any stock subject hereto and the right to any subsequent payments or distributions shall be vested absolutely in the beneficiary. The record date for the payment of dividends, rather than the date of declaration of the dividend, shall, with reference to my death, determine whether any particular dividend shall be payable to my estate or to the beneficiary.

(3) During my lifetime I reserve the right, as trustee, to vote, sell, redeem, exchange or otherwise deal in or with the stock subject hereto, but upon any sale or redemption of said stock or any part thereof, the trust hereby declared shall terminate as to the stock sold or redeemed, and I shall be entitled to retain the proceeds of sale or redemption for my own personal account and use.

(4) I reserve the right at any time to change the beneficiary or revoke this trust, but it is understood that no change of beneficiary and no revocation of this trust except by death of the beneficiary, shall be effective as to the Company for any purpose unless and until written notice thereof in such form as the Company shall prescribe is delivered to the Company at Minneapolis, Minnesota. The decease of the beneficiary before my death shall operate as a revocation of this trust.

(5) In the event this trust shall be revoked or otherwise terminated, said stock and all rights and privileges thereunder shall belong to and be exercised by me in my individual capacity.

(6) The Company shall not be liable for the validity or existence of any trust created by me, and any payment or other consideration made or given by the Company to me as trustee or otherwise, in connection with said stock or any cash dividends thereon, or in the event of my death prior to revocation, to the beneficiary, shall to the extent of such payment fully release and discharge the Company from liability with respect to said stock or any cash dividends thereon."

The applications and declarations of trust were delivered to Investors Mutual, Inc., and held by the company until Farkas' death. The stock certificates were issued in the name of Farkas as "trustee for Richard J. Williams" and were discovered in a safety-deposit box of Farkas after his death, ...


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