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Mcdonough Co. Orphanage v. Burnhart

OPINION FILED MARCH 24, 1955.

MCDONOUGH COUNTY ORPHANAGE ET AL. APPELLEES,

v.

SARAH BURNHART, TRUSTEE, ET AL., — (IDA RUDDY ET AL., APPELLANTS.)



APPEAL from the Circuit Court of McDonough County; the Hon. RILEY E. STEVENS, Judge, presiding.

MR. JUSTICE MAXWELL DELIVERED THE OPINION OF THE COURT:

This is a direct appeal by three intervening petitioners from a decree of the circuit court of McDonough County in a proceeding filed by the McDonough County Orphanage, a corporation, hereinafter called the Orphanage, to dissolve and distribute its assets pursuant to sections 54 and 55 of the "Act to revise the law relating to Corporations not for pecuniary profit" approved July 17, 1943. (Ill. Rev. Stat. 1953, chap. 32, par. 163a53, 163a54.) A part of the assets in controversy is real estate, thus a freehold is involved.

The complaint alleges that the Orphanage was organized in 1912 as a charitable corporation to care for, educate and place in good homes dependent children of McDonough County and later elected to adopt the provisions of the cited statute; that since 1950, it has had no children in the home under its supervision and that its assets are subject to waste by continuing operations and prays dissolution and distribution of its assets by the court under the aforesaid statute. Its assets are alleged to be cash, bonds, real estate and a vested interest in certain real estate and personal property as provided in the eighth clause of the will of Hannah F. Wright held in trust by Sarah Burnhart during the lifetime of Albanah R. Van Osdell as construed by the circuit court of McDonough County by decree entered on June 10, 1938.

Sarah Burnhart, as trustee under the last will and testament of Hannah F. Wright, deceased, Albanah R. Van Osdell, Ivan A. Elliott, as Attorney General for the State of Illinois, Salvation Army, Macomb Corps, and others not necessary to notice, were made parties defendant and filed answers. In addition to the defendants originally named, the court permitted Ida Ruddy and other named persons who are some of the heirs of Hannah F. Wright, deceased, the other heirs being unknown, to intervene on behalf of all the heirs of Hannah F. Wright; they made claim to the real and personal property passing under the eighth clause of the will of Hannah F. Wright, deceased, which the Orphanage claimed as assets subject to distribution. The court also permitted The Salvation Army, an Illinois corporation, Elmer T. Walker, Ralph B. Purdum, and Nelle Simpson (Parsons), as trustees under the last will and testament of Rebecca E. Everly, hereinafter called the Everly Trustees, and Young Men's Christian Association of Macomb, Illinois, hereinafter called the Association, and other charitable and municipal bodies not necessary to notice, to intervene. Each intervenor alleged that it was engaged in charitable activities substantially similar to those of the Orphanage and prayed that upon dissolution, the assets of the Orphanage be turned over to it.

No controverted question arose as to the right of the Orphanage to dissolve, and a decree was entered on November 5, 1952, dissolving the Orphanage, appointing a receiver, and reserving for future decision the determination of the assets of the Orphanage and the distribution of the same.

After hearings on the reserved questions, the court denied the right of the Wright heirs to the property claimed by the Orphanage under the eighth clause of the will of Hannah F. Wright, deceased, denied the right of the Association, the Everly Trustees, and all other claimants except the Salvation Army to participate in the distribution of the assets of the Orphanage, decreed that the property passing under the eight clause of the will of Hannah F. Wright, deceased, vested in and was an asset of the Orphanage, subject to the trust outstanding during the life of Albanah R. Van Osdell, and finally set over and vested in the intervening petitioner, Salvation Army, a corporation, all the assets of the Orphanage, conditioned that such assets as are hereafter received from the trustee under the eighth clause of the Hannah F. Wright will be devoted to caring for, educating and placing in good homes dependent children of McDonough County and that it keep records as required by the Wright will.

From this decree, the Wright heirs, the Association, and the Everly Trustees, have perfected an appeal, but each appellant has filed a separate brief. The Wright heirs limit their attack to that portion of the decree denying their claim to the property involved in the eighth clause of the Hannah F. Wright will; the other appellants limit their attack to that portion of the decree denying their claim to the Orphanage assets and giving them to the Salvation Army. The Attorney General and The Salvation Army have appeared as appellees and filed separate briefs in support of the decree. The Salvation Army has also assigned cross error claiming that the court erred in restricting its use of the property to be received under the Wright will to the purposes provided in the Orphanage charter.

There is no serious dispute in the evidence. The Orphanage was organized in 1912 as a corporation under "An Act Concerning Corporations" approved April 18, 1872, and all acts amendatory thereof, for the purpose of "caring for, educating and placing in good homes dependent children of the county." Subsequently, the Orphanage elected to accept the provision of "An Act to revise the law relating to Corporations not for pecuniary profit" approved July 17, 1943. (Ill. Rev. Stat. 1953, chap. 32, par. 163a-163a100.) The Orphanage was sustained by voluntary contributions from individuals, societies, churches, the county and bequests. From its inception, the Orphanage was actively engaged in carrying out its corporate powers until May 20, 1952, when it filed in the circuit court a petition for dissolution under the aforesaid statute. During the last few years prior to its dissolution, its operating costs had been increasing while the use made of its facilities was decreasing. One of the principal factors responsible for the diminished use of the home was the government aid recently available for dependent children. In order to reduce operating costs, the Orphanage leased its home to the Salvation Army, Macomb Corps, in 1950, but in spite of the saving effected, the per capita cost of the few children cared for was too high, and the decision was made to dissolve to prevent further waste of its assets. The conclusion is inescapable that at the present time there is no need to maintain a home to house dependent children.

Among the assets claimed by the Orphanage was an interest in a trust created by the will of Hannah F. Wright. Mrs. Wright had executed her will in 1933. After her death, in 1937, her will was probated in McDonough County and administration had. The controversy here arises under the eighth clause of the will which provides:

"EIGHTH: All the rest, residue and remainder of my property, whether real, personal or mixed and wherever the same may be situated and over which I may have any testamentary control whatsoever at the time of my death, I give, devise and bequeath, in trust, to Sarah Burnhart, of Adair, Illinois, for the following uses and purposes, viz: — I direct that my said Trustee shall invest the same in such securities as may in her judgment be best fitted for the purpose and under the direction of a Court of competent jurisdiction and from the income of said Trust Estate, she shall pay to my said niece, Albanah R. Van Osdell the sum of One Hundred Dollars ($100.00) per month during her natural life, provided the income from said Trust Fund shall be sufficient to make such payments. Should the income from such Trust Fund be insufficient to make such payments, then it is my will that all of said income shall be paid by my said Trustee to the said Albanah R. Van Osdell in equal monthly installments for and during the term of her natural life as above set out. Should said income from my said Trust Estate be more than sufficient to pay to said beneficiary the sum of One Hundred Dollars ($100.00) per month, then such excess shall be added to the principal of said Trust Estate during the lifetime of the said beneficiary. At the death of the said Albanah R. Van Osdell, I give, devise and bequeath all of the rest, residue and remainder of said Trust Fund so remaining in the hands of my said Trustee or her successor in Trust to the McDonough County Orphanage of the City of Macomb in the County of McDonough and State of Illinois, and to the proper officers of said institution to be used by them for the benefit of said institution as they may deem best. This bequest is also made by me in memory of my beloved husband, William Wright, who was a former resident of McDonough County, Illinois, and I direct that the books of said Orphanage shall carry the proper entries and notations showing the purposes of this gift."

Sarah Burnhart qualified as trustee under said will and has since administered said trust under the directions of the circuit court of McDonough County for the benefit of Albanah R. Van Osdell, who is still living. At no time has the income from the trust been sufficient to pay the life beneficiary the maximum of $100 a month as provided in the will.

It appears from the evidence that appellant Young Men's Christian Association was organized as a nonprofit corporation in Macomb in 1889 for the physical, social, intellectual and spiritual improvement of young men, being sustained by gifts from the community chest and voluntary contributions. It has most adequately fulfilled its corporate powers furnishing recreational and athletic activities for all younger age groups, regardless of race or creed, and has apparently expanded its activities to include girls of all age groups. It endeavors to develop Christian character but holds no religious meetings. It maintains no facilities to care for or house dependent children, and its previous history does not indicate that its personnel are peculiarly well fitted by training or experience to handle the many problems that arise with dependent children.

As to the appellants the Everly Trustees, the evidence shows that they are administering a trust created by the will of Rebecca E. Everly wherein she left her residuary estate to said trustees to construct in or near Macomb and maintain a home for worthy aged people of McDonough County under rules to be made by the trustees admitting only aged people of good moral character and honorable reputation, requiring those who were able to pay for their keep to do so. The Everly Trustees in fulfillment of their powers are building a home where they can care for forty-one people when fully completed, but at the present, the ...


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