APPEAL from the Probate Court of Cook County; the Hon. HOWARD
C. RYAN, Judge, presiding.
MR. JUSTICE SOLFISBURG DELIVERED THE OPINION OF THE COURT:
Rehearing denied November 25, 1963.
We consider here two separate appeals and a cross-appeal from orders of the probate court of Cook County entered in the matter of the estate of Oscar J. Breault, deceased. A freehold is involved to give us jurisdiction on direct appeal.
Kathryn M. Breault died August 3, 1952, leaving a last will and testament which devised and bequeathed the bulk of a substantial estate to Harold L. Feigenholtz and Richard Dahm, as trustees, for the benefit of her son, Oscar J. Breault, during his lifetime. Dahm, it appears, had been a long-time employee in a business conducted by the testatrix and her deceased husband, while Feigenholtz had become her attorney shortly before the will was executed. The will also bestowed a general testamentary power of appointment over the trust assets in the following manner: "Upon the death of my son, Oscar J. Breault, the property of the trust estate shall be distributed according to the provisions and terms of the Last Will and Testament of my said son, Oscar J. Breault, and if he shall fail to execute a Will or such Will should not be admitted to probate, I hereby direct distribution of said estate in the following manner:" etc., naming three charities which were to share equally.
At the time of her death the testatrix was the owner of all of the 1000 shares of common stock in Brolite Company, Inc., the family business. Feigenholtz and Dahm subsequently became directors and officers of the corporation and, when the estate was closed, title to the stock passed to them as trustees. In the ensuing years income from the trust, including stock dividends, was paid to Oscar periodically and on three occasions in the seven-year period intervening between the mother's death and that of Oscar, the trustees rendered reports and accountings which Oscar apparently approved.
Oscar was married three times, the first two marriages ending in divorce, and, it is to be gathered from the record, in bitter, costly and almost continuous litigation over support. The first wife was Ann and a child of the marriage, Kenneth Breault, is a party here. Two children, William J. and Bonnie Ellen Breault, were born of the second marriage to Florence and the latter, as guardian of the minor children, is likewise a party to these appeals. Oscar's third wife was Estelle, also a party, and he was married to her when he met an untimely death by drowning on July 16, 1959. The circumstances of his death required an investigation, and on August 5, 1959, as the result of a petition filed by Estelle, wherein it was alleged there would be a delay in the issuance of letters testamentary, Feigenholtz was appointed administrator to collect Oscar's estate and set about to do so.
A will which had been executed by Oscar in November, 1954, after his marriage to Estelle, was admitted to probate on October 14, 1959, at which time Feigenholtz qualified as executor and posted a bond of $200,000. Oscar's will first directed the payment of debts and taxes and then continued in pertinent part: "I give, devise and bequeath all the rest, residue and remainder of my property, of whatsoever character and wheresoever situate, be it real, personal or mixed, belonging to me at the time of my death, or over which I have the power of disposition: to Harold L. Feigenholtz, of Chicago, Illinois, and his successor or successors as Trustee for and upon the following Trusts, purposes and conditions, * * *." (Emphasis ours.) Subsequent provisions directed that the income from the trust should be paid to Estelle during her life, and upon her death in equal shares to Oscar's three children until the youngest should reach the age of 40 years, at which time the corpus was to be distributed between the children (5% each) and a charitable institution (85%). At the time of Oscar's death, when his will took effect, the trust estate over which he had been given a power of appointment by his mother's will totaled in excess of $400,000, and included a residence property in Florida which had been purchased with trust funds for Oscar's use.
The principal issue on this appeal is whether, by virtue of the manner in which Oscar's power of appointment was exercised, the appointive property became an asset of and passed through Oscar's estate. However, a true perspective of this and the remaining issues, and what provoked them, requires a statement in their chronological order of some of the more important happenings after the admission of Oscar's will to probate. The very next day, October 15, 1959, Dahm and Feigenholtz, as trustees under the mother's will, conveyed the Florida real estate to Feigenholtz as executor of Oscar's estate. On October 21, 1959, Dahm and Feigenholtz, as trustees, paid fees of $2,500 each to themselves and their attorney, and paid the $7,400 balance in their trustee's account to Feigenholtz as administrator to collect. Subsequently, the trustees rendered a "Fourth and Final Account" as of October 21, 1959, showing no balance, and Feigenholtz, as administrator to collect, approved the account. Without going into further specific detail, other assets which had belonged to the mother's trust estate, (as well as personal assets of Oscar marshalled by Feigenholtz in his capacity of administrator to collect,) were turned over to Feigenholtz as executor of Oscar's estate. When the turnover was complete an inventory was filed March 9, 1960, which listed not only Oscar's personal assets but also all of the appointive assets as "property of the decedent," the total value being fixed at $504,447.60. On the same day, the court ordered Feigenholtz to file an additional executor's bond in the sum of $800,000.
In the days that followed, some items of personal property included in the appointive assets were sold by the executor with the court's permission, and by an order entered March 16, 1960, the executor was authorized to sell the Florida real estate at either public or private sale. On April 13, 1960, a $10,000 dividend declared by Brolite was paid to Feigenholtz as the executor of Oscar's estate.
A turning point occurred on July 1, 1960, when the minor children of the second marriage, by their mother, Florence, as next friend and guardian, filed suit in a Federal district court in Illinois to contest their father's will. The complaint alleged that the execution of the will had been procured by undue influence on the part of Feigenholtz, and Federal jurisdiction was asserted on the ground of diversity of citizenship and that the amount in controversy exceeded $10,000, exclusive of interests and costs.
On July 12, 1960, an amended inventory was filed in Oscar's estate. This inventory distinguished between and listed separately Oscar's personal assets, fixed at $25,805, and the property over which Oscar had a "Power of Appointment or Disposition," the value of which was represented as being $477,568.60. On the same day Feigenholtz and Dahm, as trustees under the mother's will, filed claims of $20,000 and $17,363 against Oscar's estate, the first sum representing money loaned to Oscar in his lifetime for the purchase of a boat and the second sums advanced by the trustees after Oscar's death in payment of certain debts. Thereafter, on August 31, 1960, Feigenholtz, as executor, filed a motion in the Federal court to dismiss the will contest, alleging that Oscar's estate was insolvent and that the jurisdictional requisite of $10,000 was not therefore involved. This motion, we are advised, stands continued and unresolved.
On October 12, 1960, Feigenholtz, as Oscar's executor, reconveyed the Florida real estate to himself and to Dahm as trustees under the mother's will. About the same time Brolite declared a dividend of $35,000 and on this occasion it was paid to Feigenholtz and Dahm as trustees, who reopened their trustee's account by depositing such amount. The same day, October 13, 1960, they issued a check of $18,000 in payment of income tax.
A resolution of the confused state of affairs surrounding the appointive assets was brought to the fore on August 4, 1961, when Florence Breault, as guardian for the two minor children of the second marriage, filed a petition to remove Feigenholtz as executor and for the appointment of an "administrator de bonis non." In substance, the petition charged Feigenholtz with several failures and omissions, including the failure to file an additional $800,000 bond as ordered by the court; that he had been guilty of false pretenses and misrepresentation in securing letters testamentary; that his consent to the claims filed by the trustees under the mother's will was fraudulent and for the purpose of defeating the jurisdiction of the Federal court over the will contest; that he had failed to inventory the estate's right to an accounting from the trustees under the mother's will, and that, contrary to the provisions of the will of Oscar and his mother, Feigenholtz was claiming that the appointive assets were not a part of Oscar's estate. In regard to the latter charge, the petition advanced the construction that the appointive assets had become a part of Oscar's estate, inasmuch as Oscar's will "treated the property the same as his own and appointed it to his executor and to the trustees of his estate."
Feigenholtz filed an answer to the petition which, in essence, either denied or explained the omissions and failures charged to him, denied all charges of fraud and misrepresentation, and, in defense to the charge that he had not inventoried the appointive assets, advanced the construction that the exercise of the power of ...