Appeal from the Circuit Court of Kankakee County; the Hon.
ALLAN L. STOUDER, Judge, presiding. Judgment reversed.
MR. JUSTICE SEIDENFELD DELIVERED THE OPINION OF THE COURT.
This is an appeal by respondent, Grace E. Hart, from an order of the Circuit Court of Kankakee County, in Probate, ordering distribution under the will of W.M. Durham, deceased. The order of distribution found that a devise of "insurance business" in the will of the testator included accounts receivable but did not include the "Premium Fund Trust Account" which was ordered distributed under the residuary clause of the testator's will.
"Section I. I bequeath my insurance business to my Secretary, Grace E. Hart and all my office furniture and fixtures with the exception of my personal desk and lounge on condition that she agrees to assist my Executor, without charge, in the probate of my Estate. I also direct that she be charged for the inheritance tax due the State of Illinois on this bequest." . . .
"Section III. All the rest of residue of my estate, including cash, contracts, stocks, bonds, real estate and personal (intending to include everything I possess not mentioned in Paragraphs 1 and 2), I give, devise and bequeath to my Executor, Joseph J. Tolson, for the following uses and purposes: . . ."
The pleadings consist of a petition by the executor for authority to make distribution of the accounts receivable and the Premium Fund Account under Section I of the will to Grace E. Hart, her answer concurring in the petition, and the answers and objections of other respondents praying distribution to them as residuary legatees.
The facts of the case are substantially undisputed. The testator conducted a business for many years which had three parts: insurance, loans and real estate. His office consisted of two rooms, one occupied by him and one by the Respondent, Grace E. Hart, who had been in his employ for over ten years at the time of his death, serving as secretary and doing bookkeeping, issuing policies, waiting on customers and doing banking and collecting. In addition, she rendered personal services to the testator such as chauffeuring and buying groceries. The businesses were conducted under the name D.L. Durham and Son which had been continued from a previous association with the testator's father.
A separate set of books was kept for the insurance part of the business, consisting of a cash journal, ledger, accounts current, checkbook and premium fund account book. At the time the will was executed, the testator kept one principal bank account, known as the General Business Account, into which loans and collections upon contracts of sale of real estate were placed and from which office overhead was paid, and into which insurance premiums were paid.
After the execution of the will, a section of the Insurance Code was enacted requiring that a separate fund be set up, known as the Premium Fund Trust Account, and from that time, this was kept as a separate account. Under the bulletin provided by the Director of Insurance, the statement was made that "Unremitted insurance premiums and other fiduciary insurance funds are to be kept in the Premium Fund Account separate from any operating, office, business or other accounts of agents and brokers." The instructions further provided that funds other than premiums could be deposited in the account to the extent deemed prudent by the broker "for the purpose of maintaining a minimum balance or to guarantee the adequacy of the account, or for the purpose of . . . the payment of premiums to . . . a company in advance of their collection."
All premiums were deposited to the Premium Fund Account including the testator's share from this account. The companies were paid from this account once a month, and return premiums to policyholders in cases of cancellation and rate adjustments were also paid therefrom.
It was the testator's practice to refund the entire refund premium in such cases to the policyholder and to later collect the company's share of the premium from the company. Another use of the Premium Fund Account was to make remittances to the insurance companies for premiums on policies sold on credit. There were periodic withdrawals of profits from the Premium Fund Trust Account, and just prior to the testator's death the appellant paid claims against the account of around $3,000, in order not to complicate their collection from Mr. Durham's estate in the event that he was fatally ill, as it appeared that he was. This left a balance of $8,374.21 in the account at the time of his death, which is the amount in dispute. There was evidence of a practice to keep a balance in the account in the area of $10,000.
The determination of whether the Premium Fund Trust Account was part of testator's "insurance business" as that term is used in the will is subject to general rules applicable to construction of wills.
[1-4] The court's function in construing a will is to ascertain the actual intention of the testator. The intention of the testator is to be determined by a full and complete consideration of the will. When such intent cannot be ascertained from the language alone, the language used is considered in the light of the facts and circumstances which existed at the time of the execution of the will. The court must place itself in the position of the testator and not consider subsequent facts and circumstances. Abrahams v. Sanders, 274 Ill. 452, 113 N.E. 737 (1916); Evans v. DeBruler, 49 Ill. App.2d 35, 198 N.E.2d 531 (1964); Martin v. Martin, 273 Ill. 595, 113 N.E. 150 (1916); Vollmer v. McGowan, 409 Ill. 306, 99 N.E.2d 337 (1951). Although the intention of the testator is ascertained on the basis of facts and circumstances which existed when the will was made, the operation and effect of the will on the testator's property is determined as of the date of his death. Lydick v. Tate, 380 Ill. 616, 44 N.E.2d 583 (1942); Peter v. Peter, 343 Ill. 493, 175 N.E. 846 (1931); 36 ILP Wills, sec 222, p 321.
Appellee argues that the testator could not have intended the gift of the Premium Fund Account under clause I of the will because it was not in being at that time; but appellant urges, and we believe correctly, that the insurance business devised in 1957 is not the same in form or condition as the insurance business existing at the time of the testator's death. It is universally true that businesses change on a daily ...