Appeal from the Superior Court of Cook County; the Hon. JOHN
J. LUPE, Judge, presiding. Decree affirmed in part and reversed
in part and remanded with directions.
MR. JUSTICE BURKE DELIVERED THE OPINION OF THE COURT.
Rehearing denied February 15, 1966.
This complaint was filed by the Trustee under the Last Will and Testament of Silas J. Llewellyn, for the construction of the Will and for the determination of questions stated in the Trustee's original complaint and the amended and supplemental complaint.
Silas J. Llewellyn died in 1925, in Chicago, at nearly 65 years of age. He was survived by his wife, Mary E. Llewellyn, and by his three children, Paul P. Llewellyn, born September 18, 1886, Gertrude Llewellyn Stone, born July 15, 1888, and Elizabeth Llewellyn Warner, born April 20, 1899. The widow of Silas J. Llewellyn died on March 8, 1933.
Paul P. Llewellyn died January 10, 1956, survived by his only child, Mary Isabelle Llewellyn, who was born March 6, 1917. Mary Isabelle was the offspring of Paul's first marriage, to Mary Catherine Elphicke, from whom he was divorced in 1924. Paul subsequently entered three other marriages, the first two of which ended in divorce in 1937 and 1944. No children were born to Paul of any of these three subsequent marriages.
Mary Isabelle Llewellyn was married to Emil Frank in 1936 and was divorced from Frank the following year. She married Ross H. Callison in 1937 and was divorced from Callison in 1942. A child was born to Mary Isabelle in 1951, the child being called Charles Callison. Charles Callison was placed for adoption, was legally adopted under the laws of the State of Maryland, and is now known as William M. Valentine. A guardian ad litem has been appointed to represent any interest which Charles Callison may have in the Estate of Silas J. Llewellyn.
Gertrude Llewellyn Stone died April 14, 1956, survived by her husband Howard R. Stone who has since died. No children were born to Gertrude Stone during her lifetime.
Elizabeth Llewellyn Warner is presently alive and has two children, Barbara Warner Fentress, born in 1921 and Silas Warner born in 1924. Both Barbara Fentress and Silas Warner are married and have children.
At the time Silas J. Llewellyn died in 1925, he left a substantial Estate comprised of real and personal property, which he disposed of by the Last Will and Testament here in question. The dispositive provisions of the Will, executed in 1923 and admitted to probate in the Probate Court of Cook County on September 11, 1925, are as follows:
"(b) My Trustees shall pay one-third of the entire net income of said Trust Estate to my wife, Mary E. Llewellyn, during her lifetime, and shall pay during said period the remaining two-thirds of the net income of said Trust Estate in equal shares to my children, Paul P. Llewellyn, Elizabeth Llewellyn Warner and Gertrude Llewellyn Stone, the children of a deceased child to have the parent's share per stirpes. Such income shall be paid to my wife and children, as above provided, in either quarter-annual or monthly installments as they shall respectively determine.
"(c) Upon the death of my wife, Mary E. Llewellyn, my Trustees shall pay the entire net income from the Trust Estate to my children, Paul P. Llewellyn, Elizabeth Llewellyn Warner and Gertrude Llewellyn Stone, in equal shares, the children of a deceased child to have the parent's share per stirpes. In the event that any of my said children shall die prior to my decease, or thereafter while a portion of the Trust Estate is held for him or her, without leaving issue surviving, then the portion of the net income from the Trust Estate to which such deceased child would be entitled, if living, shall be paid in equal shares to such of my said children as shall be living, and to the children of any deceased child leaving issue surviving, the children of a deceased child to receive the parent's share per stirpes. In the event that any of my said children shall die prior to my decease, or thereafter while a portion of the Trust Estate is held for him or her, leaving issue surviving, then the Trustees shall pay the income from my Trust Estate to which such child would be entitled if living, to his or her issue, as the case may be, per stirpes, until such time as they shall attain the age of twenty-one years in the case of a son and eighteen years in the case of a daughter. Any income from my Trust Estate payable to the issue of a deceased child, as aforesaid, while such issue are under legal age may be paid by my Trustees directly to such issue from time to time or, in the discretion of said Trustees, be applied toward their support, maintenance and education until such issue shall have respectively attained the age of twenty-one years in the case of a son and eighteen years in the case of a daughter, and all payments so made shall be without liability to account therefor, either to their legal guardian or to any court of probate or otherwise.
"(d) When and as any son of a deceased child of mine reaches the age of twenty-one years, and when and as any daughter of a deceased child of mine reaches the age of eighteen years, my Trustees shall pay or transfer and assign in kind to my said grandchildren reaching such age, the portion or portions of the Trust Estate to which they are respectively entitled, the children of a deceased child of mine to receive the parent's share per stirpes and not per capita. In the event that one or more of my said children shall have died without leaving issue surviving, or if all of the issue of a deceased child shall die while part of the Trust Estate is being held for one or more of them, then the portion of the Trust Estate which the issue of said deceased child, if any, would have received if they had survived him or her, as the case may be, and had lived to the age hereinabove set forth, shall be added to the portions of the Trust Estate to be distributed among the issue of my other children, as herein provided. In the event that a child of mine shall be living at the time that his or her son shall reach the age of twenty-one years, or his or her daughter shall reach the age of eighteen years, then at the death of my said child, my Trustees shall forthwith pay or transfer and assign in kind to such son or daughter of my said deceased child who has reached such age, the portion of the Trust Estate to which he or she is entitled hereunder."
During the years 1941 through 1950, Mary Isabelle Llewellyn executed 14 assignments involving substantially all of her remainder interests received under the Llewellyn Will. The assignments purported to be absolute sales of fractional portions of her remainder interests in the Paul P. Llewellyn and in the Gertrude Llewellyn Stone portions of the Trust Estate, which portions shall hereinafter be referred to as the "Paul portion" and the "Gertrude portion" respectively.
Upon the death of Paul P. Llewellyn in 1956, this complaint was filed by the City National Bank and Trust Company of Chicago, successor Trustee under the Will of Silas J. Llewellyn. The Continental Illinois National Bank and Trust Company of Chicago subsequently succeeded the City National Bank and Trust Company as Trustee under the Will, and shall hereinafter be referred to as the "plaintiff-Trustee." The complaint, which was amended and supplemented upon the death of Gertrude Llewellyn Stone a short while after the death of Paul P. Llewellyn, sought the determination of the following matters:
(a) Defining the nature and extent of the interest of Mary Isabelle in the trusts created by the Will of Silas J. Llewellyn;
(b) Determining whether the interest of Mary Isabelle in the trusts created by the Will are lawfully assignable, and whether and to what extent her interests have been lawfully assigned;
(c) Determining whether or not any of the assignments executed by Mary Isabelle, if valid, have priority over other assignments executed by her;
(d) Determining whether any part of the corpus of the Trust Estate created by the Will of Silas J. Llewellyn became distributable upon the death of Paul P. Llewellyn;
(e) Determining whether any share of the corpus of said trusts now distributable to Mary Isabelle Llewellyn must be distributed in kind, or whether the same may be wholly or partly reduced to cash and distributed in cash, giving the Trustee directions in that regard;
(f) Determining whether the Trustee has the power of sale of assets of said trust, which may have become distributable upon the death of Paul P. Llewellyn, and giving the Trustee directions in that regard;
(g) Giving the Trustee directions with regard to the distribution of the Real Estate held under the Trust;
(h) Instructing the Trustee as to the disposition of the income which had accrued prior to the death of Paul P. Llewellyn, on the share in the Trust Estate held for Paul P. Llewellyn.
The complaint also requested instructions concerning the Gertrude share of the Trust Estate, a construction of the Llewellyn Will, approval of the Trustee's account, instructions concerning the administration of the Trust during the pendency of this action, and for fees and costs.
Named as parties-defendant in the suit were all those who claimed any interest in the Estate of Silas J. Llewellyn, and included the heirs of Silas J. Llewellyn, the beneficiaries under the Will and the assignees and subassignees of the Mary Isabelle Llewellyn assignments who had not theretofore settled their claims with Mary Isabelle, and who shall hereinafter be referred to as "assignees."
The issues as to the construction of the Llewellyn Will were tried by the Chancellor and on September 18, 1957, the Chancellor found and ordered, inter alia, that:
(a) Mary Isabelle, under the terms of the Llewellyn Will, is entitled to a remainder interest of one-third of the principal of the Trust Estate upon the death of her father, Paul P. Llewellyn, who died January 10, 1956, and that she is also entitled as such remainderman to all net income on said one-third of the principal accruing after January 10, 1956;
(b) Mary Isabelle became entitled as remainderman to receive an additional one-sixth of the principal of said Trust Estate upon the death of Gertrude Llewellyn Stone, who died on April 14, 1956; and she is also entitled to receive the net income on said one-sixth share after April 14, 1956;
(c) Upon the death of Gertrude Llewellyn Stone one-sixth of the principal of said Trust Estate was to be added to the share of said Trust Estate held for the benefit of Elizabeth Llewellyn Warner; and she is also entitled to receive the net income accruing on the said one-sixth share after April 14, 1956;
(d) The Will does not contain, either expressly or impliedly, any spendthrift Trust provisions;
(e) Gertrude Llewellyn Stone, at the time of her death, did not possess any interest in the corpus of the Trust and Executor is not entitled to receive any share of the corpus.
On November 27, 1957, after it had been decreed that Mary Isabelle became entitled to the distribution of the remainders on the respective deaths of her father and her aunt, an order was entered referring the matters relating to the assignments executed by Mary Isabelle to Master in Chancery Henry E. Perry. The Master commenced hearings in 1957 and the hearings continued intermittently until June of 1962.
On February 26, 1963, the Master made his report in which he found that because the assignments were made for a "grossly inadequate consideration" and because Mary Isabelle was "in straitened financial circumstances" and was not in a position of equality with the assignees, "substantial justice" would be done by permitting Mary Isabelle to rescind the assignments, returning to the assignees the amounts actually received by her with 6% simple interest. The Master further found that the assignments purported to be absolute sales, were not gambling transactions nor void under section 49 of the Illinois Chancery Act, and recommended that the assignments be treated in effect as a loan to Mary Isabelle Llewellyn, to be repaid by her with interest. The Master recommended that he be allowed approximately $90,000 in fees to be charged against the distributable portions of the Trust Estate. Objections to the report filed by the assignees were overruled, and on May 10, 1963, the Master made his revised and final report which had some slight variations from, but which was substantially the same as the original report.
In the meantime, on January 19, 1962, the plaintiff-Trustee filed a petition for leave to sell a substantial parcel of downtown Chicago Real Estate held under the Trust. The sale was objected to by the assignees and testimony was taken in support of the petition for the sale.
Exceptions to the final Master's Report were filed with the Chancellor in May of 1963, and during that following summer arguments on the exceptions were heard. On November 20, 1963, the Chancellor entered an order overruling all the exceptions as to the Master's Report and directing the presentation of a final decree. The decree was prepared and entered by the Chancellor on December 23, 1963. The decree provided for the approval of the Master's Report and the distribution of the Trust assets in accordance with the Master's recommendations; it incorporated the provisions of the former decree of September 18, 1957 (relating to the construction of the Will), provided for the sale of the Real Estate, and further provided that plaintiff-Trustee could make distribution either in kind or in cash, or partly in both forms as plaintiff-Trustee in its discretion should elect. The 1963 decree also provided for the requested allowance of fees to the Master and the allocations he had recommended, although it appears that no evidence was offered relative thereto.
Eleven appeals have been taken from the 1963 decree. The Warner and Stone appellants challenge the propriety of the Chancellor's construction of the Llewellyn Will. The Warner appellants maintain that, properly construed, the Llewellyn Will provides for the application of the entire Gertrude portion of the Trust Estate to the Elizabeth Warner portion, since Mary Isabelle had become entitled to receive the Paul portion of the Trust Estate upon her father's death, thereby leaving nothing to which the Gertrude portion could be "added" under the terms of the Will upon the death of Gertrude Llewellyn Stone without children. The Stone appellants maintain they are entitled to one-third of the Llewellyn Estate, due to the fact that the Llewellyn Trust violates the Rule Against Perpetuities. The remaining appellants are the assignees of Mary Isabelle Llewellyn and maintain that the Master incorrectly found, and the Chancellor incorrectly decreed, that the assignees took unconscionable advantage of Mary Isabelle, who was in straitened financial circumstances, by acquiring her interests in the Llewellyn Trust for a grossly inadequate consideration in each instance. The assignees also assail the ruling of the Chancellor relative to the allowance of the Master's fees without having heard evidence in connection therewith, and also assail the Chancellor's approval of the sale of the real estate, the assignees claiming that the real estate should and could have been divided by assignment of fractional interests thereof to those persons entitled thereto.
We agree with the construction of the Llewellyn Will as determined by the Chancellor in the decree of September 18, 1957, ...