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Gorin v. Mcfarland

MARCH 16, 1967.

ORVILLE B. GORIN, ET AL., PLAINTIFFS,

v.

JAMES M. MCFARLAND, ET AL., DEFENDANTS. R. WAYNE GILL, ET AL., PLAINTIFFS-APPELLEES,

v.

CHARLES H. RUEDI, ET AL., DEFENDANTS-APPELLANTS. CHARLES H. RUEDI, ET AL., PLAINTIFFS-APPELLANTS,

v.

R. WAYNE GILL, ET AL., DEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of Macon County; the Hon. RODNEY A. SCOTT, Judge, presiding. No. 10,801 — reversed and remanded. No. 10,812 — reversed and remanded.

HANNAH, J.

These are two separate and distinct cases involving the same parties, both cases arising out of the administration of a charitable trust created by the Last Will of James Millikin, deceased. The parties in both cases are the five successor trustees of said trust; namely, R. Wayne Gill, Jesse W. Patterson, William G. Traver, Lee Boland and Charles H. Ruedi. Both cases involve a dispute between the trustees, R. Wayne Gill, Jesse W. Patterson and William G. Traver on the one side as opposed to Lee Boland and Charles H. Ruedi.

By his Last Will, James Millikin, who died in 1909, created two trusts, one private and the other educational or charitable. It provided for five trustees to administer the trusts. The private trust was fulfilled and terminated in 1941. The charitable trust was created for the use and benefit of two departments of the James Millikin University, the departments being styled as "Decatur College and Industrial School" and "Lincoln College". The terms of the trust are unimportant to this case, there being no question as to the manner of its administration.

Both suits are filed in the trust estate proceedings. Two questions are presented. The first case, No. 10801, is entitled R. Wayne Gill, Jesse W. Patterson and William G. Traver, trustee plaintiffs, against Lee Boland and Charles H. Ruedi, trustee defendants. All parties are the duly appointed and qualified successor trustees of the charitable trust. The plaintiffs filed their complaint seeking a declaratory judgment determining that the powers of the trustees of the educational or charitable trust might be exercised by majority vote as distinguished from unanimous agreement or decision. This is contrary to the position of the defendants, they contending they must be exercised by unanimous decision. The Will contained no provisions covering this question.

The second case, No. 10,812, involves the approval of the 1965 annual report of the trustees, and the allowance of compensation to them for their services in administering the trust. The dispute here lies in the allowability of fees and expenses to the trustees of a charitable trust. Trustees R. Wayne Gill, Jesse W. Patterson and William G. Traver contend they are not allowable, while trustees Lee Boland and Charles H. Ruedi claim they are allowable.

The two cases have been consolidated in this court because the parties are the same and governed by the same evidence. No oral evidence was heard in either case, and the only material documentary evidence is the Millikin Will and Codicil, and a certified copy of a circuit court decree entered in the trust estate on March 23, 1916, wherein none of the present trustees were parties. This 1916 decree relates only to the second case.

We shall first consider Case No. 10,801, being the complaint seeking a declaratory judgment that the powers of the trustees may be exercised by a majority vote and need not be exercised by unanimous approval. Since the decision in this case must hinge upon procedural matters determining the power of the trial court to enter its final decree, we must review the course of pleading and procedure followed. Following legal process might be compared to traveling on a highway to a given destination, the destination in this case being the point at which the court is empowered to enter a final judgment or decree. The road is clearly marked by highway signs in the form of rules of procedure. There are no byroads or shortcuts to the ultimate destination. Our question is to determine whether the court ever reached that ultimate destination.

[1-3] The first cardinal rule of jurisprudence is that in every suit each party shall be accorded "due process." Fixed and specific procedure is provided by statute, rules of court and judicial decision as to the route to be followed which will assure each party that right of hearing. If these rules be not followed thereby denying that right, then the final decision of the court must, upon appeal, be reversed. The defendants contend they were denied the right to be heard. We are bound by what the record discloses.

On January 21, 1966, the three plaintiff trustees filed their complaint against the remaining two trustees, seeking a declaratory judgment that the powers of the trustees may be exercised by the will of the majority. They allege, in substance, that before the termination of the private trust it was considered necessary in the administration of the two trusts (private and charitable) that all trustees concur in all decisions arising in the course of the administration of the two trusts, but now that the private trust has been terminated (it was terminated in 1941) the powers of the trustees may be exercised by a majority decision. This question apparently now arises in this estate for the first time. Apparently from the date of the termination of the private trust in 1941 to the time of filing this action, the trustees had acted by unanimous agreement.

The complaint alleges that the defendant trustees contend that under the law the powers of the trustees must be exercised by unanimous decision. This disagreement, it is alleged, casts a cloud upon the power and authority of the trustees to act. There are no allegations in the complaint of any present dispute over any present existing actual or contemplated acts of administration. But it is alleged that unless the dispute is determined it will work injury to the trust estate and its beneficiaries in the course of administration. On the same date, January 21, the plaintiffs also filed a motion asking an early hearing, to which was attached an affidavit alleging there was then an actual controversy involving the voting of 55% of the stock in the Millikin National Bank, said shares being assets of the trust estate.

On January 26, 1966, the defendants entered their special appearance to object to the jurisdiction of the court. This motion was never heard, and on February 23, they filed their motion to strike the plaintiffs' complaint for a declaratory judgment, alleging (1) that the complaint was insufficient in law to entitle the plaintiffs to a declaratory judgment, (2) that the petition did not allege an actual controversy pursuant to the requirements of Ill Rev Stats 1965, c 110, § 57.1, (3) that it sought only legal advice on procedural questions, and submitted a moot question, and that other adequate remedies were available. Thus there was presented a proper question as to the sufficiency of the complaint.

On March 1, plaintiffs filed a motion for a default against the defendants, or, in the alternative, to strike the defendants' motion to strike the original complaint. On March 7, all parties being present, a hearing, and the only hearing, was had and a judgment pronounced granting the relief prayed by the complaint.

In considering these questions, let us review the proceedings at the hearing on March 7, which was the only hearing had, as disclosed by the Report of Trial Proceedings. Here we find the court proceeding to a hearing upon the merits of the complaint without first ruling upon defendants' motion to strike the complaint for its alleged insufficiency, and without ruling the defendants to answer, and without the formation of an issue. All this was against the remonstrance of the defendants. Without the formation of an issue the court proceeded to pronounce judgment granting the prayer of the complaint. "Due process" for the defendants was nonexistent. In the language of Burket v. Reliance Bank & Trust Co., 367 Ill. 196, 11 N.E.2d 6, at page 9:

". . . It is of no avail if one be summoned to a court and the issues determined against him without the hearing and determination of questions of fact. . . ."

As disclosed by the Report of Trial Proceedings, on March 7, the plaintiffs opened the hearing with the introduction of record evidence, notwithstanding the defendants' motion had not been passed upon and the cause was not at issue. Upon plaintiffs' counsel's offer to call the plaintiffs as witnesses in support of their complaint the court stated, in substance, that this was not necessary as it deemed the complaint sufficient. Accordingly the plaintiffs offered no evidence in support of the allegation that there was an actual controversy, which is basic to the relief of a declaratory judgment, Ill Rev Stats 1965, c 110, § 57.1. The court then called upon defendants to proceed. Counsel for defendants then stated:

"As I explained to the Court this morning, as I had understood, there would be a hearing upon the petition and motion. . . . I was not prepared to introduce any evidence."

After further comment defendants' counsel continued.

"I don't know exactly what the Court may have as to a next step or procedure in the case, except possibly to obtain the law that the Court can consider on these motions and on the general situation. If that is satisfactory, I will be glad, probably by tomorrow, if possible, to submit a brief on the propositions that are now material in the pleadings in the case, and reply to the brief submitted by Mr. Smith."

It therefore appears clear that defendants were seeking to be heard upon their motion to strike the plaintiffs' complaint and to have a ruling upon it. To all this the court replied:

"The Court: I propose to enter an order on this matter today."

Thereupon, without further hearing, according to the record, the court pronounced a judgment granting the relief prayed. All this was without an issue being formulated and without evidence. The written final decree was entered on May 10. The decree recites all the proceedings had, but in the inverse order of their occurrence. We are bound by the recitations of the signed decree.

Examining it, we find that paragraph 3 of the decree recites:

"The petitioners' motion to default the defendants Lee Boland and Charles H. Ruedi, or in the alternative to overrule the said defendants' motion to strike is denied."

The court in denying the plaintiffs' motion for default and also in denying their motion to strike defendants' motion to strike the complaint thereby determined the defendants' motion to strike the complaint to be sufficient in form and substance to raise a question of law as to the sufficiency of plaintiffs' complaint. It therefore became incumbent upon the court to determine the sufficiency of the complaint in the light of the requirements of Ill Rev Stats 1965, c 110, § 57.1. If the complaint was insufficient then that would terminate the case, unless there be necessary amendments. But the trial court did not pass upon the motion, and the ...


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