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Illinois State Trust Co. v. S. Ill. Nat'l Bk.

MAY 29, 1975.

ILLINOIS STATE TRUST COMPANY, PLAINTIFF AND COUNTERDEFENDANT-APPELLEE,

v.

THE SOUTHERN ILLINOIS NATIONAL BANK, DEFENDANT, COUNTERDEFENDANT, COUNTERCLAIMANT AND CROSS-APPELLANT. — (SHRINERS HOSPITALS FOR CRIPPLED CHILDREN, DEFENDANT, COUNTERDEFENDANT, COUNTERCLAIMANT-APPELLANT,

v.

DOROTHY L. CHENOWETH ET AL., DEFENDANTS AND COUNTERCLAIMANTS-APPELLEES.)



Appeal from the Circuit Court of St. Clair County; the Hon. ALVIN H. MAEYS, JR., Judge, presiding.

MR. JUSTICE EBERSPACHER DELIVERED THE OPINION OF THE COURT:

This is an appeal by defendant-appellant, Shriners Hospitals for Crippled Children, from orders entered by the circuit court of St. Clair County denying its counterclaim for a declaration that the residuary clause contained in the will of Jane W. Oehmke, deceased, was insufficient to exercise the testamentary power of appointment conferred upon her by the trust provisions of her late husband's will.

In his will, Martin F. Oehmke established a trust. Under the trust Oehmke's wife, Jane W. Oehmke, was to receive all of the income from such trust and she could withdraw up to $10,000 of the principal of such trust each year. The trust specified that upon the death of Jane W. Oehmke, the principal and undistributed income of the trust assets should be "distributed to or for the benefit of such person or persons, or the estate of my wife in such amount and proportions as my wife shall appoint by her will." Such trust further provided in default of the exercise of such power of appointment or "insofar as such appointment shall not extend to or take effect," the trustee should

"* * * pay any and all inheritance and Federal estate taxes that may be assessed in any way by reason of her death, her funeral expenses and the expenses of her last illness, and the balance, if any, shall be distributed unto Shriners Hospital for Crippled Children, a corporation, to be used exclusively for the benefit of the hospital located in the City of St. Louis, Missouri, owned, operated and maintained by said corporation."

Upon Jane W. Oehmke being declared incompetent in September 1969, and her conservator, The First National Bank of Belleville, requesting the annual withdrawal of $10,000 on their ward's behalf, the testamentary trustee, the Illinois State Trust Company, plaintiff-appellee, filed a complaint in the circuit court of St. Clair County requesting such court to consider the last will and testament of Martin F. Oehmke, deceased, and direct the plaintiff in the manner in which the income and corpus of the trust created thereunder should be distributed. The First National Bank of Belleville, as conservator for Jane W. Oehmke, widow of the deceased Martin F. Oehmke, filed an answer praying for a declaration that it be entitled, under the trust, to receive $10,000 every year it makes a demand on behalf of Jane W. Oehmke. The matter had not been disposed of at the time of Jane W. Oehmke's death, and the final judgment order in this cause provided that in the event this cause was reversed, the trustee should pay to the administrator a sum equal to State inheritance taxes and Federal estate taxes assessed by reason of the death of Jane W. Oehmke, and her funeral expenses and last illness expenses, and that the annual payments of $10,000 requested by the conservator and subsequently claimed by the administrator of Jane W. Oehmke's estate were to be denied. We are not, in view of our affirmance, concerned with those provisions.

Upon the death of Jane W. Oehmke, The Southern Illinois National Bank of East St. Louis, as administrator of the estate of Jane W. Oehmke, filed a motion to substitute it for the First National Bank of Belleville. Such motion was granted. Thereafter the plaintiff filed a motion for leave to file an amended complaint substituting Shriners Hospitals for Crippled Children, appellant, for Southern Illinois National Bank. Leave was granted and the amended complaint was filed. The Shriners Hospitals for Crippled Children filed an answer to plaintiff's amended complaint. Included therein was a counterclaim for an adjudication and a declaration determining whether or not the will of Jane W. Oehmke was sufficient to exercise the testamentary power of appointment conferred upon her by her husband's will.

The will of Jane W. Oehmke, dated February 8, 1965, provided for specific bequests of $50,500 and for,

"All the rest, residue and remainder of my Estate of every name and nature, and whatsoever situate, of which I shall die seized or possessed, I give, devise and bequeath as follows:

(a) A one-third part thereof unto Illinois State Trust Company, in trust nevertheless, as trustee for my nephew, Louis Ward, * * *;

(b) A one-third part thereof unto Russell Herseth also sometimes known as Russell Severin; and

(c) A one-third part thereof unto Leona Herseth, also sometimes known as Leona Severin.

The primary issue before this court is whether the foregoing provision of the will of Jane W. Oehmke was sufficient to exercise the testamentary power of appointment conferred upon her by her husband's will.

• 1, 2 It is well settled that the question of whether a testamentary power of appointment has been exercised depends upon the intention of the donee of such power. (Funk v. Eggleston, 92 Ill. 515. See also Rettig v. Zander, 364 Ill. 112, 4 N.E.2d 30; Merchants' Loan & Trust Co. v. Patterson, 308 Ill. 519, 139 N.E. 912; Northern Trust Co. v. Moscatelli, 54 Ill. App.2d 316, 203 N.E.2d 447.) It is equally well settled that the burden of proof rests upon the party claiming the exercise of the power of appointment. (Emery v. Emery, 325 Ill. 212, 156 N.E. 364. See also In re Estate of Breault, 29 Ill.2d 165, 193 N.E.2d 824; Merchants' Loan & Trust Co. v. Patterson, 308 Ill. 519, 139 N.E. 912.) The donee's intention to exercise a power of appointment, however, need not be manifested in any given way. (McGee v. Vandeventer, 334 Ill. 305, 165 N.E. 151.) Technical language is not necessary to the exercise of a power of appointment (Merchants' Loan & Trust Co. v. Patterson, 308 Ill. 519, 139 N.E. 912); nor is it necessary that the intention to execute the power appear by express terms or recitals (Boyle v. John M. Smyth Co., 248 Ill. App. 57). In other words, "[r]eference to the power is not essential, and the instrument need not take the slightest notice of it, provided the intent to exercise the same appears." (Hopkins v. Fauble, 47 Ill. App.2d 263, 265, 197 N.E.2d 725.) Such intention may be sufficiently manifested by the circumstances surrounding the transaction. (Rettig v. Zander, 364 Ill. 112, 4 N.E.2d 30; Northern Illinois Trust Co. v. Cudahy, 339 Ill. App. 603, 91 N.E.2d 607; Northern Illinois Trust Co. v. House, 3 Ill. App.2d 10, 120 N.E.2d 234.) The foregoing decisions are summarized succinctly in Northern Trust Co. v. Moscatelli, 54 Ill. App.2d 316, 327, 203 N.E.2d 447, wherein the court stated,

"It thus appears clear that under Illinois law the intention of the testator supercedes the formal requirements with respect to the exercise of a power of appointment, and that extrinsic evidence may be introduced to show that intention. Funk v. Eggleston, supra; Rettig v. Zander, supra; Northern Trust Co. v. Cudahy, supra. The primary object in the instant case is therefore to discover the testator's intention."

Likewise, in the instant case the ultimate test for determining whether the power has been exercised by the general residuary clause depends upon the intention of the testator. Such a determination requires a review of the testimony presented in the trial court.

The first witness to testify was Ralph Green, vice president, trust officer, at Illinois State Trust Company. He testified that Illinois State Trust Company was appointed as trustee under the will of Martin E. Oehmke. He further testified that this account was originally handled by Alexander J. Nester.

• 3 The next witness to testify was Leona "Severin" Herseth. After a few preliminary inquiries the witness was asked about her acquaintance with Jane and Martin Oehmke. At this point attorney for appellant objected, stating, "Your Honor, under the Dead Man's Act. She has a claim against the Estate. She can't testify." The trial court overruled the objection and properly stated that, "You will have to make specific objections to specific questions if you want the application of the Dead Man's Act to apply." After the questioning of the witness resumed, the witness stated that she had been employed as a secretary by William C. Dunham. William C. Dunham practiced law in a partnership with Martin E. Oehmke. During the course of the witness' employment she became acquainted with Jane and Martin Oehmke, and with Jean Oehmke Herseth, Jane Oehmke's daughter. The witness testified that she became close friends with Jean Oehmke. After the death of Jean Oehmke in 1950, the witness continued her association with Jane Oehmke. Subsequently, in 1961, the witness married Russell Herseth, the Oehmke's former son-in-law. The witness testified that she continued her relationship with Jane Oehmke after her own marriage and after the retirement of Martin Oehmke. For a "long while" after the death of Martin Oehmke, Jane Oehmke slept at the witness' home. After refusing Jane Oehmke's suggestion that the witness and her husband move into the Oehmke home, the witness agreed with Jane Oehmke that both homes be sold and a larger home be bought, in which they could live together. This was accomplished and the witness, the witness' husband, her husband's mother and Jane Oehmke lived together from sometime in 1964 until August 1968. They lived together on February 8, 1965. The witness and her husband moved to St. Louis in August, 1968. Jane Oehmke moved into the Ward home, which was occupied by Louis Ward, her nephew, and his mother. On December 23, 1969, the witness and her husband moved to California.

On cross-examination it was elicited that the $24,000 Jane Oehmke received from the sale of her home went into the purchase of the large house in which she lived with the witness. Title to the new residence was placed in the name of the witness and the witness' husband. The proceeds of sale of Jane Oehmke's home were reinvested in homes purchased by the witness and her husband and were not returned to Jane Oehmke. The witness further testified that "Jane gave us the home — she wanted to give, moreso [sic]." An additional $30,000 was withdrawn from the trust (established by Martin Oehmke) by Jane Oehmke and was given to the witness and her husband. While Jane Oehmke was living with the Herseths' she turned over some bonds and savings to the witness' husband, Russell Herseth. The witness estimated the value of these gifts at around $17,000.

Upon further examination the witness testified that Jane Oehmke treated her husband as a son and continued to do so after the death of his former wife, Jean Oehmke. The following colloquy then occurred,

"Q. During the time you lived with her were they as close as you were with Mrs. Oehmke following February 8, 1965, which was the date of her will, did she ever discuss her state of ...


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