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Northern T. v. Winona Lake Sch. of Theology

OPINION FILED JUNE 12, 1978.

THE NORTHERN TRUST COMPANY, TRUSTEE, PLAINTIFF-APPELLANT,

v.

WINONA LAKE SCHOOL OF THEOLOGY, DEFENDANT-APPELLEE AND CROSS-APPELLANT. — (THE MOODY CHURCH, DEFENDANT-APPELLANT; LORRAINE NORTH ET AL., DEFENDANTS.)



APPEAL from the Circuit Court of Cook County; the Hon. DANIEL A. COVELLI, Judge, presiding.

MR. JUSTICE MCGLOON DELIVERED THE OPINION OF THE COURT:

As trustee of a trust agreement, Northern Trust Company (Northern) brought this action for construction of certain provisions of the trust agreement relating to an attempted gift of $100,000 to Winona Lake School of Theology, Inc. (Winona). Named as defendants in the action were Winona, The Moody Church (Moody) which was the residuary beneficiary under the trust agreement, and certain other individual legatees who failed to appear and defend the cause. Pursuant to Winona's motion, the trial court entered summary judgment in Winona's favor finding that under the provisions of the trust agreement Winona was entitled to the $100,000. The trial court, however, denied Winona's motion for accrued income on the $100,000 gift.

At trial, Northern petitioned the court for trustee's fees and the attorneys for Northern and Moody petitioned the court for attorneys' fees. Although finding that the trust agreement was ambiguous and that Northern and the attorneys for Northern and Moody were thus entitled to fees, the trial court, noting the smallness of the estate and the amount of fees involved, awarded only half the requested fees. The trial court also ordered that the fees awarded should be paid out of the residue of the estate and not the $100,000 specific legacy to Winona. Winona contended at trial that the trust agreement was unambiguous and that therefore no fees should be awarded. In the alternative, Winona contended that if the court were to grant fees, it should award them attorneys' fees as well. The trial court awarded Winona half the fees requested and ordered those fees payable out of the residue of the estate.

Both Northern and Moody appeal from the trial court's order granting summary judgment in favor of Winona, from the order awarding them only half their requested fees, and the order of the trial court ordering that those fees be paid from the general residue of the estate. They contend that all fees are payable out of the $100,000 specific legacy under dispute.

Winona cross-appeals from that part of the trial court's finding that the provisions of the trust agreement relating to the gift to Winona are ambiguous and from the order awarding fees to the attorneys for Northern and Moody. In the event this court should find the award of attorneys' fees proper, Winona also appeals from that part of the trial court's order cutting its requested fees in half. Winona also appeals from the ruling of the trial court denying its request for accrued income on its $100,000 gift.

We affirm in part, reverse in part, and remand with directions.

The instant trust agreement was executed on June 21, 1955, with Lillian V. Clarke as settlor and Northern as trustee. The provision in dispute is section 4 thereof which makes the following disposition of the residue of the trust upon the settlor's death:

"SECTION 4 — DISTRIBUTION OF RESIDUE:

Upon the death of the last to die of the Settlor and the Settlor's said husband, all the principal and any accrued or undistributed net income remaining after the payments directed to be made in the preceding sections hereon, which remaining principal and accrued or undistributed net income is hereinafter referred to as the residue, shall be conveyed, transferred and assigned as follows:

(a) If all of said residue shall, in the opinion of the Trustee, whose opinion shall be final, be of a value not in excess of One Hundred Thousand Dollars ($100,000.00) after making the payments directed to be made in the preceding sections hereof, then the entire residue shall be conveyed, transferred and assigned to WINONA LAKE SCHOOL OF THEOLOGY, INCORPORATED, Winona Lake, Indiana, or to any corporate successor of said corporation which shall then be the owner of the real estate and improvements at Winona Lake, Indiana, now owned by said corporation, and which shall then be operating and conducting a school of theology at that location.

(b) If said residue shall, in the opinion of the Trustee, be of a value in excess of One Hundred Thousand Dollars ($100,000.00) computed as aforesaid, then the Trustee shall convey, transfer and assign to said WINONA LAKE SCHOOL OF THEOLOGY, INCORPORATED, or to its corporate successor, computed as aforesaid, cash, securities and property, or cash, securities or property having a then value as determined by the Trustee based upon the market value of securities so transferred of One Hundred Thousand Dollars ($100,000.00), and the balance shall be distributed in the manner set forth in the following Sub-paragraphs (c) and (d)."

Subparagraph (c) of section 4 provided for the payment of legacies totaling $90,000 to 16 different legatees. Subparagraph (d) of section 4 provided that "[i]f any of said residue shall remain after said payments, the same shall be paid to THE MOODY CHURCH, 1609 North LaSalle Street, Chicago, Illinois."

On August 31, 1962, pursuant to a power of amendment contained in the original agreement, the settlor added the following amendment:

"The Settlor shall have the right at any time and from time to time during her lifetime by instrument in writing delivered to the Trustee to alter or amend this trust indenture either in whole or in part, provided, however, that if altered or amended the duties, powers and responsibilities of the Trustee shall not be substantially changed without its consent; and provided, further, that that part of the provisions of SECTION 4 which apply to WINONA LAKE SCHOOL OF THEOLOGY, INCORPORATED, or its corporate successor ascertained as in SECTION 4 may not hereafter be altered or amended, the Settlor hereby expressly relinguishing and ...


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