Appeal from the Appellate Court for the Fifth District; heard
in that court on appeal from the Circuit Court of Monroe County,
the Hon. Alvin H. Mayes, Jr., Judge, presiding.
MR. JUSTICE MORAN DELIVERED THE OPINION OF THE COURT:
This action arises out of a series of objections to the probate of the will of the testator, May Crowder. The testator died on August 20, 1970. Her will, dated December 13, 1961, was admitted to probate in Monroe County on December 24, 1970. Letters testamentary were issued to the executor, Chester J. Dillon, on that date.
The will directed the executor to pay the expenses of administration, which specifically included payment of the testator's just debts, the expenses of her last illness and her funeral, and the taxes resulting from her death. The will further provided that all the testator's real and personal property be conveyed into a testamentary trust, with the testator's daughter, Annette C. Wilson, as trustee. The trustee was given unbridled discretion in the management and control of the trust estate and was to be relieved of liability for any depreciation or loss. The beneficiaries of the trust were the three grandchildren (the trustee's children), Bruce Wilson, Tamara Wilson Koob (now Ellis), and Iris Wilson Hoffman (now Bennett). The will set forth that the trustee was to disburse the trust assets equally to the grandchildren in accordance with the following schedule: when a grandchild attained the age of 25, he or she was to receive one-third of his or her share of the principal and undisbursed income; at age 30, one-half of the remainder of his or her share; and at age 35, the balance of the share. At the time of the testator's death, Tamara Ellis and Iris Bennett had already attained the age of 35, and Bruce Wilson was 27 years old.
On October 15, 1975, Iris Bennett and Bruce Wilson filed petitions which sought the removal of the trustee, the removal of the executor, an accounting of the trusteeship, and a reconsideration of the executor's and attorney's fees which had previously been allowed by the court. The petitions alleged, among other things, that (1) the trustee had failed to provide an accounting of the assets of Dawn Investment Company, a closely held corporation in which the testator was majority shareholder, (2) the trustee had a conflict of interest because her husband, Eugene Wilson (Wilson), was the managing officer of Dawn Investment Company, (3) the trustee had allowed farm property to remain idle and unproductive during the five years since the estate was opened, (4) the executor had failed to turn over the estate assets to the trustee, thereby depriving the beneficiaries of the use and benefit of the assets, and (5) the executor's failure to diligently file a Federal estate tax return had exposed the estate to substantial penalties and interest. On December 31, 1975, the trial court entered an order which allowed for the distribution of the farm property to the beneficiaries and allowed the trustee, upon her own request, to resign from the position. On February 20, 1976, Iris Bennett and Bruce Wilson filed their objections to the executor's final accounting. The objections repeated many of the allegations embraced in the earlier petitions and further alleged, among other things, that the accounting failed to include certain jewelry owned by the testator at the time of her death. On September 7, 1976, Iris Bennett filed a petition, subsequently amended, for recovery of assets and discovery of information. This petition alleged, in essence, that the trustee had improperly converted the above-mentioned jewelry for her own use and that Eugene Wilson (trustee's husband) had caused, to the detriment of the estate, considerable diminution of value in the assets of Dawn Investment Company.
The trial court, having consolidated the issues for the purpose of hearing, entered its final order on February 15, 1977. The order overruled the objections to the final accounting, denied each of the petitions filed by the various beneficiaries, and declared that the jewelry in question became the absolute property of the trustee by inter vivos gift from the testator. Only Iris Bennett (plaintiff) appealed. The appellate court, pursuant to Supreme Court Rule 23 (58 Ill.2d R. 23) affirmed. (58 Ill. App.3d 1115.) We granted plaintiff leave to appeal.
Plaintiff presents eight issues for review. We will consider the issues as they affect the estate's interest in the following four assets: (1) the Dawn Investment Company, (2) the farm property, (3) the jewelry, and (4) the trust estate as a whole.
Dawn Investment Company was a closely held Missouri corporation, the sole assets of which were shares of stock in other corporations. Its only shareholders were the testator and her son-in-law, Wilson. The testator owned 325 shares (80% of the total). Wilson was the sole managing officer of the corporation both during the testator's lifetime and thereafter, until the corporation was dissolved in December of 1974. The estate's interest in the corporate assets at the time of the testator's death was valued at approximately $112,000. Upon liquidation of the corporation four years later, the estate's interest had diminished to approximately $62,000. Plaintiff seeks to have either the executor or Wilson held liable for the diminution in value.
The trial court expressly found that there was no evidence that anyone other than Wilson had the right to participate in the management of the corporation, that the executor had no right to liquidate any of the assets of the estate, and that the eventual liquidation of the corporation was "at the request, insistence and [with the] participation" of plaintiff and the other beneficiaries. Plaintiff does not contend here that these findings are contrary to the manifest weight of the evidence. Nonetheless, she persists in urging that liability be placed, alternatively, on the executor for failing to obtain and liquidate the corporate assets or on Wilson as an executor de son tort for liquidating its assets at a reduced value.
Generally, an executor has a duty to administer the assets of an estate in accord with his statutory duty and the terms of the will. The Probate Act authorizes, but does not require, the executor to liquidate assets and thereby reduce the personal estate to cash when such action is necessary for the proper administration of the estate. (Ill. Rev. Stat. 1969, ch. 3, par. 209.) The express intent of the testator's will in this case, however, was to limit the authority of the executor and to repose any such authority in the trustee. The will, in providing that the trustee may distribute shares of the trust principal in kind or partly in kind and partly in money, further contemplated that assets be preserved either by retention or by reduction to cash. We agree with the trial court's finding that except as necessary to pay debts, expenses and taxes, the executor was not authorized by the will to liquidate any assets of the estate, which would, of course, include the testator's interest in Dawn Investment Company. Consequently, we find no basis for holding the executor liable for any loss which might have resulted from the failure to liquidate at a time when the market value of the corporate assets was higher.
Plaintiff's alternative theory is that Wilson should be liable as an executor de son tort for the disadvantageous liquidation of the corporation. An executor de son tort is defined as "a person who without any authority intermeddles with the estate of a decedent and does such acts as properly belong to the office of an executor or administrator, and thereby becomes a sort of quasi executor, although only for the purpose of being sued or made liable for the assets with which he has intermeddled." (Grace v. Seibert (1908), 235 Ill. 190, 192.) To hold Wilson liable as an executor de son tort, we would have to find that he intermeddled with the testator's estate. We find nothing in the record to support such a conclusion. It is undisputed that Wilson was the only person to exercise managerial control over the corporation. He did so both before and after the testator's death. His managerial duties involved the buying and selling of securities, which constituted the only assets of the corporation. Neither the testator nor the estate ever exercised any power, such as voting rights, which inhered in the ownership of corporate stock, until plaintiff demanded that the corporation be dissolved. Clearly, Wilson engineered the liquidating of the corporation's stock portfolio, at the plaintiff's request and insistence, as the duly authorized agent of the corporation, and not as an intermeddler in the affairs of the estate. Under these circumstances, we would be unwarranted in finding Wilson to be an executor de son tort.
Plaintiff also contends that the executor and the trustee are both liable for waste and loss of income with respect to the estate's farm property.
At the time of her death, the testator owned an 885-acre farm valued at $178,425. Only 320 acres were tillable. For six years prior to the testator's death, the tillable land was sharecropped by two farmers. The testator received one-third of the income derived from the farming operation. Her share averaged about $8,000 annually.
Shortly after the testator's death, the trustee instructed the executor to inform the tenant farmers that their annual lease would not be renewed. At the time, both the trustee and the plaintiff mistakenly thought that the trustee, individually, was the sole owner of the farm under the will. When the lease expired on September 1, 1971, the farmers terminated all farming operations. The land lay idle, except for 68 acres on which the trustee planted grass, until June 1973 when farming operations were resumed at the behest of the plaintiff and the other beneficiaries. Due to the late start in 1973, the owners' one-third share of the income amounted ...