APPEAL from the Circuit Court of Cook County; the Hon. JOHN F.
HECHINGER, Judge, presiding.
MR. JUSTICE LORENZ DELIVERED THE OPINION OF THE COURT:
Plaintiffs appeal from an order dismissing their complaint and declaring respective rights of the parties under a trust agreement. On appeal they contend that the trial court erred in (1) determining the respective rights of the parties under a trust agreement, (2) refusing to impose a constructive trust upon a grantee taking conveyance from a trustee and (3) allowing defendants to file a section 41 petition (Ill. Rev. Stat. 1977, ch. 110, par. 41) after plaintiffs had filed a notice of appeal.
The following facts are pertinent to a disposition of this appeal.
On July 18, 1956, the four Vournazos brothers, James, George, Harry and Charles, entered into a land trust agreement with Drovers Trust and Savings Bank (the bank). The trust agreement provided that the bank would take title to five lots located in Chicago as trustee for the benefit of the four Vournazos brothers. Each of the four brothers received a 25 percent beneficial interest in the trust. The bank retained the right under the trust agreement to resign as trustee at any time. In the event of such a resignation, the trust agreement provided that a successor trustee "may be appointed by the person or persons then entitled to direct the Trustee in the disposition of the trust property." The trust agreement further provided in pertinent part that:
"It is understood and agreed by the parties hereto and by any person who may hereafter become a party hereto, that said Drovers Trust and Savings Bank will deal with said real estate only when authorized to do so in writing and that it will (notwithstanding any change in the beneficiary or beneficiaries hereunder, unless otherwise directed in writing by the beneficiaries) on the written direction of Majority of person or persons holding any beneficial interest hereunder or on the written direction of such person or persons as may be beneficiary or beneficiaries at the time, make deeds for, or otherwise deal with the title to said real estate." (Emphasis added.)
The beneficiaries specifically retained the right to manage and control the trust property. The agreement also provided that the bank would not be called upon to do anything in the management or control of the property "except on the written instructions as hereinabove provided." Property remaining in the trust 20 years from the date of the agreement was to be sold at public sale by the trustee with the proceeds to be divided among the beneficiaries. The trust agreement was signed by a vice-president of the bank and by each of the four Vournazos brothers.
The trust agreement was amended on April 3, 1957, to provide that in the event of the death of any Vournazos brother, the remaining three brothers would take the decedent's interest in the trust as joint tenants.
On March 9, 1970, James Vournazos assigned his 25 percent interest in the trust to himself and Helen J. Vournazos, his wife, as joint tenants. The assignment provided that the power of direction under the trust would be exercised by James and Helen Vournazos. The bank acknowledged receipt of this assignment on March 10, 1970.
Harry Vournazos died on June 1, 1973, survived by his brothers, James, Charles and George, who then received his 25 percent interest in the trust as joint tenants. On February 2, 1976, James Vournazos executed a document purportedly transferring to Helen Vournazos, his wife, all his rights and beneficial interest in "an undivided one-third (1/3) interest in the undivided twenty-five per cent (25%) interest formerly held by Harry Vournazos, Deceased." Helen Vournazos accepted the assignment, but the bank apparently refused to acknowledge receipt thereof.
On February 4, 1976, James and Helen Vournazos filed a complaint against the bank and Charles and George Vournazos in which they sought, in addition to other relief, an order canceling the trust agreement and a declaratory judgment as to the respective rights of the parties in the said trust agreement. Subsequently, on April 27, 1976, George and Charles Vournazos executed a document accepting the bank's resignation as trustee and authorizing and directing the bank to deliver its trustee's deed for all property in the trust to Charles Vournazos as grantee. The bank complied with the instructions and delivered its trustee's deed to Charles Vournazos on April 28, 1976. On the same day Charles and George Vournazos executed a document appointing George Vournazos as successor trustee under the trust agreement. Charles Vournazos, also on April 28, 1976, then executed and delivered a deed in trust for all the property in the trust to George Vournazos as successor trustee. On the same day George Vournazos, as successor trustee, conveyed all of the property held in the trust to Bananas Steak House, Inc., an Illinois corporation owned and operated by the three Vournazos brothers. James Vournazos owned one-third of the outstanding stock in the Bananas Steak House while Charles and George Vournazos owned the remaining two-thirds. The matter subsequently proceeded to trial on August 31, 1977. The evidence adduced at trial is not relevant to the issues on appeal. Following the conclusion of plaintiffs' case the trial court on November 8, 1977, granted the motion of defendants to dismiss the complaint. The trial court also found "that the intention of the settlor and the original parties was that of equality of ownership of beneficial interest with the power of direction" and that the power of direction properly "lies with and in direct proportion to the ownership of beneficial interest" in the trust. The trial court held, therefore, that the issuance of the trustee's deed by the bank to Charles Vournazos was proper.
Plaintiffs filed their notice of appeal on November 8, 1977. On December 5, 1977, defendants filed a petition with the clerk of the circuit court under section 41 of the Civil Practice Act (Ill. Rev. Stat. 1977, ch. 110, par. 41), seeking costs and fees for their defense of the suit. The trial court granted defendants leave to file the petition on December 8, 1977.
Plaintiffs first contend that the trial court erroneously held that the power of direction under the trust agreement rested with the holders of the majority share of the beneficial interest rather than with a majority of persons holding any beneficial interest under the trust. They argue that the power of direction was improperly exercised by Charles and George Vournazos, holders of two-thirds of the beneficial interest after Harry Vournazos' death, because at the time of that exercise there were four persons having any beneficial interest in the trust, namely; James Vournazos and Helen Vournazos, who together held one-third of the beneficial interest, George Vournazos and Charles Vournazos. Under plaintiffs' theory, the power of direction would have to be executed by at least three of the four above beneficiaries, regardless of the size of their respective beneficial interests.
1, 2 The purpose of interpreting any trust agreement is to determine the true intent of the settlor (Storkan v. Ziska (1950), 406 Ill. 259, 94 N.E.2d 185; Estate of Sacks (1967), 89 Ill. App.2d 1, 231 N.E.2d 688) and to give effect to that intention if not against the law, good morals or public policy. (Lambos v. Lambos (1973), 9 Ill. App.3d 530, 292 N.E.2d 587.) In construing the language of a trust agreement we must "consider the facts and circumstances which gave rise to its execution, together with the provisions of the instrument." (Harris Trust & Savings Bank v. Wanner (1946), 393 Ill. 598, 606, 66 N.E.2d 867, 871.) We must consider the entire trust agreement rather than any ...