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In Re Estates of Rice







APPEAL from the Circuit Court of Du Page County; the Hon. PHILIP F. LOCKE, Judge, presiding.


This opinion deals with two appeals as to the estates of Daniel F. Rice, Sr., and Ada L. Rice. Appeal No. 78-118 is from a February 2, 1978, order by which Judge Philip F. Locke removed Arthur F. Nolan (Nolan) as co-executor of Ada L. Rice's estate, appointed William Linkul (Linkul) to serve in Nolan's place as co-executor, and made a number of other findings relating to the disposition of property from both estates, including a ruling as to which of two competing groups were rightful directors of the Rice Foundation. The other appeal, No. 78-387, is from an award of $14,936.20 in fees given to Linkul for his services as a replacement co-executor. We are consolidating these appeals on our own motion due to their intimate factual connection.

Because of the complexity of the issues herein, a brief historical overview of the Rice estates is necessary. It is to be noted that more than 29 attorneys or law firms participated in the two cases here involved. Daniel F. Rice, Sr., died on February 6, 1975, leaving an estate of over 70 million dollars. Mr. Rice left virtually his entire estate to two trusts, denominated Trust A and Trust B. Each trust received about one-half of his estate.

By means of Trust A, Mr. Rice left his widow Ada a beneficial interest in 50 percent of his assets and gave her a testamentary power of appointment over the corpus of Trust A. Trust B received the other half of the estate. Trust B, by the terms of Mr. Rice's will, is to expire on February 6, 1985. According to the terms of Mr. Rice's will, six named beneficiaries are to share each year, per stirpes, the first $80,000 of income from Trust B as follows:

2/16 Daniel F. Rice, Jr. 2/16 Florence Rice Bachrach, a niece, now deceased 3/16 Shirley Gillick Maginot, a sister 3/16 Patricia Gillick Nolan, a niece 3/16 Elizabeth Ann Gillick Palmer, a niece 3/16 Beatrice Rice Sheridan, a sister.

Any income earned by Trust B, over and above the $80,000, goes to the Rice Foundation. On February 5, 1985, upon the expiration of Trust B, the corpus of the trust is to be distributed to the beneficiaries, including the Rice Foundation, in the proportion that those beneficiaries share in the trust income immediately prior to the dissolution of the trust, i.e., prior to February 5, 1985.

On December 30, 1975, Mrs. Rice, the Rice Foundation and the executors of her husband's will filed a will construction suit in the Circuit Court of Du Page County. In February 1976, Daniel F. Rice, Jr., filed a claim against his father's estate. Mrs. Rice died on April 11, 1977. By her will she exercised her power of appointment over Trust A in favor of the Rice Foundation and left Daniel F. Rice, Jr., an annuity interest in a $500,000 trust "in consideration of [his] agreeing to settlement of the claims involving my husband's estate and [his] agreeing to release me from any claims." Her will named Nolan and the Continental Bank and Trust Company of Illinois as co-executors of her estate. After his mother's death Daniel F. Rice, Jr., filed several law suits relating to the disposition of his parents' estates, including a petition on November 4, 1977, to set aside his mother's will.

In December 1977 a settlement was proposed by Judge Locke of the Circuit Court of Du Page County, by which the junior Mr. Rice would receive $5,000,000 tax-free from the estates of his parents. This settlement was approved by Daniel F. Rice, Jr., and by the executors of his mother's estate and of his father's estate. The directors of the Rice Foundation, however, rejected the December settlement proposal, their stated reason being that it would have had severe adverse tax consequences for the estates. On December 16, 1977, during one of the settlement conferences, a question was raised orally by counsel for Daniel F. Rice, Jr., before Judge Locke regarding the composition of the Board of Directors of the Rice Foundation. Counsel for Daniel F. Rice, Jr., contended that the directors who were controlling the Rice Foundation in December 1977 (hereinafter known as the Nolan group) had "wrongfully acted as directors"; that certain bylaws giving the right to select a majority of directors to certain local medical institutions had been adopted in 1974 and that Nolan and the other directors had wilfully ignored those 1974 bylaws. On December 27, 1977, a lawsuit was filed in the Circuit Court of Cook County in which the directors of the Rice Foundation (the Nolan group) sought a judicial ruling on the proper composition of their Board.

Mr. Nolan's fitness to serve as executor of Ada Rice's estate was first placed in issue on December 29, 1977, when counsel for Daniel Rice, Jr., appearing before Judge Locke, presented a motion to have Nolan removed. This motion was not granted, apparently because it was not based on a verified petition. However, Judge Locke then issued a citation to remove Nolan as co-executor on his own motion, which is set forth below and was substantially the same as the motion submitted by counsel for Daniel F. Rice, Jr. Nolan filed a petition for a change of venue, asking that the cause be heard by another judge because of Nolan's belief that Judge Locke was prejudiced against him. This petition was filed prior to the return date on the citation and before any substantive rulings had been made in the citation proceeding. Nolan also moved for a more definite statement and for a postponement to allow him to conduct discovery. All three of these motions were denied by Judge Locke. Nolan also filed a motion to dismiss the citation, claiming that there was no conflict as a matter of law between his position as co-executor of Ada Rice's estate and his position with the Rice Foundation. Judge Locke took this motion under advisement and continued the hearing to January 24, 1978. In the meantime, on January 11, Judge Locke entered an order allowing certain medical institutions to file a petition in the probate proceeding seeking a ruling that the medical institutions had the right to select the board of directors of the Rice Foundation. No answers to this petition were due prior to February 3, 1978. Hearings were conducted on the citation to remove Nolan every day from January 24 through January 31, 1978. Witnesses were subpoenaed by Daniel F. Rice, Jr., and were called to the stand by counsel for Daniel F. Rice, Jr., who interrogated them on behalf of the court. The propriety of this procedure, as well as the other issues, will be discussed later in this opinion.

On February 2, 1978, Judge Locke entered an order which, inter alia, removed Nolan, replaced him with Linkul, and held that the medical schools and not the Nolan group of directors should be controlling the Rice Foundation. The removal of Nolan was based on his allegedly conspiring to suppress the adoption of the 1974 amendments of the bylaws of the Foundation. Nine separate parties, including Nolan as executor and the Nolan group of directors, have appealed from this order, with Daniel F. Rice, Jr., four of the medical schools and Linkul filing briefs as appellees.

On May 11, 1978, Linkul appeared before Judge Teschner of the Circuit Court of Du Page County and filed a petition for $14,936.20 for his services as co-executor between February 2, 1978, and May 11, 1978, and for an additional sum of $27,514.90 as prospective fees. The petition for fees was presented to Judge Teschner for his in camera inspection. Unbelievably, counsel was not allowed to examine the petition or the alleged time expended by Linkul. As a matter of fact, the details of Linkul's petition for fees were not disclosed to opposing counsel until June 26, 1978, over a month after the fees were allowed without the opportunity of opposing counsel to examine Linkul as to the propriety of the fees, and no evidence as to the validity of the fees was presented by Linkul. Unbeknownst to those present before Judge Teschner, on the same day, May 11, 1978, this court issued an order staying the effect of Judge Locke's February 2, 1978, order, except as it removed Nolan as co-executor. We specifically ruled that the other co-executor, the Continental Bank, was to perform as sole executor until we had an opportunity to rule on this appeal. Linkul then withdrew his request for prospective fees. On May 18, 1978, Judge Teschner awarded Linkul the $14,936.20 he had requested a week earlier, and Nolan has appealed from this award.

In order to deal with the large number of specific issues raised by the parties, this opinion is divided into four broad sections, concerning:

I. Whether Nolan should have been removed as co-executor.

II. What, if any, fees should be awarded to Linkul.

III. Who are the proper and rightful directors of the Rice Foundation.

IV. Whether certain other findings made by Judge Locke in his order of February 2, 1978, should be reversed.



Under the general heading above the first issue which this court must concern itself with is whether the trial court erred in denying the change of venue filed by Arthur A. Nolan, Jr., in the citation proceeding to remove him as executor. The facts surrounding this particular situation are as follows: Immediately after Daniel F. Rice, Jr., filed a citation to remove Nolan as an executor and before that petition was withdrawn and the court substituted its own citation, Nolan filed a motion for a change of venue, pursuant to the provisions of the Civil Practice Act relating to venue (Ill. Rev. Stat. 1977, ch. 110, par. 501(2).) That section states, in pertinent part, that:

"A change of venue in any civil action may be had * * * (2) Where any party or his attorney fears that he will not receive a fair trial in the court in which the action is pending, because * * * the judge is prejudiced against him, or his attorney * * *."

It is Nolan's contention with regard to this issue that the citation to remove him as an executor was a "civil action" under the venue act. First, he relies upon section 23-3(a) of the Probate Act (Ill. Rev. Stat. 1977, ch. 110 1/2, par. 23-3(a)), which creates the procedure which must be followed to remove an executor. That section states that the citation "must be served and returned in the manner provided for summons in civil cases." Second, he relies upon the fact that the trial judge, Judge Locke, permitted attorney Charles J. O'Laughlin to represent Nolan in the removal proceeding while denying O'Laughlin leave to represent Nolan as to any other issue or matter. Third, Nolan contends that the proceeding arising from a citation to remove an executor satisfies the test of what is a "civil action" as set out in the case of McPike v. McPike (1882), 10 Ill. App. 332, 334, where the court stated that:

"A civil action is one prosecuted for the establishment or recovery of a right, or the prevention of a wrong, or the redress of an injury."

In their arguments, the attorneys for Daniel F. Rice, Jr., contend that Nolan cannot raise the issue of the denial of the change of venue motion because he did not specifically raise it in his notice of appeal. In the alternative, they contend that the denial by the trial court of that motion was also proper as the trial ...

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