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In Re Estate of Wilson

OPINION FILED JUNE 20, 1980.

IN RE ESTATE OF MARJORIE WILSON (THE PEOPLE OF THE STATE OF ILLINOIS, APPELLANT,

v.

ELMER H. WILSON, EX'R, APPELLEE).



Appeal from the Appellate Court for the Fourth District; heard in that court on appeal from the Circuit Court of Adams County, the Hon. J. Ross Pool, Judge, presiding.

MR. JUSTICE RYAN DELIVERED THE OPINION OF THE COURT:

Rehearing denied September 26, 1980.

Elmer H. Wilson is the executor of the estate of his wife, Marjorie Wilson, who died on July 14, 1973. At the time of her death she held a checking account, United States government bonds, 1,610 shares of Moorman Manufacturing Company stock, and real estate — all in joint tenancy with her husband, Elmer Wilson. Mr. Wilson filed an Illinois inheritance tax return and listed the joint tenancy property on the appropriate schedule, but he claimed that the property was not subject to inheritance tax because the decedent made no contribution to the acquisition of the above property. Objections to the return were filed by the Illinois Attorney General. The circuit court of Adams County held that evidence of resulting trust was admissible, but that the stipulated facts were insufficient to establish a resulting trust. Therefore, inheritance tax was due on the jointly held property. The appellate court reversed, finding that a resulting trust existed in the case of the 1,610 shares of Moorman Manufacturing Company stock and the checking account, thus enabling Mr. Wilson to avoid the inheritance tax under section 375(5) of the Illinois inheritance and transfer taxes law (Ill. Rev. Stat. 1973, ch. 120, par. 375(5)). (71 Ill. App.3d 882.) We granted the State's petition for leave to appeal.

The primary issue is whether, upon the death of Mrs. Wilson, there transferred a sufficient interest in the property she held in joint tenancy with Mr. Wilson to be taxable under the Illinois inheritance and transfer taxes law.

The following facts were stipulated to by the parties. Elmer and Marjorie Wilson were married on October 7, 1931. Mrs. Wilson was never employed during the marriage, and she never received any assets from her family other than personal items of little intrinsic value. Mr. Wilson was employed by the Moorman Manufacturing Company, whose bylaws provided that only stockholders could be directors in the company. Mr. Wilson became a director on May 11, 1943, and general manager on October 5, 1943. He made his first purchase of 150 shares of stock in 1942. These were purchased entirely with Mr. Wilson's contribution and were registered solely in his name. He next purchased stock in 1945, but this time he had the stock registered "Elmer H. Wilson and Marjorie D. Wilson, his wife, in joint tenancy with the right of survivorship." Mr. Wilson chose that form of registration to make less expensive and simpler the transfer of the stock to his wife on his death. He intended that she have "a right of survivorship," but he did not intend to give her any present interest in the stock. In 1946, Mr. Wilson changed the registration on his original 150 shares of stock to joint tenancy with his wife. At other times during 1946 he purchased additional stock in the company and registered it all in joint tenancy with his wife.

In 1947, C.A. Moorman, the president of the Moorman Manufacturing Company, offered Mr. Wilson a gift of 500 shares of Moorman stock, but, at Mr. Wilson's suggestion, the shares were given to Mrs. Wilson and registered in her name. Mr. Wilson purchased additional shares of stock in his name and his wife's as joint tenants so that by August 3, 1950, 1,610 shares were registered in the names "Elmer H. Wilson and Marjorie D. Wilson, his wife, in joint tenancy with right of survivorship." The jointly held shares were purchased entirely with Mr. Wilson's contribution, and he considered the joint shares to be his alone and at no time did he intend that his wife have a present interest in them, although he did intend that she receive them on his death. All dividend checks on the joint stock were made payable to "E.H. Wilson" alone, and he always voted the stock, even though Mrs. Wilson never signed a proxy.

A checking account at the Mercantile Trust and Savings Bank, Quincy, was opened in 1933 by Mr. Wilson, as an individual account. In 1943 he changed the registration of the bank account to joint tenancy with Mrs. Wilson. In so doing it was not Mr. Wilson's intent to give his wife any present interest in the account, but only to make for an easy transfer upon his death.

Mr. and Mrs. Wilson held other assets in joint tenancy, including shares of Investors Mutual, Inc., United States savings bonds, and a home located in Quincy. While the contributions for these assets came solely from Mr. Wilson, the trial court found no indication in the stipulation of his intent at the time of their acquisition that he retain the beneficial interest in this property. We are not concerned with these items of property on this appeal.

After Marjorie Wilson's death, her husband and surviving joint tenant was appointed executor under her will and in that capacity filed an Illinois inheritance tax return. He listed the joint tenancy property on the appropriate schedule, but claimed it was for informational purposes only and not property that was subject to taxation in Marjorie's estate.

The Attorney General filed objections to the return, arguing that section 1(5) of the Illinois inheritance and transfer taxes law (Ill. Rev. Stat. 1973, ch. 120, par. 375(5)) is specifically intended to cover all assets held in joint tenancy regardless of the contribution of each joint tenant. Since the property is held or registered in joint tenancy, it is argued that the inheritance tax was properly assessed and any extraneous circumstances regarding contribution or equitable ownership are irrelevant.

The executor, Mr. Wilson, argued that although the property was held in the form of joint tenancy, the court should impose a resulting trust because of his intent that Mrs. Wilson not have a present interest. The circuit court agreed with the executor that a court could look to the circumstances surrounding the ownership of the property and impose a resulting trust, but held the facts were insufficient to impose one. The appellate court disagreed with this conclusion and found a resulting trust as a matter of law as to the 1,610 shares of Moorman Manufacturing Company stock and the checking account held in joint tenancy, based on the source of the contributions used to purchase the property and the stipulated intent of Mr. Wilson. They did not find a resulting trust on the other jointly held property due to a lack of evidence of Mr. Wilson's intent. The appellate court then held that since there was a resulting trust for the benefit of Elmer Wilson, no beneficial interest passed to him on his wife's death; thus, no tax could be imposed on the assets under section 1(5). We do not agree with the appellate court's conclusion.

The rules for establishing a resulting trust are the product of judicial construction. A resulting trust, characterized as an "intent enforcing" trust (G. Bogert, Trusts and Trustees sec. 451, at 611 (2d ed. rev. 1977)), is created by operation of law and has its roots in the presumed intention of the parties. (Wright v. Wright (1954), 2 Ill.2d 246, 250; Craven v. Craven (1950), 407 Ill. 252, 260; Tuntland v. Haugen (1948), 399 Ill. 595, 602; Murray v. Behrendt (1948), 399 Ill. 22, 28; Cook v. Blazis (1937), 365 Ill. 625, 628; Tritchler v. Anderson (1929), 334 Ill. 211, 215-16.) This court has, in a variety of factual situations, made the following observations. A purchase money resulting trust generally arises where one person purchases property with his own funds and title is taken in the name of another. (Suwalski v. Suwalski (1968), 40 Ill.2d 492, 495; Wright v. Wright (1954), 2 Ill.2d 246, 250; Kane v. Johnson (1947), 397 Ill. 112, 117; Link v. Emrich (1931), 346 Ill. 238, 242.) Resulting trusts arise at the instant legal title is taken. (Craven v. Craven (1950), 407 Ill. 252, 260; Murray v. Behrendt (1947), 399 Ill. 22, 28; Spina v. Spina (1939), 372 Ill. 50, 56.) The trust is founded "upon the natural equity that he who pays for the property should enjoy it, unless he intended by the vesting of title to confer a beneficial interest upon the grantee." (Bowman v. Pettersen (1951), 410 Ill. 519, 524.) The burden of proof is upon the party seeking to establish a resulting trust and the evidence must be clear, convincing and unmistakable. (Wright v. Wright (1954), 2 Ill.2d 246, 251; Jones v. Keopke (1944), 387 Ill. 97, 104; Paluszek v. Wohlrab (1953), 1 Ill.2d 363, 366; Heineman v. Hermann (1943), 385 Ill. 191, 199.) The payment of consideration raises a prima facie presumption of a resulting trust which may be rebutted by proof of an intention that the grantee take a beneficial interest and not merely legal title. The purchaser's intention must be gathered from the facts and circumstances of each individual case. Bowman v. Pettersen (1951), 410 Ill. 519, 524; Peters v. Meyers (1951), 408 Ill. 253, 258; Dodge v. Thomas (1914), 266 Ill. 76, 87.

Since the law surrounding resulting trusts was created to enforce the intent of the parties, certain rebuttable presumptions have evolved based on the relationship of the parties. Where a husband purchases property and title is taken in the name of his spouse, a rebuttable presumption of a gift arises. (Scanlon v. Scanlon (1955), 6 Ill.2d 224, 231.) A presumption of gift also arises where the husband pays the purchase price but ownership is taken in joint tenancy with his wife. It is deemed to have been intended by the husband that the wife should have the right to half the benefits for the life of each and, if she survives him, she should be the full owner. (Abraham v. Abraham (1949), 403 Ill. 312, 314-15; Stromsen v. Stromsen (1947), 397 Ill. 260, 262; Spina v. Spina (1939), 372 Ill. 50, 56; United States v. Trilling (7th Cir. 1964), 328 F.2d 699, 701.) The burden is upon one questioning the gift to overcome the ...


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