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First Nat'l Bk. of Joliet v. Hampson

OPINION FILED SEPTEMBER 17, 1980.

FIRST NATIONAL BANK OF JOLIET, TRUSTEE, PLAINTIFF-APPELLEE,

v.

MARGOT M. HAMPSON ET AL., DEFENDANTS-APPELLEES. — (PATRICIA HENDRICKSON, DEFENDANT-APPELLANT; THOMAS CLARK WALSH ET AL., DEFENDANTS.)



APPEAL from the Circuit Court of Will County; the Hon. MICHAEL A. ORENIC, Judge, presiding.

MR. JUSTICE BARRY DELIVERED THE OPINION OF THE COURT:

The plaintiff, First National Bank of Joliet, as trustee, filed suit in the Circuit Court of Will County to have the declaration of trust executed by Edward N. Walsh, Sr., interpreted. In reply the defendant Patricia M. Hendrickson filed four affirmative defenses, the effect of which was to have the alleged trust document declared invalid. Briefly, these affirmative defenses asserted that the alleged trust document (1) created no trust, (2) violated the rule against perpetuities, (3) was ambiguous, and (4) restrained marriage. Following a hearing on plaintiff's motion for summary judgment on two of the affirmative defenses and an evidentiary hearing on the remaining two affirmative defenses, the trial court ruled that the alleged trust document was a valid trust. The defendant Patricia M. Hendrickson has appealed from that adverse judgment.

In 1918 Edward N. Walsh, Sr., married Mae Kelly. Three children were born of the marriage: Patricia Hendrickson, the defendant, Edward Walsh, Jr., and Margot M. Hampson. In 1931 Edward N. Walsh, Sr., purchased an 80-acre farm located in La Salle County, which was placed in his wife's name. She died in 1933. In 1957 Walsh, Sr., desired to sell his La Salle County farm and obtained deeds from Edward Walsh, Jr., and Margot M. Hampson, turning their interests over to their father. Patricia Hendrickson, his other daughter, refused to voluntarily convey her interest in her mother's farm to him. Walsh, Sr., then instituted a partition suit and purchased the farm at the subsequent judicial sale, paying his daughter Patricia $12,000 for her interest. This resulted in straining the personal relationship between the defendant Patricia Hendrickson and Walsh, Sr. In April of 1966 Walsh, Sr., gave $12,000 each to his other two children, Edward Walsh, Jr., and Margot M. Hampson. Prior thereto, on January 2, 1965, Edward N. Walsh, Sr., executed the declaration of trust which was the subject matter of the proceeding below resulting in this appeal.

The declaration of trust executed by Edward N. Walsh, Sr., as settlor named himself as trustee. Upon creation of the trust Walsh, Sr., transferred and conveyed certain itemized assets to himself as trustee, to wit: the family residence, three farms, and a checking account at the plaintiff's bank. The trust expressly provided that the settlor had not made any provision for Patricia M. Hendrickson, his daughter, because previous provision had been made in her behalf. The trust provided the income therefrom be paid to the settlor Walsh, Sr., during his lifetime and that the trust should continue during the lives of his second wife and his two children, Walsh, Jr., and Margot M. Hampson, with the income being paid to his second wife during her life and then to his two children during their lives. In the event of the death of either of his two named children, the income was directed to be paid to the descendants of those two children per stirpes, and in the event no descendants were living at the time of the named deceased's child's death, to the survivor of his two named children. The trust further provided several alternative termination contingencies.

On May 10, 1972, the settlor Edward N. Walsh, Sr., died. The plaintiff bank as trustee sought an interpretation of the trust which the defendant Hendrickson urged was invalid. As aforesaid, the trial court upheld the validity of the trust.

On appeal the defendant Hendrickson has presented five issues which she phrases as follows:

1. Whether any interest in the subject matter of the trust passed to any beneficiary before the death of settlor and, therefore, the intended trust was testamentary and therefore invalid because it failed to comply with the requirements of the statute of wills.

2. Whether article III. clause B.1, subparagraphs (a) and (b), violate the rule against perpetuities, because they provide that the interests created therein will not vest or fail to vest within 21 years after the death of some life in being at the creation of the interest. Whether the trust is, therefore, void and the corpus should be distributed according to the laws of intestacy.

3. Whether the modification of the rule against perpetuities (Ill. Rev. Stat. 1969, ch. 30, pars. 190 through 196) has any application to the Edward N. Walsh trust.

4. Whether article IV of the Edward N. Walsh, Sr., trust is a savings clause.

5. Whether article III. clause B.2, of the trust is contradictory and ambiguous, and, therefore, the settlor's intention must be determined by the use of the rules of construction. When so viewed the evidence at trial was insufficient to overcome the presumption against disinheritance. Therefore, the ruling of the trial court on this issue is contrary to the manifest weight of the evidence.

• 1 The defendant's first theory that the settlor's trust is invalid is that no interest in the subject matter of the trust passed to any beneficiary before the settlor's death and accordingly the trust was testamentary, not inter vivos, in character, and failed to comply with the formalities of the statute of wills.

"Among the essential elements for the creation of any express trust is the definite and complete present disposition of the trust property, even though enjoyment of such property may take effect at a future time. It is essential to the creation of an express trust that the settlor presently and unequivocally make a disposition of property by which he divests himself of the full legal and equitable ownership thereof. He may make himself the trustee or one of the trustees, thus retaining the legal title in whole or in part, or by making himself the beneficiary or one of the beneficiaries of the trust, he may retain the equitable ownership in whole or in part, but he cannot retain the full legal and equitable ownership.

The legal title must be definitely reposed in the trustee, whether he is the trustor or another." (76 ...


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