APPEAL from the Circuit Court of Cook County; the Hon. FRANK
M. SIRACUSA, Judge, presiding.
MR. JUSTICE LINN DELIVERED THE OPINION OF THE COURT:
Rehearing denied August 26, 1981.
Petitioner, Robert Johnson, filed a claim in the probate division of the circuit court of Cook County against the estate of his deceased mother, Bernice Johnson Winston. Respondent, Northern Trust Co., is the executor of the estate. Petitioner's claim essentially alleged that his mother, during her lifetime, had held certain assets — insurance proceeds, an interest in a partnership, a beneficial interest in a land trust, and 100 shares of stock — in trust for the benefit of petitioner and his brother, Harold Johnson; that his mother as trustee had converted the assets to her own use; and that petitioner was entitled to an accounting of those assets or the proceeds received by his mother from her conversion of those assets.
Following a bench trial, the trial court granted petitioner's claim as far as the insurance proceeds were concerned but denied petitioner's claim concerning the other assets. Petitioner appeals.
We affirm in part, reverse in part, and remand for further proceedings.
In November 1967, petitioner's father, Samuel Johnson, died. His estate was probated in Cook County. He was survived by his wife, Bernice, and his two sons, petitioner and Harold. Both sons were adults at the time of Samuel's death. Petitioner lived in Europe and remained there throughout the time his father's estate was being probated. The probate of the estate was closed in late 1969.
In his will, Samuel named the Northern Trust Co. as executor. Under the will, Samuel specifically bequeathed $2,500 to each of his sons (petitioner received this sum) and bequeathed all of his stock and interest in "International Galleries, Inc." to Bernice. The residue of Samuel's estate was to be turned over to the "acting trustee" of a trust Samuel had created before his death.
The trust referred to in Samuel's will was created in 1953 and amended and restated in 1963. The trust res, when created, consisted of several insurance policies on Samuel's life payable to the "corporate trustee" of the trust. The trust designated respondent, Northern trust, as the "corporate trustee" and Bernice as the "individual trustee." The majority of the terms of the trust were activated by Samuel's death. The corporate trustee was ordered to take possession of the life insurance proceeds and to hold, manage, and distribute these proceeds and any other assets which came to the trust by way of Samuel's will as follows.
Half of the assets were to be made part of "Trust A" and half part of "Trust B." The corporate trustee was ordered to pay the income from both Trust A and B to Bernice in regular installments during her life. The corporate trustee was given the discretionary authority to distribute such sums of the principal of Trust A and B to Bernice during her life as it deemed necessary for her comfortable maintenance and welfare, but the corporate trustee could not distribute any of the principal of Trust B to Bernice until the principal of Trust A was exhausted.
Bernice was given a general testamentary power of appointment over the principal of Trust A. If Bernice failed to exercise the power, the remainder of Trust A was to go to Trust B. Bernice had no power of appointment over the principal of Trust B, and upon Bernice's death the remainder in Trust B was to go to petitioner and his brother, Harold, in equal shares.
The corporate trustee was given all of the usual discretionary powers to manage and transfer the trust principal. Bernice, as individual trustee, was to have all of the same duties as the corporate trustee and was to exercise all powers of the corporate trustee jointly with the corporate trustee. However, as individual trustee, Bernice was specifically prohibited from exercising any power relating to the distribution of income or principal to the beneficiaries. If Northern Trust, for any reason, declined to act as corporate trustee or was removed from that position, Bernice could appoint a new corporate trustee.
Shortly after Samuel's death, Northern Trust determined that it would not act as corporate trustee of the insurance trust and would not act as executor of Samuel's estate. This decision was based on representations of Bernice and Bernice's attorney that the proceeds from Samuel's insurance policies and the value of assets constituting the residue of Samuel's estate would not be enough to justify Northern's participation in the trust, and the total value of Samuel's estate would not be enough to justify Northern's participation as executor of the estate. (In the present case, Northern is not being sued in its capacity as trustee of the insurance trust or as executor of Samuel's estate, and its decision to decline to act as trustee or executor is not being challenged as improper.)
As a result of Northern's decision, Bernice was made administratrix of Samuel's estate with the will annexed. Bernice did not appoint a new corporate trustee of the insurance trust, and she essentially ignored the trust for the remainder of her life. Steps were taken for Bernice to receive the insurance proceeds which were designated for the trust, and she received these proceeds and kept them for her own use.
At the conclusion of probate of Samuel's estate in 1969, a first and final account was filed by Bernice and approved by the court. Petitioner had received notice of the hearing on this account and made no objections to the account. The final account showed receipts of approximately $90,000 and disbursements of approximately $160,000, thus showing a deficit of approximately $70,000. Two assets were shown to be on hand and designated for distribution as follows: "To Bernice S. Johnson — an undivided one-half interest in International Galleries as per will; [and] an undivided one-half interest in Exchange National Bank of Chicago Trust No. 4072." (The res of this latter land trust was real property located on Pine Grove Avenue in Chicago and we will refer to this trust as the Pine Grove Trust.)
Bernice died in 1977. She had remarried since Samuel's death, but her second husband died a few years before Bernice. Bernice's will left almost her entire estate to petitioner's brother, Harold. Bernice did not exercise any powers of appointment by her will. After the will was admitted to probate, petitioner filed the present claim against her estate.
In his claim, petitioner alleged that the trust established by Samuel had been ignored by Bernice, the individual trustee, from the time of Samuel's death until Bernice's death. As trustee, Bernice was accused of converting trust assets to her own use during her life and of commingling the proceeds received from these assets with her own assets. The total alleged value of these assets was more than $500,000.
There were basically four different assets allegedly converted by Bernice:
(1) the insurance proceeds designated for the trust;
(2) Samuel's one-half interest in the Pine Grove Trust which was distributed to Bernice and was allegedly part of the residue of Samuel's estate, and thus was property earmarked for the trust;
(3) one-half of all the assets in International Galleries representing Samuel's interest in International Galleries which was distributed to Bernice and allegedly should have been considered part of the residue of Samuel's estate and thus should have been earmarked by Bernice as trust property; and
(4) 100 shares of stock in Force Western, Inc., which stock represented the entire outstanding ownership interest in Force Western (petitioner alleged that Bernice had failed to include this asset as part of Samuel's estate and that this asset should have been part of the residue of Samuel's estate and earmarked for the trust).
Petitioner sought an accounting from Bernice's estate of all of the above assets or proceeds received from the sale of the above assets and an accounting of all the income generated by these assets and received by Bernice during her lifetime. Petitioner sought a determination that he was entitled to one-half the total value of these assets and income generated by these assets pursuant to the terms of the insurance trust established by Samuel. (Petitioner's brother, Harold, was entitled to the other one-half under the terms of the trust.)
Respondent filed a motion to dismiss petitioner's claim under section 48 of the Civil Practice Act (Ill. Rev. Stat. 1979, ch. 110, par. 48). Part of this motion sought dismissal of petitioner's claim under section 48(d), alleging that the prior order approving the final account of Samuel's estate barred petitioner from claiming any rights in the Pine Grove Trust, International Galleries, or the Force Western stock. This motion was denied. On appeal, respondent has renewed its allegation that petitioner's claim was barred.
Following denial of the motion, respondent filed its answer which denied all of the essential allegations of the claim and the case went to trial. We will set out here the evidence presented at trial concerning each of the assets to which petitioner asserted a claim.
The trial court determined that the trust created by Samuel was a valid trust and that the insurance proceeds designated for that trust should have been made a part of that trust by Bernice. The court ordered an accounting of these proceeds and awarded petitioner one-half the value of ...