APPEAL from the Circuit Court of Cook County; the Hon. ANTHONY
J. KOGUT, Judge, presiding.
JUSTICE HARTMAN DELIVERED THE OPINION OF THE COURT:
The administrator of the Estate of Frank Prusis, his surviving spouse, Gene Bacys Prusis (Gene), appeals from an order of the circuit court dismissing her amended verified petition for citation to discover assets following an evidentiary hearing by the trial court. The sole issue is whether Gene established a prima facie case.
Decedent Frank Prusis died on July 2, 1978. Gene filed an amended verified petition to recover assets alleging, among other things, that: she and decedent were married November 14, 1970; decedent established a number of "Totten trust" savings accounts in his own name as trustee for his nephew, respondent Algerd W. Prusis (Algerd); decedent retained absolute, unqualified control over the accounts and possessed and exercised all incidents of ownership thereof; petitioner learned how title was held to these accounts only after decedent's death when she saw a list of them furnished by Algerd, attached as Exhibit "A"; decedent and Algerd entered into a written agreement on January 29, 1975, Exhibit "B", purporting to dispose of the proceeds of the accounts upon decedent's death, and into a subsequent, allegedly "superseding" agreement dated December 19, 1977, Exhibit "C", of which petitioner had no notice or knowledge prior to decedent's death; and, the transfer of title to the account was illusory and intended to defraud petitioner. Gene requested that the property either be included in decedent's estate or be found subject to her claim for her statutory marital share.
Algerd filed a verified motion to dismiss the amended petition, which, among other things, admitted the establishment of the Totten trusts, and asserted that: petitioner and decedent wanted to ensure that their assets would pass to their respective families; petitioner was aware of the manner in which title was held to the subject accounts; petitioner and decedent filed joint income tax returns between 1970 and 1977; petitioner was present during the drafting of the first agreement and participated in designating certain beneficiaries thereof; Algerd had no intent to defraud petitioner, who had, in fact, delivered the list of accounts, Exhibit "A", to Algerd voluntarily.
At the hearing on the petition for citation to recover assets, held October 22, 1980, counsel agreed to proceed on the merits of the petition itself; ruling upon the motion to dismiss was reserved until the completion of petitioner's evidence.
Petitioner testified that decedent had been married once before he married her. Before they married, they discussed the disposition of his property should he predecease her. He would leave everything to her, and nothing to Algerd, who was already wealthy. Gene would leave nothing to decedent because she had children from her first marriage. A few years after the marriage, when Gene asked decedent about "our testament," he replied, "what I said previously still stands." He never told her in what institutions he had deposited his money and hid financial records from her. She saw two passbooks, however, one in her name and the other in respondent's name. Decedent never discussed with her the manner in which title was held in the five subject accounts; she first learned of them after her husband's death.
Petitioner and decedent visited decedent's attorney, Vytold C. Yasus, to complete their income tax returns, but neither decedent nor Yasus ever discussed the disposition of her husband's assets. After January 29, 1975, decedent told her he had made a "testament" in which he listed her grandchildren. She first became aware of the 1975 agreement when she discovered it in a hat box in decedent's closet after his death. She was first informed of the 1977 agreement by Algerd at decedent's wake. On cross-examination she testified that when she and decedent prepared their income tax returns at Yasus' office, decedent brought the "interest slips" from his accounts and she brought hers. She observed and signed the tax return forms to which were attached sheets listing interest from savings accounts. She also observed "bank slips" and later found a carbon copy of the "listings" which decedent had prepared. At decedent's funeral she gave Algerd one or two passbooks bearing Algerd's name "as trustee," apparently not the subject of this suit; two or three bearing decedent's and her names; and two passbooks bearing decedent's name. She told Algerd she did not know where the others were kept and he replied "with me."
Petitioner testified on redirect examination that she never exchanged "bank slips" with the decedent, and never saw a list on which the name of the bank, as well as the manner in which title was held, was listed. Decedent never showed her the passbooks before his death.
Algerd was called by petitioner as an adverse witness (Ill. Rev. Stat. 1979, ch. 110, par. 60). He was decedent's nephew. He did not know when the five accounts in question had been established, except that one had been established prior to decedent's marriage to petitioner. The "Bell Savings" account dated back to September 1969, which account he referred to as the "one that has my name on it." He identified an account at "First Federal" bearing an issue date of December 1973, which was a transfer from another account; an account at "Union Federal", which was also transferred from another account in 1971; and another account at "Union Federal Savings and Loan" which was opened in October 1975 and which had been transferred from another account. All the accounts in question had been established prior to September 16, 1977.
Algerd testified that decedent periodically gave him small gifts, telling him, "`I got a dividend and here's your share'"; however, "[i]t never was anywhere equal. But you know $50 or something close to my birthday or whatever." Prior to decedent's death he did not discuss with Gene any of the accounts or agreements in question, but he did so afterwards when "she brought it out. She knew all about it." Gene asked him to verify whether he had two agreements with decedent; when he so acknowledged, Gene looked at the agreements and simply shook her head. The total amounts in the five accounts at or near the date of decedent's death approximated $57,000.
No passbooks were offered or received in evidence, nor were any underlying financial institution trust agreements which established the accounts.
Counsel for Algerd renewed his motion to dismiss the amended petition. Memoranda of law were filed by the parties. After oral argument thereon, the trial court granted Algerd's motion and dismissed Gene's amended petition.
Gene argues that Totten savings account trusts, as well as other inter vivos transfers, which are colorable or illusory, are invalid as to the rights of a surviving spouse, relying principally upon Montgomery v. Michaels (1973), 54 Ill.2d 532, 301 N.E.2d 465 (Montgomery), and In re Estate of Mertes (1975), 34 Ill. App.3d 557, 340 N.E.2d 25 (Mertes). In Montgomery, the supreme court held that a Totten trust, while valid for other purposes, cannot defeat the surviving spouse's statutory share, wherein the settlor is trustee and retains absolute, unqualified control over the account and exercises the incidents of ownership thereof, including the right to receive interest payable thereon and withdraw principal therefrom. The supreme court emphasized that the intent of the deceased spouse in creating the trust, even if to deprive the surviving spouse of his or her statutory share, is irrelevant to this determination and the trust corpus would be available to satisfy the spouse's statutory share, or for the payment of estate debts and the expenses of administration. The Mertes court followed Montgomery and gave that decision retroactive effect by applying it to Totten trusts established before Montgomery. The appellate court found the Totten trusts there at issue invalid as to the surviving spouse, notwithstanding the trial court's finding that the trust was neither illusory nor fraudulent, and that there was no secretive conduct involved in its establishment or maintenance. On the basis of these authorities, Gene urges that the trusts here should be declared invalid as to her rights.
In Johnson v. La Grange State Bank (1978), 73 Ill.2d 342, 383 N.E.2d 185, relied upon by both parties, plaintiffs, in a consolidated appeal, attempted to invalidate certain inter vivos transfers. Plaintiffs in each case were the surviving husbands and raised Montgomery in support of their claims. In the first case, decedent had created an inter vivos trust for the ultimate benefit of several relatives and charities. In the second case, a savings account named decedent ...