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In Re Estate of Fenton

OPINION FILED AUGUST 23, 1982.

IN RE ESTATE OF COLBA GHER FENTON, DECEASED. — (ROBERT VERNON BEAVER ET AL., RESPONDENTS-APPELLANTS,

v.

FRANKLIN E. FENTON ET AL., PETITIONERS-APPELLEES.)



Appeal from the Circuit Court of Jackson County; the Hon. Bill F. Green, Judge, presiding.

PRESIDING JUSTICE KARNS DELIVERED THE OPINION OF THE COURT:

Rehearing denied September 17, 1982.

Petitioner, Franklin E. Fenton, executor of the estate of Colba Gher Fenton, deceased, brought this action in the circuit court of Jackson County seeking a construction by the court of a provision of the will bequeathing the decedent's securities to named nieces and nephews. By its judgment, the trial court found, in part, in favor of the construction sought by the legatees under the provision of the will and, in part, in favor of the construction sought by two of decedent's heirs not named in the will. Robert Vernon Beaver and Shirley Karraker, heirs of decedent, appeal.

The following issues are raised on appeal: whether the trial court erred in construing the term "securities" as intended by decedent to pass certificates of deposit and whether the doctrine of equitable apportionment should be applied between the testate and intestate assets of decedent in the payment of the expenses of administration and taxes.

Decedent died on November 18, 1980, at the age of 76 years. Her will, which was executed on November 1, 1978, was prepared by a law student in conjunction with a senior citizen's project on estate planning. The will contained 11 sections. In sections 3, 4, 5 and 8, decedent's household furniture was bequeathed. Her house was devised in section 7. Section 9 of the will provided for the disposition of the balance due on two contracts for the sale of real estate. Section 6 of the will provided the following:

"I hereby give and bequeath my securities to my nieces and nephews, Tilbert F. Henderson, Genevieve Lowry, Hazel Redcloud, Ray Lee Beaver, Robert E. Beaver, Ralph Beaver, Joy Harris, Darlene McNeil, and Judy Hall, or to the survivors of them, equally, per capita."

The will did not contain a residuary clause.

Sections 1 and 2 of the will contained directions to the executor regarding the decedent's burial and the payment of debts and expenses of administration. Section 10 contained the requirement that a legatee survive decedent by four months in order to take under the will. Section 11 named the executor, enumerated his powers and provided that all taxes

"Shall be paid and discharged by my Executor as part of the expenses of the administration of my estate, so that the legatees, beneficiaries or devisees herein shall receive their respective legacies, bequests or devises without deduction of, or liability for, any such taxes, duties or charges."

At the time of her death, the decedent's estate was valued at about $175,000 and consisted primarily of savings accounts, checking accounts and certificates of deposit held at several financial institutions located in Carbondale, Illinois, which in sum totaled about $119,000. Also included in the estate were United States Government Series "E" bonds valued at about $26,200. Decedent's home and its furnishings were valued at about $23,400. The balance due on the contract for the sale of real property was valued at about $5,800. Finally, two life insurance policies payable to the estate were valued at about $500.

Two separate hearings on the petition were conducted by the trial court. The first hearing resulted in a finding by the court that section 6 of the will was ambiguous. The evidence at the second hearing shows that the decedent purchased all of the United States Government Series "E" bonds and the majority of the certificates of deposit prior to the date of the execution of her will. The decedent did not own any common stock or corporate bonds at the time her will was executed or at her death.

The trial court held that the United States Government Series "E" bonds and the certificates of deposit owned by decedent at the time of her death passed as "securities" under section 6 of the will. The trial court ordered that the debts and expenses of administration, including taxes, be paid from the proceeds of the life insurance policies, the checking accounts and the savings accounts. The trial court also ordered that any residue from the property allocated to the payment of the expenses pass as intestate property.

Beaver and Karraker first contend that the trial court erred in finding that the certificates of deposit owned by the testatrix at the date of her death passed under section 6 of the will as "securities." More specifically, they argue that the common usage of the term "securities" means corporate stocks, bonds, treasury notes and other negotiable instruments. Further, it is asserted that because the certificates of deposit were designated as non-negotiable, they must pass as intestate property rather than under the will.

The issue raised here as to what property passes under the term "securities" as employed in a will has not been considered by the courts> of our State. This issue, however, has been discussed in other jurisdictions. (See generally Annot., 27 A.L.R. 3d 1386 (1969); 79 C.J.S. "Security"; "Securities" (1952).) Reviewing the annotation and cases cited therein, the term "securities" has been construed to encompass evidence of a debt or property or an instrument entitling the holder to demand property held by another. Corporate bonds, shares of stock and certificates of deposit are all within this definition. We do not find any support for appellants' assertion that the term "securities" is commonly defined as negotiable instruments. If appellants intend by their use of the term negotiable instruments to refer to that term as defined in the Uniform Commercial Code — Commercial Paper (Ill. Rev. Stat. 1979, ch. 26, par. 3-104) then clearly certificates of deposit are included within this definition. If appellants mean to refer to negotiable ...


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