Appeal from the Circuit Court of Du Page County; the Hon. John
Teschner, Judge, presiding.
JUSTICE VAN DEUSEN DELIVERED THE OPINION OF THE COURT:
This is an appeal brought by the Rice Foundation and the co-executors of the Estate of Ada L. Rice, deceased, from the failure of the trial court to vacate a settlement order and companion decree entered on February 5, 1982, nunc pro tunc, January 25, 1982, and an amending order entered February 18, 1982.
Historically, this matter commenced with the death of Daniel F. Rice, Sr., on February 5, 1975. Through his will Rice, Sr., provided for the establishment of two trusts, Trusts A and B. The two trusts were to be funded by splitting Rice, Sr.'s, gross residual assets. Trust A was established to provide for the lifetime needs of the testator's wife, Ada L. Rice. Under the will, Mrs. Rice was given the power of appointment over the Trust A principal. Trust B was established for the benefit of named parties. These named individuals were several relatives of Rice, Sr., including his son, Daniel F. Rice, Jr., and the Rice Foundation, a not-for-profit corporation. For a more detailed explantation of the will and trust provisions and other aspects of the litigation, see In re Estates of Rice (1979), 77 Ill. App.3d 641, and In re Estate of Rice (1981), 96 Ill. App.3d 1137.
Because of the language used in the will and the changes in the tax laws, numerous problems arose when trying to fund the trusts. Additionally, a multitude of claims, lawsuits, and counterclaims were filed by the parties named in the will. The most litigious of these was Daniel F. Rice, Jr. These suits, which were filed in Kentucky, in the Federal courts>, and in several Illinois circuit courts>, delayed the proceedings in this, the probate case.
In April of 1977, while the probate proceedings and the numerous lawsuits were pending, Ada L. Rice died. In her will and an attached codicil, Ada L. Rice exercised her power of appointment over the Trust A assets. Under the terms of the codicil, $500,000 of the Trust A funds were to be used to establish a trust (the codicil trust) with the Continental Illinois National Bank and Trust Co. as trustee. Rice, Jr., and his wife, Mary Rice, as beneficiaries of the trust, were to receive $25,000 a year for life from the trust income. Upon the death of the beneficiaries, the codicil trust assets were to go to the Rice Foundation. The remainder of the Trust A assets were to go to the Rice Foundation.
Due to the multitude of legal proceedings, the Daniel F. Rice estate has been pending for seven years. The Ada L. Rice estate has been pending for five years. Because there has been protracted litigation concerning the validity and the tax-exempt status of the Rice Foundation, taxing authorities have filed tax-deficiency notices against the Ada L. Rice estate.
In April of 1981, the Illinois Attorney General's Office, in its capacity as supervisor of public charities, initiated negotiations for a settlement of all claims. The negotiations, however, reached an impasse, and by December 2, 1981, the parties were preparing for trial. At that time, the parties learned of the possibility of further tax liability if they did not settle the case quickly.
On January 5, 1982, the parties met in the chambers of the trial judge, Judge Teschner, in order to negotiate a settlement. No record was made of these negotiations. On January 14, 1982, Mr. Jack Osswald, one of the attorneys for the Daniel F. Rice estate, reported to the court that an agreement in principal had been reached. He then requested that the other pending proceedings, including an appeal before the Illinois Supreme Court, be stayed. The court then requested that the co-executors of the Daniel F. Rice estate draft and circulate a renewed proposal for a settlement agreement. The court requested the executors to give a more specific indication of how the estate assets were to be distributed.
On January 18, 1982, Mr. Osswald circulated a renewed motion which contained more specific terms for a settlement agreement. This detailed proposal called for a distribution of the assets of the Daniel F. Rice estate. Trust B was to be funded in specific amounts and distributed through a series of reformed trusts. Trust A was to be funded and distributed by establishing the $500,000 codicil trust and transferring the remainder to the Rice Foundation. The proposal also required the estate to distribute specific sums of estate assets to named parties in exchange for the dismissal of pending lawsuits and the withdrawal of answers in the will construction suit. The proposal further required the parties to consent to the reformation of the Rice, Sr., will and to exchange mutual and general releases.
On January 25, 1982, counsel for all of the parties, including the Rice Foundation and the Ada L. Rice estate, met in the chambers of Judge Teschner in order to negotiate a settlement. All parties had requested that Judge Teschner be present during the negotiations. While there is no transcript of these proceedings before Judge Teschner, all of the parties seem to agree that the following events occurred. During the negotiations, the attorneys made references to the Osswald proposal. When negotiating dollar amounts, the Rice Foundation insisted that the amount to be distributed to Rice, Jr., be reduced by $200,000. Eventually, Rice, Jr., agreed to a $150,000 reduction, and the other Trust B beneficiaries agreed to a $50,000 reduction. At the end of the negotiations, Judge Teschner polled the attorneys to determine if an agreement had in fact been reached. The attorneys all responded in the affirmative. With the consent of all the attorneys, Judge Teschner then called Justice Moran of the Illinois Supreme Court, informed him that the case had been settled, and requested a continuance. Finally, the judge entered an order allowing the payment of $450,000 in attorney fees to the attorneys of the Trust B beneficiaries. The executors of each estate were directed to draw up the necessary settlement documents.
On February 1, 1982, the attorneys for the Daniel F. Rice estate filed their settlement documents and distributed copies of the documents to all the parties. Generally, these settlement documents were a more detailed and formalized embodiment of the Osswald proposal. Some changes were made, however, in the amounts to be distributed by the estate to the relatives of Rice, Sr. In the February 1, 1982, documents the principal of a trust fund to be distributed to named beneficiaries had been reduced by $50,000. Similarly, $150,000 had been subtracted from a specific sum that was to be awarded to Daniel F. Rice, Jr., and Mary Rice. Both the Osswald proposal and the settlement documents called for the exchange of mutual, general releases among the parties and their attorneys. Neither the Osswald proposal nor the settlement documents mentioned a requirement that the trial court enter findings of fact concerning the validity of the Rice Foundation.
On February 3, 1982, a hearing was held to confirm the settlement documents. At the beginning of the hearing, Judge Teschner spread of record some of the events which occurred on January 25, 1982. The court stated that since June the court had spent a considerable amount of time attempting to settle the case. He related that on January 25, 1982, the parties met in his chambers to discuss a settlement. The court stated that after five hours of conferences, the attorneys for the parties reached a settlement agreement concerning all matters in controversy. He stated that he then polled the attorneys and all the attorneys indicated that their clients agreed to and accepted the settlement agreement.
After the trial judge made these statements, the Attorney General's office indicated that there were a few "tag-end" matters that needed to be discussed off the record. Apparently, the matters in controversy involved specific numbers in the agreement. Attorneys for the Trust B beneficiaries asserted that there was no controversy and that it was too late for the parties to rescind.
Counsel for Rice, Jr., and the various Trust B beneficiaries argued that everyone had worked from the earlier Osswald proposal and that all had agreed to the specific sums in the proposal as they were modified in the settlement documents distributed by the executors on ...