Appeal from the Appellate Court for the First District; heard
in that court on appeal from the Circuit Court of Cook County,
the Hon. Donald J. O'Brien, Judge, presiding.
JUSTICE UNDERWOOD DELIVERED THE OPINION OF THE COURT:
Rehearing denied November 24, 1982.
This is a contest between claimants to the retirement trust account of the late Justice James A. Dooley (decedent), a former member of this court, who had established the account while engaged in the active practice of law. Decedent had designated plaintiff, Virginia Ann Dooley, his daughter, as the sole beneficiary of that account in December 1973. On February 21, 1978, 12 days before his death, decedent worked on a new designation which named plaintiff and defendants, Mary Connelly, his sister, John D. and Michael Connelly, his nephews, and Hope Jackson and Lorraine Jensen Grau, his former secretaries, as beneficiaries. The issue before us is whether a change of beneficiaries was completed. The circuit court of Cook County held that decedent's notes were ineffective as a change of beneficiaries and did not revoke the 1973 designation of plaintiff, declaring her the sole beneficiary of the account. Defendant claimants appealed and the appellate court affirmed. (100 Ill. App.3d 389.) We granted leave to appeal.
A detailed factual statement is necessary. In 1962 decedent retained Joseph Reynolds, a CPA, to design and install a retirement plan for James A. Dooley Associates, decedent's law firm. The plan was adopted and installed in 1963 and subsequently amended several times. Reynolds continued to manage the financial aspects of the plan and made annual reports to the participants, whose accounts were individually maintained. Decedent's account was the largest single account, having a value exceeding $3 million at his death. In 1976, when decedent was elected to this court, the plan was amended and a wasting trust was established. Decedent and Reynolds were named as trustees. (Decedent's wife apparently became a trustee after his death.) In 1976, decedent also stepped down as president of James A. Dooley Associates, and his long-time friend and confidant, John Cusack, assumed that position. Decedent moved his office for purposes of winding up his affairs with his former law firm, and disposed of his practice but continued to maintain some files relating to the trust.
After his death a file folder marked "Dooley Assoc. Retirement Trust (Beneficiary Slips)" and containing beneficiary designations of the participants was found in a locked file in decedent's office. There was no testimony that decedent himself maintained the file. Reynolds testified that he and decedent's secretary handled beneficiary designations. In the file was found decedent's 1973 designation of plaintiff as his beneficiary, a designation of which Reynolds was previously unaware. There were two versions of this designation, which varied slightly in wording. One, dated December 12, 1973, was handwritten and signed. The other, dated December 13, 1973, was typewritten and signed. Both contained a revocation of prior designations as was required by the version of the plan in existence at that time. The plan, however, required neither a typewritten designation nor the participant's signature. Also in the file was a 1963 designation of Virginia P. Dooley, decedent's wife, as beneficiary, which was also typed and signed. The 1973 designation was made shortly after decedent and his wife separated.
Reynolds, who was apparently concerned about adverse tax consequences to a beneficiary paid in a lump sum, testified that he had encouraged decedent for some time to revise his beneficiary designation. In April 1977, decedent met Reynolds and discussed beneficiary changes, stating he wished to leave something to defendants. He made some notes which described specific bequests to plaintiff and defendants, changing the amounts several times, with the residue going to Virginia P. Dooley, his wife. Reynolds objected to specific dollar bequests because, if decedent drew on his retirement account, there might not have been sufficient funds with which to pay them. He also objected to the installment schedule indicated in the notes because of adverse tax consequences to the beneficiaries. Decedent told him "to work on it."
Reynolds spoke with decedent over the telephone several times subsequently and, in May 1977, wrote him a four-page letter explaining various tax consequences and options. Page two set out a proposed designation and distribution scheme. Basically the proposal followed decedent's notes made in April, the major change being that the specific bequests were converted to percentages.
Decedent apparently took no further action until February 21, 1978. On that date he met Reynolds and John Adams, his tax accountant, to discuss unrelated personal tax matters. However, before those matters were discussed, decedent took Reynolds' May 1977 letter from his desk and began writing on page two. After 10 or 15 minutes he showed it to Reynolds. Decedent had lined out several portions of Reynolds' proposal and had written in his changes. Hope Jackson's and Lorraine Jensen Grau's shares were changed from 3% to 5% and plaintiff's was adjusted accordingly from 66% to 62%. Decedent changed plaintiff's installment schedule from "33 1/3% at age 25, 33 1/3% at age 30 and the balance at age 35" to "installments over thirty years." Virginia P. Dooley was deleted as contingent beneficiary of plaintiff's share and in her place decedent's nephews were designated as contingent beneficiaries of one-half and decedent's "widow" of the other half. Virginia P. Dooley was also deleted as contingent beneficiary of the shares designated to two nephews and Hope Jackson, with Loyola University of Chicago being substituted. Lorraine Jensen Grau's daughter took Virginia P. Dooley's place as contingent beneficiary of Lorraine's share. In the event that none of the named beneficiaries survived him, Loyola University was named as beneficiary.
After Reynolds read the changes he asked decedent several clarifying questions, determining that a figure was a "2" rather than a "3," that plaintiff's share was to be paid in annual installments, and that the nephews' shares were also to be paid in 30 annual installments. Reynolds made notes in the margin of the page. Then, satisfied he understood what decedent meant, he wrote "Per J.A.D. instructions on 2/21/78" and his initials at the bottom of the page. Reynolds testified that he told decedent that he would put it in "formal style for him to prepare it for his signature." Decedent replied that there was no hurry because "he was more interested in these other matters that I [Reynolds] was there to discuss than he was in finishing this up." On cross-examination Reynolds testified that he believed the corrected notations "embodied Dooley's intent in regard to the distribution of his money in the pension fund." Reynolds placed the letter on a stack of papers and the meeting turned to other matters. During the meeting, decedent's secretary made copies of several documents, but Reynolds did not know if she copied the letter. When he left he took it with him, but Justice Dooley died some 12 days later before Reynolds had it typed.
John Adams testified that he was present at the meeting of February 21 and that he saw decedent make the changes and heard him tell Reynolds what each beneficiary was to receive. Adams testified decedent had asked Reynolds to get the material typed up, telling Reynolds that "there was no rush because we had some other things that he felt were more important to do."
John Cusack, an intimate friend of decedent, testified that he met decedent on February 22, 1978, and that decedent handed him a copy of the letter and notes he had written the day before and told him it was his new beneficiary designation. Cusack stated that he asked if Reynolds had a copy of it and decedent said he had. Cusack told him that, as president of the company, he considered it a valid designation and he advised decedent to keep it with his other company files. The copy which Cusack said he saw was apparently never found. In rebuttal to this testimony, Reynolds testified that Cusack never mentioned having seen this letter or discussing it with decedent on either of the two occasions on which they met after decedent's death. Some of the defendants were present during at least one of those meetings, and they testified that the letter had been a topic of discussion.
The provision of the plan governing a change of beneficiaries in effect at the time of decedent's death stated:
"A Participant may designate the beneficiary of his choice to receive payments of amounts credited to his Company Contribution Account, his Employee Contribution Account, if any, and his Rollover Account, if any, at his death. The Beneficiary Designation must be in writing and filed with the Company and may include contingent or successive beneficiaries. A Participant's Beneficiary Designation may be changed at any time or from time to time by the Participant's filing a new Beneficiary Designation form with the Company. The revocation of a beneficiary's designation shall not require the consent of any beneficiary."
As noted earlier, the original plan required that a new designation revoke prior designations, but this language was deleted in 1977 just a few months prior to decedent's death. It does not appear that there was a specific form provided by the company for beneficiary designations. The trustees take a neutral position in this litigation, and the parties have apparently agreed that the ...