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Harris Tr. & Sav. Bk v. Beach

OPINION FILED JUNE 25, 1986.

HARRIS TRUST AND SAVINGS BANK, AS TRUSTEE UNDER THE WILL OF FRANK P. HIXON, PLAINTIFF,

v.

FRANCES GLORE BEACH ET AL., DEFENDANTS-APPELLEES (CHARLES F. GLORE III ET AL., DEFENDANTS-APPELLANTS).



Appeal from the Circuit Court of Cook County; the Hon. Richard L. Curry, Judge, presiding.

JUSTICE MCNAMARA DELIVERED THE OPINION OF THE COURT:

Frank P. Hixon died in 1931, leaving a testamentary trust under which his wife received the income for her lifetime and a testamentary power to appoint the principal. Hixon's widow died 51 years later, in 1982, and the trustee, Harris Trust Savings Bank brought this action to determine the distribution of the trust. The trial court granted summary judgment in favor of Hixon's two surviving grandchildren, Frances Glore Beach and Robert Hixon Glore. Great-grandchildren," Charles F. Glore III, Sallie Glore Farlow and Edward R. Glore, appeal seeking to take the share of their deceased father. The issues include whether a direction to add certain shares to trusts not yet in existence is void; whether the class of "surviving grandchildren," which was to take following two life estates, includes a grandson who survived the second life-estate beneficiaries, but did not survive the first life-estate beneficiary; whether the term "grandchildren" includes great-grandchildren, or is limited to Hixon's grandchildren; and which law applies, that of Florida or Illinois.

The trial court granted partial summary judgment in favor of the grandchildren on the issue of whether the direction to add certain shares to other trusts was void. The court found the clause void and unenforceable due to its vagueness, and its violation of both the Rule against Perpetuities and the Statute of Wills. The trial court subsequently granted summary judgment in favor of the grandchildren on the other issues, finding that a "surviving grandchild" must survive all life estates; the term "grandchildren" does not include great-grandchildren; and the Illinois antilapse statute is not applicable.

Hixon died in 1931 at his home in Lake Forest, Illinois, where he had lived for six years. Hixon was president, a director, and principal shareholder of Pioneer Investment Company, which, during the five years prior to his death, held 44 meetings, all in Illinois and 42 of which Hixon attended. Hixon was also the president and a director of Hixon & Company, a Delaware corporation with its principal office in Lake Forest during the period of 1929 to 1931. Hixon was a member of three Chicago-area country clubs and a businessmen's club. He contributed to a church in Lake Forest. Hixon's will and his income tax returns, however, stated that he was a resident of Lake City, Florida. The will was probated in Florida in 1931, but the records from that proceeding do not show that any finding was made or any question was raised about his domicile. At the time of his death, Hixon owned a one-half interest in a 9,000-square-foot lot in Lake City, Florida, which was valued at $1,750. The remainder of his estate consisted of personal property valued at $2,500,000.

Hixon was survived by his second wife, Alice, who continued to live in Lake Forest until her death, and his daughters Ellen, of Lake Forest, and Dorothy, of Los Angeles, California. Dorothy had no children. Ellen had three children: Charles F. Glore, Jr., who lived in Lake Forest until his death, and Robert of Lake Forest and Frances of Santa Barbara, California (grandchildren). All of the grandchildren were under the age of 21 when Hixon died. Charles F. Glore, Jr., was survived by three children, Charles, Sallie and Edward (great-grandchildren).

Under Hixon's will, one-third of his residuary estate was left to Dorothy, one-third to Ellen, and one-third was left in trust. The trustees were Robert Hixon and Charles Glore, Sr., both of Illinois, and later, Harris Trust, which has its principal place of business in Illinois. The corpus of the trust is approximately 18% of the issued and outstanding common stock of Pioneer Investment Company, which has had its principal place of business in Illinois since before 1931 until the present.

Under the trust, Alice was to receive the net income of the trust for her lifetime, with a special testamentary power to appoint the principal. In 1942, Alice partially released this power of appointment such that it could only be exercised in favor of tax-qualified charities. Dorothy and Ellen, after Alice's death, were to receive the net income for their lifetimes, with each daughter having a testamentary power to appointment over one-half of the principal. In 1942, Dorothy and Ellen partially released these powers such that the permissible appointees were limited to Hixon's grandchildren and tax-qualified charities. Dorothy and Ellen both died in 1973 without having exercised their powers of appointment. In anticipation of such an event, the will provided:

"In the event of the failure of my said daughters to dispose of all of the principal of said trust fund prior to their decease, the balance of said trust fund remaining shall be divided equally among my surviving grandchildren, the share of each grandchild to be added to and administered in the same manner as any trusts which may have been created in favor of such grandchild by his parents, and in the event that no trust has been created by the parents of said grandchildren, this trust shall continue until the youngest of my grandchildren arrives at the age of twenty-one years."

Harris Trust's complaint raised the question of whether the shares created by Hixon for the surviving grandchildren could be "added to" trusts created by Ellen. Ellen established approximately 21 inter vivos and testamentary trusts naming her children, among other people, as beneficiaries. For example, she created an irrevocable inter vivos trust in 1954 for the primary benefit of Charles F. Glore, Jr., and one for the primary benefit of Robert Hixon Glore. They each received the net income of the trust for life. At the termination of each life estate, the beneficiary's wife received the net income for her lifetime. Charles and Robert were each named as sole trustee of their respective trusts. When the primary beneficiary was no longer trustee, the net income could be distributed, at the discretion of a corporate trustee, among a class consisting of the primary beneficiary, his named wife, and issue. The corporate trustee also had discretion to distribute principal up to $5,000 per year if the beneficiary needed the funds for support, comfort, maintenance or education. Each trust provided that upon the death of the survivor of the primary beneficiary and his named wife, the principal was to be distributed to his issue per stirpes. Both of the trusts are still in effect. Ellen also created testamentary trusts naming Frances as the sole beneficiary of the net income during her lifetime. Upon her death, the principal is to be divided into sevenths for the benefit of Ellen's seven grandchildren.

Ellen's son, Charles F. Glore, Jr., died in 1976. By his will, Charles left his residuary estate in trust to his widow as the income beneficiary with the remainder to the Glore Fund. The will left nothing to his three children either outright or in trust. Alice died in 1982. By her will, she made a limited exercise of her power of appointment over the testamentary trust, appointing $260,000 to various charities. Surviving Hixon, were the two defendant grandchildren, the three defendant great-grandchildren, and four other great-grandchildren.

Harris Trust petitioned the court for instructions, and stated that it believed the trust property was properly distributable to the grandchildren. The court agreed, and ordered distribution outright in equal shares to Hixon's two grandchildren.

Preliminarily, the great-grandchildren review certain rules of will construction. These include ascertainment of the testator's intention, which should be given effect if no rule of law is violated. (Crerar v. Williams (1893), 145 Ill. 625, 34 N.E. 467.) Here, the testator's intention has been carefully heeded, keeping in mind all applicable rules of law. They also point to the presumption against disinheritance. (Pontius v. Conrad (1925), 317 Ill. 241, 148 N.E. 17.) We note, however, that any such presumption would not automatically require the inclusion of all lineal descendants. Additionally, the great-grandchildren emphasize a judicially favored construction which provides for a distribution of the estate which most closely conforms to the laws of descent. (Dollander v. Dhaemers (1921), 297 Ill. 274, 130 N.E. 705.) Finally, they rely on a construction principle which gives effect to all of a will's provisions and does not render any part meaningless. (Chapman v. Cheney (1901), 191 Ill. 574, 61 N.E. 363.) Such an effect should not be given, however, if it would violate a rule of law. See, e.g., Bear v. Millikin Trust Co. (1929), 336 Ill. 366, 168 N.E. 349.

The great-grandchildren initially contend that the trial court erred in finding the "to be added to * * * trusts" language void. The language directs that the "share of each grandchildren [is] to be added to and administered in the same manner as any trust which may have been created in favor of such grandchild by his parents."

• 1 The great-grandchildren first contend that the court erred in finding the relevant language void for vagueness. They state that a power of appointment does not require the same degree of definiteness in identifying beneficiaries as a trust requires. (See In re Estate of Schaaf (1974), 19 Ill. App.3d 662, 312 N.E.2d 348.) The language here, however, does not create a special power of appointment. The existence of a power may be implied where the language of the will shows an intent to create such a power. (Illinois Christian Missionary Society v. American Christian Missionary Society (1917), 277 Ill. 193, 115 N.E. 118.) The great-grandchildren urge that a power of appointment exists because the testator's intention was "to leave to the judgment of his daughters and their husbands whether each of his grandchildren was sufficiently mature to be able to receive and manage his or her share of the estate or whether it was advisable to continue to hold such grandchild's share in trust under such terms and conditions as his or her parents thought best." Such an interpretation of the language is strained. Hixon appears to do nothing more than state that if the parents happened to have created other trusts, which they had not done at ...


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