Appeal from the Circuit Court of Du Page County; the Hon.
Edwin Douglas, Judge, presiding.
JUSTICE REINHARD DELIVERED THE OPINION OF THE COURT:
Gary-Wheaton Bank, as administrator of the estate of Louis G. Bork, deceased, filed motions during the probate of the estate for court approval of the sale of 16.46 acres of real estate held in a land trust and for a construction of the land-trust agreement. An order was entered May 2, 1985, approving the sale and authorizing the payment of $13,822.36 real estate broker's commission. An order of May 21, 1985, declared that, based on the terms of the land-trust agreement, Gary-Wheaton Bank succeeded to deceased's power of direction over the land trust. Louis A. Bork (Bork), a son of deceased, appeals from both orders. He also filed motions for a stay of enforcement of judgment of the orders in both the trial court and appellate court which were denied. We take this appeal pursuant to Supreme Court Rule 304(b)(2) (103 Ill.2d R. 304(b)(2)).
The issues raised in this appeal are: (1) whether the probate court erred in construing the power of direction in a trust agreement to vest in the administrator of deceased, (2) whether the probate court had jurisdiction to order the sale of the subject real estate to pay the mortgage, and (3) whether the probate court erred when it ordered real estate sold out of an estate without taking any evidence to determine the adequacy of the offer, the appropriateness of the procedure utilized, and whether the sale was in the best interest of the estate.
Louis G. Bork died January 2, 1982, leaving a will which was dated August 2, 1974, and named two of his sons, Louis A. Bork and Harvey Bork, co-executors. The will was admitted to probate May 21, 1982. The co-executors were unable to agree on the proper administration of the estate and each filed a petition to remove the other. By agreed order dated April 7, 1983, both co-executors resigned and Gary-Wheaton Bank was named successor executor. The bank petitioned for appointment as administrator with will annexed. Thereafter, letters of office were issued to the bank.
The principal asset of the estate is a 74.37373% beneficial interest in a land trust, Trust No. 2169, with Old Second National Bank of Aurora as trustee. The land trust was created by a trust agreement dated December 28, 1974, in a standard-form land-trust agreement. As part of the agreement, 116 acres of land in Kane and Du Page counties were described and deeded to the trustee. Deceased was the only beneficiary named in the agreement and held a 100% beneficial interest at the time the trust was created. The agreement provides:
"It is understood and agreed by the parties hereto and by any person who may hereafter become a party hereto, that the trustee will deal with said real estate only when authorized to do so in writing and that the trustee will, (notwithstanding any change in the beneficiary or beneficiaries hereunder, unless otherwise directed in writing by the beneficiaries,) on the written direction of Louis G. Bork ____________________________________________________ ____________________________________________________ or on the written direction of such person or persons as may be beneficiary or beneficiaries at the time, make deeds for, or otherwise deal with the title to said real estate * * *."
Another pertinent provision of the agreement states:
"IT IS UNDERSTOOD AND AGREED between the parties hereto, and by any person or persons who may become entitled to any interest under this trust, that the interest of any beneficiary hereunder shall consist solely of a power of direction to deal with the title to said property and to manage and control said property as hereinafter provided, and the right to receive the proceeds from rentals and from mortgages, sales or other disposition of said premises, and that such right in the avails of said property shall be deemed to be personal property, and may be assigned and transferred as such; that in case of the death of any beneficiary hereunder during the existence of this trust, his or her right and interest hereunder shall, except as herein otherwise specifically provided, pass to his or her executor or administrator, and not to his or her heirs at law; and that no beneficiary now has, and that no beneficiary hereunder at any time shall have, any right, title or interest in or to any portion of said real estate as such, either legal or equitable, but only an interest in the earnings, avails and proceeds as aforesaid. The death of any beneficiary hereunder shall not terminate the trust nor in any manner affect the powers of the trustee hereunder."
A motion for construction of the will filed by Gary-Wheaton Bank stated that from December 28, 1974, through September 3, 1976, deceased made gifts of fractions of his beneficial interest in the land trust to his seven then living children and the children of his two deceased children. Each of his seven living children received an assignment of 2.90348% of the beneficial interest. The three children of one deceased child jointly received an assignment of 2.77722% of the beneficial interest. The only child of the other deceased child received an assignment of 2.52469% of the beneficial interest. The beneficial interests of the grandchildren of deceased were held in trust with Bork and Harvey Bork as co-trustees.
The real estate held in trust was subject to a mortgage of approximately $435,000 with semiannual interests payments due of around $30,000. Gary-Wheaton Bank filed a motion asking for court approval to list the real estate for sale. It stated that a sale would be in the best interest of the estate as the farmland was generating only $3,000 income per year from a lease with Bork as lessee and this was barely enough to pay the real estate taxes on the property. Gary-Wheaton Bank also stated that the estate did not have sufficient funds to pay the periodic interest payments due on the mortgage. The payments had been paid by legatees under the will who, according to the bank, were either unwilling or unable to continue making the mortgage payments.
Gary-Wheaton Bank alleged that it was essential that the property be sold to prevent the mortgage from going into default and foreclosure; that the estate needed the proceeds of the sale to pay administrative expenses and make the required distribution to the legatees under the will; and that an attempt to sell the 74.37373% beneficial interest would not realize an amount close to the true value of the interest.
Gary-Wheaton Bank requested that a guardian ad litem be appointed for the minor beneficial-interest holders. The bank stated that the consent of all the holders of beneficial interests was necessary to list the property and that all of the current holders had consented except for the minor grandchildren. A guardian ad litem was appointed, and the court authorized the bank to execute a letter of direction to the trustee to list the property for sale with Sutherlin Associates, Inc., on October 3, 1983. The listing, dated October 1, 1983, was to continue until October 1, 1984, listed the property at $9,200 per acre and called for a commission of 8% of the gross sales price due.
More than a year later, Gary-Wheaton Bank filed a motion for approval of the sale of two parcels of real estate, one parcel consisting of 10.851 acres for a price of $32,553 ($3,000 per acre) and the other parcel consisting of 5.608 acres for $140,266.50 ($25,000 per acre). This was an average of $10,500 per acre for the total of 16.46 acres being sold. The two parcels are contiguous and center on the existing farmhouse and buildings. The bank asked that the sales be approved as the funds generated by the sale would reduce the mortgage on the farm and allow it to negotiate a lower interest rate for the remainder of the mortgage resulting in significantly reduced yearly debt-service payments. The bank also asked for authorization to pay the real estate broker's commission in the amount of $13,822.36.
Bork filed an objection to the sale of the real estate on May 2, 1985, stating that the price for the 16.46 acres was inadequate, that the sale would result in 29% of the frontage of the real estate being sold which would jeopardize the value and saleability of the rest of the farm, that the sale would cut off easy access to Fabyan Parkway from the Du Page County portion of the farm, and that no provision for access to the remaining land is reserved. He also objected to payment of the broker's commission as the listing agreement had expired, and raised procedural objections under the Probate Act of 1975, among which was that section 20-4(c) precludes the sale of real estate after three years from the date of a decedent's death for the purpose of paying claims or expenses of administration (Ill. Rev. Stat. 1983, ch. 110 1/2, par. 20-4(c)). Bork attached a ...