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Littwin v. Littwin





Appeal from the Circuit Court of Cook County; the Hon. John F. Hechinger, Judge, presiding. JUSTICE LORENZ DELIVERED THE OPINION OF THE COURT:

Rehearing denied October 31, 1986.

Electro-Matic Products Company and Margaret C. Littwin, as executor of the estate of Arthur K. Littwin, appeal from an order of the circuit court of Cook County finding that Arthur's estate was not entitled to certain trust income accruing after Arthur's death. The circuit court found that this issue had been resolved in a prior arbitration award which had been confirmed by the court without any subsequent appeal. The appellants contend that the arbitration award did not determine this issue and that the trust agreement should be construed to grant trust income to Arthur's estate until the termination of the trust.

We find no determination of the issue in the arbitration award. But we find that under applicable trust-construction principles Arthur's estate was not entitled to trust income. Accordingly, we affirm the judgment of the circuit court.

The trust agreement at issue was executed January 2, 1951, by Leo F. Littwin, his sons Robert and Arthur, and Thomas G. McBride. The corpus of the trust consisted of certain patents held by Leo and shares of stock in Electro-Matic Products Company owned by Robert, Arthur, and Donald. That same day Robert, Arthur and Thomas G. McBride, as trustees of the trust, entered into a license agreement with Electro-Matic for the manufacture and sale of the patented items. The company was to pay royalties to the trust.

Paragraph 20 of the trust agreement provides that net trust income is to be paid annually to Leo, Robert, Arthur, and Donald (Leo's other son). Paragraph 21 provides that the trust shall terminate upon the death of the last survivor of Robert, Arthur, and Donald. The trustees are then instructed, after deducting expenses and reasonable compensation, to pay over the accumulated trust estate and all the undistributed net income to the heirs at law of Robert, Arthur and Donald in the manner and proportion "appointed" by their wills. In the absence of such "appointment," distribution is to be made to the then-living lawful heirs of Robert, Arthur, and Donald, per stirpes, or in default of such heirs, then to those who would have been their heirs at law had they died on the termination date of the trust.

In 1973 Robert withdrew as a beneficiary of the trust. In 1982 the circuit court confirmed an arbitration award settling certain disputes that had arisen between Leo and Donald on the one hand and Arthur and Electro-Matic on the other. No appeal was taken from that judgment of confirmation. Charles Michod, one of the arbitrators, was subsequently designated as the sole successor trustee.

On April 23, 1983, Arthur Littwin died and Margaret Littwin was appointed as the acting executor of his estate. Leo died on February 22, 1984.

On August 12, 1985, Charles Michod, acting as trustee, petitioned the circuit court for instructions on how accumulated net trust income should be distributed. In the petition Michod contended that pursuant to the arbitration award Donald, as the sole living beneficiary of the trust, should be paid all net trust income (except for certain annual net payments due Leo's estate because they were not paid to him during his lifetime).

Margaret Littwin, as executor of Arthur's estate, had previously commenced a citation proceeding against the trustee for recovery of trust income allegedly due the estate. However it would appear from the record that the citation claim has been held in abeyance pending the final disposition of the executor's petition for instructions.

Appellees Donald Littwin and Charles L. Michod contend that the circuit court correctly found that the arbitration award had determined the issue of the disposition of trust income after Arthur's death and prior to the termination of the trust. We find no such determination in the award.

Appellees rely on the arbitrator's determination of two issues. One issue was whether Donald and/or Robert qualified as beneficiaries or trustees when no longer associated with the business of Electro-Matic as shareholders and employees. The arbitrators found, inter alia:

"Robert has removed himself and his heirs as beneficiaries. Donald is a beneficiary and is entitled to income distribution during his life; his heirs are entitled to one-half of the corpus on termination of the Trust, according to his will, or absent a will, in equal shares, per stirpes."

The other determined issue found pertinent by appellees was the issue of the respective interests of the parties in the trust corpus. The arbitrators found:

"Leo, Arthur, and Donald are entitled to the annual net income in accordance with the payment formula in paragraph 20 of the Trust Agreement with Robert excluded from the formula. Upon the death of the survivor of Leo, Arthur and Donald, the corpus of the Trust and any undistributed income shall be paid one-half to Arthur's heirs, by will, or absent a will, in equal shares, per ...

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