APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, THIRD DIVISION
(Wayne Goodman et al., Respondents-Appellants and
Bernard Berger, Petitioner-Appellee and Cross-Appellant).
-- MARYLAND CASUALTY COMPANY et al.,
Respondents-Appellants, v. BERNARD BERGER,
Petitioner-Appellee. -- MARYLAND CASUALTY
COMPANY, Petitioner-Appellee, v.
Nos. 83-2875, 84-204, 84-1502 cons.
520 N.E.2d 690, 166 Ill. App. 3d 1045, 117 Ill. Dec. 339 1987.IL.1906
Appeal from the Circuit Court of Cook County; the Hon. Richard E. Dowdle, Judge, presiding.
PRESIDING JUSTICE McNAMARA delivered the opinion of the court. WHITE, J., concurs. JUSTICE RIZZI, Concurring in part and Dissenting in part.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE MCNAMARA
This case involves three consolidated appeals relating to improper disbursements from a recovered incompetent's estate.
In case No. 82 -- 2875, petitioner Bernard Berger, a restored incompetent, filed objections to accounts approved during his 10-year period of incompetency. Petitioner alleges that the conservators acted improperly, resulting in his estate's depletion in excess of $200,000. Petitioner also sought to discover and recover funds and personal property. He served citations on his two daughters and their husbands, respondents Wayne and Deborah Goodman and Gloria and Philip Roth. Additional parties included respondent Maryland Casualty Company, which had issued a surety bond to the original conservator, and respondent Sheila Seidmon, the executrix of the estate of the original conservator, who died during petitioner's incompetency.
Following a trial without a jury, the trial court overruled several of petitioner's objections; entered judgment in favor of petitioner as to all other objections; surcharged the accounts of the first and successor conservators; ordered that certain personal property be returned to petitioner; and entered judgment against Maryland Casualty as bonding company, in the event of noncompliance with the surcharge judgment and turnover order.
Respondents contend on appeal that the trial court erred in disallowing disbursements which previously had been approved by the probate court; that the probate court's prior approvals of the annual accounts were binding upon petitioner absent a showing of fraud, accident or mistake; that the trial court erred in not applying the doctrine of substituted judgment; that petitioner ratified the manner in which his estate was handled; that the trial court erred in excluding certain testimony; and that the findings of the trial court are against the manifest weight of the evidence.
Petitioner has filed a cross-appeal against the respondent children, contending that the trial court erred in not sustaining his objections to a gift of $30,000 made by the conservator to the daughters.
In case No. 84 -- 1502, Maryland Casualty filed an action for indemnity against the children, including counts based on subrogation for money had and received, and for a constructive trust. The trial court entered summary judgment in favor of Maryland Casualty, and the respondent daughters appeal from that order.
In case No. 84 -- 204, Maryland Casualty and Seidmon filed a petition to have conservator's fees awarded to the conservator's estate. The trial court denied the petition, and Maryland Casualty and Seidmon appeal, contending that the trial court abused its discretion.
In 1948, petitioner married his first wife, Janice Lee Efron. Respondent Deborah Rae Goodman was born in 1949, and respondent Gloria Jean Roth was born in 1953. Janice died in early 1969, and petitioner was the sole beneficiary in Janice's will.
On October 28, 1969, the court entered an order finding petitioner to be an incompetent and appointing petitioner's father-in-law, Theodore Efron, as conservator. At that time, Deborah was 21 years old and engaged to respondent Wayne Goodman. Gloria was 16 years old. In January 1970, petitioner's estate was valued at $142,776. Petitioner remained legally incompetent until June 1980, when he was restored to competency.
During the 10 years of incompetency, Efron filed nine current annual accounts with the court. Each account was approved. In addition, several petitions were filed and approved prior to the conservator's expenditures for certain individual items.
Efron died in September 1979, at which time petitioner's estate was valued at $387,264.87. Wayne Goodman, Deborah's husband, was appointed successor conservator. On June 26, 1980, the court entered an order restoring petitioner to competency. On January 29, 1981, Wayne filed Efron's final account, and filed the inventory of successor conservator, and the first and final account of successor conservator. On June 2, 1981, petitioner was given leave to file objections to the final accounts of both conservators. On August 4, 1981, petitioner filed nearly 70 objections and a petition for the issuance of citations for the discovery of information and recovery of property.
We first address respondents' contention that the trial court erred in disallowing the numerous expenditures and gifts and in directing the turnover of certain monies and personal property to petitioner.
Generally, the trial court functions in a central role which permits it to oversee and control all aspects of the management and protection of the incompetent's estate. The court controls the person and estate of the ward, and directs the conservator's care, management and investment of the estate. (Ill. Rev. Stat. 1979 through 1981, ch. 110 1/2, par. 11a-18; Ill. Rev. Stat. 1977, ch. 110 1/2, par. 11-13; Ill. Rev. Stat. 1969 through 1975, ch. 3, par. 122.) The court protects the incompetent as its ward, vigilantly guarding his property and viewing him as a favored person in the eyes of the law. (People ex rel. Miller v. Myer (1964), 46 Ill. App. 2d 106, 196 N.E.2d 370, citing Wann v. People ex rel. Birk (1870), 57 Ill. 202.) The court must do nothing "wantonly or unnecessarily to alter the ward's property, but on the contrary takes care, for his sake, that if he recovers he shall find his estate as nearly as possible in the same condition as he left it." (Lewis v. Hill (1944), 387 Ill. 542, 546, 56 N.E.2d 619.) Upon the restoration of a person of unsound mind, that person has the right to be put in possession of his property and to ask the court to order the conservator to deliver and pay to him all money and property which he may have, or to which he may be entitled. In re Estate of Hire (1941), 309 Ill. App. 566, 33 N.E.2d 652, rev'd on other grounds Hire v. Hrudicka (1942), 379 Ill. 201, 40 N.E.2d 63.
The accounting and final settlement of a conservator are governed by the rules used in cases of guardianship. (Nonnast v. Northern Trust Co. (1940), 374 Ill. 248, 29 N.E.2d 251.) The conservator shall "manage the estate frugally and shall apply the income and principal of the estate so far as necessary for the comfort and suitable support" of the ward and his children, or "for any other purpose which the court deems to be for the best interests of the ward." (Ill. Rev. Stat. 1979 through 1981, ch. 110 1/2, par. 11a-18; Ill. Rev. Stat. 1977, ch. 110 1/2, par. 11-13; Ill. Rev. Stat. 1969 through 1975, ch. 3, par. 122; see also Proehl v. Leadley (1967), 86 Ill. App. 2d 472, 230 N.E.2d 516.) The paramount duty of a conservator is to conserve and protect the assets of the incompetent person and to see that the assets and income therefrom are properly applied to the use, enjoyment and benefit of the incompetent. Lewis v. Hill (1944), 387 Ill. 542, 56 N.E.2d 619; Proehl v. Leadley (1967), 86 Ill. App. 2d 472, 230 N.E.2d 516.
The conservator must act with the degree of diligence which an ordinarily prudent person would use in conducting his own affairs. (Parson's v. Estate of Wambaugh (1982), 110 Ill. App. 3d 374, 442 N.E.2d 571.) The representative is a fiduciary and is held to the highest standard of fair dealing and diligence, and his behavior will be closely scrutinized by the courts to insure his adherence to these high standards. In re Estate of Glenos (1964), 50 Ill. App. 2d 89, 200 N.E.2d 65.
The conservator must present the court with accounts of receipts and disbursements for the court's approval. (Ill. Rev. Stat. 1977 through 1981, ch. 110 1/2, par. 24-11; Ill. Rev. Stat. 1969 through 1975, ch. 3, par. 309.) The accounts must state the receipts and disbursements and the property which is on hand. (See generally 26 Ill. L. & Prac. Mental Health § 24 (1956).) A conservator need not obtain a court order to expend money for the necessaries of a ward. (People v. Broda (1919), 215 Ill. App. 119.) The court may, however, disapprove, set aside, modify, or approve the representative's account. (Edwards v. Lane (1928), 331 Ill. 442, 163 N.E. 460.) The guardian should usually petition the court for permission to make large expenditures; otherwise, the guardian performs the acts at his own risk. Parson's v. Estate of Wambaugh (1982), 110 Ill. App. 3d 374, 442 N.E.2d 571.
When objections are properly filed to the accounts, the burden is on the representative to maintain by proof that the items objected to are just and proper. (In re Estate of Roth (1974), 24 Ill. App. 3d 412, 321 N.E.2d 81.) If the conservator pays out money without having a claim filed, upon objection being filed to his report he has the burden of making as complete and satisfactory proof as would have been required had the individual filed a claim, made proof, and obtained an order of court for the payment of the claim. Nonnast v. Northern Trust Co. (1940), 374 Ill. 248, 29 N.E.2d 251.
The conservator and the surety on his bond are liable to any person aggrieved by the mismanagement of the estate committed to his care. Such person may institute and maintain an action against the representative and surety for all money and property which have come into his possession and are withheld or may have been wasted or misapplied and no satisfaction has been made. Ill. Rev. Stat. 1977 through 1981, ch. 110 1/2, par. 24-18; Ill. Rev. Stat. 1969 through 1975, ch. 3, par. 318.
Respondents contend that the trial court's decision disallowing numerous expenditures and ordering the return of certain personal property is against the manifest weight of the evidence. This court will not substitute its judgment for that of the trial court sustaining objections to a representative's final report, finding that a gift has not been made, or finding that property belongs to the ward, unless an examination of the record as a whole indicates the decision was against the manifest weight of the evidence. Grieg v. Johnson (1974), 22 Ill. App. 3d 646, 317 N.E.2d 627; In re Estate of Cope (1949), 337 Ill. App. 388, 86 N.E.2d 290 (abstract of opinion); Storr v. Storr (1946), 329 Ill. App. 537, 69 N.E.2d 916.
Furthermore, in a non-jury trial, the court alone Judges the credibility of each witness and determines the reasonableness and weight to be given to the testimony of each witness when viewed in light of all the evidence in the case. (In re Estate of Porter (1963), 43 Ill. App. 2d 416, 193 N.E.2d 617.) The testimony of a disinterested third-party witness should receive more weight than that of the parties whose conduct is being questioned. (See In re Estate of Glenos, 50 Ill. App. 2d 89, 200 N.E.2d 65.) In this case, for example, petitioner's sister-in-law Sheila Seidmon testified that she was "very biased against" petitioner because he had caused a "rift in the family" and upset Deborah and Gloria. In addition, without sufficient explanation, Deborah repeatedly indicated doubt or ignorance as to many of the controlling facts which directly involved her. She gave answers such as, "I find that a difficult question to answer yes or no. I do. I'm going to say I don't know." She stated, "I would be guessing"; "I do have knowledge of it, but I don't have the answers to your questions, specifically"; and repeatedly, "I don't know."
The suitable support of the ward's dependents is the only allowable purpose for which the ward's funds can be spent, other than for the support of the ward himself. (In re Estate of Piech (1969), 117 Ill. App. 2d 403, 254 N.E.2d 565.) Here, the trial court disallowed certain "living expenses" for both daughters.
In November 1971, the court ordered payments for Gloria of $400 per month as living expenses to be continued until she was no longer a student at the University of Illinois. Gloria split these payments with her sister. Deborah testified that she used the funds to support her own lifestyle. Without prior court approval, the conservator unilaterally increased the monthly support payments to $600, and then to $800 a month. Gloria continued to receive the monthly support checks after graduating from college and after her marriage.
The guardian ad litem testified that he did not object to the increased monthly payments because he believed "the amount that was in excess of the $400 was consistent and in line with the station in life and the value of the estate" and the Probate Act's enumeration of a guardian's duty. Thus, he did not think an evidentiary hearing was required. The guardian ad litem also believed that the increased support payments were justified because of inflation. There was no evidence regarding inflation presented to the court. "[It] was general knowledge."
Allowances for the support and maintenance of adult needy children may be granted where, e.g., the child is indigent or in ill health. (In re Conservatorship of Hall (1885), 19 Ill. App. 295.) Disallowances are proper where there is no proof of necessity or duty to support. See Wilcox v. Parker (1887), 23 Ill. App. 429; see generally Annot., 24 A.L.R.3d 863, 889 § 8(a) (1969).
We agree with the trial court's finding that after Gloria was married in August 1976, the right to receive the support payments ceased, and before her graduation, anything over $400 was not approved by the court and was improper. Thus, the court properly surcharged the conservator in the amount of $46,938. Similarly, the court properly surcharged funds used for other items related to Gloria's support, such as new clothes, her private telephone line in Deborah's home, and her automobile gasoline bills.
Deborah also received support-related payments from the estate. For example, she testified that she attended graduate school between 1970 and 1974. Her father's estate paid the costs, a total of $3,095.50, despite the fact that she was married in 1970. In addition, Deborah received payments of $200 and $264 as a married adult when she was not dependent on petitioner for support. The trial court properly surcharged these amounts.
As to the charitable contributions made by the conservator from the estate, a court ordinarily has no authority to permit donations which the ward was under no obligation to make. The court should not approve expenditures for general charities to which the ward had not been in the habit of contributing on a specific and regular basis while competent. (44 C.J.S. Insane Persons § 81, at 191 (1945).) The charitable contributions here totaled $2,500. They were all made to the Zionist Organization, an entity to which petitioner had never contributed. The disbursements were properly surcharged.
The trial court also disallowed numerous expenditures for various gifts. The court found that the gifts had not received prior approval from the court and were not justified by any gift-giving pattern established by petitioner prior to his period of incompetency. See generally Annot., 24 A.L.R. 3d 863 (1969).
Respondent Maryland Casualty argues that the gifts were made in good faith. The supposed good intentions of the representative do not justify his defrauding the estate. (People v. Levinson (1979), 75 Ill. App. 3d 429, 394 N.E.2d 509, cert. denied (1980), 449 U.S. 992, 66 L.E.2d 288, 101 S. Ct. 527.) Good faith does not create authority for improper acts. (Nonnast v. Northern Trust Co. (1940), 374 Ill. 248, 29 N.E.2d 251; Parson's v. Estate of Wambaugh (1982), 110 Ill. App. 3d 374, 442 N.E.2d 571.) "Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior." Nonnast v. Northern Trust Co., 374 Ill. at 261, quoting Justice Cardozo in Meinhard v. Salmon (1928), 249 N.Y. 458, 464, 164 N.E. 545, 546. See also In re Estate of Abbott (1976), 38 Ill. App. 3d 141, 347 N.E.2d 215; In re Estate of Busby (1937), 288 Ill. App. 500, 6 N.E.2d 451.
Maryland Casualty points to "evidence of [petitioner's] past practice and conduct with respect to the gifts and promises he made his children." Maryland Casualty relies on evidence that petitioner and his former wife "led a very good lifestyle," including owning a summer home, dressing well, owning a fine, well-furnished home on the north side of Chicago, and taking their daughters on frequent trips and vacations. Furthermore, petitioner and his wife promised their daughters lavish weddings and college and graduate educations. "[Nothing] was too good for their daughters or their future spouses."
Petitioner testified that he never made large cash gifts to his children prior to his incompetency. He never gave them any cash in excess of $100. He and his wife gave their daughters "the nominal type of gift as to a birthday or a holiday of some nature, nothing lavish or extravagant." He bought Deborah an opal ring with diamonds for her 16th birthday; bought Gloria some pearls following his restoration; and allowed the girls to use his charge accounts at women's clothing stores.
Seidmon testified that petitioner and Janice were devoted and generous parents. The children were given "everyday gifts," but not "large gifts of money and jewelry [because] they were children, so there wouldn't be gifts like that." They did buy "tremendous amounts of clothes for teenage girls." Petitioner and Janice also took the children on trips "probably once a year" after they were about 10 or 12 years old. Shortly after Janice's death, petitioner told Seidmon he wanted Deborah and Gloria to have Janice's personal belongings, such as a diamond watch, a diamond ring, and an opal bracelet.
Deborah testified that prior to his incompetency, petitioner had made cash gifts to the two girls. When asked if the gifts were of $1,000 multiples, she replied, "I don't know." When asked if the gifts were in $3,000 multiples, she replied "Not to my knowledge." The largest cash gift she could recall was "cash gifts where they put some money into my bank account upon graduation and confirmation, but I could not tell you what the amount is at this time." Petitioner had been very generous. "There was nothing that he would not buy for us." He bought her an opal and diamond ring, an opal necklace, and pearls for birthday gifts. Petitioner bought her a mink jacket after her engagement, and on other occasions gave her a gold charm bracelet, gold earrings, pearl earrings, and a graduation trip to California.
Gloria testified that she received cash as gifts: "Initially when I was eight years old there was approximately 30 to 40 dollar bills stuffed in a yellow and orange rooster piggy bank on my dresser. That was saved from allowances that my parents had given me over the years. I did chores around the home and earned money." Gloria also testified that prior to the incompetency, she received $8,000 as half of her mother's life insurance policy. Otherwise, she received no large cash gifts from her parents.
In regard to vacation trips taken prior to the period of incompetency, petitioner testified that the family took no more than three or four trips, including trips to New York City, Los Angeles, and a few other places. Seidmon, Gloria and Deborah testified similarly.
The trial court surcharged the conservator for expenditures the daughters and Deborah's husband used for vacation travels. The estate paid the airfare for Deborah, her husband, and Gloria for two trips to Florida as anniversary gifts from the estate, and for a trip to Europe. Deborah testified that the trip was a graduation gift for Gloria, and "also part of the gift that [Deborah] never received that was promised to me by my parents." The purpose of the European and Florida trips was pleasure. The trial court surcharged the $3,611.34 for the Florida trips and the airfare to Europe.
The guardian ad litem , Herbert Gelderman, testified that he questioned the airfare for the Goodmans and Gloria to Miami. Gelderman believed that the cost of the airfare was approved because it was "expressed as an expense of the estate [and] was consistent with the value of the estate and the station in life of the parties." As to the trip to Europe, "They were interested in education, if I recall correctly. . . . [Gloria] was probably interested in going to Europe to study." When ...