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04/14/88 the State Bank of Havana, v. Harry Cordes Et Al.

April 14, 1988

THE STATE BANK OF HAVANA, TRUSTEE UNDER THE LAST WILL AND TESTAMENT OF JACOB H. CORDES, DECEASED, PLAINTIFF-APPELLEE

v.

HARRY CORDES ET AL., DEFENDANTS-APPELLEES (THE MASON DISTRICT HOSPITAL, DEFENDANT-APPELLANT)



APPELLATE COURT OF ILLINOIS, FOURTH DISTRICT

522 N.E.2d 783, 168 Ill. App. 3d 525, 119 Ill. Dec. 121 1988.IL.536

Appeal from the Circuit Court of Mason County; the Hon. Thomas L. Brownfield, Judge, presiding.

APPELLATE Judges:

JUSTICE KNECHT delivered the opinion of the court. McCULLOUGH and SPITZ, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE KNECHT

This case involves the question of whether a will is so ambiguous as to require construction by the court, and, if so, whether the will permits invasion of the corpus of a trust established by the will in order to obtain sufficient funds to meet the needs of the principal beneficiaries of the trust. We hold the circuit court properly construed the will and ruled the needs of the principal beneficiaries may be satisfied from the trust corpus insofar as the trust income is insufficient for that purpose.

The decedent, Jacob H. Cordes, died on February 18, 1982, and left a will dated April 1, 1977. In addition to making various specific bequests, the will creates a trust consisting of the residue of Cordes' estate. A portion of the trust is to be utilized for the support of Cordes' sister, Katherine E. Davis, who is now deceased, and of Cordes' brother and sister-in-law, Harry H. and Ruth Cordes (the beneficiaries). The portions of the will relating to this trust provide:

"FOURTH :

(2) The Trustees shall take possession of all property which I may own at the time of my death, real, personal or mixed of whatsoever nature wheresoever situated including proceeds of sale of property described in Paragraph 1 and shall hold said property subject to the powers herein granted for the following purposes:

(a) I direct the Trustees to invest the proceeds of my estate, to collect and invest the income derived from the Trust Estate and from such income the Trustees shall pay the costs and expenses of the trust which are normally payable out of income including reasonable compensation of the Trustees; the remainder of the income hereinafter called net income shall be distributed as is hereinafter provided.

(b) The Trustees are authorized and empowered to manage, care for, improve, protect, control, mortgage, pledge, sell for cash or on credit, partition, exchange or otherwise deal with the Trust Estate or any part thereof, in its [ sic ] discretion, in any and every way in which any owner having unrestricted ownership and control thereof could manage, care for, improve, protect, control, mortgage, sell, partition, exchange or otherwise deal with the same.

(c) The net income derived from said Trust Estate after payment of costs and expenses of this trust shall be paid, a part of same to my sister, MRS. KATHERINE E. DAVIS and a part to my brother, HARRY H. CORDES and his wife, RUTH CORDES, as they require for their personal needs, comfort and requirements which may exceed their own income. It shall be the duty of the Trustees to inquire or investigate and find out about their needs and take the necessary steps to alleviate any needs by providing from the Trust Estate.

At the earliest possible date when it can be determined what the approximate balance of the Trust Estate shall be after all the above conditions have been met, the remainder of the Trust Estate shall be distributed to the Mason District Hospital, Havana, Illinois, or its successor serving a similar purpose, for the improvements [ sic ] of equipment in the hospital which are of special use in treating and caring for elderly persons."

On August 20, 1987, the State Bank of Havana (bank), which is the trustee of the trust established by Cordes' will, filed a complaint for construction of the will. The complaint alleged the bank was making monthly payments of $2,680 to the beneficiaries. Due to a decrease in the trust's net annual income, continued payment of this amount would be impossible absent invasion of the principal of the trust. The complaint alleged by reason of the ambiguous language and terms of Cordes' will, an actual controversy existed between the trustee, the beneficiaries and the remainderman. The complaint requested construction of Cordes' will in the following particulars:

"A. Whether the term 'net income,' as used in paragraph Fourth, subparagraph 2c) [ sic ] of the will, should be strictly construed to mean that only the 'net income' of the trust estate may be used by the trustee to provide for the needs of the trust beneficiaries.

B. Whether the language '. . . It shall be the duty of the Trustees to inquire or investigate and find out about their needs and take the necessary steps to alleviate any needs by providing from the Trust Estate . . .' (emphasis added) should be liberally construed to mean that the testator intended to provide for all the needs of the trust ...


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