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May 11, 1994


Appeal from the Circuit Court of Winnebago County. No. 89-P-608. Honorable Alford R. Penniman, Judge, Presiding.

Colwell, Quetsch, PECCARELLI

The opinion of the court was delivered by: Colwell

JUSTICE COLWELL delivered the opinion of the court:

Defendants, Charles D. and Audrey E. McCormick, appeal an order of the circuit court impressing a resulting trust on the property of the decedent, Dave Fleming McCormick, in favor of the estate. We affirm in part, reverse in part, and remand the cause for further proceedings.

On December 8, 1989, John F. McCormick (John), the administrator of the estate of the deceased (Dave), filed a petition to probate decedent's will and to have letters testamentary issued. According to the petition, Dave McCormick died on October 2, 1986, leaving a will dated October 12, 1957, and believed to be the last will of the decedent. John and his brother Charles McCormick are the sons and heirs of the decedent. Audrey is the wife of Charles.

On June 21, 1990, John petitioned the circuit court to impress a resulting trust on the property of the deceased in favor of the estate and to turn over assets of the estate to the administrator. The petition alleged, inter alia, that, on August 26, 1971, Dave and his wife Marie (also later deceased) had transferred legal title of their marital home, located at 214 East Chapel Street, in Rockton, Illinois, to Charles and his wife Audrey, without consideration and for the sole purpose of allowing Charles to use the home to secure a business loan. The petition alleged that the grantors, Dave and Marie, continued to enjoy the exclusive use and occupancy of the home until their deaths and that, thereafter, Charles and Audrey failed to return the legal title to the grantors after the purpose of the transfer was accomplished.

The petition concluded that Charles and Audrey held legal title to decedent's property under a resulting trust for the use and benefit of the decedent and that they had failed to render this asset to the administrator of the estate. The petition also sought the return of approximately $6,780 in cash deposits of the decedent alleged to be held by Charles and sought an accounting of the household furnishings and other personal property of the decedent. After an evidentiary hearing, the trial court entered an order finding that Charles and Audrey jointly and severally held legal title and possession of the home, the personal property, and approximately $6,780 in cash accounts; the court ordered an accounting to the administrator for these assets which were deemed held in trust and ordered them to deliver all legal and equitable title and physical possession to the administrator.

On appeal, defendants, Charles and Audrey, contend that the trial court erred in impressing a resulting trust on the decedent's home which was transferred to them by deed in 1971. They argue that (1) this specific property was adeemed in the will because the conveyance operated to revoke the devise in the will and this real property no longer existed as part of the estate; and (2) that the administrator has failed to meet his high burden of proof to show by clear, convincing, and unmistakable evidence that a resulting trust came into existence at the time the home was conveyed; defendants assert that the deed raised a presumption that the transfer of the home was a gift and this presumption was not rebutted by the evidence.

At the hearing on June 18, 1991, Anna B. Hopkins testified that she had lived at 210 East Chapel Street in Rockton since 1940. Dave and Marie purchased their home in 1946 from Hopkins who lived next door. Dave and Marie still owed some money on the property in August 1971 and came to Hopkins to pay off the balance owed on the home. Over defendants' hearsay objection, Hopkins testified that Marie told her they were paying off the property because Charles wanted to go into business and wanted his parents to deed the property to him so he could borrow money for that purpose. Subsequently, Dave and Marie continued to live on the property until their deaths and continued to refer to the property as their own during that time. Charles never resided there until after the deaths of his parents. Hopkins believed that Dave and Marie owed several thousand dollars--perhaps $7,000--on the property in 1971.

Charles McCormick testified that he was the son of Dave and Marie and that his parents lived in the home adjacent to Mrs. Hopkins until their deaths. He acknowledged that his parents bought the home from Hopkins. Charles testified regarding the deed by which he acquired the title to the property from Dave and Marie on August 26, 1971; the deed was recorded on September 2, 1971. At that time, Charles was attempting to purchase and finance a grocery store business in Land O Lakes, Wisconsin, and needed to borrow money for this purpose. Although he owned a home in Land O Lakes, he needed additional security to obtain a loan.

The day after the transfer of title, Charles used the home to obtain his loan by mortgaging it with First Federal Savings and Loan in the amount of $20,000. When asked if there was any consideration paid for the transfer of the deed, Charles said he paid $1 in cash and did not have a receipt or a cancelled check. He did not know why there were no tax stamps on the document to indicate the purchase price. Charles admitted that his parents lived in the home until their deaths without paying rent and that he never occupied the home during that time.

Charles stated that he maintained the home by taking care of "anything major," but he had no receipts or cancelled checks for the repairs. He took possession of the home following the deaths of Dave and Marie. Marie predeceased Dave. When he took possession, there were furnishings in the home, and he assumed that they went with the house. The wills of Dave and Marie, both dated December 12, 1957, were admitted into evidence without objection. Each will purported to leave the entire estate of the surviving spouse to be divided equally between Charles and John.

Charles further testified that, at the time of his father's death, there were two cash accounts that bore his and his father's name. One savings account at the F.M. Credit Union had a balance of $5,780.16. The other account was at the First National Bank in Beloit which contained $1,003 according to the estimate of plaintiff's counsel, but Charles could not verify that amount. Charles stated that, after his father's death, he paid some bills with the cash and divided the balance with his brother John. At this point in the proceeding, Charles agreed to make an accounting to the court within 14 days and to allow the administrator to make an inventory of the contents of the house. When Charles was asked if the reason for the transfer of the realty in August 1971 was to allow him to secure financing for his business, he replied, "Yes. It was a business transaction." Charles further testified that there was a small balance remaining on the loan of probably less than $5,000 and there was still a lien on the property.

John McCormick testified that he resided in Rockford, Illinois, and was the son of Dave and Marie. He called his parents five or six times per week and visited them frequently. Over defendants' hearsay objection, he testified that his mother and father informed him that they were helping his brother get into business by giving him the deed to the home to obtain a loan for the business. From that point on, the parents never stated whose home it was and never vacated the home in favor of Charles and his family. Dave and Marie never paid rent and continued to maintain the home. John had the house painted, but he was not aware that Charles ever made any repairs to the home. They never mentioned a gift to Charles, nor was there any Discussion by them that Charles would deed the property back to them. Regarding ...

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