Appeal from the Circuit Court of Lake County. No. 99--P--975 Honorable Thomas E. Lang, Judge, Presiding.
The opinion of the court was delivered by: Justice Grometer
The present appeal involves the status of three bank accounts established by Helen Weiland, now deceased. The People of the State of Illinois ex rel. James E. Ryan, Attorney General of the State of Illinois, filed a claim against respondent Albert S. Salvi, the executor of Weiland's estate. Madeline Baurhyte, Robert Baurhyte, Glen Baurhyte, Timothy Baurhyte, and Michaeline Smith (the Baurhyte claimants) filed a separate claim naming as respondents Genevieve Smith, Salvi, and Weiland's estate. The State and the Baurhyte claimants alleged that the three bank accounts were payable-on-death (POD)accounts and that the accounts were improperly liquidated by Weiland's guardian after Weiland was adjudged disabled but before her death. Respondents disputed these allegations. Following a consolidated bench trial in the circuit court of Lake County, the trial court determined that all three accounts were POD accounts and that they were improperly liquidated. Respondents timely appealed.
On December 30, 2002, this court filed its opinion. We affirmed in part and reversed in part. Specifically, we reversed that portion of the trial court's ruling that one of Weiland's bank accounts was a POD account naming the Baurhyte claimants as beneficiaries. The basis for our decision was that the trial court applied the wrong standard of proof in assessing the Baurhyte claim. The Baurhyte claimants filed a timely petition for rehearing disputing our finding. We granted the petition for rehearing and withdrew our prior opinion. For the reasons that follow we adhere to our finding that the trial court applied the wrong standard of proof. Accordingly, we affirm the decision of the trial court in part and reverse in part.
The present dispute centers on three bank accounts established by Helen Weiland. Weiland opened account No. 0452085723 (5723) at Affiliated Bank on January 3, 1991. Early in the nineties, Comerica Bank acquired Affiliated Bank. On February 17, 1994, following the acquisition, Weiland opened account Nos. 0453024168 (4168) and 0453024218 (4218) at Comerica Bank. Sometime later, LaSalle Bank acquired Comerica Bank. Account No. 5723 is the subject of the claim brought by the Baurhyte claimants; account Nos. 4168 and 4218 are the subjects of the claim brought by the State.
B. Liquidation of Accounts
In July 1997, Weiland, then 92, was adjudged disabled. Joseph Vogler, the public guardian of Lake County, was named guardian of Weiland's person and estate. Weiland was then placed in a nursing home. Vogler was succeeded by Weiland's sister, Genevieve Smith. Smith hired attorney Albert Salvi, Sr., to represent her in the administration of Weiland's estate.
On May 22, 1998, Salvi closed account No. 5723 and deposited the funds into an account held in the guardian's name. In June 1998, Salvi petitioned the circuit court of Lake County to revoke 11 other bank accounts held by Weiland at LaSalle Bank. Salvi believed that the bank accounts were POD accounts, also known as Totten trusts. A Totten trust is created when a deposit is made by a person (the holder) of his or her own money in his or her own name as trustee for another. In re Estate of Davis, 225 Ill. App. 3d 998, 1005 (1992). The guardian of a disabled person's estate may revoke a Totten trust only with court authorization. 755 ILCS 5/11a--18(d) (West 1998). Moreover, such funds may only be used "as necessary for the comfort and suitable support and education of the ward *** or for any other purpose which the court deems to be for the best interests of the ward." 755 ILCS 5/11a--18(a) (West 1998).
Included in the list of accounts Salvi sought to revoke were account Nos. 4168 and 4218. According to the petition, the funds in the Totten trusts were intended to cover "anticipated overall cost and expense in sustaining the ward's person and estate" and "the exposure of federal estate, state inheritance and death tax liability in the event of the ward's death."
On or about June 29, 1998, Judge Bernard Drew granted the guardian's petition. The order provided in relevant part:
"IT IS FURTHER ORDERED that the guardian of the estate is authorized to amend or revoke the Totten Trusts set forth in the petition to the extent necessary to provide increased income to the estate and to provide funds necessary for the care, management and investment of the estate, protective of any beneficiary contingent interest as much as is reasonably possible considering the needs and best interests of the ward pursuant to 755 ILCS 5/11a-18(d) while preserving the interests of the beneficiaries by accounting of the guardian."
Following Weiland's death on October 3, 1999, her disabled person's estate was closed. On or about October 22, 1999, the decedent's estate was opened and Salvi was appointed as independent executor. On May 4, 2000, the Baurhyte claimants and the State filed the claims that comprise the present dispute.
The State brought its claim on behalf of the People of the State of Illinois "as the ultimate beneficiaries at common law of all assets given or held for charitable public-benefit purposes." The State alleged that account Nos. 4168 and 4218 were Totten trusts naming charitable beneficiaries and that the accounts were improperly liquidated in violation of Judge Drew's June 1998 order. According to the State, the liquidations were improper because Weiland's disabled person's estate contained sufficient assets to provide for her needs. Thus, the funds in the Totten trusts were not necessary to provide for the care and management of Weiland's disabled person's estate as required by sections 11a--18(a) and (d) of the Probate Act of 1975 (Probate Act) (755 ILCS 5/11a--18(a), (d) (West 1998)).
The Baurhyte claimants filed a two-count complaint. Count I was directed against Salvi, as independent executor of Weiland's estate. The Baurhyte claimants alleged that Weiland created certain bank accounts, including account No. 5723, as Totten trusts, naming them as beneficiaries. The Baurhyte claimants further alleged that the funds in the Totten trusts established for their benefit were not needed or used for Weiland's benefit. Count II was directed against Smith, as the guardian of Weiland's estate. However, Smith was voluntarily dismissed by the Baurhyte claimants prior to trial and is not a party to this appeal.
The trial commenced on January 22, 2001. Lynn Wanner, the keeper of records for LaSalle Bank, was the first witness. Wanner testified that she handles document production in response to court requests. Wanner compiled copies of documents related to Weiland's accounts, including bank statements and signature cards. It is the back of the signature card that the customer must complete in order to designate an account as a Totten trust. Relevant here, Wanner produced the front and back of a signature card dated January 3, 1991, for account No. 5723, the front of a signature card dated February 17, 1994, for account No. 4168, and the front and back of a signature card dated February 17, 1994, for account No. 4218. Admitted into evidence by stipulation of the parties were the signature cards pertaining to Weiland's accounts.
Wanner also produced documents purporting to be monthly bank statements for accounts 4168 and 4218. The statements are dated from February 17, 1994, through August 31, 1997. The statements for account No. 4168 are addressed to "HELEN L WEILAND, POD ST FRANCES DESALES [sic] CATHOLIC CHURCH, POD CALVARY CHAPEL OF LAKE VILLA, POD THE MARYKNOLL FATHERS & BROTHERS NY." The statements for account No. 4218 are addressed to "HELEN L WEILAND, POD NORBERTINE FATHERS, POD OUR LADY OF MIRACULOUS MEDAL & REV CHARLES F SHELBY & JAMES ILLICHMAN." Wanner admitted that these statements were not the actual statements mailed to the customer. Rather, they represented computer printouts of the records of LaSalle Bank as they existed at the time they were generated for the litigation. Wanner stated, however, that the information used to produce both the computer printouts and the statements that are mailed to the customer is identical and that the same information is sent to the customer.
Lisa McCarthy testified that in July 1997 she was employed as a personal banker at LaSalle Bank. McCarthy's duties included providing information to customers concerning their accounts. McCarthy noted that account information was routinely entered into the bank's computer system and that, in providing customers information about their accounts, she relied on the computer records as well as signature cards and other bank documents. To the best of McCarthy's knowledge, the bank kept copies of such requests and the bank's responses thereto.
On July 8, 1997, at her supervisor's request, McCarthy responded to an inquiry from the public guardian of Lake County regarding the status of Weiland's accounts at the bank. McCarthy's letter listed 11 separate accounts belonging to Weiland. Among the accounts identified were account Nos. 4168, 4218, and 5723, all three of which listed POD beneficiaries. McCarthy testified that she gathered the information included in the letter from the bank's computer records. McCarthy was unable to recall whether she examined the signature cards in drafting the letter. The letter was admitted into evidence over respondents' objection.
McCarthy testified that, if a customer wanted to add a POD beneficiary to his or her account, she would have the customer complete a new signature card. Regarding the entry of account information into the bank's computer system, McCarthy recalled that the bank used to send any account changes to a central processing department to have the changes recorded. However, at some point, these changes were able to be made at the bank branch.
Michael Williams testified that in 1994 he was senior pastor at Calvary Chapel in Lake Villa and was employed as a personal banker at Comerica Bank. Williams first met Weiland on February 17, 1994, when she opened two individual accounts (Nos. 4168 and 4218) at the bank. According to Williams, the accounts were not established as Totten trusts. Shortly after Weiland opened the accounts, Williams made the first of approximately 15 to 20 visits to her home. Williams explained that the purpose of the initial visit was to determine whether Weiland intended account Nos. 4168 and 4218 to have POD beneficiaries. According to Williams, he was concerned because those two accounts were the only accounts Weiland held at the bank that did not have POD beneficiaries.
Weiland did not make a decision on Williams's first visit. However, Williams made additional visits because Weiland "was lonely, and [he] enjoyed her company, and she loved the Lord, and [they] had good conversations." After about five or six visits, Weiland told Williams that she wished to designate POD beneficiaries. Weiland gave Williams a sheet of paper listing the intended beneficiaries of account No. 4168 as St. Francis de Sales Church, Calvary Chapel of Lake Villa, and Maryknoll Fathers and Brothers, and the intended beneficiaries of account No. 4218 as Norbertine Fathers, Our Lady of the Miraculous Medal, Reverend Charles F. Shelby, and James Illichman. Williams testified that he attempted to dissuade Weiland from including the Calvary Chapel as one of the beneficiaries because he did not want Weiland "to feel like [he] was making visits enjoying her company just to have Calvary Chapel on [the list of beneficiaries]." However, Weiland insisted that the Cavalry Church be named a beneficiary. Williams returned to the bank to prepare the necessary forms to authorize the POD beneficiaries for the two accounts. Although Williams could not recall for certain which forms he filled out, he believed the forms were either change-of-address or file-maintenance forms. The following day, Williams brought the forms to Weiland's house, and she signed the documents. Williams did not complete a new signature card for either of the two accounts because he was "unaware of the procedure."
Williams then sent the forms to the file-maintenance division to input the information in the computer system. Williams testified that in the past if a customer signed the wrong forms or the forms were not complete, the file-maintenance division would send them back to be completed properly. The file-maintenance division never informed Williams that Weiland completed the wrong forms or that they were incomplete. In fact, Williams checked the computer system a few days after he submitted the changes and discovered that the information was properly entered into the system.
On cross-examination, Williams admitted that in the past he testified that the only form that Weiland signed was a change-of-address form. Williams also acknowledged that when he attempted to explain the difference between a money market account and a certificate of deposit to Weiland, she became confused. Williams also admitted that he did not reveal the nature of his relationship with Weiland to anyone at the bank. Williams further stated that his salary at Calvary Chapel increased "[a]s the church grew." Finally, Williams testified that in 1995 or 1996 Weiland told Williams that she liked her funds where they were and that Williams "shouldn't do anything with them." Williams believed that Weiland's sentiments grew out of "speculation of when I was accused of taking or asking her for money."
Cindy Scardino testified that she is the assistant manager of a LaSalle Bank branch in Lake Zurich and was Williams's boss in 1994. Scardino helped prepare the bank's operations manual for personal bankers. The manual includes instructions for opening different types of bank accounts, including those designated as Totten trusts. According to Scardino, while some bank forms have changed over the years, it has always been true that a signature card is necessary to change the beneficiary on an account. Scardino stated that during the time the bank was known as Affiliated Bank the process for changing the beneficiary on a Totten trust involved executing a new signature card and completing a file-maintenance form reflecting information on both the original and replacement signature cards. After the customer signed both documents, the personal banker would enter the information into the bank's computer system. The personal banker would then contact another banker to compare the information on the file-maintenance form with the information entered into the computer system. Scardino admitted that the integrity of this "double-check" system depended on the personal banker who opened the account asking a second banker to review the changes. Ultimately, the file-maintenance form and the new signature card were forwarded to a centralized facility for storage. According to Scardino, this same general procedure was followed when the bank became Comerica Bank. Scardino also testified that, even if a customer's account statement does not list POD beneficiaries, it does not mean that there are not any POD beneficiaries on the account.
On cross-examination, Scardino acknowledged that there was a time when personal bankers were not permitted to input data directly into the bank's computer system. Instead, documentation was sent to the file-maintenance division for entry into the system. Scardino was unaware of the exact dates when the change allowing personal bankers to input the information came into effect. Scardino believed that the file-maintenance division would have required the branch to substantiate any request by requiring a document with the customer's signature or having the required forms completed properly. In this regard, Scardino recalled that in 1994 the account owner would have to sign the file-maintenance form. Scardino also noted that Comerica used to print the names of beneficiaries on account statements, whereas LaSalle Bank does not.
Margaret Steiner was employed as the manager of a Lake Zurich branch of LaSalle Bank from 1995 to 2000. Prior to working at the Lake Zurich branch, she was employed at Comerica Bank. Steiner explained the procedure used in 1994 to change an account from an individual account to an account with a POD beneficiary. Steiner testified that "in most cases" the existing account would be closed and a new account would be opened. When the new account was opened, the old signature card was replaced with a new signature card. Steiner explained that the reason for requiring the customer to open a new account was that the signature cards were not always stored at the bank branch. As a result, the banker would not always possess the signature card in order to change a designation on it. However, Steiner admitted that, "if somebody wanted to add a beneficiary to an account, sometimes people did that [add a beneficiary to an existing account without executing a new signature card] but you weren't supposed to." She also agreed that someone conceivably "could go in the system" and add a name. Steiner stated that a file-maintenance form would be used for changes of address, new phone numbers, or to correct misspelled names. Although Steiner testified that it was not the bank's policy to use the file-maintenance form to add new beneficiaries to an account, she could not say that the form was never used for that purpose.
According to Steiner, when the bank was part of Comerica, it was the procedure for personal bankers to complete forms in their branch and then send them to a centralized facility for input into the system. Steiner also explained that in 1994, after an account was opened, the signature card was forwarded to a central facility to be microfiched. The original was then returned to the branch for storage. The file-maintenance forms, however, were kept for only one year before being discarded. Steiner believed that the most likely explanation for an inconsistency between the bank's computer records and the signature card is that "someone changed them." However, Steiner also admitted that the documentation needed to effectuate such a change could have been destroyed or lost.
Albert Salvi, Sr., testified that he was hired in 1997 as the attorney for Smith in her capacity as the guardian of Weiland's disabled person's estate. On June 3, 1998, Salvi assisted Smith in preparing an inventory of Weiland's estate. Item number 16 on the inventory was the guardian's checking account at LaSalle Bank with a balance of $192,681.64. Salvi testified that the funds in the guardian's checking account included $10,000 from account No. 5723. According to Salvi, the bank informed him that account No. 5723 was in Weiland's "sole name" and would only require a copy of the letters of office in order to withdraw money from the account. Salvi admitted that he did not examine the signature card for account No. 5723 but believed the account was in Weiland's name alone because of what "the representative at the bank indicated to [him]." Ultimately, the entire proceeds of account No. 5723 were deposited into the guardian's checking account.
Based on statements made by representatives at LaSalle Bank, Salvi believed that some of Weiland's accounts, including account Nos. 4168 and 4218, were established as Totten trusts. As a result, Salvi filed a petition to revoke those accounts. Salvi testified that he sought to liquidate the accounts in order to have sufficient funds to pay expenses, taxes, and other obligations if Weiland were to die. Salvi did not want to sell Weiland's house to satisfy her needs because, although it appeared that Weiland was permanently disabled, "there was always the possibility that she could be restored." Salvi further explained that the home was important to Weiland and "there is no way we could have sold that home and felt comfortable that she would never need that home again." Salvi testified that he later learned that some of the accounts he believed were Totten trusts were not POD accounts.
On cross-examination, Salvi testified that the reason he petitioned to revoke the Totten trusts was to cover anticipated costs for the care, management, and investment of Weiland's estate. The basis for Salvi's belief that the estate had insufficient assets was a cost/expense analysis ...