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Altenheim German Home v. Bank of America

September 24, 2007

ALTENHEIM GERMAN HOME, PLAINTIFF-APPELLANT,
v.
BANK OF AMERICA, N.A., AND TONYA HINTZPETER, DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Du Page County. No. 05-CH-1029 Honorable Kenneth L. Popejoy, Judge, Presiding.

The opinion of the court was delivered by: Justice Byrne

Published opinion

Herman C. Hintzpeter, the trustor, executed a trust agreement in 1961 to distribute income and principal of a trust fund to his children, grandchildren, and great-grandchildren. The agreement provides that plaintiff, Altenheim German Home (Altenheim), is entitled to the principal and undistributed income of a portion of the trust fund if there is no great-grandchild eligible to receive it. Defendant Tonya Hintzpeter (Tonya) is an adopted great-grandchild of the trustor and claims a right to the disputed portion of the trust fund. Defendant Bank of America, N.A., is the successor in interest to the trustee and supports Tonya's position.

Altenheim filed a complaint for declaratory and injunctive relief to establish its rights under the trust agreement. Defendants responded with a motion to dismiss under section 2--619(a)(9) of the Code of Civil Procedure (Code) (735 ILCS 5/2--619(a)(9) (West 2006)), arguing that the trust agreement was affirmative matter defeating Altenheim's claim. The trial court concluded that Tonya was a beneficiary under the trust agreement. The court granted defendants' motion to dismiss, and Altenheim appeals.

The parties agree that the trust agreement is unambiguous. However, their interpretations of the instrument lead them to opposite legal conclusions as to whether adopted great-grandchildren, such as Tonya, are beneficiaries. On appeal, Altenheim argues that the plain language of the trust agreement shows that the trustor did not intend to treat adopted great-grandchildren as beneficiaries, because the agreement expressly includes adopted grandchildren as beneficiaries but is silent as to adopted great-grandchildren. In response, defendants argue that (1) both the 1955 Probate Act (Ill. Rev. Stat. 1955, ch. 3, par. 165) and the current Probate Act of 1975 (755 ILCS 5/2--4 (West 2006)) create a presumption that adopted children and natural children are to be treated similarly for the purpose of distributing property under trust agreements and (2) the trust agreement contains no language showing an intent to rebut the statutory presumption and exclude adopted great-grandchildren as beneficiaries.

In light of the parties' shared position that the instrument is unambiguous, we consider only the legal issue of whether the plain language of the instrument, when viewed through the prism of the statutory presumption, establishes that the trustor intended to include adopted grandchildren but exclude adopted great-grandchildren as beneficiaries. While the issue is a close one, section 2--4 of the current Act requires clear and convincing evidence to rebut the presumption in favor of including adopteds, and this high standard leads us to conclude that the instrument's mere silence as to adopted great-grandchildren does not rebut the presumption. We affirm the dismissal of the complaint.

FACTS

On July 20, 2005, Altenheim filed a complaint for declaratory and injunctive relief. The factual allegations as set forth in the complaint are generally uncontested. On August 14, 1961, Herman C. Hintzpeter, the trustor, and Continental Illinois National Bank and Trust Company of Chicago (Continental), the trustee, entered into the trust agreement. In the agreement, the trustor established a fund and authorized the trustee to use the income and principal for the benefit of the trustor, his wife, and the next three generations of the family.

Under the trust agreement, upon the death of the trustor, the trust fund was to be divided into three separate funds for the benefit of the trustor's three children, Edward Hintzpeter, Ervin Hintzpeter, and Herman C. Hintzpeter III (Herman III). The trust fund established for the benefit of Herman III was designated "Trust Fund C," which is the subject of this dispute. The trust agreement provides that the income, and in some cases the principal, of Trust Fund C was to be distributed to Herman III and his wife, Barbara, during their lives.

Section "Seventh (G)," the relevant section of the trust agreement, provides for the distribution of Trust Fund C as follows:

"(G) All of the remaining income of 'Trust Fund C' shall be distributed as follows:

(1) To [Herman III], son of said Trustor, and [Barbara], daughter-in-law of said Trustor, or to the survivor of them, for and during their natural lives.

(4) After the death of [Herman III and Barbara], leaving [a] surviving legitimate child or children born to or legally adopted by [Herman III and Barbara], to such child or children, living from time to time, equally between them.

***

(6) If at the time of the death of [Herman III and Barbara], a child or children of theirs as aforesaid shall have predeceased the survivor of [Herman III and Barbara], leaving issue surviving, and if not, then as a child of theirs dies leaving issue surviving, the Trustee shall forthwith divide this 'Trust Fund C' into as many equal parts as [Herman III and Barbara] shall leave children then surviving and child or children then deceased leaving issue then living. The income of this 'Trust Fund C' shall continue to be distributed by the Trustee to the living children of [Herman III and Barbara] and to the living issue of any child or children of a deceased child of theirs, such issue to take their parent's share equally between them. As each such great grand-child of said Trustor, whose parent, as aforesaid, shall be then deceased, arrives at the age of twenty-one years, or having at the time such great grand-child is to take already arrived at the age of twenty-one years, the Trustee shall forthwith transfer, pay over, deliver and convey to such great grand-child, his or her share of the principal and all accumulated and undistributed net income of this Trust Fund.

***

(8) In case this Trust shall lapse for want of a living person to take as aforesaid, then all principal and undistributed income to [Altenheim] ***." (Emphasis added.)

Herman III and Barbara are now deceased, but they have two natural children: Herman C. Hintzpeter IV (Charles) and Lisa Hintzpeter. Pursuant to the trust agreement, Continental was appointed trustee of Trust Fund C upon the death of Herman III. Bank of America is the current trustee of Trust Fund C as the successor in interest to Continental.

The trust agreement provides for the distribution of the income and principal of Trust Fund C upon the deaths of Herman III and Barbara. The income was to be distributed under certain circumstances to any "surviving legitimate child or children born to or legally adopted by" Herman III and Barbara. (Emphasis added.) The principal was to be distributed under certain circumstances to (1) any "surviving legitimate child or children born to or legally adopted by" Herman III and Barbara and (2) any "descendants" of any "surviving legitimate child or children born to or legally adopted by" Herman III and ...


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