Appeal from the Circuit Court of Cook County. 2007 P 003435 The Honorable Mary Ellen Coghlan,Judge Presiding.
The opinion of the court was delivered by: Presiding Justice Lavin
PRESIDING JUSTICE LAVIN delivered the judgment of the court with opinion Justices Pucinski and Epstein concurred in the judgment and opinion
¶ 1 Plaintiffs-appellants, Charles R. Walgreen III, Leslie Ann Walgreen Pratt, and James Alan Walgreen (hereinafter, the Walgreen Beneficiaries), the children of the late Charles R. Walgreen, Jr., appeal from the circuit court orders denying their cross-motion for summary judgment and granting summary judgment in favor of defendants-appellees, Rotary/One Foundation, Inc., and the Rotary Foundation of Rotary International (hereinafter, collectively referred to as the Rotary Foundations). The center of the dispute concerns the proceeds of Walgreen's living trust. The Walgreen Beneficiaries contend the trial court erred in failing to examine evidence showing that the late Charles R. Walgreen intended to, and did in fact, adeem or revoke his bequest to the Rotary Foundations. They also contend the trial court erred in failing to consider the issue of attorney fees. For the reasons to follow, we affirm.
¶ 3 The record, together with the motions, complaints, and attached documents, reveals the following. Walgreen was a member of and/or contributor to the Rotary Foundations. It is undisputed that he made regular cash donations to Rotary International and, in 1997, Walgreen urged Rotary/One Foundation members to include the organization in their estate plans, as evidenced by a correspondence from Richard McKay, the co-chairman of Rotary/One Foundation. It is also undisputed that on October 13, 1997, Walgreen became a member of "Rotary/One Foundation Legacy Award" program by "pledging a minimum bequest of $25,000 or more."
Walgreen signed this form stating he had made arrangements to bequest 20,000 shares of Walgreen company common stock to Rotary/One Foundation.
¶ 4 Walgreen died in 2007, leaving behind a will that poured over into his living trust, of which the plaintiffs-appellants and the defendants-appellees are both beneficiaries. Walgreen amended the 1979 trust throughout his life, including three times in the 1980s, twice in the 1990s, and once in 2006. Relevant here, the record shows that on September 8, 1999, Walgreen restated his declaration of trust in its entirety. Regarding any future amendments, Walgreen stated under "Article Ten" of the trust that: "I may at any time or times during my lifetime by instrument in writing delivered to the trustee amend or revoke this declaration of trust in whole or in part. The trust property to which any revocation relates shall be conveyed to me or otherwise as I may direct. This power is personal to me and may not be exercised by my legal representative or others." In addition to restating his declaration of trust, Walgreen also amended the restatement that same day. The 1999 amendment at issue in this case stated in typewritten form:
"Upon my death, the trustee shall distribute the number of shares of the common capital stock of Walgreen Co., an Illinois corporation, or any other asset, set forth before the distributee's name in the attached Exhibit A, which shall be handwritten or signed or initialed by me, to each person listed in that exhibit who is living at my death and to each institution listed in that exhibit which is in existence at my death. Exhibit A, as it exists at my death, shall be deemed to be an Amendment to the Declaration of Trust, accepted by me as trustee, if executed after the date of this amendment."
Walgreen signed the September 8, 1999, amendment, which was notarized. Attached to the amendment was "Exhibit A," a so-called "Beneficiary List," consisting of eight handwritten pages on lined paper delineating gifts of his personal property and stock to various people and some 33 institutions and organizations. The personal property gifts were decidedly of the personal variety, ranging from a "brass table lamp with a greenshade" and "cast iron kettle 19[-inch] diameter," designated for certain offspring. In terms of stock gifts, the list provided for the disposition of more than 900,000 shares of stock in Walgreen's company. Of singular importance to this appeal, Walgreen designated that "the Foundation of Rotary/One Club" was to receive 10,000 shares, and Rotary International Foundation was to receive 10,000 shares, with half that amount to go toward "the Polio Plus campaign to immunize the children of the World."
¶ 5 Allegedly, after Walgreen executed the aforementioned typewritten portion of the 1999 amendment, he presented his trustee and financial advisor Emily Koulogeorge with a sealed envelope containing the handwritten Beneficiary List. He allegedly stated he wanted the contents to remain a secret until his death and directed Koulogeorge to place the sealed envelope in a fireproof cabinet at his Walgreen company headquarters. She complied.
¶ 6 In the fall of 1999, according to a tax-return attachment, Walgreen made "charitable contributions" of stock to 15 institutions, including the University of Michigan (120,000 shares), Adler Planetarium (10,000 shares), and the International Museum of Surgical Sciences (5,000 shares). Included in that list were the Rotary Foundations, with 10,000 shares going to Rotary International on September 15, and 10,000 shares going to Rotary/One on October 4. Although Walgreen gave the Rotary Foundations the same number of shares in 1999 that were set forth in the Beneficiary List, the amounts he gave other institutions varied. For example, in the Beneficiary List, Walgreen designated that Adler Planetarium was to receive 6,000 shares as a bequest, but the tax-return document reflects a donation of 10,000 shares. On the other hand, under the Beneficiary List, the Museum of Surgical Science was to receive 10,000 shares, but the tax-return document reflects a gift of 5,000 shares in 1999. Almost all of the institutions in the tax-return document were also identified in the Beneficiary List, with the exception of four (Northland College, North Dakota State University, the University of Illinois, and the National Defense Fund).
¶ 7 Shortly after the shares were dispensed to the Rotary Foundation of Rotary International in 1999, Karen LaChapelle, the gift administration supervisor for the Foundation, wrote Walgreen thanking him for his September 16 gift of 10,000 shares to the Foundation (valued at $250,000) and assured him that, pursuant to his request, half that amount would be devoted to the Polio Plus campaign. Other letters from the fall of 1999 reflect that Walgreen presented "pre-bequest" donations, "prepayment on my bequest," or "advance payment" of Walgreen company shares in his trust to the National Jewish Medical Foundation, the Rehabilitation Institute of Chicago, and the Tau Kappa Epsilon Foundation. Correspondence between Walgreen and the University of Michigan reveals that Walgreen did the same throughout the 1990s by presenting the university with various "advances" from his trust bequest. The parties do not now dispute that, under the doctrine of ademption, these letters suggest Walgreen intended to revoke gifts identified in his trust to the National Jewish Medical Foundation, the Rehabilitation Institute of Chicago, the Tau Kappa Epsilon Foundation, and University of Michigan, by giving these institutions Walgreen shares during his lifetime. Ruby v. Ruby, 2012 IL App (1st) 103210, ¶ 16 (defining ademption).
¶ 8 In September 2000, Walgreen apparently suffered a stroke. On December 6, 2001, Walgreen's attorney Joseph Foster, per Foster's deposition testimony, attended a meeting with the 95-year-old Walgreen at the company headquarters, where Walgreen unveiled the 1999 trust amendment. Once there, Walgreen, who was in a wheelchair at his desk, requested that Koulogeorge secure the aforementioned sealed envelope from the fireproof safe. After she did so, Walgreen directed her to wait outside with another trustee while, from behind closed doors, Foster and Walgreen discussed the contents of the envelope, which included the two-page, typewritten "Trust Amendment," dated September 8, 1999, and the eight-page handwritten "Beneficiary List," serving as "Exhibit A." Foster testified the trust amendment amended "the distributive provisions for the beneficiaries named in [Walgreen's] longhand [in] Exhibit A." Foster read aloud the bequests identified in Exhibit A line by line and asked Walgreen if the document correctly identified what he wished to distribute on his death, whether it was Walgreen's signature on every page, and whether the document truly reflected Walgreen's intentions. Walgreen answered these questions in the affirmative. Foster testified that the Beneficiary List thus reflected the desired disposition of the Walgreen company stock.
¶ 9 Walgreen passed away on February 10, 2007, at the age of 100. Although several different versions of the handwritten Beneficiary List surfaced following Walgreen's death, the parties have agreed that Exhibit I is the "effective amendment" to the trust. Furthermore, although the parties did not necessarily agree below, they now agree that at the time of Walgreen's death, he owned 930,483 shares of Walgreen company stock. The parties also now agree that the total shares set forth in the Beneficiary List equaled 933,658, assuming the entities and individuals were existing at the time of Walgreen's death. This, they say, created a shortfall of 3,175 shares.
¶ 10 Following Walgreen's death, the trustees filed a complaint for a declaratory judgment constructing the trust and naming some 100 individuals and entities with an alleged interest in the determination. In relevant part, the trustees sought declaration regarding the impact of any shortfall in Walgreen company shares of stock when Walgreen died. The trustees also requested that the court determine whether a one-page, undated document, handwritten in pencil on lined paper and listing some 35 institutions, accompanied by two columns of numbers (hereinafter the Charity List), was an effective amendment to the trust. The trustees alleged that the week before Walgreen died, one of his grandsons discovered the Charity List in Walgreen's filing cabinet at his residence. The words "Exhibit A" are printed upside down toward the bottom of the page. The organizations on the Charity List, and the sequence by which they are listed, largely reflect the Beneficiary List. In a column next to each organization on the Charity List is a number that reflects shares bequested to the organizations, with the exception of Shedd Aquarium and the University of Michigan; regarding those two organizations, the number listed and that bequested varies. In addition, most of the organizations that received stock contributions in 1999, as identified in the tax-return document, are listed on the Charity List, along with the shares given in a second column.
¶ 11 On January 28, 2009, noting that the trustees' complaint did not adequately advance their interests, the Walgreen Beneficiaries filed a counterclaim for declaratory relief and under the legal doctrine of ademption. The Walgreen Beneficiaries alleged that Walgreen's bequests to 11 organizations identified in the Beneficiary List, including the Rotary Foundations, should be revoked because, during his lifetime, Walgreen had presented these organizations with gifts intended to take the place of the bequests. The Walgreen Beneficiaries thus became cross-plaintiffs and the Rotary Foundations, cross-defendants. The Walgreen Beneficiaries argued the lifetime gifts created a latent ambiguity in the trust, requiring the examination of extrinsic evidence. The Walgreen Beneficiaries thus alleged these entities were receiving a "double benefit," creating an shortfall of available shares. In support of their ademption claim, the Walgreen Beneficiaries pointed to the "Charity List," alleging that it represented a sort of "scorecard" Walgreen used to keep track of the shares he had given to the subject organizations during his lifetime. They also relied upon the aforementioned correspondence wherein the organizations acknowledged the shares were a "prebequest" lifetime gift or an "advance payment" of the planned gift. This, they suggested proved Walgreen's prebequest gifting pattern.
¶ 12 In count VI, the Walgreen Beneficiaries alleged that although the Beneficiary List directed that Rotary International receive 10,000 shares of Walgreen stock (with half going to the Polio Plus project), this bequest was adeemed by Walgreen's September 16, 1999, donation of 10,000 shares to the organization. The Walgreen Beneficiaries also averred that the September 23, 1999, letter to Walgreen from the Rotary International gift supervisor LaChapelle supported its allegations, since Walgreen's request that half the donation go to Polio Plus tracked the language of his bequest. In count XI, the Walgreen Beneficiaries alleged that although the September 8, 1999, Beneficiary List directed that Rotary/One receive 10,000 shares of Walgreen stock, this bequest was adeeemed by ...