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Bank of America, N.A. v. Judevine

Court of Appeals of Illinois, First District, First Division

January 26, 2015

BANK OF AMERICA, N.A., as Trustee of the Trust Under Agreement of Herbert W. Kochs, f/b/o Phyllis Anderson Picker dated April 23, 1958, Petitioner,
v.
DONNA MARIE JUDEVINE, THEODORE JUDEVINE, ROBERT SHAW, WILLIAM SHAW, ALEXANDER KOCHS, NELSON SHAW, AND EMILY KOCHS, Respondents-Appellees William Eugene Judevine, Jr., Robert Judevine, David Kochs, William Kochs, Stephen Kochs, James Shaw II, Kathryn Shaw Kirrish, and Stephanie Kochs, Respondents-Appellants

Page 556

[Copyrighted Material Omitted]

Page 557

Appeal from the Circuit Court of Cook County. No. 11 CH 32109. Honorable Neil H. Cohen, Judge Presiding.

Reversed and remanded.

SYLLABUS

In an action involving a dispute as to whether the remainder of the trust created for the settlor's third wife should be distributed between 4 named grandchildren of the settlor or 15 of his grandchildren, the trial court erred in granting summary judgment in favor of the 4 named grandchildren, since the trust was unambiguous to the extent that it directed the remainder of the trust to be paid to the settlor's grandchildren, it individually named his 4 grandchildren living at the time, and in view of the fact that the trust became latently ambiguous when additional grandchildren were subsequently born, the preference for equal treatment of descendants of equal degree and for construction of a will or trust that most closely follows the statutes of descent favoring a class gift should be applied; furthermore, the denial of the after-born grandchildren's motion for reimbursement of their attorney fees was reversed on the ground that the trial court abused its discretion in finding the provision of the trust relied on was unambiguous when it was, in fact, ambiguous, and therefore, the trial court's judgment was reversed and the cause was remanded for further proceedings.

For APPELLANT: James R. Carey, David E. Lieberman, Of Counsel, Levin Schreder & Carey Ltd., Chicago, IL.

For APPELLEE: William P. O'Keefe, Of Counsel, Law Office of William P. O'Keefe, Chicago, IL.

PRESIDING JUSTICE DELORT delivered the judgment of the court, with opinion. Justice Connors concurred in the judgment and opinion. Justice Cunningham dissented in part and specially concurred in part, with opinion.

OPINION

Page 558

DELORT, PRESIDING JUSTICE

This case concerns whether $1.6 million remaining in an irrevocable trust should be divided among 4 grandchildren, or among 15. Petitioner-appellee Bank of America, N.A. (Bank of America), as trustee under a April 23, 1958, trust agreement of Herbert W. Kochs for the benefit of Phyllis Anderson Picker (the Trust), filed a petition to construe the Trust. Respondents-appellants William Eugene Judevine, Jr., Robert Judevine, David Kochs, William Kochs, Stephen Kochs, James Shaw II, Kathryn Shaw Kirrish, and Stephanie Kochs (the " after-born grandchildren" ) and respondents-appellees Donna Marie Judevine, Theodore Judevine, Robert Shaw, William Shaw, Alexander Kochs, Nelson Shaw, and Emily Kochs filed cross-motions for summary judgment on the issue of whether the Trust only provided for Donna Marie Judevine, Theodore Judevine, Robert Shaw, and William Shaw, (the " named grandchildren" ) to be the remainder beneficiaries. The after-born grandchildren also sought, in a separate motion for partial summary judgment, reimbursement for their attorney fees from the assets of the Trust.

The trial court found that the Trust unambiguously provided only for the four then-living grandchildren ( i.e., the named grandchildren) as remainder beneficiaries, and therefore the trial court granted the named grandchildren's motion and denied the after-born grandchildren's motion. The trial court also deferred ruling on the after-born grandchildren's motion for partial summary judgment for attorney fees until Bank of America filed a brief addressing the petition.

On appeal, the after-born grandchildren contend the trial court erred in finding that the Trust unambiguously excluded them as remainder beneficiaries and in deferring a decision with respect to their motion for attorney fees. For the following reasons, we reverse the judgment of the trial court and remand this cause for further proceedings.

BACKGROUND

Herbert W. Kochs, the settlor of the Trust, met his third wife, Phyllis Anderson Picker, in 1955 when he was 52 years old and the chairman and chief executive officer of the Diversey Company corporation, a chemical company founded by the settlor and traded on the American Stock Exchange until 1978, when it was acquired for about $55 million. Ms. Picker, by contrast, was 23 years old and working in New York as a showgirl. They married in Juarez, Mexico, in November 1955, about eight months after Herbert divorced his (second) wife of 19 years.

Herbert and Phyllis, however, divorced childless about two years later, in April 1958, following allegations that Herbert was physically violent toward Phyllis. Pursuant to the terms of the divorce settlement agreement with Phyllis, Herbert established the Trust to provide income to Phyllis for life (and then to Phyllis's mother, if she survived Phyllis). The Trust, which was " irrevocable and not subject to amendment," was drafted by his divorce attorney, rather than his long-time estate planning attorneys, and executed the day before the divorce decree was entered. The Trust was funded with 8,450 shares of Diversey Company common stock. Paragraph C of the Trust provided in pertinent part as follows:

" Upon the death of both Phyllis Anderson and her mother, ***, the Trust Estate *** shall be distributed in equal shares to those who are then

Page 559

living of the Settlor's grandchildren, namely :

William Shaw and Robert Shaw ***, and
Susan Doniphan Hamilton and
Oliver Theodore Hamilton, IV, ***,
provided, however, that if any of such grandchildren are then deceased leaving one or more descendants then living, the share which such deceased grandchild would have received if then living shall be distributed to his or her then living descendants, per stirpes." (Emphasis added.)

In addition, the Trust provided in paragraph D that, notwithstanding anything to the contrary in the Trust, any portion of the Trust that were to become distributable to a " grandchild" who had not reached the age of 35 would vest in that grandchild but would be retained by the trustee. The portion would then be distributed either to the grandchild upon reaching that age or " if [the grandchild] shall die before attaining such age then upon such death the Trustee shall distribute such portion of the estate of such deceased grandchild."

When Herbert executed the Trust, his only grandchildren were the named grandchildren: William and Robert were Herbert's grandchildren by his first wife, Elizabeth, whereas Susan and Oliver were the grandchildren of his second wife, Mildred.

Herbert died in 1993, and Phyllis lived another 18 years, dying in 2011. Phyllis's mother was no longer living, so paragraph C of the Trust required the trustee to distribute the corpus of the Trust. By 2011, however, Herbert had 11 additional grandchildren[1] (the after-born grandchildren), 8 of whom were the grandchildren descended from his second wife, Mildred (in addition to the named grandchildren Susan and Oliver). The other three after-born grandchildren were descended from his fourth wife, Paula.

On September 13, 2011, Bank of America petitioned the trial court to construe the Trust, alleging that there was a latent ambiguity with respect to whether the settlor's after-born (but unnamed) grandchildren were included as remainder beneficiaries, where the provision at issue named the settlor's " grandchildren" but also specified the four then-living grandchildren. Bank of America noted that the residual amount of the trust approximated $1.6 million.

The named grandchildren and the after-born grandchildren filed cross-motions for summary judgment with respect to the issue of whether the Trust was ambiguous as to the remainder beneficiaries. The named grandchildren's motion included two letters, dated August 1972 and August 1975, sent by settlor to " Continental Illinois National Bank and Trust Company of Chicago" (the then-trustee of the Trust and the Crispin trust). In these letters, the settlor states that the remaindermen of the ...


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