Citizens National Bank of Paris v. Kids Hope United, Inc.

898 N.E.2d 734, 386 Ill. App. 3d 1084
CourtAppellate Court of Illinois
DecidedNovember 21, 2008
Docket4-08-0162
StatusPublished
Cited by3 cases

This text of 898 N.E.2d 734 (Citizens National Bank of Paris v. Kids Hope United, Inc.) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Citizens National Bank of Paris v. Kids Hope United, Inc., 898 N.E.2d 734, 386 Ill. App. 3d 1084 (Ill. Ct. App. 2008).

Opinions

JUSTICE COOK

delivered the opinion of the court:

In the 1960s, grantors La Fern L. Blackman and Ettoile Davis each executed a trust that benefitted the Edgar County Children’s Home (the Home). The Blackman trust stated that the Home would continue to receive income from the trust until the Home “ceased to operate or exist.” The Davis trust stated that the Home would continue to receive income from the trust until the Home ceased to function in its “present capacity.” In 2003, the Home merged with defendants, Hudelson Children’s Home and Family Services (Hudelson), now named Kids Hope United, Inc. (Kids Hope). In 2006, plaintiffs and trustee, Citizens National Bank of Paris (the Bank), filed a petition for instructions, seeking a determination that the gifts to the Home lapsed because the Home “ceased to exist” and ceased to function in its “present capacity” following the merger. Kids Hope, as the continuing entity following the merger, argued that the gifts should not lapse and it should continue to receive income from the trusts. Both the Bank and Kids Hope filed for summary judgment. The court granted summary judgment to the Bank, finding that, as set forth in section 11.50(a)(2) of the Business Corporation Act of 1983 (Act) (805 ILCS 5/11.50(a)(2) (West 2006)), the restrictive conditions that each respective testator placed on her gift came to pass. We reverse and remand.

I. BACKGROUND

A. Relevant History of the Home and Kids Hope

The Home was incorporated in the State of Illinois in 1898. Pursuant to its original charter, it was established as an institution for the education of the dependent children in Edgar County, Illinois, to exercise the custody and maintenance of such children and to provide permanent homes for them in approved private families. In 1900, the Home erected a building for this purpose on Eads Avenue in Paris, Illinois.

On August 15, 1980, an amendment to the Home’s articles of incorporation changed its object to providing

“services to children and youth in the fields of health, welfare[,] and education in the State of Illinois, including multi-treatment and educational programs for emotionally handicapped boys and girls of all races in residential treatment centers, day treatment services, counseling services to family, and such other related auxiliary services as are necessary or desirable from time to time to accomplish these purposes; and to own or lease property, establish and maintain residential treatment centers, homes, schools[,] and other facilities required.”

This was for the purpose of allowing the Home to become a residential placement resource for children throughout the State and to receive state funding. It is unclear whether the Home actually ceased operating as a traditional orphanage in 1980, or whether it operated in a manner akin to the broader mission for some time.

The Home created a not-for-profit corporation, known as the Children’s Home Endowment Fund, Paris, Illinois (the Fund), to hold the Home’s property and finances. In 1993, various pieces of property, including the property on Eads Avenue, were transferred into the Fund.

On July 1, 2003, the Home merged with Hudelson pursuant to a merger agreement. In the agreement, Hudelson “guaranteed that [the Home’s] mission of working with children in Edgar and the surrounding counties will be continued.” On March 25, 2005, the real estate owned by the Fund was transferred to Hudelson. On February 3, 2005, Hudelson changed its name to “Kids Hope.” Shortly thereafter, the facility on Eads Avenue closed. This property was sold on June 16, 2006. Kids Hope continues to own real estate in Edgar County in the form of two tracts of farmland it received from estates.

Kids Hope has families in Edgar County who serve as approved foster homes. Kids Hope offers services to some minors in abused and neglect cases in Edgar County and has representatives who appear in Edgar County juvenile court.

B. Blackman Will and Trust

La Fern L. Blackman died on July 11, 1967. She left a last will and testament dated July 23, 1961. The will states in pertinent part:

“I give, devise and bequeath any and all farm land that I may own at the time of my death to my sister, ETTOILE DAVIS, for and during her natural life only ***.
After the death of my sister, ETTOILE DAVIS, all of my farm land is to go to THE CITIZENS NATIONAL BANK OF PARIS, Paris, Illinois, as trustee ***. *** From the income of said farm land said trustee shall give twenty-five per cent (25%) thereof to the Trustees of the EMBARRASS CEMETERY *** and the remaining seventy-five per cent (75%) of said net income is to be given to the EDGAR COUNTY CHILDREN’S HOME, Paris, Illinois, they to use the same as they deem best for said home. In the event either or both of the aforesaid organizations should cease to operate or exist, then said bank as trustee is to distribute said portion or portions of said net income to such charitable organization or organizations as it deems worthy of said money.” (Emphasis added.)

C. Davis Will and Trust

Ettoile Davis died on April 27, 1971. She also left a will, dated December 4, 1968. The will states in pertinent part:

“I give, devise, and bequeath any and all farm land that I may own, at the time of my death, to the *** Bank as trustee ***. *** The net income from the above mentioned land is to be disposed of as follows:
Twenty-five per cent (25%) to the TRUSTEES OF THE EMBARRASS CEMETERY ***. *** The remaining seventy-five per cent (75%) of said net income is to be given to THE EDGAR COUNTY CHILDREN’S HOME, an Illinois Corporation, Paris, Illinois. In the event either of the aforesaid organizations shall cease to function in its present capacity, then the part of the trust fund which would have gone to this organization shall be divided equally between the FIRST METHODIST CHURCH OF PARIS MEMORIAL FOUNDATION, INC., THE EDGAR COUNTY CHAPTER OF THE AMERICAN CANCER SOCIETY, and THE EDGAR COUNTY HEART ASSOCIATION.” (Emphasis added.)

D. Procedural History

On December 26, 2006, in its status as trustee of the La Fern L. Blackman Trust, the Ettoile Davis Trust, and several other trusts not party to this appeal, the Bank filed a petition for instructions. In count I, concerning the Blackman trust, the Bank stated it believed the Home “ceased to exist.” The Bank asked the trial court to determine whether or not the Home ceased to exist, and if so, it sought instruction “pursuant to ‘cy-pres’ doctrine” as to where to distribute the 75% of the annual net income of the Blackman trust, which Black-man bequeathed to the Home.

In count II, concerning the Davis trust, the Bank again stated it believed the Home had ceased to exist.

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Related

Citizens National Bank v. Kids Hope United, Inc.
922 N.E.2d 1093 (Illinois Supreme Court, 2009)
Citizens National Bank of Paris v. Kids Hope United, Inc.
898 N.E.2d 734 (Appellate Court of Illinois, 2008)

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Bluebook (online)
898 N.E.2d 734, 386 Ill. App. 3d 1084, Counsel Stack Legal Research, https://law.counselstack.com/opinion/citizens-national-bank-of-paris-v-kids-hope-united-inc-illappct-2008.