Heritage County Bank & Trust Co. v. State Bank

556 N.E.2d 747, 198 Ill. App. 3d 1092, 145 Ill. Dec. 129, 1990 Ill. App. LEXIS 703
CourtAppellate Court of Illinois
DecidedMay 18, 1990
DocketNo. 1—89—1811
StatusPublished
Cited by4 cases

This text of 556 N.E.2d 747 (Heritage County Bank & Trust Co. v. State Bank) 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
Heritage County Bank & Trust Co. v. State Bank, 556 N.E.2d 747, 198 Ill. App. 3d 1092, 145 Ill. Dec. 129, 1990 Ill. App. LEXIS 703 (Ill. Ct. App. 1990).

Opinion

JUSTICE RAKOWSKI

delivered the opinion of the court:

Plaintiff Heritage County Bank & Trust (Heritage Bank), as executor to the estate of Willis T. Howell, Sr. (Howell Sr.), brought action to quiet title to a parcel of real estate. Both Heritage Bank and defendant Joe Howell asserted competing claims to title based on a land trust agreement between the decedent and defendant State Bank of Hammond, Illinois (Trustee Bank). Subsequently an intervening complaint and a counterclaim were filed. Heritage Bank and Joe Howell then filed cross-motions for summary judgment. The circuit court denied plaintiff’s motion and granted summary judgment for defendant Joe Howell. Jurisdiction is asserted pursuant to Supreme Court Rule 304(a) (107 Ill. 2d R. 304(a)).

On appeal, Heritage argues that: (1) Howell Sr. acquired a vested, indefeasible right to the beneficial interest in the trust res after 20 years pursuant to language in the trust agreement stating that property which remains after 20 years will be sold and the proceeds divided among those entitled under the agreement; and (2) Howell Sr. acquired an equitable right to legal title to the subject property when the trustee failed to sell the property as required under the trust agreement within a reasonable time after the agreed on date. We affirm.

The undisputed facts are these. On February 11, 1954, Howell Sr. entered into a trust agreement with the Trustee Bank and conveyed a parcel of land as the trust res. Under terms of the trust, Howell Sr. was sole beneficiary until his death and his brother, defendant Joe Howell, was contingent beneficiary. The trust agreement provided in part:

“If any property remains in this trust twenty years from this date it shall be sold at public sale by the trustee on reasonable notice and the proceeds of the sale shall be divided among those who are entitled thereto under this trust agreement.”

The trust did not specify any other expiration or termination date or event. During the next 20 years, the land remained in the trust res and the trust terms were not amended in writing.

After the 20-year period expired in February of 1974, the Trustee Bank did not attempt to sell the land and Howell Sr. did not attempt to renew the agreement in writing, as required by the trust. Howell Sr. did continue to pay trust fees to the Trustee Bank until 1978. Howell Sr. died testate on December 17, 1984, leaving his estate to his children Betty Ann Howell and Willis T. Howell, Jr.

On June 17, 1988, the Trustee Bank conveyed legal title of the property to Joe Howell at his request. On December 21, 1988, plaintiff Heritage Bank filed its complaint to quiet title. In granting Joe Howell’s motion for summary judgment, the court held: “[T]he settlor manifested [the] intention to have this trust continue in its original terms and the conduct of everyone seems to indicate that.”

The same rules that govern the construction of wills apply to the construction of trust instruments. (First National Bank v. Canton Council of Campfire Girls, Inc. (1981), 85 Ill. 2d 507, 513, 426 N.E.2d 1198, 1201.) In construing a trust agreement, the court must ascertain the intent of the settlor. (Northern Trust Co. v. Tarre (1981), 86 Ill. 2d 441, 450, 427 N.E.2d 1217, 1221.) Furthermore:

“ ‘Such intention is determined in two ways: one by ascertaining the testator’s actual meaning from the words employed, to which all rules of construction give way, and the other by finding his presumed intention by the application of rules of construction where the meaning is obscure, doubtful, or uncertain. Resort to such rules is necessary, however, only where the actual intent cannot be ascertained. If the intention may be gathered from the language of the will without reference to rules of construction, there is no occasion to use them.’ ” Trackman v. Ringer (1988), 174 Ill. App. 3d 1093, 1098, 529 N.E.2d 647, 649, quoting Wiener v. Severson (1957), 11 Ill. 2d 347, 349, 143 N.E.2d 225.

I

Heritage claims that pursuant to the trust instrument, Howell Sr. acquired a vested, indefeasible beneficial interest in the trust premises after the expiration of 20 years because the trust provided that the property was to be sold and the proceeds distributed at that time.

If the language of a trust specifies that the trust terminates and the proceeds should be distributed by a certain date or after a certain amount of time, then the beneficiaries are entitled to the res at the time specified. (Friese v. Friese (1940), 373 Ill. 216, 219-20, 25 N.E.2d 788, 790; Yedor v. Chicago City Bank (1941), 376 Ill. 121, 129, 33 N.E.2d 220, 224-25.) If a trust does not specify a termination point but directs that the res should be sold and the proceeds distributed after a certain time and this distribution does not occur, then the beneficiaries have a right to petition the court for distribution. Breen v. Breen (1952), 411 Ill. 206, 212-13, 103 N.E.2d 625, 628-29.

Heritage Bank cites these cases along with the language of the trust and concludes that the trust expired after 20 years. Heritage further cites Wiener (11 Ill. 2d 347, 143 N.E.2d 225), and Eiche v. Illinois National Bank & Trust Co. (1980), 84 Ill. App. 3d 535, 406 N.E.2d 210, to argue that Howell Sr.’s rights as a beneficiary were indefeasibly vested.

These two cases, however, are distinguishable. In Wiener, a testator left the residue of his estate in trust to pay income to his widow and incompetent son. After the survivor died, the trust was to “be immediately terminated and the trust estate herein *** distributed” equally to another son and a daughter or their issue. (Wiener, 11 Ill. 2d at 348, 143 N.E.2d at 226.) After the death of the two beneficiaries, but before distribution of the trust res, the daughter died leaving no issue. The Wiener court held that the trust had terminated when the beneficiaries died, which was also when the purpose of the trust had been fulfilled. Therefore, the daughter took at that time under the terms of the trust even though she did not survive until the distribution of the res. To rule otherwise would mean that important property rights would depend on the delay or diligence with which distribution is made. Wiener, 11 Ill. 2d at 349-53, 143 N.E.2d at 226-28.

In Eiche a settlor established a trust to pay taxes and expenses following her death. Income accumulating between the settlor’s death and trust distribution was to be paid to John Eiche. The subsequent distribution included a gift of $10,000 to Julia Eiche or, if she died “before receiving her share,” to her five named grandchildren.

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Bluebook (online)
556 N.E.2d 747, 198 Ill. App. 3d 1092, 145 Ill. Dec. 129, 1990 Ill. App. LEXIS 703, Counsel Stack Legal Research, https://law.counselstack.com/opinion/heritage-county-bank-trust-co-v-state-bank-illappct-1990.