Heritage Pullman Bank & Trust Co. v. Carr

627 N.E.2d 160, 254 Ill. App. 3d 676
CourtAppellate Court of Illinois
DecidedSeptember 28, 1993
DocketNo. 1—91—3470
StatusPublished
Cited by4 cases

This text of 627 N.E.2d 160 (Heritage Pullman Bank & Trust Co. v. Carr) 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 Pullman Bank & Trust Co. v. Carr, 627 N.E.2d 160, 254 Ill. App. 3d 676 (Ill. Ct. App. 1993).

Opinion

JUSTICE HARTMAN

delivered the opinion of the court:

Heritage Pullman Bank & Trust Company (Trustee) filed a two-count complaint seeking a declaration of whether a simple majority or unanimity of the beneficial owners was required to authorize the sale of property in a land trust. The Trustee interpleaded as defendants the four beneficiaries, each holding a 25% beneficial interest: Evelyn Rafacz Carr, Walter Rafacz,1 the estate of Henry Rafacz, and the estate of Edward Rafacz.

After a settlement, in which the parties stipulated that only a simple majority direction was required, the Trustee petitioned for its expenses. Two beneficiaries, the estates of Edward and Henry Rafacz (collectively the Estates), cross-claimed against another beneficiary, Carr, claiming she should pay the Trustee’s expenses because she took a groundless position causing the litigation. The circuit court found in favor of the Trustee as against all the beneficiaries, and in favor of the Estates as against Carr. Carr and the estate of Walter Rafacz appeal (collectively appellants), presenting as issues for review whether the circuit court erred (1) in not holding a full evidentiary hearing on the Trustee’s petitions for expenses; (2) in finding that an actual controversy existed; (3) in awarding the Trustee its expenses in accordance with the trust agreement; (4) in finding that Carr took a groundless position; and (5) in not finding that the Estates’ attorney took groundless positions which caused the litigation. For reasons which follow, we affirm.

The relevant facts are adduced from witness testimony presented at an evidentiary hearing conducted before the circuit court over the course of several days.

According to the trust agreement as originally executed on October 3, 1957, by Andrew and Agnes Rafacz, the power of direction was placed in the beneficiaries. The trust agreement was amended on October 15, 1957, to provide expressly that the power of direction was placed in the holders of the majority of interest in the trust. On October 3, 1977, the trust agreement was extended for an additional 20 years under the same terms and conditions.

One real estate parcel in the trust consisted of 45 acres fronting on Mannheim Road and running east on 94th Avenue, in the Village of Orland Park, Illinois. This property was valued between $2 and $4 per foot; at $4 per foot, it was worth well in excess of $6 million.

For sometime prior to the settlement, attorney Norman Barry represented all the beneficiaries except Carr. Barry had been the attorney of the Rafacz family for over 30 years, having represented Andrew and Agnes Rafacz when the trust agreement was first executed in 1957. He represented all the beneficiaries when the trust was amended in 1957 and extended in 1977, and the entire Rafacz family when several real estate parcels were sold out of the trust.

On February 11, 1987, Barry wrote Eileen Trost, who was then Carr’s attorney, that a majority of the trust’s beneficiaries wished to market the remaining property held in the trust and suggested that a meeting be held. On February 20, Trost wrote back that Carr was not interested in selling any property and declined the offer to meet.

On February 26, 1987, Barry received a written proposal from Jack Weglarz and Dr. Thomas Powell to purchase the aforementioned parcel in the trust for $5.4 million. Barry wrote Mrs. Edward Rafacz, Henry Rafacz, and Walter Rafacz informing them of the proposal. These three individuals were Barry’s clients, and they collectively owned 75% of the beneficial interest in the trust. Barry testified he believed that the proposal was a “negotiating document,” Weglarz and Powell were the best two prospects to buy the property, and a deal would be put together in the near future. Weglarz and Powell told Barry they had a contract with Wal-Mart to be a tenant. Barry told his clients not to accept the proposal as it stood because he thought the sale price could be negotiated upwards.

Subsequent to Trost’s February 20 letter, Barry asked Trustee representatives Vicki Baker and Malcolm Campbell whether the Trustee would act upon a majority direction. Barry told Campbell he represented a majority of the beneficiaries and had received a proposal to sell the real estate which he thought “would come to fruition.” Baker and Campbell told Barry that the Trustee would insist upon a unanimous direction. Barry objected, claiming that the trust terms require only a majority direction.

Campbell’s opinion was based upon his interpretation of assignments of beneficial interest which he thought changed the substantive terms of the trust agreement concerning the power of direction. His opinion was never communicated to Carr or Trost. Barry told Campbell that the assignments had no effect on the power of direction and submitted affidavits in support of his position to Campbell around April 12,1987.

The week before this lawsuit was filed, Barry told Cancer, the Trustee’s general counsel, that he represented a majority of the trust beneficiaries; he had a broker to market the property; he thought a sale would occur within a short period of time; and the trust terms require the Trustee to act on a majority direction, and he expected it to so act if it received such a direction. Their conversations were confirmed in Cancer’s letter to Barry and Trost on April 24,1987.

Gancer testified that he told Barry before the lawsuit was filed that he believed only a majority direction was required. Gancer also told Barry that Carr believed a unanimous direction was needed.

Christopher Joyce, the Trustee’s vice-president in charge of the trust department, was also aware that Barry and Carr had taken opposing positions. Joyce believed a majority direction was sufficient.

Shortly before this lawsuit was filed, Trost and Carr discussed whether majority or unanimous consent was required. Carr testified she told Trost she wanted unanimous consent to be required; she had no opinion prior to that time whether unanimous consent was required; she had never paid attention to what was required under the trust agreement and had not received an opinion by Trost; she never spoke to any Trustee representative about this issue and no one ever told her unanimity was required; she believed unanimous consent was required because previous directions had been unanimous; she and Trost examined the trust files in February or March 1986, and Carr did so again subsequently; and, at that time, Trustee records (a control sheet) advised Carr unanimity was required. The control sheet Carr referred to did indicate that a unanimous direction was needed; however, Carr never alleged that the control sheet confused her until March 1988, despite the many documents she had filed in the circuit court before then.

Carr submitted an affidavit of Campbell, which corroborated her claim that she and Trost examined the trust file. Campbell further swore that neither he nor any Trustee representative commented upon the legal significance of any trust document; the control sheet is a document prepared for internal use only and has no legal significance; no Trustee representative told Carr, Trost, or anyone else that unanimity was required; and Carr had never referred to the control sheet in her conversations with Trustee representatives.

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Cite This Page — Counsel Stack

Bluebook (online)
627 N.E.2d 160, 254 Ill. App. 3d 676, Counsel Stack Legal Research, https://law.counselstack.com/opinion/heritage-pullman-bank-trust-co-v-carr-illappct-1993.