Ranger v. Ranger

Opinion

NO. 4-07-0065 Filed 3/3/08

IN THE APPELLATE COURT

OF ILLINOIS

FOURTH DISTRICT

DOLORES M. RANGER, Trustee of the ) Appeal from WILLIAM E. RANGER AND DOLORES M. RANGER ) Circuit Court of REVOCABLE LIVING TRUST AGREEMENT, ) Macoupin County Plaintiff-Appellant, ) No. 06CH56 v. ) DOLORES M. RANGER, Current Beneficiary ) of the WILLIAM E. RANGER AND DOLORES M. ) RANGER REVOCABLE LIVING TRUST AGREEMENT;) and BRENDA S. ALBRECHT, MARK R. RANGER, ) and JULIE A. RANGER, Contingent ) Remainder Beneficiaries of the ) WILLIAM E. RANGER AND DOLORES M. RANGER ) REVOCABLE LIVING TRUST AGREEMENT, ) Defendants-Appellants, ) and ) MICHAEL W. RANGER and DIANA L. ) Honorable WILLIAMSON, n/k/a DIANA L. HELVEY, ) Patrick J. Londrigan, Defendants-Appellees. ) Judge Presiding. __________________________________________________________________

JUSTICE COOK delivered the opinion of the court:

Plaintiff, Dolores M. Ranger as trustee, filed a

complaint for construction on April 4, 2006, requesting the trial

court construe various parts of the William E. Ranger and Dolores

M. Ranger Revocable Living Trust Agreement (Trust). Defendants

are Dolores, as the current beneficiary of the Trust, and her

five children, Brenda Albrecht, Michael Ranger, Diana Williamson,

Mark Ranger, and Julie Ranger as contingent remainder beneficia-

ries. Defendant Michael Ranger opposed the trustee's proposed

administration of certain Trust provisions, namely William's

special directives, which dealt specifically with the family

business, William Ranger and Sons Excavating (business). On

October 4, 2006, Michael filed a motion for summary judgment alleging the Trust clearly stated that the business goes to him

upon the death of William Ranger and requesting that judgment be

entered in his favor. The trial court granted Michael's motion.

Defendants Dolores, Brenda, Mark, and Julie (appellants) appeal.

We reverse and remand.

I. BACKGROUND

The Trust was entered into on December 21, 1994, by

William and Dolores for federal-estate-tax marital-deduction

purposes. Both were named as trustors and cotrustees. Upon the

death of William, Dolores became the sole "Surviving Trustor" (as

defined by section 4.01 of the Trust), trustee, and surviving

spouse. In her role as trustee, Dolores proposed an administra-

tion of the Trust. Michael disputed the trustee's proposed

administration, so the trustee filed a complaint for declaratory

relief.

The dispute centered on whether the business in its

entirety was to be immediately transferred to Michael or whether

William's share in the business became part of trust "B" enti-

tling the surviving trustor to the net income of William's share

of the business during her lifetime. We note that while not part

of the record, all parties agree that Michael holds 49% ownership

of the business and William's pour-over will made William's 51%

ownership of the business part of the "Trust Estate" (as defined

by section 1.01 of the Trust).

In her complaint, the trustee argued that it was the

trustors' intention to benefit the Surviving Trustor during her

- 2 - lifetime with all of the assets held in the Trust. Trustee

proposed the Trust should be interpreted as William intended to

give Michael control over the business and not sole ownership.

Under the trustee's proposal, Michael "may effectually manage and

operate the Company until his death as a life estate or the prior

sale of said Company and that the Company stay in [t]rust until

said Company is sold or Michael W. Ranger is deceased." Michael

disagreed with this position, as did his sister Diana.

Under article 1, see appendix, the Trust states that it

was "formed to hold title to real and personal property for the

benefit of the Trustors of this trust and to provide for the

orderly use and transfer of these assets upon the death of the

Trustors." The "Trust Estate" is defined as "all property,

transferred or conveyed to and received by the [t]rustee, held

pursuant to the terms of this instrument."

Under article 3, the Trust states that upon the death

of one of the trustors, the surviving trustor shall do the

following:

"collect all insurance proceeds payable to

the [t]rustee by reason of such death, and

all bequests and devises distributable to

the Trust Estate, and shall divide the en-

tire Trust Estate into three separate trusts

to be known and herein designated as sur-

vivor's trust 'A', decedent's trust 'B' and

excess property trust 'C'."

- 3 - Under the same article, the Trust states that trust A consists of

the separate property of the surviving trustor, trust B consists

of the separate property of the decedent trustor, and trust C

consists of that portion, if any, of the Trust Estate that

exceeds the total of the amounts allocated to Trusts A and B.

The Trust is to be administered in such a way as to minimize all

applicable taxes.

According to subsections 3.09, 3.10, and 3.11, upon the

death of one of the trustors, the net income of trust A, B, and

C, shall be paid to the surviving spouse.

Article 4 of the Trust begins with section 4.01 enti-

tled "Second Death." Section 4.01 states the following:

"On the death of the last [t]rustor to die

(the 'Surviving Trustor') the [t]rustee shall

distribute the principal of the 'A' [t]rust

and of the 'C' [t]rust and any accrued or un-

distributed income from the principal of the

'B' [t]rust in such a manner and to such persons,

*** as directed in this [t]rust [a]greement."

Section 4.02, entitled "Payment of the Second Death Expenses,"

also begins, "On the death of the surviving Trustor," and then

directs the trustee to pay expenses from trust A. Finally,

section 4.03, entitled "Trust Income and Principal Distribution,"

without specifically referring to the death of the surviving

trustor, directs the successor trustee to:

"apply and distribute the net income and

- 4 - principal of each of the shares of the re-

sulting Trust Estate (consisting of the 'A'

[t]rust, the 'B' [t]rust, and the 'C' [t]rust)

after giving effect to the section of this

[t]rust [a]greement entitled 'Special Directives'

to the following [b]eneficiaries in the frac-

tional or percentage shares as indicated."

Under section 4.03, William's and Dolores's beneficiaries are

their five children and each is to receive 20% of the Trust

Estate.

Section 9.02 directs the trustees to do the following:

"allocate, hold, administer[,] and distribute

the Trust assets as hereinafter provided:

a) Upon the death of the first [t]rustor,

the [t]rustee shall make any separate distribu-

tions that have been specified by the deceased

[t]rustor. The [t]rustee shall also take into

consideration the appropriate provisions of

this [a]rticle.

b) Upon the death of the surviving

spouse, the [t]rustee shall hold, adminis-

ter[,] and distribute the Trust assets in the

manner prescribed."

Section 9.03, entitled "Personal Property Distribution," states,

"Notwithstanding any provision of this [t]rust [a]greement to the

contrary, the [t]rustee must abide by any memorandum by the

- 5 - [t]rustors--particularly that contained in the section entitled

'Special Directives' incorporated into this [t]rust instrument."

William Ranger's special directives contained six

provisions. The first provision lists the recipients of his

affection as first, his spouse, Dolores, and second, his five

children. The fourth provision states, "Upon my death, my

business known as William Ranger and Sons Excavating, including

all real and personal property owned by said business, is to go

entirely to my son Michael W. Ranger." The fifth provision

states that if Michael decides not to take the business, the

business shall be sold and the proceeds divided equally among

William's children. Finally, the sixth provision states that

should Michael decide to sell the business, all proceeds of the

sale shall be divided equally among William's children.

After certain limited discovery, Michael filed a motion

for summary judgment, contending that William's special directive

required that the business be immediately transferred to him.

According to Michael, section 4.03 provides that the special

directive is to be implemented upon William's death, even if

Dolores is the surviving spouse, and the fourth directive re-

quires the business go to him outright.

The trial court granted Michael's motion, finding that

although sections 4.01 and 4.02 contain language requiring the

death of the surviving trustor before being effective, section

4.03 did not have similar language. Since section 4.03 requires

implementation of the special directives and provision four of

- 6 - the special directives provides that the entire business should

go to Michael upon William's death, the trial court granted

Michael's motion for summary judgment

Appellants filed a motion to reconsider the trial

court's ruling. The court denied the motion after a hearing.

This appeal followed.

II. ANALYSIS

Appellants argue that the trial court erred in granting

Michael's motion for summary judgment for two reasons. First,

the court unreasonably inferred from the Trust that section 4.03,

unlike the rest of article 4, did not depend upon the death of

the surviving spouse to take effect, thus immediately transfer-

ring the business to Michael. Second, contrary to Illinois law,

the court did not view section 4.03 in light of the other sec-

tions of article 4 or in light of the entire Trust, causing the

court to erroneously give effect to the special directives before

the surviving trustor died. Michael argues the court neither

misapplied Illinois law nor drew unreasonable inferences from the

Trust. Finally, plaintiff, the trustee, argues that the court

erred in granting Michael's motion because the court did not

implement the clear intent of the trustors as expressed in the

Trust and failed to correctly apply Illinois law.

Summary judgment is only appropriate when "'the plead-

ings, depositions, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any

material fact and that the moving party is entitled to a [sum-

- 7 - mary] judgment as a matter of law.' [Citation.]" Gilbert v.

Sycamore Municipal Hospital, 156 Ill. 2d 511, 517-18, 622 N.E.2d

788, 792 (1993); see also 735 ILCS 5/2-1005(c) (West 2006).

Summary judgment is to be encouraged as an expeditious method of

disposing of a lawsuit, but it is a drastic measure that should

only be allowed when the right of the moving party to judgment is

free and clear from doubt. Olson v. Etheridge, 177 Ill. 2d 396,

404, 686 N.E.2d 563, 566 (1997). We review de novo a grant of

summary judgment. Busch v. Graphic Color Corp., 169 Ill. 2d 325,

333, 662 N.E.2d 397, 402 (1996).

Whether the trial court erred in granting Michael's

motion turns on interpretation of section 4.03 of the Trust. We

hold that the court erred in its interpretation.

Section 4.03 clearly does not apply until the death of

the last trustor. Under the trial court's interpretation,

reading section 4.03 alone, the trustee must immediately apply

and distribute the net income and principal of each of the shares

of the resulting Trust Estate, which includes the survivor's

trust A, the decedent's trust B, and the excess property trust C,

after giving effect to the "Special Directives" section. The

fourth section in "Special Directives" gives Michael the business

upon William's death. The court ruled that section 4.03 requires

plaintiff trustee to immediately give effect to the special

directives at William's death.

We first note that reading section 4.03 to take effect

immediately upon William's death would not only require the

- 8 - trustee to give effect to William's special directives but would

also require that the trustee distribute the net income and

principal of each trust, including trust A, the trust consisting

of the separate property of the surviving spouse. Dolores, as

trustee, would then have to give away everything while she was

still living, leaving her with no means of support. This is

clearly contrary to the trustors' intent and the purpose of the

Trust. The article which should be applied, article 3, "Provi-

sions After the First Death," does not contain a similar provi-

sion to article 4 directing distribution after giving effect to

the special directives.

The parties assert that the Trust is unambiguous.

Appellants and the trustee argue that each provision must be

considered in light of the Trust as a whole, while Michael argues

that the plain language of section 4.03 directs the trustee to

immediately give effect to the special directive that he gets the

business upon William's death.

The central purpose in construing a trust is determin-

ing the trustors' intent from the trust as a whole and effectuat-

ing that intent if not contrary to public policy. Harris Trust &

Savings Bank v. Donovan, 145 Ill. 2d 166, 172, 582 N.E.2d 120,

123 (1991). "[C]ourts must apply the same rules of construction"

when construing trusts "as apply to wills and other contracts."

Stein v. Scott, 252 Ill. App. 3d 611, 614, 625 N.E.2d 713, 716

(1993). When determining the meaning of a provision in a will,

the court looks to the true intention of the testator by compar-

- 9 - ing the different provisions and parts and reading them in light

of each other to deduce from each of the separate parts a harmo-

nious whole. Morrison v. Tyler, 266 Ill. 308, 318-19, 107 N.E.

602, 605 (1914). When the court determines the intent of parties

entering into contracts, the intent "should not be gathered from

any clause or provisions standing by itself, but each provision

should be viewed in the light of all the other parts." Bankier

v. First Federal Savings & Loan Ass'n of Champaign, 225 Ill. App.

3d 864, 869, 588 N.E.2d 391, 394 (1992).

In this case, the trustors' intent is apparent from a

reading of the Trust as a whole. Section 1.01 provides that the

purpose of the Trust is "to hold title to real and personal

property for the benefit of the [t]rustors of this [t]rust." The

Trustors clearly intended that they receive the benefit of the

Trust Estate while they were alive, as section 2.01 provides for

payment, at least annually, of the net income from the Trust

Estate to or for the benefit of husband and wife. Finally, a

notarized summary of the Trust signed by both trustors explicitly

provides for the surviving spouse to receive life income from

trusts A, B, and C, indicating the trustors intended the Trust to

benefit the surviving spouse until death.

Upon the death of one of the trustors, article 3

requires that all insurance proceeds payable to the surviving

spouse, all bequests, and all devises distributable to the Trust

Estate be divided into three trusts: trusts A (surviving

spouse's property), B (decedent's property), and C (excess

- 10 - property). Article 3 further requires that the surviving trustor

shall receive all the net income from each of trust A, B, and C.

Article 3 establishes that the trustors intended that when one of

them died, the survivor was to continue to receive the income

from the Trust Estate.

Sections 4.01 and 4.02 expressly state how to adminis-

ter the Trust upon the death of the surviving trustor. Section

4.01 requires that upon the death of the surviving trustor, the

trustee must distribute anything left in trusts A, B, and C "as

directed in this [t]rust [a]greement." Section 4.03 then directs

the trustee how to apply and distribute the net income and

principal of each of the shares of the "resulting Trust Estate."

Clearly, section 4.03 is meant to apply when the surviving

trustor dies, as the sections in article 3 already direct the

trustee how to distribute the Trust when the first trustor dies.

Further, neither William nor Dolores is named as a beneficiary in

section 4.03. Naming only the children demonstrates that William

and Dolores intended that they both be deceased when this section

becomes operative. Any other interpretation results in a finding

that they intended the surviving spouse be left without support.

The omission from section 4.03 of the phrase "[o]n the death of

the surviving [t]rustor," contained in the other sections of

article 4, is not enough to establish that the trustors intended

the distribution occur upon the death of only one of the trustors

as this would be contrary to the stated purpose of the Trust, the

distribution provided in article 3, and the rest of article 4,

- 11 - which deals with the deaths of both trustors.

It could be argued that the special directives were

meant to control in any event and supersede all other provisions

of the Trust. The general provisions listed in article 9,

section 9.02, direct that upon the death of the first trustor,

the trustee shall make any separate distributions that have been

specified by the deceased trustor. Article 9, section 9.03,

directs that "[n]otwithstanding any provision of this [t]rust

[a]greement to the contrary, the [t]rustee must abide by any

memorandum by the [t]rustors--particularly that contained in the

section entitled 'Special Directives' incorporated into this

[t]rust instrument." Section 9.03 is entitled "Personal Property

Distribution," and lists such items as furniture, pictures, and

jewelry. Section 9.03 appears to be concerned with sentimental

items and not major assets such as the business.

The business, however, is the primary focus of the

special directives signed by the trustors. No items of furni-

ture, pictures, or jewelry are listed in the special directives.

The remaining provisions of the special directives identify the

"recipients of my affection," direct that taxes be paid out of

residue, and what happens if beneficiaries predecease. Similar

provisions already appear in the Trust. Both William and Dolores

signed a special directives provision, but only William's provi-

sion mentioned the business. William's fourth special directive

stated that "[u]pon my death" the business "is to go entirely to

my son Michael." It is interesting, however, that the gift of

- 12 - the "entire" business to Michael in the special directives,

whenever it takes effect, is not unrestricted. If Michael

"decides not to take the business," the proceeds are to be

divided equally among the children. Should Michael "decide to

sell the business" the proceeds are again to be divided equally

among the children. Would Michael ever have the right to sell

the business and retain the proceeds himself? Whatever the

result might be after the death of both trustors, it does not

appear that he would have that right while one of the trustors

was living. We conclude that section 9.03's provision for

distribution of personal property does not apply to the business

and that the business is to be distributed under section 4.03.

As section 4.03 does not take effect until the death of

the surviving trustor, the special directives likewise do not

take effect until the death of the surviving trustor. Summary

judgment for Michael was therefore inappropriate as the fourth

directive would not take effect until Dolores's death.

III. CONCLUSION

For the reasons stated, we reverse the trial court's

judgment and remand for proceedings to construe the Trust consis-

tently with this order.

Reversed and remanded.

MYERSCOUGH and KNECHT, JJ., concur.

- 13 -

THE WILLIAM RANGER and DOLORES M. RANGER

REVOCABLE LIVING TRUST AGREEMENT

Dated: December 21, 1994

* * *

ARTICLE ONE

Section 1.01 Trust Estate Defined

This Revocable Trust is formed to hold title to real

and personal property for the benefit of the Trustors of this

trust and to provide for the orderly use and transfer of these

assets upon the death of the Trustors. The "Trust Estate" is

defined as all property, transferred or conveyed to and received

by the Trustee, held pursuant to the terms of his instrument.

The Trustee is required to hold, administer, and distribute this

property as provided in this Trust Agreement.

* * *

ARTICLE THREE

Section 3.01 Provisions After the First Death

On the death of either Trustor leaving the other Trustor

surviving him or her, the Trustee shall collect all insurance

proceeds payable to the Trustee by reason of such death, and all

bequests and devises distributable to the Trust Estate, and shall

divide the entire Trust Estate into three separate trusts to be

known and herein designated as survivor's trust "A", decedent's

trust "B" and excess property trust "C".

- 14 - * * *

ARTICLE FOUR

Section 4.01 Second Death

On the death of the last Trustor to die (the "Surviving

Trustor"), the Trustee shall distribute the principal of the "A"

Trust and of the "C" Trust and any accrued or undistributed

income from the principal of the "B" Trust in such a manner and

to such persons, including the estate or the creditors, as

directed in this Trust Agreement.

Section 4.02 Payment of the Second Death Expenses

On the death of the surviving Trustor, the Trustee shall pay

from Trust "A" the expenses of the surviving Trustor's last

illness, funeral, burial and any inheritance, estate or death

taxes that may be due by reason of the surviving Trustor's death,

unless the Trustee in his or her absolute discretion determines

that other adequate provisions have been made for the payment of

such expenses and taxes.

Section 4.03 Trust Income and Principal Distribution

a) The Trustee shall apply and distribute the net income and

principal of each of the shares of the resulting Trust Estate

(consisting of the "A" Trust, the "B" Trust, and the "C" Trust)

after giving effect to the section of this Trust Agreement

entitled "Special Directives" to the following Beneficiaries in

the fractional or percentage shares as indicated:

WILLIAM E. RANGER's beneficiaries:

BRENDA S. ALBRECHT 20%

- 15 - MICHAEL W. RANGER 20%

DIANA L. WILLIAMSON 20%

MARK R. RANGER 20%

JULIE A. RANGER 20%

DOLORES M. RANGER's beneficiaries:

BRENDA S. ALBRECHT 20%

MICHAEL W. RANGER 20%

DIANA L. WILLIAMSON 20%

MARK R. RANGER 20%

JULIE A. RANGER 20%

* * *

ARTICLE NINE

Section 9.01 Trustees

All Trustees are to serve without bond. The following

will act as Trustees of any Trusts created by this Trust Agree-

ment, including the "A" Trust, the "B" Trust and the "C" Trust,

in the following order of succession:

First: The undersigned, WILLIAM E. RANGER and/or DOLORES M.

RANGER

Second: The surviving spouse.

Third: At the death of the surviving spouse, BRENDA S. ALBRECHT

and DIANA L. WILLIAMSON designated as First Successor

Trustees to serve jointly.

Fourth: A Trustee chosen by those Beneficiaries entitled to

receive the majority of the income of the Trust, with a

parent or legal guardian voting for minor Beneficiaries;

- 16 - provided, however, that the children of any deceased

Beneficiary shall collectively have only one vote.

Section 9.02 Allocation and Distribution of the Trust Assets

The Trustee shall allocate, hold, administer and

distribute the Trust assets as hereinafter provided:

a) Upon the death of the first Trustor, the Trustee

shall make any separate distributions that have been specified by

the deceased Trustor. The Trustee shall also take into consider-

ation the appropriate provisions of this Article.

b) Upon the death of the surviving spouse, the Trustee

shall hold, administer and distribute the Trust assets in the

manner prescribed.

Section 9.03 Personal Property Distribution

Notwithstanding any provision of this Trust Agreement

to the contrary, the Trustee must abide by any memorandum by the

Trustor -- particularly that contained in the section entitled

"Special Directives" incorporated into this Trust instrument --

directing the disposition of Trust assets of every kind including

but not limited to furniture, appliances, furnishings, pictures,

china, silverware, glass, books, jewelry, wearing apparel, and

all policies of fire, burglary, property damage, and other

insurance on or in connection with the use of this property.

Otherwise, any personal and household effects of the trustors

shall be distributed with the remaining assets of the Trust

Estate.

* * *

- 17 - SPECIAL DIRECTIVES

WILLIAM E. RANGER

I, WILLIAM E. RANGER, a resident of the County of MACOUPIN,

State of ILLINOIS, being of lawful age, and of sound and dispos-

ing mind and memory, and not acting under duress, fraud, or undue

influence, hereby make, publish an declare this to be my Special

Directive, and I incorporate this into THE WILLIAM E RANGER and

DOLORES M. RANGER REVOCABLE LIVING TRUST AGREEMENT.

FIRST

The recipients of my affection are:

1) My spouse - DOLORES M. RANGER

2) My children - BRENDA S. ALBRECHT

MICHAEL W. RANGER

DIANA L. WILLIAMSON

MARK R. RANGER

JULIE A. RANGER

SECOND

I direct that all estate and inheritance taxes payable

as a result of my death, not limited to taxes assessed on prop-

erty, shall be paid out of the residue of my Estate, and shall

not be deducted or collected from any Legatee, Devise or Benefi-

ciary hereunder.

THIRD

In the event any of my named Beneficiaries should

predecease me, all of that person's share of the Trust Estate is

- 18 - to be left to be equally divided among that person's lineal

children. If any of the named beneficiaries does not have any

children, all of that person's share of the Trust Estate is to be

equally divided among that person's lineal descendants per

stirpes and by right of representation.

FOURTH

Upon my death, my business known as WILLIAM RANGER AND

SONS EXCAVATING, including all real and personal property owned

by said business, is to go entirely to my son MICHAEL W. RANGER.

FIFTH

Should my son MICHAEL W. RANGER decide not to take the

business, the business shall be sold and the proceeds divided

equally among my daughters, BRENDA S. ALBRECHT, DIANA L. WILLIAM-

SON, AND JULIE A. RANGER; and my sons MICHAEL W. RANGER AND MARK

R. RANGER.

SIXTH

Should my son MICHAEL W. RANGER decide to sell the

business, all proceeds of the sale shall be divided equally among

my daughters, BRENDA S. ALBRECHT, DIANA L. WILLIAMSON, AND JULIE

A. RANGER; and my sons MICHAEL W. RANGER AND MARK R. RANGER.

- 19 -