Templeton v. Continental Illinois National Bank & Trust Co.

429 F. Supp. 1294, 1977 U.S. Dist. LEXIS 16588
CourtDistrict Court, N.D. Illinois
DecidedMarch 31, 1977
DocketNo. 73 C 2960
StatusPublished
Cited by6 cases

This text of 429 F. Supp. 1294 (Templeton v. Continental Illinois National Bank & Trust Co.) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Templeton v. Continental Illinois National Bank & Trust Co., 429 F. Supp. 1294, 1977 U.S. Dist. LEXIS 16588 (N.D. Ill. 1977).

Opinion

MEMORANDUM

LEIGHTON, District Judge.

This is a diversity suit by Frank H. Templeton, Jr., a Wisconsin citizen, one of two beneficiaries of an inter vivos trust, who claims that the defendant Continental Illinois National Bank & Trust Company of Chicago, an Illinois corporate trustee, has breached a contract and seeks to collect a larger termination fee than it was entitled to receive; that it has charged for extraordinary services not performed; that it has wrongfully withheld trust funds in order to pay itself the attorney fees and costs of this litigation; and that plaintiff is entitled to recover his attorney fees and costs from the corporate trustee, personally.1 The case has been heard without a jury; and from the evidence received, the court finds that the following are the facts.

I.

On January 31, 1935, P. C. Butcher, assistant secretary of the Continental Illinois National Bank & Trust Company of Chicago wrote a letter addressed to Mrs. Theodore Harahan Templeton in which he said:

Dear Mrs. Templeton:
We enclose a revised copy of the trust agreement, which has been prepared for you, and which includes the changes agreed upon at the recent meeting with Mr. W. J. Harahan at the bank.
[1297]*1297We also enclose a copy of the Fee Schedule which sets forth the fees that are being charged by our bank for its services as Trustee at the present time. Our fee at present is one-half of one percent upon the first $50,000. of principal of the trust, taken at market value, and one-fourth of one percent of the principal in excess of $50,000.
As we have told you, we are charging no acceptance fee at the establishment of the trust. There is a distribution or revocation fee which is collected at the time the trust is terminated, or the principal thereof is distributed to the beneficiaries. This fee depends upon the number of years that the trust has run. If the distribution is made within five years from the time the trust is set up, the fee is one percent, and if the distribution is made between five and ten years it is three-quarters of one percent; between ten and fifteen years one-half of one percent, and over fifteen years it is one-quarter of one percent of the principal. All of these you will find set forth in the pamphlet enclosed.

Four days later, Mrs. Templeton executed a trust agreement that made Continental Bank the corporate trustee and named her the life income beneficiary with power to invade the principal; or, if she desired, to amend, modify or terminate the agreement. The trust estate consisted of stocks, bonds, United States treasury notes, mortgages, real estate, and cash. By the terms of the agreement, the trustees were to invest, reinvest, and manage the trust estate under powers usually granted in connection with trust property. The settlor provided that her trustees were to be paid a reasonable compensation for their service.

The trust remained in force until June 29, 1972 when the settlor executed an amendment and restatement which, in substance, retained the terms of the original agreement. She provided that on her death the trustees were to pay her debts, funeral expenses, taxes, administration expenses of her testamentary estate, and the bequests under her will. The plaintiff and his sister Ann Templeton, were the remaindermen beneficiaries. Article II of the amendment provided that the corporate trustee consult plaintiff and his sister “* * * before making any sales of assets after my death and before making any distributions to the Executor, since it is my desire that my children be able to select from my trust and my estate assets which will eventually comprise their shares of the assets which they will receive from me.” With regard to compensation, the amendment stated that “[t]he Trustees shall be entitled to a reasonable compensation out of the trust for services and shall be reimbursed out of the trust for all expenses incurred in its management and conservation.”

The settlor died on January 20, 1973. And during the 38 years of the trust’s existence under two agreements Continental Bank was paid fees for its services in accordance with existing fee schedules which, from time to time as the costs of doing business increased, were reviewed and revised upward. This occurred in 1944, 1958, 1968 and 1970. Pamphlets issued at various times contained language that told customers the current fees were “ * * * for the usual services required to manage a trust and are subject to adjustment in the event of increased costs, or if new laws, changing practices, or unusual services add to the work and responsibility of the trustee.” Continental Bank billed the settlor for its fees; they were paid, and on one occasion, a small charge for termination was made, not according to the schedule referred to in the letter of January 31, 1935, but in accordance with the schedule then in force. It, too, was paid by the settlor.

A short time after Continental Bank learned of the settlor’s death, there was a meeting with a trust officer and the remaindermen beneficiaries. Instructions were issued telling responsible officers of the corporate trustee to begin accumulating information necessary for distribution of the trust estate. Not long afterwards, plaintiff and his sister raised questions concerning the status of a lawyer who had represented their mother before her death, [1298]*1298expressing the view that they did not want him to represent the trust and testamentary estates. These questions led to a series of letters, conferences and communications between the corporate trustee and the plaintiff, resulting in the resignation of the lawyer in question. Thereafter, plaintiff objected to the lawyer’s bill for fees and reimbursement of expenses. This resulted in an exchange of memoranda, writing of letters, meetings attended by representatives of the corporate trustee, after which it was concluded that the lawyer’s bill was proper and had to be paid.

Later, discussions ensued between the responsible trust officer and the beneficiaries concerning sale of certain trust assets to provide monies for taxes which had to be paid before the trust could be distributed. These discussions disclosed there were differences between plaintiff and his sister about details of the trust’s administration. They and the corporate trustee were co-executors of their mother’s will. By law, the testamentary estate could not be closed before September 16, 1973 because the claim period extended to that day. The alternate tax evaluation date was July 20, 1973; the state inheritance tax return was filed on November 20, 1973. And when it was completed by the corporate trustee, the federal estate tax return showed that on the settlor’s death, her estate had a gross value of $846,087.29, taxable in the sum of $744,-514.96.

In the meantime, by letter, conferences in the offices of the corporate trustee, and in telephone conversations with the beneficiaries, steps were being taken to complete a plan for distribution of the trust estate. At the same time, a disagreement developed between plaintiff and his sister concerning the sale of certain shares of stock she characterized as her half of the trust corpus. Then early in June 1973, plaintiff called the responsible officer who told him that when the trust was distributed, the corporate trustee was going to charge a termination fee and a fee for extraordinary services.

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Templeton v. CONTINENTAL ILL. NAT. BANK & TR. CO.
429 F. Supp. 1294 (N.D. Illinois, 1977)

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Bluebook (online)
429 F. Supp. 1294, 1977 U.S. Dist. LEXIS 16588, Counsel Stack Legal Research, https://law.counselstack.com/opinion/templeton-v-continental-illinois-national-bank-trust-co-ilnd-1977.