Tesdal v. Tesdal

2021 IL App (3d) 190036-U

• Court: Appellate Court of Illinois
• Decided: August 19, 2021
• Docket: 3-19-0036
• Status: Unpublished

Opinion

NOTICE: This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(e)(1).

2021 IL App (3d) 190036-U

Order filed August 19, 2021 ____________________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

THIRD DISTRICT

TIMOTHY W. TESDAL, TRACY R. ) BRANDT, DOUGLAS L. BRANT, ) Appeal from the Circuit Court TODD D. TESDAL, TINA V. SOBOTTA, ) of the Thirteenth Judicial Circuit, RICHARD SOBOTTA, ) Grundy County, Illinois. ) Plaintiffs-Appellants, ) ) v. ) ) THOMAS T. TESDAL, CHERYL TESDAL, ) TERRY M. AMERMAN, individually, ) Appeal No. 3-19-0036 TERRY M. AMERMAN, as Successor Trustee ) Circuit No. 2013-CH-235 of the Margaret H. Tesdal Trust, ) ) Defendants-Appellees, ) ) and the FIRST MIWEST BANK, as Trustee ) The Honorable Under TRUST NO. 652, ) Robert C. Marsaglia, ) Judge, presiding. Additional Defendant. ) ) ____________________________________________________________________________

PRESIDING JUSTICE McDADE delivered the judgment of the court. Justice LYTTON and Justice HOLDRIDGE concurred in the judgment. ____________________________________________________________________________

ORDER ¶1 Held: The trial court did not err in granting Defendants’ motion for summary judgment because there was no genuine issue of material fact as to whether the successor trustee exceeded her authority in signing the assignment of interest to her co- defendant brother.

¶2 Tina Sobotta brought this declaratory judgment action, on behalf of herself and her

younger siblings (“Plaintiffs”), to enjoin her brother Tom Tesdal and sister Terry Amerman

(“Defendants”) from enforcing an assignment of property. The property at issue is 20-percent

beneficial interest in a land trust formerly held in their parents’ name and allegedly promised to

Tom and his wife Cheryl as part of a structured payment agreement with his parents. After the

parents’ death, Terry, acting as successor trustee to her parents, assigned the interest to Tom.

Plaintiffs filed suit claiming that the assignment was an invalid exercise of the trustee’s power.

The trial court granted summary judgment on behalf of defendants. For the following reasons,

we affirm the court’s decision.

¶3 BACKGROUND

¶4 In 1983, Wayne K. and Margaret H. Tesdal (“Tesdal Parents” or “parents”), with the aid

of their three eldest children—Tom Tesdal, Terry Amerman, and Tina Sobotta—purchased the

property known as the “Nettle Creek Farm.” The purchase price of approximately $570,000 was

financed with a note and mortgage from the First National Bank of Morris. The farm was held in

an Illinois Land Trust, Trust #652. The Tesdal Parents held 60-percent beneficial interest in the

property. Terry Amerman and Tina Sobotta each assumed a 20-percent beneficial interest. The

Tesdal Parents and their daughters were responsible for a pro rata share of the mortgage and

related interests and taxes equal to their interest. Accordingly, Terry Amerman and Tina Sobotta,

each with their respective spouses, would pay 20 percent of all related costs, and the Tesdal

Parents would pay 60 percent.

2 ¶5 Tom Tesdal was unable to sign the note because he was an officer of the financing bank.

Instead, he and Cheryl executed a written agreement with the Tesdal Parents in March 1983.

They agreed that Tom and Cheryl would make a lump sum payment of $114,000, plus interest,

and a 20-percent share of the total real estate taxes. In consideration, the Tesdal Parents agreed to

assign a 20-percent beneficial interest in Trust #652 to Tom and Cheryl to be drawn from the 60

percent retained by the Tesdal Parents. The parents would continue to pay the mortgage as

previously discussed, but under the 1983 agreement, Tom and Cheryl would reimburse them

annually for said costs. The parties continued to make payments on the note under the 1983

agreement until 2008 when both Tesdal Parents died.

¶6 James Hearns acted as the Tesdal family accountant during the 25 years following the

purchase. He first met with them in 1983 to discuss Trust #652 and how to report the farm

income. He submitted an affidavit, stating that all the relevant parties “knew and understood that

Tom and Cheryl Tesdal owned 20 [percent] of the farm.” In 1984, he prepared a partnership

return which showed that Tom and Cheryl had 20-percent beneficial interest in the farm. He also

stated that he met “simultaneously” with the three siblings, their respective spouses, and the

Tesdal Parents “to prepare all their tax returns” from 1986 until the parents passed away in 2008.

He relied on the yearly farm report which showed that each sibling owned 20-percent beneficial

interest jointly with his or her spouse. Finally, he stated that Tina Sobotta was aware of the

transactions between her parents and Tom and that she “in fact participated in [said] transactions

since 1983.”

¶7 In 2005, Tom, his sister Tina Sobotta and their respective spouses increased the loan on

the property by $116,000. That sum was shared equally between the two separate couples for

their respective children’s educational expenses. The Tesdal Parents and Terry Amerman had no

3 responsibility for any portion of the additional payments. Also in 2005, the Tesdal Parents’ 60

percent was transferred into the Margaret H. Tesdal Trust. Margaret Tesdal was the sole trustee

of this trust. The trust directed distribution to Margaret’s six children equally per stipes.

¶8 Wayne died on January 24, 2008, and Margaret hired John Rooks to represent her in the

administration of Wayne’s estate. Rooks testified that he was aware of the purchase of Nettle

Creek Farm, the loan with First National Bank of Morris and Trust #652. Margaret informed him

that she owned 40-percent beneficial interest of Trust #652 and that she held 20-percent as

“nominee” for Tom and Cheryl. He understood the agreement between the Tesdal Parents and

their son as placing Tom and Cheryl’s 20-percent beneficial interest in an escrow account held

by the Hynds Law Firm.

¶9 Rooks became aware of the Margaret H. Tesdal Trust in January 2008. This trust was

executed on May 27, 2005, and named Terry Amerman as successor trustee in case of, among

other things, Margaret’s death. Article V of the trust stated that “the trustee shall have the powers

enumerated in the Illinois Trust and Trustees Act.” Rooks testified that Margaret told him that 20

percent of the beneficial interest in Trust #652 and held in her trust was owned by Tom and

Cheryl. He noted that the Margaret H. Tesdal Trust required that an assignment be “lodged” with

the trustee to perfect a transfer of interest, but that had not been done as of January 2008. At

Margaret’s request, Rooks prepared an assignment transferring the 20-percent beneficial interest

in Trust #652, held in the Margaret H. Tesdal Trust, to Tom and Cheryl on August 2, 2008.

Margaret became ill that same month and died on November 3, 2008, having never signed the

document and having had no further contact with Rooks.

¶ 10 Rooks spoke to Tom about the assignment prior to August 5, 2008, and mailed him the

prepared document on August 5, 2008. In December 2008, Rooks met with Terry Amerman who

4 had become the administrator of her mother’s estate. He met with her again at a second meeting

where Tom was present to discuss the farm’s operation; at that meeting, Amerman signed the

assignment to Tom and Cheryl. This transfer was never discussed with the other siblings. Rooks

said that Margaret clearly considered Tom and Cheryl to be silent partners in the farm. Margaret

considered herself a place holder for Tom and Cheryl because they could not be on the record

with the bank. There are no other documents to indicate this relationship.

¶ 11 Terry Amerman stated that the Tesdal family received a yearly “recap sheet” from

Hearns regarding the farm’s accounting. Her parents and brother Tom had always indicated to

her that he had a 20-percent beneficial interest in the farm. Amerman stated that the interest was

communicated to her siblings in December 2008. On December 17, 2008, she executed the

assignment prepared by Rooks. Rooks stated that he believed the assignment to be a ministerial

act which Amerman had to perform. He also noted that Tom and Cheryl had taken out a bank

loan which released Margaret Tesdal from their 20-percent share of the debt on the farm. He

explained that this was done in exchange for the assignment.

¶ 12 Sobotta stated that she always thought that Tom had a 20-percent beneficial interest in the

farm. She noted that it was common knowledge. But she was never asked if she agreed that Tom

and Cheryl were entitled to that interest. She acknowledged that her parents did not keep her

involved in their financial affairs. However, the escrow agreement between her parents and Tom

was listed in the inventory of Wayne Tesdal’s lockbox. Sobotta attended a family meeting at

First Midwest Bank in January 2009 and another meeting at Rooks’ office in July 2009. She also

received many emails from Amerman. However, no one told her that Tom Tesdal was entitled to

a 20-percent interest at any meeting.

5 ¶ 13 Tom confirmed that he did not sign the original note because of his position as an officer

of the bank. He explained that the Tesdal family was able to obtain a preferred interest rate

which he was not able to receive. He instead executed the written escrow agreement with his

parents. The agreement required that he pay $114,000 by March 15, 1984, but he failed to meet

this deadline. Instead, the agreement was verbally modified by his parents. Tom explained that

he met his obligations under the new agreement by paying 20-percent of the amounts due on the

bank note each year. He believed that his obligations were completed when he signed a note in

which he undertook debt that satisfied his mother’s obligation on the farm. Tom stated that he

did not coerce or convince Terry Amerman to sign the assignment.

¶ 14 After discovering the assignment of interest, plaintiffs initiated this action in December

2013. They requested that the 20-percent removed be redistributed equally among all the

children of the Tesdal Parents. They argued that Tom’s failure to meet the original deadline in

the 1983 escrow agreement was a forfeiture of his interests.

¶ 15 Defendants filed a motion for summary judgment, which the trial court granted. The

court concluded: (1) that the matter was complicated by the Tesdal Parents’ failure to modify the

1983 agreement, (2) that the parents never took any action to enforce the agreement, and (3) that

the agreement demonstrated the parents’ continuing intention that Tom and Cheryl become

owners of a 20-percent interest in the farm. The court then found that the 20-percent assignment

gave Tom and Cheryl “exactly what they paid for and in the exact same manner as did” Terry

Amerman and Tina Sobotta. The court ruled that “Terry Amerman’s actions as successor trustee

in transferring the interest were made reasonably upon reliance on affidavit, certificate, letter, or

other evidence reasonably believed to genuine and on the basis of such evidence the transfer was

made in good faith.” Therefore, the court held that “there [was] no genuine issue of material fact

6 that Thomas and Cheryl Tesdal were owed that 20-percent interest held by Thomas’s mother at

the time of her death.”

¶ 16 Plaintiffs now appeal the trial court’s order.

¶ 17 ANALYSIS

¶ 18 Summary judgment is appropriate only “if the pleadings, 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 judgment as a matter of law.” 735 ILCS 5/2-1005(c)

(West 2019). The case must hinge on a question of law, and the moving party’s right to summary

judgment must be “clear and free from doubt.” In re Estate of Hoover, 155 Ill. 2d 402, 410-11

(1993). The record is construed strictly against the movant and liberally for the nonmovant, and

the trial court’s ruling is reviewed de novo. Jackiewicz v. Village of Bolingbrook, 2020 IL App

(3d) 180346, ¶ 23.

¶ 19 Like the trial court before us, we are tasked with deciding whether Terry Amerman

exceeded her authority as the successor trustee in transferring the 20-percent interest to Tom and

Cheryl. We hold that there is no genuine issue of material fact that Terry did not exceed her

authority under the Illinois Trust and Trustees Act in effect at the time she became Trustee of the

Margaret H. Tesdal Trust. Article V of the trust expressly grants the trustee “the powers

enumerated in the Illinois Trust and Trustees Act.” Under the Act, a trustee is authorized to “rely

upon an affidavit, certificate, letter, or other evidence reasonably believed to be genuine and on

the basis of any such evidence to make any payment or distribution in good faith without

liability.” 760 ILCS 5/4.17, repealed, 2019 P.A. 101-48, § 1505 (eff. Jan. 1, 2020). In addition, a

trustee is empowered to “compromise, contest, prosecute or abandon claims or other charges in

7 favor of or against the trust estate.” 760 ILCS 5/4.11, repealed, 2019 P.A. 101-48, § 1505 (eff.

Jan. 1, 2020).

¶ 20 The undisputed evidence in this case showed that when the Tesdal Parents purchased the

farm in 1983, there was an agreement that the three siblings would have equal interests in the

farm and share equal obligation for the mortgage and bank note. First, because of Tom’s inability

to participate in the loan, an enabling agreement between the parents and Tom was memorialized

and signed in March 1983, granting them a 20-percent interest in exchange for Tom and Cheryl

assuming a 20-percent payment obligation to the Tesdal Parents. Second, the lead plaintiff—Tina

Sobotta— noted that Tom’s 20-percent interest in the farm was common knowledge. Her

parents’ accountant, James Hearns, confirmed this common knowledge and stated that all the

relevant parties “each knew and understood that Tom and Cheryl Tesdal owned 20 [percent] of

the farm. Finally, all parties—including Tom and Cheryl—made payments on the note under the

1983 agreed schedule until 2008. The only recorded deviation from the agreed schedule occurred

after Tom and Tina agreed to increase the loan on the property by $116,000.

¶ 21 Plaintiffs do not dispute that the 1983 agreement was executed or that the parties acted as

if it was binding on them. Instead, plaintiffs argue that the agreement was void and

unenforceable because it violated federal banking laws. We need not address this issue, however,

because Tom entered into the agreement with his parents, in his individual capacity and not as a

bank official. The 1983 agreement is a contract between private parties and involved no financial

institution. In fact, Tom testified that he and Cheryl executed the agreement because he could not

sign the bank note and incur the mortgage, because his direct participation in the financing would

have affected his family’s ability to obtain preferred interest rates. Thus, whereas his sisters and

parents were parties to the mortgage and bank note, Tom and Cheryl’s 20-percent beneficial

8 interest was derived from his parents’ initial 60-percent beneficial interest in exchange for his

promise to assume commensurate payment obligations on the purchase price.

¶ 22 Plaintiffs next argue that Tom and Cheryl forfeited their interest by failing to pay off the

initial lump sum by March 15, 1984. They contend that the 1984 oral agreement to modify the

initial 1983 agreement—if ever executed—is unenforceable because it was not memorialized and

is unsupported by evidence. Generally, whether a written agreement was modified by a

subsequent oral agreement “is a question of fact to be determined by the fact finder.” Janda v.

U.S. Cellular Corp., 2011 IL App (1st) 103552, ¶ 62. “‘However, if after consideration of the

extrinsic evidence, the court determines that reasonable men could reach only one conclusion,

the issue can be decided by the court as a matter of law.’” Id. (quoting E.A. Cox Co. v. Rd.

Savers Int’l Corp., 271 Ill. App. 3d 144, 152 (1995)). We find that the evidence presented

supports only one reasonable conclusion: the parties bound or affected by the 1983 agreement

continued to act as if the agreement had been properly extended by the 1984 modification.

¶ 23 First, the parties operated the farm and maintained payments of the mortgage in accord

with the original agreement. Hearns, the family accountant testified that he relied on the yearly

farm report to “simultaneously” prepare taxing reports showing Tom and Cheryl’s 20-percent

pro rata payments on the tax. The Tesdal Parents received reimbursement for 20 percent of all

expenses paid on their nominal 60-percent obligation from Tom, which he and Cheryl reported

as expenses on their tax returns. This arrangement lasted until the Tesdal Parents passed away in

2008. Hearns also averred that all the parties, including Tina Sobotta, were privy to and

participants in this arrangement. All relevant parties were aware of the agreed payment

arrangement and that payments between 1983 and 2008 were being made as previously agreed

upon. In 2005, Tina Sobotta agreed with Tom to increase the mortgage on the farm and jointly

9 took on the payment obligation of this increase with him. Her decision supports the inference

that she believed that Tom maintained an ownership interest in the property long after the initial

deadline had passed.

¶ 24 Second, the Tesdal Parents continued to hold themselves bound by 1983 agreement. In

fact, Tina Sobotta testified that Wayne Tesdal kept the agreement in his lockbox until his death

almost 24 years after the initial deadline. Margaret Tesdal told Rooks that 20 percent of the

beneficial interest in Trust #652 and held in her trust was owned by Tom and Cheryl. And third,

Margaret directed Rooks to prepare an assignment document perfecting the transfer of beneficial

interest. Rooks believed this document was required so that the assignment could be “lodged”

with the trustee. Rooks prepared the document, but Margaret Tesdal fell ill and died before

signing it. Despite this setback, Rooks believed that Terry Amerman’s role in assigning the

interest to Tom was “ministerial.”

¶ 25 CONCLUSION

¶ 26 The judgment of the circuit court of Grundy County is affirmed.

¶ 27 Affirmed.