Cowdery v. Northern Trust Co.

• Decision Date: 08 February 1944
• Docket Number: Gen. Nos. 42757,42758.
• Parties: COWDERY v. NORTHERN TRUST CO. ET AL.
• Court: United States Appellate Court of Illinois

321 Ill.App. 243

53 N.E.2d 43

COWDERY

v.NORTHERN TRUST CO. ET AL.

Gen. Nos. 42757, 42758.

Appellate Court of Illinois, First District, First Division.

Jan. 24, 1944.

Rehearing Denied Feb. 8, 1944.

Appeal from Superior Court, Cook County; John C. Lewe, Judge.

Suit for construction of two trusts by Corene Cowdery against the Northern Trust Company, Chester V. Cowdery and others, wherein the named defendants filed counterclaims. From a decree dismissing complaint, and from supplemental decree fixing solicitors' fees and expenses of certain defendants, the plaintiff appealed to the Supreme Court, and the defendant Chester V. Cowdery filed a cross-appeal attacking the supplemental decree. The Supreme Court transferred the appeals to the Appellate Court, 383 Ill. 75, 48 N.E.2d 407.

Reversed and remanded. Aiken, McCurry, Bennett & Cleary, of Chicago (Charles R. Aiken, of Chicago, of counsel), for appellant.

Defrees, Fiske, O'Brien & Thomson, of Chicago (Vincent O'Brien and Virgil C. Lutrell, both of Chicago, of counsel), for Louise Mansfield Willard, Individually and as Executrix of Estate of Jennie Van Fleet Cowdery, Deceased, Charles B. Willard, Louise W. Kearns and Walter E. Willard.

Bullinger, Michels & Dicus, of Chicago, for Chester V. Cowdery.

Gordon, Buckley & Edmonds, of Chicago, (Thomas S. Edmonds, of Chicago, of counsel), for Northern Trust Co., Trustee.

NIEMEYER, Justice.

This is a consolidation of two appeals taken to the Supreme court and by it transferred to this court. 383 Ill. 75, 48 N.E.2d 407.

The plaintiff, Corene Cowdery, appealed from a decree which dismissed her complaint for the construction of two trusts--an insurance and a testamentary trust created by her father, Edward G. Cowdery--but granted part of the relief sought by her. She later appealed from a supplemental decree, entered after the first appeal had been perfected, fixing solicitors' fees and expenses of certain defendants and charging same against the principal or income of the trust funds created for her benefit. On the second appeal her brother, Chester V. Cowdery, filed a cross-appeal attacking the charging of the fees of the guardian ad litem appointed for him and a part of the fees of the guardian ad litem for certain minors and trustee for persons not in being against the trust fund established for his benefit.

July 20, 1926 Edward G. Cowdery created the insurance trust by assigning to the Northern Trust Company, as trustee, five insurance policies on his life totaling $125,000, to distribute the net income therefrom during the lifetime of his widow, Jennie Van Fleet Cowdery, one-half to the widow and the remaining one-half in equal shares to his daughters, Louise M. Willard and plaintiff, and upon the death of the widow to divide the entire trust estate into two parts as nearly equal as practicable, to transfer and deliver absolutely one of said parts to Louise M. Willard and to retain the remaining part as a trust fund and pay the net cash income therefrom to plaintiff during her lifetime.

September 19, 1929 he executed his will devising the whole of his estate, except certain small bequests, to the Northern Trust Company, as trustee, to distribute the net income therefrom during the lifetime of the widow as follows: To Chester V. Cowdery, his son, $200 per month until he shall attain the age of 40 years, $416.67 thereafter until he becomes 50 years of age, and thereafter the income from a trust fund not exceeding $200,000; the remainder of the income to the widow; upon her death the trustee was directed to promptly set up a trust fund of $200,000--or an amount equal to one-third of the aggregate principal of the insurance and testamentary trusts if one-third of both trusts should be less than $200,000--and out of the income to pay Chester like sums, dependent on his age, as the trustee was directed to pay him during the lifetime of the widow; to promptly divide the remainder of the trust estate (called the residual trust estate) into two shares as nearly equal as practicable; to convey and deliver absolutely to Louise M. Willard one of said shares, to retain the remaining share as a trust fund and pay the net income thereof to plaintiff during her lifetime.

In addition the trust instruments contained substantially similar provisions for the disposition of principal and income in the event of the death of the respective beneficiaries, as well as substantially similar spendthrift clauses and directions to the trustee in the event any of the beneficiaries should be a minor or under disability. Advisors to the trustee were appointed for each trust and the trustee was prohibited from investing trust funds or disposing of trust assets without the consent or direction of the majority of the living advisors, unless they failed or refused to give consent or direction within 60 days after written request by the trustee.

Edward G. Cowdery died January 13, 1932. His widow died February 2, 1941. At that time the two trust estates exceeded $1,000,000. By March 8, 1941 the trustee had set up a trust fund of $200,000 for the benefit of Chester and had completed plans for the division of the insurance trust fund and the residual trust estate under the testamentary trust, and by March 10 had physically segregated the securities (except securities not exceeding $25,000 in value, then not divisible) and mailed to Louise M. Willard the necessary document to obtain her receipt for her share of the trust funds. Final division was made shortly after this suit was started. None of the parties object to the final division made by the trustee.

March 11, 1941 plaintiff, not being informed as to the action of the trustee in dividing the trust funds, filed her complaint for construction of both trust instruments, making defendants thereto the Northern Trust Company, as trustee, Louise M. Willard, individually and as advisor under the insurance trust (and by amendment, as executrix of the last will and testament of the widow), Charles B. Willard, husband of Louise M. Willard, as advisor under both trusts, Chester V. Cowdery, alleged on information and belief to be incompetent, and other persons having only contingent interests. In this complaint plaintiff charges that the trustee had promulgated a number of fair, equitable and reasonable plans for establishing the trust fund of $200,000 for Chester, and for an equitable and equal division of the remaining securities between itself as trustee for the benefit of plaintiff and Louise M. Willard; that plaintiff is informed and believes Louise M. Willard had rejected each of these plans and threatened to hold the trustee responsible for any declines in the market values of the securities to which she may be ultimately entitled because of any delay in the division of the trust estates; that the widow, Louise M. Willard and Charles B. Willard were appointed as advisors to the trustee under the insurance trust, and the widow, Willard and plaintiff were appointed as advisors under the testamentary trust; that the widow was deceased and the remaining two advisors under each trust were acting; that there was great personal animosity between plaintiff and Willard and that he as advisor had arbitrarily refused to consent to the sale of certain securities which could not be divided equally, and thereby effectively and without reason prevented the trustee from making an equitable and reasonable division of the trust estates in accordance with the intent of the settlor; that substantial sums of money were in the hands of the trustee, representing income accrued from the principal of the trust estates during the lifetime of the widow and not distributed during her lifetime; that Louise M. Willard has demanded of the trustee that these sums be paid to the estate of the widow.

Plaintiff asked instruction of the court (1) as to the manner in which the trustee is to make an equitable division of the trust estates, including those items which could not be equally divided, (2) as to the manner in which the trustee is to promptly makes sales of trust securities and promptly invest trust funds, the trust instruments prohibiting such action by the trustee without the consent of a majority of the advisors, and (3) as to whether the accrued but undistributed income in the hands of the trustee at the death of the widow is the property of the widow's estate, or of the trust estates and subject to division between Louise M. Willard and the trustee for the benefit of plaintiff.

April 15, 1941 a petition on behalf of Chester was filed by his attorneys, alleging that Chester is a resident of the State of New York, that plaintiff on March 26, 1941 had instituted proceedings in the probate court of Cook county to have Chester declared incompetent and a conservator appointed for his estate; that the proceeding was being contested. The petition submitted to the court the appointment of a guardian ad litem for Chester in this suit. May 6, 1941, on the petition of Chester and motion of plaintiff under the prayer of her complaint, a guardian ad litem was appointed for Chester, the order reciting that the appointment was not to be construed as an adjudication of the incompetency of Chester, and a guardian ad litem for certain minor defendants and trustee of the interests of the issue not in being of plaintiff, Louise M. Willard and Chester was appointed. Thereafter Chester participated in the suit with double representation of a guardian ad litem and counsel of his own choosing.

The trustee in its answer denied that plaintiff was entitled to any relief other than instruction of the court as to the distribution of the accrued and undistributed income at the time of the death of the widow. Later it filed a counterclaim specifying particular instances arising after the institution of the suit when the advisors had failed to agree or one of them had failed to consent or direct the trustee, and asked for instructions of the court...