Estate of Hurst v. Hurst
| Decision Date | 16 April 2002 |
| Docket Number | No. 4-01-0528.,4-01-0528. |
| Citation | 329 Ill. App.3d 326,263 Ill.Dec. 853,769 N.E.2d 55 |
| Parties | In the Matter of the ESTATE OF Robert Charles HURST, Deceased, Alicia E. Hurst and Julie Ann Hurst, Petitioners-Appellees and Cross-Appellants), v. Patsy J. HURST, Individually, Patsy J. Hurst, Administratrix With the Will Annexed of the Estate of Robert Charles Hurst, Deceased; Lori L. Hofferbert, and Todd A. Reid, Respondents-Appellants and Cross-Appellees. |
| Court | United States Appellate Court of Illinois |
John A. Bernardi (argued), of Pekin, for appellant Patsy J. Hurst.
David G. Lubben (argued), of Davis & Campbell, L.L.C., of Peoria, and David M. House, of Canton, for appellants Lori L. Hofferbert and Todd A. Reid.
Barry M. Barash and Jamie L. Ross (argued), both of Barash & Everett, L.L.C., of Galesburg, for appellees Alicia E. Hurst and Julie Ann Hurst.
This appeal involves the interpretation of two written instruments, a promissory note and a will, and the possible use of extrinsic evidence. Patsy J. Hurst, individually and as administratrix of the will annexed of the estate of Robert Charles Hurst, along with Lori L. Hofferbert and Todd A. Reid, cross-appellees, appeal the judgment of the trial court with respect to the promissory note and will, respectively. Alicia E. Hurst and Julie Ann Hurst, cross-appellants, also appeal the trial court's ruling concerning the Dead-Man's Act (735 ILCS 5/8-201 (West 2000)). We affirm in part, reverse in part, and remand the cause with directions.
Initially, the parties involved in these appeals necessitate an introduction. Robert Charles Hurst (Chuck) married Diane Neises in September 1961. Chuck and Diane had two children: Lori L. Hurst and Todd A. Hurst (Lori and Todd). Chuck and Diane were divorced in April 1964, and Diane remarried to Alex Reid. Diane and Alex legally adopted Lori (now Hofferbert) and Todd (now Reid). In April 1965, Chuck married his second wife, Karan E. Hurst. They had two children: Alicia E. Hurst and Julie A. Hurst (Alicia and Julie). Chuck and Karan were divorced in April 1990. Later, Chuck married his third wife, Patsy J. Hurst (Patsy).
In 1993, Chuck and Patsy Hurst decided to open and operate an adult entertainment club in Tazewell County. Thereafter, with the assistance of counsel, Club Cabaret, Inc., was formed in which the Hursts retained a 51% controlling interest. The stock certificate indicated the shares were issued to "Robert C. Hurst and Patsy J. Hurst, Joint Tenants." In 1996, the Hursts decided to sell their interest in the business to other individuals involved with the corporation. Attorney Richard D. McCoy prepared a promissory note (note) and mortgage on behalf of the Hursts. Chuck and Patsy allegedly told McCoy they wanted the note to be payable to both of them jointly so if one of them died, the survivor would become the sole owner of the note. McCoy drafted the note which read, in part:
"FOR VALUE RECEIVED, the undersigned, CLUB CABARET, INC. (Maker), promises to pay to the order of ROBERT C. HURST and PATSY J. HURST, or either of them, or any holder of this note (Payee) the sum of U.S. $1,140,000.00 * * *."
Similarly, the mortgage stated, in relevant part:
"This mortgage is made this 26 day of September 1996, by CLUB CABARET, INC., an Illinois corporation (Mortgagor), * * * and delivered to ROBERT C. HURST and PATSY J. HURST (jointly and severally (Mortgagee)) * * *."
Chuck and Patsy accepted the note believing it conformed to their wishes of joint ownership with each having a full right of survivorship. The corporation made monthly payments in accordance with the terms of the obligation by electronic transfer to an account at Morton Community Bank. Chuck and Patsy held the bank account as joint tenants with right of survivorship.
In October 1997, Chuck and Patsy sought out McCoy for his services as to their estate plans. They sought assurance from McCoy the proceeds of the note would be paid to the survivor of Chuck and Patsy if one predeceased the other. McCoy checked the note and assured them it was owned jointly with right of survivorship.
In June 1998, Chuck died before completing his estate planning. It was believed he died without a will. In August 1998, Patsy was appointed independent administratrix of the estate.
In August 1999, Alicia and Julie filed a petition for citation to discover assets against Patsy, in her individual and representative capacities, and against Club Cabaret, Inc. The petition alleged the payees of the promissory note held it as tenants in common and not as joint tenants. Thus, Chuck's undivided one-half interest in the note passed into his estate and should be inventoried as an asset of his estate. Patsy, believing the note created a joint tenancy, did not include the note in Chuck's estate, maintaining she was the sole owner. In April 2000, Alicia and Julie filed a motion for summary judgment on their petition for citation to discover assets, arguing the note and mortgage are clear and unambiguous on their face and create a tenancy in common.
In March 2000, Alicia and Julie filed an answer to the complaint, admitting most of the allegations but stating the note speaks for itself.
In October 2000, Patsy filed a motion for summary judgment and attached affidavits from Richard McCoy, Robert Tudor, and James Mamer. In his affidavit, McCoy stated Chuck wanted the note to be drafted jointly with Patsy with right of survivorship. He believed he was fulfilling Chuck's wishes by using the language "or either of them." Tudor, vice-president of Club Cabaret, Inc., stated the corporation made monthly payments by electronic transfer to Chuck and Patsy. Mamer, president of Morton Community Bank, stated Chuck and Patsy held a joint account at the bank as joint tenants with right of survivorship.
Alicia and Julie filed a motion to strike the three affidavits as either irrelevant or barred by the Dead-Man's Act. Specifically, they alleged McCoy's affidavit was barred by the Dead-Man's Act because McCoy was a person directly interested in the action based on Patsy's malpractice action against him. Patsy filed a professional negligence suit, in December 1999, against Richard McCoy, Kirk Bode, and McCoy & Bode for the alleged negligence in drafting the note. Patsy argued the Dead-Man's Act did not apply because McCoy was not directly interested in the action and had not been called to testify on his own behalf.
Alicia and Julie also filed a cross-motion for summary judgment arguing the note's language created a tenancy in common. They argued if the McCoy affidavit was inadmissible, Patsy had no evidence of a mistake to justify a reformation of the note. They claimed the mistake alleged was one of law, not fact, which was not the proper subject for reformation.
In November 2000, the trial court denied Alicia and Julie's motion to strike the affidavits. As to the McCoy affidavit, the trial court found McCoy was not directly interested in the action because, regardless of the outcome of this case, the malpractice action would still be pending. In May 2001, the trial court, in an amended order, denied Patsy's motion for summary judgment and granted Alicia and Julie's cross-motion for summary judgment. The trial court reasoned the note was a tenancy-in-common instrument and, since there was a mistake of law, not fact, reformation was prohibited. The court declared Chuck's estate as the owner of an undivided one-half interest in the note and the mortgage that secures it.
Patsy filed a posttrial motion to reconsider, arguing equity provided an exception to the general rule that a mistake of law cannot be reformed and her case fell within the exception. The trial court denied the motion to reconsider. The court acknowledged some mistakes of law may be reformed, but attorney McCoy's mistake was a legal one pertaining to a general rule of law, and equity did not offer relief. This appeal and cross-appeal followed.
In October 1999, Chuck's original will, dated January 30, 1991, was found in the safe deposit box of the law firm of McCoy & Bode. The will stated, in relevant part:
In November...
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