Griffin v. Gould, 78-1977

• Decision Date: 29 May 1979
• Docket Number: No. 78-1977,78-1977
• Citation: 72 Ill.App.3d 747,391 N.E.2d 124,28 Ill.Dec. 925
• Parties: , 28 Ill.Dec. 925 Dorothy GRIFFIN and the First National Bank of Chicago, Co-Executors Under Will of Benjamin Kulp, Deceased, Respondents-Appellants. v. Harold GOULD, Petitioner-Appellee.
• Court: United States Appellate Court of Illinois

Page 124

391 N.E.2d 124

72 Ill.App.3d 747, 28 Ill.Dec. 925

Dorothy GRIFFIN and the First National Bank of Chicago, Co-Executors Under Will of Benjamin Kulp, Deceased, Respondents-Appellants. v. Harold GOULD, Petitioner-Appellee.

No. 78-1977.

Appellate Court of Illinois, First District, Second Division.

May 29, 1979.

Kirkland & Ellis, Chicago, for respondents-appellants; Donald J. Duffy and Richard A. Lang, Chicago, of counsel.

Frank J. McLoraine, and John D. Cooke, Chicago, for petitioner-appellee.

HARTMAN, Justice:

This appeal is taken from that part of an order directing appellants as co-executors under the will of Benjamin Kulp, deceased, (hereinafter "co-executors") to pay without right of reimbursement from Harold Gould (hereinafter "Gould") that portion of accrued real estate taxes upon certain real property devised to him attributable to the period of time during which either the decedent or his co-executors were in possession.

For the reasons hereinafter stated we reverse and remand with directions.

Benjamin Kulp died a resident of Cook County, Illinois on May 27, 1978. His will, dated October 7, 1975, was admitted to probate and appellants herein were appointed co-executors on June 26, 1978. After decedent devised all of his right, title and interest in the residential real estate located at 814 Franklin Avenue, River Forest, Illinois to his nephew, Gould, if living at his death, in Article Five of the will he directed:

" * * * that the executors shall provide for payment out of the residue of my probate estate of the following without seeking reimbursement from or charging any person therefor:

(a) My last illness and funeral expenses and the costs of my burial.

(b) All indebtedness owed by me at the time of my death.

(c) All expenses in connection with the administration of my estate.

(d) All valid inheritance, estate, transfer and succession taxes, including interest and penalties thereon, which may become payable by reason of my death * * *."

No specific reference is made in the will regarding payment of real estate taxes.

On July 17, 1978, pursuant to section 20-1(c) of the Probate Act (Ill.Rev.Stat.1977, ch. 1101/2, par. 20-1(c)), the circuit court entered an order granting possession of the subject real estate to Gould, who thereafter petitioned the court, Inter alia, for entry of an order directing co-executors to pay 1977 and 1978 real estate taxes on the subject property out of the residue of decedent's estate. Co-executors represent said property as having a date-of-death appraised value of $148,500 which passed to Gould unencumbered save for the second installment of 1977 and the entire 1978 real estate taxes, amounting to approximately $7,500.

The order from which this appeal is taken directs, Inter alia, that co-executors pay as the estate's obligation and without right of reimbursement from Gould the second installment of 1977 real estate taxes due and the 1978 real estate taxes from January 1 to July 17 of that year, when Gould was placed in possession of the subject property. Real estate taxes for July 17 to December 31 of 1978 and thereafter were held to be Gould's personal obligation. The court acknowledged that it was effectively pro-rating the 1978 taxes based upon the time Gould was granted possession.

An owner of real property on January 1 of a given year is personally liable for the real estate taxes for that year (Ill.Rev.Stat.1977, ch. 120, par. 508a), said taxes becoming a prior and first lien upon the property in question as of the January 1st date (Ill.Rev.Stat.1977, ch. 120, par. 697). The parties agree that since decedent was owner of the subject property on January 1 of both 1977 and 1978, he was personally liable for the real estate taxes for both years and that when he died, said liability became a debt of his estate. (In re Application of County Collector (1966), 72 Ill.App.2d 272, 218 N.E.2d 244; In re Estate of Carlson (1952), 348 Ill.App. 464, 109 N.E.2d 461.) They further agree that the question for our consideration is whether the deceased under the terms of his will expressly provided for payment of the aforesaid real estate taxes out of the residue of his estate so as to relieve Gould of such payment under section 20-19 of the Probate Act, reading in pertinent part as follows (Ill.Rev.Stat.1977, ch. 1101/2, par. 20-19):

"Except as otherwise expressly provided by decedent's will:

(a) When any real estate * * * subject to an encumbrance * * * is specifically bequeathed * * * the legatee * * * to whom the real estate * * * is given * * * takes it subject to the encumbrance and is not entitled to have the indebtedness paid from other real or personal estate of the decedent."

The term "encumbrance" is defined in the Act thus (Ill.Rev.Stat.1977, ch. 1101/2, par. 1-2.07):

" 'Encumbrance' includes mortgage, real estate tax or special assessment, deed of trust, vendor's lien, security agreement and other lien."

The liens established by the 1977 and 1978 real estate taxes thus constituted encumbrances upon the subject property within the statutory definition. See, Merchants Nat'l Bank of Aurora v. Olson (1975), 27 Ill.App.3d 432, 325 N.E.2d 633.

Section 20-19 of the Act (formerly Ill.Rev.Stat.1967, ch. 3, par. 219b) operates in derogation of the common law doctrine of exoneration, which provided that a devisee of real estate mortgaged or otherwise encumbered by a testator in his lifetime was entitled to a discharge of the lien from testator's personal estate unless he directed otherwise in his will. (See, Sutherland v. Harrison (1877), 86 Ill. 363; Merchants Nat'l Bank of Aurora, supra.) This rule was followed in Illinois and elsewhere as a corollary of the common law principle that a decedent's personalty is the primary fund for payment of his debts. (Watts v. Killian (1921), 300 Ill. 242, 133 N.E. 295; Martin v. Martin (1941), 310 Ill.App. 622, 35 N.E.2d 560; Tyler, Should the Widow Pay?, 47 Ill.Bar J. 850, 851 (1959).) The adoption of section 18-14 (formerly section 207) of the Probate Act, effective July 1, 1966 (Ill.Rev.Stat.1977, ch. 1101/2, par. 18-14, formerly Ill.Rev.Stat.1965, ch. 3, par. 207) changed this principle, making the real and personal property of a decedent equally chargeable with claims against his estate, expenses of administration, estate and inheritance taxes and legacies without distinction except as otherwise provided in his will. Not mentioned specifically in section 18-14, the viability of the exoneration doctrine was thus left in doubt, to be resolved by the enactment of section 20-19 in 1967. See generally 4 James, Illinois Probate Law and Practice 235-37 (A. Fleming Supp.1975).

Abolition of the exoneration doctrine in Illinois was further to be anticipated as a result of widespread dissatisfaction with the rule among practitioners and commentators, particularly in its failure to follow a testator's probable intent. As one commentator remarked (Fleming, Will Drafting Problems Posed by Mortgage Indebtedness, 48 Ill.Bar J. 846, 848 (1960)):

" * * * this rule of exoneration thwarts intention more often than it fulfills it. One surmises that many, if not most testators, if they thought about the problem, would have said the * * * devisee, should take the property with whatever encumbrance there might be on it, and assume the debt."

Another also found exoneration at cross purposes with a testator's likely intentions where no specific direction as to encumbrances on devised realty has been made (Tyler, Should the Widow Pay?, 47 Ill.Bar J. 850, 852-53 (1959)):

" * * * It seems probable that a testator would believe that an encumbrance followed his devise. It would be more normal to expect him to comment if he wished it to be otherwise. The inequitable case * * * is more likely to occur where the devise is exonerated * * *."

Gould contends that decedent's will expressly directs payment of the real estate taxes out of the residue of the estate, in particular by the provision that "all indebtedness" is to be paid "without seeking reimbursement from or charging any person therefor * * *," in conformity with the statute. The latter phrase, being dependent upon what is covered by the term "all indebtedness," is relevant here only insofar as that term may include the real estate taxes in issue. In the absence of Illinois authority directly on point, Gould relies upon Succession of Waterman (La.1974), 298 So.2d 731, wherein the Louisiana Supreme Court held that a testamentary direction to pay from decedent's residuary estate " '* * * all my just debts * * * ' " included a debt secured by a mortgage on a residence bequeathed to a special legatee (298 So.2d at 732). The statute there construed provided for non-exoneration of mortgaged property by the estate's representative " ' * * * unless he be required to (remove the encumbrance) by an express disposition of the testator' " (298 So.2d at 732). Gould refers in particular to the court's conclusion that since unsecured debts are taken from the residuary estate by operation of law, the quoted provision added nothing to the will unless it included secured debts, in particular the subject mortgage. By characterizing the issue to be determined as whether or not secured debts generally were covered by the language of the will under the statute, the Louisiana court overlooked the question of interpretation posed by the term "express disposition," apparently assuming that if the language of the will was sufficiently broad to cover the general category of secured debts, it expressly disposed of the encumbrance on the subject property. Waterman, supra, therefore, is of little precedential value in this regard.

Courts of other jurisdictions have taken a different position in interpreting comparable laws and will provisions. In Ring v. Wooley (1913), 155 App.Div. 817, 140 N.Y.S. 648, the court observed (140 N.Y.S. at 650):

" * * * section 250 of the Real Property Law (citations)...