Harris Trust and Sav. Bank v. Beach

• Decision Date: 29 June 1987
• Docket Number: No. 63887,63887
• Citation: 118 Ill.2d 1,513 N.E.2d 833,112 Ill.Dec. 224
• Parties: , 112 Ill.Dec. 224 HARRIS TRUST AND SAVINGS BANK et al. v. Frances Glore BEACH et al., Appellees (Charles F. Glore III et al., Appellants).
• Court: Illinois Supreme Court

Page 833

513 N.E.2d 833

118 Ill.2d 1, 112 Ill.Dec. 224

HARRIS TRUST AND SAVINGS BANK et al. v. Frances Glore BEACH et al., Appellees

(Charles F. Glore III et al., Appellants).

No. 63887.

Supreme Court of Illinois.

June 29, 1987.

Rehearing Denied Oct. 5, 1987.

Winston & Strawn, Chicago (Frederick G. Acker, Kimball R. Anderson, Carol A. Harrington, Nancy J. Brown, of counsel), for respondents California Institute of Technology, Santa Barbara Foundation, Santa Barbara Cottage Hospital, The Kansas University Endowment Association and Frederick G. Acker as Special Trustee under the Will of Charles F. Glore, Jr.

Sidley & Austin Chicago (Loren E. Juhl, Henry A. Preston, John C. Vryhof, of counsel), for petitioners, Charles F. Glore III, Sallie G. Farlow and Edward R. Glore.

Bell, Boyd & Lloyd, Chicago (Francis J. Higgins, Robert L. Wiesenthal, Alice S. Lonoff, of counsel), for respondents, Frances Glore Beach and Robert Hixon Glore.

Justice SIMON delivered the opinion of the court:

In construing either a trust or a will the challenge is to find the settlor's or testator's intent and, provided that the intention is not against public policy, to give it effect. (See Hull v. Adams (1948), 399 Ill. 347, 352, 77 N.E.2d 706.) Courts search for intent by analyzing both the words used in the instrument and the circumstances under which they were drafted, including: "the state of the testator's property, his family, and the like." (Armstrong v. Barber (1909), 239 Ill. 389, 404, 88 N.E.2d 246.) When, however, the instrument fails to make the settlor's or testator's intention clear, courts often resort to rules of construction to determine the meaning of the terms used in the document. (Hull v. Adams (1948), 399 Ill. 347, 352, 77 N.E.2d 706.) Rules of construction, which are applied in the same manner to both wills and trusts, are court created presumptions of what the ordinary settlor or testator would have intended the ambiguous terms to mean; they are merely the court's own assessments of what the person probably meant when the provision was drafted. (Harris Trust & Savings Bank v. Jackson (1952), 412 Ill. 261, 266-67, 106 N.E.2d 188.) Such rules should not be allowed to defeat what the ordinary settlor would have intended. When a rule of construction tends to subvert intentions, the rule is no longer legitimate and must be discarded. H. Carey and D. Schuyler, Illinois Law of Future Interests 190-93 (Cum. Pocket Part 1954).

In this case Harris Trust and Savings Bank, Robert Hixon Glore and William Gray III, trustees of two trusts, sought instructions from the circuit court of Cook County regarding to whom and in what manner the trusts should be distributed. The central controversy is over the proper construction of the remainder over to the heirs following the death of a life tenant: specifically, the question is whether the settlor intended that his heirs be ascertained at his death, or whether he desired that they be determined after the death of his wife, who was the life tenant.

The pertinent facts in this case are as follows: Frank P. Hixon and Alice Green entered into an antenuptial agreement dated March 30, 1921, and following that, they were married. The agreement created a trust consisting of 200 shares of preferred stock of Pioneer Investment Company, a Hixon family holding company. The trust provided that Alice was to receive the net income of the trust for life and that she could "dispose of Fifty Thousand ($50,000) Dollars of said fund in such a manner as she" deemed fit and proper. In exchange for the provisions made for her in the trust, Alice surrendered any interest, including dower, which she might have had in Hixon's estate. If Hixon survived Alice, the trust property was to be reconveyed to him. If Alice survived Hixon, the trust provided that on her death "the balance of said trust fund shall be divided among the heirs of the party of the first part [Hixon], share and share alike."

On May 31, 1926, Hixon created a second trust to provide for Alice. The principal of this trust consisted of 300 shares of stock of Pioneer Investment Company. This trust provided that Alice was to receive the income from the principal for life and upon her death "this trust shall terminate, and the trust fund shall be distributed equally among my [Hixon's] heirs."

In 1930, Hixon executed his will, which was interpreted by our appellate court and is not at issue in this case (Harris Trust & Savings Bank v. Beach (1985), 145 Ill.App.3d 682, 99 Ill.Dec. 438, 495 N.E.2d 1173), leaving gifts to specific individuals and charities. He divided the residue of his estate equally among his daughters, Ellen Glore and Dorothy Clark and in trust for Alice. Hixon died in 1931, when he was 69 years old. He was survived by Alice, who was then 49, by Dorothy and Ellen, who were then 38 and 36, respectively, and by his grandchildren, Frances Glore Beach, Charles F. Glore, Jr., and Robert Hixon Glore, who were then minors.

Alice lived for 51 more years. Both the 1921 and the 1926 trusts continued for her benefit until she died in February 1982. At that time, Hixon's then living descendants were his grandchildren, Frances Glore Beach and Robert Hixon Glore (the grandchildren), and the children of his deceased grandchild, Charles F. Glore, Jr.--Charles F. Glore III, Sallie Glore Farlow, and Edward R. Glore (the great-grandchildren). The parties agree that both the 1921 and the 1926 trust should be distributed in the same manner.

If Hixon's heirs are those surviving at his death, the trust estates will pass under the wills of his two daughters, Ellen H. Glore and Dorothy H. Clark, who both died in 1973. Ellen had three children. One child, as noted above--Charles F. Glore, Jr.--is deceased and survived by three children, Hixon's great-grandchildren. Ellen's other two children--the grandchildren Robert and Frances--are living and are parties to this suit. Dorothy had no children. The devisees under her will are defendants California Institute of Technology, Santa Barbara Foundation, Santa Barbara Cottage Hospital and the Kansas Endowment Association (collectively the charities), and her husband Alfred. Alfred is deceased and his portion of the assets would be distributed to his devisees, Frederick Acker, as special trustee under the will of Charles F. Glore, Jr., and Robert Hixon Glore. On the other hand, if the heirs are determined at the time of Alice's death, the trust estates will be divided among Hixon's now-living descendants--the two grandchildren and three great-grandchildren.

The four charities assert that the heirs should be those heirs alive at Hixon's death; this determination would include them since they were devisees under Dorothy's will. The grandchildren and the great-grandchildren argue that the heirs should be those who were surviving at Alice's death, but they disagree over whether the trust should be divided per stirpes (by each share) or per capita (by each head).

All parties seeking distribution in their favor filed motions for summary judgment, and the circuit court granted the motion in favor of the charities. That court held that the class of heirs should be ascertained at Hixon's death. The court concluded that the heirs would be only Hixon's two daughters, since Alice was excluded under the terms of the antenuptial agreement. The circuit court also decided that the Doctrine of Worthier Title (the doctrine), which is discussed more fully below, was an anachronism, and should not be applied to this case. The court observed that although the doctrine was abolished prospectively by statute in 1955 (see Ill.Rev.Stat.1985, ch. 30, par. 188), it would still be applicable here since both trusts were executed prior to that date. However, because the doctrine consistently thwarted settlors' and testators' intentions, the circuit judge determined that if the doctrine applied at all, it would be applied only as a rule of construction and not as a rule of law; hence, he was not constrained to follow it. Under the circuit court's ruling, the shares would be distributed in this manner:

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

The grandchildren and great-grandchildren appealed, and the appellate court held that the doctrine applied as a matter of law. (145 Ill.App.3d 673, 99 Ill.Dec. 435, 495 N.E.2d 1170.) The appellate court consequently voided the remainder in Hixon's heirs, ruling that the trust reverted to Hixon's estate and passed under the residuary clause of his will. Because the appellate court did not give any effect to the remainder in Hixon's heirs, it was unnecessary for that court to decide whether the class of heirs should be considered at Hixon's or at Alice's death. Under the appellate court's decision, the distribution would be as follows:

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

We granted the great-grandchildren's petition for leave to appeal to this court. If we reverse both the trial and appellate court by holding that the heirs surviving at Alice's death take the remainder over upon the termination of the life estate, we must then determine whether the trust estate should be distributed per stirpes, as the grandchildren contend, or per capita, as the great-grandchildren argue. The distribution per stirpes would be as follows:

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

Dividing the estate per capita yields this result:

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

Three issues are presented on review: (1) whether the heirs are those surviving Hixon's death or Alice's death; (2) whether the doctrine is applicable, and if so, whether it applies as a rule of construction or a rule of law; and (3) whether, if the heirs are determined at Alice's death, the shares should be distributed per stirpes or per capita. Since the meaning of the word "heirs" as used in the trust is a necessary predicate to the...