Northern Trust Co. v. Winston

• Decision Date: 10 September 1975
• Docket Number: No. 60194,60194
• Citation: 336 N.E.2d 543,32 Ill.App.3d 199
• Parties: The NORTHERN TRUST COMPANY, a corporation, as sole Trustee under Declaration of Trust of Philip A. Winston, Deceased, Plaintiff-Appellee, v. Bernice S. WINSTON et al., Defendants, Bernice S. Winston, Defendant- Appellant.
• Court: United States Appellate Court of Illinois

Page 543

336 N.E.2d 543

32 Ill.App.3d 199

The NORTHERN TRUST COMPANY, a corporation, as sole Trustee under Declaration of Trust of Philip A. Winston, Deceased, Plaintiff-Appellee, v. Bernice S. WINSTON et al., Defendants, Bernice S. Winston,

Defendant- Appellant.

No. 60194.

Appellate Court of Illinois, First District, Fourth Division.

Sept. 10, 1975.

Swidler, Patt & Swidler, Chicago, for defendant-appellant.

Pauker & Griffith, Ltd., Chicago, (David H. Pauker, James D. Griffith, Chicago, of counsel) for plaintiff-appellee.

BURMAN, Justice.

This suit was commenced by The Northern Trust Company, as successor trustee under a Declaration of Trust created by Philip A. Winston, now deceased, to construe the trust. Under the terms of the trust, the right to the use and occupancy of a condominium located at 1040 North Lake Shore Drive in Chicago, was given to Bernice S. Winston, the widow of Philip A. Winston, and appellant herein, subject to certain conditions and liabilities. The issue of construction presented was whether under the terms of the trust the widow was obligated to pay the unpaid mortgage payments on the property as they become due after the death of her husband while she occupied the premises. A further issue presented was whether the widow's attorneys' fees should be charged against the trust estate. After a trial, a decree was entered declaring that the widow was obligated to make the mortgage payments, and further denying the petition of the widow's attorneys for the allowance of fees. An appeal was thereupon taken to this court.

On or about November 18, 1970, Philip A. Winston and Bernice S. Winston, the

latter then known as Bernice S. Johnson, anticipated marriage. Each had previously been married to another for a long period of time and had been widowed. Both had grown children as a result of their previous marriages, and both also had considerable property of their own.

On November 18, 1970, Philip and Bernice executed a prenuptial agreement wherein they recited their respective net worth and income and mutually released all rights 'which each might otherwise acquire in the property and estate of the other by reason of their contemplated marriage * * *.' The prenuptial agreement further includes the following provision, pertinent to this appeal:

'(a) PHILIP contemplates entering into a Trust Agreement under which PHILIP will be Settlor under the terms of which certain benefits will be provided for BERNICE. This Agreement shall not be construed as, or be deemed to require, a waiver or renunciation by BERNICE of the terms of said Trust Agreement.'

Schedules appended to the prenuptial agreement set forth with specificity the considerable property owned by Philip and Bernice. Included in the schedule of Philip's property is the recital that he owned:

'Apartment 21C, Carlyle-Condominium, subject to unpaid principal balance on mortgage dated October 21, 1966 to Dovenmuehle, Inc. as mortgagee for $48,500.00 on which there is principal balance of $43,303.58 owing, payable each month with final balance due 12/1/88: Cost of apartment plus builtins approx. $100,000.00 less Mtg.'

On or about the same day that the prenuptial contract was executed, Philip also executed the trust agreement 'contemplated' in the prenuptial contract, and in which he transferred to himself as trustee certain scheduled personal property and his condominium apartment referred to above. In Article Fifth of the Declaration of Trust Philip reserved 'the right to modify, amend or revoke this trust in whole or in part at any time by filing a written instrument with the trustee,' and 'the right at any time, by written instrument filed with the trustee, to alter or divest the interests of or change beneficiaries and with the trustee's written consent to amend this trust without limitation in any other respect.' Article Twelfth of the Declaration of Trust, a construction of which this appeal primarily centers around, provides in full (and as amended by Philip Winston later on September 3, 1971):

'TWELFTH, From and after my death, the right to use and occupy said Apartment 21C at the Carlyle and have the exclusive use and enjoyment of my drapes, floor coverings, furniture, fixtures and other personal property contained in said apartment, if it is then a part of the trust estate, shall inure to the benefit of my intended wife BERNICE S. JOHNSON, if we are married. Under such circumstances she shall be entitled as a widow to the use and occupancy of said apartment and have the exclusive use and enjoyment of my drapes, floor coverings, furniture, fixtures and other personal property contained in said apartment for and during her natural life Subject to the same terms, conditions and liabilities imposed upon me as owner of said condominium and to which said BERNICE agrees by taking possession and exercising her rights hereunder, i.e., she is to pay the bills for electricity, the monthly and other assessments, if any, by Carlyle Building Management and real estate taxes assessed against said apartment

'However, she shall not rent, or sublet nor allow any other person, including her son ROBERT S. JOHNSON and his family to use and occupy said apartment under any circumstances. In the event of the death of said BERNICE S. JOHNSON or if she fails to continue to live in and occupy said apartment as herein provided (except for winter vacations not exceeding four months in any one year) or fails to assume the terms, conditions and liabilities herein imposed upon her, all right to possession of said Apartment 21C at the Carlyle shall immediately inure and revert forthwith to the successor trustee who shall have the right to immediate possession thereof and to sell said condominium apartment * * * for cash or partly for cash and partly for credit at the market price thereof at that time--subject to the terms of the Carlyle building condominium agreements that I have or will sign. My daughter BEVERLY W. SCHOR shall have the right of first refusal to purchase said apartment.' (Emphasis added.)

The only other amendment to the trust, executed June 11, 1971, provides Inter alia that The Northern Trust Company act as successor trustee in the event of Philip's death.

Philip A. Winston and Bernice S. Johnson were married in November 1970, shortly after the prenuptial agreement and trust agreement were executed. Philip died approximately 14 months later on January 4, 1972, thereby effectuating the trusteeship of The Northern Trust Company. He left surviving him his widow Bernice, his daughter Beverly W. Schor, and his son Perry L. Winston, all of whom had an interest in the trust.

A dispute arose when Bernice took the position that, under the terms of the prenuptial contract and Article Twelfth of the trust agreement, she was not obligated to assume mortgage payments on the Carlyle condominium while she occupied it after her husband's death. The trust company as trustee therefore sought guidance from the court as to her liability and filed its complaint asking the court to construe the trust.

The court in its decree focused first on the language of Article Twelfth of the Declaration of Trust, which indicates that the widow has the right to use and occupy the Carlyle condominium 'subject to the same terms, conditions and liabilities imposed upon (Philip) as owner * * * i.e., she is to pay the bills for electricity, the monthly and other assessments, if any, by Carlyle Building Management and real estate taxes assessed against said apartment.' The court found that this language was 'of such an ambiguous nature that it was necessary for the Court to construe the same' and to consider extrinsic evidence as to whether the language contemplated the widow paying the mortgage. The extrinsic evidence the court considered included the prenuptial agreement, wherein Philip Winston listed the Carlyle condominium as an asset, but also set forth the mortgage indebtedness thereon, thus indicating to Bernice that the mortgage was a 'liability imposed upon him as owner.'

Other extrinsic evidence considered by the court included the testimony of Perry Winston, son of the deceased. He stated his occupation as a real estate broker and testified that his father and he discussed the trust agreement on or about December 18, 1971, while alone in his father's apartment. His father was suffering from cancer at the time. The elder Winston asked Perry to read the trust agreement aloud to him so he could be assured Perry understood it. When Perry reached the pertinent portion of the Twelfth Article and read 'i.e.' as meaning 'that is,' his father stopped him and said 'No, that is 'for example. " Perry responded that 'i.e.' meant 'that is.' His father again responded he meant 'for example' and indicated that he meant his wife to pay the mortgage as well as the things listed there, since it was part of the liabilities imposed upon him as owner that she would have to assume. Perry then asked his father to clarify that section, and his father began making notes on an envelope.

Perry further testified that the envelope was discovered after his father's death. It was admitted into evidence at trial. On the envelope there was scribbled in red ink:

'In default of making payments she forfeits all right to possession--exclude visiting by him not allowed--she pays entire payment on mortgage, principal, interest, and real estate taxes--payable to the estate and not to Dovenmuehle as there is no interest for her to claim on equity at any time. These payments will offset wear, tear, and on depreciation.'

A couple of days later, on December 22, 1971, Perry Winston testified that he spoke to his father on the telephone and asked if he had taken care of the clarification they had spoken about. His father replied 'I'm writing it down, doing it right now, addendum to trust, Bernice to pay rent equal to mortgage and all other expenses,' and he said 'It's done.' Philip Winston passed...