Northern Trust Co. v. Continental Illinois Nat. Bank & Trust Co. of Chicago

• Decision Date: 13 October 1976
• Docket Number: No. 62037,62037
• Citation: 1 Ill.Dec. 767,356 N.E.2d 1049,43 Ill.App.3d 169
• Parties: , 1 Ill.Dec. 767 The NORTHERN TRUST COMPANY, as executor of the Estate of Harriet F. B. Stuart, Deceased, not Individually but as a co- executor and as a co-trustee under the Last Will and Testament of Harold L. Stuart, Deceased, Plaintiff below, Separate Appellee, Elizabeth B. Stuart, not Individually but as a co-executor and as a co-trustee under the Last Will and Testament of Harold L. Stuart, Deceased, Plaintiff below, Appellant and Separate Appellee, Illinois Institute of Technology, a not-for-profit corporation, plaintiff below, Separate Appellant, v. CONTINENTAL ILLINOIS NATIONAL BANK AND TRUST COMPANY OF CHICAGO, a National Banking Association, not Individually but as a co-executor and as a co-trustee under the Last Will and Testament of Harold L. Stuart, Deceased, Defendant below, Appellee, Museum of Science and Industry, Intervenor below, Separate Appellant, The Art Institute of Chicago, Intervenor below, Separate Appellant, De Paul University et al., Intervenors below, Separate Appellants and Appellees, Chicago Historical Society et al., Intervenors below.
• Court: United States Appellate Court of Illinois

Page 1049

356 N.E.2d 1049

43 Ill.App.3d 169, 1 Ill.Dec. 767

The NORTHERN TRUST COMPANY, as executor of the Estate of Harriet F. B. Stuart, Deceased, not Individually but as a co- executor and as a co-trustee under the Last Will and Testament of Harold L. Stuart, Deceased, Plaintiff below Separate Appellee Elizabeth B. Stuart, not Individually but as a co-executor and as a co-trustee under the Last Will and Testament of Harold L. Stuart, Deceased Plaintiff below, Appellant and Separate Appellee Illinois Institute of Technology, a not-for-profit corporation, plaintiff below, Separate Appellant, v. CONTINENTAL ILLINOIS NATIONAL BANK AND TRUST COMPANY OF CHICAGO, a National Banking Association, not Individually but as a co-executor and as a co-trustee under the Last Will and Testament of Harold L. Stuart, Deceased, Defendant below, Appellee, Museum of Science and Industry, Intervenor below, Separate Appellant, The Art Institute of Chicago, Intervenor below, Separate Appellant, De Paul University et al., Intervenors below, Separate Appellants and Appellees, Chicago Historical Society et al., Intervenors below.

No. 62037.

Appellate Court of Illinois, First District, Fourth Division.

Oct. 13, 1976.

William T. Hart, Allan Horwich, Joan E. Steinman, Schiff, Hardin & Waite, Chicago, for Elizabeth B. Stuart, plaintiff-appellant and appellee, and The Northern Trust Co. Executor of the estate of Harriet F. B. Stuart, deceased, appellee.

Samuel W. Witwer, J. Alfred Moran, Samuel W. Witwer, Jr., Timothy R. Young, Witmer, Moran, Burlage & Atkinson, Chicago, for Ill. Institute of Technology plaintiff-appellant.

Roger W. Barrett, Franklin P. Auwarter, Muriel B. Irwin, Mayer, Brown & Platt, Chicago, for Continental Ill. Nat. Bank & Trust Co. of Chicago, defendant-appellee.

Michael C. Weston, Evanston, for Northwestern University.

Charles E. Herzog, Bell, Boyd, Lloyd, Haddad & Burns, Chicago, for University of Chicago.

Vernon T. Squires, Wilson & McIlvaine, Chicago, for Field Museum of Natural History, the Orchestral Ass'n, Children's Memorial Hospital, Chicago Boys Clubs and Lake Forest College.

Stephen L. Schar, Aaron, Aaron, Schimberg & Hess, Chicago, for American Red Cross.

Rodney Joslin, Jenner & Block, Chicago, For Girl Scouts of Chicago.

Christopher W. Wilson, Hopkins, Sutter, Mulroy, Davis & Cromartie, Chicago, for Blackburn College.

Peterson, Ross, Rall, Barber & Seidel, Owen Rall, Chicago, for Museum of Science and Industry.

William A. McSwain, James O. Silliman, Eckhart, McSwain, Hassell & Silliman, Chicago, for The Art Institute of Chicago, intervenor defendant-appellant.

King, Robin, Gale & Pillinger, Willard L. King, Chicago, for Chicago Historical Society.

Thomas J. Russell, Mitchell, Russell & Kelly, Chicago, for De Paul University.

William H. Oswald, Office of General Counsel, Loyola University School of Law, Chicago, for Loyola University.

John E. Angle, Kirkland & Ellis, Chicago, for Boy Scouts of America and Rehabilitation Institute.

Otis H. Halleen, Sonnenschein, Carlin, Nath & Rosenthal, Chicago, for Michael Reese Hospital and Medical Center.

John M. Rammel, Williams, Rutstein, Goldfarb & Sharp, Ltd., Chicago, for Mercy Hospital and Medical Center.

James J. McClure, Jr., Gardner, Carton, Douglas, Chilgren & Waud, Chicago, for Rush-Presbyterian-St. Luke's Hospital, Berea College, and Chicago Educational Television Ass'n.

Lee A. Freeman, Sr., Freeman, Freeman & Salzman, Chicago, for Lyric Opera of Chicago.

William L. Ryan, Davis, Dietch & Ryan, Chicago, for the Salvation Army--Chicago Chapter.

Louis M. Rundio, Jr., McDermott, Will & Emery, Chicago, for YMCA of Metropolitan Chicago.

Frank J. Madden, Boodell, Sears, Sugrue, Giambalvo & Crowley, Chicago, for Union College. JOHNSON, Presiding Justice.

This is an appeal from a judgment order entered in an action brought by plaintiffs against a corporate co-trustee to settle a dispute which arose concerning a trust power to nominate and fund charitable organizations. The judgment, Inter alia, approved and adopted a plan of distribution proposed by the corporate trustee which provided for complete distribution of a charitable trust created pursuant to the will of Harold L. Stuart; approved a $250,000 grant to the Chicago Foundation for Cultural Development; and approved the individual co-trustees$' designation of the remaindermen of certain life trusts created by the will. A consideration of this judgment necessitates a full statement of the facts.

Harold L. Stuart, the testator, died on June 30, 1966 leaving a multimillion-dollar estate. He was unmarried and survived by two sisters, Harriet F. B. Stuart and Elizabeth B. Stuart. A will executed by the testator on April 23, 1964, named Continental Illinois National Bank and Trust Company of Chicago (hereinafter Continental or the Bank) and his two sisters as co-executors and co-trustees. Under its terms, life estates were granted to each of the sisters in separate trusts of $1 million each, with the remainders to go to charity according to certain terms. The remainder of the Stuart estate was left in trust to be distributed to qualified charitable organizations. These charities were to be selected by the co-executors and co-trustees within 5 years of the testator's death and their interests were to vest at the end of that period. Accordingly, the trust should have been distributed or designated for distribution by June 29, 1971.

The facts adduced at trial showed that Harold L. Stuart was born in Rhode Island and came to Chicago in 1893 at the age of 14. Although largely self-educated, he obtained some formal education at Lewis Academy (now part of Illinois Institute of Technology), where he studied for five semesters between 1896 and 1900. The Stuart family originally maintained a home in Kenilworth, Illinois; however, since 1921, Stuart had shared a Chicago residence with his sisters, Harriet and Elizabeth, who were also unmarried. The relationship between the three was described as close and harmonious.

The testator, an investment banker of national renown, was the president and sole stockholder of Halsey, Stuart & Co., Inc., an investment banking firm and underwriter of fixed income public utility securities. He was devoted to building the firm to a position of pre-eminence in the investment banking business and, with relation to this, was interested in building the city of Chicago into a financial center which could compete with New York,

In February 1964, David M. Kennedy, then chairman of Continental, invited Stuart to lunch to discuss the question of a will since he did not have one on file at the Bank. Kennedy asked whether he had a will and told him that it would be very bad for Continental if one of its largest individual shareholders did not have one with the Bank. He then explained the importance of having a will and the problems with intestacy. Various educational, civic and cultural organizations, and other institutions were mentioned as possible charitable recipients. Kennedy discussed his own activities with the Mayor's Committee for Economic and Cultural Development of Chicago and its difficulties in obtaining funds for its programs. Since Stuart was an enthusiastic supporter of Chicago and his business was centered there, Kennedy suggested that he would probably want most of his estate to be distributed in this area. The discussion also explored in detail the subject of providing for the needs of Stuart's sisters. Kennedy then stated that the Bank would recommend a lawyer who would draft the document for him. Stuart in fact had a will which was executed in 1942 but, according to the testimony, it was never mentioned in this conversation. Kennedy testified that he later spoke with the attorney who was drafting the will and asked that co-executors and co-trustees be included and that the necessity for this be explained to the testator.

The vice chairman of the board of Continental, Donald Graham, testified that he had a luncheon meeting with Stuart and another officer of the Bank, Arthur Leonard, prior to the execution of the will. The purpose of this conference was to discuss the proposed will, and to give Stuart another high-level contact at the Bank in addition to Kennedy. Two or three months later, in another luncheon conference, Graham told Stuart that the should consider making gifts during his lifetime so that he would have the satisfaction of knowing to which charities his money was going. Stuart responded that he did not have any particular beneficiaries in mind. A suggestion that he might want to consider making anonymous gifts was answered in the negative.

Edward D. Benninghoven, former head of the business development section of the trust department at Continental, testified that he met with the testator, the Stuart sisters, Arthur Leonard, Kennedy and another vice president on April 23, 1964, the date of the execution of the will. During the course of the meeting, Stuart stated that he had no interest in designating the various tax-exempt organizations to which the money would go. Because he had been pestered for money by so many organizations, he preferred that his executors and trustees consummate that part of the problem after his death, rather than making his own decision with respect to disposition of the funds. Benninghoven testified that nothing was said by the sisters.

The testimony of Elizabeth Stuart was in conflict with that offered by the Bank. She stated that the testator never discussed his will with anyone except his two sisters, his brother Charles (who died in 1963) and Arthur Leonard, who was a good friend. Copies of the will were given to the sisters as soon as it was drafted and they read it many times before its execution. The sisters discussed the 'majority clause' in the will with Stuart who explained that they, Harriet and Elizabeth, were the majority because they knew exactly what he wanted. The witness stated that...