Prospect Bank v. Meyer

• Decision Date: 06 November 2020
• Docket Number: NO. 4-20-0074,4-20-0074
• Citation: 2020 IL App (4th) 200074 -U
• Parties: PROSPECT BANK, as Successor Trustee for the H.T. Bell Farm Trust, Plaintiff-Appellee, v. DANIEL P. MEYER; MICHAEL W. MEYER; JEAN M. KAHN; JAMES C. MEYER; ANNA K. McGILLEN; JACILYN M. MANZELLA; SHRINERS HOSPITALS FOR CHILDREN, a Nonprofit Organization; SHRINERS HOSPITALS FOR CHILDREN-ST. LOUIS, a Nonprofit Organization; and THE PEOPLE OF THE STATE OF ILLINOIS ex rel. KWAME RAOUL, Attorney General of Illinois, Defendants (Daniel P. Meyer, Michael W. Meyer, Jean M. Kahn, James C. Meyer, Anna K. McGillen, and Jacilyn M. Manzella, Defendants-Appellants, and Shriners Hospitals for Children and Shriners Hospitals for Children-St. Louis, Defendants-Appellees).
• Court: United States Appellate Court of Illinois

2020 IL App (4th) 200074-U

PROSPECT BANK, as Successor Trustee for the H.T. Bell Farm Trust, Plaintiff-Appellee, v. DANIEL P. MEYER; MICHAEL W. MEYER; JEAN M. KAHN;

JAMES C. MEYER; ANNA K. McGILLEN; JACILYN M. MANZELLA;

SHRINERS HOSPITALS FOR CHILDREN, a Nonprofit Organization;

SHRINERS HOSPITALS FOR CHILDREN-ST. LOUIS, a Nonprofit Organization;

and THE PEOPLE OF THE STATE OF ILLINOIS ex rel. KWAME RAOUL,

Attorney General of Illinois, Defendants

(Daniel P. Meyer, Michael W. Meyer, Jean M. Kahn, James C. Meyer,

Anna K. McGillen, and Jacilyn M. Manzella, Defendants-Appellants,

and Shriners Hospitals for Children and Shriners Hospitals

for Children-St. Louis, Defendants-Appellees).

NO. 4-20-0074

APPELLATE COURT OF ILLINOIS FOURTH DISTRICT

November 6, 2020

NOTICE

This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(e)(1).

Appeal from the Circuit Court of Douglas County

No. 19MR47

Honorable Wm. Hugh Finson, Judge Presiding.

JUSTICE TURNER delivered the judgment of the court.

Justices Knecht and Harris concurred in the judgment.

ORDER

¶ 1 Held: The circuit court properly granted plaintiff a declaratory judgment declaring testatrix's will with its two codicils did not grant defendants-appellants a long-term or lifetime leasehold interest in the Trust's farmland, but the court erred by granting a declaratory judgment on the other declarations requested by plaintiff.

¶ 2 In August 2019, plaintiff, Prospect Bank, as successor trustee for the H.T. Bell Farm Trust (Trust), which was established by the last will and testament (as amended by the first and second codicils) of Mary Lou McGrew (testatrix), filed a complaint for a declaratory judgment against defendants, Daniel P. Meyer; Michael W. Meyer; Jean M. Kahn; James C. Meyer; Anna K. McGillen; Jacilyn M. Manzella; Shriners Hospitals for Children, a nonprofit organization; Shriners Hospitals for Children-St. Louis, a nonprofit organization; and the People of the State of Illinois ex rel. Kwame Raoul, Attorney General of the State of Illinois. Daniel P. Meyer, Michael W. Meyer, Jean M. Kahn, James C. Meyer, Anna K. McGillen, and Jacilyn M. Manzella (collectively the Meyer siblings) are the adult children of Wayne N. Meyer, who are mentioned in testatrix's second codicil to her last will. Shriners Hospitals for Children and Shriners Hospitals for Children-St. Louis (collectively Shriners defendants) are the Trust's charitable beneficiaries. Plaintiff sought a judgment declaring the following: (1) testatrix's will and its codicils do not grant Wayne or any of his children, including Daniel, a long-term or lifetime leasehold interest in the Trust's farmland; (2) the current lease between the Trust and Daniel, which runs for one year and expires on March 1, 2020, may be terminated or nonrenewed in accordance with its terms; and (3) any sale of the Trust's farmland is subject only to the farm lease's current term ending on March 1, 2020, and the farm lease may be terminated thereafter. In October 2019, Shriners defendants filed a motion for judgment on the pleadings in favor of plaintiff. After a January 2020 hearing, the Douglas County circuit court entered a written order granting Shriners defendants' motion and entering the declaratory judgment requested by plaintiff.

¶ 3 The Meyer siblings appeal, asserting (1) the farm lease cannot nullify testatrix's testament and (2) testatrix's testamentary intent controls. We affirm in part and vacate in part.

¶ 4 I. BACKGROUND

¶ 5 Testatrix executed her last will and testament at issue in this case on May 24, 1991. In September 1992, she executed a first codicil to her 1991 will in which she revoked thethird section of her 1991 will and replaced it with language establishing the Trust and devising all of her farm real estate to the Trust, which included the farm leased by Daniel. (Given the Trust at issue is a testamentary one created by the first codicil and later amended by a second codicil, we refer to the Trust's language and the codicils' language interchangeably.) The Trust was a charitable remainder unitrust with Shriners Hospitals for Children as the charitable beneficiary. The first codicil specified that, after the death of testatrix's sister, Harriet Bell, the Trust's income was to be used for Shriners Hospitals for Children's hospital located in St. Louis, Missouri. At that time, the trustee was to pay Shriners defendants all of the Trust's net income in quarterly installments. Additionally, paragraph (A)(6) of the Trust addressed prohibited transactions and stated the following:

"The Trustee shall make distributions at such time and in such manner as not to subject the Trust to tax under section 4942 of the [Internal Revenue] Code [(26 USC § 4942 (1988))]. Except for the payment of the unitrust amount to the Recipient, the Trustee shall not engage in any act of self-dealing, as defined in section 4941(d) [(26 USC § 4941(d) (1988))] and shall not make any taxable expenditures, as defined in section 4945(d) [(26 USC § 4945(d) (1988))]. The Trustee shall not make any investments that jeopardize the charitable purpose of the Trust, within the meaning of section 4944 [(26 USC § 4944 (1988))] and the regulations thereunder, or retain any excess business holdings, within the meaning of section 4943(c) [(26 USC § 4943(c) (1988))]."

¶ 6 On August 26, 1994, testatrix executed a second codicil to her 1991 will adding paragraph (B)(3)(j) to the third section of her will, which was the section creating the Trust. Paragraph (B)(3)(j) stated the following:

"I direct that the Trustee continue to rent the farm on conditions and terms similar to those in effect at my death, to the present farm tenant, Wayne N. Meyer, or to any of his adult children, provided that either Wayne Meyer or his adult children to whom the farm is rented are actively engaged in farming and agree to personally farm the land themselves and provided further that they follow good farming practices as determined by the Trustee in its sole discretion."

The testatrix ratified and confirmed her will in all other respects.

¶ 7 On September 23, 1996, testatrix's farm manager, First of America Agricultural Services, and Daniel entered a farm lease (1996 Lease), which was for the period of March 1, 1997, to the last day of February 1998. The 1996 Lease was a 50/50 crop share lease and provided, in pertinent part, the following:

"LENGTH OF TENURE: The term of this lease shall begin on March 1, 1997, and shall continue through the last day of February, 1998, and year to year thereafter, unless terminated in writing executed by either the Landowner, his Agent or Tenant not less than four months prior to the end of the current lease year.

EXTENT OF AGREEMENT: Terms of this lease shall be binding on the heirs, executors, administrators or assigns, or agents for both the Landowner and Tenant, in the same manner as upon the original parties." (Emphases in original.)

According to the complaint, the aforementioned farm lease had continued to renew annually since its execution. At the time of the August 2019 complaint, the farm lease's current term was to end on the last day of February 2020. The complaint also stated the Trust was comprised of 198.23 acres of farmland in Douglas County and $35,638.13 in cash as of June 30, 2019.

¶ 8 Testatrix died on August 7, 1998, and Bell died on February 21, 1999. On October 1, 2009, Edgar County Bank and Trust Company became the Trust's successor trustee, and Edgar County Bank became known as Prospect Bank, plaintiff, on August 1, 2017.

¶ 9 In August 2019, plaintiff filed its complaint for declaratory judgment. Plaintiff noted it had determined selling at least some of the Trust's farmland and investing the proceeds in more liquid assets was in the best interest of the Trust because it would provide liquidity to continue to make sufficient charitable distributions to avoid a substantial excise tax imposed by the Internal Revenue Service. It further alleged Daniel had asserted testatrix's will, with its codicils, granted him a leasehold interest in the Trust's farmland for as long as he or his siblings choose to farm it and thus the property must be sold subject to such a continuing long-term leasehold interest. Plaintiff contended the will did not grant the Meyer siblings such an interest in the farmland and the interest asserted by Daniel would diminish the value for which the farmland could be sold. In paragraph 50 of the complaint, plaintiff alleged the following: "An actual controversy exists between the Trustee and [Daniel] as to whether the Will (as amended by the First and Second Codicils) created a lifetime or long-term leasehold interest in the Trust's farmland for Wayne N. Meyer or any of his children (including [Daniel])." The relief prayed for by plaintiff in its complaint was a court order declaring the following:

"a. The Last Will and Testament of Mary Lou McGrew (as amended by the First and Second Codicils) does not grant Wayne N. Meyer or any of his children (including Daniel P. Meyer) a long-term or lifetime leasehold interest in the Trust's farmland (as described in Exhibit E).

b. The current lease between the Trust and the Meyer Tenant runs for one year, expiring on March 1, 2020, and may be terminated or non-renewed inaccordance with its terms.

c. Any sale of the Trust's farmland is subject only to the Farm Lease's current term, which ends on March 1, 2020, and the Farm Lease may be terminated thereafter." (Emphasis in original.)

Additionally, plaintiff attached to its complaint the following: (1) testatrix's last will and testament with the first and second codicils, (2) the farm lease executed in 1996, and (3) a plat of survey with an attached legal description for the Trust's farmland.

¶ 10 Shriners defendants and the Attorney General both filed answers requesting the circuit court to enter an order issuing the aforementioned declarations requested in pla...