Roberts v. Northern Trust Co.

• Decision Date: 01 March 1982
• Docket Number: No. 81 C 0040.,81 C 0040.
• Court: U.S. District Court — Northern District of Illinois
• Parties: Alison Leilani ROBERTS, Plaintiff, v. The NORTHERN TRUST COMPANY, as trustee of the Marjorie Lewis Griffing Trust, dated April 3, 1963, Honolulu Academy of Arts, Queen's Medical Center, Bishop Trust Company, Ltd., as Executor of Last Will & Testament of Robert P. Griffing, Jr., and Unborn Descendants of Alison Leilani Roberts, Defendants.

550 F. Supp. 729

Alison Leilani ROBERTS, Plaintiff, v. The NORTHERN TRUST COMPANY, as trustee of the Marjorie Lewis Griffing Trust, dated April 3, 1963, Honolulu Academy of Arts, Queen's Medical Center, Bishop Trust Company, Ltd., as Executor of Last Will & Testament of Robert P. Griffing, Jr., and Unborn Descendants of Alison Leilani Roberts, Defendants.

No. 81 C 0040.

United States District Court, N.D. Illinois, E.D.

March 1, 1982.

Richard J. Hoskins, Allan J. Sweet, Charles D. Fox IV, Schiff, Hardin & Waite, Chicago, Ill., for plaintiff.

Gary L. Prior, Robert T. Palmer, McDermott, Will & Emery, Jill Ann Coleman, Levy & Erens, Stephen P. Kenney, Lord, Bissell & Brook, Chicago, Ill., for defendants.

MEMORANDUM AND ORDER

MORAN, District Judge.

This is a declaratory judgment action in which plaintiff, Alison Leilani Roberts ("Roberts"), seeks a determination that her father, Robert P. Griffing ("Mr. Griffing"), by his last will and testament, effectively exercised his testamentary power of appointment over a marital trust established by his late wife and Roberts' mother, Marjorie Lewis Griffing ("Mrs. Griffing"). Defendant, The Northern Trust Company ("Northern"), which is trustee of Mrs. Griffing's trust, has moved for judgment on the pleadings pursuant to Fed.R.Civ.P. 12(c). Defendants, Honolulu Academy of Arts, Queen's Medical Center, and the Unborn Descendants of Alison Leilani Roberts, all contingent remaindermen of the trust established by Mrs. Griffing, have joined in the motion for judgment on the pleadings.

On a motion for judgment on the pleadings, all well-pleaded factual allegations in the complaint are deemed admitted, and the only question is whether the movant is entitled to judgment as a matter of law. For purposes of this motion, therefore, defendants admit the following facts set forth in Roberts' complaint and attached exhibits.

In 1963, Mrs. Griffing executed a trust agreement, subsequently amended in 1973, under which Mr. Griffing received a trust ("the marital trust"). Mr. Griffing was given a testamentary general power of appointment over the corpus of the marital trust pursuant to § 6(c) of the trust agreement:

On the death of my husband, Robert P. Griffing, Jr., the principal of the fund named for him and all accrued or undistributed income thereof shall be distributed ... as my husband may provide and appoint by will specifically referring to this power to appoint.

The trust agreement further provided that, in the event of Mr. Griffing's failure to exercise his power of appointment, the corpus of the marital trust would remain in trust for Roberts ("the daughter's trust"). Roberts would receive the income from the trust principal unless the trustee (Northern) deemed it advisable to accumulate the income or invade the principal in the interest of Roberts.

Mrs. Griffing provided that Roberts would receive a special testamentary power of appointment over the daughter's trust. If she failed to exercise this power of appointment, the corpus would go to her living descendants or, if there were none, to the Honolulu Academy of Arts and the Queen's Medical Center.

Paragraph 25 of Mrs. Griffing's trust agreement provided that "the laws of Illinois shall govern the interpretation and validity of the provisions of this instrument and all questions relating to the management, administration and investment of the trusts hereby created."

Mr. Griffing died testate on August 10, 1979. He partially exercised his power of appointment over the marital trust by making bequests to certain individuals pursuant to the following language in Article VIII of his will:

I give, devise, and bequeath from ... the Robert P. Griffing, Jr. Trust ... under my power to appoint as provided for by Paragraph 6(c) of the AMENDMENT TO THE TRUST AGREEMENT OF THE MARJORIE LEWIS GRIFFING TRUST DATED April 30, 1963, amended May 21, 1973, the following amounts to the individuals designated ....

Roberts was not included among the beneficiaries specified in Article VIII. These bequests did not, however, exhaust the available corpus of the marital trust, and in Article X of his will, Mr. Griffing left the remainder of his estate to Roberts as follows:

I give all the remainder of my estate, and any property over which I may possess any power of appointment by Will or otherwise, hereinafter called by "residuary estate", to my daughter, ALISON LEILANI GRIFFING, absolutely, if she shall survive me.

According to ¶ 13A of the second amended complaint,¹ Mr. Griffing "intended to exercise completely the power of appointment which he had over the marital trust and thereby terminate the marital trust," (Roberts Comp. ¶ 13A).

Northern and the other defendants contend that they are entitled to judgment in their favor because the pleadings conclusively show that Mr. Griffing failed to comply with one of two requirements under Illinois law for the effective exercise of a testamentary general power of appointment, that is, strict compliance by the donee (here, Mr. Griffing) with any conditions imposed by the donor of the power of appointment (here, Mrs. Griffing). Since Mr. Griffing did not specifically refer in Article X of his will to the power of appointment granted him under Mrs. Griffing's trust agreement, Roberts is not entitled to the remaining corpus of the marital trust, according to defendants.

Roberts makes two arguments in response. First, she contends that Mr. Griffing complied with the conditions on the exercise of his power of appointment by referring specifically to it in Article VIII of his will and generally, in Article X, to any power of appointment. Alternatively, she argues that compliance with conditions on the exercise of a power of appointment is not an independent requirement of Illinois law.² Rather, she interprets this requirement as simply one factor to consider in deciding whether the general rule that the donee must intend to exercise the power has been satisfied. Because she has alleged that Mr. Griffing intended to exercise his power of appointment in her favor, Roberts says defendants' motion must be denied.

The first question presented is what law is to be applied to this case. Roberts contends that Hawaii law controls because both Mr. and Mrs. Griffing were domiciled in that state. Defendants seek to apply Illinois law because Mrs. Griffing provided in her trust agreement that Illinois law should govern questions relating to the agreement. The court concludes that the law of Illinois should be applied to this case.³

It is true that, in Illinois, the law of the donor's domicile generally controls questions about the donee's exercise of a power of appointment since the appointment is considered to be part of the instrument created by the donor. In re Estate of Breault, 29 Ill.2d 165, 174, 193 N.E.2d 824, 829, (1963). Northern Trust Company v. Porter, 368 Ill. 256, 263, 13 N.E.2d 487, 491 (1938). The express terms of Mrs. Griffing's trust agreement, however, place this case outside this general choice-of-law rule. Mrs. Griffing provided that Illinois law was to govern questions relating to the interpretation or validity of the trust agreement and the management of the trust created by it. This court will not overrule the state law preferences of the person who created the trust and power of appointment in question in the absence of a clear showing of conflict with an important public policy. First National Bank of Chicago v. Ettlinger, 465 F.2d 343, 347 (7th Cir.1972). Since questions relating to the exercise of a donee's power of appointment under an inter vivos trust are determined by the law governing the creation of the trust, id. at 346, Illinois law therefore controls here.⁴

Both Roberts and defendants look to a recent case in the Illinois Appellate Court as the guide for decision in this action. The case in question, In re Estate of MacLeish, 35 Ill.App.3d 835, 342 N.E.2d 740 (1st Dist. 1976), involved Article Va(b) of the will of MacLeish's wife, which provided that the trustee of a particular trust should distribute "the entire remaining principal of Trust One, and any accrued income therefrom, as BRUCE MacLEISH shall direct and appoint in and by his last Will expressly exercising such power ...." MacLeish died testate, stating in his will, "Under the provisions of paragraph (b) of Article V added to the Will of my wife, ELIZABETH MOORE MacLEISH ... I am given the power to appoint the entire remaining principal of Trust Number One and any accrued and undistributed income therefrom by my Will. Expressly exercising said power, I hereby appoint all of said assets to my estate ...."

The Illinois Appellate Court rejected a claim that MacLeish's attempted exercise of the power of appointment was invalid because MacLeish had incorrectly referred to Article V of his wife's will rather than to Article Va. In so doing, the court set up the following standard for the effective exercise of a testamentary power of appointment: "First, the intention of the testator to exercise the power must be shown. Second, there must be compliance with any conditions established by the donor for its exercise. Northern Trust Co. v. House (1954), 3 Ill.App.2d 10, 120 N.E.2d 234." 35 Ill.App.3d at 838, 342 N.E.2d at 743.

The court concluded that MacLeish had clearly intended to exercise the power of appointment and that, despite the incorrect reference to Article V of his wife's will, he effectively complied with the requirement of express exercise of the power. In drawing the latter conclusion, the court relied on basic principles of will construction that (1) the intent of the testator controls and courts should construe wills to give effect to a testator's general intention; (2) a devise or bequest should not be voided because of errors in describing the subject matter as long as enough remains to show the testator's intent; and (3) the court will use its equitable powers to correct technical defects in a...