State Bank of Chicago v. Gross

• Decision Date: 18 June 1931
• Docket Number: No. 20667.,20667.
• Parties: STATE BANK OF CHICAGO v. GROSS.
• Court: Illinois Supreme Court

344 Ill. 512

176 N.E. 739

STATE BANK OF CHICAGO

v.GROSS.

No. 20667.

Supreme Court of Illinois.

June 18, 1931.

Error to First Branch, Appellate Court, First District, on Appeal from Circuit Court, Cook County; George Fred Rush, Judge.

Final accounting by the State Bank of Chicago, executor of the estate of Minnie Schmidt, deceased, to which Wilhelmina Gross filed objections. Judgment sustaining the objections was modified by the Appellate Court, and the executor brings certiorari.

Affirmed.

Helmer, Moulton, Whitman & Holton, of Chicago (Roland D. Whitman, of Chicago, of counsel), for plaintiff in error.

Thomas G. Deering and West & Eckhart, all of Chicago, for defendant in error.

ORR, J.

By the sixth section of the will of Minnie Schmidt the testatrix created a $25,000 trust for her granddaughter, Wilhelmina Gross, defendant in error. The testatrix there directed her executor, the State Bank of Chicago, plaintiff in error, to pay this sum of money to the State Bank of Chicago, as trustee, ‘to have and to hold the same upon the trust and for the uses and purposes hereinabove expressed.’ After authorizing the trustee to invest and reinvest the trust funds, the paragraph in question provides: ‘After paying all necessary and proper expenses incurred by said trustee in the care and management of said trust fund, I direct said trustee to pay the net income from said trust fund to my grand-daughter, Wilhelmina Gross, in convenient installments to be determined by said trustee, commencing at my death and continuing until January 2, 1935.’ Minnie Schmidt died April 9, 1925, and her will was duly admitted to probate and record in the probate court of Cook county on May 12, 1925. On the same day the executor qualified. On April 9, 1926, Wilhelmina Gross filed her bill to contest the will, alleging that the testatrix was without testamentary capacity, but on November 26, 1927, she dismissed her bill. The final account of the executor was filed on April 12, 1928, to which an objection was filed by Wilhelmina Gross, claiming that the $25,000 trust fund should bear interest from April 9, 1925, the date testatrix died, to December 19, 1927, the date when the executor made payment to itself, as trustee. By stipulation of the parties it is agreed that the securities left by testatrix were in excess of the $25,000 required to be paid over by the executor to the trustee. The objection of the granddaughter was sustained in the probate and circuit courts of Cook county, and, with slight modification, by the Appellate Court for the First District, all of which held that income from the corpus of the trust was payable under the express terms of the will, commencing at the death of testatrix. By writ of certiorari the executor has brought the case here for review.

The chief questions for determination are whether the $25,000 was payable by the executor to the trustee at the date of the death of testatrix or one year from that date, or whether the action of Wilhelmina Gross in filing her bill to contest the will warranted the executor in further postponing the payment of the $25,000 to the trustee. In either of these events the executor contends that the $25,000 should not bear interest.

General pecuniary legacies draw interest from the time they are due and payable. This has been the law of England for over two centuries. That this rule has been generally adopted in the United States is shown by the decisions of courts of last resort in Massachusetts, New York, New Jersey, Pennsylvania, Ohio, Indiana, Iowa and many other jurisdictions. This law is so generally accepted that the citation of numerous authorities is needless. The allowance of interest on legacies from the time when they are regarded as payable is said to have been borrowed by the English chancery courts from the practice in the ecclesiastical courts. Woodward's Estate, 78 Vt. 254, 62 A. 718, 719,6 Ann. Cas. 524. It appears, however, to have been a general rule of law applicable whenever and in whatever court a legatee might claim or sue for a legacy. Hamilton v. McQuillan, 82 Me. 204, 19 A. 167. The rule, therefore, which allowed interest on pecuniary legacies from the time they are due and payable, was undoubtedly the rule of the common law of England within the meaning of our statute, which makes that law the rule of decision in this state.

It is not so much that there has been improper delay in payment, but rather that the testator intends the legatee, as part of the legacy, to have the value of the use of the money, which has influenced the courts to adopt the rule giving interest on legacies. It has thus become a rule of construction that the unconditional gift of a general pecuniary legacy is a gift of both principal and interest, and that the interest is given not as a penalty for the executor's negligence, but as an incident and accretion to the legacy itself. Kent v. Dunham, 106 Mass. 586;Esmond v. Brown, 18 R. I. 48, 25 A. 652;Davison v. Rake, 44 N. J. Eq. 506, 16 A. 227. The residuary legatee is postponed until specific legacies are paid, and the loss which he suffers, it is said, is no more than the testator expressly provided for by preferring the general pecuniary legatees to the residuary legatees. Sloan's Appeal, 168 Pa. 422, 32 A. 42,47 Am. St. Rep. 889. Furthermore the rule allowing interest is by no means as harsh on the residuary legatee as might at first appear, for, whenever long delays occur in the collection of assets in the form of securities for money, they usually bear interest. In England, as well as in most of the American jurisdictions, the rule is well established that, unless the will clearly expresses a contrary intent, a general pecuniary legacy is regarded as due and payable one year from the testator's death and draws interest from such time. Fenton v. Hall, 235 Ill. 552, 85 N. E. 936. It therefore must be first determined whether the language used was clear and specific enough to take the legacy in question out of the general rule.

Our first duty is to ascertain and give effect to the intention expressed by the testatrix in her will. By the section referred to she directed the trustee ‘to pay the net income from said trust fund * * * commencing at my death.’ This language is plain and unambiguous, and needs no construction. The general rule requiring the payment of interest on pecuniary legacies one year after the death of the testator has no application where the will clearly fixes a different time when such payment shall begin. 40 Cyc. 1800; Davis v. Brown, 112 Wash. 121, 191 P. 1098;Blair v. Blair, 122 Me. 500, 120 A. 902;Bishop v. Bishop, 81 Conn. 509, 71 A. 583;Edwards v. Edwards, 183 Mass. 581, 67 N. E. 658;Poole v. Union Trust Co., 191 Mich. 162, 157 N. W. 430, Ann. Cas. 1918E, 622. Where the will fixes the time for payment of interest or income, it is controlling. 28 R. C. L. 353, 354, and cases cited. Any construction which in effect would postpone the payment of this incomewould be in conflict with the primary meaning of the language used by the testatrix, which no facts or circumstances should be allowed to change.

It is argued by plaintiff in error that the clause of the will under consideration is an express direction to the trustee but that it is neither an express nor an implied direction to the executor. This position cannot be sustained. The clear intention expressed in the will must govern, and all persons, whether executors, trustees, legatees, or other parties interested, are bound by its directions. The usual excuse found in cases where payment of legacies has been postponed is that the assets out of which the legacy must be paid were not and could not be collected until long after a year from the testator's death. This excuse has always failed. Kent v. Dunham, supra; Marsh v. Hague, 1 Edw. Ch. (N. Y.) 174;Miller v. Sandford, 31 N. J. Eq. 427;Koon & Wight's Appeal, 113 Pa. 621, 6 A. 377;Eichelberger's Estate, 170 Pa. 242, 32 A. 605;Gray v. Case School, 62 Ohio St. 1, 56 N. E. 484. It is equally no excuse that probate was delayed until long after the testator's death, Ogden v. Pattee, 149 Mass. 82, 21 N. E. 227,14 Am. St. Rep. 401; or that the legatee died within one year after the testator's death, so there was no one who could receive the legacy, Esmond v. Brown, supra; Lyon's Adm'r v. Magagnos' Adm'r, 7 Grat. (48 Va.) 377; or that the legatee disappeared and could not be found, Miles' Estate, 12 Pa. Co. Ct. Rep. 383; or that the legatee, being a nonresident, was not in position to receive the legacy, Marsh v. Hague, supra; or where the delay was due to the fact that the testator himself allowed further time for the settling of the estate, Spencer, Petitioner, 16 R. I. 25, 12 A. 124;Warwick v. Ely, 59 N. J. Eq. 44, 44 A. 666; or where no demand was made by the legatee, Hamilton v. McQuillan, supra; Kent v. Dunham, supra; Ogden v. Pattee, supra. The sixth clause of the will of Minnie Schmidt contains an express direction to the executor to pay the sum of $25,000 to the trustee, coupled with a further direction that the trustee pay the net income from such trust fund to her granddaughter, ‘commencing at my death.’ The executor was therefore bound by these express directions to pay over this fund without delay, so that the beneficiary should commence to receive the income from the trust fund in the manner directed by the will. To come to any other conclusion would be to refute the will itself.

It is a well-established principle of law that, unless a contrary intention appears, a beneficiary is entitled to the income from trust property from the testator's death. In 40 Cyc. 1800, the rule is thus stated: ‘The time of accrual of the right of beneficiaries to income or capital and the times at which payments are to be made depend, of course, upon the provisions of the will and the intention of the testator. Unless a contrary intent appears,...