BMO Harris Bank N.A. v. Towers

Illinois Official Reports
Appellate Court
BMO Harris Bank N.A. v. Towers, 2015 IL App (1st) 133351
Appellate Court BMO HARRIS BANK N.A., as Trustee of the Mary A. Cornelius
Caption Trust Dated November 18, 1972, f/b/o Martin P. Cornelius, Jr., and as
Trustee of the Martin P. Cornelius, Sr. Trust, f/b/o Martin P.
Cornelius, Jr., Plaintiff and Counterdefendant-Appellee, v.
RICHARD S. TOWERS, as Successor Trustee of the Martin P.
Cornelius, Jr. Revocable Living Trust, HARRY H. CORNELIUS,
CAMILLA ANNE CORNELIUS, and MARTIN P. CORNELIUS III,
Defendants and Counterplaintiffs-Appellants (Dagmar Cornelius,
Defendant-Appellee).
District & No. First District, Fifth Division
Docket Nos. 1-13-3351, 1-13-3635 cons.
Filed October 23, 2015
Decision Under Appeal from the Circuit Court of Cook County, No. 12-CH-38519; the
Review Hon. Thomas R. Allen, Judge, presiding.
Judgment Affirmed.
Counsel on Norman J. Lerum, P.C., of Chicago (Norman J. Lerum and Catherine
Appeal E. Lerum, of counsel), for appellants.
Chapman & Cutler LLP, of Chicago, (Rebecca Wallenfelsz and Bryan
E. Jacobson, of counsel), for appellee BMO Harris Bank N.A.
Harrison & Held, LLP, of Chicago (Robert S. Held and George N.
Vurdelja, Jr., of counsel), for appellee Dagmar Cornelius.
Panel JUSTICE LAMPKIN delivered the judgment of the court, with
opinion.
Presiding Justice Rochford and Justice Hall concurred in the judgment
and opinion.
OPINION
¶1 This cause arose when plaintiff BMO Harris Bank N.A. (Bank), as trustee of two trusts,
filed a petition seeking instructions from the court regarding the validity of the exercise of
the testamentary powers of appointment by Martin Cornelius, Jr., (Martin Jr.) over the two
trusts, which were created by his parents. Thereafter, the trustee of Martin Jr.’s revocable
living trust and three of Martin Jr.’s four living children (collectively, the Towers defendants)
filed a counterpetition against the Bank, alleging that Martin Jr.’s exercise of his powers of
appointment was valid and the Bank violated its fiduciary duties by filing its petition.
Another defendant, Martin Jr.’s daughter Dagmar Cornelius, moved for partial summary
judgment in her favor on certain counts of the Bank’s petition.
¶2 The trial court granted Dagmar Cornelius’s partial motion for summary judgment, held
that Martin Jr. improperly exercised the powers of appointment granted to him by his parents,
and instructed the Bank to distribute the trust funds held in the parents’ two trusts per stirpes
to Martin Jr.’s four living children. The trial court also granted the Bank’s motion for
judgment on the pleadings and dismissed the Towers defendants’ counterpetition, and
granted Dagmar’s petition for attorney fees.
¶3 On appeal, the Towers defendants contend Martin Jr. properly exercised his powers of
appointment over his parents’ two trusts using his revocable living trust as a conduit; the trial
court erred in granting the Bank’s motion to dismiss the Towers defendants’ counterpetition;
and the trial court erred by summarily granting Dagmar’s petition for attorney fees.
¶4 For the reasons that follow, we affirm the judgment of the circuit court. We hold that: (1)
as the trust donee, Martin Jr.’s exercise of his limited testamentary powers of appointment in
favor of himself was ineffective and therefore void because he was not a permissible
appointee; (2) as the trustee, the Bank acted within its fiduciary duties by filing a petition
seeking instruction from the court regarding the proper distribution of the trusts; and (3) the
trial court did not err in awarding Dagmar attorney fees without conducting an evidentiary
hearing.
¶5 I. BACKGROUND
¶6 Mary and Martin Cornelius, Sr., created two trusts with the Bank as trustee that were to
be administered for the benefit of their son, Martin Jr., during his lifetime. Each trust granted
Martin Jr. a limited testamentary power of appointment. Under the terms of the Mary trust,
Martin Jr. could appoint assets to or in further trust for his spouse, Mary’s descendants other
than Martin Jr., or the spouses of such descendants. Under the terms of the Martin Sr. trust,
Martin Jr. could appoint assets to or in further trust for his spouse, his lineal descendants and
their spouses, Martin Sr.’s other lineal descendants and their spouses, or any charitable
organization. Under the terms of the Mary trust and Martin Sr.’s will, if the powers of
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appointment were not effectively exercised, then distributions would be made to the
descendants of Martin Jr. living at the time of his death.
¶7 During his lifetime, Martin Jr. created a revocable living trust (Martin Jr. trust). Martin Jr.
died a resident of North Carolina in 2006 and was survived by his spouse and four children,
Harry, Martin III, Camilla, and Dagmar. Martin Jr.’s last will and testament, dated 1991, was
admitted to probate in North Carolina. Section 1.1 of Martin Jr.’s will directed “that all of my
legal debts, the expenses of the administration of my estate and the expenses of my last
illness, funeral and interment be paid out of my estate, but not from any marital assets which
are exempt from federal estate tax unless there are no other assets available.” In sections 2.2
and 2.3 of his will, Martin Jr. exercised his limited powers of appointment under the Mary
and Martin Sr. trusts by appointing all the property to the trustee of the Martin Jr. trust.
Section 3.1 of the will provided that Martin Jr. devised “the residue of [his] estate, including
[his] property over which [he] may have any general power of appointment at the time of
[his] death” to the trustee of the Martin Jr. trust “to be administered as part of the principal of
the Trust.”
¶8 Section 1.1 of the Martin Jr. trust agreement stated that the “Trust assets shall consist of
assets previously transferred by [Martin Jr.] to the trustee, and such other assets as [Martin
Jr.] may transfer to the trustee, or which the trustee shall receive and accept from other
sources, including [Martin Jr.’s] estate, and any other assets substituted therefor or added
thereto.” Section 4.1 of the trust agreement addressed the trustee’s administration of the trust
during Martin Jr.’s lifetime and provided that all income not distributed during Martin Jr.’s
lifetime would be added to the principal.
¶9 Section 5.1 of the trust agreement instructed the trustee that, if Martin Jr.’s spouse
survived him, then the trustee would divide the trust estate, “both income and principal,
which shall include any additions made to the Trust by reason of [Martin Jr.’s] death (such as
transfers under [Martin Jr.’s] Will, or life insurance policies on [Martin Jr.’s] life),” into a
marital share and a credit shelter share. If Martin Jr.’s spouse did not survive him, then the
credit shelter would consist of the entire estate. The marital share would be designated the
Marital Deduction Share and the credit shelter share would be designated the Martin Phelps
Cornelius, Jr. Family Trust.
¶ 10 Section 5.3 of the trust agreement directed the trustee, upon Martin Jr.’s death, to pay
from the “original trust *** all debts, expenses of administration, and death taxes (estate,
inheritance, and like taxes, including interest and penalties but not including any
generation-skipping transfer taxes) that are payable as a result of [Martin Jr.’s] death.”
According to section 8.1 of the trust agreement, the “original Trust” created by the trust
agreement may be referred to as the Martin Phelps Cornelius, Jr. Revocable Living Trust
dated July 29, 1987, whereas the family trust may be referred to as the Cornelius Family
Trust, followed by the date of the trust’s initial funding. Section 5.5 of the trust agreement
provided that “[a]t any time during the continuance of the original Trust after [Martin Jr.’s]
death, the trustee may distribute to [Martin Jr.’s] probate estate, as a beneficiary of the Trust,
cash or other property out of any assets then held by the Trust.” Section 5.7 of the trust
agreement stated that “[w]hen all of the properties of the original Trust have been so divided
and distributed, the original Trust shall be deemed terminated.” After the death of Martin
Jr.’s spouse, the remaining assets of the trust would be paid in equal shares to Martin Jr.’s
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son Harry and three of Martin Jr.’s grandchildren. Martin Jr. explicitly stated that his children
Dagmar and Martin III were omitted as residuary beneficiaries.
¶ 11 The estate of Martin Jr. was closed in December 2007, and his trustee contacted the Bank
in 2009 and transmitted information relating to the administration of the Martin Jr. estate for
the purpose of transferring the assets held by the Bank in the Mary and Martin Sr. trusts to
the Martin Jr. trust. However, the assets of the Mary and Martin Sr. trusts were never
transferred to the Martin Jr. trust.
¶ 12 In October 2012, the Bank filed with the trial court a petition for instructions and
approval of accounts and other relief. The Bank stated that, under the terms of the Mary and
Martin Sr. trusts, the Bank was unsure whether or to what extent Martin Jr.’s exercise of the
powers of appointment over his parents’ two trusts was valid due to the possibility of
impermissible appointees receiving property from the parents’ two trusts.
¶ 13 In February 2013, the Towers defendants, i.e., Harry Cornelius, Martin Cornelius III,
Camilla Cornelius, and the trustee of the Martin Jr. trust, filed a counterpetition for
instructions, declaratory relief and money damages. The Towers defendants argued that the
Bank should have transferred the funds in the Mary and Martin Sr. trusts to the Martin Jr.
trust, the exercise of the powers of appointment in the Martin Jr. trust was valid and
consistent with the provisions of the Mary and Martin Sr. trusts, and the Bank breached its
fiduciary duties to the beneficiaries of the Martin Jr. trust by filing a petition for instructions
and unnecessarily generating legal expenses.
¶ 14 Thereafter, defendant Dagmar Cornelius moved the court for partial summary judgment
under section 2-1005(d) of the Code of Civil Procedure (Code) (735 ILCS 5/2-1005(d) (West
2012)), arguing there was no genuine issue of material fact to be resolved concerning the
counts of the Bank’s petition requesting instructions on the validity of Martin Jr.’s exercise
of the powers of appointment. Dagmar contended that the clear and unambiguous language
of the Mary, Martin Sr., and Martin Jr. trusts and Martin Jr.’s will established that Martin
Jr.’s appointment of the Mary and Martin Sr. trusts’ property to Martin Jr.’s own trust
exceeded the permissible class of appointees because neither power of appointment was
exercisable in favor of Martin Jr., his creditors, his estate, or the creditors of his estate.
¶ 15 Thereafter, the Bank moved the court for judgment on the pleadings pursuant to section
2-615(e) of the Code (735 ILCS 5/2-615(e) (West 2012)). The Bank asserted there was a
genuine question of law regarding Martin Jr.’s exercise of the powers of appointment, denied
that it breached its fiduciary duty by instituting these proceedings, and asserted that it had a
right to the determination of the propriety of its accounts before making a final distribution.
¶ 16 On September 4, 2013, the court granted Dagmar’s motion for partial summary judgment
and instructed the Bank to distribute the Mary and Martin Sr. trusts to Martin Jr.’s four living
children, per stirpes. However, the court ruled that the Bank should not distribute the funds
until the court approved the Bank’s final accounting. The court also granted the Bank’s
motion for judgment on the pleadings and dismissed with prejudice the Towers defendants’
counterpetition against the Bank. The court found that this order was final and appealable
pursuant to Illinois Supreme Court Rule 304(a) (eff. Feb. 26, 2010).
¶ 17 Thereafter, the Towers defendants moved the court to stay enforcement of the September
2013 order pending appeal without bond. The Towers defendants argued that the order was
contrary to the intent of Martin Jr. as expressed in his trust and deprived certain designated
beneficiaries of their distributions. The Towers defendants also argued that an appeal bond
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was unnecessary to protect Dagmar’s interests because the Bank, as trustee, held the trust
funds and the court should not approve the Bank’s final accounting until completion of the
appeal upon remand. This motion, however, was subsequently withdrawn.
¶ 18 Dagmar filed a petition for $49,780.43 in attorney fees, arguing the fees were payable out
of the trusts because there was an honest difference of opinion as to the language of the trust
agreements and her attorneys’ work was in the interest of and benefitted the trusts. Invoices
detailing the dates, billable hours, and professional services provided were attached to the
petition.
¶ 19 On October 2, 2013, the Towers defendants appealed the trial court’s September 4, 2013
order, and the case was assigned No. 1-13-3351.
¶ 20 On November 12, 2013, the trial court granted Dagmar’s attorney fee petition for
$49,780.43. The court instructed the Bank to pay the total fee equally from the Mary and
Martin Sr. trusts on or before November 26, 2013.
¶ 21 On November 14, 2013, the Towers defendants appealed the trial court’s November 12,
2013 order, and the case was assigned No. 1-13-3635. On January 29, 2014, this court
granted the Towers defendants’ motion to consolidate the appeals in case Nos. 1-13-3351 and
1-13-3635.
¶ 22 II. ANALYSIS
¶ 23 A. Improper Exercise of the Powers of Appointment
¶ 24 The Towers defendants challenge the trial court’s ruling that granted Dagmar’s motion
for partial summary judgment and held that Martin Jr. violated the powers of appointment
granted to him by his parents in the Mary and Martin Sr. trusts. The Towers defendants assert
that Martin Jr. properly segregated the assets from his parents’ trusts because after Martin
Jr.’s death no assets were ever withdrawn from the Mary and Martin Sr. trusts, used for any
improper purpose, or distributed to any improper beneficiary. The Towers defendants
acknowledge that Martin Jr., as the donee of his parents’ powers of appointment, could not
make the property subject to that power part of his estate for all purposes, and argue that the
terms of Martin Jr.’s will and trust and extrinsic evidence establish that he intended to fulfill
his parents’ wishes without making the assets of their trusts part of his estate for all purposes.
¶ 25 According to the Towers defendants, the clear terms of the Mary trust agreement and
Martin Sr.’s will allowed Martin Jr. to exercise the powers of appointment through the
residuary clause of his trust and Martin Jr. simply exercised the powers in favor of a trustee
with the intention of distributing the property subject to the powers of appointment to the
permitted beneficiaries in accordance with the Mary and Martin Sr. trusts. Moreover, the
Towers defendants assert that Martin Jr.’s designations to his spouse, his son Harry, and
three of Martin Jr.’s grandchildren were proper because all the designated individuals were
qualified beneficiaries under the terms of the powers of appointment. Although Martin Jr.’s
designation to charitable organizations may not have been proper under the terms of the
Mary trust, the Towers defendants contend this issue is moot because the facts demonstrate
that the assets from the Mary trust would never have been utilized to satisfy the specific
charity distributions designated by Martin Jr.
¶ 26 “Summary judgment is appropriate only when the pleadings, depositions, and admissions
on file, together with the affidavits, if any, show that there is no genuine issue as to any
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material fact and that the moving party is entitled to a judgment as a matter of law.” (Internal
quotation marks omitted.) JPMorgan Chase Bank, N.A. v. Earth Foods, Inc., 238 Ill. 2d 455,
460-61 (2010). We review a grant or denial of a summary judgment de novo. Id. at 461. A
reviewing court’s function in reviewing a trial court’s entry of summary judgment is to
ensure that no genuine issue of material fact was raised and to determine whether the
judgment was correctly entered as a matter of law. Comtrade, Inc. v. First National Bank of
Highland Park, 146 Ill. App. 3d 1069, 1072-73 (1986). A nonmoving party need not prove
its case, but must present some factual basis entitling it to judgment. Parker v. House O’Lite
Corp., 324 Ill. App. 3d 1014, 1019 (2001).
¶ 27 Summary judgment is appropriate in a case involving the construction of a trust because
the ascertainment of the trust’s meaning or intent is strictly a matter of law. First National
Bank of Chicago v. Edgeworth, 94 Ill. App. 3d 873, 880 (1981); see Jones v. Heritage
Pullman Bank & Trust Co., 164 Ill. App. 3d 596, 602 (1987) (“The meaning to be given the
plain words of a written instrument is a question of law to be determined by the trial court.”).
A trial court’s construction of a trust instrument is reviewed under a de novo standard.
Herlehy v. Marie V. Bistersky Trust, 407 Ill. App. 3d 878, 889 (2010). “The purpose of a
court in construing the provisions of a will is to give effect to the intention of the testator.
[Citation.] ‘[W]hen the words used in their ordinary sense are plain and their meaning clear,
construction demands the use of the plain intention.’ [Citation.]” Jones, 164 Ill. App. 3d at
601-02. The same rules that pertain to the construction of a will also pertain to the
construction of a trust, with the intention of the testator being of supreme importance.
Federick v. Lewis, 164 Ill. App. 3d 240, 243 (1987).
¶ 28 “A power of appointment is not an absolute right of property, nor is it an estate, for it has
none of the elements of an estate.” People v. Kaiser, 306 Ill. 313, 316-17 (1922). The
individual appointed the power takes title from the donor, not the donee. Id. at 317. “[A]
power is said to be general when it is exercisable in favor of any person whom the donee may
select, and special, limited, or particular when it is exercisable only in favor of persons or a
class of persons designated or described in the instrument creating the power.” (Internal
quotation marks omitted.) Pinzino v. Vogel, 98 Ill. App. 3d 330, 332 (1981). A special power
of appointment is only valid if it was exercised in compliance with any conditions established
by the donor. In re Estate of MacLeish, 35 Ill. App. 3d 835, 838 (1976). “If the donee of a
special power appoints a beneficial interest to a non-object of the power, the appointment is
ineffective.” In re Buck Trust, 301 A.2d 328, 330 (Del. Ch. 1973) (citing Restatement of
Property § 351 (1940)).
¶ 29 Both the agreement establishing the Mary trust and the will of Martin Sr. provide that
Illinois law governs the interpretation and enforcement of those documents. Moreover, the
plain language controlling the powers of appointment for both the Mary and Martin Sr. trusts
establishes that Martin Jr. could not exercise the powers of appointment in favor of himself
because he was not within the class of permissible beneficiaries designated by his parents.
After reviewing the record, we conclude that the trial court properly granted partial summary
judgment in favor of Dagmar because Martin Jr. improperly exercised his powers of
appointment over the assets of the Mary and Martin Sr. trusts. Although Martin Jr.’s initial
conveyance to the Martin Jr. trust could have been permissible pursuant to the terms
controlling the Mary and Martin Sr. trusts, the plain terms of Martin Jr.’s will and trust
agreement provided that the assets from his parents’ trusts would be commingled with the
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assets of his original trust and then his trustee would pay “all debts” that were payable as a
result of Martin Jr.’s death from the original trust. No language in the Martin Jr. trust
agreement segregated the assets from his parents’ trusts from the assets of Martin Jr.’s
original trust, and Martin Jr.’s creditors could have used the commingled assets to satisfy
Martin Jr.’s debts.
¶ 30 A test to determine whether there has been a blending of the donee’s own property with
the appointed property provides: “ ‘The mere fact that the appointed estate is given to the
same persons who take the residue of a testator’s individual estate is not the test to be applied
in determining whether there has been a blending of the two estates, but the real test under
our line of decision is whether the testator has treated the two estates as one for all purposes,
and manifested an intent to commingle them generally.’ ” (Emphasis in original.) In re Estate
of Breault, 29 Ill. 2d 165, 176 (1963) (quoting In re Hagen’s Estate, 132 A. 175, 176 (Pa.
1926)). We conclude that Martin Jr. blended his own property with the appointed property
for all purposes. Contrary to the Towers defendants’ argument on appeal, the plain language
of section 5.3 of Martin Jr.’s trust agreement establishes that it was Martin Jr.’s intent to pay
all his debts from his original trust, which included the assets appointed from the Mary and
Martin Sr. trusts. Because Martin Jr. exercised his powers of appointment in favor of himself
and he was not within the class of permissible beneficiaries under the limited powers of
appointment designated by his parents, his impermissible exercise of his powers of
appointment rendered the act of conveyance void. Accordingly, the trial court correctly
instructed the Bank to distribute the appointed property per stirpes to Martin Jr.’s four
children who were living at the time of his death, in compliance with the terms of the Mary
and Martin Sr. trusts in the event the powers of appointment were not effectively exercised.
¶ 31 The Towers defendants’ reliance on In re Estate of Breault, 29 Ill. 2d at 177-78, where
the court held that the donee did not commingle his own property with the appointed
property for all purposes, is misplaced. In that case, the court noted that the donee, in the first
two paragraphs of his will, specifically directed the payment of his debts and taxes before
any attempt at blending or commingling occurred. Id. at 177. Here, in contrast, Martin Jr.
directed the trustee of his trust to pay all his debts from the original trust, which included the
appointed assets from his parents’ trusts.
¶ 32 The Towers defendants claim that section 8.1 of the trust agreement manifests Martin
Jr.’s intent that the trustee create two separate trusts to segregate, hold, administer, and
distribute the trust property. The Towers defendants also cite section 3.11 of the trust
agreement, which states that a person serving “as trustee of any Trust created by this
document” shall not be precluded from serving as trustee by reason of having a beneficial
interest in the trust. We conclude, however, that these references to additional created trusts
are not dispositive of the issue of the commingling of Martin Jr.’s property with the
appointed property. While Martin Jr. did direct his trustee, upon Martin Jr.’s death, to divide
his original trust assets into a marital share and a credit shelter share, this was to be done
after the appointed property was commingled with Martin Jr.’s estate property in the original
trust. Moreover, the trustee was directed to pay, inter alia, all of Martin Jr.’s debts from the
original trust.
¶ 33 The Towers defendants also argue extrinsic evidence establishes that no debts of Martin
Jr.’s estate were ever paid from the assets of his parents’ two trusts, and Martin Jr.’s spouse
paid all the debts, expenses, and taxes directly from Martin Jr.’s estate without taking any
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money from the parents’ two trusts held by the Bank. This happenstance, however, is not
controlling in the determination of whether Martin Jr. improperly exercised the powers of
appointment. “[A] statutorily valid will takes effect at the death of the testator.” In re Estate
of Hostetter, 75 Ill. App. 3d 1020, 1022 (1979); see also In re Estate of Durham, 62 Ill. App.
2d 111, 115 (1965) (“the operation and effect of the will on the testator’s property is
determined as of the date of his death”). Regardless of how the trustee actually performed his
duties, the intent and validity of a will is determined at the time of death, and the will and
trust agreement here dictated that Martin Jr.’s debts would be paid from the original trust,
which contained the commingled assets of both Martin Jr.’s estate property and the assets
from his parents’ trusts. This was the intent of Martin Jr., and the fact that Martin Jr.’s
creditors never actually accessed the assets of his parents’ trusts does not remedy the invalid
conveyance.
¶ 34 B. Judgment on the Pleadings
¶ 35 The Towers defendants next contend the trial court erred in granting the Bank’s motion
for judgment on the pleadings because there are genuine issues of material fact that remain to
be determined by the trial court. The Towers defendants allege the Bank waived the right to
challenge the sufficiency of the Towers defendants’ counterpetition under section 2-615 of
the Code after the Bank had filed an answer and affirmative defenses to the counterpetition,
and contend the Bank’s failure to file a proper motion for summary judgment deprived the
Towers defendants of the opportunity to file a counteraffidavit or take discovery on issues of
fact concerning the Bank’s answer and affirmative defenses. We disagree because after the
trial court properly granted summary judgment in favor of Dagmar and held that Martin Jr.
improperly exercised the powers of appointment, there were no genuine issues of material
fact pending, and the Bank was entitled to judgment on the pleadings as a matter of law
against the Towers defendants on their counterpetition alleging the Bank had breached its
fiduciary duty by seeking court instructions concerning the validity of the exercise of the
powers of appointment.
¶ 36 In a section 2-615 motion with respect to pleadings, a party denies the legal sufficiency of
the complaint, essentially saying, “So what? The facts the [complainant] has pleaded do not
state a cause of action against me.” (Internal quotation marks omitted.) Howle v. Aqua
Illinois, Inc., 2012 IL App (4th) 120207, ¶ 35. If a pleading is objected to by a motion to
dismiss or for judgment because the pleading is substantially insufficient in law, the motion
must specify wherein the pleading is insufficient. 735 ILCS 5/2-615(b) (West 2012). “Any
party may seasonably move for judgment on the pleadings.” 735 ILCS 5/2-615(e) (West
2012).
¶ 37 “Judgment on the pleadings is proper where the pleadings disclose no genuine issue of
material fact and that the movant is entitled to judgment as a matter of law.” Gillen v. State
Farm Mutual Automobile Insurance Co., 215 Ill. 2d 381, 385 (2005). A reviewing court must
determine whether any issues of material fact exist and, if not, whether the movant was
entitled to judgment as a matter of law. Id. A reviewing court will review the trial court’s
decision de novo. Id. The trial court may only consider “facts apparent from the face of the
pleadings, matters subject to judicial notice, and judicial admissions in the record.” Id. A trial
court must take all well-pleaded facts as true except for conclusions of law that are
unsupported by specific factual allegations. Horwath v. Parker, 72 Ill. App. 3d 128, 134
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(1979). All reasonable inferences must be drawn in favor of the nonmoving party. Herlehy,
407 Ill. App. 3d at 895.
¶ 38 “Unless the terms of the trust document provide otherwise, a trustee’s fiduciary duty to
each beneficiary precludes it from favoring one party over another.” Northern Trust Co. v.
Heuer, 202 Ill. App. 3d 1066, 1070 (1990). A trustee may not argue that a trust should be
interpreted in a manner beneficial to one beneficiary and detrimental to another; doing so
breaches the trustee’s fiduciary duty of impartiality. Id. at 1072. However, a trustee must also
carry out the trust according to its terms. Herlehy, 407 Ill. App. 3d at 896. A trustee may,
whenever a situation arises that justifies proceedings, “ask the court for instructions as to
their duties under the circumstances under which they or the trust funds are placed.” (Internal
quotation marks omitted.) Warner v. Mettler, 260 Ill. 416, 421-22 (1913); see Northern Trust
Co., 202 Ill. App. 3d at 1070-71 (“When there are conflicting claims to trust funds, a trustee
is not required to make a determination as to the rights of the prospective claimants but
should file an interpleader action to avoid acting at its own peril.”).
¶ 39 As discussed above, the construction of a trust is a matter of law, and we have concluded,
after de novo review, that Martin Jr. improperly exercised the powers of appointment in favor
of himself. Therefore, the Bank’s motion for judgment on the pleadings was correctly
granted. There were no material facts in dispute and the Bank was entitled to judgment as a
matter of law. The Bank did not breach its fiduciary duty to any beneficiary when it filed, per
its duty, a petition for instructions from the court. The Bank, as trustee of the Mary and
Martin Sr. trusts, had a duty to ensure that it administered the trusts as prescribed by the trust
agreements. In seeking a determination on whether Martin Jr.’s appointment was valid, the
Bank acted precisely as a trustee is tasked to act; it brought the action to be settled by the
court and did not advocate for one interpretation over the other.
¶ 40 Accordingly, we affirm the trial court’s order that granted the Bank’s motion for
judgment on the pleadings and dismissed the Towers defendants’ counterpetition.
¶ 41 C. Attorney Fees
¶ 42 The Towers defendants argue the trial court improperly awarded Dagmar $49,780.43 in
attorney fees because the court did not hold a hearing on either “what services specifically
were devoted to unraveling any alleged ambiguity in the documents” or the reasonableness of
the fees claimed.
¶ 43 “In will construction cases the costs of litigation are borne by the estate on the theory that
the testator expressed his intention so ambiguously as to necessitate construction of the
instrument in order to resolve adverse claims to the property.” Orme v. Northern Trust Co.,
25 Ill. 2d 151, 165 (1962). An ambiguity exists where there is an honest difference of opinion
regarding the proper construction of the trust. Id. If the trust is unambiguous and construction
is unnecessary, no fees should be authorized. Id. Determining whether a trust provision is
ambiguous is a question of law where “ambiguity can be found only if the language is
reasonably or fairly susceptible to more than one interpretation.” Espevik v. Kaye, 277 Ill.
App. 3d 689, 694 (1996). Fees should only be awarded for services rendered in furtherance
of solving the ambiguity issue and not authorized for any service dealing with other issues.
First National Bank, 94 Ill. App. 3d at 887-88. Furthermore, there should be a reasonable
nexus between the total amount in controversy and the amount of fees authorized. Id. at 885.
Ideally, the fee petitioners will present contemporaneously made, detailed time records as
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evidence of the services performed, by whom the services were performed, the time
expended thereon, and the hourly rate charged therefore. In re Estate of Bitoy, 395 Ill. App.
3d 262, 273 (2009). “The matter of fixing attorneys’ fees is one of the few areas in which a
judge may rely upon the record before him and also upon his knowledge and experience.”
First National Bank, 94 Ill. App. 3d at 885. The need and amount of attorney fees awarded is
at the discretion of the trial court and will not be reversed unless it abused that discretion.
Northern Trust Co., 202 Ill. App. 3d at 1071.
¶ 44 In the present case, the term “original trust” in the Martin Jr. trust agreement was
ambiguous and susceptible to multiple meanings. There was an honest difference of opinion
between whether the term could mean Martin Jr.’s estate before the blend of the appointed
property or after. Consequently, there was ambiguity present in the instrument Martin Jr.
used to appoint the powers granted to him by his parents. Furthermore, the trial court did not
abuse its discretion in awarding Dagmar attorney fees. Dagmar presented the trial court with
records that provided details and explanations about the purpose of the services her lawyers
performed. After reviewing the record, we conclude that the services rendered were either
beneficial in helping the trial court resolve the ambiguity present in Martin Jr.’s trust
agreement and determine its effect on his exercise of his powers of appointment, or the
services were so closely interrelated to defy separation in computing fees. See Orme, 25 Ill.
2d at 167. Moreover, the fees charged, which were less than 10% of the approximately
$600,000 value of the parents’ trusts, are reasonable in light of the amount of work
performed and the value of the trusts.
¶ 45 The Towers defendants argue the trial court also erred by failing “to follow the standard
established by Orme[, 25 Ill. 2d at 151,] by requiring Dagmar’s counsel to prove at a hearing
which services were devoted specifically to clarifying the ambiguities caused by inept legal
draftsmanship and whether the fees for those services were reasonable.” We disagree.
Although a hearing on the issue of attorney fees was held in Orme under the circumstances of
that case, Orme does not stand for the proposition that a trial court must conduct an
evidentiary hearing before it may award attorney fees. Moreover, the Towers defendants
have forfeited review of this issue by failing to specify, both before the trial court and on
appeal, which fees presented in Dagmar’s attorney fee petition were excessive or not related
to the ambiguity resolved by the trial court in this matter. “ ‘A reviewing court is entitled to
have issues clearly defined with pertinent authority cited and coherent arguments presented;
arguments inadequately presented on appeal are waived.’ ” McCarthy v. Denkovski, 301 Ill.
App. 3d 69, 74 (1998) (quoting Holmstrom v. Kunis, 221 Ill. App. 3d 317, 325 (1991)).
¶ 46 III. CONCLUSION
¶ 47 We affirm the judgment of the circuit court granting Dagmar’s motion for summary
judgment, granting the Bank’s motion for judgment on the pleadings and dismissing the
Towers defendants’ counterpetition against the Bank, and awarding Dagmar attorney fees.
¶ 48 Affirmed.
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