2018 IL App (1st) 163210
Ill. App. Ct.2018Background
- Settlor Joseph J. Sullivan Sr. created a trust (1997, restated/amended) naming son Joseph Jr. and Amy as successor cotrustees; when two cotrustees act their decisions must be joint; Samuel Diamond (now deceased) was designated to break tie disputes.
- Trust’s Administrative Provisions reimbursed trustees for reasonable expenses and provided corporate trustees compensation by fee schedule; a separate clause limited child-trustees from participating in decisions about payments to themselves (their cotrustee must determine such payments).
- After settlor’s death, Joseph Jr. withdrew $175,000 from the trust as a trustee fee (and $40,000 for legal-fee reimbursement); Amy objected and plaintiffs sued for declaratory relief and breach of trust; Joseph counterclaimed (including in terrorem forfeiture and quantum meruit).
- Trial court granted plaintiffs’ partial summary judgment (holding noncorporate trustees could not receive compensation and the in terrorem clause was not triggered), denied Joseph’s cross-motion, and sua sponte granted summary judgment against Joseph on quantum meruit; Joseph appealed.
- Appellate court held noncorporate trustees may be paid under the Trust (and Illinois statute) but Amy’s lack of consent and the Trust’s tie-breaking gap require remand to determine a reasonable fee; quantum meruit was barred; in terrorem clause did not apply.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Trust permits noncorporate trustee compensation | Trust language shows compensation only by corporate-trustee schedule and thus prohibits individual trustee fees | Trust language allows a trustee (not limited to corporate) to receive regular compensation; noncorporate trustees entitled to reasonable fees | Court: Noncorporate trustees may receive compensation; held Joseph may be paid (remanded to fix amount) |
| Whether Amy’s and Joseph’s course of conduct waived the Trust’s joint-approval requirement | No waiver; cotrustee consent required and Amy objected promptly | Prior conduct (separate checkbooks, past approvals, email saying Joseph “deserved” a fee) waived strict joint-approval requirement | Court: No implied waiver; requirement to follow trust terms remains; Joseph’s waiver argument fails |
| Whether quantum meruit allows recovery for trustee services | N/A (plaintiffs opposed) | Joseph: equitable recovery justified because he conferred substantial value and fee was reasonable | Court: Quantum meruit barred because an express trust contract governs trustee compensation; summary judgment for plaintiffs affirmed on this count |
| Whether plaintiffs triggered the in terrorem clause via litigation | Plaintiffs sought only construction/declaratory relief and to compel arbitration, not to challenge validity of the Trust | Joseph: plaintiffs’ suits (including earlier arbitration suit) constituted attacks triggering forfeiture | Court: In terrorem clause is strictly construed; plaintiffs did not contest validity and clause not triggered; forfeiture not applied |
Key Cases Cited
- Storkan v. Ziska, 406 Ill. 259 (discussing construction of trusts and settlor intent)
- Northern Trust Co. v. Tarre, 86 Ill. 2d 441 (courts should not rewrite clear trust provisions)
- Harris Trust & Savings Bank v. Donovan, 145 Ill. 2d 166 (plain meaning controls trust interpretation)
- Harris Trust & Savings Bank v. Beach, 118 Ill. 2d 1 (rules for resolving ambiguity in trusts)
- Bell v. Carthage College, 103 Ill. App. 2d 289 (rejecting speculation about settlor’s unexpressed intent)
- People v. Kinion, 97 Ill. 2d 322 (quasi-contract recovery precluded where express contract governs)
- Clark v. Bentley, 398 Ill. 535 (equity disfavors forfeitures; in terrorem clauses strictly construed)
- In re Estate of Wojtalewicz, 93 Ill. App. 3d 1061 (validity of no-contest clauses and contesting wills)
- In re Estate of Mank, 298 Ill. App. 3d 821 (in terrorem clauses are disfavored and strictly construed)