NO. 4-08-0162 Filed 11/21/08
IN THE APPELLATE COURT
OF ILLINOIS
FOURTH DISTRICT
THE CITIZENS NATIONAL BANK OF PARIS as ) Appeal from
Trustee of the La Fern L. Blackman ) Circuit Court of
Trust; as Trustee of the Ettoile Davis ) Edgar County
Trust; as Trustee of the Ruth Cook ) No. 06CH59
Memorial Fund; and as Trustee of the )
Gladys Stratton Trust; and THE EDGAR )
COUNTY BANK & TRUST COMPANY OF PARIS, )
ILLINOIS, as Trustee of the Samuel R. )
Smith Trust, )
Plaintiffs-Appellees, )
v. )
KIDS HOPE UNITED, INC., an Illinois Not- ) Honorable
for-Profit-Corporation, ) James R. Glenn,
Defendant-Appellant. ) Judge Presiding.
_________________________________________________________________
JUSTICE COOK delivered the opinion of the court:
In the 1960s, grantors La Fern L. Blackman and Ettoile
Davis each executed a trust that benefitted the Edgar County
Children's Home (the Home). The Blackman trust stated that the
Home would continue to receive income from the trust until the
Home "ceased to operate or exist." The Davis trust stated that
the Home would continue to receive income from the trust until
the Home ceased to function in its "present capacity." In 2003,
the Home merged with defendants, Hudelson Children's Home and
Family Services (Hudelson), now named Kids Hope United, Inc.
(Kids Hope). In 2006, plaintiffs and trustee, Citizens National
Bank of Paris (the Bank), filed a petition for instructions,
seeking a determination that the gifts to the Home lapsed because
the Home "ceased to exist" and ceased to function in its "present
capacity" following the merger. Kids Hope, as the continuing
entity following the merger, argued that the gifts should not
lapse and it should continue to receive income from the trust.
Both the Bank and Kids Hope filed for summary judgment. The
court granted summary judgment to the Bank, finding that, as set
forth in section 11.50(a)(2) of the Business Corporation Act of
1983 (Act) (805 ILCS 5/11.50(a)(2) (West 2006)), the restrictive
conditions that each respective testator placed on her gift came
to pass. We reverse and remand.
I. BACKGROUND
A. Relevant History of the Home and Kids Hope
The Home was incorporated in the State of Illinois in
1898. Pursuant to its original charter, it was established as an
institution for the education of the dependent children in Edgar
County, Illinois, to exercise the custody and maintenance of such
children and to provide permanent homes for them in approved
private families. In 1900, the Home erected a building for this
purpose on Eads Avenue in Paris, Illinois.
On August 15, 1980, an amendment to the Home's articles
of incorporation changed its object to providing
"services to children and youth in the
fields of health, welfare[,] and education in
the State of Illinois, including multi-treat-
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ment and educational programs for emotionally
handicapped boys and girls of all races in
residential treatment centers, day treatment
services, counseling services to family, and
such other related auxiliary services as are
necessary or desirable from time to time to
accomplish these purposes; and to own or
lease property, establish and maintain resi-
dential treatment centers, homes, schools[,]
and other facilities required."
This was for the purpose of allowing the Home to become a resi-
dential placement resource for children throughout the State and
to receive state funding. It is unclear whether the Home actu-
ally ceased operating as a traditional orphanage in 1980, or
whether it operated in a manner akin to the broader mission for
some time.
The Home created a not-for-profit corporation, known as
the Children