Citizens National Bank of Paris v. Kids Hope United, Inc.

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- - 2 - 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