The Law School Authority

Pernod v. Am. Nat’l Bank & Trust of Chicago Case Brief

Summary of Pernod v. Am. Nat’l Bank & Trust of Chicago, 8 Ill.2d 16, 132 N.E.2d 540 (1956)

Facts: The trust instrument as executed provided that the trustees were to pay the Pl for her life in their discretion sums necessary for her support. If her daughter survives her then she receives the same.  If grandson is alive at the end of those two life estates he is to receive the remainder. By its terms the trust is declared irrevocable and not subject to amendment.  The Pl met w/ her attorney 4 times prior to executing the trust.  He testified that he explained that her purpose in being irrevocable is one that is fixed and can’t be changed.  He provided her w/ a draft after the second meeting.  Pl agreed and executed the document.

Issue: Whether a trust which by its terms is declared irrevocable and not subject to amendment may be revoked b/c of a mistake?

Holding: Only upon a showing by clear and convincing evidence, with strong corroboration of settlor’s testimony.

Procedure: Nellie Pernor, settlor, brought suit in superior ct to revoke the trust on ground of mistake naming Dfs trustee bank, beneficiary daughter Cleon, grandson Pernod, co-trustee gr.granddaughter Katherine. Dfs Cleon&Katherine filed answer admitting allegations and consenting to decree. Ct found the trust was mistakenly executed, decreed it set aside with property reconveyed to Pl.  Decree reversed.

Rule: Where the grantor has not reserved a power to revoke, a voluntary trust may be set aside only upon a showing, by clear and convincing evidence, that it was induced by fraud, duress, undue influence or mistake, except where all the parties in interest are ascertained, are under no incapacity and consent to the revocation.

Rationale: B/c all the beneficiaries are not in being, revocation by consent is impossible.  There is an absence of a power of revocation. The instrument provides that it is irrevocable or subject to amendment by any party or beneficiary.  The testimony of a settlor seeking to revoke a trust is likely to be unreliable, therefore strong corroboration of the settlor’s testimony is required. Even if the atty’s testimony is disregarded there is a lack of corroboration of settlor’s testimony.

The Gen. Rule is that words are written as the parties intended when the instrument is signed.  No matter how mistaken about the meaning of those words, no relief can be granted.

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