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Wednesday, August 23, 2006

Ind. Courts - Oral arguments yesterday in Lilly trusts appeal

Richard D. Walton reports today in the Indianapolis Star on oral arguments heard yesterday in Americans for the Arts v. The Ruth Lilly Trust, et al. Here is the synopsis from the Court website:

Synopsis:The issue presented by this appeal is whether the trial court erred in granting summary judgment (a) approving the Bank’s intermediate accountings for the Accounting period; and (b) relieving the Bank from liability for the administration of Trusts during the accounting period.

The Scheduled Panel Members are:Judges Sullivan, Baker and May.

From the Star story:
An appeals court hearing Tuesday left the judge wondering why two charities that stand to reap millions from the estate of Ruth Lilly are squabbling about the money before it is even theirs.

Lilly, 91, is the only surviving great-grandchild of Eli Lilly, founder of the pharmaceutical company that bears his name. In 2002, her wealth was estimated to exceed $1 billion. When she dies, the Chicago-based Poetry Foundation and the Washington-based Americans for the Arts will be beneficiaries of two of her trusts.

Indiana Court of Appeals Judge John Baker said the Poetry Foundation and the Americans for the Arts are beneficiaries of "Ruth's lar-gess" and questioned why neither group objected when the trust documents originally were drawn up.

After hearing Eugene Schiltz, attorney for the Poetry Foundation, say there is a difference between consenting to language and failing to object to it, Baker responded pointedly.

"If you have a gift horse," he said, you "keep your mouth shut."

The appeal by the two groups of a Marion Probate Court judge's ruling will be decided on the law, Baker said, while suggesting a need sometimes for "some degree of common sense."

In 2002, the charitable groups filed suit alleging that National City Bank of Indiana, which oversees Lilly's wealth, had failed to sell $286 million worth of Lilly stock in the trusts quickly enough, reducing the value of the nonprofits' potential payday when she dies by tens of millions. The trusts were worth roughly $184 million when the suits were filed.

National City's attorneys, in court filings, said that both groups should be grateful for whatever money they receive. The bank said the arts groups "are potential beneficiaries today only because the bank sought them out."

Schiltz questioned a clause in trust documents that he says has protected the bank from accountability. The provision gives it the powers to sell or "to retain indefinitely" assets, provided the decision is made in good faith.

In response to Baker's observation that the bank didn't pocket trust money, Schiltz agreed but said the institution still benefited from the trust clause.

"It's a huge benefit," he said, "because they're not liable."

Posted by Marcia Oddi on August 23, 2006 08:30 AM
Posted to Ind. App.Ct. Decisions