Docket No. 91496-Agenda 12-March 2002.

FRED EYCHANER et al., Appellees, v. THEODORE GROSS et al., Appellants.

Opinion filed October 3, 2002.

JUSTICE FREEMAN delivered the opinion of the court:

Plaintiffs, Fred Eychaner and Betty Lou Weiss, were directors of the Auditorium Theatre Council (Council). Plaintiffs brought an action against defendants, Roosevelt University and its president, Theodore Gross (collectively Roosevelt), in the circuit court of Cook County. In the claims and counterclaims that developed in this case, the Auditorium Theatre Council, Inc. (ATC Inc.), and Roosevelt, respectively, asserted their authority to control and operate the Auditorium Theatre (Theatre). Specifically, plaintiffs and ATC Inc. claimed that Roosevelt placed the right to control and operate the Theatre into a charitable trust with ATC Inc. as trustee.

At the close of a bench trial, the trial court found in favor of Roosevelt and rejected all theories supporting ATC Inc.'s control of the Theatre. The trial court, inter alia, declared Roosevelt the sole and exclusive owner of the Theatre. The court also ordered an accounting of ATC Inc.'s funds to separate public donations from operating revenues.

The appellate court, with one justice dissenting, reversed these orders and remanded the cause for further proceedings. 321 Ill. App. 3d 759. We allowed defendants' petition for leave to appeal. 177 Ill. 2d R. 315(a). We now reverse the judgment of the appellate court, affirm the order of the trial court, and remand the cause to the trial court for further proceedings.

BACKGROUND

During the 10-week bench trial, the court received approximately 400 documents and heard testimony from 37 witnesses, all of which generated 98 record volumes. The bench trial adduced the following facts.

Setting

The Auditorium Building is located in downtown Chicago, bordered by Michigan Avenue on the east, Congress Parkway on the south, and Wabash Avenue on the west. The building was designed and built in the late nineteenth century by the renowned architects Louis Sullivan and Dankmar Adler. The building originally contained a hotel, commercial office space, and the Theatre, which comprises approximately 40% of the entire building. The Auditorium Building, including the Theatre, with its near-perfect acoustics, was recognized as an architectural masterpiece. However, by the end of World War II, the building, including the Theatre, was abandoned and in a state of disrepair.

Cast

In 1945, Roosevelt was incorporated as an Illinois not-for-profit corporation. In 1946, it became possible for Roosevelt to purchase the Auditorium Building and, to that end, the University solicited and received donations. In 1947, Roosevelt purchased the building, protected the Theatre from further deterioration, and converted the remaining space for use as Roosevelt's campus.

In the mid 1950s, Roosevelt began exploring ways to restore the Theatre. On September 11, 1958, a committee of Roosevelt's board of trustees recommended to the full board that a separate not-for-profit corporation be created to restore and operate the Theatre under that corporation's "trusteeship." On September 25, the full board rejected the proposal amid concerns of giving away rights to the University's property. The board recommended that "[t]he University should remain the 'trustee' of the Auditorium Theatre."

At a December 4, 1958, board meeting, trustee Beatrice Spachner submitted "a plan for the restoration of the Auditorium Theater and its operation under the auspices of Roosevelt University." On February 17, 1959, Roosevelt's board of trustees established the Auditorium Restoration and Development Committee (ARDC), composed of Roosevelt Board members and faculty, and community representatives. The ARDC was directed to examine Spachner's Theatre restoration plan.

On October 29, 1959, the ARDC reported to Roosevelt's board of trustees. At that meeting, the board passed a motion tentatively approving a fund drive to restore the Theatre, subject to the following conditions: that the committee's fund-raising efforts not impair Roosevelt's financial resources or credit; that Roosevelt's legal counsel recommend to the board "the legal entity and manner of contract" that would enable Roosevelt to obtain its objectives; and "[t]hat the University not lose ownership or control of the Auditorium Theatre."

The ARDC oversaw the drafting of a resolution to implement the fund drive. Attorney Elmer Gertz was the principal drafter of the resolution. In a letter dated January 21, 1960, Gertz asked Kenneth Montgomery, Roosevelt's attorney, to review the draft resolution. Gertz stated:

"[A] draft of the resolution has been agreed upon. I am sending a copy of it herewith. It is the consensus of all involved in this situation that it is best not to form any separate corporation, foundation, trust or other legal entity, but to proceed in the manner set forth in the resolution." (Emphasis added.)

Gertz asked for Montgomery's ideas on the resolution, specifically on the subject of tax exemption.

The ARDC presented the draft resolution to Roosevelt's trustees at their February 11, 1960, board meeting. The proposed resolution renamed the ARDC the Auditorium Theatre Council (Council) and authorized it to raise funds for and to restore the Theatre. Several trustees continued to express concerns that the proposed resolution was not sufficiently explicit in its description of Roosevelt's control over the ARDC. They questioned whether the resolution complied with the board's October 29, 1959, motion that Roosevelt "not lose ownership or control of the Auditorium Theatre." Criticizing the proposed resolution, trustee Lerner stated that the "Theater would be given away in perpetuum, under this proposal. No [Roosevelt] trustee who understands the word 'trust' should vote for it."

As reflected in the minutes of the board meeting, Gertz responded to these concerns:

"[Gertz] was not attempting to make policy for the Board, he said, but had simply tried to realize its intent as derived from the Board's own earlier resolutions and statements of policy. He went on to say that no separate corporation had been proposed because this arrangement would be even more subject to the objection that the University would be prevented from exercising control over the Auditorium. He asserted that any action taken by the proposed Auditorium Council could be changed or rescinded by the Board of Trustees."

The resolution was tabled to allow the ARDC to address the concerns that had been raised.

On February 18, 1960, the ARDC presented a revised resolution to Roosevelt's board of trustees. The revision renamed the ARDC the Auditorium Theater Council. The revision made Roosevelt's control more explicit and further limited the authority of the Council. Language stating that the Council would "fully control" the fund-raising, restoration, maintenance, management, and programming for the Theatre was deleted, leaving the Council only "responsible" for fund-raising and restoration and "charged with the responsibility of carrying out the details of" the fund-raising campaign and the management, programming, and operation of the Theatre. Language that would have allowed the Council to "adopt such procedures *** as it may deem necessary" was dropped. Language was added to ensure Roosevelt board approval, on an annual basis, of all new members to the Council's executive committee. Language was added to ensure the board's involvement in establishing a development reserve amount for the Theatre, with all Theatre revenues above that amount being transferred to Roosevelt's unrestricted funds. Language was added requiring the Council to make periodic progress reports regarding the restoration to the board, to provide information requested by the board, to make annual reports of operations to the board, and to submit to an annual audit by accountants. Finally, language was added requiring that the actions and programming of the Council "be in harmony with the aims of the University in serving the educational and cultural aspirations of the community."

The revised resolution, as quoted in the minutes, reads in its entirety:

" 'Resolved, that it is the intent of the Board of Trustees of Roosevelt University, for and on behalf of the University to implement as described hereinafter the plan for the restoration and operation of the Auditorium Theater which was submitted by the [ARDC] to the Board at its meeting of October 29, 1959, and incorporated in its minutes of that date.

IT IS, THEREFORE, ORDERED

(1) That the [Council] be now authorized and directed to take such steps as it may deem necessary to carry out a fund drive for the restoration of the Theater with due regard for safeguarding the right, title and interest of the University in and to the Theater and protecting the resources and credits of both the University and the Council.

(2) That the Council be responsible for raising funds for the restoration of the Theater and for the supervision and administration of its restoration.

(3) That the Council be empowered to secure the services of a professional fund-raising executive and staff to guide and operate the campaign for funds.

(4) That the Council have authority to supervise the work of reconstruction, select engineers, architects, contractors, approve plans and specifications and contract and pay for the work performed, making periodic progress reports to the Board and providing requested information.

(5) That a special fund be established to be known as the Auditorium Restoration Fund, segregated and separate from other funds of the University, that contributions for the restoration be deposited in this fund, and that the fund be used for no other purpose than the restoration and operation of the fund drive.

(6) That the Council not contract, purchase or enter into obligations of any kind with any supplier or other person for the furnishing of work, services, or materials, or for any other purpose, unless funds or pledges are available for that purpose, and unless arrangements with any such person are in a form approved by legal counsel and embody the following provisions, among others, (a) a waiver of mechanics' liens; (b) the contracting parties will look only to the Restoration Fund for payment and no to any other fund of the University; and (c) the contracting parties will not hold the University nor any member of the Council or University liable or any reason whatsoever.

(7) That the Council nominate for Board approval persons of its selection to be members of an Executive Committee charged with the responsibility for carrying out the details of the fund-raising campaign and for the management, maintenance, budgeting, programming, financing and operation of the restored Auditorium Theater.

(8) That until such time as the Executive Committee of the Council is formed the Executive Committee of the [ARDC], members of which have already been approved by the Board, be responsible for the fund-raising campaign.

(9) That the Executive Committee of the Council be composed of not more than 25 persons; that the initial membership of the Executive Committee be divided into three groups, with terms ending respectively in 1961, 1962, and 1963; and that the Council nominate annually persons for Board approval to serve terms of three years as the initial terms of the original group end.

(10) That the Executive Committee of the Council organize itself and select such officers and committees as it deems necessary.

(11) That after the restoration of the Theater, any funds remaining in the Auditorium Restoration Fund be transferred to an Auditorium Theater Operating Fund to be used only for the maintenance and operation of the Theater and be disbursed by direction of the Executive Committee of the Council.

(12) That any surplus resulting from the operation of the Theater be retained in a development reserve, and that when an adequate sum, as determined by the Executive Committee of the Council in consultation with the Executive Committee of this Board, has been accumulated, any amount above that reserve be transferred to the unrestricted funds of the University.

(13) That the actions and programming of the Council be in harmony with the aims of the University in serving the educational and cultural aspirations of the community.

(14) That the Council or Executive Committee not conduct any capital, operating or maintenance fund-raising campaign other than the initial Restoration Campaign without consent of the Board.

(15) That the Council through its Executive Committee prepare annual reports of its operations for the Board, and that an annual audit of the Council's operations be made by a firm of certified public accountants.' "

Discussion on the resolution followed.

Some trustees proposed additional amendments based on their concerns that the revised resolution did not sufficiently describe the control that the University would have over the Council. Kenneth Montgomery, Roosevelt's attorney, opposed any additional amendments as unnecessary. He described the Council as an "agency" of the University and assured the board that nothing would "prevent the Board of Trustees from 'deactivating' the Auditorium Council and Committee [ARDC], who would owe their origin and authority to the Board."

Trustee Gerald Gidwitz, an ARDC member and supporter of the revised resolution, similarly assuaged the board as reflected in the minutes:

"The Committee [ARDC] considered that adequate protection for the University's interest inhered in the Board of Trustees' right to reconstitute or abolish the Auditorium Council and Committee, or to alter, modify, or abolish its powers in any way that the Board of Trustees might see fit. He said that the Board could change its mind about the terms of the resolution at any time in the future and he therefore urged that the resolution be passed without amendment."

In response to a request, Gidwitz agreed that his statement "could be incorporated in the minutes as reflecting the agreed understanding within the Board on the control which the Board could exercise over the Auditorium Council and [its] Executive Committee."

Upon this agreed understanding, the Roosevelt University board of trustees rejected the proposed amendments. The board adopted the revised resolution by a vote of 18 to 7.

Subsequent to the February 18, 1960, board meeting, Montgomery wrote a letter to the United States Internal Revenue Service (IRS), in which he sought a determination on behalf of Roosevelt that contributions to the Council would be tax deductible. Montgomery asked the IRS to grant Roosevelt's request because contributions to the Council were "in fact contributions to [Roosevelt] because the Council is its agent." The IRS ruled that contributions to the Council would be tax deductible to the donor, stating: "Since it appears that contributions to the Council will inure entirely to your [Roosevelt's] benefit such contributions will be considered contributions to you."

The Council employed architects, engineers, construction experts and others to determine a plan to restore the Theatre. The cost of restoration was estimated at a minimum of $2.75 million. Roosevelt would often advance funds for the restoration of the Theatre. On October 31, 1967, the Theatre was reopened to the public.

The Council operated the Theatre under the supervision and control of Roosevelt. At the March 4, 1971, meeting of Roosevelt's board of trustees, Chairperson Jerome Stone reported that Standing Policies and Operating Procedures (SOPs) had been developed for the Theatre. According to the minutes, Stone reported: "This statement reaffirms and supplements the Board's resolution of February 18, 1960 establishing the Council." At its April 22, 1971, meeting, the board approved the SOPs. They mandated procedures the Council was to follow for the day-to-day operation of the Theatre and further secured the University's control over Theatre operations. For example, the SOPs mandated that all Theatre employees be paid by the University and be subject to University regulations.

In the late 1970s, some Council members posited that fund-raising for the Theatre would improve if the Council could obtain its own tax-exempt status from the IRS. According to the minutes of the December 20, 1977, meeting of the Council's executive committee, the Council and Roosevelt were discussing "the establishment of a 'Shell Corporation' for the purpose of separate tax-exempt status of the [Council]."

Robert Gorman, the University's attorney, revised a draft of the articles of incorporation and bylaws of the proposed corporation. In a letter dated October 22, 1979, Gorman opined:

"In review, the Articles of incorporation and By-laws establish a separate Illinois not-for-profit corporation named the Auditorium Theatre Council. It is explicitly set forth in the Articles of Incorporation and in the By-laws that this new corporation is for fund raising purposes only and has no duties, rights, or operating responsibilities in connection with the Auditorium Theatre. ***

* * *

If the Board of Trustees approves the establishment of a new corporation, the Auditorium Theatre Council will exist in two legal capacities. In one capacity it will continue to exist as it has in the past as an unincorporated agency of Roosevelt University operating under, and subject to, the direction and control of the Board of Trustees of Roosevelt University. The books and accounts of the Auditorium Theatre Council will also continue to be subject to inspection by[,] and among the fiscal responsibilities and duties of[,] the Roosevelt Controller. The use, maintenance, operation and restoration of the Auditorium Theatre will continue in the identical fashion it has always done pursuant to the Resolution of the Board of Trustees of Roosevelt University dated February 18, 1960, and the [1971 SOPs].

In its other legal capacity the Auditorium Theatre Council will exist as an Illinois not-for-profit corporation in accordance with the Articles of Incorporation and By-laws submitted. It will use the name 'Auditorium Theatre Council.' However, the corporation will exist and be used for the solicitation of funds only. It will not affect in any way whatsoever the operations of the *** Council and the *** Theatre which will continue in the same manner as in the past."

Gorman concluded that the articles of incorporation and bylaws of the proposed corporation, Auditorium Theatre Council, Inc. (ATC Inc.), "are satisfactory and not in conflict with the interests of Roosevelt University."

Beatrice Spachner, University trustee and chairperson of the Council, reported on the Council's fund-raising efforts at the October 25, 1979, meeting of Roosevelt's board of trustees. She stated that potential donors hesitated to contribute to the Council because it was not separately identified as a not-for-profit corporation organized for tax-exempt purposes. According to Spachner: "To overcome this concern of contributors, it was concluded that an affiliate of the Council should be incorporated only for the purpose of raising funds *** for the restoration, operation and maintenance of the Auditorium Theatre. *** [T]his will be the only function of the Corporation."

Both the Council and ATC Inc. would share similar names, and would have largely the same membership. However, the resolution authorizing the incorporation of ATC Inc. expressly stated:

"This corporation is authorized for fund raising purposes only. The corporation will have no rights whatsoever for the use, operation, maintenance, or restoration of the Auditorium Theatre. The use, operation, maintenance and restoration of the Auditorium Theatre will continue, without change, to be the responsibility of the Auditorium Theatre Council in its separate legal capacity as an unincorporated agency of Roosevelt University subject to the control of the Roosevelt University Board of Trustees as set forth in the [1971 SOPs]. *** In the event that at any time in the future [ATC Inc.] should exceed any of the duties, rights, or powers granted it by this resolution, the Board of Trustees hereby reserves the right to terminate any uses, duties or rights of [ATC Inc.] in connection with the *** Theatre."

Roosevelt's board of trustees adopted the resolution.

On September 8, 1981, ATC Inc. filed its articles of incorporation with the State of Illinois and was incorporated under the General Not For Profit Corporation Act (see 805 ILCS 105/101.01 et seq. (West 2000)). According to its articles of incorporation, ATC Inc.'s corporate purpose was, in pertinent part:

"To raise funds and gifts from individuals and organizations for the restoration, operation and maintenance of the Auditorium Theatre *** and the presentation of educational, civic and cultural programs therein, with due regard for safeguarding the right, title and interest of Roosevelt University in and to the Theatre, so that it will serve as a cultural center for the people of Chicagoland."

ATC Inc. subsequently obtained an IRS ruling that ATC Inc. was a tax-exempt organization and that donations to it would be tax-deductible by the donor.

Subsequent to the incorporation of ATC Inc., the University updated the 1971 SOPs. The 1983 SOPs stated in pertinent part:

"The purpose of the *** Council is to maintain, operate and continue the restoration of the internationally famed Auditorium Theatre of Roosevelt University. The Council will operate the Theatre for the benefit of the faculty and students of Roosevelt University and also, subject to the academic priorities of the University, to make artistic, cultural and educational contributions to the people of Greater Chicago through the sponsorship of events in the performing arts."

The 1983 SOPs are substantially similar to those of 1971. Significantly, the 1983 SOPs distinguish the identity and the function of the Council from those of ATC Inc. The 1983 SOPs recount that the University created the Council through the 1960 resolution of Roosevelt's board of trustees and that the University created ATC Inc. through the board's October 25, 1979, resolution. The 1983 SOPs state that the "sole purpose" of ATC Inc. "is to solicit funds for the Auditorium Theatre."

Dialogue

The University paid the Theatre's operating costs, such as insurance and employee payroll, from the University's general account. Roosevelt was supposed to be repaid from the Theatre revenue account. However, by the late 1980s, the Theatre's operating expenses exceeded its revenues. The Theatre lost more money than fund raising could offset. The general funds that Roosevelt expended were not reimbursed. Theatre losses and the operating deficit increased. Roosevelt paid this deficit by transferring money from its endowment fund to Theatre accounts.

On July 1, 1986, Roosevelt trustee Robert Mednick met with Council chairperson Jack Whitney to discuss this problem. According to a July 7, 1986, letter from Mednick to Whitney, they agreed that if the Theatre's cumulative operating deficit increased over approximately $250,000, the Theatre would be discontinued due to a lack of community support. An April 29, 1987, letter by a Council officer reflected the understanding that if the cumulative deficit exceeded this amount "at any time, Roosevelt may close down the Council."

The Theatre's cumulative operating deficit eventually totaled over $400,000. However, despite the above-stated understanding, the University kept the Theatre open and continued to support the Theatre. Eventually, during the 1990s, the Theatre attracted large Broadway productions such as "Miss Saigon," "Les Miserables," "Phantom of the Opera," and "ShowBoat." These productions and other popular programs enabled the Council to increase its revenues from ticket sales and to repay the funds transferred to the Theatre accounts from the University's other accounts.

Strife

Beginning in the late 1980s, the Council and Roosevelt disputed their respective rights over the Theatre. As reflected in a November 15, 1988, letter from Council chairperson Edward Weil to University President Gross, the Council recognized signs of success. "Things are coming together nicely in the operation of the Theatre and at the same time the Council is starting to get the favorable recognition it deserves, and is beginning to tap into major funding sources." However, a June 26, 1989, memo from Gross to a committee of University trustees reflected the University's view: "The distinction that must continually be made is between authority and responsibility: the RU Board of Trustees has authority over the Theatre; the [Council] has the responsibility to manage the Theatre." (Emphases in original.)

A rift grew between the parties. In 1989, Roosevelt informed the Council that a Council fund-raising campaign, initiated without the approval of Roosevelt's board of trustees, possibly violated the 1983 SOPs. At the April 14, 1989, meeting of the Roosevelt board, Gross reported this and other violations. He suggested options including "[d]rawing up a new agreement that retains our ownership of the theatre but that establishes the [Council] as a no[t]-for-profit, separate corporation which pays $1 a year rent to the university and is responsible for its own operating budget and its own fund-raising."

On July 10, 1989, the Council's executive board agreed with Gross' recommendations. The group also concluded that the Council should continue to manage the day-to-day operations of the Theatre.

At its July 20, 1989, meeting, the Roosevelt board of trustees approved a resolution concerning "the organizational structure between Roosevelt University and the Auditorium Theatre." The resolution stated that the Council "has responsibility for the artistic direction of the Theatre and the executive director of the Theatre reports directly to the president of the University with regard to budgetary and general operating matters."

The Council viewed this resolution essentially as Roosevelt transferring authority for managing the Theatre from the Council to Roosevelt. The Council's executive board rejected Roosevelt's resolution.

On August 1, 1989, the Council's executive board presented to Roosevelt a proposal to change the relationship between the University and the Council. The proposal acknowledged that Roosevelt owned the Theatre. Under the proposal, subject to conditions such as repayment of funds to Roosevelt, the Council would be disbanded and all operating authority would be transferred to ATC Inc., which would conduct fund raising independently of the University. Roosevelt rejected this proposal.

On August 24, 1989, the Council's executive board resigned. The Council assumed "no further responsibility" for Theatre operations and advised University trustees to prepare to do so.

As a result of this discord, Roosevelt and the Council reached a disharmonious decision. The Council would continue its day-to-day operations of the Theatre; members of the Council's executive board rescinded their resignations; and Gross was elected chairperson of the Council. At its October 10, 1989, meeting, Roosevelt's board of trustees approved the following resolution:

"The Auditorium Theatre is an aesthetic and financial asset of Roosevelt University, an integral unit led by an Executive Director who reports to the President of the University. The President serves as Chairman of the Auditorium Theatre Council. The Executive Director is assisted by the Auditorium Theatre Council in programming, fund-raising, special events, and other activities directly related to the Theatre.

Although Roosevelt University retains final authority over all matters pertaining to the Auditorium Theatre, the Board of Trustees recognizes that the Auditorium Theatre Council must remain as autonomous as possible, contingent upon sound fiscal management. The University endorses the concept that Roosevelt University and the Auditorium Theatre are one entity. Roosevelt University wishes to assist the Auditorium Theatre in all of its efforts and supports the principle that, as a matter of first priority, all revenues raised in its behalf be placed in the account of the Auditorium Theatre for its continuing advancement.

The Auditorium Theatre should now be presented as the Auditorium Theatre of Roosevelt University."

Whatever understanding the parties may have reached faltered from the beginning. Roosevelt and the Council constantly disputed their respective powers over the Theatre and the ownership of the Theatre's operating revenues.

Throughout the early 1990s, the parties conducted continuous negotiations regarding various forms of agreements to change their relationship to each other and to the Theatre. For example, in 1991, John Blew, Council and ATC Inc. secretary, presented another proposal for transfer of Theatre operations from the Council to ATC Inc. His proposal included several justifications. First, pointing to the Council's board, Blew stated that the Council had an opportunity to move the board's composition "into a higher tier by attracting a group of more influential and higher profile members who both have more money themselves and, perhaps more important, have greater access to other sources of major funding." (Emphasis in original.) Blew posited that it was "essential for such broad development that there be a separate legal entity and organization with its own identity and mission in place. The 'heavy hitters' we are talking about will simply not lend their names and prestige to an 'advisory committee' or anything of the sort." Blew suggested that operating the Council through ATC Inc. was a necessary condition to strengthening the Council's board.

Blew also recommended that the relationship between the Council and ATC Inc. be clarified. According to Blew: "The minutes of meetings of the two 'mirror' organizations which now exist-the unincorporated association and the corporation-are not in acceptable shape. Most of our own board members don't really know or understand the organizational structure." Blew continued that "if producers, artists and vendors were aware of the structure or lack thereof, they might be reluctant to enter into contracts with respect to the Theatre. It is not a healthy situation, and it is one which should not be permitted to continue."

In the course of his proposal, Blew acknowledged: "There is no question but that the University owns the Theatre and controls the Council-period." Roosevelt rejected the proposal.

Through 1993 and 1994, Roosevelt and ATC Inc. discussed a license or lease agreement under which Roosevelt would transfer Theatre operations to a reorganized ATC Inc. On June 22, 1993, ATC Inc. sent a letter to the IRS inquiring into the corporation's tax-exempt status if it took over Theatre operations. In the letter, ATC Inc. represented to the IRS, under penalty of perjury, that the Council operated the Theatre as a "part" of, or "unit within," the University since 1960 and that a "proposal" had been made to transfer Theatre operations to ATC Inc. prospectively. The IRS determined that the proposed reorganization would not affect the tax-exempt status of ATC Inc. By December 1994, the parties had agreed on neither the terms of a license nor the makeup of the proposed reconstituted ATC Inc.

During this time, ATC Inc. made additional proposals to Roosevelt regarding the Theatre. In mid-1994, ATC Inc. offered to purchase the Theatre from Roosevelt for $1 million, but the University rejected the offer. In November 1994, ATC Inc. offered to purchase the Theatre for $3 million, which offer the University rejected.

At a December 15, 1994, meeting of the Council's executive committee, Gross requested that the committee recommend the transfer of $1.5 million out of the $3 million then contained in the Theatre's operating accounts into Roosevelt's general accounts. Roosevelt wanted to use the $1.5 million to finance its new Schaumburg campus. The money would be transferred from the Theatre's operating revenues and not from contributions. The Theatre's executive director stated at this meeting that the transfer would not impair Theatre operations. ATC Inc. members objected to the transfer. It was agreed that no action would be taken on the request pending receipt of an opinion from Roosevelt's counsel regarding the legality of the proposed transfer.

Adversaries

The next day, plaintiffs brought this lawsuit. In July and November 1995, the Roosevelt University board of trustees approved resolutions that: (1) dissolved the Council; (2) withdrew any and all powers given to ATC Inc.; and (3) authorized a new not-for-profit corporation to manage and operate the Theatre, known as the Auditorium Theatre of Roosevelt University (AT of RU).

In their complaint, plaintiffs sought an injunction prohibiting defendants and ATC Inc. from directing the transfer of any money from ATC Inc. to Roosevelt for non-Theatre purposes. Also, plaintiffs sought a declaration that Roosevelt had placed the Theatre "in the public domain for the benefit of the people of Chicagoland," with the Council and its successor, ATC Inc., as trustee. Plaintiffs also sought a declaration that, inter alia: ATC Inc. had legal title to all funds donated and all revenue generated from its operations; any transfer of money from ATC Inc. to Roosevelt for non-Theatre purposes would violate the articles of incorporation and bylaws of ATC Inc.; and such transfer would violate the General Not For Profit Corporation Act of 1986 (805 ILCS 105/101.01 et seq. (West 2000)).

Roosevelt filed an answer, in which the University raised defenses. Roosevelt claimed that ATC Inc.'s sole corporate purpose was to raise funds for the Theatre and that the board of trustees of the University, the owner of the building, had never granted ATC Inc. authority or power to restore, maintain, or operate the Theatre. Roosevelt also claimed that ATC Inc. did not succeed the Council created in 1960. Among its defenses, Roosevelt claimed: "there is absolutely no legal doctrine involving the dedication of private property to the 'public domain,' at least without a governmental taking though a condemnation proceeding with just compensation."

Roosevelt also filed a counterclaim against plaintiffs and ATC Inc. for declaratory and injunctive relief. Roosevelt sought a declaration that the University owns all right, title, and interest in the Theatre. Roosevelt sought a further declaration that: the University has the sole power and authority to restore, maintain, and operate the Theatre; that the University granted a revocable license to the Council to perform those tasks; and that ATC Inc. has no right to perform those tasks, but was created solely for fund raising purposes. Roosevelt also sought, inter alia, an accounting of ATC Inc.'s funds and an injunction to prevent ATC Inc. from operating the Theatre.

ATC Inc. filed its own counterclaim against Roosevelt. The corporation asserted a number of alternative legal theories in support of its claimed control of the Theatre.

The trial court granted Gross' motion to dismiss all claims against him as legally insufficient (see 735 ILCS 5/2-615(a) (West 2000)). Also, granting Roosevelt's motion for partial judgment on the pleadings (see 735 ILCS 5/2-615(e) (West 2000)), the trial court held that: (1) Roosevelt had the authority and right to restore, maintain, and operate the Theatre; (2) ATC Inc.'s sole right is to raise money for the Theatre; and (3) the positive net operating revenues from Theatre performances are the property of the University.

In a Rule 23 order, the appellate court reversed the orders of the circuit court and remanded the cause for a trial. Eychaner v. Gross, Nos. 1-95-3614, 1-96-1412 cons. (1997) (unpublished order under Supreme Court Rule 23). The appellate court determined that disputed questions of material fact existed regarding the parties' relationship. The appellate court also held that plaintiffs' claims were legally sufficient.

On remand, plaintiffs and ATC Inc. (hereafter referred to as plaintiffs) amended their pleadings. They, inter alia, altered their trust theory to assert an "express trust" of the right to restore, maintain, and operate the Theatre, which they referred to as the "Auditorium Theatre Trust." Plaintiffs maintained their allegations that the Council was the trustee and ATC Inc., as legal successor to the Council, became, and remains, the trustee. In its counterclaim against Roosevelt and Gross, ATC Inc. alleged, inter alia: (1) an express charitable public trust; (2) constructive trust; (3) breach of contract based on the 1960 resolution and SOPs; (4) equitable estoppel; and (5) promissory estoppel.

At the close of a bench trial, on September 28, 1998, the court entered judgment in favor of Roosevelt on its counterclaim and denied plaintiffs' theories of relief. The trial court declared the University to be the sole and exclusive owner of the Theatre. The trial court: ordered plaintiffs to turn over control of the Theatre to the newly formed AT of RU; barred the Council and ATC Inc. from operating and controlling the Theatre; and ordered an immediate accounting of Theatre operations. On September 29, the trial court made an express written finding making these orders immediately enforceable (see 155 Ill. 2d R. 304(a)).

A divided appellate court reversed these orders and remanded the cause for further proceedings. 321 Ill. App. 3d 759. The appellate court held that the trial court's conclusion that there was no express trust was clearly erroneous. 321 Ill. App. 3d at 779. Based on that holding, the court declined to address plaintiffs' alternative claims. 321 Ill. App. 3d at 780-81. A concurring justice wrote separately to disagree with the dissent. 321 Ill. App. 3d at 785 (Cahill, P.J., specially concurring). The dissenting justice concluded: "Because there is enough admissible evidence to support the trial judge's view that this was a takeover attempt by an instrumentality of Roosevelt University, I would affirm his conclusion that there is no trust." 321 Ill. App. 3d at 788 (Wolfson, J., dissenting). We allowed defendants' petition for leave to appeal.⁽¹⁾

We subsequently granted leave to DePaul University and the Illinois Institute of Technology to file an amicus curiae brief in support of defendants' appeal. We also granted leave to the Landmarks Preservation Council of Illinois to file an amicus curiae brief in support of plaintiffs.

ANALYSIS

I. Standard of Review

The parties disagree as to our standard of review of the trial court's decision. Defendants contend that we should review the trial court's decision under the "manifest weight of the evidence" standard. Plaintiffs contend that the "clearly erroneous" standard is the proper standard of review. The appellate court employed the "clearly erroneous" standard of review. 321 Ill. App. 3d at 770.

The trial court heard witness testimony and resolved conflicts of fact. In a bench trial, the trial court must weigh the evidence and make findings of fact. In close cases, where findings of fact depend on the credibility of witnesses, it is particularly true that a reviewing court will defer to the findings of the trial court unless they are against the manifest weight of the evidence. Chicago Investment Corp. v. Dolins, 107 Ill. 2d 120, 124 (1985). The findings of the trial court as to the existence of a trust will not be disturbed on review unless such findings are against the manifest weight of the evidence. In re Estate of Zukerman, 218 Ill. App. 3d 325, 330 (1991) (and cases cited therein). This standard also applies regarding the existence of an agency relationship. Martin v. Heinold Commodities, Inc., 163 Ill. 2d 33, 47 (1994). A decision is against the manifest weight of the evidence only when an opposite conclusion is apparent or when the findings appear to be unreasonable, arbitrary, or not based on the evidence. Rhodes v. Illinois Central Gulf R.R., 172 Ill. 2d 213, 242 (1996); Leonardi v. Loyola University of Chicago, 168 Ill. 2d 83, 106 (1995); Bazydlo v. Volant, 164 Ill. 2d 207, 215 (1995). "The court on review must not substitute its judgment for that of the trier of fact." Kalata v. Anheuser-Busch Cos., 144 Ill. 2d 425, 434 (1991).

Nevertheless, the trial court also construed and ruled on the legal effect of documents. In reviewing the trial court's conclusions of law, we apply a de novo standard of review. See Norskog v. Pfiel, 197 Ill. 2d 60, 70-71 (2001); Woods v. Cole, 181 Ill. 2d 512, 516 (1998); T. O'Neill & S. Brody, Taking Standards of Appellate Review Seriously: A Proposal to Amend Rule 341, 83 Ill. B.J. 512, 516 (1995). We now turn to the merits of the issues before us.

II. Express Charitable Trust

Plaintiffs claim that the 1960 resolution of Roosevelt's board of trustees, together with the surrounding circumstances, created an express charitable trust with the Council and its successor, ATC Inc., as trustee in charge of restoring and operating the Theatre. The trial court rejected plaintiffs' claim, and concluded that Roosevelt created the Council as its agent for restoring and operating the Theatre. The appellate court reversed and remanded for further proceedings, finding "legal and factual errors in the trial court's resolution of the charitable trust issue." 321 Ill. App. 3d at 771.

Before this court, plaintiffs, as appellees, not only defend the appellate court's judgment, but also request, as cross-relief, that we declare the existence of the alleged trust. We decline plaintiffs' request. The record contains ample evidence that supports the trial court's findings of fact.

The controlling legal principles are quite settled. A trust "is a fiduciary relationship with respect to property, subjecting the person by whom the title to the property is held to equitable duties to deal with the property for the benefit of another person, which arises as a result of a manifestation of an intention to create it." (Emphasis added.) Restatement (Second) of Trusts