Opinion
September 8, 1960 —
October 4, 1960.
APPEAL from a judgment of the circuit court for Milwaukee county: RONOLD A. DRECHSLER, Circuit Judge. Reversed.
For the appellants there was a brief and oral argument by Victor H. Glanz of Milwaukee, guardian ad litem.
For the respondents Fred W. Uihlein, Albert O. Trostel, Jr., and William D. Vogel, trustees, there was a brief by Foley, Sammond Lardner, Lynford Lardner, Jr., Harrold J. McComas, and Harry L. Wallace, all of Milwaukee, and oral argument by Mr. McComas.
For the respondents Charles A. Uihlein and Sarah K. Uihlein, there was a brief and oral argument by John F. Zimmermann of Milwaukee, guardian ad litem.
Action instituted by the plaintiffs Fred W. Uihlein, Albert O. Trostel, Jr., and William D. Vogel, as trustees under an inter vivos trust agreement executed by Melitta K. Uihlein as donor dated November 1, 1948, for the benefit of the children, and the issue of the children, of Dr. Alfred Uihlein, son of the donor, for the construction of the trust instrument. The defendants are the four natural children and the three adopted children of Dr. Alfred Uihlein.
On November 1, 1948, Melitta K. Uihlein, the donor, had three children living, to wit: Dr. Alfred Uihlein, Fred W. Uihlein, and Melitta Uihlein Donnelly (now Elliott). Her husband, William B. Uihlein, was also living, and she was the sole owner of insurance policies on his life in the total sum of $750,000.
On that date she executed three irrevocable trust agreements, using one third of $750,000 or $250,000 of such insurance policies as the corpus of each trust; one, that which is now before the court for construction, was entitled, "For the benefit of the children of Dr. Alfred Uihlein;" another "For the benefit of the children of Fred W. Uihlein ;" and another "For the benefit of the children of Melitta Uihlein Donnelly." Except for the names of the trustees and beneficiaries the instruments are identical.
The pertinent provisions of the trust agreement before the court for construction are the following:
The first paragraph, on page 2, provides:
"Whereas, the trust fund so created shall be for the benefit of the children and the issue of the children of Dr. Alfred Uihlein."
Article III (A), page 5, provides:
"The trust property, together with any accrued, accumulated, and undistributed income, shall be divided into as many equal shares as there shall be children of Dr. Alfred Uihlein surviving the insured and deceased children of Dr. Alfred Uihlein leaving issue surviving the insured, and each such share shall thereafter for all purposes be held and administered as a separate trust and trust fund hereunder; provided, that the trust property shall from time to time be subject to reallocation and redivision, as hereinbefore provided, upon the subsequent birth of a child or children of Dr. Alfred Uihlein, or upon receipt of additional property by the trustees; provided further, that after any child of Dr. Alfred Uihlein shall have reached the age of thirty (30) years there shall be no further reallocations because of the birth of any child of Dr. Alfred Uihlein born thereafter."
Article III (C), page 6, provides:
"If any child of Dr. Alfred Uihlein shall die before the insured or shall die prior to the termination of the trust hereinabove created for him, in either case leaving issue surviving him and the insured, the trust fund of such deceased child shall be subdivided into equal shares and each such share shall thereafter for all purposes be held and administered in trust hereunder as a separate trust and trust fund for each of such surviving issue of such deceased child, upon the same terms and conditions as are provided for the children of Dr. Alfred Uihlein under paragraph (B) of this article."
Article XVI, page 21, provides:
"The words `child,' `children,' and `issue,' as used herein shall include the adopted children of any parent."
On November 1, 1948, Dr. Alfred Uihlein was forty years of age, living at Rochester, Minnesota, with his first wife and three children born of this marriage, and on such date the eldest of his children was thirteen years of age. They are the defendants Debbra Montoya, William B. Uihlein II, and Charles A. Uihlein.
Dr. Alfred Uihlein was divorced from his first wife January 26, 1951, and later married Ione Peters Dodge, who had three children born to her of her first marriage and which children at that time were ten, eight, and four years of age respectively.
A child, Sarah K. Uihlein, was born of this second marriage on March 22, 1952.
On December 6, 1956, Dr. Alfred Uihlein in proceedings in a Minnesota court adopted the three children of his second wife, who were the issue of her prior marriage.
On November 1, 1948, the date of the execution of the trust agreements, Fred W. Uihlein had two adopted children, one adopted in 1946 and the other early in 1948. The relationship existing between the donor and these adopted children was the usual cordial one of grandmother and grandchildren, and there was the usual degree of affection between them.
William B. Uihlein, the husband of the donor upon whose life the life insurance policies had been issued, died on July 28, 1953, and the $250,000 then became payable to the plaintiff trustees.
Pursuant to the direction of Article III (A) of the trust agreement, the trust funds were thereupon divided into four equal shares, each held as a separate trust for each of the three children born to Dr. Uihlein by his first marriage and one share for the child born to him by his second marriage.
Upon the adoption of the three children in 1956, the trustees had doubt "as to the proper interpretation of the trust agreement as applied to children adopted by Dr. Alfred Uihlein after the death of the insured William B. Uihlein" because of a possible conflict contained in Article III (A) and Article XVI. Because of such doubt the trustees brought this action for construction of the trust agreement and for directions to the trustees. The guardian ad litem for the adopted children interposed an answer contending that it was the intention of the donor to include such children adopted in 1956. The guardian ad litem for the minor natural children of Dr. Uihlein interposed an answer contending that the donor's intention was not to include such adopted children.
The action was tried to the court without a jury. After trial, the court filed a memorandum decision in which Article III (A) of the trust instrument was construed as not embracing the three adopted children of Dr. Uihlein. Judgment was accordingly entered under date of October 15, 1959, adjudging that such three adopted children have no interest in the trust funds of the trust, and directing that the trustees not redivide and reallocate such trust funds so as to set aside any portion thereof for such adopted children. From such judgment the guardian ad litem for the three adopted children of Dr. Uihlein has appealed.
The issue before us on this appeal is whether the three children, who were adopted in 1956 by Dr. Uihlein after the death in 1953 of the insured husband of the donor, are entitled to shares in the trust corpus.
The general principles governing the interpretation of a trust instrument are the same whether created inter vivos or by will. Welch v. Welch (1940), 235 Wis. 282, 290 N.W. 758, 293 N.W. 150; Brock v. Hall (1949), 33 Cal.2d 885, 206 P.2d 360, 11 A.L.R. 2d 672; and 2 Scott, Trusts (2d ed.), p. 1160, sec. 164.1. This being so, the general principles of construction applicable to all wills are pertinent because courts do not apply one set of rules of construction to wills having trust provisions and another to wills which do not.
Whether adopted children of a particular individual take under a testamentary disposition the same as children of the blood is dependent upon the intention of the testator. Estate of Breese (1959), 7 Wis.2d 422, 426, 96 N.W.2d 712, and Lichter v. Thiers (1909), 139 Wis. 481, 488, 121 N.W. 153. Therefore, the problem before us here is to ascertain the intention of the donor.
The guardian ad litem for the two minor natural children of Dr. Uihlein contends that we must first confine our quest to ascertain such intention of the donor to the provisions of Article III (A) of the trust instrument in order to determine whether under the plain wording of such paragraph there is an ambiguity. We reject such approach.
Whether an ambiguity exists must be determined from a consideration of the entire trust instrument and not from a single portion thereof. United States Trust Co. v. Jones (1953), 414 Ill. 265, 270, 111 N.E.2d 144, 147. This is because the intention of the creator of a trust is to be ascertained from the whole trust instrument, and not from the language of any particular provision or clause therein when taken by itself. In re Schwedler's Trust (1952), 113 N Y Supp. 2d 306, 311, and Williams v. Morris (1933), 144 Or. 620. 625, 25 P.2d 135, 136.
While the will before this court in Will of Stephens (1931), 206 Wis. 16, 238 N.W. 900, 80 A.L.R. 134, did not involve a testamentary trust, the court applied the principles of construction set forth in the foregoing paragraph. The will of the testator Stephens bequeathed certain money bequests to various nieces and nephews. Paragraph sixth of such will stated that he gave his niece Eloise Hall nothing (p. 17), "for the reason that I have heretofore given her a sum of money out of my estate equal in amount to her share as compared with her brothers and sisters and I will therefore give her no more." (Emphasis supplied.) The nephews and nieces "aforesaid" were made beneficiaries under the residuary clause. The question was whether Eloise Hall took under the residuary clause. This court rejected the argument that paragraph sixth was unambiguous and clearly expressed an intent that she was not to share in any part of the estate. In its opinion the court stated (p. 19):
"The appellants, by their guardian ad litem, earnestly contend that paragraph sixth is unambiguous and clearly expresses an intent on the part of the testator wholly to exclude Eloise Hall as a beneficiary under his will.
"Paragraph sixth, standing by itself, alone and apart from the other provisions of the will, is without doubt subject to such a construction. But we must look to the language of the whole will and read it in the light of the circumstances surrounding the testator, in order to discover what was apparently in his mind at the time he made it, and thus ascertain his intention."
When we consider the instant trust instrument as a whole we discover that there is an ambiguity present with respect to the issue of whether it was the intent of the donor that the three adopted children of Dr. Uihlein are entitled to share in the trust fund. The first "whereas" paragraph on page 2 states that such trust fund, "shall be for the benefit of the children and the issue of the children of Dr. Alfred Uihlein." Then Article XVI states, that, "The words `child,' `children,' and `issue' as used herein shall include the adopted children of any parent." Construing these two clauses together, as we must, we have a clear and unequivocal declaration by the donor that the children of Dr. Uihlein for whose benefit she created the trust includes adopted children. However, when we turn to Article III (A) we find that the donor speaks of the "subsequent birth of a child or children of Dr. Alfred Uihlein." If we ascribe to the word "birth" its literal meaning of being born from the body, then children adopted by Dr. Uihlein subsequent to the death of the insured husband of the donor are excluded and we have a conflict which results in an ambiguity.
The guardian ad litem for the minor natural children of Dr. Uihlein contends that this court must construe the word "birth" as meaning born of the body and cites the cases of Wachovia Bank Trust Co. v. Green (1954), 239 N.C. 612, 80 S.E.2d 771, and Third Nat. Bank Trust Co. v. Davidson (1952), 157 Ohio St. 355, 105 N.E.2d 573. Both cases construed the word "born" with reference to children as excluding an adopted child. However, we do not consider that these two cases should control the result here. This is because there was no express clause included in the trust provisions there being interpreted which corresponded to the provision of Article XVI of the instant trust instrument expressing an intent that adopted children should take the same as natural children.
In Dreyer v. Schrick (1919), 105 Kan. 495, 185 P. 30, the court there had before it for construction its pretermission statute, which provided that a child " born" after the execution of a will shall take the same share of the estate that it would be entitled to do if the testator had died intestate. The question before the court was whether a child adopted by the testatrix after she had made her will would share in the estate under such statute. However, the same argument was then advanced as here, viz., that the word " born" should be given its strict literal meaning. In commenting thereon the Kansas court stated ( 105 Kan. 497, 185 P. 31):
"This icily logical argument, based on the letter of the law, which killeth, is supported by judicial decisions from several states."
The Kansas court refused to follow such precedents and construed the statute as applicable to an adopted child. Our own court has construed Wisconsin's pretermission statute, now sec. 238.10, as including adopted children in spite of the use of the words "when any child shall be born." Sandon v. Sandon (1905), 123 Wis. 603, 101 N.W. 1089, and Glascott v. Bragg (1901), 111 Wis. 605, 87 N.W. 853.
In Will of Ehlers (1913), 155 Wis. 46, 143 N.W. 1050, this court enunciated the principle of construction which we deem should govern the result here when it declared (p. 48):
"The court has very great power which may be exercised to prevent failure of a testator's purpose, all in harmony with the rule that the legal intention of the testator is the one expressed by his language, though it may not be exactly the real intention he had in mind — that his purpose can be given vitality only so far as it can be read reasonably out of the will — but to the end that the testamentary idea may be so read the language should be examined in the light of the situation of the testator at the time he used it and all environing circumstances. If thereby the intention is plain, or the major probabilities are on the side of a particular intent, for the purpose of so reading the will as to express it, words may be given a very broad or very restrictive meaning, going to the very limit of the boundaries of reason, or may be transposed or rejected, or words not seen, may be read in place which are there by reasonable or necessary inference, or may be transposed or supplied, and thus the language be moulded to express, so far as can reasonably be done, the testator's intention." (Emphasis supplied.)
The decision of this court in Estate of Blackbourn (1951), 260 Wis. 25, 49 N.W.2d 755, exemplifies an application of the above-quoted principle of construction. There the testator provided (p. 26), "All of such nieces and nephews shall take per stirpes and not per capita as it is my desire that they shall share equally in my estate." The provision that the nieces and nephews were to take " per stirpes" was in direct conflict with the expressed intent that they should share equally. We held that such expressed intent was controlling.
Likewise in the instant case we deem the expressed intent of the donor, that the trust was created for the benefit of any adopted children of Dr. Uihlein, or his issue, as well as for his natural children, or their issue, controls here so that the word "birth" appearing in Article III (A), should not be interpreted as excluding children adopted by Dr. Uihlein after the death of the insured.
In construing the trust instrument in order to arrive at the intent of the donor, it is appropriate that we consider the surrounding circumstances of the donor at the time she executed the instrument on November 1, 1948. Estate of Breese, supra, at page 426. Her son Dr. Alfred Uihlein then had no adopted children but her son Fred W. Uihlein had two. Her relationship to these two adopted children was a cordial one. It is a reasonable inference that this is the reason she caused to be inserted in the trust which she created for the benefit of the children of Dr. Uihlein, or their issue, the provision in favor of adopted children found in Article XVI. If Dr. Uihlein had adopted any children between November 1, 1948, and the death of the insured husband of the donor on July 28, 1953, there would be no question but what such adopted children would have shared in the trust fund. The donor would have been powerless to prevent it, even if she had desired to do so, because the trust is irrevocable. This being so, we can perceive of no valid reason why the donor should have intended that children adopted by Dr. Uihlein after the death of the insured should be excluded. The happenstance, that the insured died in 1953 instead of after the adoption proceedings had been consummated in 1956, would appear to be purely fortuitous and unrelated to any motive the donor might have to include, or exclude, adopted children as beneficiaries of the trust.
Therefore, it is our considered judgment that the ambiguity must be resolved in favor of the three adopted children of Dr. Uihlein being entitled to share in the trust fund.
The brief in behalf of the appellant guardian ad litem requests that the costs of all parties to this appeal be ordered paid out of the trust corpus inasmuch as the appeal was taken in good faith, and because the appeal has presented questions worthy of consideration by this court.
In Davis v. Davis (1907), 132 Wis. 54, 111 N.W. 503, 111 N.W. 1129, which involved an appeal in an action for construction of a testamentary trust, this court directed that the costs of appeal be paid out of the estate inasmuch as the appeal was taken in good faith and the questions presented were worthy of presentation to this court. We deem that such case is sufficient precedent for us to direct that the costs of all parties to this appeal be paid out of the trust estate because there is no question but that all parties to this appeal acted in good faith and the question presented is worthy of our consideration. Such costs shall include reasonable attorney fees. We do not deem the fact that the two adversary parties here are two guardians ad litem precludes the payment of their costs of appeal from the entire trust estate instead of charging the same against the separate shares of the trust funds allocated, or to be allocated, to their respective wards. On this point, see Jones v. Roberts (1897), 96 Wis. 427, 434, 70 N.W. 685, 71 N.W. 883.
By the Court. — Judgment reversed, and cause remanded with directions to enter a judgment consistent with this opinion, which judgment is to provide that the costs of all parties to this appeal, including reasonable attorney fees, are to be paid out of the trust estate. No costs are to be taxed in this court.