Dutra de Amorim v. Norment

Citation460 A.2d 511
PartiesMichelle DUTRA DE AMORIM, Co-Defendant Below, Appellant, v. Hughes NORMENT, Brady O. Bryson, and Wilmington Trust Company, Trustees Under Agreement with Elizabeth Donner Norment, Plaintiffs Below, Appellees, and Phaedra Hanson, Stephanie Kay Watters Hanson and Edward L. Auditore, Personal Representative of the Estate of Donner Hanson, Co-Defendants Below, Appellees. . Submitted:
Decision Date17 September 1982
CourtUnited States State Supreme Court of Delaware

Upon appeal from the Court of Chancery. Affirmed.

Roger A. Akin (argued) and H. Murray Sawyer, Jr., H. Murray Sawyer, Jr., P.A., Wilmington, for appellant.

John Biggs, III, Biggs & Battaglia, Wilmington, for appellee-cross appellant.

Robert K. Payson, (argued) and Daniel F. Lindley, Potter, Anderson & Corroon, Wilmington, for Bank of California, successor guardian appellee.

Before McNEILLY and MOORE, JJ., CHRISTIE, J. (then sitting as a Superior Court Judge by designation of the Chief Justice pursuant to Del. Const. art. IV, § 12).

MOORE, Justice:

This is an appeal by Michelle Dutra de Amorim (Michelle) and a cross-appeal by Phaedra Hanson (Phaedra) from the judgment of the Court of Chancery on a petition for instructions regarding a trust created in 1972 for Donner Hanson (Donner) by his mother, Elizabeth Donner Norment. The trustees had requested resolution of several questions: whether Stephanie Hanson (Stephanie) and certain unnamed illegitimate children were "issue" as defined in the trust; whether Donner had effectively exercised a special testamentary power of appointment; whether specific trust conditions had been met to qualify Stephanie as an object of the power or as a taker in default of the power. The present Chancellor granted summary judgment on these issues, concluding that Donner did not validly exercise his power of appointment, and in default thereof the corpus and income were distributable to Phaedra and Stephanie as Donner's "then living issue" in accordance with the special meaning and intent of that term under the trust instrument. We agree with the Chancellor's conclusions and affirm.

I.

We refer to the facts as found by the Court of Chancery. In 1972, Mrs. Norment established a trust for the benefit of her son, Donner, and his issue. The trust agreement gave the trustees the discretion to pay income and principal to Donner as well as to his issue. It also provided, in portions applicable here, that upon the death of Donner the trust principal and accumulated income were to be

distributed to or for the benefit of such of my issue then living or thereafter born and the spouses of such issue (including the beneficiary's spouse) in such proportions and subject to such trusts, powers and conditions as such beneficiary may appoint by Will containing specific reference to this power of appointment.... [Emphasis added.]

In the event that the power of appointment was not exercised, the trust agreement provided that any unappointed principal and accumulated income should be distributed to Donner's then living issue, per stirpes. However, Mrs. Norment limited the definition of issue as follows:

The term 'issue' used with respect to descendants of Donner Hanson shall not include any person now living, with the exception of his daughter, Phaedra Ann Hanson, unless my said son shall have notified Trustees in writing that such term shall include any issue of his second marriage. [Emphasis added.]

At the time of his death, at age 27, Donner had been married and divorced twice. He had a legitimate daughter, Phaedra, born during his first marriage and an illegitimate but legally acknowledged daughter, Stephanie, born prior to his second marriage to that child's mother. Donner purportedly fathered other illegitimate children, including the appellant, Michelle, but paternity was not legally acknowledged or adjudicated for those children.

In 1948, Mrs. Norment had created a trust for Donner in which he had a testamentary power of appointment. When she created the power in the 1972 trust, Donner was in the midst of his second divorce and had not yet acknowledged paternity of Stephanie. It is undisputed that Mrs. Norment intended to permit her son to decide whether Stephanie was to be included as a trust beneficiary. She specifically excluded Stephanie from that status and conditioned the child's later inclusion on an affirmative act of notice by Donner to the trustees. Donner gave no such notice during his lifetime, but denominated her as one of his "children" and his "daughter" in his will, and in that document exercised all powers of appointment in favor of Phaedra and Stephanie. He did not refer, however, to the specific power contained in the 1972 trust.

The Court of Chancery concluded that the term "issue" as used by Mrs. Norment excluded the illegitimate children of Donner Hanson. It further determined that Donner's attempted exercise of the power of appointment was defective as to form because he did not specifically refer to the 1972 trust instrument as requested. The Court declined to apply equitable relief to remedy that defect. Finally, the Court decided that Donner had met the condition imposed in the trust to qualify Stephanie as "issue" for all trust purposes. Thus, the Chancellor found that Stephanie and Phaedra, Donner's only "issue" within the meaning of the trust, were takers in default of the power of appointment.

Michelle, an unacknowledged illegitimate child, appeals the findings of the Court of Chancery as to the intent of Donner's mother, the settlor, in her use of the term "issue". Michelle also challenges the finding that Stephanie was properly qualified as an appointee or taker in default. Phaedra appeals the refusal of the trial court to apply an equitable remedy to the defect of form in Donner's exercise of the power of appointment and also challenges the determination that Stephanie properly qualified as "issue" of Donner. Stephanie urges affirmance of the Chancellor's decision or, alternatively, that an equitable remedy should have been applied to the intentional but defective exercise of the power. We have reviewed the extensive record in this case. The Chancellor's findings are clearly supported by the record and his conclusions are the obvious product of an orderly and logical deductive process. Thus, we affirm the grant of summary judgment. Levitt v. Bouvier, Del.Supr., 287 A.2d 671, 673 (1972).

II.

The cardinal rule of law regarding construction of trust provisions is that the settlor's intent controls the interpretation of the language. duPont v. Equitable Security Trust Co., Del.Supr., 122 A.2d 429, 434, 439 (1956); Chinn v. Downs, Del.Ch., 421 A.2d 915, 917 (1980); Porter v. duPont, Del.Ch., 194 A.2d 565, 566 (1963); Delaware Trust Company v. Delaware Trust Company, Del.Ch., 91 A.2d 44, 46-47 (1952). See also Fiduciary Trust Co. v. Fiduciary Trust Co., Del.Supr., 445 A.2d 927, 930 (1982); Bird v. Wilmington Society of Fine Arts, Del.Supr., 43 A.2d 476, 480 (1945). That intent is determined by considering the language of the instrument, read as an entirety, in light of the circumstances surrounding its creation. Chinn v. Downs, 421 A.2d at 920; Restatement of Property § 242 (1940). Only if this manner of analysis fails to disclose the settlor's intent may the courts resort to rules of construction. Restatement of Property § 243.

The term "issue", as used by Mrs. Norment, is susceptible of several meanings. See Farrell v. Faries, Del.Supr., 22 A.2d 380, 384 (1941); 95 C.J.S. Wills § 666 (1957). Historically, that term has been defined to include only descendants born in wedlock, although statutory changes have broadened its scope for intestacy purposes in some jurisdictions. For example, in Delaware, subsequently legitimized children and illegitimate children whose parents later marry may inherit intestate under statutory authority. 12 Del.C. §§ 101, 508. 1 See also Restatement of Property § 265, comment c. However, the majority rule defines "issue" to exclude illegitimate offspring from the class. See G. Bogert, Trusts and Trustees § 182 at 298 (second rev. ed. 1979); 10 Am.Jur.2d Bastards § 136 (1963); 95 C.J.S. Wills § 666(4) (1957); but see Restatement of Property § 292, comment a 2 and Will of Hoffman, N.Y.Supr., 53 A.D.2d 55, 385 N.Y.S.2d 49 (1976).

The Chancellor examined the trust instrument and the circumstances which surrounded its formulation and determined that Mrs. Norment intended to rely on the majority interpretation of the term "issue". He drew this conclusion, in part, from the fact that at the time the trust was created Mrs. Norment was aware of two living claimants to the...

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    ...of all the relevant evidence fails to uncover the parties' intentions as manifested in the writing. See Dutra De Amorim v. Norment, Del.Supr., 460 A.2d 511, 514 (1983) (dealing with construction of the language of a trust). Even if we assume that the court in fact carefully considered the e......
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