Ehrenclou v. Macdonald

• Court: California Court of Appeals
• Writing for the Court: Ikola
• Citation: Ehrenclou v. Macdonald, 12 Cal.Rptr.3d 411, 117 Cal.App.4th 364 (Cal. App. 2004)
• Decision Date: 30 March 2004
• Docket Number: No. G032020.,G032020.
• Parties: Martine EHRENCLOU et al, Plaintiffs and Respondents, v. Steven MacDONALD et al, Defendants and Appellants; Animal Legal Defense Fund, etc., Intervener and Appellant.

12 Cal.Rptr.3d 411

117 Cal.App.4th 364

Martine EHRENCLOU et al, Plaintiffs and Respondents, v. Steven MacDONALD et al, Defendants and Appellants Animal Legal Defense Fund, etc., Intervener and Appellant.

No. G032020.

Court of Appeal, Fourth District, Division 3.

March 30, 2004.

Rehearing Denied April 26, 2004.

Review Denied July 21, 2004.

Weinstock, Manion, Reisman, Shore & Neumann, M. Neil Solarz and Blake A. Rummel, Los Angeles, for Defendants and Appellants.

Morrison & Foerster, Shirley M. Hufstedler, Joseph L. Wyatt, Jr., and Sheila O. Recio, Los Angeles, for Intervener and Appellant.

Loeb & Loeb, Andrew S. Garb and David C. Nelson; Oldman, Cooley, Leighton & Sallus and Marc L. Sallus, Los Angeles, for Plaintiffs and Respondents.

OPINION

IKOLA, J.

On a petition for instructions regarding the proper distribution of the remaining assets held in a trust, the court ruled that adults adopted under Colorado's adult adoption statute did not qualify as "issue" of the person adopting them. The adopted adults, joined by a group of intervening charities, appeal. We affirm the judgment.

FACTS AND PROCEDURAL BACKGROUND

In late 1954, Jacob Paley (Jacob) created a trust (the 1954 trust), which, upon his death, would provide for his adopted daughter Jacqueline Paley Wolber (Jacqueline) and Jacob's grandchildren.¹ Now, some 50 years later, we are called upon to decide how the remaining assets of that trust are to be distributed.

Jacob died in 1960. Under the terms of the 1954 trust, upon Jacob's death the assets were divided between Jacqueline and "each of her children then living." The shares of Jacqueline's "children then living" were placed in separate trusts, allowing discretionary pay-outs for support, maintenance, comfort and education, and requiring one-third of the principal to be distributed to the children at ages 30, 35, and 40. Jacqueline's share was also retained in trust from which she received the net income for life. Upon Jacqueline's death, her trust was to be terminated, and the assets "distributed by the trustees to her then living lawful issue per stirpes."

Jacqueline's "children then living" upon Jacob's death were Martine Ehrenclou (Martine) and Konrad M. Bors (Konrad). But in 1992, thirty-two years after Jacob's death, Jacqueline, then residing in Colorado, adopted Steven MacDonald (Steven) and Cynthia Hutt (Cynthia) as adults under the provisions of section 14-1-101 of the Colorado Revised Statutes.

Jacqueline died in 2001. Upon her death, Martine and Konrad petitioned the court for instructions pursuant to section 17200 of the Probate Code,² requesting the court (1) to declare they were the only"living lawful issue" of Jacqueline, thereby excluding Jacqueline's adult adoptees, Steven and Cynthia, from taking a share of the remaining assets of the 1954 trust, and (2) instructing the trustee to distribute the remaining assets of the 1954 trust to Martine and Konrad equally. Thus, the court was asked to determine whether Steven and Cynthia qualify as Jacqueline's "living lawful issue" under the terms of Jacob's 1954 trust.

The Animal Legal Defense Fund (ALDF) intervened in the dispute on behalf of itself and as a representative of a class of 12 charities. The charities are interested in the outcome of this dispute because in addition to the 1954 trust, Jacob had created another trust for Jacqueline's benefit in 1937 (the 1937 trust). The 1937 trust gave Jacqueline a testamentary power of appointment, which allowed her to dispose of its assets as part of her own estate. Jacqueline exercised her power of appointment by providing in her will that one-half of the residue of her estate, including the assets of the 1937 trust, would pass to Steven and Cynthia, but only if they were not permitted to take under the 1954 trust. The remainder of the residue would pass to some 12 charities, including the ALDF. Thus, if Steven and Cynthia take under the 1954 trust, the distribution to the charities, including ALDF, is doubled. For this reason, the ALDF, on behalf of itself and 11 other charities, joined with Steven and Cynthia in opposing Martine's and Konrad's petition for instructions.

On cross-motions for summary judgment, the court excluded Steven and Cynthia from the class of "living lawful issue." The court based its ruling on its conclusion that under the law of the State of Colorado "adult adoption ... create[s] in the adoptee only the status as heir at law to the person adopting, and such adoptee does not, by virtue of the adoption, become a `child' or `issue' of the person so adopting, and inheritance flows only through intestate succession of the adopting person and not as `issue' of such persons." The court further concluded that it was required to determine the status of Steven and Cynthia under Colorado law by reason of the "Full Faith and Credit Provisions of both State and Federal Law." Accordingly, the court granted Martine's and Konrad's summary judgment motion, denied Steven's and Cynthia's summary judgment motion, and granted the petition for instructions as requested by Martine and Konrad.

DISCUSSION

Appellants (Steven, Cynthia, ALDF, and the other charities) contend the court erred by applying Colorado law to determine whether Steven and Cynthia qualified as members of the class of Jacqueline's "living lawful issue." Appellants argue California law must be applied, as directed by Jacob's language in his 1954 trust, to "determine what incidents to accord to Steven and Cynthia's adoption decrees." Since Jacob expressed no contrary intent, they argue, "the Court must assume that he intended his Trust to `fit it and be compatible with the law and public policy' in effect at the time he executed the Trust document." According to appellants, the public policy of California requires courts "to treat adopted adults the same as natural children," the "Full Faith and Credit Clause does not require adherence to Colorado law," and is thus "completely irrelevant."

We agree with appellants that California law must be applied "with no exceptions." But we also conclude the application of California law requires us to determine the legal relationship between Jacqueline and her two adult adoptees, Steven and Cynthia, under Colorado law.

The 1954 Trust is Presumed to Include Within the Class of "Living Lawful Issue" Adopted Persons Having a Parent-Child Relationship With the Adopting Person

Appellants argue, and we agree, Jacob plainly stated his choice of law: "This instrument and all matters pertaining to the administration, execution and performance of this trust shall be governed and determined in all respects by and in accordance with the laws of the State of California." Subject to exceptions not here applicable, California law requires us to honor Jacob's choice. "The meaning and legal effect of a disposition in an instrument is determined by the local law of a particular state selected by the transferor in the instrument...." (§ 21103.)

Appellants also argue, and we agree, "the cases emphasize that among the circumstances to be considered [when interpreting the language of an instrument] are relevant statutes, case law and public policy in effect at the time of the execution of the document which, in the absence of a contrary intent, are deemed to become a part of the testamentary scheme." (Wells Fargo Bank v. Huse (1976) 57 Cal.App.3d 927, 933, 129 Cal.Rptr. 522.) Normally, of course, "the courts may [also] consider and examine the circumstances surrounding the execution of the document in order to ascertain what the parties meant by the words used." (Id. at pp. 932-933, 129 Cal.Rptr. 522.) But here, the bare language of the trust instrument, including the date it was executed, is the only evidence presented to the court concerning the circumstances surrounding its execution. Or, if we stretch the reach of "surrounding circumstances" to a date 17 years earlier, the evidence established that Jacob also created a 1937 trust which gave Jacqueline a testamentary power of appointment over its assets. The 1954 trust, however, did not give Jacqueline a power of appointment.

Our Supreme Court recently affirmed that "[a] testator is presumed to be aware of the public policy reflected in the statutory definitions of the terms used in a will at the time the will is executed and to intend that those definitions be followed in construction of the will unless a contrary intent is expressed in the will. This presumption is strongest when an attorney has drafted the will because `[w]here an instrument has been drawn by one skilled in the law, the presence of legal and technical terms is an indication that the legal term of art has been used, and therefore is to be accepted, in accordance with its legal definition.'" (Newman v. Wells Fargo Bank (1996) 14 Cal.4th 126, 136, 59 Cal.Rptr.2d 2, 926 P.2d 969, italics added.) The court continued, "We presume that provisions in a will are made with an understanding of, and an intent to act pursuant to, the law and public policy as it exists when the will is executed. It is more reasonable to assume that a testator who intends a different disposition will make express provision governing the status of adopted children than to assume that the testator intends that their status not be established until some future time and be contingent upon legislative fiat." (Id. at p. 140, 59 Cal.Rptr.2d 2, 926 P.2d 969.) For these reasons, the Newman court concluded that the law and public policy to be considered when a will provision must be interpreted is that which was in effect when the will was executed, not the law and public policy in effect at the time the construed words will take effect. (Id. at p. 129, 59 Cal.Rptr.2d 2, 926 P.2d 969.)

The rule is the same when construing an inter vivos trust. "[T]he primary duty of the court in construing all documents is to give effect to the intention of the maker, and we can see no justification for any distinction...