Estate of Nicolaus, Matter of

• Decision Date: 17 April 1985
• Docket Number: No. 84-458,84-458
• Citation: 366 N.W.2d 562
• Parties: In the Matter of the ESTATE OF Harry G. NICOLAUS, Deceased.
• Court: Iowa Supreme Court

Page 562

366 N.W.2d 562

In the Matter of the ESTATE OF Harry G. NICOLAUS, Deceased.

No. 84-458.

Supreme Court of Iowa.

April 17, 1985.

J.L. Kuehnle, Mechanicsville, and David A. Elderkin of Elderkin, Pirnie, Von Lackum & Elderkin, Cedar Rapids, for appellant Sheryl L. Nicolaus.

Jon R. Pearce and Mark R. Gillett of Stanley, Lande, Coulter & Pearce, Muscatine, for appellee trustee.

Considered by UHLENHOPP, P.J., and McCORMICK, SCHULTZ, CARTER, and WOLLE, JJ.

UHLENHOPP, Justice.

This appeal involves construction of the term "issue" in a will.

Testator Harry G. Nicolaus was a successful banker and a man of means in Wilton, Iowa. He and his wife Edith had two children, Harold G. and Robert H. Nicolaus. As adults, both sons worked in the bank until a later time when Robert took over the bank's insurance business; he thereafter operated that business in the same building. The Nicolauses were a closely-knit family.

Harold and his wife Grayce had two children, Theresa A. and George R. Nicolaus. In 1951 Robert married Helen Arp, the daughter of Mr. and Mrs. Fred Bohnsack. Helen had been married before and was divorced. The divorce estranged Helen's parents from her, and she did not inherit from them. Helen had custody of a daughter from her first marriage, Sheryl L. Arp, born in 1946, whom she brought into her marriage with Robert. From the beginning Sheryl was taken in by the entire Nicolaus clan as one of the family.

Although Sheryl used the name Nicolaus, Robert did not immediately adopt her. Helen testified regarding adoption proceedings:

I don't remember the exact date that preliminary action was started. I know [Robert] talked to an attorney very shortly after we were married regarding it, but Sherry's natural father was still living. And as I recall the incident, the attorney felt that it would be better to wait. He was defaulting--Sherry's father was defaulting in either his monthly payments or in the insurance policies that in the petition he agreed to keep up for Sherry's education. And my recollection of it is that the attorney felt that it would be much easier to effect the adoption if they waited until he defaulted on those things. And that's to the best of my recollection.

In 1953 Robert and Helen had a son, Robert H. Nicolaus II (called "Nicky").

Testator drafted legal instruments of various kinds for bank customers. In 1956 he drafted and typed his own will consisting of eighteen paragraphs on three and one-half pages. The will named Edith as executrix and contained a residuary trust with the net income to go to Edith as long as she lived and this remainder clause:

Upon the death of my said wife, Edith I. Nicolaus, said trust shall immediately terminate, and thereupon the assets of said trust, together with any undistributed income therefrom, shall be divided equally between our two sons, Harold G. Nicolaus and Robert H. Nicolaus, share and share alike. Should either of said sons be deceased at the date of the termination of said trust leaving issue surviving, I direct that the share which would have gone to the one so deceased shall go to such issue, to be divided equally between them, should there be no child surviving, but should either of our said sons be deceased at the date of the termination of said trust, leaving no issue surviving, I direct that the share of the one so deceased shall go to the survivor of said sons.

Testator named the Wilton Savings Bank as trustee.

About five months after executing the will, testator died, survived by all the members of the family we have named. His will was admitted to probate and the residuary trust went into operation.

In 1959 Robert adopted Sheryl; she was then thirteen years old.

In 1975 Robert died, survived by Helen, Sheryl, and Robert II.

In 1977 Robert II died, unmarried and childless.

In 1982 Edith died. At that time testator's son Harold was alive but testator's son Robert was deceased, and Robert's only surviving child was his adopted daughter Sheryl. Harold claims that under the will Sheryl is not "issue" of Robert, so that he, Harold, takes the whole remainder of the trust. Sheryl claims that she is Robert's "issue" so that Harold and she divide the remainder.

The trustee brought this declaratory judgment action to resolve the question. After trial, the court held that Harold takes the whole remainder. Sheryl appealed. We review do novo. Russell v. Johnston, 327 N.W.2d 226, 228 (Iowa 1982).

The question, of course, is whether Sheryl takes as "issue". The question may be broken down into two parts. First, is Sheryl "issue" as to her adoptive father Robert? That is, if Robert had left a will giving his own property to his issue, would Sheryl have taken? If so, then second, is Sheryl "issue" of Robert as to testator Harry G. Nicolaus? That is, under the clause of the will of Harry G. Nicolaus giving part of the remainder to Robert's issue, does Sheryl take?

I. At the time testator made his will our statute provided in section 633.223 of the Iowa Code of 1954:

Upon the entering of such [adoption] decree, the rights, duties, and relationships between the child and parent by adoption shall be the same that exist between parents and child by lawful birth and the right of inheritance from each other shall be the same as between parent and child born in lawful wedlock.

At the time of Edith's death, the statute provided in section 633.223 of the 1981 Code:

A lawfully adopted person and his heirs shall inherit from and through the adoptive parents the same as a natural born child....

Under similar statutes several courts have stated that as between the adopter and the adoptee, the latter is the "issue" of the former, and we so hold in the absence of language in the will, not present here, showing an intent to limit "issue" to biological descendants. Southside Baptist Church v. Drennen, 362 So.2d 854 (Ala.1978); In re Heard's Estate, 49 Cal.2d 514, 319 P.2d 637 (1957); Wilmington Trust Co. v. Chichester, 369 A.2d 701 (Del.Ch.1976), 377 A.2d 11 (Del.1977); Wilmington Trust Co. v. Haskell, 282 A.2d 636 (Del.Ch.1971); Breckinridge v. Skillman's Trustee, 330 S.W.2d 726 (Ky.1959); In re Holden's Trust, 207 Minn. 211, 291 N.W. 104 (1940); In re Bowen's Estate, 66 Misc.2d 122, 320 N.Y.S.2d 186 (1971); Graves v. Graves, 79 Ohio App. 262, 155 N.E.2d 540 (1956); Dollar Savings & Trust Co. v. Musto, 88 O.L.A. 62, 181 N.E.2d 734 (App.1961). But see Campbell v. Musart Society of the Cleveland Museum of Art, 72 Ohio App. 46, 131 N.E.2d 279 (1956) (language of particular statute deprived adoptee of right to take). If the present gift to "issue" had been in will of Robert, Sheryl would have taken as Robert's issue.

II. The other part of the question is whether the result is different because the gift was in the will of a stranger to the adoption, Harry G. Nicolaus. This court formerly applied the stranger to the adoption rule, which severely restricted the scope of clauses in wills and grants with respect to children adopted by others. Schaefer v. Merchants National Bank, 160 N.W.2d 318 (Iowa 1968); Cook v. Underwood, 209 Iowa 641, 228 N.W. 629 (1930); Warden v. Overman, 155 Iowa 1, 135 N.W. 649 (1912). We subsequently reversed the presumption and overturned those decisions in Elliott v. Hiddleson, 303 N.W.2d 140 (Iowa 1981). See also In re Wright's Estate, 241 Iowa 349, 41 N.W.2d 80 (1950).

Elliott involved a life estate followed by a gift to grandchildren or their "lineal heirs at law." Id. at 142. The question was whether adopted grandchildren took. After discussing Schaefer, Cook, and Warden we stated:

However, we now reject the stranger to the adoption rule.

In accordance with the policy favoring adoption recognized in Schaefer, the majority of jurisdictions which have confronted the issue in recent years have rejected the rule. Some decisions have been based on statutes which have been held to dictate that result. Other decisions rejecting the rule have been based on the policy expressed in statutes like our own which simply give an adopted child the legal status of a natural child of the adopting parents. Because we are dealing with a rule of construction, we are free to change it by judicial decision.

In a similar situation, the Supreme Court of New Jersey reasoned:

"At any rate, it is not important whether the adoption statute directly controls the interpretation of instruments. The important point is that the statute reflects the feeling and attitude of the average man and hence its policy should be followed unless the benefactor explicitly reveals a contrary purpose....

"...

"We cannot believe it probable that strangers to the adoption would differentiate between the natural child and the adopted child of another. Rather we believe it more likely that they accept the relationships established by the parent whether the bond be natural or by adoption and seek to advance those relationships precisely as that parent would. None of us discriminates among children of a relative or friend upon a biological basis.... We ought not to impute to others instincts contrary to our own."

[In re ] Coe, 42 N.J. [485,] at 489-92, 201 A.2d [571,] at 574-75 [1964]. We join the states which have rejected the stranger to the adoption rule. Consequently we overrule prior cases which have relied on it.

Id. at 144 (citations omitted).

Testator died in 1956 and Elliott was decided in 1981. Court decisions, however, normally operate retrospectively as well as prospectively, unless they are "Sunbursted", that is, they announce that they operate prospectively only. Beeck v. S.R. Smith Co., 359 N.W.2d 482, 484 (Iowa 1984). Nothing in Elliott indicates that it is restricted to prospective operation. It therefore governs testator's will.

III. When we rejected the stranger to the adoption rule in Elliott, however, we laid down two qualifications. If adoption is consciously used to frustrate a testator's normal expectations, Elliott will not be applied....