Fleet Nat. Bank v. Hunt
| Decision Date | 07 April 2008 |
| Docket Number | No. 2005-204-Appeal.,2005-204-Appeal. |
| Citation | 944 A.2d 846 |
| Parties | FLEET NATIONAL BANK et al. v. Janet HUNT et al. |
| Court | Rhode Island Supreme Court |
Ronald Eliot Gay, pro se, Heir-Appellant.
Wylma Gay Cooley, pro se, Heir-Appellant.
John M. Harpootian, Esq., for Janet Hunt and Lucille Foster.
Lauren E. Jones, Esq., Providence, for Settling Heirs-At-Law.
Leon C. Boghossian III, Esq., Providence, for Fleet National Bank, Trustee.
Present: WILLIAMS, C.J., GOLDBERG, FLAHERTY, and SUTTELL, JJ.
The appellants, Ronald Gay and Wylma Cooley (appellants), appeal from a Superior Court order directing the distribution of assets under two trusts. This case originated when the petitioner, Fleet National Bank (Fleet), petitioned the Superior Court for instructions about the proper distribution of assets under three trusts, for which it serves as trustee. The three trusts are the Art Hadley Trust U/I dated January 15, 1936 (the Art Hadley Living Trust), the Art Hadley Trust U/W dated January 24, 1933 , and the Frances E. Hadley Trust U/W dated February 12, 1965 (the Frances Hadley Trust) (collectively the Hadley trusts).1
To determine the proper distribution of the trusts' assets, the Superior Court was presented with two questions: (1) whether adult adoptees can inherit from the lineal ancestors of their adoptive parents when the trust itself directs the trustee to apply Rhode Island's intestacy laws for purposes of distributing the trust's assets and (2) whether adult adoptees are excluded from the definition of "issue" as used in a trust agreement. The Superior Court answered each question in the affirmative, which effectively precluded appellants from inheriting under either trust.
After reviewing both the trust and the relevant law in this state, we reach the same conclusion. Accordingly, we affirm the judgment of the Superior Court.
The facts of this case were largely established in an agreed-upon statement of facts submitted to the Superior Court and are not contested on appeal.
Art Hadley, a self-made entrepreneur and Providence businessman, died on May 27, 1941. He was survived by his wife, Frances E. Hadley, and his two children, Thomas Hadley and Sarah Hadley. Thomas Hadley married Betty Hadley on March 8, 1962. At the time of her marriage to Thomas Hadley, Betty Hadley had two children, Janet Hunt and Lucille Foster. Frances Hadley died on August 25, 1968. On March 11, 1976, Thomas Hadley adopted the daughters of his wife, Betty, Janet Hunt and Lucille Foster, both of whom were over eighteen years old. In 1993, Thomas Hadley died, having no biological children but survived by Betty Hadley and his two adopted daughters, Janet Hunt and Lucille Foster. Sarah Hadley died childless and unmarried on January 3, 2002. Her death triggered the distribution of the two Hadley trusts in dispute. At the time of her death, Art Hadley had no surviving children, or biological grandchildren, or biological issue. However, Thomas Hadley's two adopted daughters, Janet Hunt and Lucille Foster, were living.
Before his death in 1941, Art Hadley established both a living trust and a testamentary trust. The Art Hadley Living Trust, executed on January 15, 1936, established a trust for the benefit of Art Hadley and his wife, Frances Hadley, that would terminate upon the last of their deaths and would be distributed to their children. On three subsequent occasions, Art Hadley amended this trust. The third amendment, on December 9, 1940, is the only amendment that affects the distribution of the trust assets.
In its final form, the Art Hadley Living Trust establishes a trust for the benefit of Art Hadley's wife, Frances Hadley, and his two children, Thomas Hadley and Sarah Hadley. According to the trust's terms, upon Frances Hadley's death, the trust income was to be paid, in the trustees' discretion, for the benefit of Art Hadley's two children, Thomas Hadley and Sarah Hadley. Upon the death of the last survivor of Art Hadley's children or his wife the trust would terminate and the corpus would be distributed in fee simple to the children and issue then living of his two children, in equal shares per stirpes. If, however, Thomas Hadley or Sarah Hadley left no surviving issue, the trust contained a failure provision. That provision instructed:
"In case of the total failure of all of the trusts hereinbefore provided for with respect to the final disposition of the principal of the trust estate or any shares thereof, the Trustee shall transfer, convey and pay over the then principal of the trust estate, or such shares, as the case may be, discharged of these trusts, to and among those persons who would then be entitled to the personal estate of the Settlor under the laws of said State of Rhode Island had he then died intestate, a domiciled inhabitant of said State, according to the statutes of distribution then in force in said State, and in the shares and proportions provided by said statutes."
Through his will, dated January 24, 1933, and amended by two codicils, Art Hadley established the Art Hadley Testamentary Trust, consisting of the residue of his estate.
The Art Hadley Testamentary Trust provided that upon the death of the survivor of Art Hadley and his wife, Frances Hadley, the trust was to continue for the benefit of his children, Thomas Hadley and Sarah Hadley. The trust was to terminate upon the death of the last survivor of his children, at which time the corpus was to be distributed in fee simple to the children and issue then living of his two children, in equal shares per stirpes.
Unlike the Art Hadley Living Trust, the Art Hadley Testamentary Trust did not contain a failure provision.
In late 2002, Fleet, in its capacity as trustee of the Hadley Trusts, petitioned the Superior Court seeking instructions about the proper construction of language used in these trusts and instructions relative to the proper distribution of funds under these instruments. Specifically, Fleet informed the court that uncertainties in Rhode Island law with respect to the inheritance rights of adopted adult children, coupled with ambiguities in the language of the trusts, compelled it to seek the court's instructions to avoid liability in distributing the trusts' assets.
The respondents, all parties who asserted an interest in the trusts, are as follows: (1) Janet Hunt and Lucille Foster, the adopted children of Thomas Hadley; (2) Marcia Hanrahan, the executrix and a potential beneficiary of Sarah Hadley's estate; (3) Cynthia Gay, a potential beneficiary of Sarah Hadley's estate;2 (4) Allyson Gay, Wendy Gay, Robert Seeley, Diana Robertson, Suzanne Beyer, Cynthia Gay, Sheila Gay Franklin, Ronald Gay, Wylma Cooley, Stephen Gay, and Nancy Miller, all potential beneficiaries of Art Hadley's estate; (5) Stephen R. Lucas, Donald J. Lucas, Jeffrey C. Lucas, Fay C. Drummond, Raymond J. Harrison,3 R Carol Justice, Clair Perry, Elizabeth Robinson, Brigette Young, Sigrid J. Reddon, Sharon Glover, Eugene E. Perry II, Jane Cranston,4 and S. Bruce Allsop, all potential beneficiaries of Frances Hadley's estate (collectively respondents).
On March 9, 2005, the Superior Court issued a written opinion in which it concluded that this Court's opinion in Tinney v. Tinney, 799 A.2d 235, 237-38 (R.I.2002), made it clear that under Rhode Island's intestacy laws, there is no distinction between adult adoptees and minor adoptees. Therefore, under Rhode Island's intestacy laws adult adoptees are deemed heirs of their adoptive parents, as if they were their natural children.
Adhering to this principle, the Superior Court ruled that Thomas Hadley's two adopted daughters, Janet Hunt and Lucille Foster, stood to inherit under the failure provision of the Art Hadley Living Trust. With respect to the Art Hadley Testamentary Trust, however, the Superior Court ruled that Janet Hunt and Lucille Foster were not lawfully the "issue" of Thomas Hadley and were, therefore, not entitled to the amount specifically designated for Thomas Hadley's issue under the trust.
Dissatisfied with the Superior Court's ruling, every respondent, with the exception of Janet Hunt and Lucille Foster, appealed to this Court.
Before the matter reached this Court for briefing and argument, all parties — except appellants — agreed upon the appropriate settlement of all matters raised by Fleet's petition through this Court's Appellate Mediation Program. Accordingly, a distribution order was entered, providing the settling parties with a fixed percentage of the settlement corpus. Pursuant to the order, an amount equal to the maximum amount claimed by appellants was set aside, in the event that either of these two parties prevailed on appeal.
With many of these matters disposed of, the only question remaining before this Court on appeal is the interpretation of the two trusts in which appellants Ronald Gay and Wylma Cooley claim an interest.
In their pro se appeals to this Court, appellants argue that the trial justice erred in his interpretation of both the Art Hadley Living Trust and the Art Hadley Testamentary Trust. The appellants argue that it was an error for the trial justice to permit the Art Hadley Living Trust to be distributed to two women who were over the age of eighteen when they were adopted by Art Hadley's son. They further argue that the trial justice erred when he defined Art Hadley's heirs for purposes of distributing the Art Hadley Testamentary Trust as those individuals living at the time of Art Hadley's death. Rather, appellants urge this Court to overrule the law set forth in prior cases and hold that Art Hadley's heirs should be ascertained as of the time of the trust's failure.5
The interpretation of a trust instrument presents a question of law that this Court r...
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