IN THE MATTER MEDEIROS TESTAMENTARY TRUST

Decision Date03 September 2004
Docket NumberNo. 24602.,24602.
Citation105 Haw. 284,96 P.3d 1098
PartiesIn the Matter of the Joseph Pimental MEDEIROS TESTAMENTARY TRUST AND LIFE INSURANCE TRUST, Deceased.
CourtHawaii Supreme Court

Stephen D. Tom, and Marie E. Riley (of White & Tom), Honolulu, on the briefs, for appellant Donna Gayle Bender.

Mark B. Desmarais, Raymond K. Okada, and Judy Y. Lee (of Goodsill Anderson Quinn & Stifel), Honolulu, on the briefs, for beneficiary-appellee Joseph Medeiros.

David C. Larsen and Rhonda L. Griswold (of Cades Schutte Fleming & Wright), Honolulu, counsel of record, for petitioner-appellee Pacific Century Trust.

MOON, C.J., LEVINSON, NAKAYAMA, ACOBA, and DUFFY, JJ.

Opinion of the Court by MOON, C.J.

Appellant Donna Gayle Bender appeals from the first circuit court's1 (1) September 12, 2001 order granting petition for instructions and (2) October 1, 2001 final judgment closing trust proceedings. The circuit court determined in its September 12, 2001 order that Bender is not a beneficiary under the Joseph Pimental Medeiros Testamentary Trust [hereinafter, the testamentary trust] and the Joseph Pimental Medeiros Life Insurance Trust [hereinafter, the life insurance trust, and, together with the testamentary trust, the trusts], which Bender's natural grandfather, Joseph Pimental Medeiros (Medeiros), established in 1942 via will and indenture, respectively. On appeal, Bender essentially contends that the circuit court erred by: (1) applying the law in effect when the trusts were executed in 1942 to conclude that her adoption during minority by her stepfather precludes her from being the "issue" of her natural father, Lawrence Medeiros (Lawrence), for purposes of claiming as a beneficiary under the trusts; and (2) failing to give effect to Hawai'i Revised Statutes (HRS) § 560:2-114 (Supp.1997),2 Hawaii's "ohana adoption" statute, pursuant to which she is considered the "issue" of her natural father (Lawrence) for purposes of construing the trusts. For reasons more fully discussed infra, Section III, we believe Bender's claims lack merit. Accordingly, we affirm the September 12, 2001 order granting petition for instructions and the October 1, 2001 final judgment closing the trust proceedings.

I. BACKGROUND

On February 2, 1942, Medeiros executed (1) a last will and testament, which provided, inter alia, for the creation of the testamentary trust, and (2) an indenture establishing the life insurance trust. At the time, Medeiros was married to Helen Guerreiro Medeiros, with whom he had four children, Lawrence, Mary Ann Cozey Medeiros, Abel P. Medeiros, and Alice Medeiros Ehing.

The testamentary trust provided in pertinent part that:

(b) If my wife, HELEN GUERREIRO MEDEIROS, shall survive me, my said Executors and, from and after distribution of my residuary estate to my Trustees, then my Trustees shall from the date of my death pay to her, so long as she shall live, all the net income derived from said estate or trust estate, as the case may be, until the first January 1st after my death, and thereafter monthly all the net income derived from said estate or trust estate, as the case may be, up to a total amount of Six Thousand Dollars ($6,000.00) per calendar year, and shall pay the surplus net income, if any, in equal shares to those who shall be surviving from time to time of my said wife and MARY ANN COZEY MEDEIROS, LAWRENCE P. MEDEIROS, ABEL P. MEDEIROS and ALICE MEDEIROS EHING, my children, and of the issue of any of my children who shall be then dead, such issue taking per stirpes by right of representation in each generation[]....
(c) From and after the death of my wife, or if she be not married to me at the time of my death, or if she shall predecease me, my Trustees shall pay the net income from my trust estate, in equal shares, to those who shall be surviving from time to time of my said children and of the issue of my said children, such issue taking per stirpes by right of representation in each generation, until the termination of this trust[]....

(Emphases added.)

Similarly, the life insurance trust directed in relevant part that:

1. The Trustees shall pay the net income from the foregoing trust estate in the manner following, to-wit:
Unto the said HELEN GUERREIRO MEDEIROS and to those of MARY ANN COZEY MEDEIROS, LAWRENCE P. MEDEIROS, ABEL P. MEDEIROS and ALICE MEDEIROS EHING, children of the Trustor and his said wife, who shall be living on each quarterly remittance date, respectively, in equal shares; provided, however, that if any of said children of the Trustor shall die either before or after him leaving issue him or her surviving, such issue shall take by right of representation, per stirpes, the share of the net income which such deceased child would have received hereunder had he or she continued to live[ ]....

(Emphases added.)

Medeiros died sometime before June 29, 1946, the date his will was presented for probate. On July 7, 1949, Bender was born to Edna Falces (Edna) and Lawrence, who were not married to each other. On January 23, 1952, Edna married Glen A. Bender (Glen). Glen legally adopted Bender on February 26, 1952, when Bender was nearly three years old.

Lawrence died on July 13, 2000, survived by two children, beneficiary-appellee Ronald Medeiros (Ronald) and Bender. In a February 5, 2001 letter from Bender to Pacific Century Trust (PCT), the trustee of the trusts, Bender claimed to be the issue of Lawrence and that she was, therefore, "entitled to his [(Lawrence's)] benefits [under the trust] upon his death." Relying upon HRS § 560:2-114, Bender asserted that her "adopt[ion] by the husband of her natural mother[] ... has no effect upon her ability to inherit from or through her natural father, Lawrence P. Medeiros."

In a February 20, 2001 letter to Bender, PCT responded in relevant part:

In your analysis, you rely upon Section 560:2-114 of Hawaii's present Uniform Probate Code, which went into effect on January 1, 1997. While we agree that, under Hawaii's current law, the adoption by a stepparent does not affect the rights of the child to inherit from the child's biological parents, we believe that the analysis must focus upon the law in effect in 1942 when Joseph Medeiros executed the irrevocable life insurance trust and in 1946 when he died. In re Estate of Campbell, 33 Haw. 799 (1936) (court reviewed law in effect at time will was executed to determine testator's intent); W. Fratcher, Scott on Trusts § 164.1 (4th ed. 1987).
The statute in effect in 1942 clearly provided that "[a]n adopted child ... shall inherit estate undisposed of by will from its adopting parents the same as if it were the natural child of such adopting parents, and shall not inherit estate from its natural parents . . ." Act 83 (1905) (emphasis added). There was no statutory exception for an adoption by a stepparent at that time. Hawaii case law also made it clear that an adopted child could inherit through an adoptive parent's ancestors. [In re Estate of Kamauoha], 26 Haw. 439 (1922). However, our research did not yield any case in Hawaii or elsewhere during this time frame that addressed the issue of adoption by a stepparent in the context of inheritance rights. Therefore, the only indication of the law in effect in 1942 is the statute, which clearly states that an adopted child shall not inherit from his or her natural parents.
....

(Some brackets, ellipses points, and emphasis in original.) In short, PCT took the position that HRS § 560:2-114 did not apply to the trusts. PCT indicated, however, that it would petition the circuit court for instructions on the issue should Bender disagree with its analysis.

In a March 9, 2001 letter, Bender advised PCT that she disagreed with its analysis, requesting that it petition the circuit court for instructions. On March 31, 2001, PCT filed its petition for instructions with the circuit court, requesting instructions, inter alia, "as to whether Donna Bender is a beneficiary under the [t]rusts ...[.]" The petition was served by PCT on Bender and Ronald.

On May 14, 2001, PCT filed a supplemental memorandum "in order to identify other parties with an interest in the issues raised in the Petition for Instructions" and "to provide them with notice." Stating that the petition for instructions "affects the interests of [Medeiros]'s other grandchildren," PCT identified as additional interested persons beneficiaries-appellees Virginia T. McGargill (Virginia), Faith Christiansen (Faith), Joseph P. Medeiros (Joseph), Helen Schmall (Helen), John Medeiros (John), and Marilyn Alicia Ehing (Marilyn) as Medeiros's other grandchildren (in addition to Ronald).

On July 2, 2001, Virginia, Faith, Joseph, Helen, and John filed a pro se response to the petition for instructions, stating that they agreed with PCT's position. On July 20, 2001, PCT filed a supplemental memorandum in support of its petition for instructions, attaching letters from Ronald, Marilyn, and John, individually, each of whom expressed agreement with PCT's position.

Following an August 3, 2001 hearing on the matter, the circuit court granted PCT's petition and ruled that Bender is not a beneficiary under the trusts. In its September 12, 2001 order granting PCT's petition for instructions, the circuit court stated in pertinent part:

The Court, having considered the Petition, Reply Memorandums, Responses, Supplemental Memorandums, Amendments, and the record and files herein, and having found that all interested persons were properly served and had notice of the Petition, hereby determines that:
1. The law in effect in 1942 when the [trusts] were signed should be applied to determine whether Donna Gayle Bender is a beneficiary under the Joseph Pimental Medeiros Testamentary Trust ... and the Joseph Pimental Medeiros Life Insurance Trust....
2. The law in effect in 1942 provided that an adopted child shall not inherit from his or her natural parents. The same law that was in effect when Joseph Medeiros signed his
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