Lopez, Matter of

Citation64 Haw. 44,636 P.2d 731
CourtSupreme Court of Hawai'i
Decision Date24 November 1981
PartiesIn the Matter of the Trust Estate created under Deed of Trust by Antonio J. LOPEZ by Indenture of Trust dated

Syllabus by the Court

1. The intention of the settlor as expressed in a trust instrument shall prevail unless inconsistent with some positive rule of law.

2. In construing a trust document to determine the settlor's intent, the instrument must be read as a whole, not in fragments.

3. "Children" in its primary and common meaning is limited to descendants in the first degree, the immediate offspring of the parent, and the term does not include grandchildren unless a clear indication of a contrary intention appears from the context of the instrument, or unless an applicable statute requires the term "children" to include "grandchildren," or unless the will or trust would remain inoperative absent an interpretation of the term "children" to include "grandchildren."

4. Where the grandchild of the settlor had a vested right to the income from the trust until the trust terminated, he had a right to dispose of such interest by either inter vivos conveyance or by his will.

5. Distribution of the trust corpus will be per capita when the language of the instrument clearly indicates intent to create a class gift in favor of the children of the named beneficiaries, the members of the class stand in identical relation to the settlor, and the instructions mandate distribution in "equal shares if more than one."

6. Where the terms "child" and "children" in the trust instrument were intended to refer to immediate offspring rather than the issue and lineal descendants of the named beneficiaries, any of the children of deceased named beneficiaries had a vested right to the trust income prior to termination of the trust, which occurred upon the death of the last survivor of the named beneficiaries, and said children had a right to dispose of their interest by inter vivos transfer or by will; and the trust income shall be distributed per stirpes to the children of each member of the named beneficiaries who died before the termination of the trust, but the corpus shall be divided among the surviving children per capita.

Robert M. Ehrhorn, Jr. (Okumura Takushi Funaki & Wee, Honolulu, of counsel), for appellants Antonio J. Lopez et al.

John H. R. Plews (Hoddick, Reinwald, O'Connor & Marrack, Honolulu, of counsel), for appellees Cassandra A. Killion et al.

Eichi Oki, Honolulu, Guardian Ad Litem for Unborn Persons.

Before RICHARDSON, C. J., and OGATA, MENOR, LUM and NAKAMURA, JJ. RICHARDSON, Chief Justice.

In this appeal we are called upon to interpret certain trust provisions in the Deed of Trust executed on February 27, 1905 by the deceased, Antonio J. Lopez. The provisions in question concern the distribution of income prior to the termination of the trust and the distribution of the corpus upon said termination.

Respondents-Appellants, Anthony J. Lopez, et al., appeal particularly from paragraphs 1(a), 1(b), 2(b) and 3 1 of the lower court's Order Denying Motion for Summary Judgment and Determining Trust's Provisions, Denying Objections Thereto, and Awarding Fees, filed August 3, 1977. The court below ruled that the terms "child" and "children" in the trust meant issue or lineal descendants. It further construed the phrase "in equal shares" to effect a per stirpital distribution of income and corpus among the lineal descendants of certain named beneficiaries.

After closely examining the content of the trust document to determine the intent of the Settlor and reviewing the relevant legal precepts, we reverse the decision of the lower court, holding that the terms "child" or "children" refer to the immediate offspring or issue of the first generation, that the income shall be distributed per stirpes to the issue of the first generation, and that the corpus shall be distributed per capita among the Settlor's grandchildren who are living upon the termination of the trust.

I.

The Settlor, Antonio J. Lopez, created an inter vivos trust which provided, inter alia, that after his death, the income was to be paid to his wife and to eight named individuals: his seven children and one godchild 2 (referred to hereafter as the "Named Eight").

Prior to the termination of the trust, the "children" of any deceased member of the Named Eight were entitled to take their parent's share of the income. The specific provision describing the distribution of income stated:

(e) to the said Kaahanui Lopez, during her life, of the said annuity of $600.00 until the said mortgage shall be paid and the annuity of $900.00 thereafter during the life of the said Kaahanui Lopez and subject to the said payments, to pay the said rents, issues and profits to the said Antone J. Lopez, the younger, Clara Lopez, Manuel J. Lopez, Rosa Lopez, Caezer Lopez, Richard Lopez, Christina Lopez and Joseph P. Medeiros and to the survivors or survivor of them during their, his or her lives or life in equal shares while there are more than one of them, provided however, that if any of the said (Named Eight) shall die leaving a child or children surviving him or her, then in every such case, such last mentioned child, or children, shall, so long as any of the (Named Eight) shall be living, take the share of the said annual income which his, her or their parent would have taken if such parent had continued to live, in equal shares if more than one. (Emphasis added.)

Upon the death of the last survivor of the Named Eight, the corpus was to be distributed among "all of the children" of the named beneficiaries. The provision for the distribution of the trust corpus read in part: 3

AND IT IS HEREBY further agreed and declared that after the death of the last survivor of the (Named Eight), an undivided two-thirds of the said premises shall be held by the Trustee or his successors in trust.

IN TRUST for all of the children of the (Named Eight) who shall be living at the time of the death of the last survivor of the (Named Eight) in equal shares if more than one. (Emphasis added.)

Only one of the Named Eight, Richard Lopez, was alive at the inception of this case, but he died during the pendency of this appeal. Hence the corpus must now be distributed among the rightful beneficiaries.

Another of the Settlor's children, Clara Lopez Tavares (referred to in the trust deed as Clara Lopez), died on May 28, 1942, survived by three children: Nina A. White (still living), and Edward Abdul, Sr. and Daniel L. Abdul (both now deceased). Edward Abdul, Sr. died on December 4, 1972, being survived by his widow, Aurelia Fern Abdul, and a minor adopted child, Edward Abdul, Jr. In his Last Will and Testament, Edward Abdul, Sr. made the following disposition of his residuary estate:

Third : I give, devise and bequeath all the rest, residue and remainder of my estate, real, personal and mixed, wheresoever situate and of every kind and nature, and any property over which I may possess any power of appointment by Will or otherwise, hereinafter called my "residuary estate," to my wife, Aurelia Fern Abdul, absolutely, if she shall survive me.

In view of the foregoing testamentary provision, Bishop Trust Company, Ltd. (hereinafter Petitioner), successor trustee of said trust established by Antonio J. Lopez, was in doubt as to whether Aurelia Fern Abdul was entitled to the share of income formerly payable to her husband, Edward Abdul, Sr., by virtue of the Lopez trust. Additionally, Petitioner questioned whether either the minor adopted child of Edward, Sr. or the other surviving descendants of Clara Lopez Tavares have any rights to such income under the Lopez trust. Finally, Petitioner was uncertain as to the distribution of the corpus upon the termination of the deed of trust. Petitioner thus filed a Petition for Instructions on October 12, 1973, in the Circuit Court of the First Circuit.

On September 21, 1976, Petitioner moved the court for an order granting partial summary judgment pursuant to Rule 56, H.R.C.P. Petitioner urged the court to rule that Edward Abdul, Sr.'s right to income was transferred to his wife Aurelia Abdul; that her assignment of this income right to her son, Edward, Jr. was effective until the termination of the trust; and that prior to the termination of the trust, any grandchild of the Settlor who had a right to share in the income from the trust could convey such a right either by an inter vivos disposition or by will.

Several Respondents 4 comprised of the Settlor's great-grandchildren opposed Petitioner's motion for partial summary judgment. Their memoranda in opposition basically suggested that the income and corpus of the trust should be distributed per stirpes among the lineal descendants of the Settlor.

On February 15, 1977, Respondents Anthony J. Lopez and other grandchildren and great-grandchildren of the Settlor submitted an objection to a proposed order denying Petitioner's motion for summary judgment. These respondents basically concurred with Petitioner's motion and added that the corpus should be distributed per capita among the then living grandchildren of the Settlor at the end of the trust.

The court ultimately rendered an order denying Petitioner's motion for summary judgment and Respondents-Appellants, Anthony J. Lopez, et al., have appealed.

II.

We first consider whether the terms "child" and "children" in the Lopez trust were intended to refer to immediate offspring rather than the issue and lineal descendants of the Named Eight. In other words, did the Settlor intend to effect a general distribution of income and corpus among all his lineal descendants or simply a distribution only among the Named Eight and their immediate offspring?

A fundamental rule is that the intention of the settlor as expressed in a trust instrument shall prevail unless inconsistent with some positive...

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    • United States
    • Hawaii Supreme Court
    • December 9, 2005
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    • Hawaii Supreme Court
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1 books & journal articles
  • FEDERAL TRANSFER TAXES AND THE PROTEAN IRREVOCABLE TRUST.
    • United States
    • Albany Law Review Vol. 85 No. 1, March 2022
    • March 22, 2022
    ...v. Harrison, 604 S.E.2d 184, 186 (Ga. 2004) (citing Kirby v. Citizens & S. Nat'l Bank 219 S.E.2d 112,113 (1975)); In re Lopez, 636 P.2d 731, 741 (Haw. 1981) (citing Bishop Tr. Co. v. Cooke Tr. Co., 39 Haw. 641, 643 (1953); Walker v. O'Brien. 35 Haw. 13, 17 (1939)); Dolan v. Johnson, 509......

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