Lutz v. Fortune

• Decision Date: 15 November 2001
• Docket Number: No. 49A04-0012-CV-545.,49A04-0012-CV-545.
• Parties: Sarah LUTZ, Appellant-Respondent, v. Russell FORTUNE, III, and William L. Elder, Trustees, Appellees-Petitioners, and William L. Fortune, Anne Elder Schermerhorn, William L. Elder, II, Russell Fortune, III, Carter M. Fortune, Sheila M. Fortune, Peter Fortune, and Cathryn Reynolds Fortune, Respondents-Appellees.
• Court: Indiana Appellate Court

758 N.E.2d 77

Sarah LUTZ, Appellant-Respondent, v. Russell FORTUNE, III, and William L. Elder, Trustees, Appellees-Petitioners, and William L. Fortune, Anne Elder Schermerhorn, William L. Elder, II, Russell Fortune, III, Carter M. Fortune, Sheila M. Fortune, Peter Fortune, and Cathryn Reynolds Fortune, Respondents-Appellees.

No. 49A04-0012-CV-545.

Court of Appeals of Indiana.

November 15, 2001.

Stanley C. Fickle, Michael Rosiello, Barnes & Thornburg, Indianapolis, IN, Jonathan R. Bell, Gerard E. Harper, Paul Weiss Rifkind Wharton & Garrison, New York, NY, Attorneys for Appellant.

Robert K. Stanley, Scott D. Himsel, Baker & Daniels, Indianapolis, IN, Attorneys for Appellees.

OPINION

BAILEY, Judge.

Case Summary

On September 14, 2000, the trial court ("Probate Court") entered summary judgment in favor of Appellees William L. Fortune, Anne Elder Schermerhorn, William L. Elder, II, Russell Fortune, III, Carter M. Fortune, Sheila M. Fortune, Peter Fortune, and Cathryn Reynolds Fortune, all beneficiaries to a trust created by William Fortune ("Fortune Trust"). The Probate Court ruled that Appellant Sarah L. Lutz ("Sarah") was not a beneficiary to the Fortune Trust. We affirm.

Issues

The following issues are dispositive of the parties' contentions on appeal:

I. Whether Sarah was an intended beneficiary of the Fortune Trust;

II. Whether the "stranger-to-the-adoption" rule violates the Privileges and Immunities Clause of Article I, section 23 of the Indiana Constitution; and

III. Whether damages should be assessed against Sarah for bringing a frivolous or bad-faith appeal.

Facts and Procedural History

This litigation stems from the Last Will and Testament of William Fortune ("Fortune"). Fortune was born in 1863 and died in 1942, and his Will was created in 1939. Specifically at issue here is the creation of the trust in Item Seven of Fortune's Will, hereinafter referred to as the Fortune Trust, which reads as follows:

ITEM SEVEN.

After the payment of the debts and taxes provided for in Item One hereof and the payment and satisfaction of the specific legacies and bequests provided for in Items Two to Five hereof I hereby will, devise and bequeath to my son, Russell Fortune, and my daughters, Evelyn Fortune Bartlett and Madeline Fortune Elder as co-trustees, all the rest, residue and remainder of my property, real, personal and mixed of whatsoever kind or character, wheresoever situated and whether now owned by me or hereafter acquired IN TRUST NEVERTHELESS for the uses and purposes and subject to the restrictions and limitations hereafter set forth in this Will.

....

(Appellant's Appendix, Tab 1). Item Seven, Article V further provided as follows:

Title to said trust estate shall vest in the person or persons then entitled to receive my said trust property upon the death of the last survivor of the following named persons: My son, Russell Fortune, my daughter, Evelyn Fortune Bartlett, and my daughter Madeline Fortune Elder, provided that at the death of the last survivor of my son and daughters above named the youngest of my grandchildren, viz: Russell Fortune, Jr., William L. Fortune, Robert Fortune, Evelyn Lilly, Anne Elder, and William L. Elder, II, then living, shall have attained the age of twenty-one years.

(Appellant's App., Tab 1). Article VI(g) of Item Seven addressed distribution of the Fortune Trust upon its termination:

Upon the termination of this trust said trust estate shall be divided and I hereby will, devise and bequeath the same to my grandchildren, Russell Fortune, Jr., William L. Fortune, Robert Fortune, Evelyn Lilly, Anne Elder, and William L. Elder, II, per capita and not per stirpes. In the event any one of my said grandchildren should die prior to the termination of this trust leaving a child or children, ..., then such child or children ... shall take per stirpes that portion of said trust estate which his or her ancestor would have taken had he or she survived, but in the event any one of my said grandchildren should die prior to the termination of said trust leaving no child or children and no descendants of a deceased child or children him or her surviving, then he or she shall take no part of said trust estate, and the survivors of my said grandchildren, including per stirpes the issue of any who may be dead, shall among them take the entire trust estate.

(Appellant's App., Tab 1). On July 1, 1997, Fortune's last surviving child, Evelyn Fortune Bartlett, died at the age of 109. The Fortune Trust thereby terminated.

Fortune's grandchildren, William L. Fortune, William L. Elder, II, and Anne Elder Schermerhorn survived termination of the Fortune Trust. Grandchildren Robert Fortune, Russell Fortune, Jr., and Evelyn Lilly Lutz ("Evie") died prior to the termination of the Fortune Trust. Peter Fortune and Cathryn Reynolds Fortune are Robert Fortune's surviving children. Russell Fortune, III, Carter M. Fortune and Sheila M. Fortune are the surviving children of Russell Fortune, Jr. Evie did not bear any children prior to her death in 1970. However, in 1968, Evie and her husband Herbert Lutz ("Whitey") adopted Whitey's granddaughter, Appellant Sarah Lutz ("Sarah"). Sarah is the daughter of Christopher Lutz, Whitey's son from a previous marriage.

On September 19, 1997, Russell Fortune III and William L. Elder II, as trustees, filed a verified petition to distribute the Fortune Trust with the Probate Court. Within this petition, the trustees sought a ruling from the Probate Court that Sarah was not a beneficiary under the Fortune Trust. Sarah's responsive pleading alleged that she was Evie's adopted daughter and surviving child, and therefore a beneficiary under the Fortune Trust.

On July 18, 2000, Sarah moved for partial summary judgment. Sarah argued that she was not barred from status as a remainder beneficiary of the Fortune Trust. The probate court found the issues raised to be dispositive, and entered the following summary judgment order against Sarah:

1. Settlor, William Fortune, executed his testamentary trust on August, 10, 1939, and he passed away on January 28, 1942.

2. ....

3. Evelyn Lilly Lutz ... was a granddaughter of settlor.

4. Sarah L. Lutz was born on February 17, 1967.

5. In February, 1968, Sarah L. Lutz was adopted by her grandfather, Herbert Barr Lutz, and his wife, Evelyn Lilly Lutz.

6. Evelyn Lilly Lutz was not related by blood to Sarah L. Lutz.

7. Evelyn Lilly Lutz passed away in 1970.

8. The trust terminated on July 1, 1997.

9. The rule set out in Peirce v. Farmers State Bank of Valparaiso (1943), 222 Ind. 116, 51 N.E.2d 480, was in effect at the time of Mr. Fortune's death and remains in effect.

10. The rule set out in Peirce does not violate the Indiana Constitution.

11. The adoption of Sarah L. Lutz by Evelyn Lilly Lutz did not cause Sarah L. Lutz to become a beneficiary of the trust.

12. For purposes of this order, the court is disregarding all allegations and all evidence regarding waiver, disclaimer, fraud, invalidity of the adoption, motives for the adoption, custody of the adopted child and/or re-adoption.

13. There is no genuine issue as to any material fact.

14. The plaintiffs are entitled to judgment as a matter of law.

IT IS THEREFORE ORDERED that:

1. Sarah L. Lutz is not a beneficiary of the William Fortune testamentary trust.

2. Co-trustees shall wind up the trust and make final distribution of the trust and make final distribution of the trust assets in a manner consistent with this order.

3. There being no remaining issues in this proceeding and no just reason for delay, this order shall be entered in the Record of Judgments and Orders as a final judgment.

(Appellant's App., Tab 2).

This appeal followed.

Discussion and Decision

I. Determining Beneficiaries

Sarah contends that she is a beneficiary of the Fortune Trust. Specifically, Sarah alleges that the trial court erred when it relied on the "stranger-to-the-adoption" rule to determine her beneficiary status. We disagree.

Standard of Review

A trial court's grant of summary judgment is clothed with a presumption of validity on appeal, and the appellant bears the burden of demonstrating that the trial court erred. Crossno v. State, 726 N.E.2d 375, 378 (Ind.Ct.App.2000). Nevertheless, the record must be carefully scrutinized to ensure that the plaintiff was not improperly denied a day in court. Id. Summary judgment is appropriate only when the evidentiary matter designated by the parties shows that there are no genuine issues as to any material fact and that the moving party is entitled to judgment as a matter of law. Indiana Trial Rule 56(C). Should the record disclose an incorrect application of the law to the facts, we must reverse a grant of summary judgment. In Re Estate of Weitzman, 724 N.E.2d 1120, 1122 (Ind.Ct.App.2000).

Rule of Law—"Stranger-to-the-Adoption"

The interpretation, construction or legal effect of a will is a question to be determined by the court as a matter of law. Hershberger v. Luzader, 654 N.E.2d 841, 842 (Ind.Ct.App.1995). When construing the language of a will, our primary focus is on the intent of the testator. Id. In determining the testator's intent, we look to the four corners of the will and the language used in the instrument. Id.

Moreover, a will must be construed with regard to the law and statutes in effect at the time of the testator's death. In the Matter of the Estate of Spanley, 458 N.E.2d 289, 290 (Ind.Ct.App.1984). Prior to Fortune's death on January 28, 1942, caselaw pertaining to adopted children as beneficiaries read as follows:

When one makes provision for his own child or children in his will he will be deemed to have included an adopted child or children unless there is something in the will, or something in the extraneous circumstances to rebut said presumption. Where one makes provision in his will for a child or children of some person other than himself he will be deemed not to have included an adopted child or

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