Schaefer v. Merchants Nat. Bank of Cedar Rapids

• Decision Date: 18 July 1968
• Docket Number: D,No. 425,No. 53009,425,53009
• Citation: 160 N.W.2d 318
• Parties: Ellen Keeler SCHAFER, Plaintiff-Appellee, v. MERCHANTS NATIONAL BANK OF CEDAR RAPIDS, Iowa, Trustee Under the Will of Ellen C. Keeler and Trustee of a certain Inter Vivos Trust Agreement dated July 26th, 1939, bearing Trustefendant-Appellee; Eleanor Putnam Sewall, Defendant-Appellant; and Leila Love Keeler, Defendant.
• Court: Iowa Supreme Court

Page 318

160 N.W.2d 318

Ellen Keeler SCHAFER, Plaintiff-Appellee, v. MERCHANTS NATIONAL BANK OF CEDAR RAPIDS, Iowa, Trustee Under the Will of Ellen C. Keeler and Trustee of a certain Inter Vivos Trust Agreement dated July 26th, 1939, bearing Trust No. 425, Defendant-Appellee Eleanor Putnam Sewall, Defendant-Appellant and Leila Love Keeler, Defendant.

No. 53009.

Supreme Court of Iowa.

July 18, 1968.

Lynch, Dallas, Smith & Haman, Cedar Rapids, for defendant-appellant, Eleanor Putnam Sewall.

Simmons, Perrine, Albright & Ellwood, Cedar Rapids, for defendant-appellee, Merchants National Bank of Cedar Rapids.

Nazette & Bromwell, Cedar Rapids, for plaintiff-appellee.

STUART, Justice.

The ultimate question for our determination is whether Eleanor Putnam Sewall (who was adopted by Charles Butler Keeler, the beneficiary of inter vivos and testamentary trusts, thirteen years after the execution of the trust instruments and nine years after the death of the settlor-testatrix) was intended by said settlor-testatrix to be included in the gift to the class denominated in the trust instruments as 'direct heirs' of the beneficiary. The trial court held such adopted person was not within the contemplation of the settlor-testatrix when she executed the trust instruments. We agree.

Ellen C. Keeler executed her last will and testament in 1935. On July 26, 1939 she executed the codicil to her will and the inter vivos trust agreement which are in question here. In 1939 she had two sons (1) George G. Keeler, father of John B. Keeler and Ellen Keeler Schaefer, plaintiff; and (2) Charles Butler Keeler, who had been married to Leila Love Keeler since 1920. No children were ever born of this marriage. Charles Butler Keeler was 57 years old in 1939 and his wife was a year or two older.

For convenience, Ellen C. Keeler will be referred to as the testatrix. The three instruments as a group will be referred to as the trust instruments. We will refer to the individual instruments as the will, codicil and trust agreement respectively.

Under the terms of the trust instruments the principal of each trust created thereby was divided into two equal parts, one for each son. The codicil, in part provided: "* * * In the event of the death of either son, before or after my death, his share of the principal, hereinafter referred to as his trust share, and the net income thereon, shall be disposed of as follows: (1) In the event he has no surviving wife, or his surviving wife is not a person in being upon the date of this instrument, His said trust share and undistributed net income thereon shall be transferred and paid over to his direct heirs, if any, per stirpes, * * *'.'

Paragraph 13(b)(1) of the trust agreement provided for the disposition of the principal of the trust as follows:

'* * * said principal shall, after the death of the grantor, be divided by the Trustee into two equal shares (one of which shall be designated as the Charles Keeler share and the other as the George Keeler share) and so long as either son shall live he shall so receive, after the death of the grantor, the net income upon his share. After the death of the grantor and after the death of either of said sons, his share of the principal, hereinafter referred to as his trust share, and the net income thereon, shall be disposed of as follows: (1) In the event he has no surviving wife, or his surviving wife is not a person in being upon the date of this instrument, His said trust share and undistributed net income thereon shall be transferred and paid over to his direct heirs, if any, per stirpes, * * *.'

Ellen C. Keeler died March 19, 1943. Her son George G. Keeler died in July, 1944. George's son John died in July, 1951. Ellen Keeler Schaefer, plaintiff is the only surviving 'direct heir' of George. His portion of the trust is not in issue.

In May, 1943 Charles Butler Keeler was divorced from Leila Love Keeler. He moved to California and on June 11, 1952 at the age of 70, he adopted defendant, Eleanor Putnam Sewall, a widow. Her age is not given. Charles died January 19, 1964.

The dispute is between Eleanor Putnam Sewall who claims to be the 'direct heir' of Charles Butler Keeler and Ellen Keeler Schaefer who would receive the trust estate if Charles had no 'direct heirs' as used in the trust instruments.

Mrs. Sewall's position is 'that the limitation in favor of the 'heirs' of Charles Butler Keeler designated the heirs of Charles Butler Keeler as determined by the statutes of intestate succession of the State of Iowa as they existed on the date of his death on January 19, 1964, and that by the use of the word 'direct' the testator and settlor intended to exclude collateral heirs'. She agrees the question is not determined by the fact that adopted persons are entitled to inherit from the adoptive parents under the law of Iowa but whether testatrix, a stranger to the adoption, intended to include adopted persons in the class she designated as 'direct heirs' of her sons.

We now turn to the rules of will construction which also apply to the trust agreement, 86 A.L.R.2d 19.

The cardinal rule of will construction is that the intention of the testator must be ascertained and given effect unless contrary to some rule of law or public policy. Clarken v. Brown, 258 Iowa 18, 23, 137 N.W.2d 376, 379; Buchan v. Buchan, 254 Iowa 566, 570, 118 N.W.2d 611, 614; In Re Austin's Estate, 236 Iowa 945, 949, 20 N.W.2d 445, 447; Slavens v. Bailey, 222 Iowa 1091, 1095, 270 N.W. 367, 369; In Re White's Estate, 209 Iowa 1210, 1212, 229 N.W. 705, 706.

The rules of construction are merely to aid in the determination of such intent. In Re Austin's Estate, supra.

The word 'heirs' does not have a fixed meaning and the sense in which the word is used by testatrix must be determined from the instruments read as a whole and in the light of all the relevant facts and circumstances under which the instrument was executed. In Re Estate of Tedford, 258 Iowa 890, 893, 140 N.W.2d 908, 911; Buchan v. Buchan, supra; Slavens v. Bailey, supra; In Re Austin's Estate, supra; Hiller v. Herrick, 189 Iowa 668, 671, 179 N.W. 113; Warden v. Overman, 155 Iowa 1, 8, 135 N.W. 649.

Unless a contrary intent appears from the evidence 'heirs' will be construed as those who would take under the statutes of descent; Katz Inv. Co. v. Lynch, 242 Iowa 640, 650, 47 N.W.2d 800, 806--807; Lincoln Joint Stock Land Bank of Lincoln, Neb. v. Mitchell, 239 Iowa 995, 1000, 33 N.W.2d 388, 391; Restatement, Property, §§ 305, 308; but the strict legal meaning is not controlling and if it fairly appears that the testatrix used the term in some other sense, the technical meaning will not be permitted to defeat the manifest intention of the testatrix. Gilbert v. Wenzel, 247 Iowa 1279, 1282, 78 N.W.2d 793, 795; Wright v. Copeland, 241 Iowa 447, 453, 41 N.W.2d 102, 106; Warden v. Overman, supra; Hiller v. Herrick, 189 Iowa 668, 671, 179 N.W. 113; Slavens v. Bailey, supra.

I. Although this is an equity matter, the trial court, without objection ruled on the admissibility of the testimony of the scrivener of the instruments in question, a highly regarded attorney with extensive probate practice and experience in drawing instruments of this kind. An offer of proof was made. As our review is de novo and as the evidence, if admissible, should be considered in deciding this case, we will first consider this proposition for reversal.

As indicated by the authorities cited above it is proper to consider the circumstances under which the instruments were executed. In Flynn v. Holman, 119 Iowa 731, 737, 94 N.W. 447, 449, we said: 'The purpose for which extrinsic evidence may be legally admitted is not to add to or vary the meaning of a will nor to prove an unexpressed intention of the testator, but to enable the court, by the light of the circumstances surrounding the execution of the instrument, to determine just what was meant by the words actually employed by him.'

Some of the questions called for the opinion and conclusion of the witness and objections thereto were properly sustained. For the purpose of this case, we will consider the following testimony to be properly in evidence.

Testatrix was the wife of an attorney and had assisted him in some of his work. She seemed more familiar with lawyers and legal terms than the ordinary client. Her husband had left everything to her and she felt morally bound to see her sons got the benefit of the property.

The witness was asked: '* * * did you ever have any conversation with Mrs. Keeler, * * * in which you explained to her the meaning of the word 'heirs'?' He answered: 'It was my custom to always explain the meaning of the word 'heirs' to any client for whom I was drafting a trust agreement or a will and I am sure that at that time the significance of the word 'heirs' was explained to her * * *.' He then stated what she 'understood'. This was an opinion and conclusion which we will not consider.

He also testified: 'She was advised * * * that the word 'heirs' would include adopted children.'

Appellant argues this evidence shows beyond a question of a doubt that the words 'direct heirs' were used by testatrix with the 'intention of adopting the statutes of intestate succession for the purposes of determining those persons who should succeed to the 'Charles Keeler share' of both trusts'. We do not consider this evidence to be so conclusive.

It must be remembered the attorney is attempting to recall events and conversations which took place 25 years or more before. I was undoubtedly true, as pointed out by Mr. Nazette: 'I think the record should also show, Your Honor, if he were allowed to...