Opinion
No. 172.
Submitted under sec. (Rule) 251.54 January 5, 1973. —
Decided January 30, 1973.
APPEAL from an order of the county court of Milwaukee county: WILLIAM J. SHAUGHNESSY, Judge. Order vacated and cause remanded.
For the appellant the cause was submitted on the briefs of Whyte, Hirschboeck, Minahan, Harding Harland, S.C., attorneys, and Herbert C. Hirschboek and Anthony W. Asmuth III of counsel, all of Milwaukee.
For the respondent the cause was submitted on the brief of Foley Lardner and Steven E. Keane and Keith A. Christiansen, all of Milwaukee.
This is an appeal from an order of the county court of Milwaukee county construing an irrevocable inter vivos trust instrument.
Carl A. Forster (hereinafter the "donor"), on September 22, 1951, executed a trust agreement with his second wife, Marguerite L. Forster, and William H. Hamilton as trustees. The trust was named the "Fortwin Trust" and was made for the benefit of the donor's twin children by his prior marriage: Mary Forster Hamilton, the petitioner in the probate court and the appellant on appeal, and John S. Forster, now deceased. Securities of the value of $26,750 constituted the trust principal and were transferred to the trustees on November 8, 1951. Under the "Fortwin Trust" both beneficiaries were entitled to equal shares of the net income and in art. 8, the following provision was made:
"The shares of the children of the donor in this trust shall on death inure to their respective issue. If either of them die without leaving issue surviving, the share of the deceased child of the donor shall inure to the other child and to his or her issue by right of representation . . ." (Emphasis supplied.)
It is the construction of the word "issue" which is the subject of the dispute between the parties.
At the time the trust instrument was executed, John S. Forster was twenty-nine years of age, unmarried and was living at the donor's home in Milwaukee. Mary Forster Hamilton, on the other hand, was at this time married. Subsequent to the execution of this instrument, John S. Forster moved to Florida where he married Margaret Sweet Forster. They adopted an infant boy named Allen Jeffrey Forster. Less than two months later, John S. Forster died, survived by his widow, Margaret Forster, the respondent on this appeal, and his adopted infant son, Allen Jeffrey.
Following the death of John S. Forster in 1959, the trustees made income payments to the respondent, Margaret Forster, for the benefit of Allen Jeffrey. These payments continued through 1969, the same year that the donor passed away. Prior to his death, in June of 1965, the donor established another trust with the Security Trust Company, a Florida corporation, serving as trustee. Art. III of this second trust provides that "Upon the death of the Settlor, . . . After payment of all settlement costs and taxes, the Trustees shall set aside an amount equal to one tenth (1/10th) of the principal of the then remaining trust fund as a separate trust for the benefit of Allen J. Forster. . . . for so long as he shall live." The remaining funds are to be divided into as many equal shares as there shall be children of his daughter, Mary Forster Hamilton, and a separate and distinct trust established as to each. The earnings on the trust established for the benefit of Allen J. Forster were $6,000 for nine months of 1969.
On June 17, 1970, Mary Forster Hamilton, petitioned the Milwaukee county court, probate division, for a construction of the word "issue" as it was used in art. 8 of the "Fortwin Trust" contending that Allen Jeffrey Forster, the adopted son of her deceased brother, was not an "issue" of her brother within the meaning and intent of the donor. Margaret Sweet Forster, as guardian of the property and person of her adopted son, Allen Jeffrey Forster, answered the petition. At the hearing on the petition, Mary Forster Hamilton attempted to introduce extrinsic evidence of the donor's intent in the form of a memorandum to his attorney; the last will and testament of the donor; the second trust created by the donor in 1965; a letter written by the respondent, Margaret Forster, to the petitioner-appellant, Mary Forster Hamilton, and her husband, Bill Hamilton, one of the cotrustees; together with the testimony of both herself and the cotrustees.
In sustaining the objection to the introduction of this evidence, the probate court held that the word "issue" when read in light of the surrounding circumstances at the time of execution, was clear and unambiguous and that Allen J. Forster was the issue of his deceased father for purposes of the trust Mary Forster Hamilton has appealed from the order directing the trustees of the "Fortwin Trust" to consider and treat Allen J. Forster as an issue of his deceased father, John S. Forster.
Two issues are presented on this appeal:
1. Did the trial court err in finding that the undefined word "issue" as used in art. 8 of the "Fortwin Trust" was unambiguous?
2. If the word "issue" is ambiguous as used in the "Fortwin Trust," may the extrinsic evidence offered by appellant be introduced?
Ambiguity of the word "issue."
Both parties to this appeal are in substantial agreement as to the appropriate rules of construction to be applied, and it would be well to review them at the very outset. It is clear that the principles of construction which are applicable to wills and testamentary trusts are also applicable to inter vivos trusts. Uihlein v. Uihlein (1960), 11 Wis.2d 219, 105 N.W.2d 351. Whether an adopted person takes under the terms of a trust instrument depends upon the intent of the donor at the time of its execution. Lichter v. Thiers (1909), 139 Wis. 481, 488, 121 N.W. 153.In order to ascertain that intent, ". . . the court attempts to place itself in the position of the testator when he made his will and to consider the use of the words in relation to the surrounding circumstances." Estate of Breese (1959), 7 Wis.2d 422, 426, 96 N.W.2d 712.
In reaching the conclusion that the trust provision was unambiguous, the trial court placed great emphasis on the status of the law with regard to the rights of adopted children at the time the trust was executed. Appellant contends that the trial court erred in so doing. The thrust of her argument is that a court may resort to an examination of what the law was at the time a dispositive instrument was drafted only after it has first determined that the instrument itself, when read in light of the surrounding circumstances at the time of drafting, is found to be ambiguous.
Respondent takes the position that as a matter of necessity, since the donor is presumed to know what the present status of the law is, the words of the instrument actually used must be examined from that perspective and are, therefore, merely part of the surrounding circumstances.
This court has consistently held that the donor's subjective intent is determinative in interpreting a will or trust. In Estate of Gehl (1967), 39 Wis.2d 206, 211, 159 N.W.2d 72, the court quoted from Atkinson, Wills (hornbook series, 2d ed.), sec. 146 at p. 810 as follows:
"`However strong the argument for an objective standard in case of contracts, the words of a will should be given the meaning that the testator gives them as distinguished from the usual or dictionary meaning. A court can never be confident as to testator's probable meaning unless it puts itself into the testator's armchair so as to see what he knew, liked, disliked and how he talked and wrote about the matters connected with his disposition.'"
After finding that the word "children" was capable of giving rise to two entirely different meanings, the court in Estate of McDonald (1963), 20 Wis.2d 63, 121 N.W.2d 245, found that the term constituted a "latent ambiguity" and only after so concluding, stated at page 67 that:
"Existing statutory and case law is one of the extrinsic aids which may be consulted in resolving a will ambiguity by construction. Lichter v. Thiers (1909), 139 Wis. 481, 486, 121 N.W. 153, and In re Moran's Will (1903), 118 Wis. 177, 195, 96 N.W. 367. The reason for this is that testator is presumed to know the law both statutory and case law. 57 Am. Jur., Wills, p. 759, sec. 1162. Where applicable law is to be looked to as a surrounding circumstance, it is the law in effect at the time of making the will."
The court there went on to state at page 68 of the opinion that:
"In the recent case of Estate of Breese (1959), 7 Wis.2d 422, 96 N.W.2d 712, the question presented was whether the word `issue' as used by testatrix in her will included the adopted children of her deceased brother. This court concluded that there was no ambiguity in the will, when read in the light of surrounding circumstances, which would authorize the admission into evidence of conversations between testatrix and her attorney. It was held that the word `issue' did include the adopted children of testatrix's deceased brother. In the course of the opinion the court stated (p. 430):
"`We have arrived at this construction of the will without reference to any statutes, which in some cases are an aid in ascertaining the testator's intention. . . . In our view of the language of the will and of the surrounding circumstances there is no ambiguity and the resort to sec. 48.92 is not necessary as an aid in the construction of the testatrix's will.'
"The plain implication of this quoted language is that, even if an ambiguity had existed in the will, any use of the mentioned statute would have been merely as `an aid' and not as a controlling authority. Other extrinsic evidence of a testator's intent might outweigh the effect of such a statute." (Emphasis added.)
Likewise, in the more recent case of Will of Adler (1966), 30 Wis.2d 250, 140 N.W.2d 219, the parties stipulated that the word "issue" was ambiguous in light of its use in the will, and that there was no conduct or utterances of the testator which furnished extrinsic evidence of his intent. Upon this foundation and before going into an extensive review of the law which was in existence at the time of execution, the court stated at page 256:
"In the Estate of McDonald (1963), 20 Wis.2d 63, 67, 121 N.W.2d 245, the court stated that both statutory and case law were extrinsic aids . . . ."
In Will of Adler, supra, the testator created a trust, the proceeds of which were to be distributed to a principal beneficiary or, in the case of death, to her "issue." The principal beneficiary adopted a child after the death of the testator and the court was there concerned, just as it is here, with whether the adopted child was an "issue" under the terms of the trust. It is stated at page 255:
"The ambiguity arises when the interpreter of the will is confronted with the fact that one not a blood relative of the principal beneficiary, but an adopted daughter, makes claim as an `issue.'"
We conclude that the trial court erred in finding the trust instrument unambiguous and in sustaining the respondent's objections to petitioner's offers of evidence. We further determine that the order of the trial court, dated June 4, 1971, must be vacated and set aside and the cause remanded for further proceedings. On remand, the trial court should consider the status of the law as it actually existed at the time the "Fortwin Trust" was executed, together with admissible extrinsic evidence.
By the Court. — Order vacated and set aside and cause remanded for further proceedings consistent with this opinion.