Opinion
C.A. No. 18366.
Submitted: February 11, 2002.
Decided: March 4, 2002.
Robert A. Penza, Esquire, and Peter S. Gordon, Esquire, GORDON, FOURNARIS MAMMARELLA, Wilmington, Delaware, Attorneys for Plainttffs.
David J. Ferry, Jr., Esquire, and Rick S. Miller, Esquire, FERRY JOSEPH, P.A., Wilmington, Delaware, Attorneys for Defendant PNC Bank, Delaware.
Thomas Herlihy, III, Esquire, HERLIHY HARKER KAVANAUGH, Wilmington, Delaware, Attorney for Defendant Harlan Miller.
MEMORANDUM OPINION
I.
Kenneth D. Chavin and Jeffrey M. Chavin sue for a declaratory judgment that they are the residuary beneficiaries of a revocable living trust ("Trust") created by their grandmother, Florence Chavin. They bring their suit against PNC Bank, Delaware, ("PNC"), in its capacities as both Trustee of the Trust and as administrator of the estate of their uncle, Leslie Sanford Chavin. They also sue Harlan Miller, a collateral relation who is the sole beneficiary under Leslie's Will. Plaintiffs contend that they, and not Leslie's estate, are the ones entitled to take under the Trust.
Florence Chavin was the settlor of the Trust and its sole beneficiary during her lifetime. On October 1, 1998, Florence executed her Last Will and Testament ("Will") and, at the same time, executed a complete amendment to the Trust. Florence died on May 7, 1999, having made no further changes in her estate plan. She was survived by her son Leslie and by the plaintiffs, whose father and Leslie's brother, I. Favel Chavin, predeceased Florence. On May 20, 1999, Florence's Will was admitted to probate, and PNC was duly appointed executor of her estate.
Leslie died testate but unmarried and without issue on August 21, 1999, while domiciled in Brazil, where his estate is being probated. On May 10, 2001, Leslie's Will was filed in the New Castle County Register in Wills pursuant to 12 Del. C. § 1307 and serves as the basis for the ancillary administration of his estate in Delaware by PNC.
The question presented in this action arises out of the language used in Section 4 of Item XIII of the Trust that provides for the payment of estate taxes and certain specific bequests, and then for the distribution of the remaining Trust assets as follows:
. . . upon the death of Settlor, Trustee shall pay over, transfer and convey whatever remains of the trust estate, discharged of the trust, to Settlor's son, LESLIE S. CHAVIN, if he shall then be living. If Settlor's son shall then be deceased, to Settlor's then living issue, per stirpes.
Plaintiffs contend that the requirement that Leslie "then be living" refers to the time at which the Trustee "shall pay over, transfer and convey whatever remains of the trust estate." Thus, because Leslie died shortly after his mother, and long before PNC was prepared to make any distribution of Trust assets, plaintiffs argue that neither Leslie nor his estate has ever had an interest in the Trust. Rather, they argue, they are the takers in default under the final sentence quoted above, as they are the Settlor's only living issue. Plaintiffs claim that this scheme of distribution is in keeping with Florence's intent to keep the estate assets within the immediate family.
PNC and Miller contend to the contrary, arguing that the quoted language should be construed to mean that Leslie was required to survive only his mother's death to become indefeasibly entitled to the remaining assets of the Trust. Upon his later death, they argue, the right to take the remaining Trust assets simply vested in his estate and, by the dispositive provisions of his will, in Harlan Miller. Thus, they point out Miller's right to take does not come from Florence, but from her son, Leslie.
Between them, the plaintiffs have received or are entitled to receive approximately one-half of the collective assets of Florence and her late husband. This is because Florence exercised a limited power of appointment under a trust created by her late husband in favor of the plaintiffs. She also made Leslie the residuary beneficiary under her Will, subject to a survival contingency. Plaintiffs do not contest the conclusion that Leslie satisfied that contingency simply by having survived his mother's death.
Defendants moved for summary judgment in advance of the scheduled trial. Briefing and discovery is complete, and the matter was submitted for decision on February 11, 2002.
II.
Summary judgment will be granted where there is no genuine issue of material fact, and the movant is entitled to judgment as a matter of law. This case involves a dispute as to the meaning of the language of the Trust. The cardinal rule of law in a trust case is that the intent of the settlor controls the interpretation of the instrument. "Such intent must be determined `by considering the language of the trust instrument, read as an entirety, in light of the circumstances surrounding its creation.'" All other rules of construction must be subordinate to determining settlor's intent, their value being as aids in ascertaining that intent as precisely as possible.
Ct. Ch. R. 56(c).
Annan v. Wilmington Trust Co., 559 A.2d 1989, 1292 (Del. 1989).
Id. (quoting Dutra De Amorim v. Morment, 460 A.2d 511, 514 (Del. 1983)).
Fiduciary Trust Co. v. Fiduciary Trust Co., 445 A.2d 927, 930 (Del. 1982).
The question raised is whether Florence intended the phrase "if he shall then be living" to refer to the time of her death or to the performance of the Trustee's obligation to "pay over, transfer and convey" the remainder of the Trust property. A court presumes that non-technical words in a will are used in their usual, popular and ordinary meaning, unless it appears from the context that some other meaning was intended. Here, the phrase in question requires a temporal reference to have meaning and the most plausible temporal reference in the instrument is found in the phrase "upon the death of Settlor." Certainly, the date of Florence's death is fixed and ascertainable and provides a completely satisfactory answer to the question: "When is `then'?"
PAGE ON THE LAW OF WILLS, § 30.21 (1961).
In contrast, plaintiffs' suggestion — that the quoted phrase should be interpreted to mean that Leslie was required to survive until the Trustee distributed the Trust assets — leaves the survival contingency open and uncertain. Distribution of the assets could take months; it could take years. It could be accomplished all at once, or in stages. When it was actually begun, or completed, would be open to interpretation and, perhaps, litigation. Anomalously, the Trustee, by its actions or inactions, would be able to influence who would receive the legacy. This is certainly a less than satisfactory interpretation of the survival contingency.
Moreover, one is left to wonder why Florence would intend to impose such a contingency. If, as plaintiffs suggest, she intended that the estate assets should stay within the immediate family, why did she provide that all bequests to plaintiffs and Leslie were to be made free of trust?
The law generally prefers constructions of instruments that result in early vesting of estates. "Even where the will uses words of survivorship it is presumed that they relate to the death of the testator if fairly capable of that construction." Here, the survival contingency is certainly capable of a construction resulting in vesting of Leslie's interest in the Trust at the time of his mother's death. Indeed, that is the more natural construction of the instrument.
In re Will of Dixon, 280 A.2d 735, 737 (Del.Ch. 1971).
Id.
The extrinsic evidence also supports a finding that Leslie's interest vested on his mother's death. The parties deposed John M. Amalfitano, a lawyer who worked in the trust department at PNC and was deeply involved with Florence in drawing her estate plan. His deposition plainly shows that Florence intended that upon her death there be a "clean break" with regard to the distribution of assets to Leslie and her grandsons.
Amalfitano testified that Florence considered and rejected the idea of having Leslie exercise control over plaintiffs' share of the estate as trustee, while also having Leslie's portion remain in trust:
[S]he specifically had toyed with the idea of having Leslie keep his hand in and controlling some of [plaintiffs'] assets. And eventually we came down to just a clean break: They get their piece; Leslie gets his piece; and that's the end of it.
John M. Amalfitano Testimony, p. 24, February 4, 2002.
This same testimony also shows that, while Florence considered the possibility that Leslie might predecease her and made provision for that contingency in her Will and the Trust, she never gave any thought to what would happen to Leslie's share of her estate after she died:
So we sure . . . would have covered the contingency if Leslie had predeceased his mother. But there was no conversation about, you know, what would happen later . . . what would happen after her death. We never had conversations about that.
Id., p. 26.
Plaintiffs also rely on the fact that Florence's Will uses different words than her Trust to define the survival contingency. The Will's residuary clause states as follows:
I devise and bequeath to my son, LESLIE S. CHAVIN, if he shall survive me, all the rest, residue and remainder of my estate . . . . If my son shall predecease me, I devise and bequeath my residuary estate to my issue, per stirpes.
Plaintiffs contrast this language with that used in the Trust and argue that the difference "creates an ambiguity as to the meaning of the language in the Trust." The fact that the two instruments use a different form of words does not mean that the two contingencies do not mean that same thing or that either instrument, standing alone, is ambiguous. Certainly, the mere fact that the language used in the Will is somewhat plainer does not suggest that the survival contingency in the Trust can reasonably bear the interpretation plaintiffs suggest.
Finally, plaintiffs rely on several cases that, fairly read, do not reasonably support the conclusion they contend for. For example, Riggs National Bank of Washington, D.C. v. Zimmer involved the construction of a testamentary trust that specifically provided that, after certain bequests were satisfied, the remainder of certain trust property was to be paid over free of trust to that son of testator's grandnephew, Willard, III, who first attained twenty-one years of age. In default of this occurring, the will provided "then and in that event" the trustees were "to pay the rest, residue and remainder of the trust estate as aforesaid to the respective descendants of William Saulsbury and John Ponder my two grandfathers in equal shares per capita." The testator died in 1927. Willard, III died without producing a son in 1971. Thus, the question was whether the class of descendants should be determined as of 1927 or as of 1971. The court concluded, reading the instrument as a whole, that the testator intended that the class of descendants should be determined at the later date. This was consistent with the use of the words "then and in that event" and also with the intention apparent from the instrument itself to benefit only linear descendants of the testator's grandfathers.
304 A.2d 69 (Del. 1973).
The Riggs case does not provide support for plaintiffs' position because the disposition of Florence's Trust was never conditioned on the occurrence of some future event. On the contrary, it was to follow immediately upon her death, subject only to those delays attendant to the proper and orderly administration of her estate. The position of Leslie's estate is, instead, like that of those descendants of the testator in that case who survived Willard, III and, thus, qualified to participate as members of the class of descendants of the testator's grandfather. There is no suggestion that those persons faced the further contingency of surviving until the Trustees completed the administration of the trust and distributed its assets.
Similarly unhelpful to plaintiffs is In re the Matter of Mitchell, 85 N.Y.S.2d 405 (Surr.Ct. 1948), wherein the bequest specifically provided that, should any of the persons named as residuary beneficiaries die "before coming into possession of the bequest made to her" that portion would be divided among the surviving beneficiaries. There is no language in the trust remotely similar to the explicit contingency described in that case.
I also reject plaintiffs' argument that the fact that Florence bequeathed only $1,000 to Harlan Miller leads to an inference that Harlan Miller is somehow disqualified from indirectly benefiting in her estate to a larger extent by virtue of being named the sole beneficiary under Leslie's Will. There is absolutely no suggestion in the record that Florence and Leslie jointly planned their estates or executed reciprocal Wills. Thus, there is no reason to look to any provision in either one's estate documents to interpret the meaning of the other or to limit the dispositive provisions of either. Thus, plaintiffs' reliance on Fiduciary Trust Co. v. Fiduciary Trust Co., 445 A.2d 927 (1982) is misplaced.