The opinion of the court was delivered by: Dupuis
This matter comes before the court upon cross-motions for summary judgment by the Duke Endowment ("The Endowment") and Chandi Duke Heffner ("Ms. Heffner"). Ms. Heffner has also filed motions to remove the Trustees, to disqualify the law firm of Dewey Ballantine and to strike certain allegations of the complaint.
On December 11, 1924, James B. Duke, a legal resident of the state of New Jersey, executed his last will and testament and two trust instruments. All three of the documents were drafted by William R. Perkins, Esq. The first trust instrument, which Mr. Duke denominated "The Duke Endowment", was created in order to perpetually benefit certain named charities. The second, denominated the "Doris Duke Trust", was created for the benefit of Mr. Duke's daughter, Doris Duke ("Miss Duke"), and certain other named relatives.
The Doris Duke Trust ("The Trust") provided that two-thirds of the income in The Trust would be paid to Miss Duke each year until her death. The remaining one-third would be paid to certain other named relatives. Upon Doris Duke's death, her two-thirds portion of the yearly trust income would be paid per capita in equal installments to her lineal descendants for life, not to exceed twenty-one years after the death of certain named relatives. At the expiration of the twenty-one year period, two-thirds of the corpus of The Trust would be paid per capita in equal installments to her lineal descendants. In the event Doris Duke died without lineal descendants, The Trust would terminate and Miss Duke's two-thirds portion of The Trust would be paid to the Duke Endowment.
Miss Duke had one natural child who died in infancy. On November 10, 1988, she legally adopted Charlene Gail Heffner, now known as Chandi Duke Heffner ("Ms. Heffner"), pursuant to New Jersey's adult adoption statute, N.J.S.A. 2A:22-1 to -3. Ms. Heffner was thirty-five years old at the time of the adoption, and Miss Duke was seventy-five years old. When Miss Duke died on October 28, 1993, Ms. Heffner demanded that the Trustees of the Doris Duke Trust immediately commence payments to her as the successive life beneficiary of the Doris Duke Trust.
The Trustees have requested that the court instruct it on the Disposition of Miss Duke's two-thirds share of The Trust. It is the Endowment's position that, since Miss Duke was not survived by any natural children, she has no lineal descendants, and the assets therefore pass to the Duke Endowment. The Endowment seeks an order declaring it to be the remainderman of two-thirds of the assets of The Trust and instructing the Trustees to distribute the assets to the Endowment.
Ms. Heffner, on the other hand, seeks an order declaring that she, as Miss Duke's sole lineal descendant, is entitled to that income. The Doris Duke Trust has a current estimated worth of $170,000,000.
These motions turn on the critical question of whether Ms. Heffner can in fact be classified as a "lineal descendant" as that term is used in the Doris Duke Trust. If so, she is entitled to two-thirds of the income from The Trust's assets and, at the end of twenty-one years after the death of certain named relatives, will be entitled to two-thirds of the corpus of The Trust as well.
In order to determine whether Ms. Heffner is Miss Duke's lineal descendant, the court must first determine the governing law. The Endowment argues that, pursuant to Article Eighth of the trust document, the court must use the law in force at the time James B. Duke executed the trust instrument in 1924. It is The Endowment's position that, since New Jersey did not permit adult adoptions in 1924, Ms. Heffner would not be considered a lineal descendant. *fn1 The Doris Duke Trust provides in Article Eighth:
This Indenture is executed by a resident of the State of New Jersey in said State, is intended to be made, administered and given effect under and in accordance with the present existing laws and statutes of said State, notwithstanding it may be administered and the beneficiaries thereof may be located in whole or in part in other states, and the validity and construction thereof shall be determined and governed in all respects by such laws and statutes (emphasis added).
Alternatively, The Endowment argues that even if this court were to apply the law in existence at the time of Miss Duke's death in 1993, the "stranger to the adoption" doctrine would bar Ms. Heffner from taking under The Trust. That doctrine prohibits adult adoptees from taking from lineal or collateral relatives other than the adoptive parents.
Ms. Heffner argues that present law governs. She contends, first, that the law to be applied is the law at the date the class is determined, that is 1993, the date of Miss Duke's death. Second, she argues that even if 1924 law governs, the absence of a statute in New Jersey authorizing adult adoptions in 1924 does not disqualify her as a lineal descendant since New Jersey courts at the time recognized adult adoptions from other states. Third, she argues the statutory law of New York, which permitted adult adoptions in 1924, is relevant since The Trust was drawn by a New York attorney. Fourth, she argues that New Jersey and other states have applied adoption statutes revised after the execution of the will and trust. Fifth, she contends the Trustees are precluded from arguing a position inconsistent with a prior consent judgment they received in an earlier action brought to construe certain portions of The Trust. Finally, she contends the "stranger to the adoption" doctrine is not applicable.
It is clear that while a motion for summary Disposition should be granted with caution, where no genuine issue of fact is raised by the pleadings or affidavits and there is an absence of showing by defendants that they have a ground of defense, plaintiffs are entitled to a summary Disposition. Judson v. Peoples Bank & Trust Co. of Westfield, 17 N.J. 67, 73-75, 110 A.2d 24 (1964); R. 4:46-2.
This matter had previously been before this court on The Endowment's motion for summary Disposition. This court permitted a period of discovery to determine what evidence could be produced that would bear on the issue of Mr. Duke's intent. Extensive discovery has taken place and both parties agree the question is one of law to be decided on summary judgment.
In determining the meaning and effect of a deed of trust, the primary inquiry must be to ascertain the intent of the settlor from the language of the instrument itself. In re Trust Co. of Morris County, 83 N.J. Super. 411, 416, 200 A.2d 330 (App. Div. 1964). In so doing, the judicial function is to ascertain and give effect to the probable intention of the settlor. Ibid. The general principles which govern interpretation of trust instruments are the same as those which govern interpretation of instruments under which property is disposed absolutely whether by instrument inter vivos or by will. In re Voorhees Trust, 93 N.J. Super. 293, 299 n.1, 225 A.2d 710 (App. Div. 1967).
If the settlor's intent cannot be ascertained or is susceptible to a number of meanings, this court must conduct a hearing to determine Mr. Duke's probable intent. Ms. Heffner contends the settlor's intent cannot be ascertained on the face of the instrument.
Initially, Ms. Heffner contends the language of the trust instrument requires this court to use the law in 1993, not 1924. It is her position that Mr. Duke would have included adopted adults as lineal descendants. She contends she has successfully proven that James B. Duke was a "man of the times", deeply concerned with family and particularly concerned for those without families. She asserts that Mr. Duke would never have excluded adopted persons, either child or adult, from his generosities, that he encouraged adoption and even offered to adopt his step-son. She argues that Mr. Duke demonstrated he knew how to limit his beneficiaries to those "of the blood" by specifically doing so in several documents, and she claims that since he did not do so in the case of the Doris Duke Trust, this court must find that he intended to include adopted children as well as natural children in the term "lineal descendants."
Ms. Heffner offers such evidence as an affidavit by Dr. E. Wayne Carp, an expert on the history of adoption, stating that Mr. Duke would have approved of adoption, particularly adult adoption; his special benevolence toward orphans, possibly as a result of he himself growing up without his mother; the fact that he resided in New York, where adoptions were legal as of 1915; the fact that adult adoption was practiced by Mr. Duke's social peers; Mr. Duke's commitment to African-American causes, which "shows he was ahead of many of his fellow Southerners in social thinking"; statements of people who knew Mr. Duke that he was "forward-thinking" and had a willingness to adapt; his tremendous love for his daughter Doris; the importance of family to Mr. Duke; and his decision to exclude an adopted relative from his will by providing only for "blood relatives."
Ms. Heffner argues that James B. Duke was a sophisticated businessman who must have anticipated later changes in the law that might affect membership in the class. She cites a Kansas decision, In re Estate of Fortney, 5 Kan. App. 2d 14, 611 P.2d 599 (KS 1980) to support this position. *fn2
As stated in Fortney, the tools in aid of the search for the testator's intent are the language contained within the four corners of the document, plus extraneous circumstances surrounding its execution which assist in understanding his true intent and purpose. Id. at 602, quoting In re Estate of Lehner, 219 Kan. 100, 547 P.2d 365, 368-369 (KS 1976). The court in Fortney permitted an adult adoptee to take despite the fact that the will was drawn seventeen years before the adult adoption statute. However, in Fortney, the will did not address the issue of the law to be applied.
Ms. Heffner has been given an opportunity to discover circumstances surrounding the execution of the will which would indicate Mr. Duke's intent. No direct evidence has been found, which is not surprising given that seventy years have elapsed.
While all of the evidence which Ms. Heffner offers is historically interesting, it can be used only to surmise what Mr. Duke's intent might have been. None of it provides any concrete proof whatsoever of his actual intent. Indeed, much of it is irrelevant, and serious questions exist as to whether this evidence could be admitted at trial, although this court has considered all evidence for purposes of this motion. Accordingly, this court finds that Ms. Heffner has failed to demonstrate that any ambiguity exists in the language of the Doris Duke Trust, and that language must govern. This court determines that the plain and only meaning of the words "present existing laws and statutes" is that 1924 law must be used.
Second, Ms. Heffner argues that, even prior to the enactment of New Jersey's adult adoption statute, New Jersey recognized adult adoptions by other states and therefore hers would have been recognized as legal. This argument is irrelevant since Ms. Heffner was not adopted in another state. Furthermore, Mr. Duke chose to have his trust interpreted pursuant to the laws of New Jersey, not of any other state. His precise mandate was that The Trust was "intended to be made, administered and given effect under in accordance with the present existing laws and statutes of said State." There can be no other reading of this language, and it is undisputed that the language refers to the law of New Jersey.
Third, Ms. Heffner argues that since Mr. Duke's will was prepared by a New York attorney, New York law should apply. She relies upon In re Thompson, 53 N.J. 276, 250 A.2d 393 (1969) to support her argument. A careful reading of Thompson discloses that the court there addressed the issue of the New York scrivener only because the will did not state the law to be applied. As stated above, in this case Mr. Duke clearly stated the law of the State of New Jersey must apply.
Fourth, Ms. Heffner argues that New Jersey has applied adoption statutes of other states which were enacted or revised after execution of The Trust. She relies upon the decision in In re Coe, 42 N.J. 485, 201 A.2d 571 (1964). As will be discussed later, Coe is inapplicable given our courts' later decisions on this issue.
Fifth, Ms. Heffner argues that the Trustees are prevented from arguing that she is not a lineal descendant based upon a consent judgment entered in a Somerset County proceeding and a stipulation in a New York action. According to Ms. Heffner, the Trustees had initially refused to provide payments to certain adopted children of the named beneficiaries. However, after the Somerset County suit was filed and discovery commenced, the parties signed the consent agreement, the effect of which was to treat adopted children as lineal descendants. This 1976 consent judgment specifically provides that it is not to be construed as determinative of the settlor's intent. See Certification II of Benjamin Michel in Support of Defendant Heffner's Cross-Motion for Removal, Disqualification and to Strike Certain Allegations at Exhibit 13. Miss Duke and Ms. Heffner also entered into a stipulation on June 21, 1990 in a surrogate court action in New York which provided that Ms. Heffner would not receive income from the trust during Miss Duke's lifetime but that Ms. Heffner reserved her right to make such an application after Miss Duke's death.
The court has reviewed the arguments made to the courts in those two actions and finds that at no time did the Trustees argue that adult adoptees could take. Accordingly the principle of judicial estoppel does not bar their argument here. Levin v. Robinson Wayne & LaSala, 246 N.J. Super. 167, 586 A.2d 1348 (Law Div. 1990). Since both cases were settled on terms that specifically do not affect this case they are not controlling.
Having determined that the language of The Trust governs, this court must now determine the meaning of that language.
No right of adoption existed at common law as to either infants or adults. Such adoptions cannot take place in the absence of statute. The first New Jersey adult adoption statute was enacted on March 25, 1925, approximately 100 days after James Duke's trust was executed. 1925 N.J. Laws 99. It was only then that an adult could be adopted in this state. This court notes that Mr. Duke was still alive as of March 25, 1925 and in fact executed a codicil to his will on October 1, 1925. That codicil did not in any way refer to the newly enacted adult adoption statute.
As stated, the court is convinced that the intent of the settlor, Mr. Duke, can clearly be ascertained on the face of the instrument. Despite extensive discovery there remains no doubt in the court's mind that the phrase in the trust instrument "present existing law" means present law at the time of the execution of the trust instrument in 1924. The language in Article Eighth is clear.
This Indenture . . . is intended to be made, administered and given effect under and in accordance with the present existing laws and statutes of said State. . . and the validity and construction thereof shall be determined and governed in all respects by such laws and statutes (emphasis added).
By this language Mr. Duke expressly mandated the application of 1924 New Jersey law to the construction of the Doris Duke Trust. A testator is presumed to use words in their "ordinary signification." Pierson v. Jones, 108 N.J. Eq. 453, 455, 155 A. 541 (Ch. 1931). Having examined all the evidence presented, and the will itself, the court cannot find any indication that the testator intended other than the ordinary meaning.
This court notes that under the terms of Article Sixth, distributions to be made to certain beneficiaries shall, if such beneficiaries are not living, be distributed "in all respects in accordance with the laws and statutes of the State of New Jersey at the time of the death of such beneficiary. . . ." (emphasis added). Clearly, Mr. Duke was able to distinguish between distributees controlled by 1924 law and law at some future date.
It is undisputed that when Mr. Duke executed the Doris Duke Trust in December, 1924 there was no adult adoption statute in this state. New Jersey's adult adoption statute became effective on March 13, 1925. Consequently, Ms. Heffner could not take under 1924 law.
New Jersey courts have already determined that adult adoptees could not take as lineal descendants in 1924. Commercial Trust Co. of NJ v. Adelung, 136 N.J. Eq. 37, 40 A.2d 214 (Ch. 1944), aff'd, 137 N.J. Eq. 541, 45 A.2d 841 (E. & A. 1946). In that case, the settlor left a share of a trust to his "next of kin." He was survived by two adoptees, one a child and the other an adult. The language of the trust specifically provided that the trust should be distributed to the settlor's "next of kin" according to New Jersey law on distribution of personal property of those dying intestate existing at the time the trust was created. Id. at 39.
At the time of the settlor's death, there was no New Jersey law permitting adult adoption. The court permitted the adopted child, but not the adopted adult to take. The court found there was an assumption that the settlor would have intended his adopted child to take.
In cases where a settlor, grantor, or testator, uses the words "child," "lawful heir," or "next of kin" with reference to himself, the assumption is that he intended to include in those classes adopted children of his own, whether adopted before or after the execution of the trust indenture, deed or will.
Id. at 45. However, the adopted adult, the court said, is not entitled to share in the trust, since he was an adult at the time of his adoption. Id. at 46.
The statute relating to the adoption of adults in New Jersey did not become effective in New Jersey until March 13th, 1925 (P.L. 1925, ch. 99 p. 309), which is subsequent to the date of the trust indenture. Consequently, he cannot be considered as coming within the purview of the statute of distribution in force on the date of the indenture.
Ms. Heffner claims The Endowment has misread the Adelung decision and attempts to distinguish it in two ways. First, she emphasizes that the settlor in Adelung, by providing that the law to be applied was the law of New Jersey in force at this date, froze the class definition of "next of kin" to its 1924 statutory definition. Mr. Duke's language, she argues, on the contrary referred only to the laws and statutes of New Jersey, requiring that the court apply the law as it exists at the time when vesting occurs.
This court fails to see the distinction between the language used by the settlor in Adelung and Mr. Duke's language. Mr. Duke provided that the Doris Duke Trust was to be given effect in accordance with the "presently existing" laws of the state of New Jersey. "Presently existing" necessarily means the laws in force as of December 11, 1924 when the trust was executed, and has the same effect as the settlor's language in Adelung. Ms. Heffner makes a distinction without a difference.
Ms. Heffner's argument that extrinsic evidence confirms that Mr. Duke did not intend to freeze interpretation of the trust under 1924 law is also unpersuasive. All of the evidence proffered by Ms. Heffner to demonstrate ambiguity on the face of the instrument is secondhand. None of the evidence presented, even if all of it is true, indicates Mr. Duke's actual intent; it only allows us to speculate about what his intent might have been. Even Doris Duke's own statements about what she believed her father would have done are unhelpful given that they constitute the opinion of someone who was just twelve years old at the time Mr. Duke died. Given the express mandate of the language in The trust, this evidence is irrelevant.
Ms. Heffner's second argument is that Adelung differs from this case because the settlor in Adelung modified the phrase "next of kin" with the words "of the Settlor", unlike Mr. Duke, who merely provided for payments to the "lineal descendants" of Doris Duke. By merely specifying lineal descendants, she argues, Mr. Duke intended to refer to the class of persons falling within that category as of Doris Duke's death. This interpretation, she asserts, is in accordance with the law existing in 1924. By creating a class gift, she argues, Mr. Duke necessarily ensured that 1993 law would be applied to determine Miss Duke's lineal descendants. Therefore, she alleges acting in accordance with 1924 law actually mandates applying 1993 law.
Identification of the Class
There can be no doubt that Mr. Duke did in fact create a class gift. A class gift is defined as a gift to a group of persons, which group is uncertain in number at the time the gift is made and which is to be ascertained at a future time, who are all to take in equal or other definite proportions. Rippel v. King, 126 N.J. Eq. 297, 8 A.2d 777 (Ch. 1939), aff'd 128 N.J. Eq. 179, 15 A.2d 758 (E. & A. 1940). The share which each member of the class takes is dependent upon the actual number in the class. Ibid. When a class gift is made, the testator is presumed to intend that those shall take it who constitute the class at the time the gift is to take effect, providing no contrary intent is shown. Damron v. Mast, 121 N.J. Eq. 489, 191 A. 467 (Ch. 1937). A class must be determined as of the date of death of the testator, unless the indenture or will plainly indicates otherwise. Adelung, supra, 136 N.J. Eq. 37. Here the instrument clearly requires the determination to be made as of Miss Duke's death, since her lineal descendants cannot be ascertained until her death.
This court is convinced that, under New Jersey law, the meaning of the term lineal descendants must be determined as of 1924, although the identification of the particular persons in the class must be made as of Miss Duke's death in 1993. Trenton Trust Co. v. Gane, 125 N.J. Eq. 389, 393, 6 ...