Complaint to reform a Will examined IN THE MATTER OF THE TRUST OF VIOLET NELSON, DECEASED
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4004-15T1
APPROVED FOR PUBLICATION
March 28, 2018
. APPELLATE DIVISION
_______________________________
Submitted November 6, 2017 – Decided March 28, 2018
Before Judges Sabatino, Ostrer and Whipple.
On appeal from Superior Court of New Jersey,
Chancery Division, Bergen County, Docket No.
P-000001-15.
Chiesa Shahinian & Giantomasi PC, attorneys
for appellants/cross-respondents Jacob
Nelson and Ayelet Nelson, Ariel Nelson and
Alexandra Nelson-Tal (A. Ross Pearlson,
Daniel D. Barnes and Brigitte M. Gladis, on
the briefs).
Lorraine Teleky-Petrella, attorney for
respondent/cross-appellant Jared M. Lina.
The opinion of the court was delivered by
OSTRER, J.A.D.
The principal issue in this appeal is whether a trial court
may look beyond the apparently plain language of a trust that
benefitted the settlor's "grandchildren," to determine whether
the settlor intended to benefit only some of her grandchildren.
We conclude a court may. As the trial court here confined
itself to the words found within the four corners of the trust,
we reverse the grant of partial summary judgment to a claimed
beneficiary, and remand for trial.
I.
The late Violet Nelson left trust property to her
"grandchildren" per capita after the death of her husband, an
income beneficiary. The trust stated that "the then principal
and all accrued or undistributed net income of the trust shall
be distributed in equal shares per capita and not per stirpes to
Settlor's grandchildren who survive Settlor . . . ." On its
face, the trust apparently benefited all six children of
Violet's three children – sons Jacob (known as "Jack") and
Robert, and daughter Jacoba.1
Jack, the trustee, sought a declaratory judgment that
Jacoba's two sons were not included among Violet's
"grandchildren." He maintains that Violet did not consider
Jacoba's sons to be her "grandchildren," because Jacoba married
outside their Orthodox Jewish faith. Jack contends that after
Jacoba's marriage in 1970, Violet mourned her as if she were
dead and cut off contact with her.
1
The trust delayed distribution to any grandchildren under
twenty-one years of age. When Violet executed the trust in
2005, two of the grandchildren fell into that category.
Robert's only child was sixteen. The youngest of Jack's three
children was nineteen.
2 A-4004-15T1
That fact and other extrinsic evidence allegedly illuminate
the restrictive meaning of "grandchildren" that Jack propounds.
The attorney who drafted the trust stated that he understood
that Violet did not count Jacoba's children among her
grandchildren, nor even acknowledge their existence. He used
the word "grandchildren" to include only Jack's and Robert's
children. Although Jack and Violet's husband directed the
attorney to draft the trust, the attorney said that he reviewed
the trust with Violet, explained that only Jack's and Robert's
children would benefit, and she understood.
Jack acknowledges that after years of silence between
Violet and Jacoba, the two attempted reconciliation in 1986.
But he contends relations were cut off again after Violet
learned that Jacoba's children had been baptized. Jack points
to an unprobated will Violet signed in 1988. It identified
Jacoba as her daughter, but omitted Jacoba's sons among the
listed grandchildren, and expressly left nothing to Jacoba or
her "surviving issue." A 2001 codicil also referred only to her
"four grandchildren."
One of Jacoba's sons, Jared Lina, opposed Jack's
declaratory judgment action. Jared and his brother first
learned the trust existed when its scrivener sent him a letter,
asking him to renounce and waive any claim. Jared refused. He
3 A-4004-15T1
contended the trust was clear on its face. He also marshaled
competing extrinsic evidence to show that Violet intended to
bestow her property on her grandchildren without exception. He
presented evidence of the reconciliation between his mother and
Violet in 1986. He included letters in which Violet expressed
her love for Jacoba and alluded to the role her husband played
in the schism between them. Jared also described gatherings
involving his branch of the family and Jack's family, to belie
the claim that his mother's side was "dead" to the rest of the
family. He noted that his mother visited Violet during her
final illness.
Jared filed a counterclaim, alleging that Jack breached his
fiduciary duty by wrongfully retaining income from the trust
after his father died, rather than promptly terminating the
trust and distributing the principal and income to the
grandchildren. Jared also sought an accounting and appointment
of a successor trustee.
After a period of discovery, Jared and Jack filed cross-
motions for summary judgment on the trust's interpretation. 2 The
2
Jack filed his motion on behalf of himself and his three
children as "parties in interest." All four filed the notice of
appeal. However, for convenience, we will refer to appellant as
Jack. We note that neither Robert's son, nor Jared's brother
Jason, formally participated in the litigation. Jason wrote an
email to the trust's scrivener recognizing that Violet never
(continued)
4 A-4004-15T1
trial judge determined that Jared and his brother were trust
beneficiaries. The court relied solely on the plain meaning of
"grandchildren." The judge concluded that In re Estate of
Gabrellian,
372 N.J. Super. 432, 443 (App Div. 2004), which we
discuss below, barred the court from considering extrinsic
materials. The judge acknowledged that had he looked beyond the
trust's four corners, the evidence would have created a genuine
issue of material fact, which would have precluded summary
judgment for either side.
The court later denied Jack's subsequent motion to
reconsider. Jack contended the court should have applied the
New Jersey version of the Uniform Trust Code (NJUTC), L. 2015,
c. 276, codified at
N.J.S.A. 3B:31-1 to -84, which was enacted
while the cross-motions were pending. Jack invoked two sections
of the new law that allow a court to construe or reform a trust
to conform to a settlor's probable intent.
N.J.S.A. 3B:31-31
(Section 31) states, "The court may reform the terms of a trust,
even if unambiguous, to conform the terms to the settlor's
probable intent if it is proved by clear and convincing evidence
that there was a mistake of fact or law, whether in expression
(continued)
intended to leave him a share. He expressed his willingness to
renounce in writing any interest in the trust, provided there
were no negative tax consequences to him.
5 A-4004-15T1
or inducement." The following section states, "Nothing in this
act shall prevent the court from construing the terms of a
trust, even if unambiguous, to conform to the settlor's probable
intent."
N.J.S.A. 3B:31-32 (Section 32).
The court held that the NJUTC did not apply because its
effective date occurred after the decisions on the cross-motions
and the motion to reconsider. See L. 2015, c. 276, § 4 (stating
the act shall take effect on the 180th day after enactment).
The court was unconvinced that Sections 31 and 32 of the NJUTC
applied pursuant to N.J.S.A. 3B:31-84(a)(3). That section
states that, except as otherwise provided, the new law "applies
to judicial proceedings concerning trusts commenced before its
effective date unless the court finds that application of a
particular provision . . . would substantially interfere with
the effective conduct of the judicial proceedings or prejudice
the rights of the parties . . . ." Ibid.
The court had earlier denied Jared's motion to dismiss
Jack's complaint for lack of standing and to appoint a
substitute trustee. In the order denying Jack's motion for
reconsideration, the court granted Jared's request for an
accounting — the court having determined that Jared, as a
recognized beneficiary, had standing to request one. The court
also awarded Jared fees.
6 A-4004-15T1
Jack thereafter appealed from the court's order that found
Jared and his brother to be beneficiaries. Jared cross-appealed
from the order denying his motion to dismiss and to appoint a
substitute trustee.
II.
In considering Jack's appeal from the grant of summary
judgment, we review the trial court's order de novo, and employ
the same standard as the motion judge under Rule 4:46-2(c).
Henry v. N.J. Dep't of Human Servs.,
204 N.J. 320, 329-30
(2010). We do not quarrel with the trial court's assessment
that the evidential materials on file create a genuine issue of
fact as to the intended meaning of the term "grandchildren."
But the trial judge concluded the fact issue was not material,
as he believed he was bound to apply the plain meaning of the
term. As to that legal conclusion, we disagree.
The court's primary goal in interpreting a trust agreement
is to fulfill the settlor's intent. "[T]he goal always is the
ascertainment of the testator's intent and it is not to be
thwarted by unduly stressing 'the literal meaning' of his
words." Fidelity Union Trust Co. v. Robert,
36 N.J. 561, 565
(1962) (quoting Bank of New York v. Black,
26 N.J. 276, 284
(1958)). The court may even read a trust or will "contrary to
its primary signification" if necessary "to prevent the
7 A-4004-15T1
intention of the testator from being defeated by a mistaken use
of language." Id. at 566 (citation omitted); see also In re
Estate of Branigan,
129 N.J. 324, 331-32 (1992) (noting that
under the doctrine of probable intent the courts have "construed
the language of a will in a fashion contrary to its literal,
technical, or settled meaning"); Bottomley v. Bottomley,
134 N.J. Eq. 279, 291 (Ch. 1944) (recognizing judicial power "to
effectuate the manifest intent of a testator by inserting
omitted words, by altering the collocation of sentences, or even
by reading his will directly contrary to its primary
signification is well established").
The Court has acknowledged that in ascertaining intent, its
focus really is probable intent. "[W]hen we say we are
determining the testator's intent, we mean his probable intent."
Fidelity Union,
36 N.J. at 564; see also In re Estate of Payne,
186 N.J. 324, 335 (2006). The Court speaks of "probable intent"
because "it is impossible to determine with absolute certainty
[the testator's] actual subjective intent." Morristown Trust
Co. v. McCann,
19 N.J. 568, 572 (1955).
The Court "continue[s] to adhere to the view of the
doctrine of probable intent expressed in Fidelity Union."
Payne,
186 N.J. at 335. The doctrine does not permit a court to
"conjure up an interpretation or derive a missing testamentary
8 A-4004-15T1
provision out of whole cloth." Engle v. Siegel,
74 N.J. 287,
291 (1977) (quoting In re Estate of Burke,
48 N.J. 50, 64
(1966)). However, a court "may, on the basis of the entire
will, competent extrinsic evidence and common human impulses
strive reasonably to ascertain and carry out what the testator
probably intended . . . ." Ibid. (quoting Burke,
48 N.J. at
64).
The doctrine is enshrined in statute. See
N.J.S.A. 3B:3-
33.1. That states that the trust's language and statutory rules
of construction control "unless the probable intent of such
settlor or of such individual, as indicated by the trust or by
such governing instrument and relevant circumstances, is
contrary."
N.J.S.A. 3B:3-33.1(b). See William A. Dreier, Paul
A. Rowe, and Andrea J. Sullivan, Guidebook to Chancery Practice
in N.J., § V(C)(1) (9th ed. 2014) (noting that
N.J.S.A. 3B:3-
33.1 codifies the judicial doctrine of probable intent).3
The judicial effort to fulfill a settlor's or testator's
probable intent takes two forms: interpretation, and
reformation. It is sometimes difficult to discern which task a
court has undertaken. The former involves finding the meaning
"of language already in the instrument." See Uniform Trust
3
Enactment of the NJUTC did not affect
N.J.S.A. 3B:3-33.1, which
appears consistent with
N.J.S.A. 3B:31-31, -32, quoted above.
9 A-4004-15T1
Code, cmt. to § 415, 7C U.L.A. 515 (2000).4 For example, in In
re Trust Created by Agreement Dated Dec. 20, 1961, ex rel.
Johnson,
194 N.J. 276, 280 (2008), a principal issue involved
interpreting the word "spouses" to determine whether the settlor
intended to benefit "surviving spouses," where the trust
expressly benefitted the settlor's children and "their spouses."
On the other hand, reformation involves remaking or
modifying an instrument, to correct mistakes, to fulfill an
unexpressed intention, or to address circumstances that were
unforeseen. Uniform Trust Code, cmt. to § 415; see, e.g.,
Branigan,
129 N.J. at 335 (reforming a testamentary trust to
account for changes in tax law after testator's death); compare
Restatement (Third) of Prop.: Wills and Donative Transfers §§
11.1 – 11.3 (Am. Law Inst. 2003) (discussing interpretation of
ambiguous provisions of a will or trust), with id. §§ 12.1 –
12.2 (discussing reformation of a will or trust).5
4 Section 31 of the NJUTC is based on Section 415 of the uniform
law. Only the former uses the term "probable intent." Section
415, by comparison, states: "The court may reform the terms of a
trust even if unambiguous, to conform the terms to the settlor's
contention if it is proved by clear and convincing evidence that
both the settlor's intent and the terms of the trust were
affected by a mistake of fact or law, whether in expression or
inducement." Uniform Trust Code, § 415.
5
In interpreting an instrument, the court attempts to ascertain
actual and specific intent, even if not clearly expressed. In
reforming an instrument, the court ascertains actual intent,
(continued)
10 A-4004-15T1
The preponderance-of-the-evidence standard of proof applies
to interpretation; however, the more rigorous clear-and-
convincing standard of proof applies to reformation. See
Fidelity Union,
36 N.J. at 565 (stating "the object is to
ascertain 'the probable intent' of the testator by a
'preponderance of the evidence'"); Pivnick v. Beck,
326 N.J.
Super. 474, 481 (App. Div. 1999) (noting that "[r]eformation of
trust agreements in probate actions requires clear and
convincing proof"), aff'd,
165 N.J. 670, 671 (2000) (noting
"preponderance of evidence to resolve ambiguity in donative
instruments; clear and convincing evidence to reform such
instruments" (quoting Restatement (Third) of the Law Governing
Lawyers § 51 cmt. f (Am. Law Inst. 1998))); see also St. Pius X
House of Retreats, Salvatorian Fathers v. Diocese of Camden,
88 N.J. 571, 581 (1982) (reformation is proved by clear and
convincing evidence); Restatement (Third) Prop. § 10.2, cmt. i;
but see In re Estate of Munger,
63 N.J. 514, 521 (1973) (stating
that a court must be "thoroughly convinced" of a testator's
probable intent, where the interpretative issue pertained to
(continued)
mistakenly expressed, or inferred intent, that is, what the
settlor or testator "probably intended should be the disposition
if the present situation developed." Burke,
48 N.J. at 64.
11 A-4004-15T1
whether the trustee's power to invest in "securities" included
real estate).
The higher standard of proof for reformation is warranted
to prevent reliance on "contrived evidence." Uniform Trust
Code, cmt. to § 415; see also Restatement (Third) Prop. § 12.1,
cmt. e. The NJUTC expressly states that the clear-and-
convincing standard applies to reformation of trust terms to
correct mistakes and conform to the settlor's probable intent.
N.J.S.A. 3B:31-31.6
With respect to interpretation, our courts have long
disapproved the so-called "plain meaning rule," which bars a
court from looking beyond the face of a writing to consider
extrinsic evidence in ascertaining intent. "Evidence of the
circumstances is always admissible in aid of the interpretation
of an integrated agreement. This is so even when the contract
on its face is free from ambiguity." Atlantic N. Airlines v.
Schwimmer,
12 N.J. 293, 301 (1953); see also Conway v. 287 Corp.
Ctr. Assocs.,
187 N.J. 259, 269 (2006) (quoting Schwimmer and
noting that the Court has long followed Professor Corbin's
6
The New Jersey drafters of the NJUTC stated their intention to
preserve existing law pertaining to the doctrine of probable
intent. Sponsor's Statement to Assembly Bill No. 2915, at 37
(March 13, 2014). We therefore presume that it did not intend
to preclude resort to the preponderance-of-the-evidence standard
where discernment of probable intent involves interpretation,
not reformation.
12 A-4004-15T1
"expansive view" of a court's interpretative task). "[I]n
construing contractual instruments, our courts will broadly
search for the probable common intent of the parties, will
consider their relations, the attendant circumstances and the
objectives they were trying to obtain, and will endeavor to find
a reasonable meaning 'in keeping with the express general
purpose.'" Fidelity Union,
36 N.J. at 567 (quoting Tessmar v.
Grosner,
23 N.J. 193, 201 (1957), a contract case). If an
ambiguity exists, then resolution of the document's intended
meaning is a fact issue. Michaels v. Brookchester, Inc.,
26 N.J. 379, 387-88 (1958).
If anything, these principles of interpretation apply with
greater force in interpreting trusts and wills. In construing
contracts, "courts may be confronted with significant problems
of reliance and the troublesome goal of effecting the common
intent of different parties whereas in the construction of
wills, there are fewer problems of reliance and the goal is the
effectuation of the intent of the testator alone." Fidelity,
36 N.J. at 567.7
7
We recognize that our Court has enunciated a less expansive
view of statutory construction. In discharging its
responsibility to effectuate the Legislature's intent, a court
shall "start with the plain language of the statute. If it
clearly reveals the Legislature's intent, the inquiry is over."
State v. Harper,
229 N.J. 228, 237 (2017); see also In re
(continued)
13 A-4004-15T1
The Supreme Court held in Wilson v. Flowers,
58 N.J. 250,
263 (1971), that it does not matter whether an ambiguity was
"latent" — that is, discernable only by resort to extrinsic
evidence — or "patent" — identifiable on the face of the
document. "[I]n deciding whether there is an ambiguity, a court
should always admit extrinsic evidence including direct
statements of intent since experience teaches that language is
so poor an instrument for communication or expression . . . ."
Ibid. Extrinsic evidence shall be considered twice: to
determine if there is ambiguity, and, if there is, to resolve
it. Ibid.; see also In re Estate of Baker,
297 N.J. Super. 203,
212 (App. Div. 1997). If a factual issue remains, the court
(continued)
Kollman,
210 N.J. 557, 568 (2012) ("If the plain language is
clear, the court's task is complete."). Whether this represents
a shift in our jurisprudence, we need not say. Compare
Fidelity,
36 N.J. at 568 (stating, regarding statutory
construction, that "when the probable intent is made manifest,
any language which may read literally to the contrary must give
way"). Our modern Court has not hesitated to look beyond the
apparently plain meaning of a statute when it "would lead to
absurd results," Harper,
229 N.J. at 237, or violate "the
overall statutory scheme." DiProspero v. Penn,
183 N.J. 477,
493 (2005). In any event, a stronger case can be made for
applying the "expansive view" to interpreting donative
instruments, because one is ascertaining the intent of a single
donor; and, unlike a Legislature that can correct its own
mistakes, a donor is often unable to correct or refine the
expression of his or her intent. See Restatement (Third) Prop.
§ 12.1, Reporter's Note 5 to cmt. d.
14 A-4004-15T1
must conduct an evidentiary hearing. Baker,
297 N.J. Super. at
212-13.
"Once the evidence establishes the probable intent of the
testator, 'the court may not refuse to effectuate that intent by
indulging in a merely literal reading of the instrument.'"
Payne,
186 N.J. at 335 (quoting Wilson,
58 N.J. at 260). In
Wilson, the Court held, based on resort to extrinsic evidence,
that a testator's provision that a portion of his residuary
trust be dedicated to "philanthropic causes," meant "charitable
causes," a narrower category.
58 N.J. at 264.
Against the backdrop of this substantial authority, we
cannot endorse the general statement in Gabrellian,
372 N.J.
Super. at 443, upon which the trial court relied (and for which
we intend no criticism), that "[t]he doctrine of probable intent
is not applicable where the documents are clear on their face
and there is no failure of any bequest or provision." As noted,
a court may resort to extrinsic evidence to unveil ambiguity
that does not appear on the document's face.
Nor is our Court's long-held resistance to the "plain
meaning rule" limited to cases where there is a failure of a
bequest. For example, in Branigan,
129 N.J. at 336, the Court
was faced not with a failure of a bequest; just a higher tax
bill under laws enacted after the will's execution. Given the
15 A-4004-15T1
testator's overarching intent to reduce tax liability, the Court
reformed the terms of a testamentary trust to "derive maximum
benefits under the federal estate tax laws." Id. at 335-36.
See also Payne,
186 N.J. at 338 (applying probable intent
doctrine to interpret a "just debts clause" to require estate to
pay off mortgage debt on two properties, where will expressly
referred only to one of them).
We should not tolerate interpreting a trust to provide
benefits the settlor did not intend. "The claim of an
unintended taker is an unjust claim." Restatement (Third) Prop.
§ 12.1 cmt. b. In In re Estate of Bonardi,
376 N.J. Super. 508,
517-18 (App. Div. 2005), the court relied on the trust's text,
and extrinsic evidence from the scrivener, to bar "acceleration
and termination of [a] trust [that] would have resulted in a
distribution to a person other than those intended by the
testator." The settlor's probable intent deserves vindication
to bar unintended takers, as well as to protect intended
beneficiaries.
In any event, the statement in Gabrellian was unnecessary
to its holding. The testator's adult son sought reformation of
his father's will. He was not suggesting that any particular
word or phrase was ambiguous and should be construed in his
favor. Aside from a $625,000 bequest, the will left the
16 A-4004-15T1
father's entire residuary estate, including business assets, to
his wife. The son contended that, despite the will's clear
language, his father intended to leave him in control of the
father's business.
372 N.J. Super. at 440. The son failed to
marshal evidence of his father's purported intent. The court
found, "There is nothing to support's [the son's] claim . . . to
retain control of his father's businesses." Id. at 443.
III.
Jack's principal argument depends on interpretation of the
trust's language. He contends the simple word "grandchildren"
had a meaning personal to Violet, which excluded Jacoba's sons.
Alternatively, he contends that the scrivener made a mistake, by
failing to identify the grandchildren Violet intended to
benefit; and the trust should be reformed to conform to that
intent. In assessing both arguments, the trial court was
obliged to consider the extrinsic evidence Jack presented.
We are satisfied that, extending to Jack all favorable
inferences, extrinsic evidence demonstrated that
"grandchildren," as the term was used in this trust, was
ambiguous. While "grandchildren" generally means "the children
of children," Jack presented evidence that Violet used the term
in a different sense, personal to her. "[A] latent ambiguity
arises if the donor's personal usage differs from the ordinary
17 A-4004-15T1
meaning of a term used in the text." Restatement (Third) Prop.
§ 11.2 cmt. r; see also id., illus. 22 (where extrinsic evidence
demonstrated that testator habitually referred to his actual
grandchildren as "cousins," will that left property to "my
cousins" could be interpreted to benefit the grandchildren); id.
§ 14.10 cmt. d (although generally a "term of a relationship in
a class gift does not include relatives by marriage," contrary
intention may be demonstrated by "[e]xtrinsic evidence that the
donor habitually referred to his or her relatives by marriage as
his or her relatives").
Jack has presented sufficient extrinsic evidence to support
a conclusion that "grandchildren" meant not all children of
Violet's children, but the children of her sons, who continued
to practice her religion, and not the sons of her daughter who
inter-married. Having established ambiguity, Jack is obliged to
demonstrate by a preponderance of the evidence that his proposed
meaning is the one that fulfils Violet's intent.8 He may do so
8
Although the scrivener here stated he used "grandchildren" to
conform to Violet's personal sense of the term, use of a
professional scrivener may tend to counter evidence of personal
usage. Restatement (Third) Prop. § 11.2 cmt. r. Also, although
a scrivener may relate objective manifestations of a settlor's
intent, such as statements and conversations with the settlor,
In re Trust Created by Agreement,
194 N.J. at 282, and the
scrivener's own "rationale for selecting certain language," id.
at 285, a scrivener may not offer a lay opinion about a
settlor's "unspoken thought processes," id. at 283.
18 A-4004-15T1
by marshaling extrinsic evidence. Of course, Jared may counter
that with evidence of his own.9
Even if the court as fact-finder is not persuaded that
"grandchildren" excluded Jacoba's children, Jack should be
allowed to establish that the scrivener made a mistake in using
the word, and in drafting the trust without identifying the four
grandchildren Violet intended to benefit. That would require
reformation of the trust. Jack would bear the burden of
demonstrating that general intent by clear and convincing
evidence.
Given our disposition, we need not reach Jack's contention
that
N.J.S.A. 3B:31-31 and -32 of the NJUTC apply pursuant to
N.J.S.A. 3B:31-84. Under prior law, as we have described, the
trial court was obliged to consider extrinsic evidence.
Finally, Jared's cross-appeal lacks sufficient merit to
warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
Reversed and remanded. We do not retain jurisdiction.
9
For example, although Jack relies on Violet's explicit
exclusion of Jacoba's children in her will as evidence of a
similar intention in the trust, the omission of such an explicit
exclusion in the trust may instead reflect her intent to include
all the children of her children.
19 A-4004-15T1
Tuesday, May 22, 2018
Complaint to reform a Will examined IN THE MATTER OF THE TRUST OF VIOLET NELSON, DECEASED
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment