Case Title: Matter of Estate of Nicolaus

Citation: 366 N.W.2d 562

Docket Number: 84-458

State: iowa

Court: Iowa Supreme Court

Date: 1985-04-17T00:00:00Z

Document:
366 N.W.2d 562 (1985) In the Matter of the ESTATE OF Harry G. NICOLAUS, Deceased. No. 84-458. Supreme Court of Iowa. April 17, 1985. *563 J.L. Kuehnle, Mechanicsville, and David A. Elderkin of Elderkin, Pirnie, Von Lackum & Elderkin, Cedar Rapids, for appellant Sheryl L. Nicolaus. Jon R. Pearce and Mark R. Gillett of Stanley, Lande, Coulter & Pearce, Muscatine, for appellee trustee. Considered by UHLENHOPP, P.J., and McCORMICK, SCHULTZ, CARTER, and WOLLE, JJ. UHLENHOPP, Justice. This appeal involves construction of the term "issue" in a will. Testator Harry G. Nicolaus was a successful banker and a man of means in Wilton, Iowa. He and his wife Edith had two children, Harold G. and Robert H. Nicolaus. As adults, both sons worked in the bank until a later time when Robert took over the bank's insurance business; he thereafter operated that business in the same building. The Nicolauses were a closely-knit family. Harold and his wife Grayce had two children, Theresa A. and George R. Nicolaus. In 1951 Robert married Helen Arp, the daughter of Mr. and Mrs. Fred Bohnsack. Helen had been married before and was divorced. The divorce estranged Helen's parents from her, and she did not inherit from them. Helen had custody of a daughter from her first marriage, Sheryl L. Arp, born in 1946, whom she brought into her marriage with Robert. From the beginning Sheryl was taken in by the entire Nicolaus clan as one of the family. Although Sheryl used the name Nicolaus, Robert did not immediately adopt her. Helen testified regarding adoption proceedings: In 1953 Robert and Helen had a son, Robert H. Nicolaus II (called "Nicky"). Testator drafted legal instruments of various kinds for bank customers. In 1956 he drafted and typed his own will consisting of eighteen paragraphs on three and one-half pages. The will named Edith as executrix and contained a residuary trust with the net income to go to Edith as long as she lived and this remainder clause: Testator named the Wilton Savings Bank as trustee. About five months after executing the will, testator died, survived by all the members of the family we have named. His will was admitted to probate and the residuary trust went into operation. In 1959 Robert adopted Sheryl; she was then thirteen years old. In 1975 Robert died, survived by Helen, Sheryl, and Robert II. In 1977 Robert II died, unmarried and childless. In 1982 Edith died. At that time testator's son Harold was alive but testator's son Robert was deceased, and Robert's only surviving child was his adopted daughter Sheryl. Harold claims that under the will Sheryl is not "issue" of Robert, so that he, Harold, takes the whole remainder of the trust. Sheryl claims that she is Robert's "issue" so that Harold and she divide the remainder. The trustee brought this declaratory judgment action to resolve the question. After trial, the court held that Harold takes the whole remainder. Sheryl appealed. We review do novo. Russell v. Johnston, 327 N.W.2d 226, 228 (Iowa 1982). The question, of course, is whether Sheryl takes as "issue". The question may be broken down into two parts. First, is Sheryl "issue" as to her adoptive father Robert? That is, if Robert had left a will giving his own property to his issue, would Sheryl have taken? If so, then second, is Sheryl "issue" of Robert as to testator Harry G. Nicolaus? That is, under the clause of the will of Harry G. Nicolaus giving part of the remainder to Robert's issue, does Sheryl take? I. At the time testator made his will our statute provided in section 633.223 of the Iowa Code of 1954: *565 At the time of Edith's death, the statute provided in section 633.223 of the 1981 Code: Under similar statutes several courts have stated that as between the adopter and the adoptee, the latter is the "issue" of the former, and we so hold in the absence of language in the will, not present here, showing an intent to limit "issue" to biological descendants. Southside Baptist Church v. Drennen, 362 So. 2d 854 (Ala. 1978); In re Heard's Estate, 49 Cal. 2d 514, 319 P.2d 637 (1957); Wilmington Trust Co. v. Chichester, 369 A.2d 701 (Del.Ch. 1976), 377 A.2d 11 (Del.1977); Wilmington Trust Co. v. Haskell, 282 A.2d 636 (Del.Ch. 1971); Breckinridge v. Skillman's Trustee, 330 S.W.2d 726 (Ky.1959); In re Holden's Trust, 207 Minn. 211, 291 N.W. 104 (1940); In re Bowen's Estate, 66 Misc.2d 122, 320 N.Y.S.2d 186 (1971); Graves v. Graves, 79 Ohio App. 262, 155 N.E.2d 540 (1956); Dollar Savings & Trust Co. v. Musto, 88 O.L.A. 62, 181 N.E.2d 734 (App. 1961). But see Campbell v. Musart Society of the Cleveland Museum of Art, 72 Ohio App. 46, 131 N.E.2d 279 (1956) (language of particular statute deprived adoptee of right to take). If the present gift to "issue" had been in will of Robert, Sheryl would have taken as Robert's issue. II. The other part of the question is whether the result is different because the gift was in the will of a stranger to the adoption, Harry G. Nicolaus. This court formerly applied the stranger to the adoption rule, which severely restricted the scope of clauses in wills and grants with respect to children adopted by others. Schaefer v. Merchants National Bank, 160 N.W.2d 318 (Iowa 1968); Cook v. Underwood, 209 Iowa 641, 228 N.W. 629 (1930); Warden v. Overman, 155 Iowa 1, 135 N.W. 649 (1912). We subsequently reversed the presumption and overturned those decisions in Elliott v. Hiddleson, 303 N.W.2d 140 (Iowa 1981). See also In re Wright's Estate, 241 Iowa 349, 41 N.W.2d 80 (1950). Elliott involved a life estate followed by a gift to grandchildren or their "lineal heirs at law." Id. at 142. The question was whether adopted grandchildren took. After discussing Schaefer, Cook, and Warden we stated: Id. at 144 (citations omitted). Testator died in 1956 and Elliott was decided in 1981. Court decisions, however, normally operate retrospectively as well as prospectively, unless they are "Sunbursted", that is, they announce that they operate prospectively only. Beeck v. S.R. Smith Co., 359 N.W.2d 482, 484 (Iowa 1984). Nothing in Elliott indicates that it is restricted to prospective operation. It therefore governs testator's will. III. When we rejected the stranger to the adoption rule in Elliott, however, we laid down two qualifications. If adoption is consciously used to frustrate a testator's normal expectations, Elliott will not be applied. Elliott, at 144-45 ("we will not permit the conscious use of adoption as a means of upsetting a transferor's normal expectations"). Nothing in this case suggests such a use of adoption. The evidence shows an intent by Robert, before he and Helen married and before testator made his will, to adopt Sheryl. Evidently complications intervened, and the adoption was not accomplished until later. It was achieved, however, when Sheryl was but thirteen years old. We find nothing in the record to suggest that Robert and Helen consciously used adoption to upset testator's plans. On the contrary, the adoption appears to have resulted from Robert's normal and commendable desire to have Sheryl be his own child. The other qualification is that a testator retains the right to distinguish between natural and adopted children as his beneficiaries. We stated: Id. at 144. Thus we have held that by a gift to the heirs "of her body", a grantor has indicated an intent to exclude an heir by adoption; adopted children are not of the "body", and we cannot ignore the express language employed by the grantor. Skoog v. Fredell, 332 N.W.2d 333 (Iowa 1983). See also Bladt v. Bladt, 191 Iowa 1344, 181 N.W. 765 (1921). While acknowledging that Elliott rejected the stranger to the adoption rule, Harold contends that the circumstances here demonstrate "a contrary intent" within the second Elliott qualification. One of the circumstances relates to three monetary bequests in the will. When testator made the will in 1956, he had three grandchildren: Theresa, George, and Robert II. Sheryl lived with Robert and Helen, but she had not been adopted. She was not a child or heir of Robert nor a grandchild or heir of testator. In paragraphs 4, 5, and 6 of the will testator gave $5000 to "my Granddaughter, Theresa", $5000 to "my Grand-son, George", and $5000 to "my Grand-son Robert II". He did not make a similar bequest to Sheryl (although the record shows that Edith as executrix paid such bequests to both Robert II and Sheryl in the form of stocks). We do not find this circumstance to be sufficient to establish a "contrary intent" within the Elliott qualification. Sheryl had not then been adopted; she was not Robert's daughter. Testator would know, however, that between the time of his death and Edith's death a number of changes in the family were possible, births, adoptions, deaths. He did not designate by name the individuals who would take at Edith's death if Harold or Robert did not survive Edith; he used the term issue. The identity of that issue would be ascertained at Edith's death, was subject to change until then, and could not be known beforehand. Smith v. Harris, 227 Iowa 127, 287 N.W. 255 (1939). Testator must have known that the makeup of the class would be determined at that later date, and that the class might consist of all or some who were his *567 grandchildren living in 1956, might include none of them, and might include others. Another circumstance Harold relies on relates to a conversation he testifies he had with testator concerning the will. We preface that testimony with a letter Harold wrote. In 1977 Robert II (Nicky) died, and Sheryl was executor of his will. Her attorney wrote Harold inquiring whether Nicky had an interest in the Harry G. Nicolaus trust which should be included in Nicky's estate. Harold responded by mail directly to Sheryl, and stated in part: (Emphasis added.) At trial, Harold was unable to identify "legal counsel" mentioned in the letter, did not bring forth such counsel, and testified he did not agree with the legal advicealthough he reported it without expressing disagreement in the letter to the potential beneficiary. Harold's testimony in the 1983 trial contains the following (objections, arguments, and rulings omitted): Preliminarily, an evidentiary problem arises concerning this testimony: whether it is admissible at all in view of the parol evidence ruleendeavoring to show by testator's parol utterances that he did not intend to include Sheryl in the will. See In the Matter of the Estate of Anderson, 359 N.W.2d 479 (Iowa 1984). Putting that problem aside, the basic question relates to the weight and value of the quoted testimony. In determining credibility, financial interest is a consideration, and the witness Harold had many thousands of dollars at stake. Another consideration is Harold's previous letter reciting the opinion of his unnamed attorney contrary to Harold's present positionwithout any disagreement expressed by Harold. Still another factor is Harold's silence about the parlor incident over the years, and his recitation of it after testator and all of the principals, who might have shed light by testimony, were deceased. Entirely separate from the dead man's statute (now itself deceased), this court has long applied the rule that testimony of claimed conversations with a person since deceased should be scrutinized with care, for the very practical reason that the decedent is unable to relate his version or perhaps testify as to the nonexistence at all of such a conversation. The survivor therefore has no fear of contradiction. As stated in First Trust Joint Stock Land Bank v. McNeff, 220 Iowa 1225, 1231, 264 N.W. 105, 108 (1935): *570 Applying the principle, see Kufer v. Carson, 230 N.W.2d 500 (Iowa 1975); Byers v. Byers, 242 Iowa 391, 46 N.W.2d 800 (1951); Evans v. Evans, 230 Iowa 434, 297 N.W. 867 (1941); Williams v. Harrison, 228 Iowa 715, 293 N.W. 41 (1940); In re Bremer's Estate, 151 Iowa 449, 131 N.W. 667 (1911); Boeck v. Milke, 141 Iowa 713, 118 N.W. 874 (1908). Voicing similar views, see Wustum v. Kradwell, 270 F. 546 (7th Cir. 1920); In re Seaman, 27 F. Supp. 760 (E.D. Mo.1939); First National Bank v. Rovell, 51 Ill.App.2d 282, 201 N.E.2d 140 (1964); In re Maijgren's Estate, 193 Misc. 814, 84 N.Y.S.2d 664 (1948); Wargo v. Wargo, 48 Misc.2d 349, 265 N.Y.S.2d 37 (1965); Heuer v. Heuer, 7 Wis.2d 208, 96 N.W.2d 485 (1959). Our basic disagreement with Harold in this case relates to the strength of the presumption "that a testator intended to treat adopted children in the same manner as natural children," and in the strength a counter-showing must possess to overcome that presumption and establish that a testator intended "to distinguish between natural and adopted children as objects of his bounty." Elliott, at 144. In our de novo review we are obliged to find the facts. Assuming without deciding that Harold's quoted testimony is admissible, and also that it generates a fact question as to whether testator intended to distinguish between natural and adopted issue, we find as a fact that such testimony is of insufficient weight and value to overcome the usual presumption the testator intended to treat an adopted child the same as a natural child. We do not imply that the result would be different if Harold's testimony were accepted at full value; we do not reach that question. We have examined the other circumstances that Harold contends establish an intent to exclude the adopted child, but we find they do not rise to that level. We thus hold that Sheryl shares equally in the remainder with Harold. REVERSED.