Opinion ID: 1780972
Heading Depth: 2
Heading Rank: 1

Heading: The In Terrorem Clauses

Text: The parties agree that only one Alabama case exists dealing with the enforceability of an in terrorem clause. In Donegan v. Wade, 70 Ala. 501, 505 (1881), the will provided: `It is my will, that if any one of my children shall resist the probate of my will, or petition to break or set it aside, such child or children shall not have any part of my estate whatever, and the portion intended for such child shall be distributed among those of my children mentioned in item No. 8 who shall not oppose my will, in the same way that the balance of my estate is therein directed to be distributed; the child or children opposing my will being excluded from any participation therein.' This Court stated: It is not denied that this [in terrorem clause] is a legal or valid condition, when attached to a legacy or devise. Its purpose, too, is clear. It was designed to prevent the inauguration or prosecution of a suit or contest in the courts, commenced with the view of defeating the will of the testator as he had seen fit to make it. Such contests often breed irreconcilable family feuds, and lead to disgraceful family exposures. They not unfrequently, too, waste away vast estates, by protracted and extravagant litigation. 70 Ala. at 505. One beneficiary, a daughter of the decedent who had filed a petition to contest the will, resisted forfeiture by relying on the fact that the petition had been dismissed. The Court rejected her argument that the fact that the petition had been dismissed was of consequence, noting that her conduct in filing the contest constituted opposition to that unlitigated probate or establishment of her father's will, which it was his great care to secure. 70 Ala. at 506. In other words, she had violated the express terms of the in terrorem clause. The other beneficiary, a brother of the petitioner in the will contest, resisted forfeiture on the ground that his sister, and not he, had filed the contest. This Court found evidence of the beneficiary's behind-the-scenes payment of expenses and management of the litigation as sufficient to invoke the in terrorem clause as to the brother. The Court held: To relieve him under such circumstances, and, at the same time, to visit her with the penalty of a forfeiture, would be, in effect, to permit the law to place a premium on artifice, and to suffer the just reproach of seeking after the shadow instead of the substance. 70 Ala. at 506. As was the case in Donegan, [5] the issue of the enforceability of an in terrorem clause has not been asserted in this case. We treat such clauses as enforceable for purposes of this appeal. Both sides contend that the in terrorem clauses are unambiguous, but both sides insist on different results from the plain language. Royce and KMC, however, now artfully suggest on appeal that an ambiguity might exist in the in terrorem clauses. [6] The simple fact that a writing is described by adversaries as unambiguous while each insists on a different interpretation does not render the writing ambiguous. Wayne J. Griffin Elec., Inc. v. Dunn Constr. Co., 622 So.2d 314, 317 (Ala.1993); Englund's Flying Serv., Inc. v. Mobile Airport Auth., 536 So.2d 1371 (Ala. 1988). A document is unambiguous if only one reasonable meaning emerges. Wayne J. Griffin Elec., Inc.; Reeves Cedarhurst Dev. Corp. v. First Amfed Corp., 607 So.2d 184 (Ala.1992). Whether a document is ambiguous is a question of law that this Court reviews de novo. See Mobile Eye Center, P.C. v. Van Buren P'ship, 826 So.2d 135, 138 (Ala.2002) (`Thus, we apply a de novo review to a trial court's determination of whether a contract is ambiguous and to a trial court's determination of the legal effect of an unambiguous contract term.') (quoting Winkleblack v. Murphy, 811 So.2d 521, 525-26 (Ala.2001)). We begin our search for the existence of one reasonable unambiguous meaning with a parsing of the relevant portions of the in terrorem clauses. The language in the trusts and the will is virtually the same; we focus on the clause found in the will. Shorn of unnecessary verbiage, the in terrorem clause reads as follows: If either of my sons in any manner, directly or indirectly, contests or attacks the validity of this Will or the validity of any trust ... or any disposition made under this Will or under any Trust ... by filing suit against my executor or the trustee of any trust created by me or otherwise, then any share or interest given to such son ... shall be disposed of in the same manner as if such son and all of his descendants had predeceased me. The trial court concluded that Knox did not violate that aspect of the in terrorem clauses prohibiting an attack on the validity of the will or the trusts. We agree. The trial court concluded that Knox violated the in terrorem clauses in that he attacked the validity of any disposition made under this Will or under any Trust. (Emphasis added.) Because Knox's claims, if successful, would have increased his share of the distribution under the trusts, the trial court concluded that Knox had violated that portion of the in terrorem clause. The trial court obviously has treated disposition as being synonymous with distribution. The trial court, in its order, stated: However, the court does not agree that he [Knox] is not contesting or attacking distributions and/or dispositions under the will and trust. (Emphasis added.) By the time the trial court stated its ultimate conclusion in the order, the word dispositions had been dropped from the lexicon: By filing this action Knox, in his capacity as co-executor, co-trustee, and beneficiary, has attacked and contested distributions under the will and trusts and he has also sued the other co-executors and co-trustees in an effort to change distributions. (Emphasis added.) Knox directs our attention to § 43-2-640, Ala.Code 1975, which authorizes an executor or administrator to make distribution of the whole or any part of the property once satisfied that the estate is solvent. Obviously, under this statute, distribution of estate assets is a function of the executor or administratornot the testator. Knox further cites § 43-2-691, dealing with the summary disposition of small estates and defining distributees as [t]he persons who are entitled to the personal property of a decedent under the terms of a testamentary disposition or under the Alabama descent and distribution statutes. Again, the function of an executor or administrator with reference to the distribution of estate assets is set apart from the function of the testator with reference to testamentary disposition. This dichotomy recurs in other parts of the Code. For examples of the use of disposition in the context of activities of the testator, see § 43-8-222 (The intention of a testator as expressed in his will controls the legal effect of his dispositions. The rules of construction expressed in the succeeding sections of this article apply unless a contrary intention is indicated by the will.); § 35-4-295 (When a power to dispose of lands is confined to a disposition by devise or will, the instrument of execution must be by will, duly executed as wills of real estate are required by law.); § 43-8-141 (A will may dispose of property by reference to acts and events which have significance apart from their effect upon the dispositions made by the will, whether they occur before or after the execution of the will or before or after the testator's death. The execution or revocation of a will of another person is such an event.); § 43-8-221 (The meaning and legal effect of a disposition in a will shall be determined by the local law of a particular state selected by the testator in his instrument unless the application of that law is contrary to the provisions relating to the elective share described in sections 43-8-70 through 43-8-75, the provisions relating to exempt property and allowances described in sections 43-8-110 through 43-8-113, or any other public policy of this state otherwise applicable to the disposition .); and § 43-8-229 (A general residuary clause in a will, or a will making general disposition of all of the testator's property, does not exercise a power of appointment held by the testator unless specific reference is made to the power or there is some other indication of intention to include the property subject to the power.). On the other hand, for references to activities on the part of persons other than a testator with respect to distribution, see § 12-13-1(5), stating that the probate court shall have jurisdiction over [t]he sale and disposition of the real and personal property belonging to and the distribution of intestate's estates; and Commentary to § 43-2-830 (In the absence of testamentary disposition, personal property nevertheless devolves to personal representative for distribution to decedent's heirs or to those indicated as substitutes for them in cases involving disclaimer or renunciation or other circumstances affecting devolution of intestate estates.) (2000 Cum.Supp.). The separate functions of distribution and disposition have been addressed in the same statute. See, e.g., § 35-4-297 (When a disposition under a power is directed to be made by, between or among several persons, without specifying the sum or share to be allotted to each, all the persons designated are entitled to an equal proportion; but when the terms of the power import that the estate or fund is to be distributed between the persons so designated, in such manner or proportion as the trustee of the power may think proper, the distribution or apportionment made by such trustee cannot be impeached on the ground that it is unsubstantial, illusory or nominal.); the previously referenced definition of distributees in § 43-2-691(1) (The persons who are entitled to the personal property of a decedent under the terms of a testamentary disposition or under the Alabama descent and distribution statutes.); and § 43-2-692(h) (To each surviving spouse, child or other distributee who is entitled to take under Alabama's descent and distribution laws, or, alternatively, to each devisee entitled to take under any testamentary disposition of the decedent.). The pattern of confining the application of the term disposition to the acts of the testator and the term distribution to the duties of the executor or the administrator is supported by definitions in Black's Law Dictionary (7th ed.1999). Disposition is defined as [t]he act of transferring something to another's care or possession, esp. by deed or will; the relinquishing of property ; closing of estate is defined as [t]he completion of the administration of a decedent's estate, brought about by the administrator's distribution of estate assets, payment of taxes, and filing of necessary accounts with the probate court; distribution is defined as, [a]t common law, the passing of personal property to an intestate decedent's heirs. Cf. descent (1). 2. The act or process of apportioning or giving out; a probate distribution is defined as [t]he judicially supervised apportionment and divisionusu. after the payment of debts and chargesof assets of an estate among those legally entitled to share; a trust distribution is defined as [t]he cash or other property paid or credited to a trust beneficiary; distributive clause is defined as [a] will or trust provision governing the distribution of income and gifts; and distributive share is defined as [t]he share that an heir or beneficiary receives from the legal distribution of an estate. See also State ex rel. Dryden v. Thym, 282 S.W.2d 178 (Mo.Ct. App.1955). [7] Royce and KMC dismiss Knox's contention that the trial court erred when it treated distributions and dispositions synonymously as splitting hairs. In this case of splitting heirs, we cannot embrace such a casual dismissal of the trial court's erroneous conflation of the terms distribution and disposition. Nor do we consider our construction hypertechnical. The record makes it clear that we are not dealing with words clumsily chosen by an unsophisticated layperson, as is often the case with other written instruments. Mrs. Kershaw's wills and trusts were drafted by competent counsel. We find no basis in this record upon which to conclude that Knox has challenged any act of Mrs. Kershaw as settlor of the trusts or as testatrix with respect to the dispositions made in either the trusts or the will. Knox's challenges leave intact the formulas in the trusts and the will; they affect only the amount of the payout when those formulas are applied to the assets. Consequently, we cannot say that Knox has directly or indirectly, contest[ed] or attack[ed] ... any disposition made under this Will or under any Trust created by me. We must therefore look elsewhere for a violation of the in terrorem clauses. The trial court also concluded that Knox had violated the in terrorem clauses by petitioning to have Royce and Davis joined as coplaintiffs or dismissing them as coexecutors and cotrustees; the trial court concluded that his doing so constituted action that otherwise violated the in terrorem clause. However, the phrase or otherwise in the in terrorem clause appears after the reference to the condemned conduct of contesting or attacking the validity of the will or the trusts or any disposition under the will or trusts. Specifically, after listing the condemned acts, the in terrorem clauses provide that those acts are accomplished by filing suit against my executor or the trustee of any trust created by me or otherwise. (Emphasis added.) Knox contends that the phrase or otherwise refers to any trust created by Royce Sr. Even conceding, as Royce and KMC contend, that the phrase or otherwise refers to some action other than filing a lawsuit against the executor or the trustee, in the absence of Knox's attacking or contesting the validity of the will or the trusts or attacking or contesting the disposition made under the will or the trusts, it is not necessary to reach the scope of any restriction in the in terrorem clauses on the means employed to reach those ends. Having concluded that the in terrorem clauses are not ambiguous, i.e., that from a reading of those clauses one reasonable meaning emerges and that Knox has not violated the letter of the in terrorem clauses, we must return to Donegan. The sister in Donegan who filed the contest clearly violated the letter of the in terrorem clause. However, this Court found her brother, who had coached from the sideline, just as guilty, observing, [a]nd the participation of David Wade, Jr., in such contest, was of the same character, however deficient in the candor of open resistance. 70 Ala. at 506. The brother, by aiding and abetting behind the scenes, violated the spirit, if not the letter, of the clause. We must decide whether this Court's rejection in Donegan of an artifice to avoid the impact of the in terrorem clause permits an expansive approach to the application of the in terrorem clauses now before this Court so as to warrant the conclusion that Knox, like the brother in Donegan, also violated the spirit, if not the letter, of the clauses and is therefore subject to the penalty of forfeiture. We answer that question in the negative. Unlike the case here presented, at least one of the beneficiaries in Donegan clearly violated the letter of the unambiguous in terrorem clause. The court in Donegan was confronted with the prospect of the unpalatable disparate treatment of two parties. To be sure, a literal application of the in terrorem clause would have spared the brother from forfeiture. However, reliance upon Donegan as support for enforcing an in terrorem clause in all instances where the court finds a violation of the spirit but not the letter of such a clause would embrace a rule of construction favoring forfeiture. As a general proposition, in settings other than an in terrorem clause, this Court has embraced a policy of strict construction of contractual provisions calling for forfeiture. See, e.g., Hunter-Benn & Co. v. Bassett Lumber Co., 224 Ala. 215, 222, 139 So. 348, 353 (1932) (the rule of general application is that stipulations in contracts intended to work a forfeiture of a valuable right will be strictly construed, and strict compliance therewith by the party claiming the forfeiture will be exacted, and doubtful provisions will be resolved against the right to claim such forfeiture). We are persuaded by the weight of authority from other jurisdictions as expressed in Claudia G. Catalano, Annotation, What Constitutes Contest or Attempt to Defeat Will Within Provision Thereof Forfeiting Share of Contesting Beneficiary, 3 A.L.R. 5th 590 § 2[a] (1992) (Consistent with the often expressed view that the law abhors a forfeiture, no-contest provisions are looked upon with some disfavor and have been strictly construed.... A breach of a forfeiture clause will be declared only when the acts of a party come strictly within its expressed terms.). The holding in Donegan imposing a penalty for a violation of the spirit and not the letter of the in terrorem clause is limited to the facts presented therewhere another beneficiary was guilty of a clear violation of the letter of the in terrorem clause. Even if we were disposed to treat Donegan as establishing a rule whereby the penalty for violating an in terrorem clause can be imposed in all cases when the spirit, but not the letter, of the clause has been violated, we would have to face the practical problem of determining the spirit of the in terrorem clause in a setting, such as is presented here, where the in terrorem clause, as we have previously determined, is unambiguous. The trial court therefore erred in admitting parol evidence concerning the testator's intention. [8] See Ex parte Employees Retirement Sys. Bd. of Control, 767 So.2d 331, 334-35 (Ala.2000) (This Court has stated that in interpreting a will `[e]xtrinsic evidence is not admissible to vary, contradict or add to the plain and unambiguous language of the will.' Cook v. Morton, 254 Ala. 112, 116, 47 So.2d 471, 474 (1950). This Court often has stated that it will not look beyond the four corners of an instrument unless the instrument contains latent ambiguities. Martin v. First Nat'l Bank of Mobile, 412 So.2d 250, 253 (Ala.1982).). This problem is avoided by limiting Donegan to instances where there has been a clear violation of the unambiguous terms of an in terrorem clause by at least one beneficiary. Because no violation of the in terrorem clause occurred here, we need not reach Knox's contention that we should recognize a good-faith exception to the enforcement of such clauses. We reverse the trial court's judgment insofar as it held that Knox violated the in terrorem clauses.