Fiduciary Trust Co. v. Manchester H. Wheeler Jr.
2016 Me. LEXIS 25, 132 A.3d 1178, 2016 ME 26 (2016)
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Rule of Law:
The doctrine of res judicata does not bar litigation over the interpretation of an unambiguous trust provision if a prior court decision construed a different provision of the same trust that was triggered by a different contingency and used different controlling language. A court will enforce the plain meaning of a trust term that directs distribution according to intestacy laws in effect at a future date.
Facts:
- In 1911, Elizabeth S. Haynes created a trust, later amended in 1918.
- Paragraph 1 of the trust directed that income be paid to her two daughters, Hope Manchester Wheeler and Muriel Sturgis Haynes, or their surviving 'issue.'
- Paragraph 2 of the trust directed that 21 years after the death of the last survivor of her daughters and another individual, the trust principal would be distributed according to the 'intestate laws of Maine then in force.'
- One daughter, Hope Manchester Wheeler, had both a biological son and an adopted daughter.
- The other daughter, Muriel Sturgis Haynes, had two adopted children but no biological children.
- Upon Hope Manchester Wheeler's death in 1955, a legal question arose regarding whether her adopted child qualified as 'issue' to receive income under Paragraph 1.
- The trust terminated on December 26, 2013, triggering the distribution of the principal as governed by Paragraph 2.
- At the time of the trust's termination in 2013, Maine's intestacy laws treated adopted children as the legal children of their adoptive parents for all inheritance purposes.
Procedural Posture:
- In 1957, Fiduciary Trust Company petitioned the Supreme Judicial Court of Maine in Fiduciary Trust Co. v. Brown to interpret the term 'issue' in Paragraph 1 of the trust for income distribution purposes.
- The Supreme Judicial Court held in that 1957 case that the settlor intended 'issue' to mean only biological descendants, thereby excluding adopted children from receiving income.
- After the trust terminated in 2013, Fiduciary Trust filed a new complaint in the Kennebec County Probate Court seeking instruction on the distribution of the trust principal under Paragraph 2.
- The case was subsequently removed to the Superior Court.
- Fiduciary Trust moved for summary judgment, arguing for distribution according to 2013 Maine intestacy laws, which include adopted children.
- The Superior Court granted summary judgment in favor of Fiduciary Trust, ruling that the 1957 decision was not res judicata on the meaning of Paragraph 2.
- Manchester H. Wheeler Jr., an appellant, appealed the Superior Court's grant of summary judgment to the Supreme Judicial Court of Maine.
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Issue:
Does the doctrine of res judicata, based on a 1957 court decision interpreting the term 'issue' for income distribution under one paragraph of a trust, preclude a court from applying the plain language of a separate paragraph that governs principal distribution according to the specific intestacy laws in effect at the trust's termination in 2013?
Opinions:
Majority - Mead, J.
No. The doctrine of res judicata does not preclude the court from applying the plain language of Paragraph 2. The 1957 decision interpreted a different paragraph of the trust ('issue' in Paragraph 1 for income distribution) which was triggered by a different event and could not have resolved the current issue regarding the principal distribution under Paragraph 2, which was contingent on the trust's termination far in the future. Claim preclusion is inapplicable because the matter of construing Paragraph 2 at the time of the trust's 2013 termination could not have been litigated in 1957, as the court at that time refused to rule on future contingencies and the applicable law was unknowable. Issue preclusion is also inapplicable because it prevents the relitigation of factual issues, whereas the interpretation of a settlor's intent from unambiguous language is a question of law. Paragraph 2 is unambiguous in its direction to apply the Maine intestacy laws in force at the time of termination, which in 2013 included adopted children.
Analysis:
This decision reaffirms the narrow application of res judicata, emphasizing that it requires a true identity of claims or issues between past and present litigation. It establishes that a court's interpretation of one ambiguous clause in a trust does not control the interpretation of a separate, unambiguous clause, particularly when that clause incorporates by reference a body of law from a future date. This ruling protects the intent of settlors who use such 'floating' provisions to align their trusts with contemporary legal standards and societal norms, preventing outdated interpretations from overriding clear, forward-looking instructions.
