In re Soper's Estate
264 N.W. 427 (1935)
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Rule of Law:
When a term in a written contract or trust instrument is unambiguous on its face but becomes ambiguous when applied to the extrinsic facts of the case (a latent ambiguity), parol evidence is admissible to determine the parties' true intent.
Facts:
- In 1911, Ira Collins Soper married Adeline Johnson Westphal in Kentucky.
- Soper and Westphal lived together as husband and wife until August 1921.
- In 1921, Soper faked his own suicide to deceive his wife and family, then disappeared.
- Soper moved to Minneapolis, assumed the alias John W. Young, and became known exclusively by that name in his new community.
- In 1927, while still legally married to Westphal, Soper (as Young) bigamously married Gertrude Whitby, who believed in good faith that he was a widower.
- Soper (as Young) and his business partner, Ferdinand Karstens, created a stock purchase agreement funded by life insurance policies held in trust.
- The trust agreement stipulated that upon the death of either partner, the insurance proceeds would be paid to the deceased partner's 'wife' in exchange for the deceased's company stock, which would go to the surviving partner.
- In 1932, Soper (as Young) committed suicide.
Procedural Posture:
- Adeline Soper and the administrator of Ira Soper's estate sued Gertrude Whitby and the First Minneapolis Trust Company in a Minnesota trial court to recover the insurance proceeds.
- The trial court rendered a decision in favor of the defendants (Gertrude Whitby et al.).
- The plaintiffs' motion for a new trial was denied by the trial court.
- The plaintiffs, as appellants, appealed the order denying a new trial to the Supreme Court of Minnesota.
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Issue:
May parol evidence be used to identify the intended beneficiary of a trust agreement that designates the beneficiary as the settlor's 'wife,' when the settlor was secretly married to one woman but publicly living with and holding out another woman as his wife?
Opinions:
Majority - Julius J. Olson, Justice.
Yes. Parol evidence is admissible because while the term 'wife' is not ambiguous on its face, a latent ambiguity arises when applying it to the specific facts of this case. The court's duty is to ascertain the actual intent of the parties to the contract, not to apply a rigid, objective meaning to a word. Here, the trust agreement was a business contract between Soper (as Young) and Karstens. All surrounding circumstances, including Soper's assumed identity, his public marriage to Gertrude, and the fact that only Gertrude was known to the other parties of the agreement, demonstrate that Gertrude was the person intended to be the beneficiary. The arrangement was a valid, non-testamentary insurance trust, and to award the proceeds to Adeline would do violence to the clear intent of the contract.
Dissenting - I. M. Olsen, Justice
No. The court should not create a new contract for the parties by substituting a new beneficiary. The word 'wife' has a clear and unambiguous legal meaning: a man can have only one lawful wife. Adeline Soper was Ira Soper's only legal wife, and the contract should be enforced as written. The majority's decision ignores the profound wrong Soper inflicted upon his lawful wife and effectively validates his fraudulent and bigamous conduct.
Analysis:
This case is a landmark example of a court resolving a latent ambiguity by prioritizing the subjective intent of the contracting parties over the plain, objective meaning of a term. It demonstrates a significant shift away from the rigid 'four corners' doctrine of contract interpretation toward a more modern, contextual approach. The court's willingness to disregard the old distinction between patent and latent ambiguities signifies that even seemingly clear language can be subject to interpretation if its application to extrinsic facts creates uncertainty. This holding empowers courts to look at surrounding circumstances to prevent an outcome that would thwart the clear purpose of an agreement.
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