In Re the Estate of Shunji Kay Ikuta

639 P.2d 400, 64 Haw. 236, 1981 Haw. LEXIS 148

• Court: Hawaii Supreme Court
• Decided: December 30, 1981
• Docket: NO. 6175
• Status: Published

Opinions

OPINION OF THE COURT BY

RICHARDSON, C.J.

A petition for ancillary probate of the estate of Shunji K. Ikuta was presented to the circuit court of the first circuit in 1970. This appeal and cross appeal were brought upon the subsequent order of the probate judge approving accounts, determining trust, distributing the estate and discharging the ancillary executor.

On appeal, Shunji Ikuta’s first wife and their three sons contest the following conclusions of the lower court:

I. Hawaii real property was properly includable in the inventory of decedent’s estate;

II. Having considered the record, memoranda, and arguments of counsel for the respective parties, reformation of decedent’s testamentary trust was required by changing the word “oldst” [sic] to “youngest”; and

III. This is not a proper case for the application of the doctrine of acceleration.

On cross appeal, Shunji Ikuta’s second wife and their son contest the following conclusions:

IV. The positions taken by Shunji Ikuta’s first three sons were not acts which contested or attacked the Will or any of its provisions so as to cause a forfeiture of their interests and rights as provided in decedent’s will; and

V. The court is empowered to appoint additional trustees and therefore Mary T. Ikuta and Bishop Trust Co., Ltd. are appointed co-trustees of the trust created by decedent’s will. We affirm the lower court on all issues for the following reasons.

I.

Soon after their marriage, Shunji Ikuta and his first wife, Chiyoko, obtained real property in Wailupe through a deed dated ■December 29, 1956. The deed provided in part as follows:

TO HAVE AND TO HOLD the granted premises, with all the privileges and appurtenances thereto belonging to the said Shunji Kay Ikuta (k) and Chiyoko Lucille Ikuta (w), husband and wife as aforesaid, as tenants by the entirety, per tout et non per my, (and not as tenants in common nor as joint tenants) and to the survivor of the two, in fee simple, absolute and forever.

This deed was recorded at the Bureau of Conveyances, Honolulu, Hawaii.

Due to domestic difficulties, Shunji and Chiyoko Ikuta entered into a property management agreement which they executed on October 12,1948. The agreement stated in pertinent part as follows:

WHEREAS, the First [Shunji] and Second [Chiyoko] Parties have joint tenancy property located at Wailupe, Oahu, Territory of Hawaii.. ..

Their marital problems increased and, on December 14, 1950, Judge Curtis of the California Superior Court issued an interlocutory decree of divorce, which was finalized on July 22, 1953. The Interlocutory Judgment of Divorce provided as follows with respect to the Wailupe parcel:

That the following described property [situate at Wailupe] was prior to the 12th day of October, 1948, and has been at all times since and still is the separate property of plaintiff and defendant, Dr. Shunji K. Ikuta, and held by them as joint tenants[.]

There is no other documentary reference to the nature of the tenancy of the Wailupe property as between Shunji and Chiyoko. In June of 1969 Shunji Ikuta executed his last will and testament. He died in Honolulu, Hawaii the next month. His will was admitted to probate in California later that year and to ancillary probate in Hawaii in 1970. With regard to the Wailupe property, the Hawaii probate court determined that:

[U]p to the divorce of decedent and Chiyoko Ikuta on December 14, 1950, the Wailupe property was held and owned by them as tenants by the entirety, and upon their divorce, decedent and Chiyoko Ikuta, by operation of law, became each a one-half owner as tenants in common of the Wailupe property, with the result that one-half of said Wailupe property was includable in the inventory of the estate of the decedent.

Order on Motion for Instructions filed December 26, 1972.

Appellants, Shunji Ikuta’s first wife Chiyoko' and their three sons, contend that the California divorce court found Shunji and Chiyoko to be joint tenants with right of survivorship of the Wailupe property before and after their divorce, so that Shunji’s death caused the title to vest in Chiyoko. Appellees, Shunji Ikuta’s second wife Mary and their son, argue that the Hawaii probate court was correct in finding that the property was held as tenants by the entirety up until the divorce and as tenants in common afterwards, which thereby transferred one-half interest in the Wailupe property to Shunji Ikuta’s testamentary trust. The resolution of this issue ultimately depends upon our interpretation of the documents involved in light of the applicable law.

Our first task is to decide whether the California court had jurisdiction to determine tenancy of real property in Hawaii. In a suit to enforce a foreign judgment, the jurisdiction of the court which rendered it is open to judicial inquiry, Adam v. Saenger, 303 U.S. 59 (1938), and where the question of law or fact necessary to establish jurisdiction was not litigated in the original suit, it is a matter to be adjudicated in a subsequent suit upon the judgment. Id.

It is the general rule in California that a court has no jurisdiction to assign separate property of one spouse to the other, Fox v. Fox, 18 Cal.2d 645, 117 P.2d 325 (1941); Mitchell v. Marklund, 238 Cal.App.2d 398, 47 Cal. Rptr. 756 (Dist. Ct. App. 1965); Citizens National Trust & Savings Bank v. Hawkins, 87 Cal. App.2d 535, 197 P.2d 385 (Dist. Ct. App. 1948); and when it does, that part of its decision is not res judicata nor binding on other courts. Mitchell, supra; Sonnicksen v. Sonnicksen, 45 Cal. App.2d 46, 113 P.2d 495 (Dist. Ct. App. 1941). There was no express authority for the California court to dispose of either spouse’s separate property in this case. At the time of the Ikuta divorce, the relevant California statute referred only to the assignment of community property and homesteads in connection with divorce decrees. Cal. Civ. Code § 137 (1949); id. § 146 (Supp. 1953) (current version at Cal. Civ. Code § 4800 (West Supp. 1981)). In Green v. Green, 100 F.2d 241, 243 (9th Cir. 1938), cert. denied, 306 U.S. 651 (1939), the Ninth Circuit stated that “[w]ith regard to any property not community, the limit of the court’s power is to decide that it is excluded from the community, and hence cannot be distributed by it.” Outside of determining community status, the California court did not have jurisdiction over the noncommunity property,¹ and a “judgment is entitled to no further effect in another state than it has in that jurisdiction.” Pierrakos v. Pierrakos, supra n.1, 148 N.J. Super, at 579, 372 A.2d at 1333. Hence we must look to Hawaii law to determine the tenancy of the Wailupe property after the Ikutas’ divorce.²

The law is well settled in this jurisdiction that if real property which is held as tenants by the entirety is not otherwise provided for, an absolute divorce will convert title into a tenancy in common. Chock v. Chock, 39 Haw. 657 (1953); see Madden v. Madden, 44 Haw. 442, 355 P.2d 33 (1960). Appellants allege that the 1948 property management agreement altered the tenancy by the entirety to joint tenancy with right of survivorship.

HRS § 509-2 (1976) provides as follows:

Land . . . may be conveyed by . .. tenants by the entirety to themselves ... as joint tenants . . . without the necessity of conveying through a third party, and each such instrument shall be construed as validly creating a joint tenancy.. .if the tenor of the instrument manifestly indicates such intention. (Emphasis added.)

The purpose of § 509-2 and its relevant antecedent, RLH § 12781 (1945), is to eliminate the common-law requisite of a “straw man” in creating a joint tenancy. In re Estate of Au, 59 Haw. 474, 583 P.2d 966 (1978). The statute also provides the standard for determining whether an agreement conveys land. If the property management agreement of 1948 were an instrument of conveyance the tenor of which manifestly indicated an intention to create a joint tenancy, then, per RLH § 12781 (1945), the Wailupe property was held in joint tenancy after the Ikutas’ divorce.³ We hold that the 1948 agreement neither conveyed property nor altered the tenancy by entirety.

A property settlement agreement settles and determines the property rights between husband and wife, Bost v. Bost, 234 N.C. 554, 67 S.E.2d 745 (1951), and could manifestly indicate an intention to create a new tenancy (as per RLH § 12781 (1945)). On the other hand, a property management agreement only conveys a right of management, and a right of management does not convey any property rights, cf. In re Monaghan’s Estate, 65 Ariz. 9, 173 P.2d 107 (1946) (community property context), nor does it alter title to the property.

Because both parties agreed that the contract between Shunji and Chiyoko Ikuta dated 1948 was a property management contract and because the substance of the contract did not purport to settle property rights as between the parties, it must be found that the contract did not change title to the Wailupe property. Hence, until the parties were divorced, title remained as tenants by the entirety.

We agree with the probate court’s finding that the Wailupe property was held as tenants by the entirety until the divorce and, after the divorce, title was held as tenants in common. The effect of our finding is to leave one-half interest in the Wailupe property in the testamentary trust established by Shunji Ikuta.

II.

Appellants contend that the probate court erred in reforming Dr. Ikuta’s last will and testament because 1) extrinsic evidence should not have been admitted and 2) reformation of Dr. Ikuta’s will is against public policy. We do not agree with these contentions. •

Clause IV(h) of Dr. Ikuta’s will reads:

This trust shall terminate and the estate distributed, upon the death of the last survivor of Masa Muraoka or Mary I. Ikuta, or when the oldst [sic] of my sons attains the age of 30 years, whichever event occurs first.

In the Order Approving Accounts, Determining Trust, Distributing the Estate and Discharging the Ancillary Executor, dated December 11,1975, the probate judge held that the use of the word “oldst” was a mistake and should be substituted with the word “youngest.”

In Hokama v. Relinc Corp., 57 Haw. 470, 476, 559 P.2d 279, 283 (1977), we allowed extrinsic evidence “i.e., all evidence outside of the writing including parol evidence, to be considered by the court to determine the true intent of the parties if there is any doubt or controversy as to the meaning of the language embodying their bargain.” We also eliminated the common-law distinction between “patent” and “latent” ambiguities and now permit “parol evidence of the surrounding circumstances in the making of a contract to aid the trial court in its determination of the intention of the parties.” Id. at 476. In Graham v. Washington University, 58 Haw. 370, 569 P.2d 896 (1977), wherein a trust provision was interpreted, we applied the rule stated in Hokama and held that the trial court should have admitted extrinsic evidence in order to ascertain the settlor’s intent.

In the present case it is clear that there was a controversy before the probate court and theHokama rule should apply. If Clause IV(h) were permitted to stand then it would defeat Dr. Ikuta’s testamentary trust from its very inception. At the time the will was written, Dr. Ikuta’s oldest son was already 30 years of age. Evidence of the doctor’s intent was properly admitted.

Appellants’ argument on grounds of public policy is not valid in the present case. The purpose of the policy against reformation of a will is to prevent distortion of the testator’s intent. Dr. Ikuta’s will was reformed to reflect the testator’s true intent.

The public policy which does apply is that “the law abhors intestacy and presumes against it." Estate of Weill, 48 Haw. 553, 406 P.2d 718 (1965). If Dr. Ikuta’s will were not reformed then his estate would have to be distributed in accordance with the intestacy laws of Hawaii. Hence, reformation was appropriate here.

III.

Since Mary T. Ikuta elected to take her dower interest, appellants allege that her election accelerates the termination date of Dr. Ikuta’s trust. Clause IV(h) of his will provides that the trust terminates upon either the death of the last survivor of Masa Muraoka (deceased) or Mary T. Ikuta or when the youngest son attains the age of 30 years, whichever occurs first. Appellants claim that the former event has occurred since Mary T. Ikuta’s renunciation of the will constitutes her “death” for purposes of the trust.

Appellants rely primarily on the doctrine of acceleration. The doctrine of acceleration, as applied to the laws of property, “refers to a hastening of the owner of the future interest toward a status of present possession or enjoyment by reason of the failure of the preceding estate.” 2 L. Simes & A. Smith, The Law of Future Interests § 791 at 263 (2d ed. 1956) (footnote omitted). “When a court accelerates the remainder interest upon the failure of the preceding interest, it causes the remainder to take effect at a date earlier than the wording of the conveyance would normally permit.” G. Bogert, Trusts and Trustees § 172, at 230 (2d ed. rev. 1979). We recognize that the doctrine may apply in Hawaii, Estate of Castle, 25 Haw. 108 (1919); Lidgate v. Danford, 23 Haw. 317 (1916), but we do not find it applicable in this particular situation. There are two factors which preclude acceleration; the first is that the unfulfilled condition precedent of Mary T. Ikuta’s death has created a contingent remainder interest, and the second is that acceleration would defeat Dr. Ikuta’s general plan for the distribution of his property.

“When an attempted prior interest fails because it is renounced by the person to whom it is limited, a succeeding interest is not accelerated so long as a condition precedent to such succeeding interest continues unfulfilled.” II Restatement of Property § 233, at 978-79 (1936). The rationale is that acceleration of such an interest would frustrate the plan of disposition to a greater extent than is necessary. While some courts have applied the doctrine of acceleration even though the remainder interest is contingent, we find that such application would defeat the purpose of the testator and prevent a potential beneficiary from possible participation in the distribution of the principal. See Ohio National Bank v. Adair, 54 Ohio St.2d 26, 374 N.E.2d 415 (1978); Aberg v. First National Bank, 450 S.W.2d 403 (Tex. Civ. App. 1970); V A. Scott, The Law of Trusts § 412.1, at 3246 (3d ed. 1967).

The longstanding rule in this jurisdiction is that the intent of the testator must prevail “so long as it is not contrary to some positive rule of law and hence no legal fiction nor a non-Hawaiian, technical or a strained construction shall be permitted to nullify it.” O’Brien v. Walker, 35 Haw. 104, 132 (1939). The importance of a testator’s intention was emphasized in Valentin v. Brunette, 26 Haw. 417, 423 (1922), where we stated that when a widow declines to accept under her husband’s will and elects to take dower, her election should not be permitted to disturb the testator’s directions any further than absolutely essential.

In the case at hand, Dr. Ikuta’s intentions are discernable from the provisions of his testamentary trust, which provides in pertinent part as follows:

IV(e) If any beneficiary dies or predeceases me, his share shall go to his heir or heirs. For the purposes of this will, his wife, or his adopted or illegitimate child or children shall not be considered to be the heir or heirs of the deceased beneficiary. If there be no heir or heirs as herein defined, then the deceased beneficiary’s portion shall be divided equally among the surviving beneficiaries or their heirs.

The contingency is the death of a beneficiary, and the persons entided to the contingent remainder interest are the surviving heirs. For instance, acceleration would cut off the interests of Dr. Ikuta’s grandchildren whose father dies before the death of Mary T. Ikuta or the youngest son’s attainment of the age of 30 years. We refrain from discussing the validity of Clause IV(e) and use it only to demonstrate that the testator did not intend his trust to accelerate upon Mary T. Ikuta’s election of her dower interests.⁴ We find that the lower court’s refusal to accelerate the termination date of Dr. Ikuta’s trust conforms with the intent of the trust and was not reversible error.

IV.

Clause VI of Dr. Ikuta’s will states:

If any beneficiary under this will in any manner, directly or indirectly, contests or attacks this will, or any of its provisions, any share or interest in my estate given to that contesting beneficiary under this will is revoked and shall be disposed of in the same manner provided herein as if that contesting beneficiary had predeceased me without heirs.

Cross-appellants Mary T. Ikuta and Paul Ikuta allege that crossappellees Clyde, Michael and Robert Ikuta have violated Clause VI by requesting the court to exclude the Wailupe property from the trust res, by taking a position inconsistent with Bishop Trust’s Motion for Instructions, and by objecting to the Petition for Final Accounts. Cross-appellees alternatively argue that forfeiture clauses, including Clause VI, are void as against public policy or, if valid, then their actions did not constitute a “contest” which would activate such a clause.

We find here that cross-appellees’ actions were in the nature of construing the will. As such, we follow the general rule and hold that will construction is not a “contest” to which the clause would apply.⁵ Wells v. Menn, 158 Fla. 228, 28 So.2d 881 (1946); Hicks v. Rushin, 228 Ga. 320, 185 S.E.2d 390 (1971).

V.

Cross-appellants protest the appointment of Bishop Trust as co-trustee to serve along with Mary T. Ikuta. We deny their request to cancel this appointment.

John A. Chanin for appellants, cross-appellees Chiyoko Ikuta, Clyde Ikuta, Robert Ikuta and Michael Ikuta. Clesson Y. Chikasuye for appellees, cross-appellants Mary T. Ikuta and Paul Ikuta.

The ability of courts to appoint additional trustees under certain circumstances is a common element of trust law recognized by leading authorities on the subject. G. Bogert Trusts and Trustees § 532, at 137-38 (2d ed. rev. 1978); II A. Scott, The Law of Trusts § 108.2, at 860 (3d ed. 1967); Restatement (Second) of Trusts § 108 (1959). In accordance with these authorities, we find that the lower court was empowered to “appoint additional trustees, and not merely fill vacancies by appointment, when the circumstances are such that the appointment of such additional trustees would be conducive to the better administration of the trust.” Id. Comment e at 239.

The record in the present situation contains sufficient evidence to establish that appointment of Bishop Trust as co-trustee would be conducive to the better administration of the Ikuta trust. In light of the conflict between Dr. Ikuta’s first and second families, the fact that Mary T. Ikuta remains a resident of California, and because the trust res includes Hawaii realty, we find that the appointment of a Hawaii corporate fiduciary was proper. See Haberland v. Haberland, 303 F.2d 345 (3d Cir. 1962).

Affirmed.

1 Comment, Divorce Agreements in California, 2 U.C.L.A. L. Rev. 233, 234 (1954-1955). See also Pierrakos v. Pierrakos, 148 N.J. Super. 574, 372 A.2d 1331 (1977). But cf. Porter v. Superior Ct., 73 Cal. App.3d 793, 141 Cal. Rptr.59 (Dist. Ct.App. 1977), holding that the parties could try the issue of validity of a joint tenancy deed of separate property in their marital dissolution action if they both agreed to do so. Porter is distinguishable from the case at bar because it was based in part on the general jurisdiction a California court has over California real property and because the relevant statute had been substantially amended.

2 If the jurisdictional issue had been actively litigated in California and California had proper jurisdiction (i.e., the Wailupe property had been community property), then the California decree would be binding as to the litigating parties. Cf. Durfee v. Duke, 375 U.S. 106 (1963) (full faith and credit requires the application of res judicata and collateral estoppel principles in a quiet title action where factual issue of jurisdiction was explicitly addressed, fully litigated and judically determined); Argent v. Argent, 396 F.2d 695 (D.C. Cir. 1968) (in divorce actions District of Columbia courts are authorized to require execution Of conveyance instruments for marital realty in Maryland); Smith v. Smith, 56 Haw. 295, 535 P.2d 1109 (1975) (full faith and credit clause not applicable); Rozan v. Rozan, 129 N.W.2d 694 (N.D. 1964) (by an in personam decree, California divorce court with proper jurisdiction has power to compel conveyance of community property located in North Dakota).

Smith, supra, involved a California divorce in which the California court specifically declined to assume jurisdiction over Hawaii real property. Because the California court lacked jurisdiction in the present case, the effect of the divorce decree over the property in question is the same as the Smith divorce decree.

Recent legislation now directs California courts in divorce proceedings to maintain, insofar as possible, the manner in which record title to community and quasi-community real property located in another state is held. Cal. Civ. Code § 4800.5 (WestSupp. 1981); In re Marriage of Fink, 25 Cal.3d 877, 603 P.2d 881, 160 Cal. Rptr. 516 (1980).

3 If found to be a transfer of real property within the State of Hawaii, the property management agreement should have been recorded pursuant to RLH § 12760 (1945) (current version at HRS § 502-91 (1976)). However, we recognize that failure to record would only affect the rights and interests of third parties. The agreement would continue to bind both Shunji and Chiyoko Ikuta.

Since the Wailupe property is not land court property, we do not find it necessary to determine the impact of RLH § 12649 (1945) (current version at HRS § 501-101 (1976)) on an unrecorded property management agreement at this time. See City & County v. Clarke, 60 Haw. 40, 587 P.2d 294 (1978).

4 Also it'should be noted that as an attorney Dr. Ikuta knew of the possibility of a dower election, yet he failed to provide for it.

5 Accord, HRS § 560:3-905 (1976), which provides as follows:

Penalty clause for contest. A provision in a will purporting to penalize any interested person for contesting the will or instituting other proceedings relating to the estate is unenforceable if probable cause exists for instituting proceedings.

The Uniform Probate Code was adopted after the present action was instituted and does not have a retroactive effect.