Keybank Natl. Assn. v. Firestone , 2019 Ohio 2910 ( 2019 )

[Cite as Keybank Natl. Assn. v. Firestone, 2019-Ohio-2910.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
KEYBANK NATIONAL ASSOCIATION, :
Plaintiff-Appellee, :
No. 107307
v. :
JEFFREY B. FIRESTONE, ET AL., :
Defendants. :
[Appeal by Cindy Firestone] :
JOURNAL ENTRY AND OPINION
JUDGMENT: AFFIRMED
RELEASED AND JOURNALIZED: July 18, 2019
Civil Appeal from the Cuyahoga County Court of Common Pleas
Probate Division
Case No. 2017 ADV 225027
Appearances:
Ulmer & Berne, L.L.P., James A. Goldsmith, and Daniela
Paez Paredes, for appellee Keybank National Association.
Thompson Hine, L.L.P., Mark A. Conway, Terry W. Posey,
Jr., and Christine M. Haaker, for appellees Jeffrey B.
Firestone and Amy Firestone.
Deborah Lynn Firestone Boylen, pro se.
Reminger Co., L.P.A., Adam M. Fried, and Clifford C.
Masch, for appellant.
EILEEN T. GALLAGHER, P.J.:
Appellant, Cindy Firestone (“Cindy”), appeals from the trial court’s
determination that she is not a beneficiary under a trust executed by her adopted
father in July 1960. She raises the following assignment of error for review:
Pursuant to the relevant governing Ohio law in existence at the time the
1960 Trust Agreement was executed, Cindy Firestone qualifies as a
beneficiary under the trust.
After careful review of the record and relevant case law, we affirm the
trial court’s judgment.
I. Procedural and Factual History
On July 5, 1960, D. Morgan Firestone (the “Settlor”) and his former
wife, Nancy Morgan Firestone, entered into a separation agreement as part of their
divorce. Relevant to this appeal, the separation agreement governed the details of
the property settlement, alimony, and the custody and care of their children. David
M. Firestone, Amy M. Firestone, and Jeffrey B. Firestone are the biological children
of the Settlor and Nancy. Paragraph 7(a) of the separation agreement provided for
the creation and funding of an irrevocable trust (the “Trust”), which was attached as
an exhibit to the separation agreement. Under the terms of the Trust, Nancy was
entitled to the Trust income during her lifetime.
Section 1 of the Trust outlined how the remaining proceeds of the
Trust were to be distributed upon the death of Nancy, stating:
Upon [Nancy’s] death, the trustee shall distribute the then principal of
the [T]rust estate to the then living descendants of the settlor in equal
shares per stirpes. The term “descendants of the settlor” shall include
Amy Morgan Firestone, David Morgan Firestone, and Jeffrey Bryan
Firestone, and any child or more remote descendant of the settlor who
shall be born after the date of this instrument.
In March 1974, the Settlor remarried and, in June 1983, he adopted
his wife’s two adult daughters, Deborah Lynn Boylen Firestone, then age 23, and
appellant, Cindy Firestone, then age 21.
Upon the death of Nancy in May 2016, KeyBank National Association,
as Trustee for the Trust, filed a complaint for declaratory judgment “to resolve any
uncertainty with respect to the distribution of the Trust assets.” Specifically,
KeyBank requested “a declaration from the court as to whether Defendants Cindy
Firestone and Deborah Lynn Boylen Firestone are excluded as beneficiaries of the
trust, and a determination as to whether they are entitled to receive a distribution of
Trust assets under the terms of the Trust.”
On November 3, 2017, Cindy filed a motion for judgment on the
pleadings pursuant to Civ.R. 12(C). Cindy asserted that she is a beneficiary pursuant
to the plain language of the Trust and by operation of R.C. 3107.15(A)(2). She further
argued that while R.C. 3107.15(A)(2) applies retroactively to include her as a
beneficiary, R.C. 3107.15(A)(3), which by its language is also retroactive and would
disqualify her, “unconstitutionally imposes burdens and obligations on transactions
that transpired before the effective date of the amended statutory provision.”
On December 11, 2017, Amy and Jeffrey1 filed a cross-motion for
judgment on the pleadings, arguing (1) the words of the Trust must be interpreted
according to their legal effect and meaning in 1960 when the Trust was executed; (2)
the legal effect of the term “child” in 1960 was only to include blood relatives; (3) in
1960, Ohio law did not permit adult adoptions, and, therefore, (4) the Settlor and
Nancy could not have intended to include an adult adoptee as a member of the class
of children.
In May 2018, the trial court granted the cross-motion for judgment
on the pleadings in favor of Jeffrey and Amy, finding that, in the absence of an
express intent to include adopted persons, Deborah and Cindy are not beneficiaries
of the Trust. The court further granted the complaint for declaratory judgment,
finding that R.C. 3107.15(A)(3) is constitutional as applied to the Trust and operates
to exclude Cindy and Deborah from status as beneficiaries of the Trust.
Cindy now appeals the trial court’s judgment.
II. Law and Analysis
In her sole assignment of error, Cindy argues the trial court erred in
excluding her as a beneficiary under the Trust.
We review a ruling on a motion for judgment on the pleadings de
novo. Matthews v. United States Bank Natl. Assn., 8th Dist. Cuyahoga No. 105315,
2017 Ohio-7079, ¶ 8. Civ.R. 12(C) provides that a party may move for judgment on
1 David M. Firestone passed away in September 2013.
the pleadings after the pleadings are closed but within such time as to not delay trial.
Duncan v. Cuyahoga Community College, 2012-Ohio-1949, 970 N.E.2d 1092, ¶ 16
(8th Dist.). A motion for judgment on the pleadings raises only questions of law,
and the court may look to only the allegations in the pleadings in deciding the
motion. Id. The pleadings must be construed liberally and in a light most favorable
to the party against whom the motion is made, indulging every reasonable inference
in favor of the party against whom the motion is made. Id., citing Case W. Res. Univ.
v. Friedman, 33 Ohio App.3d 347, 515 N.E.2d 1004 (8th Dist.1986).
In order to be entitled to a dismissal under Civ.R. 12(C), it must appear
beyond doubt that [the nonmovant] can prove no set of facts
warranting the requested relief, after construing all material factual
allegations in the complaint and all reasonable inferences therefrom in
[the nonmovant’s] favor.
Matthews at ¶ 8, quoting State ex rel. Toledo v. Lucas Cty. Bd. of Elections, 95 Ohio
St.3d 73, 74, 2002-Ohio-1383, 765 N.E.2d 854.
On appeal, Cindy argues the trial court erred in finding that “R.C.
3107.15 is determinative of the issue in this case.” She summarizes her position as
follows:
[T]he trial court failed to consider the ramifications that arise by virtue
of the common law stranger to the adoption rule in effect when the
1960 Trust was drafted. The imposition of the presumption that settlor
Morgan Firestone intended to include all persons adopted by him in a
beneficiary class of a “child or more remote descendant born after the
date of the agreement” leads to the inescapable conclusion that he
intended to include his adopted daughter Cindy Firestone as the trust
contains no language indicating a contrary position. * * * Moreover,
this court must also conclude that the retroactive application of R.C.
3107.15(A)(3) under the facts of this case unconstitutionally imposes
restrictions on [the settlor’s] right to distribute and protect his property
as is his substantive right.
For the purposes of this appeal, we separately assess the Settlor’s
intent and the application of R.C. 3107.15.
A. The Settlor’s Intent
In general, a “trust” is defined as “‘the right, enforceable in equity, to
the beneficial enjoyment of property, the legal title to which is in another.’” In re
Guardianship of Lombardo, 86 Ohio St.3d 600, 603, 716 N.E.2d 189 (1999),
quoting Ulmer v. Fulton, 129 Ohio St. 323, 339, 195 N.E. 557 (1935). An inter vivos
trust is a trust that is created and becomes effective during the lifetime of the settlor.
Id., citing Hageman v. Cleveland Trust Co., 41 Ohio App.2d 160, 161, 324 N.E.2d
594 (8th Dist.1974), rev’d on other grounds, 45 Ohio St.2d 178, 343 N.E.2d 121(1976). See also Black’s Law Dictionary 821 (6th Ed.1990). This is in contrast to a
testamentary trust, “‘which takes effect at the death of settlor or testator.’” In re
Estate of Scanlon, 8th Dist. Cuyahoga No. 95264, 2011-Ohio-1097, ¶ 19, quoting
Black’s Law Dictionary, 568-69 (6th Ed.1990).
As a general proposition, the parameters of a trustee’s authority are
controlled by the specific terms of the trust. In re Trust U/W of Brooke, 82 Ohio
St.3d 553, 557, 697 N.E.2d 191 (1998). Interpreting a trust is akin to interpreting a
contract. Millstein v. Millstein, 8th Dist. Cuyahoga No. 106270, 2018-Ohio-1204,
¶ 14. With both, the role of courts is “to ascertain and give effect to the intent of the
parties.” Arnott v. Arnott, 132 Ohio St.3d 401, 2012-Ohio-3208, 972 N.E.2d 586, ¶
14, citing Saunders v. Mortensen, 101 Ohio St.3d 86, 2004-Ohio-24, 801 N.E.2d
452. The construction of a written contract is a matter of law that we review de novo.
Id. at ¶ 23. “The same is true of the construction of a written trust.” Id. at ¶ 14.
In interpreting the terms of a trust, a settlor’s intent is determined by
considering the language used in the trust, reading all the provisions of the trust
together and “in light of the applicable law, and circumstances surrounding the
[trust’s] execution.” Cent. Trust Co. of N. Ohio, N.A. v. Smith, 50 Ohio St.3d 133,
553 N.E.2d 265 (1990); Mumma v. Huntington Natl. Bank of Columbus, 9 Ohio
App.2d 166, 223 N.E.2d 621 (10th Dist.1967). Generally, when the language of the
instrument is not ambiguous, a court may ascertain the settlor’s intent from the
express terms of the trust itself. In re Estate of Davis, 109 Ohio App.3d 181, 671
N.E.2d 1302 (12th Dist.1996). A court presumes the settlor used the words in the
trust according to their common, ordinary meaning. In re Trust U/W of Brooke at
557.
As stated, in this case the Settlor provided for the distribution of the
Trust income to Nancy during her lifetime. Upon the death of Nancy, Section 1 of
the irrevocable Trust directed the trustee to act as follows:
Upon [Nancy’s] death, the trustee shall distribute the then principal of
the trust estate to the then living descendants of the settlor in equal
shares per stirpes. The term “descendants of the settlor” shall include
Amy Morgan Firestone, David Morgan Firestone, and Jeffrey Bryan
Firestone, and any child or more remote descendant of the settlor who
shall be born after the date of this instrument.
Under the terms of the Trust, the biological children of the Settlor and
Nancy were expressly named as beneficiaries. In addition, the Trust provided for
equal distribution to “any child or remote descendant of the Settlor” who may be
born at some time in the future. Thus, the Trust contemplated future children or
remote descendants of the Settlor. Relevant to this appeal, however, there is no
express language in the Trust indicating whether the Settlor intended to include
adult adoptees in the class of “child[ren] or more remote descendant[s] of the settlor
who shall be born after the date of this instrument.”
Where the express language does not reveal the grantor’s intent, the
court must ascertain that intent through the use of various presumptions, rules of
construction, and a review of applicable statutes and case law. See Ohio Citizens
Bank v. Mills, 45 Ohio St.3d 153, 155-156, 543 N.E.2d 1206 (1989), superseded by
statute on other grounds; Solomon v. Cent. Trust Co. of N.E. Ohio, N.A., 63 Ohio
St.3d 35, 37, 584 N.E.2d 1185 (1992); 76 American Jurisprudence 2d, Trusts, Section
31, citing Fifth Third Bank v. Harris, 127 Ohio Misc.2d 1, 2003-Ohio-7361, 804
N.E.2d 1044 (Prob. Ct. 2003). Specifically, when construing an inter vivos trust, a
court should determine the intent of the settlor in light of the law existing at the time
of the creation of the trust, since “an inter vivos trust speaks from the date of its
creation — not the date upon which the assets are to be distributed.” Mills at 156,
citing First Natl. Bank v. Tenney, 165 Ohio St. 513, 138 N.E.2d 15 (1956), paragraph
one of the syllabus; see also Pack v. Osborn, 117 Ohio St.3d 14, 2008-Ohio-90, 881
N.E.2d 237, ¶ 8 (“[A] trust is construed according to the law in effect at the time it
was created.”).
Furthermore, we must presume that “the settlor was acquainted with
the relevant then-existing statutes, their judicial interpretation, and the effect they
may have had upon the distribution of her trust estate.” Mills at 156; Cent. Trust Co.
v. Bovey, 25 Ohio St.2d 187, 190, 267 N.E.2d 427 (1971). See also Gottesman v.
Estate of Gottesman, 8th Dist. Cuyahoga No. 81265, 2002-Ohio-6058, ¶ 14, citing
Flynn v. Bredbeck, 147 Ohio St. 49, 54, 68 N.E.2d 75 (1946). This presumption is of
particular importance in this case because the Trust is an irrevocable trust that was
executed as part of a divorce. Thus, the Settlor had no right to amend its terms after
it was created.
At the time the Trust was created by the Settlor in this case, the
applicable statute governing adoptions was former Ohio Revised Code Chapter
3107, which conferred upon a legally adopted child the same status and rights, and
the same legal relationship to his adopting parents as if he were born to them in
lawful wedlock. Significantly, however, the statute only contemplated legally
adopted children2 and did not permit the adoption of adult persons. It was not until
1976 that the Ohio legislature adopted R.C. 3107.02 (effective January 1, 1977),
which permitted certain adults to be adopted in instances where, among other
things, the adult had established a child-foster caregiver or child-stepparent
relationship as a minor.
2 The statute defined a child as “any person under twenty-one years of age.” See
R.C. 3107.01(A) (formerly G.C. 8004-1), effective October 1, 1953, repealed January 1,
1977. Cindy was not under the age of twenty-one at the time she was adopted by the
Settlor.
Applying the foregoing to the circumstances of this case, we must
presume that at the time the Settlor was formulating the relevant terms and
conditions of the subject Trust in 1960, he understood that adults could not be
adopted under Ohio law. Contrary to Cindy’s position on appeal, we find logic
dictates that the Settlor could not have intended to have adult adoptees included in
the class of “child[ren] or more remote descendant of the settlor who shall be born
after the date of this instrument.” See Harris, 127 Ohio Misc.2d 1, 2003-Ohio-7361,
804 N.E.2d 1044, at ¶ 13. Accordingly, we agree with the trial court’s assessment
that Cindy is not an intended beneficiary of the Trust.
In an effort to avoid the realities of the law in place at the time the
Trust was executed, Cindy directs this court to “stranger to the adoption rule,” which
the Ohio Supreme Court has described as follows:
Such rule basically is to the effect that there is a presumption that a
testator or settlor intended to include a child adopted by him within a
generally stated class, but where the testator or settlor is a stranger to
an adoption of another, such as where the adoption takes place after
the testator’s death, it will be presumed that he did not intend the
adopted child to be included within the designated class, unless a
contrary intention clearly appears.
Mills, 45 Ohio St.3d, at 156, 543 N.E.2d 1206, citing Phillips v. McConica, 59 Ohio
St. 1, 9, 51 N.E. 445 (1898); Albright v. Albright, 116 Ohio St. 668, 680, 157 N.E. 760(1927); Third Natl. Bank & Trust Co. v. Davidson, 157 Ohio St. 355, 105 N.E.2d 573(1952), paragraphs three and four of the syllabus; Cent. Trust Co. v. Bovey, 25 Ohio
St.2d 187, 267 N.E.2d 427 (1971).
In this case, the abrogation of the “stranger to the adoption” doctrine
had not yet begun at the time the Settlor executed the inter vivos Trust in 1960. See
Mills at 159-160 (discussing the implications of January 26, 1972 amendment to
former R.C. 3107.13.). Moreover, indisputably, the Settlor was not a stranger to the
adoption of Cindy, because he was Cindy’s adopted father. Thus, Cindy contends
that by virtue of the common law stranger to the adoption rule in effect at the time
the Trust was executed, there is a presumption that the Settlor intended to include
Cindy within the beneficiary class of “any child or more remote descendant of the
Settlor who shall be born after the date of the trust.”
After careful consideration, we decline to expand prior judicial
application of the stranger to the adoption rule to the factual circumstances
presented in this case. Our reading of the Ohio Supreme Court’s explanation of the
common law stranger to the adoption rule in Mills indicates that the rule only
contemplated the adoption of children, which, as stated, was defined in terms of the
adoptee’s age in 1960. See former R.C. 3107.01(A). Had Cindy been adopted by the
Settlor when she was a “child,” the stranger to the adoption rule may have raised a
presumption favorable to her interests if she could overcome the fact that the
adoption occurred after this irrevocable Trust was executed. Under the facts before
this court, however, Cindy has not presented any meritorious basis to suggest the
common law presumption should apply equally to an adult adoptee where, as here,
such an adoption was not authorized by statute at the time the Trust was executed.
Notwithstanding our rejection of Cindy’s reliance on the stranger to
the adoption rule, Cindy provides an alternative argument that asks this court to rely
on the Settlor’s “presumed” contemplation of future changes in statutory law at the
time the Trust was executed. Cindy notes that the Trust language is broad, does not
expressly exclude adopted persons from the class of beneficiaries, and “focuses on
the birth of the child or more remote descendant in relation to the date of the
execution of the Trust, not when the child becomes a member of [the Settlor’s]
family.” Thus, Cindy asserts that this court must not assume the Settlor did not
intend to include adult adoptees as beneficiaries merely because the law did not
allow for such an adoption in 1960. In support of this position, Cindy directs this
court to Solomon, 63 Ohio St.3d 35, 584 N.E.2d 1185 (1992).
In Solomon, the Ohio Supreme Court considered the right of an adult
adoptee to be recognized as beneficiary under a testamentary trust that provided for
distribution of trust assets to the “then living children” of the testator’s deceased
brother. The natural born children of the testator’s brother argued that the trust did
not intend to include adopted adults in the class of beneficiaries because Ohio law
did not recognize adult adoptions at the time the testamentary trust was drafted.
The Ohio Supreme Court rejected the arguments set forth by the natural born
children and ultimately concluded that the adult adoptee may take under the terms
of the testamentary trust “as a member of the class of ‘then living children’ of the
beneficiary.” Id. at 40.
In reaching this conclusion, the court in Solomon looked beyond the
then-existing law when assessing the testator’s intent. The court explained that in
addition to presuming that the testator was aware that the law in Ohio only provided
for the adoption of children at the time the testamentary trust was executed, it “must
also presume that a testator is aware that the laws that affect his estate are subject
to change.” Id. at 39. The court explained:
Although Ohio law did not allow adult adoptions at the time the testator
executed his will, we note that other jurisdictions did allow such
adoptions either explicitly by statute or by judicial interpretation of
pertinent statutes. See, generally Annotation 21 A.L.R.3d 1012, 1017-
1021, Section 3 (1968); Annotation, 83 A.L.R. 1395, 1396 (1933). It
would be reasonable for the testator to have presumed that Ohio could,
eventually, join the other jurisdictions in allowing such adoptions to
occur. A testator who creates a trust that provides for termination at
the death of a life beneficiary and distribution of trust assets to the
“then living children” of the beneficiary is presumed to know that the
legislative definition of children will be determined at the time the class
closes and that the definition may include adult adoptees even though
adult adoptions were not authorized at the time the trust was created.
Id. at 39-40.
Pursuant to Solomon, Cindy argues that “the fact that Ohio law did
not recognize the legal adoption of adults when the 1960 Trust was executed is not
dispositive of [her] rights as an adult adoptee.” She maintains this court must
presume, as the Ohio Supreme Court did in Solomon, that the Settlor understood
that laws in Ohio are subject to change and that the definition of a “child” may
include adult adoptees even though adult adoptions were not authorized at the time
the Trust was created.
After careful consideration, we find Solomon to be distinguishable
and, therefore, inapplicable to the circumstances of this case. Contrary to the nature
of the Trust involved in this case, Solomon reviewed the application of a
testamentary trust, rather than an inter vivos trust. As stated, “an inter vivos trust
speaks from the date of its creation — not the date upon which the assets are to be
distributed.” See Mills, 45 Ohio St.3d, at 156, 543 N.E.2d 1206; Tenney, 165 Ohio
St. 513, 138 N.E.2d 15, at paragraph one of the syllabus. Thus, “[p]rovisions of an
inter vivos trust shall continue to be governed by the law existing at the time of its
creation, absent a contrary expression of intent within the trust instrument itself.”
(Emphasis sic.) Id. at 157. Because Solomon is limited to the review of a
testamentary trust, we decline to apply the decision to the terms of the irrevocable
inter vivos trust disputed in this case. See also Wendell v. AmeriTrust Co., N.A., 69
Ohio St.3d 74, 76-78, 630 N.E.2d 368 (1994) (applying the law in effect at the time
of the will’s execution and reiterating that “it has been the policy of [the Ohio
Supreme Court] to apply the law in effect at the time of the execution of the will
when interpreting testamentary documents since that law typically frames the intent
of the testator”); Willman v. Star Bank, N.A., 1st Dist. Hamilton No. C-930338, 1994
Ohio App. LEXIS 2667, 8 (June 22, 1994) (declining to apply the presumption in
Solomon that the testator is aware that the laws that affect his estate are subject to
change to all interpretations of wills in light of Wendell). Accordingly, we reject
Cindy’s attempt to interpret terms of the 1960 Trust in light of legislation that was
enacted years later.
Based on the foregoing, we find no presumptions, rules of
construction, then-existing laws, or applicable case law to suggest the Settlor
intended to include adult adoptees within the Trust’s stated beneficiary class of “any
child or remote descendant of the Settlor.” Accordingly, the fact that Cindy was born
after the Trust was executed is irrelevant. In rendering this conclusion, we recognize
that R.C. 3107.15(A)(2), discussed below, encompasses all “adopted persons” and
applies retroactively. Nevertheless, consideration of the Settlor’s intent at the time
the Trust was executed in this case is necessary and relevant to our resolution of
Cindy’s constitutionality challenges to R.C. 3107.15(A)(3), addressed below.
B. Application of R.C. 3107.15(A)
Having determined that the Settlor could not have intended to
include an adult adoptee as beneficiaries under the Trust where adults could not be
adopted at the time the Trust was executed, we now turn to the implications of R.C.
3107.15. The statute provides that a final decree of adoption issued by Ohio shall
have the following effect:
(2) To create the relationship of parent and child between petitioner
and the adopted person, as if the adopted person were a legitimate
blood descendant of the petitioner, for all purposes including
inheritance and applicability of statutes, documents, and instruments,
whether executed before or after the adoption is decreed, and whether
executed or created before or after May 30, 1996, which do not
expressly exclude an adopted person from their operation or effect;
(3) Notwithstanding division (A)(2) of this section, a person who is
eighteen years of age or older at the time the person is adopted, and the
adopted person’s lineal descendants, are not included as recipients of
gifts, devises, bequests, or other transfers of property, including
transfers in trust made to a class of persons including, but not limited
to, children, grandchildren, heirs, issue, lineal descendants, and next of
kin, for purposes of inheritance and applicability of statutes,
documents, and instruments, whether executed or created before or
after May 30, 1996, unless the document or instrument expressly
includes the adopted person by name or expressly states that it includes
a person who is eighteen years of age or older at the time the person is
adopted.
On appeal, Cindy argues she qualifies as a beneficiary under the Trust
by operation of R.C. 3107.15(A)(2). She contends that while R.C. 3107.15(A)(2)
applies retroactively, the exception set forth under R.C. 3107.15(A)(3)
unconstitutionally imposes burdens and obligations on a transaction that transpired
before the effective date of the amended statutory provision.
Whether a statute is unconstitutionally retroactive requires a two-
step determination. Hyle v. Porter, 117 Ohio St.3d 165, 2008-Ohio0542, 882
N.E.2d 899, ¶ 7-9. The initial determination is whether the General Assembly
intended the statute to apply retroactively. Id. at ¶ 8. Because statutes are presumed
to apply only prospectively, the statute must contain some language indicating that
it applies to transactions or conduct occurring on or before the effective date of the
statute, before it will be held unconstitutional. Bielat v. Bielat, 87 Ohio St.3d 350,
721 N.E.2d 28 (2000).
R.C. 3107.15(A)(3) states that its prohibitions against transfers of
trust property apply to any and all documents or instruments, “whether executed or
created before or after May 30, 1996.” Thus, the language set forth under R.C.
3107.15(A)(3) demonstrates the General Assembly’s clear intent to apply the section
retroactively.
The second determination that a constitutional inquiry requires is
whether the retroactive statute is substantive or merely remedial. Enactment of
retroactive remedial statutes does not offend Article II, Section 28. See id.; Nease v.
Med. College Hosp., 64 Ohio St.3d 396, 596 N.E.2d 432 (1992). “On the other hand,
a retroactive statute is substantive — and therefore unconstitutionally retroactive —
if it impairs vested rights, affects an accrued substantive right, or imposes new or
additional burdens, duties, obligations, or liabilities as to a past transaction.” Id. at
353, citing State v. Cook, 83 Ohio St.3d 404, 700 N.E.2d 570 (1998); see also Van
Fossen v. Babcock & Wilcox Co., 36 Ohio St.3d 100, 522 N.E.2d 489 (1983).
Here, Cindy does not dispute that her rights did not vest until after
Nancy’s death in May 2016, which occurred after the effective date of R.C.
3107.15(A)(3). However, she contends that R.C. 3107.15(A)(3) is substantive
because it “unconstitutionally imposes restrictions impacting the intent of the
Settlor which did not exist at the time of the drafting of the document.” Thus, she
asserts that retroactive application of the statute would unconstitutionally impair
the Settlor’s right to distribute and protect his property in violation of Article I,
Section 1, of the Ohio Constitution. In support of this proposition, Cindy relies
extensively on the Second District’s constitutional interpretation of R.C.
3107.15(A)(3) in Bank One Trust Co., N.A. v. Reynolds, 173 Ohio App.3d 1, 2007-
Ohio-4197, 877 N.E.2d 342 (2d Dist.).
Reynolds concerned the interpretation of certain language contained
in a trust established by the last will and testament of the decedent in 1959. The
trust provided that following the decedents’ death, the trustee shall have discretion
to manage and apply the assets and income of the trust for the use of the decedent’s
daughter, grandchildren, or then living issue. The trust further provided that,
following the death of the decedent’s daughter, the trustee was to “hold and manage
[the] trust assets for the benefit successively of my living lineal descendants per
stirpes, indefinitely, subject only to the termination of the trust as hereafter
provided.” Relevant to his appeal, the Reynold’s trust defined the terms “lineal
descendants” and “issue” as including “both blood and adoption relationships.”
Thus, pursuant to the express terms of the Reynold’s trust, adopted individuals were
unambiguously named as intended beneficiaries under the terms of the trust.
In Reynolds, the decedent died in 1964 and his daughter died in 2001.
Pursuant to the terms of the trust, the trustee commenced an action to seek a
declaration concerning the status of the decedent’s two great-grandchildren as
potential beneficiaries. One of the potential beneficiaries, Mickey, was adopted by
the decedent’s blood grandchild, appellant, Rodney Reynolds, when Mickey was 27
years old. Ultimately, the probate court determined that Mickey was barred from
benefitting from the trust pursuant to the language set forth under R.C.
3107.15(A)(3). Id. at ¶ 4-8.
On appeal, Reynolds argued that the probate court erred when it
determined that Mickey is not a “lineal descendant” of the decedent and, therefore,
not among the class of persons who are beneficiaries of the testamentary trust. Id.
at ¶ 11. In assessing the plain language of R.C. 3107.15(A)(3), the Second District
noted that the trust “neither identifies Mickey by name nor states that persons who
were more than eighteen years of age when they were adopted are entitled to benefit
from the trust.” Id. at ¶ 18. Thus, the appellate court concluded that
“notwithstanding the broad definition of ‘lineal descendants’ in the trust, Mickey is
barred from benefitting from the trust pursuant to the requirements of R.C.
3107.15(A)(3).” Id.
However, this did not end the appellate court’s analysis. Reynolds
further argued that R.C. 3107.15(A)(3), which became effective of March 14, 2003,
“cannot retroactively affect Mickey’s status as a beneficiary under the trust
established by [the decedent], a status which became effective on the death of her
daughter * * * on January 7, 2001.” Id. at ¶ 21. In assessing whether retroactive
application of R.C. 3107.15(A)(3) is substantive, the appellate court observed that (1)
the trust identified its beneficiaries as “lineal descendants,” (2) the trust defined
lineal descendants broadly to include “in every instance both blood and adoption
relationships,” and (3) the definition of lineal descendants “makes no distinction
with respect to the age of the person when he or she is adopted.” Id. at ¶ 26. Thus,
the appellate court determined that absent the new requirements of R.C.
3107.15(A)(3), Mickey would otherwise be considered a lineal descendant pursuant
to the terms broad definition in the trust. Under such circumstances, the appellate
court found R.C. 3107.15(A)(3) to be unconstitutional, stating:
[R.C. 3107.15(A)(3)] requires the testator to also identify by name in
the trust document those persons who are adults when they are
adopted, or to include a provision in the trust document expressly
including persons who are eighteen or more years of age when they are
adopted. [The decedent] was not subject to those “burdens” or
“obligations” when she wrote her will. They are burdens because they
limit a settlor’s right to create a trust as a means of “protecting
property,” which Section 1, Article I of the Ohio Constitution identifies
as an inalienable right. R.C. 3107.15(A)(3) thus directly and materially
affects substantive rights, and being retroactive in its effects with
respect to the provisions of the testamentary trust that benefits
[Mickey], R.C. 3107.15(A)(3) violates Article II, Section 28, and is
therefore unconstitutional.
Id. at ¶ 27. Accordingly, the Second District reversed the judgment of the probate
court and remanded the matter for the court “to declare that [Mickey] is a lineal
descendant of [the decedent].” Id. at ¶ 49.
After careful review, we find the unique circumstances presented in
Reynolds to be distinguishable. Here, Cindy’s reliance on Reynolds is predicated on
her belief that “the 1960 Trust language must be deemed to include persons adopted
by [the Settlor] by virtue of the presumption that arises under the stranger to the
adoption rule.” However, as previously stated, we reject Cindy’s interpretation of
the Trust and her reliance on the stranger to the adoption rule. Given the status of
Ohio law in 1960, we find the Settlor could not have intended to have adult adoptees
included in the class of “child[ren] or more remote descendant of the Settlor who
shall be born after the date of this instrument.” Unlike the circumstances presented
in Reynolds, the Trust in this case contained no language indicating that the Settlor
intended the class of beneficiaries to include “adopted relationships,” which would
reasonably include adult adoptees, as the testator did in Reynolds. Thus, unlike
Reynolds, the requirements of R.C. 3107.15(A)(3) are not inconsistent with the
Settlor’s intent in this case, and therefore, do not retroactively impose new burdens
or restrictions on the Settlor’s “right to create a trust as a means of protecting his
property.” In short, R.C. 3107.15(A)(3) does not alter the legal consequences of the
1960 instrument. Accordingly, we are unable to conclude that R.C. 3107.15(A)(3) is
unconstitutional as applied to the facts of this case.
Assuming arguendo that the provision governing adopted persons
under R.C. 3107.15(A)(2) applies retroactively to the instant Trust because it does
not expressly exclude an adopted person from its operation or effect, we agree with
the trial court that application of R.C. 3107.15(A)(3) is appropriate and consistent
with the intention of the Settlor in this case. Because the Trust neither identifies
Cindy by name nor states that persons who were more than 18 years of age when
they were adopted are entitled to benefit from the Trust, Cindy is barred from
benefitting from the Trust. Accordingly, we find the trial court did not err in
granting judgment in favor of Jeffrey and Amy Firestone and declaring that “R.C.
3107.15(A)(3) is constitutional as applied to the Trust and operates to exclude
defendants Cindy Firestone and Deborah Lynn Boylen from status as beneficiaries
of the Trust.”
Appellant’s sole assignment of error is overruled.
Judgment affirmed.
It is ordered that appellee recover from appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to the common pleas court,
probate division, to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27
of the Rules of Appellate Procedure.
EILEEN T. GALLAGHER, PRESIDING JUDGE
FRANK D. CELEBREZZE, JR., J., CONCURS;
RAYMOND C. HEADEN, J., CONCURS IN JUDGMENT ONLY