1. Adoption--adopted children as trust beneficiaries--1935
trust
Two adopted children were entitled to take as “issue” or
“descendants” under the terms of an irrevocable inter vivos trust
created in 1935 where the natural children contended that adopted
children were presumptively excluded in 1935 from taking as issue
or descendants unless the terms of the trust clearly indicated an
intent to include them; that the settlor here had given stock to
the adoptive mother on the assumption that the adopted children
could not take under the trust; and that the application of
N.C.G.S. § 48-1-106(e) to allow the children to take ignores the
circumstances existing at the time of the trust and the intent of
the settlor, resulting in a windfall to the adopted children.
The terms of the statute are clear and unambiguous; the trust was
a written instrument executed before 1 October 1985 and no
intention to exclude the adopted grandchildren plainly appears
from the terms of the instrument. Also, the court did not err by
granting defendant's motion to strike plaintiff's allegations
regarding the purported gift of stock since N.C.G.S. § 48-1-
106(e) precludes looking beyond the terms of the trust instrument
in determining whether defendants share in the distribution of
the trust.
2. Appeal and Error--notice of appeal--subsequent ruling on
motion for attorney fees
The trial court erred in a declaratory judgment action to
determine whether adopted children could take under a trust by
ruling on defendants' motion for attorney fees pursuant to
N.C.G.S. § 6-21(2) after plaintiffs gave notice of appeal from a
judgment on the pleadings. The court stated that plaintiffs'
action was without merit and the decision to award attorney fees
was clearly affected by the outcome of the judgment from which
plaintiffs appealed. Appeal by plaintiffs from judgments entered 31 March 1998
and 13 August 1998 by Judge Sanford L. Steelman in Richmond
County Superior Court. Heard in the Court of Appeals 15 February
1999.
On 31 December 1935, John Gibbons, Sr. (“Gibbons”) created
an irrevocable inter vivos trust for the benefit of his wife,
Virginia Ware Gibbons, their four children, and “their
successors.” The trust provisions directed the trustee Wachovia
Bank to distribute income to Gibbons' wife and their children
during their lives. The trust further created a contingent
remainder interest in the trust principal to those surviving
“issue” or “descendants” of Gibbons' children per stirpes at the
time of final termination and distribution of the trust. The
trust instrument provided that the trust would terminate and the
principal would be distributed to the surviving “issue” or
“descendants” after the death of the “last survivor of Grantor's
wife and children hereinabove named and when the youngest living
grandchild of the Grantor shall attain the age of twenty-one (21)
years.” The trust instrument made no mention of adopted children
or grandchildren.
In 1947, one of Gibbons' daughters, Virginia Gibbons
Royston, adopted defendants Dawn Royston Cole and Philip Royston.
According to plaintiffs, after Virginia adopted Cole and Royston,
Gibbons gave “a substantial gift of stock” to Virginia for the
benefit of Cole and Royston. Gibbons died on 27 December 1962.
All of Gibbons' grandchildren, natural and adopted, have reached
21 years of age and Gibbons' last surviving child died on 2February 1998, triggering termination of the trust.
On 20 November 1997, Gibbons' four natural grandchildren
filed a declaratory judgment action, requesting the court to
enter an order declaring that the adopted grandchildren,
defendants Cole and Royston, are not entitled to share in the
distribution of the trust. Defendants Cole and Royston moved to
dismiss, requested judgment on the pleadings, and moved to strike
the portions of plaintiffs' complaint that referred to the
alleged gift of stock to Virginia Gibbons Royston. Defendant
trustee Wachovia Bank agreed not to distribute the trust corpus
until the trial court determined whether defendants were entitled
to share in the distribution.
On 3 April 1998, the trial court granted defendants' motions
to strike and for judgment on the pleadings, concluding that
“defendants . . . are entitled to share in the distribution of
income and principal of the trust.” In a written order, the
trial court stated that defendants' motion for attorneys fees
should be placed on the trial court calendar for 13 April 1998.
On 27 April 1998, plaintiff-appellants gave notice of appeal from
the trial court's entry of judgment on the pleadings. On 1 June
1998, the trial court held a hearing on defendants' motion for
attorneys fees. On 13 August 1998, the trial court entered a
final order granting defendants' attorneys fees motion. On 17
August 1998, plaintiffs gave notice of appeal from the trial
court's award of attorneys fees to defendants. Plaintiffs'
appeals have been consolidated here.
Shipman & Associates, L.L.P., by Gary K. Shipman and C. WesHodges, Jr., for plaintiff-appellants.
Etheridge, Moser, Garner & Bruner, P.A., by Terry R. Garner
and Christopher N. Heiskell, for defendant-appellees.
Hunton & Williams, by Albert Diaz, for defendant Wachovia.
Thigpen & Jenkins, L.L.P., by James H. Jenkins, for
defendant Mary Elizabeth Gibbons Sutherland (deceased).
EAGLES, Chief Judge.
[1]The primary issue before us is whether, pursuant to G.S.
48-1-106(e), the two adopted children of Gibbons' daughter,
Virginia Gibbons Royston, are entitled to take as “issue” or
“descendants” under the terms of the irrevocable inter vivos
trust created by Gibbons in 1935. G.S. 48-1-106(e) provides:
In any deed, grant, will, or other written
instrument executed before October 1, 1985,
the words "child," "grandchild," "heir,"
"issue," "descendant," or an equivalent, or
any other word of like import, shall be held
to include any adopted person after the entry
of the decree of adoption, unless a contrary
intention plainly appears from the terms of
the instrument, whether the instrument was
executed before or after the entry of the
decree of adoption. The use of the phrase
"hereafter born" or similar language in any
such instrument to establish a class of
persons shall not by itself be sufficient to
exclude adoptees from inclusion in the class.
In any deed, grant, will, or other written
instrument executed on or after October 1,
1985, any reference to a natural person shall
include any adopted person after the entry of
the decree of adoption unless the instrument
explicitly states that adopted persons are
excluded, whether the instrument was executed
before or after the entry of the decree of
adoption.
G.S. 48-1-106(e) (1996). As its text clearly indicates, G.S. 48-
1-106(e) must be applied retroactively and gives adopted children
the same rights as natural children to share in property conveyedthrough deeds, grants, wills, or other written instruments,
unless the instruments expressly exclude them. Plaintiffs argue
that G.S. 48-1-106(e) should not apply to defendants. Plaintiffs
first contend that to allow defendants to share in the
distribution conflicts with the intent of the settlor Gibbons.
Plaintiffs contend that Gibbons' intent not to include defendants
is evidenced by the “substantial gift of stock” that Gibbons
purportedly gave to the defendants' mother for the benefit of the
defendants. Plaintiffs argue that when the trust was executed in
1935 (before enactment of G.S. 48-1-106(e) in 1996), adopted
children were presumptively excluded from taking as “issue” or
“descendants” under the trust unless the terms of the trust
clearly indicated an intent to include them. Plaintiffs contend
that Gibbons wanted to provide equally for Gibbons' natural and
adopted grandchildren and that he gave the stock to Virginia
Gibbons Royston after she adopted the children on his assumption
that they could not take as “issue” or “descendants” under the
trust. According to plaintiffs, “the trial court's strictapplication of [G.S. 48-1-106(e)] ignores the circumstances
existing at the time of the creation of the Trust, the intent of
the settlor, and results in a windfall to the appellees, which
clearly was not intended by the General Assembly in enacting the
adoption statutes.”
Plaintiffs' argument fails. The terms of the statute are
clear and unambiguous. Accordingly, we must give G.S. 48-1-
106(e) its plain and definite meaning. We are without power to
create provisions and limitations not contained in the language
of the statute itself. State v. Green, 348 N.C. 588, 596, 502
S.E.2d 819, 824 (1998). Here, the irrevocable inter vivos trust
created in 1935 was clearly a “written instrument executed before
October 1, 1985,” and no intention to exclude the adopted
grandchildren plainly appears from the terms of the instrument.
Accordingly, we are required by G.S. 48-1-106(e) to conclude that
the defendants are entitled to share in the distribution of the
trust as “issue” or “descendants” of their adoptive mother,
Virginia Gibbons Royston. In Peele v. Finch, 284 N.C. 375, 383,
200 S.E.2d 635, 641 (1973), the Supreme Court construed G.S. 48-
23(3), the predecessor to 48-1-106(e), concluding that an adopted
child was entitled to take under a will as “issue” of the
testator's children pursuant to the statute. The Peele Court
stated:
Clearly, the purpose of the Legislature in
adding to G.S. 48-23[3], [now G.S. 48-1-
106(e)] enacted almost immediately after the
decision of this Court in Thomas v. Thomas,
supra, was to change the law as there
declared. The express provision of the
statute is that in any will the word 'issue'
shall be held to include any adopted person,unless the contrary plainly appears by the
terms of the will itself. It is also
expressly provided by the statute that such
rule of construction shall apply whether the
will was executed before or after the final
order of adoption and irrespective of whether
the will was executed before or after the
enactment of the statute.
Peele v. Finch, 284 N.C. 375, 381-82, 200 S.E.2d 635, 640 (1973).
See also Wachovia Bank and Trust Co. v. Chambless, 44 N.C. App.
95, 105, 260 S.E.2d 688, 695 (1979); and Stoney v. MacDougall, 31
N.C. App. 678, 681, 230 S.E.2d 592, 593 (1976), cert. denied, 291
N.C. 716, 232 S.E.2d 208 (1977).
We recognize that the application of G.S. 48-1-106(e) may
cause arguably unfair results. However,
[t]he terms of the statute being clear, no
construction of its provisions by this Court
is required. In such event, it is our duty
to apply the statute so as to carry out the
intent of the Legislature, irrespective of
any opinion we may have as to its wisdom or
its injustice to the deceased testator,
unless the statute exceeds the power of the
Legislature under the Constitution.
Peele v. Finch, 284 N.C. 375, 382, 200 S.E.2d 635, 640
(1973) (citations omitted) (holding that G.S. 48-23 [now G.S.
48-1-106(e)] does not exceed the power of the legislature under
the Constitution).
We also conclude that the trial court did not err in
granting defendants' motion to strike plaintiffs' allegations
regarding the purported gift of stock since G.S. 48-1-106(e)
precludes us from looking beyond the terms of the trust
instrument in determining whether defendants share in the
distribution of the trust. [2]We next address whether the trial court erred when it
ruled on defendants' motion for attorneys fees pursuant to G.S.
6-21(2) after plaintiffs gave notice of appeal to this Court from
the trial court's judgment on the pleadings. G.S. 1-294 (1996).
G.S. 6-21(2) governs attorneys fees in this case and provides in
pertinent part:
Costs in the following matters shall be taxed
against either party, or apportioned among
the parties, in the discretion of the court:
2) Caveats to wills and any action or proceeding
which may require the construction of any will or
trust agreement, or fix the rights and duties of
parties thereunder; ....
G.S. 6-21(2) (1997). Plaintiffs contend that the trial
court erred in granting defendants' motion for fees because the
court was without jurisdiction to proceed on the motion after
appellants filed an appeal in this Court. We agree. The record
shows that the trial court granted defendants' motion for
judgment on the pleadings on 3 April 1998. On 27 April 1998,
plaintiffs gave notice of appeal from the trial court's entry of
judgment on the pleadings. On 1 June 1998, the trial court held
a hearing on defendants' motion for attorneys fees. On 27 July
1998, the trial court entered a final order granting defendants'
motion. G.S. 1-294 provides in pertinent part:
When an appeal is perfected as provided by
this Article it stays all further proceedings
in the court below upon the judgment appealed
from, or upon the matter embraced therein;
but the court below may proceed upon any
other matter included in the action and not
affected by the judgment appealed from . . .
. G.S. 1-294 (1996). In the final order granting defendants'
motion for attorneys fees, while defendants appeal from judgment
on the pleadings was pending, the trial court stated: “[T]he
action of the plaintiffs was without merit. It would be
inappropriate in such a matter to tax attorneys fees and costs
against the trust corpus. In this matter, costs, including the
defendants' reasonable attorneys fees, should be taxed against
the plaintiffs.” Here, the trial court's decision to award
attorneys fees was clearly affected by the outcome of the
judgment from which plaintiffs appealed. Accordingly, the appeal
by plaintiffs from the judgment on the pleadings deprived the
superior court of the authority to make further rulings in the
case until it returns from this Court. G.S. 1-294. Oshita v.
Hill, 65 N.C. App. 326, 330, 308 S.E.2d 923, 927 (1983). We
vacate the trial court's award of attorneys fees and we remand to
the trial court for further consideration regarding attorneys
fees as the circumstances require.
We need not address plaintiffs' remaining assignments of
error.
Affirmed in part and vacated and remanded in part.
Judges WYNN and EDMUNDS concur.
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