In the Matter of: H.M. Mosher Trust Dated January 14, 1938
CA 2017-0653-SG
| Del. Ch. | Oct 29, 2018Background
- Henry M. Mosher created a trust (1938) providing income to his four children for life, then to their children (grandchildren) for life, and upon a grandchild’s death to that grandchild’s “heirs at law” as determined by California succession law; the Trust terminates on the death of the last named grandchild and corpus is divided among then-income beneficiaries in proportion to their income shares.
- Henry’s daughter Marjorie took a 1/4 income share; her only surviving child Valerie renounced that share, so Valerie’s four children (Mark, John, Craig, Kent) each received 1/4 of Marjorie/Valerie’s share.
- Mark (one of those great-grandchildren) died leaving a daughter, Ashley (a great‑great‑grandchild). A dispute arose whether Mark’s life‑income share passes intact to Ashley or must be redistributed among Valerie’s heirs (Mark’s siblings) so Ashley would receive only a prorated share.
- Petitioners (four Trust managers) argued the Trust requires re‑allocation on each life‑income death so that upon Mark’s death his share is redistributed among Valerie’s heirs, producing a “death‑timing” inequality among stirpes; Respondent (Ashley) argued she, as Mark’s sole descendant and an heir of Valerie under California intestacy/stirpes rules, succeeds to Mark’s entire life income share.
- The Delaware Court of Chancery (applying California law, as the Trust specifies) granted Ashley’s motion and denied the Petitioners’ motion, holding the Trust should be interpreted to effect per‑stirpes succession consistent with California law and settlor intent—Ashley takes Mark’s full life interest.
Issues
| Issue | Petitioners' Argument | Respondent's Argument | Held |
|---|---|---|---|
| Whether a deceased great‑grandchild’s life‑income share lapses and is reallocated among the grandchild’s heirs so descendants of a deceased heir get only a prorated share (the “death‑lottery” result) | Trust language (“heirs at law” of the grandchild) requires that when a life beneficiary dies the interest reverts and is redistributed among the grandchild’s heirs as of that time, producing partial shares for descendants of a deceased heir | The Trust imports California intestacy (per stirpes) so the then‑living representative(s) of each stirpital line take the same life‑income share as their progenitor; Mark’s sole descendant Ashley takes his full share | Held for Respondent: the Trust should be read to vest Valerie’s entitlement per stirpes among four lines; Ashley, as sole representative of Mark’s line, succeeds to his full life‑income share (Petitioners’ motion denied; Respondent’s granted) |
| Whether equitable doctrines (estoppel/unclean hands) independently bar Petitioners from asserting the new interpretation based on trustee letters | Petitioners relied on Williams; argued prior case supports their claim | Respondent asserted trustee statements and prior practice estopped contrary position | Court decided on Trust language and settled law and did not reach estoppel/unclean‑hands arguments (unnecessary) |
Key Cases Cited
- OSI Sys., Inc. v. Instrumentarium Corp., 892 A.2d 1086 (Del. Ch. 2006) (standard for judgment on the pleadings)
- Anolick v. Holy Trinity Greek Orthodox Church, Inc., 787 A.2d 732 (Del. Ch. 2001) (pleading standards and inferences on Rule 12(c))
- United Vanguard Fund, Inc. v. TakeCare, Inc., 693 A.2d 1076 (Del. 1997) (discussion of procedural standards for motions on the pleadings)