Opposition Brief — Schlaeppi v. Delaware Trust Co.

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NO. 86-1962

su 1988

JOSEPH F. SPANIOG, JR.

CLERK

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1987

CATHERINE duPONT SCHLAEPPI, et al.,

Petitioners,

DELAWARE TRUST COMPANY, Trustee under a Trust

Indenture with MARION DUPONT SCOTT, deceased,

dated June 7, 1960, and amended on June 17, 1970,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

SUPREME COURT OF THE STATE OF DELAWARE

BRIEF IN OPPOSITION AND APPENDIX

Blaine T. Phillips

Counsel of Record

Potter Anderson & Corroon

350 Delaware Trust Building

P.O. Box 951

Wilmington, DE 19899

(302) 658-6771

Attorney for Respondent

Delaware Trust Company

Of Counsel:

Daniel F. Lindley

Potter Anderson & Corroon

July 10, 1987

SMITH EOWARDOS OUNLAP COMPANY 2067 E ALLEGHENY AVENUE, PHILADELPHIA, PA 19134 (215) 425-8800

QUESTIONS PRESENTED

Pursuant to Supreme Court Rule 34.2, respondent Deia-

ware Trust Company (“Delaware Trust”) here restates the

questions presented which are inaccurately stated in the peti-

tion for a writ of certiorari (Pi).*

1. Whether Mrs. Scott’s individual act of executing a

private trust agreement, which defines her beneficiaries in a

manner that unambiguously excludes all adopted persons, is

transformed into “state action” under the Fourteenth Amend-

ment where the State of Delaware neither encouraged Mrs.

Scott to exclude adopted persons nor has any role in the

administration of the trust, and where the Delaware courts

did not affirmatively enforce the trust agreement at the behest

of Delaware Trust, the trustee, but merely refused petitioners’

demand to rewrite Mrs. Scott’s trust to include adopted per-

sons?

2. Whether the Delaware rule presuming adopted per-

sons to be included within a class of trust beneficiaries but

permitting the settlor, by use of clear and unambiguous lan-

guage in the trust instrument, to exclude adopted persons

warrants the Court's attention where (a) the Court is tradi-

tionally deferential to the States’ regulation of post-mortem

dispositions of property, (b) historically, adopted persons have

not been stigmatized on account of their status, (c) the Dela-

ware rule permits settlors to maintain their testamentary

freedom of choice and to prevent unanticipated dilutions of

their estates, and (d) the Delaware rule does not allow adopted

persons to be more readily excluded than natural persons?

3. Whether this Court has jurisdiction to review the

determination of the Delaware Supreme Court that a trust

settlor has the right under Delaware law, upon an expression

of clear and unambiguous intent, to exclude adopted persons

from the class of trust beneficiaries where that determination

is based solely upon the Delaware Supreme Court's inter-

*Throughout this response, the petition for a writ of certiorari is cited as “P

—..” petitioners’ appendix is cited as “__a,” and Delaware Trust's appendix is

cited as “__b.”

pretation of the Delaware statute defining the rights and

obligations of adopted children?

Even if the Court were to decide the first two questions in

favor of petitioners, the result below would not change be-

cause the judgment of the Delaware Supreme Court rests

upon independent and adequate grounds of Delaware law.

Before the Court even addresses the petitioners’ first two

questions, the petition must be denied if the following ques-

tion, which is misleadingly omitted from the petition, is an-

swered in the negative:

4. Whether the judgment of the Delaware Supreme

Court, which is based on (a) Mrs. Scott’s exercise of her right

under Delaware law to exclude adopted persons and (b) the

res judicata effect under Delaware law of the Delaware Decree

upon all claims not “embodied in Count IV of the Delaware

Action,” would be modified in any respect by a decision of this

Court disagreeing with the Delaware Supreme Court's analy-

sis of the Fourteenth Amendment issues?

TABLE OF CONTENTS

SER Ys 0 i

8) V

RULE 28.1 LISTING OF PARENTS,

SUBSIDIARIES AND AFFILIATES ............... vi

erenUeeeee Ge GPP SSUES GAGE ..... 2.6... eee eee

SUMMARY OF ARGUMENT .......................

I. THE JUDGMENT BELOW WAS BASED UPON

INDEPENDENT AND ADEQUATE GROUNDS

OF DELAWARE LAW, WHICH DEPRIVES THE

COURT OF JURISDICTION OVER PLAIN-

TIFFS’ CONSTITUTIONAL CLAIMS ......... 6

A. The Judgment Of The Delaware Supreme

Court On The Meaning Of Delaware Law

Cannot Give Rise To A Due Process Claim

That It Misapplied Delaware Law .......... 6

B. Plaintiffs’ Equal Protection Claim Is Indepen-

dently Barred By The Doctrine Of Res Judi-

ee aa ws 6< So eos <x ws 8

Il. THERE IS NO SUBSTANTIAL FEDERAL

QUESTION BECAUSE THE DELAWARE

COURTS’ REFUSAL TO SET ASIDE THE

TERMS OF MRS. SCOTT’S TRUST DOES NOT

AMOUNT TO STATE ACTION ............... 10

III. CERTIORARI IS NOT APPROPRIATE IN THIS

CASE BECAUSE PLAINTIFFS’ CLAIM LACKS

IMPORTANCE AND MERIT IN ANY EVENT .. 13

A. Plaintiffs, As Adopted Children, Do Not Fall

Within A “Quasi-Suspect” Classification .... 13

o> Ol =

ill

TABLE OF CONTENTS—(Continued)

Page

B. There Is No Need For The Court To Intervene

In This Private Dispute Because 13 Del.C.

§919(a), As Applied By The Delaware Courts,

Serves Legitimate State Interests And Does

Not Treat Adopted Persons Unfavorably ..... 14

ee 8) a ee Peer ee ee er ere 16

APPENDIX

Decree of the Circuit Court of Orange County,

Virginia, dated October 22, 1984, Chancery No.

| SE aN ree ee Gir Pe, a on Se Pe eee lb

Decree of the Court of Chancery of the State of

Delaware In and For New Castle County, dated

October 25, 1984, Civil Action No. 7421 ....... 12b

Opinion of the Court of Chancery of the State of

Delaware In and For New Castle County, dated

September 15, 1986, reported at 525 A.2d 562 .. 16b

Excerpt from Transcript of Oral Argument in the

Supreme Court of the State of Delaware (March

a ea i lay cp eS Pree 31b

TABLE OF AUTHORITIES

Cases Page

Bium v. Bacon, 457 U.S. 132 (1962) ............5..... i)

Blum v. Yaretsky, 457 U.S. 991 (1982) ............... 1]

Coleman v. Alabama, 399 U.S. 1 (1970).............. 8,9

Clayborne v. Califano, 603 F.2d 372 (2d Cir. 1979)..... 14

DuPont v. Equitable Security Trust Co., 122 A.2d 429

i | sere ree GER Ce ee 15

Dutra DeAmorim v. Norment, 460 A.2d 511 (Del. 1983) . 15

Evans v. Abney, 396 U.S. 435 (1970) ................. 12

Evans v. Newton, 382 U.S. 296 (1966) ............... 12

Gordon v. Gordon, 124 N.E.2d 228 (Mass. 1954), cert.

Gamba, DEP UD. BET CID hoe ccalcdceesaivcnkss 12

Herb v. Pitcairn, 324 U.S. 117 (1945) ................ 10

Holbrook v. Califano, 636 F.2d 157 (6th Cir. 1980) ..... 14

Hortonville Joint School Dist. No. 1 v. Hortonville Educ.

Aat'a, G2 US. SBS CITB) «wo ce chee eccenas 8,9

International Longshoreman’s Assn., AFL-CIO v. Davis,

me) eee ee ee 10

Jackson v. Riggs Nat'l Bank of Washington, D.C., 314

Ae Ce eho ces seesesaseeeee was 7

Jaffke v. Dunham, 352 U.S. 280 (1957) ...........0--. 9

Moose Lodge No. 107 v. Irvis, 407 U.S. 163 (1972) ..... 13

Palmore v. Sidoti, 466 U.S. 429 (1984) ............... 1]

Rendell-Baker v. Kohn, 457 U.S. 830 (1982)........... 16

Rice v. Sioux City Memorial Park Cemetery, Inc., 349

A SEE, ss oh care ed aiedaseen oad ee ee 16

Rodriguez v. Sec’y of Health, Education and Welfare, 644

Fe A SNE ois o dee eeecceeies taveaase 14

Shelley v. Kraemer, 334 U.S. 1 (1948) .............. 11,12

TABLE OF AUTHORITIES—(Continued )

Cases Page

Trimble v. Gordon, 430 U.S. 762 (1977) ............ 11,13

United States v. American Ry. Express Co., 265, U.S. 425

SED 5'04 6 0s 0 4.00068 ode ad 995005 410d On eREe s)

United States Nat’l Bank v. Snodgrass, 275 P.2d 860 (Or.

ee an de uhh kA KOON OOOMAEE STE 12

Williams v. Mathews, 441 F.Supp. 1045, (E.D.La. 1977),

affd sub nom. Williams v. Califano, 566 F.2d 1044 (5th

Cir. 1978), cert. denied, 439 U.S. 821 (1978) ........ 14

Wilmington Trust Co. v. Chichester, 369 A.2d 701

(Del.Ch. 1976), affd, 377 A.2d 11 (Del. 1977) ...... 7

Wilmington Trust Co. v. Huber, 311 A.2d 892 (Del.Ch.

1973) affd sub nom. Benz v. Wilmington Trust Co. , 333

i CEE, GTUED ko todsxcanew das ecessureusennl 7

Zacchini v. Scripps-Howard Broadcasting Co., 433 U.S.

ED 0 i oe ee Sad a canna ee eRe eee ee 10

Constitutional Provisions

Se RE, SEL, FEE 00 cae cnaceevseceacses ] et passim

Statutes

EN cs caw cesses eaneenhewa 6, 7, 8, 13, 14

Rules.

1.3 Gapmemne Coumt Bate 87.006). 5c soc sccscccascccce 16

Rule 28.1 Listing of Parents,

Subsidiaries and Affiliates

Delaware Trust Company does not presently have a par-

ent corporation or any affiliate corporations. All subsidiaries of

Delaware Trust Company are wholly owned by it. However, on

May 21, 1987 Delaware Trust Company entered into an

Agreement of Reorganization and Merger by which it will

become a wholly-owned subsidiary of Meridian Bancorp, Inc.,

of Reading, Pennsylvania, after January 1, 1988.

STATEMENT OF THE CASE

The petition for certiorari now before the Court is the

latest installment in the seemingly endless litigation in-

stituted by petitioners (hereinafter, the “plaintiffs”) to insinu-

ate themselves as beneficiaries of a 1960 inter vivos trust

agreement (the “Trust”) between Marion duPont Scott (“Mrs.

Scott”) and Delaware Trust, notwithstanding Mrs. Scott's un-

ambiguous language excluding all adopted persons (such as

plaintiffs) as beneficiaries of the Trust. Plaintiffs improperly

seek to have the court review issues of Delaware law that were

decided by two Delaware courts, including whether Mrs. Scott

had, and exercised, the right under Delaware law to exclude

adopted persons. Plaintiffs also claim that the judgments of

the Delaware courts, which have the effect of excluding

adopted persons as Trust beneficiaries, amount to a denial of

plaintiffs’ equal protection rights under the Fourteenth

Amendment.

The dispute has its origins in Mrs. Scott’s June 17, 1970

amendment (47a-53a) to her Trust (39a-46a). Having no chil-

dren herself, Mrs. Scott designated the beneficiaries of her

Trust to consist of her grandnieces and grandnephews, and

great grandnieces and great grandnephews (49a-50a). In the

same 1970 amendment Mrs. Scott made clear that her bene-

ficiaries were limited to the “lawful blood descendants” of her

brother, William duPont, Jr; Mrs. Scott expressly excluded

adopted children from the class of “lawful blood descendants”:

An adopted child and such adopted child’s lawful

blood descendants shall not be considered as lawful blood

descendants of the adopting parent or parents or of any-

one who is an ancestor of the adopting parent. (52a).

In 1967, one of Mrs. Scott’s nephews, Henry E. I. duPont,

married Martha Ann Caroline Verge Schneider, who had five

children that were born during her prior marriage: Catherine

duPont Schlaeppi (née Schneider), William Garey Schneider,

Christopher Hans Schneider, Martha Ann Caroline duPont

(née Schneider) and Henry Verge duPont (née Schneider)

(19a). Henry E. I. duPont, already having five natural children

of his own, adopted all five of his wife's children, pursuant to

Delaware adoption laws (Id.). Three of such children were

adopted before Mrs. Scott, in 1970, amended her Trust to

exclude adopted children as beneficiaries (19a-20a).

After Mrs. Scott died on September 4, 1983, Henry E. I.

duPont and all of his adult and minor children and grand-

children (who, including the five adopted children, amounted

to nineteen persons altogether) brought two wide-ranging,

concurrent actions against Delaware Trust, one in the Court

of Chancery of the State of Delaware (the “Delaware Action”)

and the other, also against Mrs. Scott’s executors and other

interested parties, in the Circuit Court of Orange County in

the Cemmonwealth of Virginia (the “Virginia Action”).

The Delaware Action contained multiple counts attack-

ing the validity of the Trust and challenging the apparent

effect of Mrs. Scott's Will upon her Trust. One such count,

known as Count IV, alleged that Mrs. Scott's exclusion of

adopted children violated Delaware law and public policy

(67a-68a).

The Virginia Action differed from the Delaware Action in

that it was principally an attack on Mrs. Scott's testamentary

capacity and various features of her Will (which had been

admitted to probate in Virginia) including her charitable be-

quest to the National Trust for Historic Preservation for pur-

poses of purchasing and preserving her home, Montpelier,

which had once been the home of President James Madison.

After prolonged negotiations, all of the adult parties ex-

ecuted the October 15, 1984 Agreement of Settlement (the

“Settlement Agreement”) to bring an end to the Virginia Ac-

tion, the Delaware Action and a separate, related action in the

Delaware Court of Chancery. Thereafter, the Virginia and

Delaware courts both approved the Settlement Agreement

and entered separate final decrees (the “Virginia Decree’,

lb-11b, and the “Delaware Decree”, 12b-15b).

The Settlement Agreement and the decrees implement-

ing the Settlement Agreement were intended (with two ex-

ceptions) to result in a full and final adjudication of all claims

relating to Mrs. Scott's Trust and Will (14b, 2b-3b, 6b). The

only pertinent exception, in Article VI of the Settlement

Agreement, permitted the plaintiffs to commence a new ac-

tion in Delaware limited to the so-called “adopted children

issue”:

(A) The Adopted Children Issue in the Delaware Ac-

~ tion. The “adopted children issue” as used herein means

the claim embodied in Count IV of the Delaware Action.

The adopted children issue is not being settled or com-

promised by this Agreement or the Decrees to be entered

by the Virginia and Delaware Courts, but the adopted

children issue may be asserted in the new Delaware

Action, as provided in paragraph B below.

B. The New Delaware Action. The parties to this

Agreement who are plaintiffs in the Delaware Action, or

some of them, shall have a right to file, by January 1,

1985 and not thereafter, a new and separate suit in the

Delaware Court raising the adopted children issue (the

“new Delaware Action”). No statute of limitations or lach-

es defense shall be applicable to bar any such new Dela-

ware action if such action is commenced prior to January

1, 1985. (Emphasis supplied. 59a).

Paragraph 3 of the Delaware Decree incorporated the provi-

sions of Article VI of the Setthement Agreement and thus

restricted the scope of the plaintiffs’ new Delaware Action to

“the claim embodied in Count IV of the Delaware Action.”

(14b).

Contrary to the terms of the Settlement Agreement and

the Delaware Decree, the allegations of plaintiffs’ “new Dela-

ware Action” contained three separate, alternative counts:

Mrs. Scott did not intend, factually or legally, to exclude

adopted stepchildren (Count I), Delaware law does not permit

Mrs. Scott to exclude adopted children (Count II) and any

ruling of the Delaware courts enforcing the exclusion of

adopted persons amounts to invidious discrimination prohib-

ited by the Fourteenth Amendment. (Count III). Delaware

Trust moved to dismiss the amended complaint on the

grounds that (a) the res judicata effect of the Delaware Decree

bars Counts I and III of the amended complaint, and (b)

although permitted under the terms of the Delaware Decree,

Count II fails to state a claim on which relief can be granted.

After briefing and argument, the Court of Chancery, in a

memorandum opinion and order dated September 17, 1986,

dismissed the amended complaint (16b-30b, reported at $25

A.2d 562). The Court of Chancery first concluded that plain-

tiffs’ Count II was insufficient because “Delaware law . . . does

not prohibit settlors from excluding adopted persons from

their trusts” (20b) and the language of Mrs. Scott’s Trust “is

consistent with Delaware case law which permits a settlor to

exclude adopted persons from a trust...” (Id.). As for Count

I, the Vice Chancellor determined that its allegations “do not

spring from the claim which was preserved by the Settlement

Agreement [i.e., Count IV of the Delaware Action]”, so it was

barred by the doctrine of res judicata (24b). The Vice Chancel-

lor began His analysis of Count III by assuming, arguendo,

that the plaintiffs’ constitutional claim was not subject to the

bar of res judicata (24b). He found that Count III failed to

' state a claim because there is “no discernable basis for a

finding of state action” (26b) and, in any event, plaintiffs

cannot defeat “the manifest reasonableness of the challenged

Delaware rule of law” (28b). The Vice Chancellor concluded

his opinion, however, with a broad statement concerning the

res judicata effect of the parties’ settlement:

Suffice it to say that my holdings that the claims raised by

plaintiffs are barred by res judicata are not based on

procedural rules or semantics or arcane theories of juris-

prudence. Rather, I have barred the claims pursuant to

the clear language of the Settlement Agreement which

was primarily drafted by plaintiffs’ counsel and which

both sides agreed to only after protracted arm’s-length

negotiations. Whatever plaintiffs may now think about

the effect of the Settlement Agreement, it is clear that

they have gotten what they bargained for. (29b-30b).

On plaintiffs’ appeal to the Supreme Court of the State of

Delaware, the Supreme Court entered a judgment order on

March 13, 1987 (reported at 523 A.2d 981) affirming the

judgment of the Court of Chancery “on the grounds stated in

the well-reasoned opinion of the Vice Chancellor” (1la-2a).

Plaintiffs’ petition for a writ of certiorari seeks review of that

judgment order.

SUMMARY OF ARGUMENT

1. The judgment below rests upon two independent and

adequate grounds of Delaware law: first, Mrs. Scott had, and

exercised, the right to exclude adopted persons as benefici-

aries of her Trust; and second, under the doctrine of res

judicata, plaintiffs’ remaining claims (including their con-

stitutional theory that their exclusion amounts to a denial of

equal protection) were barred upon the entry of the Delaware

and Virginia Decrees. The Court lacks jurisdiction to review

the Delaware courts’ analysis of federal issues where the

judgment would not be changed even if the federal issues

were decided differently.

2. There is no substantial federal issue for the Court to

review because Mrs. Scott’s individual act of excluding

adopted persons as beneficiaries of her private trust is not

fairly attributable to the State of Delaware. Given the absence

of any “state action”, there is no justiciable controversy arising

under the Fourteenth Amendment.

3. There are no compelling circumstances in this pro-

ceeding to warrant the Court's intervention: first, the Court

has traditionally shown great deference toward state regula-

tion of post-mortem dispositions of property; second, as

adopted persons, plaintiffs are not members of a class that,

historically, has been disadvantaged or stigmatized; third, the

Delaware rule allows a settlor to exercise freedom of choice in

making post-mortem dispositions and to prevent unantici-

pated dilutions of his or her estate; and fourth, because Dela-

ware law presumes that a class gift includes adopted persons

and requires a clear showing of intent to exclude such persons

from a trust, Delaware law does not discriminate at all against

adopted persons.

ARGUMENT

I. THE JUDGMENT BELOW WAS BASED UPON INDE-

PENDENT AND ADEQUATE GROUNDS OF DELA-

WARE LAW, WHICH DEPRIVES THE COURT OF

JURISDICTION OVER PLAINTIFFS’ CONSTITU-

TIONAL CLAIMS.

All three of plaintiffs’ “Questions Presented” are derived

from Count III of plaintiffs’ complaint (29a-30a). This was

plaintiffs’ contention that the Delaware courts’ enforcement

of Mrs. Scott's Trust amounts to (1) a violation of due process

because it results from a misapplication of Delaware law

(P25-27), and (2) a violation of plaintiffs’ rights to equal pro-

tection under the Fourteenth Amendment because the Trust

is “invidiously discriminatory” (P 13-24). The Court, however,

cannot reach either alleged constitutional infirmity because

the judgment below rests upon independent and adequate

grounds of Delaware law.

A. The Judgment Of The Delaware Supreme Court

On The Meaning Of Delaware Law Cannot Give

Rise To A Due Process Claim That It Misapplied

Delaware Law.

In the Delaware courts plaintiffs argued that 13 Del.C.

§919(a), which provides that an adopted child has all the

rights and obligations of a natural child, transforms them into

the blood descendants of their adoptive father. The effect of

Delaware law, they claimed, was to render unlawful Mrs.

Scott's exclusion of adopted children from her Trust. When

the Vice Chancellor rejected the notion that a settlor is

powerless under Delaware law to exclude adopteds (19b-20b),

the plaintiffs insisted that they had been denied due process.

The essence of plaintiffs’ due process theory is that 13

Del.C. §919(a) has the effect of immutably placing the plain-

tiffs within their stepfather’s bloodline (P27). The Court of

Chancery determined, however, that 13 Del.C. §919(a) does

not create any such absolute right. In so doing the Vice

Chancellor followed an established line of Delaware cases that

holds that 13 Del.C. §919(a) only provides a rebuttable pre-

sumption that adopted children be considered as natural chil-

dren in the construction of trust instruments. This presump-

tion is overcome by a showing in the trust instrument of a

clear intent to exclude adopted persons. (20b). See, e.g., Wil-

mington Trust Co. v. Chichester, 369 A.2d 701 (Del.Ch. 1976),

affd, 377 A.2d 11 (Del. 1977); Jackson v. Riggs Nat’l Bank of

Washington, D.C., 314 A.2d 178 (Del. 1973).

Plaintiffs similarly complain that they were denied their

“day in court” because the Delaware Supreme Court affirmed

the lower court's conclusion, based upon its review of Mrs.

Scott's Trust alone, that she clearly intended to exclude

adopted persons (P22). Although plaintiffs allege that Mrs.

Scott actually intended not to exclude adopted persons, the

Delaware courts held that such factual claims stated in Count

I were barred by the Delaware Decree (24b). Apart from the

fact that plaintiffs relinquished their “day in court” when they

executed the Settlement Agreement, the refusal of the Dela-

ware courts to entertain plaintiffs’ claims about Mrs. Scott's

“actual” intent was, implicitly, an application of the well-

established Delaware rule that extrinsic evidence of intent is

not admissible unless the instrument itself is ambiguous.

Wilmington Trust Co. v. Chichester, supra, 369 A.2d at 709;

Wilmington Trust Co. v. Huber, 311 A.2d 892, 894-95

(Del.Ch. 1973), affd sub nom. Benz v. Wilmington Trust Co.,

333 A.2d 169 (Del. 1975).

The fact that the Delaware courts rejected plaintiffs’ ar-

gument concerning the effect of 13 Del.C. §919(a) does not

give rise to any due process claim under the Fourteenth

Amendment. The Delaware Supreme Court is the final au-

thority on the meaning of Delaware law. The Court is bound

to accept the Delaware Supreme Court's interpretation of 13

Del.C. §919(a) as creating only a rebuttable presumption in

favor of adopted persons. The Court, likewise, cannot review

the Delaware Supreme Court's decision that Mrs. Scott’s fac-

tual intent cannot be relitigated or its factual determination

that the language of Mrs. Scott's Trust satisfies the require-

ments of Delaware law for excluding adopted persons. Hor-

tonville Joint School Dist. No. 1 v. Hortonville Educ. Ass’n, 426

U.S. 482, 488 (1976); Coleman v. Alabama, 399 U.S. 1, 9

(1970). The judgment of the Delaware courts that Mrs. Scott

had the right under 13 Del.C. §919(a) to exclude adopted

persons, and that her Trust clearly and unambiguously ex-

presses her intent to do so, is a judgment based exclusively on

Delaware law. The Court has no jurisdiction under the Four-

teenth Amendment to determine whether the Delaware

courts misapplied Delaware substantive law relating to Mrs.

Scott's rights as settlor.

B. Plaintiffs’ Equal Protection Claim Is Indepen-

dently Barred By The Doctrine Of Res Judicata.

Although the Delaware Court of Chancery reached, and

rejected, the merits of plaintiffs’ equal protection claim

(24b-29b), plaintiffs’ Count III was dismissed for the additional

reason, arising under Delaware law, that it was barred under the

doctrine of res judicata. This state law ground is wholly indepen-

dent of the constitutional issues and is adequate to support the

judgment dismissing plaintiffs’ Count III.

In the original Delaware Action plaintiffs alleged a claim

(known as Count IV) that Mrs. Scott had excluded adopted

children from her Trust in violation of the provisions of 13

Del.C. §919(a) (67a-68a). When the Delaware Action was

settled, the Settkement Agreement finally resolved all claims

except for the “adopted children issue”; the Settlement Agree-

ment defined the “adopted children issue” as “the claim em-

bodied in Count IV of the Delaware Action” (59a-60a). The

Delaware Decree approving the Settlement Agreement ex-

pressly limited the scope of the present action to the “adopted

children issue” as defined in the Settlement Agreement (14b).

The Delaware Supreme Court affirmed the Vice Chancel-

lors determination that the Delaware Decree imposes the bar of

res judicata upon any claim that was not embodied in the

allegations of Count IV of the Delaware Action (23b-24b).! Plain-

1. Plaintiffs argue (P28-29) that the Delaware courts “took a result-

oriented view” when they held plaintiffs to the terms of their settlement and

gave broad res judicata effect to the Delaware Decree. Although plaintiffs

tiffs do not contend that the res judicata ruling is dependent

upon the constitutional issues, but they insist that res judicata is

“not broad enough in itself to sustain the judgment dismissing

the complaint” (P28). Although the Vice Chancellor initially

assumed, arguendo, that res judicata did not bar plaintiffs’ con-

stitutional claims, he only put the defense of res judicata to one

side so that he could completely dispose of the plaintiffs’ con-

stitutional claims on the merits. The Vice Chancellor's opinion

(29b-30b) leaves no doubt that he also considered the constitu-

tional claims to be barred by the Delaware Decree. Plaintiffs’

complaint had three separate counts. The Vice Chancellor con-

cluded that the claims raised by plaintiffs are barred by res

judicata and that “I have barred the claims[?] pursuant to the

clear language of the Settlement Agreement” (29b, emphasis

added as to “claims”). Yet the Vice Chancellor understood that

“Count II_is not barred by the Settlement Agreement” (19b).

Thus, his conclusion that that (plural) “claims” are barred dem-

onstrates that he ultimately accepted Delaware Trust's submis-

sion that “plaintiffs bargained away their Count I and Count II

claims in the prior Settlement Agreement” (18b-19b).%

clearly hope the Court will correct the Delaware courts’ interpretation of the

meaning of the Settkement Agreement and the Delaware Decree, the

breadth of the res judicata effect of those instruments is exclusively a ques-

tion of Delaware law and is not a matter that is within the Court's jurisdic-

tion. Hortonville Joint School Dist. No. 1 v. Hortonville Educ. Ass’n, supra,

426 U.S. at 488; Coleman v. Alabama, supra, 399 US. at 9.

2. Plaintiffs’ Appendix incorrectly transcribes the plural “claims” as

the singular “claim.” Compare 16a with the conclusion of the Vice Chancel-

lor’s opinion as officially reported at 525 A.2d at 569 (29b).

3. Even if the Delaware courts had not actually decided whether res

judicata bars the plaintiffs’ constitutional claims, Delaware Trust is entitled

to rely upon res judicata as an independent and adequate state law ground.

“It is well accepted . . . that without filing a cross-appeal or cross-petition, an

appellee may rely upon any matters appearing in the record in support of

the judgment below.” Blum v. Bacon, 457 U.S. 132, 137, n.5 (1982); Jaffke v.

Dunham, 352 U.S. 280, 281 (1957); United States v. American Ry. Express

Co., 265 U.S. 425, 435-36 (1924). This is so even though the argument of

appellee or respondent “may involve an attack upon the reasoning of the

lower court or an insistence upon matter overlooked or ignored by it.” Ameri-

can Ry. Express Co., supra, 265 U.S. at 435. Here, of course, Delaware Trust

In short, plaintiffs’ petition seeks the Court’s review of a

Delaware court judgment that rests upon two independent

and state law grounds: Mrs. Scott’s right under Delaware law

to exclude adopteds from her Trust and the res judicata bar of

the Delaware Decree upon all of plaintiffs’ other claims (in-

cluding their constitutional claims). The Court's review of the

Delaware courts’ analysis of the constitutiona! issues would

be purely advisory, having no effect on the Delaware court

judgment. Plaintiffs’ petition should accordingly be denied.

International Longshoreman’s Assn., AFL-CIO v. Davis, —U.S.

_, 106 S.Ct. 1904, 1910 (1986); Zacchini v. Scripps-Howard

Broadcasting Co., 433 U.S. 562, 566 (1977); Herb v. Pitcairn,

324 U.S. 117, 125-126 (1945).

II. THERE IS NO SUBSTANTIAL FEDERAL QUES-

TION BECAUSE THE DELAWARE COURTS’ RE-

FUSAL TO SET ASIDE THE TERMS OF MRS.

SCOTT’S TRUST DOES NOT AMOUNT TO STATE

ACTION.

Before the Court can consider the merits of plaintiffs’

equal protection claim under traditional Fourteenth Amend-

ment analysis, there is a threshold inquiry of whether plain-

tiffs can properly invoke their Fourteenth Amendment rights

in the context of a private, non-charitabie trust. This inquiry

arises, of course, because the Fourteenth Amendment

reaches only the acts of states, not private individuals. Ren-

dell-Baker v. Kohn, 457 U.S. 830, 838 (1982). Unless the

alleged infringement of plaintiffs’ constitutional rights is

“fairly attributable to the State’, there can be no resort to the

Fourteenth Amendment. Id. Where, as here, a plaintiff chal-

lenges private conduct, a state can be held responsible under

the Fourteenth Amendment only when “it has exercised coer-

cive power or has provided such significant encouragement,

either overt or covert, that the choice must in law be deemed

does not attack the Delaware courts’ reasoning but only insists that the res

judicata limitations imposed by those courts upon plaintiffs’ Count I be

imposed equally upon plaintiffs’ constitutional claims.

to be that of the State.” Blum v. Yaretsky, 457 U.S. 991, 1004

(1982). No such state involvement is present with Mrs. Scott’s

exclusion of adopted persons from her Trust, so plaintiffs’

petition raises no substantial federal question for review.

The plaintiffs urge that there is state action in the Delaware

Supreme Court’ affirmance of the Vice Chancellor's finding that

Mrs. Scott had the right under Delaware law to exclude adopted

persons as beneficiaries of her Trust (P15-16). In support of their

“state action’ claim, plaintiffs cite Palmore v. Sidoti, 466 U.S. 429

(1984), a case in which a white plaintiff enlisted the aid of a

Florida court of deprive the defendant, plaintiffs ex-wife,’ of

custody of their infant child because the defendant's second

husband was black. Plaintiffs similarly rely on Shelley wv.

Kraemer, 334 U.S. 1 (1948), in which the Court held that it

violated the Fourteenth Amendment for a state court to enforce

private agreements excluding persons of a designated race from

occupying residential real estate.

Plaintiffs’ constitutional authorities have no application,

however, to Mrs. Scott's act, as an individual, of excluding

adopted person as beneficiaries of her Trust. The Court has

implicitly rejected the plaintiffs’ notion that an individual

cannot discriminate in selecting his or her trust beneficiaries.

In Trimble v. Gordon, 430 U.S. 762 (1977), the Court found a

“fundamental difference” under the Fourteenth Amendment

between an individual's disinheritance of an illegitimate child

and a state intestacy statute which caused the same result:

Appellees characterize the Illinois intestate succession law

as a “statutory will” Because intent is a central ingredient in

the disposition of property by will, the theory that intestate

succession laws are “statutory wills” based on the “pre-

sumed intent” of the citizens of the State may have some

superficial appeal. The theory proceeds from the initial

premise that an individual could, if he wished, disinherit his

illegitimate children in this will. Because the statute merely

reflects the intent of those citizens who failed to make a

will, discrimination against illegitimate children in intestate

succession laws is said to be equally permissible. The term

“statutory will,” however, cannot blind us to the fact that

intestate succession laws are acts of States, not of indi-

viduals. Under the Fourteenth Amendment this a funda-

mental difference. (Emphasis added.)

Id., 430 U.S. at 775, n.16. Similarly, in Evans v. Newton, 382

U.S. 296 (1966), Justice Douglas postulated that “[i]f a testa-

tor wanted to leave a school or center for the use of one race

only and in no way implicated the State in the supervision,

control, or management of that facility, we assume arguendo

that no constitutional difficulty would be encountered.” Id.,

382 U.S. at 300. See also, Evans v. Abney, 396 U.S. 435,

445-46 (1970) (application of neutral state trust laws to termi-

nate charitable trust is not state action where trust settlor, not

the state, imposed racial restrictions requiring termination);

Gordon v. Gordon, 124 N.E.2d 228 (Mass. 1954), cert. denied,

349 U.S. 947 (1955); United States Nat’l Bank v. Snodgrass,

275 P.2d 860 (Or. 1954).

Plaintiffs’ claim of “state action” is not enhanced by the

dismissal of their complaint in the Delaware Court of Chan-

cery and the Delaware Supreme Court's affirmance of that

result. As the Court's decision in Shelley v. Kraemer, 334 U.S.

1 (1948), makes clear, private action is not transformed into

state action when “the States have merely abstained from

action, leaving private individuals free to impose such dis-

criminations as they see fit.” 334 U.S. at 19. Rather, the salient

factor is the “active intervention of the state courts, supported

by the full panoply of state power,” without which the private

discriminations could not be enforced. Id.

The undisputed facts of this dispute bear no resemblance

to Shelley v. Kraemer and its progeny. Delaware Trust neither

enlisted the aid of the Delaware Court of Chancery to enforce

the Trust's provisions against the plaintiffs nor sought in-

structions that it can adhere to Mrs. Scott’s clear direction

excluding adopted persons. If plaintiffs had not timely com-

menced this action, Delaware Trust would have made dis-

tributions of Trust income and assets as Mrs. Scott expressly

intended—solely to the blood descendants of William duPont,

Jr. Further, there is no pervasive involvement of the State of

Delaware in the administration of the Trust; it is a purely

private inter vivos trust in which the Delaware Court of Chan-

cery would have had no role but for the plaintiffs’ own self-

serving challenges to the validity of the Trust. Compare,

Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 173 (1972). As the

Vice Chancellor correctly noted, this is a case in which the

Delaware Court of Chancery (and, in turn, the Delaware

Supreme Court) merely abstained from granting relief to the

plaintiffs, leaving Mrs. Scott free to impose such discrimina-

tion as she saw fit. (26b). The refusal of the Delaware courts to

intervene in the affairs of Mrs. Scott’s private trust does not

constitute state action, so plaintiffs’ petition for a writ of

certiorari does not implicate any federal question, let alone a

substantial federal question, for the Court’s review.

III. CERTIORARI IS NOT APPROPRIATE IN THIS

CASE BECAUSE PLAINTIFFS’ CLAIM LACKS IM-

PORTANCE AND MERIT IN ANY EVENT.

Plaintiffs preface their argument with the suggestion that

their petition offers the Court “an opportunity to define the

constitutional status of adopted children and to establish a mini-

mum standard under the Fourteenth Amendment’ for protect-

ing the rights of adopteds under statutes such as 13 Del.C.

§919(a). (P14-15). However, there is no sound reason for the

Court to take the plaintiffs up on this “opportunity” Indeed, the

Court should be especially reluctant to intervene in the Dela-

ware courts’ determination of rights arising under Mrs. Scott's

Trust, because “[t]he orderly disposition of property at death

requires an appropriate legal framework, the structuring of

which is a matter particularly within the competence of the

individual states” Trimble v. Gordon, 430 U.S. 762, 771 (1977).

A. Plaintiffs, As Adopted Children, Do Not Fall

Within A “Quasi-Suspect” Classification.

Plaintiffs urge the Court to determine that adopted persons

are members of a “quasi-suspect” classification so that any dis-

crimination based upon adoption should be subject to height-

ened scrutiny (P16-19). Although the Court has not determined

whether adopted persons are within a suspect or “quasi-suspect”

classification, a number of lower federal courts have decided that

they are not. For example, in Rodriguez v. Sec’y of Health,

Education and Welfare, 644 F.2d 918 (ist Cir. 1981), the First

Circuit upheld a provision of the Social Security Act that treated

natural children more favorably than adopted children. The

court reasoned that the distinctions as to adopted persons did

not involve “any inherently suspect classification,” 644 F.2d at

920, and that the Act was entitled to “a strong presumption of

constitutionality,” 644 F-2d at 921, which the plaintiffs had not

overcome by showing that it bore no rational relationship to a

legitimate governmental interest.4 Accord, Holbrook v. Califano,

636 F.2d 157, 159 (6th Cir. 1980); Clayborne v. Califano, 603

F.2d 372, 378 (2d Cir. 1979). The reason, of course, is that “[t]/he

status of being adopted has not historically been a focus of

discrimination; it causes no enduring social stigma, it has never

limited access to the electoral process.” Williams v. Mathews, 441

F.Supp. 1045, 1049 (E.D.La. 1977), affd sub nom. Williams v.

Califano, 566 F.2d 1044 (5th Cir. 1978), cert. denied, 439 US.

821 (1978).

B. There Is No Need For The Court To Intervene In

This Private Dispute Because 13 Del.C.

§919(a), As Applied By The Delaware Courts,

Serves Legitimate State Interests And Does Not

Treat Adopted Persons Unfavorably.

Given the presumption of constitutionality that attaches to

13 Del.C. 919(a), plaintiffs have the impossible burden of show-

ing that the statute, as interpreted, bears no rational relationship

to a legitimate state interest. Rodriguez v. Sec’y of Health, Educa-

tion & Welfare, supra, 644 F.2d at 921. But as the Delaware

courts correctly discerned, there are several legitimate interests

that are served by the principle of Delaware law that a settlor has

4. The First Circuit in Rodriguez also found that distinctions involving

adopted persons did not “impose a burden on the exercise of any fundamen-

tal right” (644 F.2d at 920-21), contrary to plaintiffs’ unsupported statement

that this case involves “the most sensitive kinds of personal rights” (P16).

the right to reject the presumption that adopted persons are

participants in a class of “descendants” or “issue”

Fundamentally, the rule permits a settlor such as Mrs.

Scott to dispose of her wealth in the manner she deems most

appropriate (28b). Plaintiffs’ constitutional theory—that

adopted persons cannot be excluded as a class—would un-

necessarily infringe on a settlor’s freedom of choice in making

post-mortem dispositions, to which the States have tradi-

tionally shown great deference. See, e.g., DuPont v. Equitabie

Security Trust Co., 122 A.2d 429, 439 (Del. 1956) (“a settlor

may be as capricious as he likes, provided his intent is clear”)

In addition, the rule permits a settlor to protect trust

assets from being diluted by unanticipated adoptions into the

class of beneficiaries (28b). If Mrs. Scott could only exclude

adopted persons by name or specific description, it would be

possible for countless persons adopted after Mrs. Scott's

death, who are not so named or described in the Trust, to join

the class of “lawful blood descendants of William duPont, Jr.”>

The Delaware rule not only serves legitimate interests of

the State, on closer analysis it does not discriminate at all

against adopted persons. Delaware law does not prohibit

adopted persons from being included as beneficiaries of a

trust. On the contrary, under Delaware law adopteds, like

natural issue, are presumed to be included within the term

“descendants.” It requires the clear, affirmative act of the

settlor to exclude adopted persons from a trust, which is

nothing less than would be required of a settlor to exclude

natural issue in favor of adopteds.® In short, plaintiffs’ com-

5. At oral argument before the Delaware Supreme C ourt, plaintiffs

counsel ventured that the plaintiffs could have been excluded by a specific

description (“All of the children of Mr. and Mrs. Henry E.I. duPont now

adopted or hereafter adopted by them shall not be beneficiaries of my

trust.”), but could not coherently answer the Court's inquiry whether such

limited language would exclude children adopted by Hemry duPont's broth-

ers and sisters (31b). Clearly, it would not. >

6. For example, in Dutra DeAmorim v. Norment, 460 A.2d 511, 515

(Del. 1983), the Delaware Supreme Court held that the settlor’s “deliberate

distinction” in her trust evidenced her clear intent to exclude certain of her

son's natural children from the class of “issue” under her trust.

plaint is not that they are the victims of a State-imposed

classification that discriminates against adopted persons.

Their real gripe is that Mrs. Scott exercised her personal

freedom of choice under a neutral and nondiscriminatory

Delaware law to limit the beneficiaries of her Trust to her

brother's natural bloodline descendants. Stripped bare of its

constitutional raiment plaintiffs’ action is nothing more than

a private dispute brought for the sole purpose of rewriting the

solemn language of Mrs. Scott's Trust. Plaintiffs’ petition

should accordingly be denied because it presents no issues of

importance to anyone but the parties themselves. Supreme

Court Rule 17.1(c); Rice v. Sioux City Memorial Park Ceme-

tery, Inc., 349 U.S. 70, 74, 79 (1955).

CONCLUSION

For the foregoing reasons this Court should deny the

plaintiffs’ petition for a writ of certiorari to review the decision

of the Supreme Court of the State of Delaware.

Respectfully submitted,

BLAINE T. PHILLIPS

Counsel of Record

Potter Anderson & Corroon

350 Delaware Trust Building

P.O. Box 951

Wilmington, DE 19899

(302) 658-6771

Attorney for Respondent

Delaware Trust Company

OF COUNSEL:

DANIEL F. LINDLEY

POTTER ANDERSON & CORROON

Dated: July 10, 1987

APPENDIX

TABLE OF CONTENTS OF APPENDIX

Decree of The Circuit Court of Orange County, Vir-

ginia, dated October 22, 1984, in DuPont v. Shackelford,

fT rrr re rer re

Decree of The Court of Chancery of the State of Dela-

ware In and For New Castle County, dated October 25,

1984, in DuPont v. Delaware Trust Co., Civil Action No.

{* eel Sans ERA Sp nd ieee Bee Seed CEP NN A oA A

Opinion of the Court of Chancery of the State of Dela-

ware In and For New Castle County, dated September

17, 1986, in Schlaeppi v. Delaware Trust Co., reported at

fk er ys ere re

Excerpt from Transcript of Oral Argument in The

Supreme Court of the State of Delaware (March 10,

fj EPR E Pr OEE CR rene eee ered pre

Page

12b

16b

IN THE CIRCUIT COURT OF ORANGE COUNTY

HENRY E. I. duPONT, et al.

Plaintiffs

V. R. SHACKELFORD, JR.,

Individually and Executor of the

Estate of Marion duPont Scott, et al.,

Defendants.

Chancery No.

E 84-1

Ne” “Nee” Ne” “Nee” Ne” “Se “Nee” Nae” “ee”

DECREE

This 22nd day of October, 1984, came all of the parties to

this action and petitioned the Court to enter this Decree upon

consideration of the Agreement of Settlement and for the

Entry of Decrees (“Agreement”), a copy of which is annexed

hereto, between and among all of the parties to this action

who are sui juris.

IT APPEARING that all of the parties plaintiffs in the

captioned action are also parties plaintiffs in that certain

action captioned Henry E. I. duPont, et al. v. Delaware Trust

Company. Civil Action No. 7421 (“Delaware Action”) pending

in the Court of Chancery of the State of Delaware in and for

New Castle County (“Delaware Court”);

AND IT FURTHER APPEARING that the parties to the

Agreement have agreed therein that this Decree may be

entered in accordance with the terms and provisions of the

Agreement;

AND IT FURTHER APPEARING that Thomas M.

Purcell, Esquire, was appointed Guardian ad litem for the

minor, natural issue of Henrv E. I. duPont; that Thomas J.

Province, Esquire, was appointed as Guardian ad litem for the

unborn natural issue of William duPont, Junior; that Caroline

Watts, Esquire, was appointed as Guardian ad litem for

ina

2b DECREE OF CIRCUIT COURT OF ORANGE COUNTY

Elizabeth Ansley Schlaeppi and for the issue, adopted and

natural, of the adopted children of the natural issue of William

duPont, Junior; and that Martin J. McGetrick, Esquire, was

appointed as Guardian ad litem for the minor, natural issue of

Jean Ellen duPont Shehan, Evelyn duPont Donaldson and

William duPont III, and that the Guardians ad litem have filed

Answers;

AND, the Court having received reports from the

Guardians ad litem, and having heard evidence presented in

open court and the arguments of counsel, makes the

following FINDINGS:

A. The plaintiffs have alleged certain claims against the

defendants, as is more fully set forth in the Bill of Complaint

filed in this action and in the Complaint, as amended, filed in

the Delaware Action. In addition, defendant National Trust

for Historic Preservation in the United States (“National

Trust”) has alleged certain claims against various parties as is

more fully set forth in its Cross-Bill filed in this action.

B. Plaintiffs Henry E. I. duPont and John E. duPont have

filed a Bill of Complaint for an issue devisavit vel non in this

Court, Chancery No. E 84-164 (“Will Contest Suit”). The

purpose of the Will Contest Suit is to impeach in their entirety

the paper writings dated February 6, 1975, dated April 20,

1976, and dated January 22, 1981, admitted to probate on

September 8, 1983 in the Office of the Clerk of the Circuit

Court of Orange County, Virginia, as the Will and Codicils

thereto of Marion duPont Scott (“Will”).

C. The purpose of the Agreement is to compromise, settle

and resolve any and all claims, cross-claims, demands and

causes of action of any nature, either asserted or which could

have been asserted, in this action, the Will Contest Suit or in

the Delaware Action, or in that certain action captioned

Marion duPont McConnell, et al. v. Delaware Trust Company,

as Trustee, Civil Action No. 7673, pending in the Court of

Chancery of the State of Delaware in and for New Castle

County (the “McConnell Suit”), or arising in connection with

the Will, or the Trust Indenture with Delaware Trust

DECREE OF CIRCUIT COURT OF ORANGE COUNTY 3b

Company, Trustee, executed by Decedent on June 7, 1960, as

amended on June 17, 1970 and April 20, 1976 (“Trust

Indenture”), or the administration of the Decedent's Estate

and Trust, or the execution of this Agreement, or to the extent

that it is performed according to its terms the performance of

the Agreement, except for the adopted children issue pending

in the Delaware Action as described in the Agreement, which

may become the subject of the new Delaware Action, as

described in the Agreement, and except for any issues of

expenses, including attorneys’ fees, described in Article VIII,

C, 1 of the Agreement.

D. The Agreement was entered into, subject to the

approval of this Court and of the Delaware Court, in good

faith, in order to compromise and settle disputed issues; to

avoid expensive litigation the defense of which could reduce

the value of the Decedent's Estate and of the Trust; to avoid

the further prosecution of the Will Contest Suit which, if

successful, would destroy the scheme of distribution set forth

in the Will, and to preserve harmony among Decedent’s

family.

E. The Agreement is fair and reasonable, and is in the

»st interests of the Decedent's Estate and Trust, and their

beneficiaries, and should be approved by the Court.

F. Article Two of Decedent's Will contains a charitable

bequest of Ten Million Dollars ($10,000,000.00) to National

Trust (“Bequest”). Certain provisions of Article Two of the Will

concerning the use of the Bequest are ambiguous.

G. The provisions of Article Two of Decedent's Will

concerning conformation of the Mansion at Montpelier as

nearly as possible with the architectural pattern which

existed when the said property was owned by James Madison

are precatory in nature.

H. The Will grants discretion to National Trust

concerning the use of the Bequest and the restoration,

preservation, presentation and operation of Montpelier as an

historic site and museum open to the public.

4b DECREE OF CIRCUIT COURT OF ORANGE COUNTY

I. Montpelier is significant in American history and

culture.

J. National Trust has expertise in preservation matters

and the operation of historic sites and museums open to the

public.

K. National Trust has acquired or will acquire the

interests of William duPont, Senior's grandchildren in the

entirety of Montpelier.

L. Under Virginia law, the Attorney General of Virginia

has the enforcement responsibility to determine that

charitable bequests are properly used.

IT IS HEREBY ORDERED, ADJUDGED AND

DECREED that:

1. The Court has jurisdiction of the subject matter and of

the parties, and has jurisdiction to enter this Decree.

2. The answers filed by the Guardians ad litem are made

part of the record.

3. The terms and provisions of the Agreement, annexed

hereto, are approved and are incorporated by reference into

this Decree for all purposes as though set out at length. The

action of the Executors of the Decedent's Estate and of the

Delaware Trust Company, Trustee under the Trust Indenture,

in executing the Agreement is hereby confirmed, ratified and

approved. The Executors and the Trustee are hereby relieved

of any and all responsibility and liability which they might

otherwise have on account of the execution of the Agreement,

or to the extent it is performed in accordance with its terms,

the performance of the Agreement and the settlement of this

action, the Will Contest Suit, the Delaware Action, and the

McConnell Suit.

4. The Executors shall administer the Decedent's Estate

in accordance with the Will and the provisions of the

Agreement, and in the event of any conflict or inconsistency

between any provision of the Will and any provision of the

Agreement, the relevant provision of the Agreement shall, in

DECREE OF CIRCUIT COURT OF ORANGE COUNTY 5b

all instances, control the rights and interests of the parties.

The Executors are authorized and directed to carry out all

steps necessary to implement the Agreement.

5. The Trustee shall administer the Trust in accordance

with the provisions of the Trust Indenture and in accordance .

with the provisions of the Agreement and, in the event of any

conflict or inconsistency between any provision of the Trust

Indenture and any provisions of the Agreement, the relevant

provisions of the Agreement shall, in all instances, control the

rights and interests of the parties. The Trustee is authorized

and directed to carry out all steps necessary to implement the

Agreement. ,

6. The Agreement shall be binding on the following

persons, as though each such person were sui juris and had

executed the Agreement, and they, or any of them, shali not

be entitled in the future to challenge or contest the validity or

enforceability of the Agreement, the Will, or the Trust

Indenture, or to assert claims or liability against any party tc

the Agreement on account of that party’s execution of the

Agreement, or to the extent that it is performed according to

its terms, the performance of the Agreement:

(a) the living minor issue and unborn issue of

William duPont, Junior; and

(b) the minor present and future adopted children of

the issue of William duPont, Junior; and

children of the issue of William duPont, Junior; and

(d) the present and future adopted children of the

present and future adopted children of the issue of William

duPont, Junior.

Notwithstanding the foregoing provision, nothing in this

Decree shall be construed to prevent any person listed in

subparagraphs (b) to (d) from hereafter raising the question

of whether adopted persons and their issue, natural and

adopted, can be beneficiaries under the Trust Indenture, but

any such claim permitted by this paragraph 6 shall be limited

6b DECREE OF CIRCUIT COURT OF ORANGE COUNTY

to income or principal not distributed prior to the filing of any

such action against, and service upon, the Trustee.

7. The Executors are authorized to pay the fees of the

Guardians ad litem from the assets available to the Estate, as

approved by the Court; and the Guardians ad litem are

directed to submit to the Court and serve upon the parties

within thirty (30) days from the date of this Decree a

statement of their fees for duties performed through the date

of this Decree.

8. The Trustee is authorized to pay to plaintiffs in the

McConnell Suit, their actual expenses, including attorneys’

fees, as provided in Article VIII, C, 2, up to a limit of Twenty-

Five Thousand Dollars ($25,000.00). The Executors and the

Trustee are authorized to pay to themselves their expenses,

including attorneys’ fees, as provided in Article VIII, B of the

Agreement.

9. This Decree shall constitute a full and final

adjudication of any and all claims, cross-claims, demands and

causes of action of any nature, either asserted or which could

have been asserted, in the Virginia action, or arising in

connection with the Will, or the Trust Indenture, or

administration of the Estate and Trust, except for the adopted

children issue pending in the Delaware action, as described

in Article VI, A of the Agreement; except for any issues of

expenses, including attorneys’ fees, incurred by any party

other than the Executors, the Trustee, and the plaintiffs in

the McConnell Suit, as described in Article VIII, C, 1; and

except as otherwise provided in paragraph 6 above.

10. The Bequest shall be used by National Trust,

consistent with the Agreement and with the purposes set

forth in its Charter, only for one or more of the following

purposes:

(a) National Trust shall use and apply the Bequest

first for payment of each undivided one-fifth interest in all of

Montpelier purchased from Jean Ellen duPont Shehan,

Evelyn duPont Donaldson, William duPont III, Henry E. I.

DECREE OF CIRCUIT COURT OF ORANGE COUNTY 7b

duPont and John E. duPont, and any other costs associated

with the acquisition by National Trust of the interests of the

Decedent's said nephews and nieces in Montpelier.

(b) Costs associated with National Trust's prosecu-

tion and settlement of any litigation concerning the Bequest,

including its reasonable attorneys’ fees.

ration, renovation, repair, maintenance, operation, furnish-

ing, interpretation and presentation of Montpelier or any por-

tion thereof as an historic site or museum open to the public.

(d) Any improvements at Montpelier which National

Trust believes are appropriate and that are consistent with the

use of the Mansion as a national historic site or museum open

to the public.

(e) Any other purpose National Trust believes ap-

propriate and is consistent with the use of the Mansion as a

national historic site or museum open to the public.

(f) Any act necessary or appropriate to carry out the

provisions of the Agreement.

11. Attorney General. The Attorney General of Virginia

shall have the sole responsibility to see that the Bequest to

National Trust is used for the purposes stated in Article II, B

of the Agreement.

(a) Any determination of whether the Bequest is

being so used shall be made in a proceeding brought by the

Attorney General of Virginia in this Court. National Trust

shall be made a party and notice of the proceeding shall be

given to the parties to the Agreement who have provided their

addresses to the Attorney General.

(b) If this Court shall determine that the Bequest (or

any portion thereof) is not being used in accordance with the

purposes stated in Article II, B of the Agreement, the Attorney

General shall request this Court to order that the Bequest, or

the relevant portion thereof, be devoted by National Trust to

the purposes stated in Article II, B of the Agreement; or if

8b DECREE OF CIRCUIT COURT OF ORANGE COUNTY

such purposes cannot be accomplished, by some charitable

organization (which may include National Trust), for some

charitable purpose related to James Madison and his times.

12. The Court retains jurisdiction of this action for the

purpose of deciding: (a) any dispute which may hereafter

arise in connection with the construction, interpretation or

implementation of any provision of the Agreement or of this

Decree; (b) any further matters related to the administration

of the Decedent's Estate as may come before the Court; or (c)

any issues of expenses, including attorneys’ fees, described in

Article VIII, C, 1 of the Agreement.

13. The Clerk of this Court shall index this Order in the

Index of Wills in his Office under the names of Marion

duPont Scott and William duPont, Senior. The Clerk shall

make a reference to this Order in the margin of the first page

of the Will Book where the Wil! of Marion duPont Scott is

recorded and also in the Will Book where the Will of William

duPont, Senior, is recorded.

Enter: October 24, 1984

/s/ E. GERALD TREMBLAY

Judge

We ask for this:

/si JOHN C. LowE

/s/ Morris L. WEISBERG

Counsel for Plaintiffs

Henry E. I. duPont, Deborah

duPont Pries, Henry Laurence

duPont, Harriet Nicole duPont,

Catherine duPont Schlaeppi,

DECREE OF CIRCUIT COURT OF ORANGE COUNTY 9b

William Garey Schneider,

Christopher Hans Schneider,

Martha Ann Caroline duPont and

Henri Verge duPont

/s/ Henry LEE CaRTER

Counsel for Cross-Bill-defendants

Beverly Austin duPont and

William Henry duPont, Jr.

/s/ JOHN C. Lowe

/s/ Taras M. WocHoK

Counsel for Plaintiff

John E. duPont

/s/ ALEXANDER WELLFORD

Counsel for Intervenor-defendants

Jean Ellen duPont Shehan, Marion

duPont McConnell, Susan

McConnell Rinehart and James

H.T. McConnell, Jr.

/s/ LEONARD S. TOGMAN

/s/ S. PaGE HIGGINBOTHAM

Counsel for Intervenor-defendants

Evelyn duPont Donaldson, Judith

D. Jordan, Elise D. Bulger,

Charlotte A. D. Maher and Linda

D. Donaldson

10b DECREE OF CIRCUIT COURT OF ORANGE COUNTY

/s/ LEONARD S. TOGMAN

/s/ S. Pace HIGGINBOTHAM

Counsel for Intervenor-defendant

William duPont III

/s/ JOHN S. BATTLE

Counsel for Defendant

The National Trust for Historic

Preservation in the United States

/s/ JosepH C. KEARFOTT

Counsel for Defendants

V. R. Shackelford, Jr., David C.

Rittenhouse and William duPont

III, Executors of the Estate of

Marion duPont Scott

/s/ ArTwELL W. SOMERVILLE

Counsel for Defendant

V. R. Shackelford, Jr.,

Individually

/s/ DANIEL F. LINDLEY

/s/ M. Scorr Hart

Counsel for Intervenor-defendant

Delaware Trust Company, Trustee

/s/ JOHN E. DONALDSON

Counsel for Defendant

DECREE OF CIRCUIT COURT OF ORANGE COUNTY 11b

Gerald L. Baliles, Attorney General

of the Commonwealth of Virginia

Seen:

/s/ THomas M. PurcELL

Guardian ad litem for the minor

natural issue of Henry E.I.

duPont

/s/ J. THOMAS PROVINCE

Guardian ad litem for the unborn

natural issue of William

duPont, Junior

/s/ CAROLINE Warts

Guardian ad litem for the minor

and unborn adopted children

of the natural issue of William

duPont, Junior and for the

minor and unborn issue,

adopted and natural, of such

adopted children

/s/ MarTIN J. McGetTrRICK

Guardian ad litem for the minor

natural issue of Jean Ellen

duPont Shehan, Evelyn duPont

Donaldson and William duPont

Ill

A COPY TESTE:

/s/ Utysses P. Joyner, Jr., Clerk

Circuit Court of Orange County, Virginia

12b

IN THE COURT OF CHANCERY OF THE STATE OF

DELAWARE IN AND FOR NEW CASTLE COUNTY

HENRY E. I. duPONT, et al.,

Plaintiffs Civil Action

US. No. 7421

DELAWARE TRUST COMPANY,

Trustee Under Trust Indenture

dated June 7, 1960,

Defendant.

DECREE

AND NOW, this 25th day of October, 1984, upon

consideration of the Agreement of Settlement and For Entry of

Decrees (the “Agreement”), annexed hereto, dated as of

October 15, 1984 between the named plaintiffs and the

defendant herein, who are also parties to a companion action,

captioned Henry E. I. duPont, et al. v. V. R. Shackelford, Jr., et

al., Chancery No. E 84-1 (the “Virginia Action”) pending in

the Circuit Court of Orange County, Virginia (the “Virginia

Court”);

IT APPEARING that the Virginia Court appointed

separate Guardians ad litem to represent (a) the minor,

natural issue of William duPont, Junior, whose ancestor had

conveyed his or her interest in Montpelier to the National

Trust for Historic Preservation in the United States (“National

Trust”) prior to August 31, 1984; (b) the minor, natural issue

of William duPont, Junior, whose ancestor had not conveyed

his interest in Montpelier to National Trust prior to August

31, 1984; (c) the unborn, natural issue of William duPont,

Junior; and (d) the minor and unborn adopted children of the

natural issue of William duPont, Junior, and the minor and

unborn issue, adopted and natural of such adopted children;

and

DECREE OF DELAWARE COURT OF CHANCERY 13b

IT APPEARING that the various Guardians ad litem

reviewed the annexed Agreement and have made their

respective Reports thereon to the Virginia Court; and

IT APPEARING that upon consideration of the Reports of

the Guardians ad litem, evidence presented in open court and

the arguments of counsel, the Virginia Court has made

findings that the Agreement is fair and reasonable and is in

the best interests of the Decedent's Estate and Trust and the

beneficiaries thereof, and should be approved; and

IT APPEARING that a Decree was entered on the 24th

day of October, 1984 by the Virginia Court in the Virginia

Action, pursuant to the annexed Agreement;

AND IT FURTHER APPEARING, that the parties to this

action have agreed that this Decree may be entered by this

Court in accordance with the annexed Agreement.

IT IS HEREBY ORDERED, ADJUDGED AND

DECREED THAT:

1. The terms and provisions of the annexed Agreement

are hereby approved and are incorporated by reference into ~

this Decree for all purposes as though set out at length. The

action of the Delaware Trust Company, Trustee, in executing

the Agreement is hereby confirmed, ratified and approved.

The Trustee is hereby relieved of any and all responsibility

and liability it might otherwise have on account of the

execution of the Agreement, or to the extent that it is

performed according to its terms the performance of the -

Agreement and the settlement of this action and the Virginia

Action. The expenses, including attorneys’ fees, incurred by

the Trustee, shall be paid in accordance with Article VIII, B, 2

of the annexed Agreement.

2. Defendant, Delaware Trust Company, Trustee, shall

administer the Trust of Marion duPont Scott (“Decedent”) in

accordance with the provisions of the Trust Indenture and

with the provisions of the annexed Agreement, and in the

event of any conflict or inconsistency between any provision

of ‘ne Trust Indenture and any provision of the annexed

14b DECREE OF DELAWARE COURT OF CHANCERY

Agreement, the relevant provision of the annexed Agreement

shall, in all instances, control the rights and duties of the

parties. The Trustee is authorized and directed to carry out all

steps necessary to implement fully the annexed Agreement.

3. The adopted children issue, as defined in Article VI, A

of the annexed Agreement, is excepted from the settlement

and compromise effected by the annexed Agreement, and is

specifically neither compromised nor settled. The parties to

the Agreement who are plaintiffs herein, or some of them,

shall have the right, as provided for in Article VI, B of the

annexed Agreement, before January 1, 1985 and not

thereafter, to institute a new action in this Court asserting

only the adopted children issue. Nothing in this Decree shall

be construed to prevent any person who is not presently sui

juris and who claims an interest in the Trust from hereafter

raising the question of whether adopted persons and their

issue, natural and adopted, can be beneficiaries under the

Trust Indenture, but any such claim shall be limited to

income or principal not distributed prior to the filing of any

such action against, and service upon, the Trustee.

4. The Court shall retain jurisdiction of this action for

the purposes of deciding or ruling upon any dispute which

may hereafter arise in connection with the interpretation or

application of the Trust Indenture or any matter of Trust

administration in connection with any provision of the

annexed Agreement or of this Decree.

5. Except as provided in paragraphs 3 and 4 hereof, this

Decree shall constitute a full and final adjudication of any and

all claims, cross-claims, demands, motions and causes of

action of any nature, either asserted or which could have been

asserted in this action, or arising in connection with the Trust

Indenture and Amendm: ats thereto or the administration of

the Trust.

/s/ Maurice A. Hartnett, Ill

Maurice A. Hartnett, III

Vice Chancellor

DECREE OF DELAWARE COURT OF CHANCERY 15b

The signing by the Vice Chancellor of,

and the entry of, the foregoing Decrees,

is hereby approved.

/s/ JOHN C. PHILLIPS

John C. Phillips

200 West Ninth Street

Wilmington, DE 19801

/s/ Morris L. WEISBERG

Morris L. Weisberg

Blank, Rome, Comisky & McCauley

1200 Four Penn Center Plaza

Philadelphia, PA 19103

/s/ Taras M. WocHoK

Taras M. Wochok

13 Paoli Court

Paoli, PA 19103

Attorneys for Plaintiffs

POTTER ANDERSON & CORROON

By /s/ DANIEL F. LINDLEY

Blaine T. Phillips

Charles S. Crompton, Jr.

Daniel F. Lindley

350 Delaware Trust Building

P.O. Box 951

Wilmington, DE 19899

Attorneys for Defendant

Delaware Trust Company

16b

IN THE COURT OF CHANCERY OF THE STATE OF

DELAWARE IN AND FOR NEW CASTLE COUNTY

CATHERINE duPONT

SCHLAEPPI, WILLIAM GAREY

SCHNEIDER, CHRISTOPHER

HANS SCHNEIDER, MARTHA

ANN CAROLINE duPONT, and

HENRI VERGE duPONT, children

of Henry E. I. duPont and Martha

Verge duPont,

and

ELIZABETH ANSLEY

SCHLAEPPI, a child of Catherine

duPont Schlaeppi,

Plaintiffs,

DELAWARE TRUST COMPANY,

Trustee under a Trust Indenture

with Marion duPont Scott, deceased,

dated June 7, 1960, and amended

on June 17, 1970,

Defendant.

Civil Action

No. 7898

i ee ee ee ee ee he a a i

Court of Chancery of Delaware,

New Castle County

Submitted: April 11, 1986

Decided: September 17, 1986

ON DEFENDANT’S MOTION TO DISMISS

THE AMENDED COMPLAINT: GRANTED.

John C. Phillips, Jr, PHILLIPS & SNYDER, P.A.,

Wilmington, and Morris L. Weisberg, BLANK, ROME,

COMISKY & McCAULEY, Philadelphia, Pa., for plaintiffs

OPINION OF DELAWARE COURT OF CHANCERY 17b

Blaine T. Phillips, and Daniel F. Lindley, POTTER,

ANDERSON & CORROON, Wilmington, Del., for

defendant-trustee

HARTNETT, Vice Chancellor

This is the latest, and hopefully final, legal proceeding

arising out of an inter vivos Trust created by Mrs. Marion

duPont Scott in 1960—long before she died in 1983. Plaintiffs

are descendants by adoption of William duPont, Jr., the

brother of Mrs. Scott. As such they are a grandnephew,

grandniece or great grandniece by adoption of the deceased.

They are not, however, blood relatives of Mrs. Scott. They

brought this action seeking to be included as beneficiaries

under the Trust. The defendant, Delaware Trust Company,

the trustee, moved to dismiss the amended complaint. I find

that the motion must be granted.

The essential facts are not disputed. The late Mrs. Scott

executed the Trust in 1960 and amended it in 1970. A second

amendment was executed in 1976 but it is not relevant to the

present controversy. Section II(4)(a) of the Amended Trust

Indenture (hereinafter referred to as “Proviso (a)”) provides,

in part:

“For the purposes of this Trust reference to

‘grandnieces and grandnephews and great grandnieces

and great grandnephews' and ‘issue of great grandnieces

and issue of great grandnephews' shall mean lawful blood

descendants of the Grantor's brother, William duPont, Jr.

_provided always, however, that:

(a) An adopted child and such adopted child's lawful

blood descendants shall not be considered as lawful blood

descendants of the adopting parent or parents or of

anyone who is an ancestor of the adopting parent”

(Emphasis added. )

This language on its face clearly and unambiguously

18b OPINION OF DELAWARE COURT OF CHANCERY

shows that Mrs. Scott intended to preclude plaintiffs from

benefitting under the Trust. Plaintiffs, however, assert

numerous Claims that the language does not preclude them

from benefitting from it.

Mrs. Scott died on September 4, 1983 and soon thereafter

actions concerning the Trust and her Will were filed in this

Court: DuPont, et al. v. Delaware Trust Co., Del. Ch., Civil

Action No. 7421-NC; and in the Circuit Court of Orange

County, Virginia: DuPont, et al. v. Shackelford, et al.,

Chancery E 84-1. These cases, and a related action,

McConnell v. Delaware Trust Co., Del. Ch., Civil Action No.

7673-NC, were ultimately resolved pursuant to a Settlement

Agreement executed by all the parties to the suits on October

15, 1984 and approved by this Court and the Virginia Court

later that same month. All the present plaintiffs joined in the

Settlement Agreement.

The Settlement Agreement, however, did not dispose of

all the disputes over the Scott Trust. Paragraph VI(B) of the

Settlement Agreement permitted the present plaintiffs to file

“a new and separate suit in the Delaware Court raising the

adopted children issue.” This “adopted children issue” is

defined in Paragraph VI(A) of the Settlement Agreement as

“the claim embodied in Count IV” of the Complaint filed in

DuPont, et al. v. Delaware Trust Co., Del. Ch., Civil Action No.

7421-NC, the original Delaware action.

On December 28, 1984, plaintiffs filed this present

lawsuit. In their Complaint, they alleged that the late Mrs.

Scott intended to include plaintiffs as beneficiaries under her

Trust (Count I); that Mrs. Scott intended i3 Del. C. §919(a) to

govern the Trust, and thereby intended that plaintiffs be

deemed to be lawful blood descendants of Wiliiam duPont, Jr.

(Count II); and that the Fourteenth Amendment to the

United States Constitution bars this Court from ruling that

plaintiffs are not beneficiaries under the Trust solely because

of their adopted status (Count III).

The Trustee responded by urging that plaintiffs

bargained away their Count I and Count III claims in the

OPINION OF DELAWARE COURT OF CHANCERY 19b

prior Settkement Agreement and that the remaining

allegations (Count II of the Complaint) fail to state claims

upon which relief can be granted.

I will first consider the arguments as to Count II of the

Complaint. The Trustee concedes that Count II is not barred

by the Settlement Agreement, however it argues that it fails to

allege a claim upon which relief can be granted. The

allegations of Count II, read in the light most favorable to

plaintiffs, challenge the validity of Proviso (a) of the Trust. .

Plaintiffs claim that Proviso (a) is invalid because it is

contrary to the provisions of 13 Del. C. §919(a). That

subsection is part of subchapter I, chapter 9, title 13 Delaware

Code which is the statute that provides for and regulates the

adoption of children in Delaware. It states:

“(a) Upon the issuance of the decree of adoption, the

adopted child shall be considered the child of the

adopting parent or parents, entitled to the same rights

and privileges and subject to the same duties and

obligations as if he had been born in wedlock to the

adopting parent or parents.”

In Count II of the Complaint plaintiffs also allude to an

argument—made more explicitly in Count IV of the First

Amended Complaint in the original Delaware action—that 13

Del. C. §919(a) supersedes Proviso (a). Plaintiffs claim that 13

Del. C. §919(a) is incorporated by reference into the Trust by

Section IV(2) of the Trust which states that Delaware law is to

control all questions of the Trust's construction or validity.

Plaintiffs argue that the provisions of 13 Del. C. §919(a) are

inconsistent with Proviso (a), and therefore plaintiffs

conclude that Section IV(2) of the Trust (and by implication

13 Del. C. §919[a]) should prevail over Proviso (a), thereby

allowing them to take as beneficiaries under the Trust despite

the clear language of Proviso (a).

Plaintiffs’ argument, however, incorrectly states both the

20b OPINION OF DELAWARE COURT OF CHANCERY

scope and the substance of the law of this State. While

plaintiffs focus on the language of 13 Del. C. §919(a), they

ignore the holdings in Delaware cases which also constitute

Delaware Law. These Delaware cases clearly hold that 13 Del.

C. §919(a) provides only a rebuttable presumption—not a

mandate—that adopted children be treated the same as

biological children in the construction of the provisions of

trust instruments. Wilmington Trust Co. v. Huber, Del. Ch.,

311 A.2d 892 (1973), affd sub. nom., Benz v. Wilmington

Trust Co., Del. Supr., 333 A.2d 169 (1975). This presumption

can be overcome by a showing that the trust instrument itself

evinces a clear intent to exclude adopted persons. See Benz v.

Wilmington Trust, supra, 333 A.2d at 170. See also, Jackson v.

Riggs Nat'l. Bank of Washington, D.C., Del. Supr., 314 A.2d

178 (1973); Haskell v. Wilmington Trust Co., Del. Supr., 304

A.2d 53 (1973); Wilmington Trust Co. v. Chichester, Del. Ch.,

369 A.2d 701 (1976), affd., Del. Supr., 377 A.2d 11 at 14

(1977) (‘adult adopted persons are permitted to take through

their adoptive parents where the pertinent instruments evince

no intent to the contrary”). (Emphasis added.)

Delaware law therefore does not prohibit settlors from

excluding adopted persons from their trusts as plaintiffs

assert; rather, Delaware law simply presumes that settlors do

not intend such exclusions absent clear directions to the

contrary. Mrs. Scott's intention to exclude adopted children

and the adopted children’s blood descendants is, however,

clear and unambiguous from the language of Proviso (a).

Plaintiffs also assert that Proviso (a) of the Trust is, for

some unspecified reason, void. Proviso (a), however, is

consistent with Delaware case law which permits a settlor to

exclude adopted persons from a trust and, while, as indicated

above, such exclusions are not favored in this State, they are

permitted. I conclude, therefore, that Count II of the First

Amended Compiaint fails to state a claim upon which relief

can be granted and must be dismissed.

Next to be considered is the Trustee’s attack on Count I of

OPINION OF DELAWARE COURT OF CHANCERY 21b

the Complaint. Giving plaintiffs the benefit of any reasonable

inferences, I find that three distinct claims are set forth in

Count I: (1) that plaintiffs are, under Delaware law, the lawful

blood descendants of William duPont, Jr.; (2) that, as a matter

of law, the late Mrs. Scott intended to include plaintiffs as

beneficiaries under the Trust; and (3) that Mrs. Scott lacked

the capacity to amend the Trust for many years prior to her

death in 1983.

The first allegation of Count I of the Complaint—that

under Delaware law plaintiffs must be treated as the lawful

blood descendants of their adopting parents—is merely the

same argument made, as discussed above, in connection with

Count II of the Complaint. Suffice to say that, because the

first allegation of Count I merely mirrors Count II, it must be

similarly dismissed for failure to state a claim upon which

relief can be granted.

The Trustee next asserts that the doctrine of res judicata

bars the second and third allegations of Count I of the

Complaint. In support of its position it refers to Section I (B)

of the Settkement Agreement adopted by the decrees of this

Court and the Virginia Court, which stated that it resolved:

“... fully and finally any and all claims, cross-claims,

demands and causes of action of any nature, either

asserted or which could have been asserted in the [prior

litigation], or arising in connection with or related to

Decedent's Will, the administration of the Estate, the

Indenture, the administration of the Trust, [or] the

execution of this Agreement ... except for the adopted

children issue in the Delaware Action, as provided in

Article VI hereof, and any issues of expenses .. ””

A settlement which is approved by a court has the same

res judicata effect as a final judgment on the merits. Ezzes v.

Ackerman, Del. Supr., 234 A.2d 444 (1967); Maldonado v.

22b OPINION OF DELAWARE COURT OF CHANCERY

Flynn, Del. Ch., 417 A.2d 378 (1980). The doctrine of res

judicata is available as a defense:

“... if the pleadings framing the issues in the first action

would have permitted the raising of the issue sought to

be raised in the second action, and if the facts were

known, or could have been known to the plaintiff in the

second action at the time of the first action ...” (Citation

omitted.)

Ezzes v. Ackerman, supra, 234 A.2d at 445-446.

The defense of res judicata, therefore, clearly applies to

the second and third allegations of Count I of the Complaint.

In the second allegation of Count I plaintiffs refer to

Section II(4)(b) of the Trust and quote language from Mrs.

Scott’s Will and then claim that the instruments show that

Mrs. Scott intended to include plaintiffs as beneficiaries

under the Trust. Leaving aside the merits of such an

allegation (novel as it may seem), it is clear that this claim

could have been raised in the original Delaware action.

Moreover, because the claims in this present suit are based

entirely on the language of the Trust and Mrs. Scott's Will,

both of which were attached as exhibits to the First Amended

Complaint in the original Delaware action, plaintiffs cannot

claim that they now raise new facts which could not have

been known at the time of the first action.

Likewise, the allegations contained in Count I of the

Complaint, that Mrs. Scott was incompetent to amend her

Trust is now barred by the res judicata effect of the Settlement

Agreement. This claim not only could have been raised in the

original Delaware action, it was. Count II of the First

Amended Complaint in Del. Ch., Civil Action No. 7421-NC

alleged that Mrs. Scott lacked the capacity to reform her Trust

in 1976 or years before her death in 1983. Thus, assuming

arguendo that this allegation states a cognizable claim,

although it does not assert that the settlor was incompetent in

OPINION OF DELAWARE COURT OF CHANCERY 23b

1970 when the dispositive amendment to the Indenture was

executed, it is also barred by the doctrine of res judicata

because it was a claim raised in the prior suit and

compromised by the settlement.

Plaintiffs, however, contend that the second and third

allegations of Count I cannot be barred by the doctrine of res

judicata because these allegations were specifically exempted

from the settlement decrees in the prior actions. The

language of the Settlement Agreement expressly preserves

“the adopted children issue” for further litigation in “a new

and separate action”. This exemption, however, cannot be

given the expansive definition urged by plaintiffs because the

Settlement Agreement expressly limits the adopted children

issue to “the claim embodied in Count IV” of the Complaint in

Del. Ch., Civil Action No. 7421-NC. The substance of that

claim stated:

“Section IV(2) of the Trust Indenture of Marion duPont

Scott provides that all questions pertaining to the

construction or validity of the Trust Indenture shall be

governed by the law of the State of Delaware. The law of

Delaware as to adopted children, embodied in 13 Del. C.

§919 and 920 ... was thus made controlling by Marion

duPont Scott ... and the laws and public policy of the

State of Delaware prevail over any contrary provision in

the Trust Indenture of Marion duPont Scott.”

The only viable defense to the res judicata claim posed at

this juncture, therefore, is whether the second and third

allegations of Count I in this present case can fit within the

claims embodied in the above language.

Plaintiffs maintain that Count IV of the original Delaware

action fairly raised the issue of whether Mrs. Scott really

intended to exclude them from her Trust. They also urge that

the second and third allegations of Count I of the present suit

raise questions concerning the settlor’s intent and thus are

24b OPINION OF DELAWARE COURT OF CHANCERY

similar enough to Count IV of the original suit to survive the

settlement of the earlier lawsuits. I disagree.

Although the second and third allegations of Count I of

the First Amended Complaint in the present case can be

facially harmonized with the allegations in Count IV of the

Complaint in the original Delaware action, three separate

claims are actually alleged, each of which is predicated on~

radically different theories. The second allegation of Count I

of the Complaint presently before the Court is premised on

the alleged inconsistency of Section I1(4)(b) of the Trust,

certain language of the settlor’s Will, and Proviso (a), whereas

the third allegation of this Count focuses on the mental state

of Mrs. Scott. Conversely Count IV of the Complaint in the

original Delaware action alleged that Proviso (a) could not be

reconciled with Section IV(2) of the Indenture and 13 Del. C.

§§919 and 920. I, therefore, conclude that the second and

third allegations of Count I of the Complaint presently before

the Court do not spring from the claim which was preserved

by the Settlement Agreement and therefore Count I must be

dismissed because it was compromised in the prior litigation.

Assuming, arguendo, that the doctrine of res judicata

does not bar any of the plaintiffs’ claims which are based on

the Fourteenth Amendment to the U.S. Constitution, it is

clear, nonetheless, that Count III of the Complaint does not

make a sufficient allegation of state action to fall within the

protection of the Fourteenth Amendment and therefore must

be dismissed for failure io state a cause of action upon which

relief can be granted. The Fourteenth Amendment protects

individuals only against the acts of States. U.S. Const.

Amend. XIV §1; e.g., Rendall-Baker v. Kohn, 457 U.S. 830, 102

S.Ct. 2764, 73 L.Ed.2d 418 (1982). In In re Will of Potter, Del.

Ch., 275 A.2d 574, 580 (1970), this Court recognized that “the

Fourteenth Amendment does not apply to purely private

trusts.”

In determining whether there is sufficient state action to

OPINION OF DELAWARE COURT OF CHANCERY 25b

bring a matter within the ambit of the provisions of the

Fourteenth Amendment, courts must look to the facts and

circumstances of each case. Burton v. Wilmington Parking

Authority, 365 U.S. 715, 81 S.Ct. 856, 6 L.Ed.2d 45 (1961). In

the present case the Complaint. even when cast in the light

most favorable to plaintiffs, does not even suggest that the

State of Delaware or any of its agents ever controlled, advised,

or were in any way involved with either the Scott Trust or Will

or the defendant-trustee before these suits were brought.

Plaintiffs argue, however, that if this Court finds that the

defendant-trustee must exclude them from the Scott Trust

solely because of their adopted status, such a finding alone

would constitute sufficient state action to invoke the

provisions of the Fourteenth Amendment. Plaintiffs

therefore, in effect, contend that this Court has no choice but

to invalidate Proviso (a). In support of this position plaintiffs

cite, inter alia, Barrows v. Jackson, 346 U.S. 249, 73 S.Ct.

1031, 97 L.Ed. 1586 (1953); Shelley v. Kraemer, 334 U.S. 1,

68 S.Ct. 836, 92 L.Ed. 1161 (1948); State v. Brown, Del. Supr.,

195 A.2d 379 (1963); and Bank of Delaware v. Buckson, Del.

Ch., 255 A.2d 710 (1969).

In each of these cases, however, there was a much greater

showing of state action than can be inferred from plaintiffs’

allegations in their Complaint. All of the cases cited by

plaintiffs involved racial discrimination which is especially

suspect. In order to find State action, courts generally require

a more compelling showing of state involvement where

discrimination on some grounds other than race is alleged.

Annot., 42 A.L.R.2d 463, at 471 (1979 & Supp. 1985).

Even in cases where racial discrimination was claimed,

and this Court found that it could neither enforce nor instruct

a trustee to honor a racially discriminatory clause in a trust

instrument, the Court was not content to hold that such an

instruction alone was state action within the meaning of the

Fourteenth Amendment. In Milford Trust Co. v. Stabler, Del.

Ch., 301 A.2d 534 at 537 (1973); Will of Potter, supra, 275

A.2d at 582-583. And in Bank of Delaware v. Buckson, supra,

26b OPINION OF DELAWARE COURT OF CHANCERY

255 A.2d at 714-715, this Court relied on facts independent of

its own role in order to find State action. No such facts have

even been alleged here. :

The present case also comes to this Court on a much

different footing than in the federal cases cited by plaintiffs.

In Barrows v. Jackson, supra, 73 S.Ct. 1031 and Shelley v.

Kraemer, supra, 68 S.Ct. 836, the parties to a racial restrictive

land covenant brought actions at law and in equity to enforce

the agreements when some of their co-covenantors sold

parcels to blacks. Similarly, in State v. Brown, supra, 195 A.2d

379, a merchant initiated the prosecution of an action for

criminal trespass against a black who refused to leave his

store after being denied service. Thus, in the federal cases

cited by plaintiffs a court was called upon to enforce a policy

of racial discrimination. In the words of the United States

Supreme Court, “These are not cases ... in which the States

have merely abstained from action, leaving private

individuals free to impose such discrimination as they see fit.”

Shelley v. Kraemer, supra, 68 S.Ct. at 845.

The allegations of plaintiffs, however, are quite different.

It is the plaintiffs who are seeking to have this Court rewrite

the Indenture to include them as beneficiaries. This the

Court cannot do as the Trust is purely a private matter. See

Blum v. Yaretsky, 457 U.S. 991, 102 S.Ct. 2777, 73 L.Ed.2d

534 (1982) which held that a State is not responsible for the

initiatives of a private party even where the State approves or

acquiesces in those initiatives, and 15 AM.JUR.2d, Civil

Rights §10.

Because | have concluded that plaintiffs have provided no

discernable basis for a finding of state action, Count III of the

Complaint must be dismissed for failure to state a claim upon

which relief can be granted.

Even if I were somehow able to glean some state action

from the allegations of Count II’, I would still have to dismiss

this Count on the alternative ground that it fails to state a

OPINION OF DELAWARE COURT OF CHANCERY 27b

proper claim for relief under the Equal Protection Clause of

the Fourteenth Amendment. When legislation is challenged

as being contrary to the Equal Protection Clause, courts apply

greater scrutiny to those statutes which either impair a right

protected by the Constitution or affect a suspect class.

Cleburne v. Cleburne Living Center, 473 U.S. 432, at 439, 105

S.Ct. 3249, at 3254, 87 L.Ed.2d 313, at 320 (1985). Although

the challenge here is not to a legislative act but to a judicial

rule, I will, arguendo, ignore the difference.

There is clearly no constitutional right at stake. Plaintiffs

do not, and cannot, claim that they have any choate interest

in the res of the Scott Trust or a right to be named as

beneficiaries. Instead, plaintiffs assert that their exclusion

from the Trust must be strictly scrutinized because they, as

adopted persons, are members of a suspect class.

Plaintiffs failed to cite, however, any case holding that

adopted persons constitute a suspect class under the Equal

Protection Clause. The United States Supreme Court has held

that statutory classifications based on race, alienage and

national origin warrant its strictest scrutiny. Cleburne Living

Center, supra, 105 S.Ct. at 3255. It has, however, declined to

afford the same high level of scrutiny to illegitimate children.

Mathews v. Lucas, 427 U.S. 495, 96 S.Ct. 2755, 49 L.Ed.2d

651 (1976). The Court in Mathews v. Lucas reasoned that,

although arbitrary discrimination against the illegitimate was

impermissible, not all distinctions based on legitimacy were

inherently untenable. Mathews, 96 S.Ct. at 2762. In addition,

the Supreme Court found that “discrimination against

illegitimates has never approached the severity or

pervasiveness of the historic legal and political discrimination

against women and Negroes” (citation omitted). Id.

Everything the Supreme Court said of illegitimates, by

analogy, also is applicable to adopted persons. Accordingly, |

find that the challenged rule of law here should be given the

same scrutiny as is normally attributed to statutes which

make distinctions on the basis of legitimacy. Under this level

of review, the party challenging the classification bears the

28b OPINION OF DELAWARE COURT OF CHANCERY

burden of establishing its insubstantiality. Mathews v. Lucas,

supra, 96 S.Ct. at 2764.

Given the above standard of review and finding the

manifest reasonableness of the challenged Delaware rule of

law, it is clear that plaintiffs could not prevail under any set of

facts which they have alleged. In adopting the rule of law that

a testator may disinherit adopted children, if he desires, the

courts of Delaware have merely held that the State has an

interest in protecting the rights of property owners to dispose

of their holdings as they see fit. This rule does not necessarily

discriminate against adopted persons because it does not

prohibit them from being included in a trust. It merely treats

them as any other relatives—who may be favored or dis-

inherited at the discretion of the Settlor.

Another reason that the rule of law in this State is not

unfair is that it prevents a testator’s intent from being

subverted by technicalities. Mrs. Scott's Trust Indenture

evinces an intent to use the trust assets to benefit the blood

descendants of William duPont, Jr., the settlor’s brother.

Without Proviso (a) in place, however, an actual descendant

of William duPont, Jr. could adopt an unlimited number of

persons—all of whom might then become beneficiaries of the

Scott Trust. Thus the assets of the Trust would be spread far

beyond the limits intended by the late Mrs. Scott.

‘In addition, the late Mrs. Scott may have executed

Proviso (a) with the intention of specifically excluding the

plaintiffs. Despite plaintiffs’ arguments to the contrary, there

is no reason why a settlor should have to identify by name the

adopted persons she wanted to exclude from her Trust—

indeed, a sense of diplomacy may have led Mrs. Scott to couch

Proviso (a in its present terms or she may have suspected

that other children might be adopted after the Trust was

executed. In any event, it was for Mrs. Scott to decide who

would be the beneficiaries of her Trust. Will of Potter, supra,

275 A.2d at 582. And the State is justified in preserving her

right to select the objects of her bounty.

Count III of plaintiffs’ Complaint fails to allege any

OPINION OF DELAWARE COURT OF CHANCERY 29b

grounds under which I could find that the challenged rule is

insubstantially related to a valid State interest. Plaintiffs

cannot, on their allegations, carry their burden under

Mathews v. Lucas, supra. Count III therefore must be

dismissed along with the rest of the Complaint.

I also note that plaintiffs’ briefs have set forth a

hodgepodge of facts and other arguments. Plaintiffs seem to

claim that the fact that they were not strangers to Mrs. Scott's

family before their adoption is somehow important. Because

plaintiffs have not claimed that, but for their adoption, they

would be beneficiaries under the Scott Trust, I disagree.

Plaintiffs also argue that the Due Process Clause of the

Fourteenth Amendment of the U.S. Constitution requires this

Court to conform to the Legislative mandate of 13 Del. C.

§919(a) and thus requires that Proviso (a) be invalidated. |

have decided, however, that Proviso (a) is consistent with

Delaware Law—including §919(a)—and it is pointless to

discuss this argument any further.

Finally, plaintiffs contested defendant's res judicata

defense with a curious mix of assertions apparently to the

effect that: under the Chancery Rules they should be allowed

to freely amend the claims which were not prejudiced by the

Settlement Agreement; that the Trustee has somehow

distorttd the distinctions between claims and allegations; and

that the Trustee's position depends on the obsolete “Theory of

the Pleadings” Suffice it to say that my holdings that the

claims raised by plaintiffs are barred by res judicata are not

based on procedural rules of semantics or arcane theories of

jurisprudence. Rather, I have barred the claims pursuant to

the clear language of the Settlement Agreement which was

primarily drafted by plaintiffs’ counsel and which both sides

agreed to only after pretracted arm’s-length negotiations.

Whatever plaintiffs may now think about the effect of the

Settlement Agreement, it is clear that they have gotten what

30b OPINION OF DELAWARE COURT OF CHANCERY

they bargained for. Accordingly, the Complaint must be

dismissed in its entirety.

IT IS SO ORDERED.

EXCERPT—TRANSCRIPT OF ORAL ARGU MENT 31b

EXCERPT FROM TRANSCRIPT OF ORAL ARGUMENT

IN THE SUPREME COURT OF THE

STATE OF DELAWARE (MARCH 10, 1987;

MOORE, WALSH AND HOLLAND, JJ.)

[pp. 25-26]

* . *

JUSTICE WALSH: If you had specified name by name

what would be the status of the after born adopted children?

MR. WEISBERG: That's easy. “All of the children of Mr.

and Mrs. Henry E. I. duPont now adopted or hereafter

adopted by them shall not be beneficiaries of my tru:*”

JUSTICE WALSH: How about if John adopted ten chil-

dren? Would they be covered?

MR. WEISBERG: Well, John is not married.

JUSTICE WALSH: He can still adopt children.

MR. WEISBERG: They will not be covered in my under-

standing of what the intention was here.

JUSTICE WALSH: They will not be excluded had they

used your specific language, is that correct?

MR. WEISBERG: I think if they are stranger adoptees

they would be excluded.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.