Smith v. Cent. Trust Co. of New York

• Decision Date: 23 November 1897
• Citation: 48 N.E. 553,154 N.Y. 333
• Parties: SMITH v. CENTRAL TRUST CO. OF NEW YORK et al.
• Court: New York Court of Appeals Court of Appeals

154 N.Y. 333

48 N.E. 553

SMITH

v.CENTRAL TRUST CO. OF NEW YORK et al.

Court of Appeals of New York.

Nov. 23, 1897.

Appeal from supreme court, appellate division, First department.

Action by Emma Condit Smith against the Central Trust Company of New York and others. From a judgment of the appellate division (42 N. Y. Supp. 740) affirming a judgment at special term, plaintiff appeals. Affirmed.

This action was brought by the plaintiff, as the testamentary guardian of Louise Condit and Sallie Barnes Smith, infants of tender years, to compel a corporation which is alleged to hold certain securities in trust for them to account for the interest by it collected thereon, and for other relief. In July, 1890, Mrs. Sallie L. D. B. Smith, a resident of New Jersey, died, leaving a husband, said two daughters, a large amount of personal property, and a will, by which, after some minor bequests, she gave one-half of the residue of her estate to her husband, George Condit Smith, and the other half to her children ‘absolutely,’ in equal shares, and directed that her husband should ‘hold the same in trust for such child or children during its or their minority, managing and investing the same according to law, and from time to time applying such parts of the income thereof to the support, maintenance, and education of such child or children as he may think advisable. The determination of my husband as to such management, investment, and application of income shall be final, and without appeal or question, as I have full confidence in his good sense and discretion.’ She appointed her husband as her sole executor, and expressed the desire that he should ‘not be required to give any security for the performance of his duties, either as executor or as trustee.’ This will was admitted to probate before the surrogate of Essex county, N. J., on the 28th of July, 1890, and letters testamentary were issued thereon to George Condit Smith, who, after finally accounting before said surrogate, and in December, 1890, and May, 1891, deposited with the defendant, the Central Trust Company of the City of New York, the securities in question, consisting of railway bonds, upon the condition expressed in a writing, signed by him as ‘executor and trustee,’ that it should act as custodian of such securities until his children should become of age, collect the interest thereon, and pay it to him while he lived, and after that to their guardian, to be appointed by his will or by some court of competent jurisdiction. As the children became of age, the securities were to be delivered to them. After changing his residence from the state of New Jersey to the state of New York, he died in New York City, in October, 1894, leaving a will, whereby he appointed the plaintiff, his second wife, the guardian of his children, who resided with him in this state up to the time of his death. His will was admitted to probate in the county of New York on the 31st of January, 1895. In the meantime, and on the 16th of October, 1894, upon the petition of said infants through their uncle, as their next friend, the court of chancery of the state of New Jersey appointed William Pennington, of the city of Paterson, in that state, trustee for said infants, ‘in the room and stead of George Condit Smith, deceased, to execute the trusts mentioned and declared in and by the last will and testament of Sallie Smith, deceased, * * * with all the rights, powers, duties, and privileges incident to the appointment.’ Mr. Pennington promptly qualified by giving two bonds in the penalty of $60,000 each, and thereupon notified the trust company not to deliver the securities or pay the income to any one except himself. On the 4th of April, 1896, this action was commenced by the plaintiff, as such testamentary guardian, against the Central Trust Company alone; but, on the 10th of August following, pursuant to an order of the appellate division, the summons was so amended as to include Mr. Pennington as such trustee. 7 App. Div. 278,40 N. Y. Supp. 152. The relief demanded by the amended complaint was that said Pennington should be adjudged to have no interest either in the bonds or income, and that the defendant company should be required to account for and pay over to the plaintiff all accumulations of interest in its possession derived from said securities. Both defendants answered, setting up the foregoing facts in substance; and Mr. Pennington demanded that the complaint should be dismissed, while the trust company asked for an adjudication in respect to the conflicting claims of the other parties to the action. The trial judge dismissed the complaint, and adjudged that the trust company held the bonds subject to the order of William Pennington, as trustee, and that it should pay over to him, as such, the accrued interest. The appellate division unanimously affirmed the judgment, on the ground that the order made by the chancellor of New Jersey appointing Mr. Pennington as trustee was valid, and could not be attacked in this state for irregularity, but only for want of jurisdiction. 12 App. Div. 378,42 N. Y. Supp. 45. The plaintiff thereupon appealed to this court.

Alexander Thain, for appellant.

Adrian H. Joline, for the Central Trust Company.

John Brooks Leavitt, for William Pennington, as trustee.

VANN, J. (after stating the facts).

When the court of chancery of the state of New Jersey appointed Mr. Pennington trustee for said infants in the place of their deceased father, ‘to execute the trusts mentioned and declared’ in their mother's will, it adjudged that a trust was created by that will, for that question had to be decided in order to determine whether a trustee should be appointed. Caujolle v. Ferrie, 13 Wall. 467, 472. It was the foundation upon which the decision to appoint a trustee necessarily rested. If that court had jurisdiction to make the determination, it is binding upon us, even if we are of the opinion that, in fact, no trust was created, but simply a power, because the federal constitution provides that ‘full faith and credit shall be given in each state to the * * * judicial proceedings of every other state,’ and that congress may, by general laws, prescribe the method of proving such proceedings and the effect thereof. Const. U. S. art. 4, § 1. Pursuant to this authority, congress has enacted that judicial proceedings in another state shall have the same effect in every court within the United States as they have by law or usage in the courts of the state in which they were taken. Rev. St. U. S. p. 171, § 905.

A judgment rendered by the courts of another state, however, is always open to impeachment for the the want of jurisdiction either over the subject-matter or the parties. Jurisdiction over the...