357 U.S. 235 (1958), 107, Hanson v. Denckla
|Docket Nº:||No. 107|
|Citation:||357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283|
|Party Name:||Hanson v. Denckla|
|Case Date:||June 23, 1958|
|Court:||United States Supreme Court|
Argued March 10-11, 1958
APPEAL FROM THE SUPREME COURT OF FLORIDA
While domiciled in Pennsylvania, a woman executed in Delaware a revocable deed of trust making a Delaware trust company trustee of certain securities, reserving the income for life and providing that the remainder should be paid to such parties as she should appoint by inter vivos or testamentary instrument. Later, after becoming domiciled in Florida, where she remained until her death, she executed (1) an inter vivos instrument appointing certain beneficiaries to receive $400,000 of the trust property, and (2) a will containing a residuary clause covering, inter alia,
all property, rights and interest over which I may have power of appointment which, prior to my death, has not been effectively exercised.
In a proceeding in which the Delaware trust company did not appear and was given notice only by mail and publication, a Florida State Court held that the trust and power of appointment were ineffective under Florida law, and that the $400,000 passed under the residuary clause of the will. This ruling was sustained by the Supreme Court of Florida, which also held that the Florida court had jurisdiction over the nonresident trust company, and an appeal was taken to this Court. A Delaware court with personal jurisdiction over the trust company sustained the trust and inter vivos appointment and held that the parties designated therein were entitled to the $400,000. This decision was sustained by the Supreme Court of Delaware, and its judgment was brought here on certiorari. Both Delaware courts denied motions to give full faith and credit to the Florida decree.
1. This Court need not determine whether Florida was bound to give full faith and credit to the Delaware decree, because that question was not seasonably presented to the Florida court. Pp. 243-244.
2. This Court is without jurisdiction of the Florida appeal, and it is dismissed; but, treating the papers whereon appeal was taken
as a petition for certiorari, 28 U.S.C § 2103, certiorari is granted. P. 244.
3. Appellants in the Florida case have standing to challenge the jurisdiction of the Florida court over the nonresident trust company which made no appearance, because they have a "direct and substantial personal interest in the outcome" of the litigation, Chicago v. Atchison, T. & S.F. R. Co., ante, p. 77, and the trustee was an indispensable party without whom a Florida court had no power to adjudicate the controversy. Pp. 244-245.
4. The Florida court did not have in rem jurisdiction over the corpus of the trust or personal jurisdiction over the trust company. Without such jurisdiction, it had no power under Florida law to pass on the validity of the trust. Therefore, its decree is void under the Due Process Clause of the Fourteenth Amendment, and it is reversed, not only as to the trust company, but also as to the individuals over whom it did have jurisdiction. Pp. 245-254.
(a) Though the property involved was intangible personal property, the settlor was domiciled in Florida at the time of her death, and Florida had jurisdiction over the probate and construction of her will, it had no in rem jurisdiction over the trust assets, and its judgment is invalid insofar as it rests on the basis of in rem jurisdiction. Pp. 246-250.
(b) The trust company did not have sufficient affiliation with Florida to empower the Florida courts to exercise personal jurisdiction over it. McGee v. International Life Ins. Co., 355 U.S. 220, distinguished. Pp. 250-253.
(c) Since it is the validity of the trust agreement, not the exercise of the power of appointment, that is at issue here, the execution in Florida of the power of appointment does not give Florida a substantial connection with the contract on which the suit is based, nor justify the exercise of personal jurisdiction over the nonresident trustee. Pp. 253-254.
(d) That the settlor and most of the appointees and beneficiaries were domiciled in Florida does not give Florida personal jurisdiction over this nonresident trustee. P. 254.
(e) Because the Florida Supreme Court has repeatedly held that a trustee is an indispensable party without whom a Florida court has no power to adjudicate controversies affecting the validity of a trust (though it did not rule on that point in this case), the
Florida judgment must be reversed not only as to the nonresident trustees, but also as to the appellant over whom the Florida court admittedly had jurisdiction. Pp. 254-255.
5. Delaware was under no obligation to give full faith and credit to the invalid Florida judgment, and the Delaware judgment is affirmed. Pp. 255-256.
(a) Since Delaware was entitled to conclude that Florida law made the trust company an indispensable party, it was under no obligation to give the Florida judgment any faith and credit -- even against parties over whom Florida's jurisdiction was unquestioned. P. 255.
(b) The Delaware case should not be held while the Florida case is remanded to give the Florida court an opportunity to determine whether the trustee is an indispensable party in the circumstance of this case, since there is ample Florida authority from which the answer to that question may be determined. Pp. 255-256.
WARREN, J., lead opinion
MR. CHIEF JUSTICE WARREN delivered the opinion of the Court.
This controversy concerns the right to $400,000, part of the corpus of a trust established in Delaware by a settlor who later became domiciled in Florida. One group of claimants, "legatees," urge that this property passed under the residuary clause of the settlor's will, which was admitted to probate in Florida. The Florida courts have sustained this position. 100 So.2d 378. Other claimants, "appointees" and "beneficiaries," contend that the property passed pursuant to the settlor's exercise of the inter vivos power of appointment created in the deed of trust. The Delaware courts adopted this position and refused to accord full faith and credit to the Florida determination because the Florida court had not acquired jurisdiction over an indispensable party, the Delaware trustee. ___ Del. ___, 128 A.2d 819. We postponed the question of jurisdiction in the Florida appeal, No. 107, 354 U.S. 919, and granted certiorari to the Delaware Supreme Court, No. 117, 354 U.S. 920.
The trust whose validity is contested here was created in 1935. Dora Browning Donner, then a domiciliary of Pennsylvania, executed a trust instrument in Delaware naming the Wilmington Trust Co., of Wilmington, Delaware, as trustee. The corpus was composed of securities. Mrs. Donner reserved the income for life, and stated that the remainder should be paid to such persons or upon such trusts as she should appoint by inter vivos or testamentary instrument. The trust agreement provided that Mrs. Donner could change the trustee, and that she could amend, alter, or revoke the agreement at any time. A measure of control over trust administration was assured by the provision that only with the consent of a trust "advisor" appointed by the settlor could the trustee (1) sell trust assets, (2) make investments, and (3) participate in any plan, proceeding, reorganization or merger
involving securities [78 S.Ct. 1232] held in the trust. A few days after the trust was established, Mrs. Donner exercised her power of appointment. That appointment was replaced by another in 1939. Thereafter, she left Pennsylvania, and, in 1944, became domiciled in Florida, where she remained until her death in 1952. Mrs. Donner's will was executed Dec. 3, 1949. On that same day, she executed the inter vivos power of appointment whose terms are at issue here.1 After making modest appointments in favor of a hospital and certain family retainers (the "appointees"),2 she appointed the sum of $200,000 to each of two trusts previously established with another Delaware trustee, the Delaware Trust Co. The balance of the trust corpus, over $1,000,000 at the date of her death, was appointed to her executrix. That amount passed under the residuary clause of her will, and is not at issue here.
The two trusts with the Delaware Trust Co. were created in 1948 by Mrs. Donner's daughter, Elizabeth Donner Hanson, for the benefit of Elizabeth's children, Donner Hanson and Joseph Donner Winsor. In identical terms, they provide that the income not required for the beneficiary's support should be accumulated to age 25, when the beneficiary should be paid 1/4 of the corpus and receive the income from the balance for life. Upon the death of the beneficiary, the remainder was to go to such of the beneficiary's issue or Elizabeth Donner Hanson's issue as the beneficiary should appoint by inter vivos or testamentary instrument; in default of appointment, to the beneficiary's issue alive at the time of his death, and if none to the issue of Elizabeth Donner Hanson.
Mrs. Donner died Nov. 20, 1952. Her will, which was admitted to probate in Florida, named Elizabeth Donner
Hanson as executrix. She was instructed to pay all debts and taxes, including any which might be payable by reason of the property appointed under the power of appointment in the trust agreement with the Wilmington Trust Co. After disposing of personal and household effects, Mrs. Donner's will directed that the balance of her property (the $1,000,000 appointed from the Delaware trust) be paid in equal parts to two trusts for the benefit of her daughters Katherine N. R. Denckla and Dorothy B. R. Stewart.
This controversy grows out of the residuary clause that created the last-mentioned trusts. It begins:
All the rest, residue and remainder of my estate, real, personal...
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