Hanson v. Wilmington Trust Co.

Decision Date28 December 1955
Citation35 Del.Ch. 411,119 A.2d 901
PartiesElizabeth Donner HANSON, as Executrix and Trustee under the last Will of Dora Browning Donner, deceased, Plaintiff, v. WILMINGTON TRUST COMPANY, a Delaware corporation, as Trustee, et al., Defendants.
CourtCourt of Chancery of Delaware

William H. Foulk, Wilmington, for plaintiff Elizabeth Donner Hanson, executrix and trustee.

Caleb S. Layton (of Richards, Layton & Finger), Wilmington, for defendant Wilmington Trust Company, trustee.

Edwin D. Steel, Jr. (of Morris, Steel, Nichols & Arsht), Wilmington, guardian ad litem for defendants, Joseph Donner Winsor, Curtin Winsor, Jr., and Donner Hanson.

Josiah Marvel, Arthur G. Logan and Aubrey B. Lank (of Logan, Marvel, Boggs & Theisen), Wilmington, for defendants, Dora Stewart Lewis, Mary Washington Stewart Borie and Paula Browning Denckla.

Robert B. Walls, Jr., Wilmington, guardian ad litem for defendants, Dorothy B. R. Stewart and William Donner Denckla.

David F. Anderson (of Berl, Potter & Anderson), Wilmington, for defendant Delaware Trust Company, trustee.

HERRMANN, Acting Vice Chancellor.

The Court is called upon to decide (1) whether the doctrine of collateral estoppel precludes the parties from litigating in this action the issue of the validity of a certain written agreement as an inter vivos trust agreement; and, if not, (2) whether the trust and the exercises of the power of appointment thereunder are valid or invalid.

This action for declaratory judgment was brought by Elizabeth Donner Hanson, Executrix and Trustee under the Will of Dora Browning Donner, to determine the persons entitled to assets valued at $417,000. The assets were held at the time of the death of Mrs. Donner by the defendant Wilmington Trust Company under an Agreement entered into by them in 1935. After Mrs. Donner's death, the assets were distributed by Wilmington Trust Company to certain recipients named in Instruments executed by Mrs. Donner in 1949 and 1950 in the exercise of the power of appointment reserved to her under the Agreement of 1935.

The case is before the Court upon four motions for summary judgment. Three of the motions are based upon the contention that the Agreement of 1935 created a valid trust, that the power of appointment thereunder was validly exercised in 1949 and 1950, and that the distributions by Wilmington Trust Company pursuant thereto were properly made in discharge of its duty as Trustee under the Agreement. This is the position taken in the motions for summary judgment filed by the plaintiff 1, by Wilmington Trust Company, Trustee, and Edwin D. Steel, Jr., Guardian Ad Litem for three minor defendants, Joseph Donner Winsor, Curtin Winsor, Jr., and Donner Hanson, grandchildren of Mrs. Donner. Opposed to this position is the cross-motion for summary judgment filed by the defendants Dora Stewart Lewis, Mary Washington Stewart Borie and Paula Browning Denckla, other grandchildren of Mrs. Donner. These defendants contend that by application of the doctrine of res judicata or collateral estoppel, or by reason of applicable principles of law, this Court must conclude that the Agreement of 1935 was an agency agreement and not a trust agreement; that, therefore, the Instruments of 1949 and 1950 were invalid testamentary acts and the transfer of assets by Wilmington Trust Company thereunder was erroneous because such assets should have been distributed under the Will of Mrs. Donner. These defendants cross-claim and seek a judgment against Wilmington Trust Company in the amount of $417,000. The defendant Delaware Trust Company, Trustee, supports the motions of the proponents of the Trust. Robert B. Walls, Jr., Guardian Ad Litem for the defendants Dorothy B. R. Stewart and William Donner Denckla, incompetent daughter and minor grandson of Mrs. Donner, supports the motion of the opponents of the Trust. The pending motions are based upon the pleadings and exhibits thereto, affidavits, depositions and certified copies of the Florida proceedings hereinafter discussed.

There does not appear to be any genuine issue as to any of the following facts:

Under the Agreement with Wilmington Trust Company, dated March 25, 1935, Mrs. Donner transferred to it certain designated securities. The Agreement provided that Wilmington Trust Company, as Trustee, should pay the net income of the trust fund to Mrs. Donner for life and, upon her death, should transfer the trust fund, free from the trust, 'unto such person or persons * * * as Trustor shall have appointed by the last instrument in writing which she shall have executed and delivered to Trustee.'

Thereafter, Mrs. Donner executed and delivered to Wilmington Trust Company an Instrument, dated December 3, 1949, in which, after revoking earlier Instruments by which she purportedly had exercised her power of appointment, she again purported to exercise the power of appointment by directing that, upon her death, the Trustee should transfer the trust fund as follows: (1) $4,000 to three named individuals; (2) $1,000 to each of certain servants; (3) $10,000 to Louisville Trust Company in trust for Benedict H. Hanson, a son-in-law of Mrs. Donner; (4) $10,000 to the Bryn Mawr Hospital; (5) $200,000 to the Delaware Trust Company in trust for Joseph Donner Winsor; (6) $200,000 to the Delaware Trust Company in trust for Donner Hanson; and (7) the residue to the Executrix under Mrs. Donner's Will to be dealt with as stated therein. Mrs. Donner thereafter executed and delivered to Wilmington Trust Company an Instrument, dated July 7, 1950, which purported to partially revoke the Instrument of December 3, 1949 by deleting therefrom the provision for $10,000 to the Louisville Trust Company, Trustee. In all other respects, the Instrument of 1950 confirmed the Instrument of 1949.

At the time of the execution of the Agreement of 1935, Mrs. Donner was a resident of Pennsylvania. The securities referred to in the Agreement were delivered to Wilmington Trust Company in Delaware and they remained in Delaware in the possession of and under the administration of the Trust Company. Wilmington Trust Company has no place of business and transacts no business outside of Delaware.

When Mrs. Donner died in 1952, she was a resident of Palm Beach County, Florida, and had been such since 1944. The Will of Mrs. Donner, dated December 3, 1949, was probated there and the plaintiff herein, Elizabeth Donner Hanson, duly qualified as Executrix under the Will. After bequeathing her personal and household effects to Mrs. Hanson and Dora Donner Ide, two of her daughters, Mrs. Donner made the following disposition of the residue of her property 'including any and all porperty, rights and interest over which I may have power of appointment which prior to my death has not been effectively exercised by me or has been exercised by me in favor of my Executrix': (1) Payment of all death taxes on property appointed by Mrs. Donner under the 1935 Agreement; and (2) the balance to be divided into two equal parts: (a) one part to Delaware Trust Company in trust for Katherine N. R. Denckla, another daughter; and (b) the other part to Mrs. Hanson in trust for Dorothy B. Rodgers Stewart, another daughter, during her lifetime and after her death to Delaware Trust Company in trust for Mrs. Denckla.

When Mrs. Donner died, the securities and cash held by Wilmington Trust Company under the 1935 Agreement amounted to $1,493,629.91. Thereafter, Wilmington Trust Company distributed cash and securities aggregating $417,000 in accordance with the provisions of the Instruments of 1949 and 1950 and deposited the balance to the account of Mrs. Hanson as Executrix and Trustee under the Will of Mrs. Donner. None of the trust funds distributed to Delaware Trust Company, Trustee, have ever been held or administered outside of Delaware.

In January 1954, Mrs. Denckla and Elwin L. Middleton, guardian of the property of Mrs. Stewart, brought an action in the Circuit Court of Palm Beach County, Florida, against Mrs. Hanson, individually and as Executrix of Mrs. Donner's Will, Wilmington Trust Company, Delaware Trust Company and others who were interested in the assets, directly or beneficially, by reason of appointment or the residuary clause of the Will. The Florida action sought a declaratory judgment determining what passed under the Will and the authority of the Executrix over the assets held by Wilmington Trust Company under the 1935 Agreement. Neither Wilmington Trust Company, Delaware Trust Company nor any of the other appointees under the Instrument of 1949, named defendants in the action, were served personally and they did not appear in the action. None of the assets held by Wilmington Trust Company under the Agreement of 1935 have ever been held or administered in Florida. On January 14, 1955, a 'summary final decree' was entered by the Florida Court holding (1) that the Court lacked jurisdiction over the assets in Delaware and over Wilmington Trust Company, Delaware Trust Company, and the other nonanswering defendants and that the complaint be dismissed without prejudice as to all such defendants; and (2) that no present interest passed to any beneficiary other than Mrs. Donner under the Agreement of 1935 and the Instrument of 1949 and that the Instrument was testamentary in character and invalid as a testamentary disposition because it was not subscribed by two witnesses as required by Florida law; and (3) that, therefore, as to the parties before the Florida Court, the assets held by Wilmington Trust Company under the Agreement of 1935 passed under the residuary clause of Mrs. Donner's Will.

In the meanwhile, in July 1954, the instant action was begun by Mrs. Hanson as Executrix and Trustee under Mrs. Donner's Will. Named herein as defendants are Wilmington Trust Company as Trustee, Delaware Trust Company as Trustee, the appointees named in the Instruments of Appointment executed by Mrs. Donner,...

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4 cases
  • Hanson v. Denckla Lewis v. Hanson
    • United States
    • United States Supreme Court
    • June 23, 1958
    ...Delaware law, and that the trust corpus had properly been paid to the Delaware Trust Co. and the other appointees. Hanson v. Wilmington Trust Co., 119 A.2d 901. Alleging that she would be bound by the Delaware decree, the executrix moved the Florida Supreme Court to remand with instructions......
  • Denver Nat. Bank v. Von Brecht, 18022
    • United States
    • Supreme Court of Colorado
    • February 3, 1958
    ...created by the agreement creating the inter vivos trust, is to be determined from the face of the instrument itself. Hanson v. Wilmington Trust Co., Del.Ch., 119 A.2d 901. Much is said in the briefs concerning a stipulation of counsel concerning the hearing on the motion for summary judgmen......
  • Cravero v. Holleger, 951-K
    • United States
    • Court of Chancery of Delaware
    • June 3, 1989
    ...of the settlor as expressed in the agreement itself which is controlling as to whether a trust has been created. Hanson v. Wilmington Trust Co., Del.Ch., 119 A.2d 901 (1955), aff'd, Del.Supr., 128 A.2d 819 (1957). It is immaterial that the parties did not know that they were creating a trus......
  • Hickman v. Hickman, 68
    • United States
    • Superior Court of Delaware
    • March 21, 1956
    ...Scott in 56 Harvard Law Review 1 at Page 18. This rule was applied by Judge Herrmann in the recent case of Hanson v. Wilmington Trust Co., Del.Ch.1955, 119 A.2d 901. The Superior Court in this State is the only tribunal that has jurisdiction to directly hear and determine actions of divorce......

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