Morgan Guaranty Trust Co., In re

• Decision Date: 07 April 1971
• Citation: 320 N.Y.S.2d 905,269 N.E.2d 571,28 N.Y.2d 155
• Parties: , 269 N.E.2d 571 In the Matter of the Final Accounting of MORGAN GUARANTY TRUST COMPANY of New York, as trustee under an Indenture of Trust Made by Margaret M. Acheson, Petitioner-Respondent. Helen F. ACHESON et al., Respondents, v. Laura A. DOWELL et al., Appellants.
• Court: New York Court of Appeals Court of Appeals

Page 905

320 N.Y.S.2d 905

28 N.Y.2d 155, 269 N.E.2d 571

In the Matter of the Final Accounting of MORGAN GUARANTY TRUST COMPANY of New York, as trustee under an Indenture of Trust Made by Margaret M Acheson, Petitioner-Respondent Helen F. ACHESON et al., Respondents, v. Laura A. DOWELL et al., Appellants.

Court of Appeals of New York.

April 7, 1971.

Paul P. Cohen and Hilary P. Bradford, Niagara Falls, for appellants.

Eugene P. Souther, James C. Quigley and Steven A. Ruskin, New York City, for Bank of America National Trust & Savings Assn. as executor of Edward G. Acheson, III, deceased, respondent.

Joseph A. Byrne, Jr. and W. Bernard Carlson, Jr., New York City, for Helen F. Acheson, respondent.

Stephen A. Helman, New York City, guardian ad litem for Linda B. Acheson, an infant, respondent.

FULD, Chief Judge.

This appeal calls upon us to determine whether the order of a California court, which construed the will of a California domiciliary--who exercised a general power of appointment created by a New York trust indenture--is entitled to full faith and credit in this State.

In 1935, Margaret Maher Acheson, as settlor, and Morgan Guaranty Trust Company of New York, as trustee, entered into a trust indenture. Insofar as relevant, it created a trust for the life of the settlor's son, Edward Goodrich Acheson, Jr., and provided that, upon his death, the trustee was to divide the trust corpus into six equal parts, one of which was to be held in trust for the life of a grandson, Edward Goodrich Acheson, III (hereafter referred to as Acheson). Upon the latter's death, the indenture further recited, the trustee was to distribute the corpus of that trust as Achescon might appoint by will or, failing the exercise of such appointment, to his distributees as in intestacy.

The settlor's son, Edward Jr., the first life beneficiary under the terms of the trust, died in 1962. Acheson, domiciled in California, died in 1965, survived by his widow, Helen, and their daughter, Linda Belle, and five children by previous marriages. By his will, admitted to probate in California, Acheson exercised his power of appointment by specifically directing his trustee to divide his residuary estate into two trusts, one for the benefit of his widow and the other for the benefit of their daughter, Linda Belle. More particularly, the will provided that the trust for the latter was to 'cease and terminate twenty- one (21) years after the death of the last survivor of my wife, HELEN * * * my daughter, LINDA BELLE * * * and the children of my said daughter, living at the time of my death.'

The proceeding before us was commenced in 1966 by Morgan Guaranty in the Supreme Court, pursuant to CPLR article 77, to settle its final account under the separate trust for the benefit of Acheson. However, before that proceeding was concluded, Acheson's executor, Bank of America National Trust and Savings Association, instituted an heirship proceeding in the California Superior Court seeking an order construing the will in such manner as to require 'termination of the Trust (for Linda Belle) * * * within twenty-one years after the death of HELEN F. ACHESON, the surviving spouse, if not sooner, terminated by the death of LINDA BELLE ACHESON.' ¹ The New York Court thereupon decided to hold the present case in abeyance pending the conclusion of the California construction proceeding.

In September of 1967, the California court granted the relief requested by Acheson's executor. Declaring that 'the obvious intent of the testator * * * (was) that the residuary trust be curtailed, if necessary, to preserve the testamentary plan to the fullest extent possible from invalidity under the rule against perpetuities', the court construed the provisions of Acheson's will to require that 'any trust still subsisting * * * twenty-one years after the death of HELEN F. ACHESON then terminates as to all assets in such trust derived from the MARGARET MAHER ACHESON Trust'. ² In so construing the will, the court applied section 715.5 of the California Civil Code. ³ The appellants in the case before us, Acheson's five children by earlier marriages, who would share in the trust corpus only if the exercise of the power were held invalid, did not appear in the California heirship proceeding, although properly notified of the executor's application. However, in March, 1968, some six months later, they applied to the California court, as authorized by statute (California Code of Civil Procedure, § 473), for relief from its determination, contending that their absence resulted from 'mistake, inadvertence, surprise or excusable neglect.' ⁴ It was their position that the court had, in construing Acheson's will, misread his intention and that, consequently, section 715.5 should not have been applied to save the power of appointment. After a hearing, the court denied the application on the ground that the appellants' failure to contest resulted not from 'mistake, inadvertence, surprise or excusable neglect' but, rather, from a 'calculated strategic omission' on their part. We note, however, that the New York trustee did not appear in the Califonia proceedings.

Thereafter, in October of 1968, the respondents in the present accounting proceedings--Acheson's widow and Linda Belle--requested that full faith and credit be accorded to the California order. The court at Special Term agreed, holding that 'the (California) instruction order, to the extent that it interprets the will be finding an intention on the part of the testator * * * to limit the duration of the trusts so that it be deemed not in violation of the rule against perpetuities, is entitled to full faith and credit' and was binding in personam upon the five appellants who had voluntarily appeared in the California proceeding. The court, therefore, directed payment of the trust corpus to the California executor according to the terms of Acheson's will, and the Appellate Division unanimously affirmed the resulting order (34 A.D.2d 619, 308 N.Y.S.2d 641).

If anything is settled, it is that the courts of New York will look to the law of the testator's domicile for the meaning and interpretation of language used by him in disposing of his personal property by will. (EPTL 3--5.1, subd. (b), par. (2); subd. (e); see, e.g., Matter of Fox, 9 N.Y.2d 400, 404, 214 N.Y.S.2d 405, 408--409, 174 N.E.2d 499, 501--502; Matter of Fabbri, 2 N.Y.2d 236, 239, 159 N.Y.S.2d 184, 186--187, 140 N.E.2d 269, 270--271; Matter of Gifford, 279 N.Y. 470, 474--475, 18 N.E.2d 663, 664--665; Fell v. McCready, 236 App.Div. 390, 394, 259 N.Y.S. 512, 517--518, affd. 263 N.Y. 602, 189 N.E. 718; see, also, Restatement, Second, Conflict of Laws, Proposed Official Draft (1969), §§ 263--264, pp. 154--160.) Since Acheson was domiciled in California at the time of his death, and there executed his will there can be no doubt that it 'must be interpreted in accordance with the rules and principles adopted by the courts of that state.' (Fell v. McCready, 236 App.Div. 390, 394, 259 N.Y.S. 512, 517--518, affd. 263 N.Y. 602, 189 N.E. 718, Supra.) The California Superior Court--a court of unlimited general jurisdiction with full authority to pass on the interpretation and construction of wills executed by California domiciliaries (California Probate Code, §§ 301, 302, 1080) ⁵--in construing Acheson's will in the light of California law, explicitly held that his trust for the benefit of his duaghter, Linda Belle, was to terminate not later than 21 years after the death of his wife, Helen. Quite obviously, under such a construction, Acheson's executor could receive and dispose of the trust principal set aside for Linda Belle in a manner not inconsistent with, or violative of, the New York rule against perpetuities (EPTL 9--1.1).

There can be no doubt--and our dissenting brethren recognize this--that the California court, in rendering its decree construing the will, had presonal jurisdiction over all five of the appellants before us; their postjudgment application, under section 473, to vacate the instruction order constituted a general appearance and that served to give the California court in personam jurisdiction over them. (See, e.g., Farmers & Merchants Nat. Bank v. Superior Ct., 25 Cal.2d 842, 846--847, 155 P.2d 823; Security Loan & Trust Co. v. Boston & South Riverside Fruit Co., 126 Cal. 418, 421--423, 58 P. 941, 59 P. 296.) In point of fact, whether or not the appellants actually received due notice of the California heirship proceeding is of no moment, since their later general appearance had 'the effect of curing any defect arising from the lack of jurisdiction due to the failure to serve or notify a person of the proceedings'. (Farmers & Merchants Nat. Bank v. Superior Ct., 25 Cal.2d 842, 846, 155 P.2d 823, 826, Supra.) As already indicated, the appellants' postjudgment application was a request for Affirmative relief--namely, that the power of appointment exercised by Acheson be declared invalid on the ground that the court had mistaken 'his intent'--and at no time was any challenge made to the jurisdiction of the California court.

Under these circumstances, the appellants submitted themselves 'to the jurisdiction of (the California) court for the purpose of obtaining an adjudication as to the validity of the * * * judgment * * * This determination appears to be upon the merits and is Res judicata and dispositive of this appeal.' (Schwamm v. Davis, 18 A.D.2d 1070--1071, 239 N.Y.S.2d 579, 580, mot. for lv. to app den. 13 N.Y.2d 597; see, also, Sherrer v. Sherrer, 334 U.S. 343, 350, 68 S.Ct. 1087, 1097, 92 L.Ed. 1429; Magnolia Petroleum Co. v. Hunt, 320 U.S. 430, 439--440, 64 S.Ct. 208, 88 L.Ed. 149; Vander v. Casperson, 12 N.Y.2d 56, 59, 236 N.Y.S.2d 33, 34--35; Parker v. Hoefer, 2 N.Y.2d 612, 616, 162 N.Y.S.2d 13, 16--17, 142 N.E.2d 194, 196--197.) In giving full fiath and credit to the California instruction order construing Acheson's...