Second Nat. Bank of Paterson v. Curie
Decision Date | 04 May 1934 |
Docket Number | No. 51.,51. |
Parties | SECOND NAT. BANK OF PATERSON v. CURIE et al. |
Court | New Jersey Supreme Court |
Syllabus by the Court.
1. Trust settlement by husband for benefit of wife upheld as to consideration.
2. The question whether the trust settlement considered in this case offends against the statute of perpetuities in respect to provisions in remainder held immaterial, where the controversy relates only to life estate.
3. The trust agreement considered in this case held unenforceable by way of specific performance, but subject to the discretionary control of the Court of Chancery.
Appeal from Court of Chancery.
Suit by the Second National Bank of Paterson against Charles Curie and Etta D. Curie, wherein both defendants filed counterclaims. From the decree, Charles Curie appeals.
Decree affirmed in part and reversed in part, with directions.
On appeal from decree advised by Vice Chancellor Bigelow, whose unreported memorandum opinion is as follows:
This is a suit by a trustee seeking the advice of the court. The real controversy is between the defendants Charles Curie and Etta D. Curie, his wife, both of whom have filed counterclaims.
The trust was created in 1928 by a formal instrument between Mr. Curie as donor, the bank as trustee, and Mrs. Curie as the principal beneficiary. At the same time that the trust indenture was executed, and pursuant thereto, Mr. Curie transferred and delivered to the trustee securities then worth some $235,000. The provisions for the distribution of the income and corpus of the trust estate are as follows:
The trust indenture also contains the following agreement on the part of Mr. Curie:
The securities in the trust estate produced in 1932 an income of only $7,633. Mrs. Curie, by her counterclaim, prays specific performance of Mr. Curie's undertaking to provide additional securities to make up the deficit in the income. Mr. Curie, by his counterclaim, prays that the trust be declared invalid and the trustee be directed to return to him the securities which it holds.
The basis of Mr. Curie's prayer is briefly this: He and his wife at the time of the creation of the trust were, and they still are, residents of New York, and therefore the validity of the trust must be determined by the law of that state; the term of the trust is a longer period than the continuance of two lives, namely, the lives of Mr. and Mrs. Curie, and further until the youngest of their issue shall attain the age of 21 years; this is contrary to the Personal Property Law of New York, § 11 (Consol. Laws N. Y. c. 41), relating to perpetuities, and hence the whole scheme is illegal. Mrs. Curie answers that the securities which were transferred to the trustee when the trust was set up were then in the state of New Jersey; that the trustee corporation was then, and has since continued to be, located in this state; that the parties intended the trust estate here to be held and administered in accordance with our law; and that the New York statute does not control.
The situs of a trust of personalty created inter vivos is at the domicile of the donor, and the law of the state in which the trust has its situs determines its validity. Such is our New Jersey rule. Swetland v. Swetland, 105 N. J. Eq. 608, 149 A. 50, affirmed 107 N. J. Eq. 504, 153 A. 907. The question is, Would a New York court interpret the statute so as to invalidate this particular trust under the circumstances shown by the pleadings and the evidence? In Hope v. Brewer, 136 N. Y. 126, 32 N. E. 558, 561, 18 L R. A. 458, the Court of Appeals said: "Our law with respect to the creation of trusts, the suspension of the power of alienation of real estate, and the absolute ownership of personal, was designed only to regulate the holding of property under our laws and in our state, and a trust intended to take effect in another state, or in a foreign country, would not seem to be within either its letter or spirit."
In Robb v. Washington & Jefferson College, 185 N. Y. 4885, 78 N. E. 359, 363, a trust created inter vivos by a resident of New York was before the court.
The last case to which I will refer is Hutchinson v. Ross, 262 N. Y. 381, 187 N. E. 65, 71, decided July 11, 1933. Mr. and Mrs. Ross were residents of the province of Quebec. Mr. Ross created a trust fund for the benefit of his wife and children and appointed a New York trust company trustee. If the trust were governed by the laws of Quebec, then the trust was void. Bat the court upheld the trust on the ground "that the validity of a trust of personal property must be determined by the law of this state, when the property is situated here and the parties intended that it should be administered here in accordance with the laws of this state."
A consideration of these decisions satisfies me that the New York Court of Appeals would resolve that the New York statute does not invalidate the Curie trust; that the statute does not control a trust established and to be administered outside the state. The courts of New Jersey will not give to the statute an effect more broad. The trust created by Mr. Curie is valid under the law of New Jersey; comity would not be served by declaring it invalid by reason of a rule of New York which, the courts of that commonwealth hold, does not affect the trust. As directed by the Swetland Case, we apply the New York law, but in so doing we take the interpretation of that law from the New York Court of Appeals. The result is that Mr. Curie's counterclaim will be dismissed.
I turn to the counterclaim of the wife. The instrument which is the basis of the controversy is of a dual nature. It defines a trust in the securities assigned to the bank, and in the tenth paragraph it contains a covenant by the husband under circumstances which, have come to pass "to add to the securities constituting the principal of this trust fund, other securities, the income from which shall be sufficient to make up any deficit in the stated annual income herein provided for." It is this promise which Mrs. Curie prays may be specifically enforced by the court.
A court of equity will not enforce an executory contract to create a trust unless the contract is supported by a valuable consideration. Wittingham v. Lighthipe, 46 N. J. Eq. 429, 19 A. 611. Mrs. Curie contends that there was good and valuable consideration...
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