Taylor's Estate, In re

• Decision Date: 28 February 1967
• Docket Number: CA-CIV
• Citation: 424 P.2d 186,5 Ariz.App. 144
• Parties: , 26 A.L.R.3d 1010 In the Matter of the ESTATE of Porter C. TAYLOR, Deceased. Irene TAYLOR, Appellant, v. The FIRST NATIONAL BANK OF OTTAWA, Ottawa, ILLINOIS, Appellee. 2280.
• Court: Arizona Court of Appeals

Page 186

424 P.2d 186

5 Ariz.App. 144, 26 A.L.R.3d 1010

In the Matter of the ESTATE of Porter C. TAYLOR, Deceased.

Irene TAYLOR, Appellant, v. The FIRST NATIONAL BANK OF OTTAWA, Ottawa, ILLINOIS, Appellee.

2 CA-CIV 280.

Court of Appeals of Arizona.

Feb. 28, 1967.

Rehearing Denied April 13, 1967.

Review Denied May 16, 1967.

Laney, Randolph, Warner & Angle, by Melvin L. Vaughn, Phoenix, for appellant.

Boyle, Bilby, Thompson & Shoenhair, by C. Kilmer Combs, Tucson, for appellee.

MOLLOY, Judge.

Porter C. Taylor died on or about October 29, 1948, a resident of Tucson, Arizona. He left a will, which was duly admitted to probate in the Superior Court in Pima County, which left all of his property to 'ALFRED H. TAYLOR, of Glencoe, Illinois (emphasis added), IN TRUST, HOWEVER, for the purposes and upon the terms and conditions * * *' set forth in the will. The principal beneficiary under the trust established was his wife, Irene Taylor, who is the appellant in the instant appeal. The will in question further provided:

'In the event of the death, inability or refusal of my brother, ALFRED H. TAYLOR, to act as trustee hereunder, I hereby appoint THE FIRST NATIONAL BANK of Ottawa, Illinois, successor trustee, * * *.'

(Emphasis added)

On or about June 25, 1961, the trustee, Alfred H. Taylor, died and on October 16, 1961, in the subject probate proceeding, and as part of an order settling the accounts of the trustee, the following order was entered:

'2. That FIRST NATIONAL BANK OF OTTAWA, Ottawa, Illinois, be and it is hereby appointed Seccessor Trustee of the testamentary trust created by the Last Will and Testament of Porter C. Taylor, deceased.'

Prior to this order, the First National Bank of Ottawa, Illinois, had been acting as trustee, the record before us indicating that it filed an account and report covering the period from August 1, 1961, to July 31, 1962, which was duly approved and settled by the probate court on August 31, 1962. Thereafter, successive annual accounts and reports were filed by said bank to and including the period from August 1, 1964, to July 31, 1965, each of which accounts and reports were duly approved and settled by the court. The accounts filed indicate that the only assets in the estate were movable property, such as United States Treasury bills, stocks and bonds, FHA insured notes, and cash.

On December 7, 1965, the appellant filed a petition for the removal of the successor trustee and to surcharge its accounts for all of the monies received by it for its services, for the reason that said bank was a foreign corporation and not licensed to do business with the State of Arizona as required by A.R.S. §§ 10--481 and 10--484. It is conceded that the successor bank is a national banking association, incorporated under the laws of the United States, with its principal place of business in Ottawa, Illinois. There is no question but what this bank is authorized to act as a testamentary trustee in the State of Illinois.

On the basis of the petition for the removal, an order to show cause was issued which resulted in a hearing before the court. There was no written response filed by the bank to the petition for removal. At the hearing there was no oral evidence taken. The only evidence admitted by the court was the affidavit of an officer of the trustee bank indicating that it was authorized under its federal charter to conduct a banking business and a certificate from the Secretary of the Arizona Corporation Commission to the effect that the trustee bank was not qualified as a foreign corporation to do business in Arizona. There is no showing in the record before us as to whether any of the assets of the trust were physically within the State of Arizona at the time of the proceedings in the lower court. The only activities of the trustee bank disclosed by the record which have occurred in this state are the filing of the annual accounts and reports mentioned above.

The attack made upon the lower court's order is best summarized in the 'summary' contained in the opening brief:

'In order to be appointed as a testamentary trustee, a foreign corporation must comply with Section 10--484. Both the appointment of a foreign corporation, and its serving as testamentary trustee without first complying with Section 10--484, A.R.S., would constitute doing business in the state of Arizona in violation of Section 10--481.'

We first consider whether the appointment of the trustee bank is a violation of A.R.S. § 10--484, which, insofar as pertinent, reads as follows:

'A. Upon complying with the provisions of this article, a foreign corporation shall have the same rights and privileges held by a domestic corporation, except as provided in subsections D and E of this section.

'D. No corporation organized under any jurisdiction other than the United States, or any political subdivision or possession thereof, shall own or hold land within this state.

'E. No foreign corporation shall be appointed to act as executor, administrator, trustee or guardian of the estate of a minor or incompetent person, or in any other fiduciary capacity Except as testamentary trustees.' (Emphasis added) A.R.S. § 10--484.

We see no intent in this legislation to prohibit a foreign corporation under all circumstances from acting as a testamentary trustee. Generally, foreign corporations are not prohibited from acting as a trustee in another state, unless such be against the public policy of the latter state. In the Restatement of Trusts (Second), § 96 Comment g, we find the following:

'g. Foreign corporations. A corporation organized under the laws of one State and having capacity to act as trustee by the law of that State has capacity to act as trustee in another State, unless it is against the policy of the latter State to allow such a corporation to act as trustee.' Restatement (Second), Trusts § 96 Comment g.

In reading A.R.S. § 10--484, supra, together with the preceding three sections contained within Article 17, Chapter 1, Title 10, entitled 'Foreign Corporations,' we arrive at the conclusion that the thrust of these sections is aimed at foreign corporations '* * * doing or transacting any business, conducting any enterprise, or engaging in any occupation in this state * * *' (from A.R.S. § 10--481, subsec. A), and that unless acting as testamentary trustee constitutes 'doing business' in this state there is no proscription against a foreign corporation acting as such contained within this article of our code.

The question remains whether the continuation of the trustee in office is a violation of our statutes regulating the doing of business in this state by foreign corporations. The appellant, seeking to remove the trustee, had the burden of proof. 90 C.J.S. Trusts § 234(g), p. 203. As we have previously pointed out, the only activities established by the record occurring in this state insofar as this trust is concerned are the filing of the annual accounts and reports by the trustee bank.

There is substantial authority to the effect that when a testator intended that a testamentary trust be administered under the laws of a foreign state, such intention controls, and a statute of the state of the probate regulating the administration of the estate is inapplicable. Such a decision is Re Risher, 227 Wis. 104, 277 N.W. 160, 115 A.L.R. 790 (1938).

There is also substantial authority holding that the designation of an out-of-state trust company as trustee presumptively indicates the intent that the trust be administered according to the law of the state of the designated trustee, and that unless such presumption is rebutted by other expressions of intent within the will itself, such expression of intent is controlling. See Restatement, Conflict of Laws § 298, p. 380; Erdheim v. Mabee, 305 N.Y. 307, 113 N.E.2d 433 (1953); In re Turner's Will, 195 Misc. 331, 90 N.Y.S.2d 481 (1949); In re Shipman's Will, 179 Misc. 303, 40 N.Y.S.2d 373, 375 (1942); and see Beal, Conflicts of Law, Vol. 1, § 118 C. 40, pp. 598--99 (1935); see also Restatement (Second), Trusts § 54. Contra, In re Johnson's Estate, 127 N.J.Eq. 576, 14 A.2d 469 (1940). We note that there is no expression of intent in this will to weigh against the intent expressed by the designation of this Illinois bank as trustee.

But in this case we need not go so far as to hold that Arizona has no place in the administration of this trust. It is proper for a court of one state to supervise the administration of a trust according to the law of a foreign jurisdiction. The area of conflicts of laws is replete with decisions in which one court gives full force and effect to the laws of another state through principles of comity. Examples of such decisions in the area of testamentary trusts are the following: In re Carter's Estate, 6 N.J. 426, 78 A.2d 904 (1951); Equitable Trust Co. v. Ward, 29 Del.Ch. 206, 48 A.2d 519 (1946); National City Bank of New York v. Beebe, Sup., 131 N.Y.S.2d 67 (1954), aff'd 285 App.Div. 874, 139 N.Y.S.2d 238, appeal denied 285 App.Div. 935, 139 N.Y.S.2d 887, appeal dismissed 308 N.Y. 960, 127 N.E.2d 100 (1955).

We do not have before us any contention that this testamentary trust has gone beyond the control of the Arizona court. The trustee bank has submitted itself to the jurisdiction of the superior court and is apparently content to continue to so submit itself in the future. Such is sufficient to give validity to the lower court's orders regardless of whether it otherwise had jurisdiction. In re Gilmaker's Estate, 57 Cal.2d 627, 21 Cal.Rptr. 585, 371 P.2d 321 (1962); In re Knox' Estate, 52 Cal.App.2d 338, 126 P.2d 108 (1942); Restatement, Conflict of Laws § 90, p. 139. See also 14 A.L.R. 621. We are here only concerned with whether the very process of so submitting itself is a violation of our laws regulating the doing of business in this jurisdiction by a foreign corporation. We hold that it is not.

In so holding, we find little...