233 A.D. 626 | N.Y. App. Div. | 1931
This action was originally brought by one John Kenneth Leveson Ross in 1927 and is prosecuted by plaintiff James Hutchison, as trustee in bankruptcy of the property of said John Kenneth Leveson Ross, the said trustee having intervened in the action on September 5,1929. Plaintiff herein seeks to recover possession of certain securities which were delivered by Ross to the Equitable Trust Company of New York, a defendant herein, for the purpose of setting up a trust under the terms of a trust deed executed by said John Kenneth Leveson Ross and Ethel Adine Ross, his wife, and by the said Equitable Trust Company of New York, as trustee. Plaintiff bases his claim to the securities in question upon the contention that the trust attempted to be set up by Ross was' void by virtue of the law of the Province of Quebec, where Ross and his wife were domiciled at the time of the execution of the deed of trust. There is no contention that the deed of trust was made in fraud of any creditors of Ross, or that the plaintiff
On January 28, 1902, plaintiff John Kenneth Leveson Ross and defendant Ethel Adine Ross, then Ethel Adine Matthews, of the city of Toronto, in the Province of Ontario, Canada," contemplated marriage. Under the law of the Province of Quebec, where John Kenneth Leveson Ross then resided, and where both he and his prospective wife intended to live after their marriage, there was a community of property interest between husband and wife. Under the Quebec Civil Code it was provided that if parties about to marry did not enter into a written marriage settlement, the Code supplied one for them. It is provided by article 1260 of the Quebec Civil Code as follows: “If no covenants have been made, or if the contrary have not been stipulated, the consorts are presumed to have intended to subject themselves to the general laws and customs of the country, and particularly to the legal community of property, and to the customary or legal dower in favor of the wife and of the children to be born of their marriage.
“ From the moment of the celebration of marriage, these presumed agreements become irrevocably the law between the parties, and can no longer be revoked or altered.”
" Article 1265 of the Quebec Civil Code provides that “ After marriage, the marriage covenants contained in the contract cannot be altered (even by the donation of usufruct, which is abolished), nor can the consorts in any other manner confer benefits inter vivos upon each other, except in conformity with the provisions of the law, under which a husband may, subject to certain conditions and restrictions, insure his fife for bis wife and children.”
On January 28, 1902, the prospective husband and wife entered into an antenuptial agreement at the city of Montreal, executed by the said John Kenneth Leveson Ross and by Adam Rutherford Creelman, the duly authorized attorney of the said Ethel Adine Matthews, whereby it was agreed there should be no community of property between the future consorts notwithstanding the common law of the Province of Quebec, in which they intended to reside, and by the laws of which they should be governed, except in so far as the same might be derogated from by said instrument. It was
Shortly after the execution of the antenuptial agreement aforesaid John Kenneth Leveson Ross and Ethel Adine Matthews married and became domiciled in the city of Montreal, in the Province of Quebec, where they thereafter continued to reside as British subjects. Prior to December 13,1916, when the trust agreement now sought to be set aside was executed, Ross received, upon the death of his father, James Ross, and under his will, a large fortune, amounting to about $10,000,000, upon arriving at his fortieth birthday. In 1916 and until 1919 Ross, the settlor, was in service of the British Government, first, in the navy, and, later on, as a member of the Dominion Pension Board at Ottawa. Sometime in the year 1916, Ross, having acquired this immense fortune from bis father, conceived the idea that it would be well for him to make some additional provision for the support of his wife and two children, then of the ages of eleven and thirteen years, respectively. At that time he had. in his employ a secretary by the name of Hogg, who had previously been in the employ of Ross’ father, in like capacity, as a trusted servitor. During the war days of 1916 and prior thereto, Ross was compelled to be continuously absent from the city of Montreal, where he resided, except for occasional visits. He intrusted to Hogg, his secretary, in whom he appears to have reposed complete confidence, the control of his large fortune and the management of his personal interests. Hogg was a lawyer and was trustee of the estate of the elder Ross, with whom he had been associated for many years. Having determined that provision should be made for his wife and children out of his newly-acquired and abundant fortune, Ross instructed his secretary, Hogg, to take steps to create a trust in the State of New York for their benefit. At that time nearly $1,000,000, the property of Ross, was on deposit with the New York agency of the Bank of Montreal, where, indeed, it had been placed by the elder Ross during his lifetime. It was decided by Ross that the trust for the benefit of his wife and children should be in the sum of $1,000,000, and that the funds then on deposit in the city of New York at the agency of the Bank of Montreal should be devoted to such purpose, and that an additional amount should be forwarded to New York to make up the sum of the $1,000,000 trust fund. There was a discussion and an agreement between Ross and his secretary that the Equitable Trust Company of New York was a safe institution to act as trustee. Hogg was dispatched to New York and ascertained the readiness of the Equitable Trust Company to act as trustee, upon suitable terms and conditions. A
After the trust agreement had been executed, Ross instructed the trust company to send the income to Mrs. Ross at the Bank of Montreal, and for a period of more than ten years, from December 13,1916, the trust company held the securities which it had received, sold them and reinvested the proceeds, and paid over the income, pursuant to the terms of the instrument, to Mrs. Ross. The wisdom of Ross in providing this trust for the benefit of his wife and children appears to have been vindicated from the fact that by 1926 practically the entire net amount of his fortune, amounting to $9,000,000, had been lost by bad investment or otherwise, and he, at that time, was practically insolvent and was being pressed by creditors. Trust companies in the city of Baltimore, Md., held his notes for large amounts, and were pressing him for payment. At about this time Ross consulted his lawyer, a Mr. Barclay, of Montreal, concerning the preparation of a will, and informed Barclay of the creation of the trust in question. Barclay advised him that the trust was illegal and void. Thereafter Ross went to the Baltimore banks and disclosed to them the advice which he had received from his lawyer and the prospect of his regaining possession of the $1,000,000 trust fund which he had created for the benefit of his wife. The Baltimore bankers were interested in the prospect of improving their position, but refused to do so unless Ross could obtain the consent of his wife to the revocation of the trust. New York counsel advised that through a revocation and the possible illegality of the trust there was a chance to recover the money. Ross then consulted his wife, but instead of telling her of his desire that she revoke the trust which he had created for her benefit and for the benefit of their children, told her that it was necessary for her to execute a paper to cover an irregularity in the trust instrument which otherwise might cause trouble for her and the children; that there was some question in regard to the validity of the $1,000,000 trust, and that he had a paper which he wanted her to sign to fix it up. According to the testimony of Mrs. Ross, she was not informed in any way of the purport of the paper, which she eventually signed without reading it. Ross, in his testimony, fully corroborates his wife and admits having perpetrated a fraud upon her by concealing from her the true intent and purpose of the instrument which he asked her to sign. Believing that it was
By the decision of the learned justice at Equity Term, the plaintiff’s right to a recovery is placed upon the ground that the trust was void in its inception, and that by the trust instrument Ross had never divested himself of the legal title to the property, and that his right to recover the same was not barred by the Statute of Limitations. The court held that the law of the Province of Quebec applied, on the theory that by the antenuptial agreement entered into between the parties in 1902 they had stipulated that the law of Quebec should govern in all their future dealings, and upon the theory that the law of matrimonial domicile was controlling, and that the settlor’s domicile governed the validity of the trust, and that the trust was void by reason of the provisions of section 1265 of the Civil Code of Quebec, which provides that "After marriage, the marriage covenants contained in the contract cannot be altered, (even by the donation of usufruct, which is abolished), nor can the consorts in any other manner confer benefits inter vivos upon each other.” We think the learned justice based his decision on certain unjustified assumptions of fact. The court assumed that Mr. and Mrs. Ross in their antenuptial agreement had expressly stipulated that the Quebec law should govern their future relations, and that the transfer in trust modified and contravened said antenuptial agreement; and, finally, that the trust was set up by Ross in 1916 in consideration of his wife’s renunciation of her rights under said
In the antenuptial settlement agreement there is no provision whatever prohibiting Ross from making an additional settlement on his wife and children, and there is no agreement on the part of Mrs. Ross forbidding her to accept such provision for herself and
In our opinion the trial court incorrectly held that the trust agreement was to be governed by the laws of the Province of Quebec. We are of the opinion that the trust agreement, having been executed here, concerning property located here, and administered here, should be governed by the laws of the State of New York. The question presented is one of conflict of la ws. If the trust instrument is to be governed by the laws of the Province of Quebec, then the trust was void and the plaintiffs were entitled to recover. If, on the
In the second place, the situs of the trust estate was in the State of New York. Prior to the execution of the deed of trust, all of the securities transferred by Ross to the Equitable Trust Company in 1916 were situated in the city of New York. Most of these securities had been here for a long period of time, antedating ownership by Ross himself, and were held in New York at the office of Ross’ New York agent. Other securities necessary to make up the $1,000,000 were sent down by Ross to his agency in New York, and all were delivered to the Equitable Trust Company in his behalf. The situs of the proposed trust res was in New York. We think the law is well settled that the situs of corporate stock for the purpose of inter vivos transfers of title thereto is the place where the certificates are situated. (Disconto-Gesellschaft v. U. S. Steel Corp., 267 U. S. 22; Simpson v. Jersey City Contracting Co.,
In Creighton on Interstate and International Living Trusts — Some Legal Points Involved (50 Trust Companies, 741), the text writer states the rule as follows: “ The English rule, universally recognized by the lawyers of that country, is that the law of the situs of the trust res, where execution of the instruments and transfer of the property occur in that jurisdiction, shall govern. In other words, I understand that the English courts will uphold as an English settlement a trust made in England covering property located there, the transfer taking place in England, without reference to the laws of the domicile or the nationality of the settlor or any other laws of any other country.”
Notwithstanding, respondents contend that in case of a deed of trust of securities the law of the place of domicile of the settlor must govern. The authorities cited by respondents in support of this contention have no application here, for the reason that it was clearly the intention of the parties in establishing this trust to avoid the operation of such rule.
In the first place, by an amendment to the Personal Property
While it is true that in the instrument in question there is no express declaration that it shall be construed and regulated by the laws of this State, yet it is impossible to hold from a consideration of its recitals and terms that the parties did not have that specific intention. The rule that movables follow the person, upon which the cases cited by respondents are based, is not an exclusive rule of universal application, but is one of convenience merely (State of Colorado v. Harbeck, supra), and where the intention of the parties clearly appears, as here, from the surrounding circumstances as well as from the instrument itself, that such rule shall not apply, the law of this State will not have the effect of overriding that intention.
Most of the securities long before 1916 had been on deposit in the city of New York. The required balance to make up the $1,000,000 was sent down by Ross prior to the execution of the trust agreement. He directed that all the securities be delivered to the Equitable Trust Company by his agent. The trust instrument itself was prepared by the Equitable Trust Company and was strictly a New York form. The paper was executed by Ross and his wife at the American consulate at the suggestion of the Equitable Trust Company in case Ross and his wife could not come to the city of New York for the purpose of execution, and acknowledgment before a New York notary. When he and his wife had executed the same, Ross sent it to his New York agent with directions to deliver the instrument for execution to the Equitable Trust Company along with the securities making up the trust. The instrument itself provided for the appointment of the Equitable Trust Company of New York as trustee. The transfer of the trust estate was in consideration of the payment of one dollar in “ money of the United States ” and, finally, the trust agreement contained a provision that “ Upon the resignation of said trustee, Mr. Ross may in his lifetime or, if he be not living, Mrs. Ross may appoint as successor hereunder any trust company incorporated under the laws of the State of New York having a capital of not less than one million dollars, by an instrument in writing similarly executed and acknowledged.” (Italics are the writer’s.)
Finally, in our opinion, the trust agreement is to be governed by the law of New York where the trust itself was administered for ten years following its creation. Not only was the Equitable Trust Company selected by Ross to act as trustee, but, as before stated, the instrument provided that in case the Equitable Trust Company should resign or cease to act as trustee, then in its place a New York trust company having a capital of at least $1,000,000 should be substituted as trustee. In the case of Robb v. Washington & Jefferson College (185 N. Y. 485) a question was involved as to the validity of a trust of personal property inter vivos. In that case the domicile of the settlor was New York, but the trust was invalid under the laws of this State. The property was located here at the time of the transfer. The trustee was a Pennsylvania corporation, and the trust, under the instrument, was to be administered in Pennsylvania. The Court of Appeals held that, notwithstanding the trust was invalid in the State of New York, if it was valid in the State of Pennsylvania the funds should be transmitted to that State and the trust upheld. The Court of Appeals (at p. 496) stated: “ We are, therefore, of opinion that this trust is invalid under the laws of this State, but we are also of opinion that those laws do not control. The trustee is a corporation created by and located in the State of Pennsylvania.
For the reasons stated, we are of the opinion that the trust in question was a valid one under the laws of the State of New York, and that the same is governed by the laws of this State.
Holding as we do that the trust created by Eoss for the benefit of his wife and children was a valid one, it becomes unnecessary to pass upon the appellant’s contention, based upon the claimed invalidity of the trust, that plaintiffs’ cause of action is barred by the Statute of Limitations.
The judgment of the court below appealed from should be reversed, with costs, and plaintiffs’ complaint dismissed, with costs, and, upon appropriate findings, judgment should be entered in favor of defendants and against plaintiffs.
Finch, P. J., McAvoy, Martin and Sherman, JJ., concur.
Judgment reversed, with costs, and complaint dismissed, with costs, and judgment directed to be entered in favor of defendants. The findings inconsistent with this determination should be reversed and such new findings made of facts proved upon the trial as are necessary to sustain the judgment hereby awarded. Settle order on notice.