Hanson v. Denckla, 357 U.S. 235 (1958)

Hanson v. Denckla

No. 107

Argued March 10-11, 1958
Decided June 23, 1958 *
357 U.S. 235

APPEAL FROM THE SUPREME COURT OF FLORIDA

Syllabus

While domiciled in Pennsylvania, a woman executed in Delaware a revocable deed of trust making a Delaware trust company trustee of certain securities, reserving the income for life and providing that the remainder should be paid to such parties as she should appoint by inter vivos or testamentary instrument. Later, after becoming domiciled in Florida, where she remained until her death, she executed (1) an inter vivos instrument appointing certain beneficiaries to receive $400,000 of the trust property, and (2) a will containing a residuary clause covering, inter alia,

all property, rights and interest over which I may have power of appointment which, prior to my death, has not been effectively exercised.

In a proceeding in which the Delaware trust company did not appear and was given notice only by mail and publication, a Florida State Court held that the trust and power of appointment were ineffective under Florida law, and that the $400,000 passed under the residuary clause of the will. This ruling was sustained by the Supreme Court of Florida, which also held that the Florida court had jurisdiction over the nonresident trust company, and an appeal was taken to this Court. A Delaware court with personal jurisdiction over the trust company sustained the trust and inter vivos appointment and held that the parties designated therein were entitled to the $400,000. This decision was sustained by the Supreme Court of Delaware, and its judgment was brought here on certiorari. Both Delaware courts denied motions to give full faith and credit to the Florida decree.

Held:

1. This Court need not determine whether Florida was bound to give full faith and credit to the Delaware decree, because that question was not seasonably presented to the Florida court. Pp. 243-244.

2. This Court is without jurisdiction of the Florida appeal, and it is dismissed; but, treating the papers whereon appeal was taken as a petition for certiorari, 28 U.S.C § 2103, certiorari is granted. P. 244.

3. Appellants in the Florida case have standing to challenge the jurisdiction of the Florida court over the nonresident trust company which made no appearance, because they have a "direct and substantial personal interest in the outcome" of the litigation, Chicago v. Atchison, T. & S.F. R. Co., ante, p. 77, and the trustee was an indispensable party without whom a Florida court had no power to adjudicate the controversy. Pp. 244-245.

4. The Florida court did not have in rem jurisdiction over the corpus of the trust or personal jurisdiction over the trust company. Without such jurisdiction, it had no power under Florida law to pass on the validity of the trust. Therefore, its decree is void under the Due Process Clause of the Fourteenth Amendment, and it is reversed, not only as to the trust company, but also as to the individuals over whom it did have jurisdiction. Pp. 245-254.

(a) Though the property involved was intangible personal property, the settlor was domiciled in Florida at the time of her death, and Florida had jurisdiction over the probate and construction of her will, it had no in rem jurisdiction over the trust assets, and its judgment is invalid insofar as it rests on the basis of in rem jurisdiction. Pp. 246-250.

(b) The trust company did not have sufficient affiliation with Florida to empower the Florida courts to exercise personal jurisdiction over it. McGee v. International Life Ins. Co., 355 U.S. 220, distinguished. Pp. 250-253.

(c) Since it is the validity of the trust agreement, not the exercise of the power of appointment, that is at issue here, the execution in Florida of the power of appointment does not give Florida a substantial connection with the contract on which the suit is based, nor justify the exercise of personal jurisdiction over the nonresident trustee. Pp. 253-254.

(d) That the settlor and most of the appointees and beneficiaries were domiciled in Florida does not give Florida personal jurisdiction over this nonresident trustee. P. 254.

(e) Because the Florida Supreme Court has repeatedly held that a trustee is an indispensable party without whom a Florida court has no power to adjudicate controversies affecting the validity of a trust (though it did not rule on that point in this case), the Florida judgment must be reversed not only as to the nonresident trustees, but also as to the appellant over whom the Florida court admittedly had jurisdiction. Pp. 254-255.

5. Delaware was under no obligation to give full faith and credit to the invalid Florida judgment, and the Delaware judgment is affirmed. Pp. 255-256.

(a) Since Delaware was entitled to conclude that Florida law made the trust company an indispensable party, it was under no obligation to give the Florida judgment any faith and credit -- even against parties over whom Florida’s jurisdiction was unquestioned. P. 255.

(b) The Delaware case should not be held while the Florida case is remanded to give the Florida court an opportunity to determine whether the trustee is an indispensable party in the circumstance of this case, since there is ample Florida authority from which the answer to that question may be determined. Pp. 255-256.

100 So.2d 378 reversed, and cause remanded. ___Del. ___, 128 A. 2d 819, affirmed.