Source: http://openjurist.org/712/f2d/1156
Timestamp: 2013-05-22 02:21:12
Document Index: 133964985

Matched Legal Cases: ['§ 267', '§ 267', '§ 292', '§ 571', '§ 7', '§ 292', '§ 7', '§ 801', '§ 267', '§ 292', '§ 801', '§ 801', '§ 801', '§ 801']

712 F2d 1156 Norton v. Bridges L T | OpenJurist
712 F. 2d 1156 - Norton v. Bridges L T	Home712 f2d 1156 norton v. bridges l t
712 F2d 1156 Norton v. Bridges L T 712 F.2d 1156
Helen Page NORTON, Plaintiff-Appellant,v.Ruste Durnal BRIDGES, a disabled person under the law ofIllinois, as Successor Trustee of the John L. Page Trust,and Patrick T. Murphy, as Public Guardian of the County ofCook, State of Illinois, as Guardian of her Estate,Defendants- Appellees.
No. 82-1877.
The district court dismissed the case insofar as it sought to compel reduction of the trust assets. The court reasoned that it lacked in rem jurisdiction over the assets which were located in Illinois and that personal jurisdiction over the defendants could not be asserted under either the Wisconsin long-arm statute or the constitutional requirements delineated in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). The district judge found that the plaintiff's remedy lay in the courts of Illinois, rejecting Norton's assertion that the Wisconsin circuit court has exclusive jurisdiction over the action.
A. Status of Bridges as Successor Trustee
In International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), the Supreme Court held that a state could assert personal jurisdiction over a non-resident defendant only if that defendant had sufficient contacts with the forum state. The court below found that Bridges lacked the required minimum contacts with the state of Wisconsin, citing Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958), in support of its conclusion.
357 U.S. at 257, 78 S.Ct. at 1241. Hanson v. Denckla is, however, distinguishable from the present controversy. The trust at issue in that case was neither created in Florida nor registered in that state. There was no provision creating a power of appointment over successor trustees in a Florida court. Further, the trustee in Hanson was an institution rather than an individual, which suggests that the settlor intended administration of the trust to occur in Delaware.3
Boone v. Wachovia Bank & Trust Co., 163 F.2d 809 (D.C.Cir.1947), upon which Norton relies is similarly not dispositive. In Boone, the appellant urged that a North Carolina judgment removing him as testamentary trustee was not entitled to full faith and credit. The trust had been established under the decedent's will which had been admitted to probate in North Carolina. That court had appointed Boone trustee. The North Carolina court was exercising continuing jurisdiction over the trust. Upon application of the beneficiaries, the North Carolina court removed Boone as trustee.
Norton argues that the relief she seeks against Bridges requires only quasi in rem jurisdiction rather than personal jurisdiction and therefore, under Boone, the Wisconsin court can exercise jurisdiction over this controversy. In considering the constitutional requirements for jurisdiction, the distinction between personal and quasi in rem jurisdiction is of little help. In Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977), the Supreme Court held that the minimum contacts standard enunciated in International Shoe must be satisfied for a judgment quasi in rem to meet the requirements of due process. For constitutional analysis, the relevance of Boone lies not in how the jurisdictional basis is labeled but in whether minimum contacts between the forum and the defendant were demonstrated and, if they were, whether Boone supports a finding that minimum contacts exist in the present case.
Nonetheless, Boone illustrates a principle pertinent to resolution of this jurisdictional controversy. Numerous courts have held that, "[i]n the case of an inter vivos trust where the administration of the trust is fixed in a particular state, the courts of that state will exercise jurisdiction." Restatement (Second) of Conflict of Laws § 267 reporter's note (rev.ed.1971). Further, it is recognized that if a trust is to be administered in a particular state, that state has jurisdiction to determine not only the interests of the beneficiaries in the trust properties but also questions relating to the liability of the trustee to the beneficiaries. Id. § 267 comment d; see G. Bogert, The Law of Trusts and Trustees § 292, at 409 (2d ed. rev. 1977). These authorities suggest that the critical difference between Hanson and Boone is neither the actual physical location of the trust assets nor whether the trust is inter vivos or testamentary but rather that the Hanson trust was not administered in the state claiming jurisdiction whereas the Boone trust was.
When trust assets are held by an institutional trustee, the state in which that institution is located is generally considered the place of administration of the trust. See A. Scott, supra, § 571, at 3823; Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). This principle is readily explained by the fact that an institution is relatively likely to remain domiciled in the same forum over the entire period of the trust's existence. By choosing such an institution as trustee, the settlor has impliedly chosen a state of administration.
In summary, the registration of the trust in Wisconsin and the power of appointment accorded the Wisconsin court evidence Page's intent that the trust should be administered in that state. George Bridges and Ruste Bridges accepted the trusteeship with knowledge of these considerations and therefore can be deemed to have consented to the jurisdiction of the Wisconsin court insofar as that court might act to determine any rights or liabilities relating to the trust. See Uniform Probate Code § 7-103 and comment; G. Bogert, supra, § 292, at 412. These facts satisfy the "minimum contacts" standard of International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), and therefore an exercise of jurisdiction by the Wisconsin court over Norton's claim is consistent with due process.
C. Wisconsin Statutory Jurisdiction
Norton cites both the Wisconsin provisions that authorize in personam and in rem or quasi in rem jurisdiction. Whether the appropriate jurisdictional basis in this case is in personam or quasi in rem is not resolved by Section II(B), supra. It was unnecessary to resolve the question in determining the constitutionality of Wisconsin's exercising jurisdiction because demonstrated contacts between the forum and the defendant were required in either case. Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977). Further, the Uniform Probate Code, upon which we relied in addressing the constitutional question fails to make the distinction between personal and quasi in rem jurisdiction. § 7-103 comment.5
Wis.Stat. § 801.07. This statutory section would support Wisconsin jurisdiction in the present case if the trust itself is characterized as "property" and the assets, which are physically in Illinois, are deemed to be subject to the jurisdiction of the court because the assets are subject to the trust. This line of reasoning is consistent with Boone v. Wachovia Bank & Trust Co., 163 F.2d 809 (D.C.Cir.1947), and appears most consistent with the principle that in rem jurisdiction over a trust permits a determination of the rights and liabilities of all interested parties. Restatement, supra, § 267 comment d; G. Bogert, supra, § 292, at 409-10. Further, characterizing the jurisdictional basis of this action as in rem or quasi in rem is most consistent with the analysis in Section II(B), supra, in which we rely primarily on the relationship of the Page trust to the state of Wisconsin that is established by the settlor's intent that the trust be administered in that state.
Wis.Stat. § 801.05(6)(c). Because the settlor was a Wisconsin resident, the trustee's control over the assets necessarily originated when the assets were still in Wisconsin, at the time the trust was created. The applicability of this statutory section is unaffected by whether Page forwarded the assets to Bridges in Illinois or whether Bridges came to Wisconsin to take possession of them, a factual issue that is unclear from the record.6
The Supreme Court disposition in Princess Lida v. Thompson, 305 U.S. 456, 59 S.Ct. 275, 83 L.Ed. 285 (1939), supports Norton's contention that jurisdiction lies exclusively in the state court. In Princess Lida, the Supreme Court considered whether a Pennsylvania federal district court could entertain a suit brought by the beneficiaries of an inter vivos trust alleging mismanagement of the trust funds and praying that the trustees be removed and made to account for the losses suffered by the trust. The United States Supreme Court upheld the decision of the Pennsylvania Supreme Court enjoining the petitioners from proceeding further in the federal court. The United States Supreme Court distinguished cases like Princess Lida, in which the claims related to administration and restoration of corpus, from cases in which a plaintiff seeks merely an adjudication regarding the validity or amount of his claims in a fund. Id. at 466-67, 59 S.Ct. at 280-81. The principle illustrated by Princess Lida is that "the court first assuming jurisdiction over property may maintain and exercise that jurisdiction to the exclusion of the other." Id. at 466, 59 S.Ct. at 280.
In West v. First Fond du Lac National Bank, 31 F.Supp. 169 (E.D.Wis.1940), the Wisconsin district court relied on Princess Lida in dismissing a federal action that sought an accounting and reduction of trust assets and an appointment of new trustees. The district court held that, under Wisconsin law, exclusive jurisdiction vested in the county court.
West involved a testamentary rather than an inter vivos trust. That distinction does not render the case inapposite, however, because the trust at issue in Princess Lida, upon which the West court relied, was created inter vivos. Further, the West district court relied on the fact that the will pursuant to which that testamentary trust arose was in probate in the Wisconsin court as a separate and additional ground for dismissing the federal action. 31 F.Supp. at 171.
At issue in Princess Lida was whether the power of appointment accorded the common plea court would fulfill the requirement of a previous assumption of jurisdiction. The state court had been named in the trust instrument as having the power to appoint a successor trustee should the remaining trustees be unable to agree on a choice. There was no indication that such an impasse among the trustees had occurred. Nonetheless, the appointment of new trustees had routinely been reported to the common plea court which had purported to confirm and ratify the action taken by the trustees. 305 U.S. at 462, 59 S.Ct. at 278-79. The petitioners urged that this action by the state court was wholly gratuitous and therefore did not constitute an assumption of jurisdiction. The Supreme Court stated that it was "unnecessary to pass upon the contention." of the petitioners. Id.
If the Wisconsin state court lacks jurisdiction over the controversy, the federal district court, sitting in diversity, similarly lacks power to resolve the controversy. Lakeside Bridge & Steel Co. v. Mountain State Construction Co., 597 F.2d 596, 598 (7th Cir.1979), cert. denied, 445 U.S. 907, 100 S.Ct. 1087, 63 L.Ed.2d 325 (1980)
The defendants imply in their brief that even if personal jurisdiction could be exercised by a Wisconsin court over Ruste Bridges, no personal jurisdiction over Patrick T. Murphy exists. Section 801.05(12) of the Wisconsin Statutes permits an assertion of personal jurisdiction over the personal representative of a deceased person who, if he were living, would be subject to jurisdiction pursuant to Wis.Stat. § 801.05(2)(11). Although Ruste Bridges is living, her status as an incompetent under Illinois law, would suggest that section 801.05(12) governs whether jurisdiction can be asserted over the guardian of her estate. Because the basis of personal jurisdiction that would apply to Bridges is codified as Wis.Stat. § 801.05(6)(c), jurisdiction over Murphy is consistent with section 801.05(12)
Our having considered the applicability of Wis.Stat. § 801.05(6)(c) (in personam jurisdiction) to this action does not alter our conclusion that Wisconsin has power to adjudicate the controversy primarily because of that state's relationship, as a reflection of the settlor's express and implied intent, to the administration of the trust
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