Elizabeth Donner HANSON, as Executrix and Trustee under the last Will of Dora Browning Donner, deceased, Plaintiff,
WILMINGTON TRUST COMPANY, a Delaware corporation, as Trustee, et al., Defendants.
Action was brought for declaratory judgment to determine persons entitled to assets under purported inter vivos trust agreement. Four motions for summary judgment were made. The Court of Chancery, in and for New Castle County, Herrmann, Acting Vice Chancellor, held that fact that agreement creating purported inter vivos trust reserved to the trustors the right to all net income for life, right to amend or revoke agreement in whole or in part, right to change trustee, and right to name and change an investment adviser, did not render the agreement invalid.
Motions for summary judgment filed by certain of the defendants denied, and other motions for summary judgment granted.
[35 Del.Ch. 413] William H. Foulk, Wilmington, for plaintiff Elizabeth Donner Hanson, executrix and trustee.
Caleb S. Layton (of Richards, Layton & Finger), Wilmington, for defendant Wilmington Trust Company, trustee.
Edwin D. Steel, Jr. (of Morris, Steel, Nichols & Arsht), Wilmington, guardian ad litem for defendants, Joseph Donner Winsor, Curtin Winsor, Jr., and Donner Hanson.
Josiah Marvel, Arthur G. Logan and Aubrey B. Lank (of Logan, Marvel, Boggs & Theisen), Wilmington, for defendants, Dora Stewart Lewis, Mary Washington Stewart Borie and Paula Browning Denckla.
Robert B. Walls, Jr., Wilmington, guardian ad litem for defendants, Dorothy B. R. Stewart and William Donner Denckla.
David F. Anderson (of Berl, Potter & Anderson), Wilmington, for defendant Delaware Trust Company, trustee.
HERRMANN, Acting Vice Chancellor.
The Court is called upon to decide (1) whether the doctrine of collateral estoppel precludes the parties from litigating in this action the issue of the validity of a certain written agreement as an inter vivos trust agreement; and, if not, (2) whether the trust and the exercises of the power of appointment thereunder are valid or invalid.
This action for declaratory judgment was brought by Elizabeth Donner Hanson, Executrix and Trustee under the Will of Dora [35 Del.Ch. 414] Browning Donner, to determine the persons entitled to assets valued at $417,000. The assets were held at the time of the death of Mrs. Donner by the defendant Wilmington Trust Company under an Agreement entered into by them in 1935. After Mrs. Donner's death, the assets were distributed by Wilmington Trust Company to certain recipients named in Instruments executed by Mrs. Donner in 1949 and 1950 in the exercise of the power of appointment reserved to her under the Agreement of 1935.
The case is before the Court upon four motions for summary judgment. Three of the motions are based upon the contention that the Agreement of 1935 created a valid trust, that the power of appointment thereunder was validly exercised in 1949 and 1950, and that the distributions by Wilmington Trust Company pursuant thereto were properly made in discharge of its duty as Trustee under the Agreement. This is the position taken in the motions for summary judgment filed by the plaintiff, by Wilmington Trust Company, Trustee, and Edwin D. Steel, Jr., Guardian Ad Litem for three minor defendants, Joseph Donner Winsor, Curtin Winsor, Jr., and Donner Hanson, grandchildren of Mrs. Donner. Opposed to this position is the cross-motion for summary judgment filed by the defendants Dora Stewart Lewis, Mary Washington Stewart Borie and Paula Browning Denckla, other grandchildren of Mrs. Donner. These defendants contend that by application of the doctrine of res judicata or collateral estoppel, or by reason of applicable principles of law, this Court must conclude that the Agreement of 1935 was an agency agreement and not a trust agreement; that, therefore, the Instruments of 1949 and 1950 were invalid testamentary acts and the transfer of assets by Wilmington Trust Company thereunder was erroneous because such assets should have been distributed under the Will of Mrs. Donner. These defendants cross-claim and seek a judgment against Wilmington Trust Company
in the amount of $417,000. The defendant Delaware Trust Company, Trustee, supports the motions of the proponents of the Trust. Robert B. Walls, Jr., Guardian [35 Del.Ch. 415] Ad Litem for the defendants Dorothy B. R. Stewart and William Donner Denckla, incompetent daughter and minor grandson of Mrs. Donner, supports the motion of the opponents of the Trust. The pending motions are based upon the pleadings and exhibits thereto, affidavits, depositions and certified copies of the Florida proceedings hereinafter discussed.
There does not appear to be any genuine issue as to any of the following facts:
Under the Agreement with Wilmington Trust Company, dated March 25, 1935, Mrs. Donner transferred to it certain designated securities. The Agreement provided that Wilmington Trust Company, as Trustee, should pay the net income of the trust fund to Mrs. Donner for life and, upon her death, should transfer the trust fund, free from the trust, ‘ unto such person or persons * * * as Trustor shall have appointed by the last instrument in writing which she shall have executed and delivered to Trustee.’
Thereafter, Mrs. Donner executed and delivered to Wilmington Trust Company an Instrument, dated December 3, 1949, in which, after revoking earlier Instruments by which she purportedly had exercised her power of appointment, she again purported to exercise the power of appointment by directing that, upon her death, the Trustee should transfer the trust fund as follows: (1) $4,000 to three named individuals; (2) $1,000 to each of certain servants; (3) $10,000 to Louisville Trust Company in trust for Benedict H. Hanson, a son-in-law of Mrs. Donner; (4) $10,000 to the Bryn Mawr Hospital; (5) $200,000 to the Delaware Trust Company in trust for Joseph Donner Winsor; (6) $200,000 to the Delaware Trust Company in trust for Donner Hanson; and (7) the residue to the Executrix under Mrs. Donner's Will to be dealt with as stated therein. Mrs. Donner thereafter executed and delivered to Wilmington Trust Company an Instrument, dated July 7, 1950, which purported to partially revoke the Instrument of December 3, 1949 by deleting therefrom the provision for $10,000 to the Louisville Trust Company, Trustee. In all other respects, the Instrument of 1950 confirmed the Instrument of 1949.
[35 Del.Ch. 416] At the time of the execution of the Agreement of 1935, Mrs. Donner was a resident of Pennsylvania. The securities referred to in the Agreement were delivered to Wilmington Trust Company in Delaware and they remained in Delaware in the possession of and under the administration of the Trust Company. Wilmington Trust Company has no place of business and transacts no business outside of Delaware.
When Mrs. Donner died in 1952, she was a resident of Palm Beach County, Florida, and had been such since 1944. The Will of Mrs. Donner, dated December 3, 1949, was probated there and the plaintiff herein, Elizabeth Donner Hanson, duly qualified as Executrix under the Will. After bequeathing her personal and household effects to Mrs. Hanson and Dora Donner Ide, two of her daughters, Mrs. Donner made the following disposition of the residue of her property ‘ including any and all porperty, rights and interest over which I may have power of appointment which prior to my death has not been effectively exercised by me or has been exercised by me in favor of my Executrix’ : (1) Payment of all death taxes on property appointed by Mrs. Donner under the 1935 Agreement; and (2) the balance to be divided into two equal parts: (a) one part to Delaware Trust Company in trust for ...