SOME ASPECTS F TRUSTS in the CONFLICT of LAWS of The

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SOME ASPECTS F TRUSTS IN THE CONFLICT OF LAWS LESTER G. HOAR Saint John, X.B. Of the problems encountered today in the conflict of laws, those involving trusts seem less susceptible than most to the stating of definite and universal rules. This is understandable perhaps when one considers that the subject "conflict of laws" was -a comparatively late development in English and American law, and, in addition, that only in fairly recent years has there been a noteworthy growth in the use of the trust device. Even now there are extremely few helpful Canadian and English cases to be found dealing with these problems. Consequently eiten- sive reference will be made to decisions of courts in the United States, where the subject has been explored more widely. For convenience, it is usual to adopt the practice, which will be followed in this article, of separating testamentary trusts and those established inter vivos, which are known sometimes as "living . trusts" . At the outset it may be said also that problems relating to trusts with foreign elements resolve themselves for the most part into questions of validity and adniinistration 2 Frequently it is difficult to. draw the line between these two classes of questions and the courts do not always assist by making it clear whether the matter before them is being treated as one of validity or of adminsitration. There appears to be general agreement among American authorities that the creation aspects of a trust end, and the administrative aspects begin, after title to the trust property has passed to the trustee.3 Thus prob- blems of validity have arisen over the capacity of the creator of

'Moreover this article will be confined almost entirely to those of the New York courts, since the most cursory examination reveals that New York courts provide the forum in a very large proportion of the American cases. Professor Cavers of the Harvard Law School suggests that New York's peculiar rules as to trusts may account for that State's beingso prolific in pertinent decisions : Cavers, Trusts Inter Vivos and the Conflict of Laws (1930), 44 Harv. L. Rev. 161, at p. 175. 2 It is proposed to restrict this article to questions of validity and administration, and not to deal, except where incidentally necessary, with, such problems as have to do with the construction of the trust instrument, jurisdiction and taxation. 3 See Swabenland, The Conflict of Laws in Administration of Express Trusts of Personal Property (1936), 45 Yale L.J. 438 ; Note (1941), 89 U. of Pa. L. Rev. 360, at p. 361 . Professor Beale, however, is content to say that "Any question which arises after the trust has come into being is a question of the administration of. the trust" : Beale, Living Trusts of Movables in the Conflict of Laws (1932), 45 Harv. L. Rev. 969, at p. 972 . Cf . the view of an English writer, who feels that .it is important to sever questions respecting both creation and administration from those concerning the vesting of the trust property in the trustees : Croucher, .Trusts of Movables in- Private ;International Law (1940-41), 4 Mod., L. Rev. 111 .

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the trust, formalities of execution and "essential validity", while questions of administration have included those relating to the duties and powers of the trustee, the .investments he may make, the persons to whom he must pay income and principal, the right of the beneficiary to alienate his interest and the rates of commission to which the trustee is entitled. In determining the law to govern, however, there is a tendency on the part of the courts to treat similarly all such questions of validity, and a like tendency is noticeable where problems of administration are concerned. The attitude of the courts in this regard may well be a healthy one in a field, such as this, where there are few settled rules. As it is, too little distinction is made often between the problem of creating a valid trust of movables and problems arising from other transactions where movables are involved. One can detect a willingness as a result to treat the trust transaction in the same manner as a problem of succession or of contract. That there is a limit to the usefulness of analogies drawn from these branches of the law is apparent when one reflects upon the purposes of employing the trust device.4 It is suggested that if the courts were to attempt a more specific treatment of problems respecting validity, particular- izing as to questions of capacity, formalities and "essential validity", there would be a likelihood of an even more extensive resort to the ready-made rules of other branches of the law.

I. Validity of Testamentary Trusts Trusts of land, whether they be testamentary or inter vivos, present so small a problem in the conflict of laws that they barely need be mentioned here. The law of the situs appears to have been applied in determining the validity of such trusts no less generally than it has been in respect of all transactions where an interest in land is created or transferred.5 Nor indeed would there seem to be any substantial reason that this should not be so. In respect of personal property, however, the treatment of testamentary trusts does not follow that of trusts inter vivos.s 4 See Cavers, supra, footnote 1, at p. 188. c Thus in an early New York case the court, upon finding that the real property devised by a New York testator was situated in California, stated, "The tenure, mode of enjoyment, transfer and descent of real property is [sic] regulated by the lex loci rei sitae. . . . Whether, therefore, the trust created by will as to the realty is valid, or whether it is void as in conflict with the laws or policy of the State of California, can only be determined by the courts of that State": Knox v. Jones (1872), 47 N.Y . 389, at p. 395 . See also Restatement, Conflict of Laws (1934), s. 241 ; Goodrich, Conflict of Laws (1938), s. 147; Schmitthoff, English Conflict of Laws (1945), p. 178. 6 The importance of distinguishing between testamentary and inter

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. As a general rule the validity of such a testamentary trust is I held to be governed by the law o£ the testator's domicile at the time o£ his death,? and this rule is applied even though the trustees or beneficiaries may. reside elsewhere, and although the property too maybe elsewhere.$ . There is some confusion among the American authorities as to whether the problem created by legal restrictions,. such as the rules against perpetuities and accumulations, is to be cat egorized as relating to validity or administration. The close connection with matters of administration is recognized, but a logical difficulty is sensed. Thus in Cross v. United States Trust Company of New York,-9 the court in permitting administration in New York of a trust created under a Rhode Island testatrix's will, which was valid under the domiciliary law but contravened the New York rule against perpetuities,l 9 remarked that "The will was valid or not at the moment of the death of the testatrix, and if it was valid then it is valid now" . Again, it has been said that, "where the trust is to be administered in a state other than the testator's domicil, and the validity of the trust depends, not upon the creation; but whether the trust can be validly carried out at the place of administration, there is some disagree- ment as to what law should govern the validity"." Whether or not there is a logical difficulty in the sense that the validity of the trust should be determined irrespective of any question as to its administration, the reasonable approach would appear to be to examine the nature of the, restriction affecting the trust. Clearly then, in the case of the rule against perpetuities for example, it will be seen that the object of .the prohibition is to prevent the holding, rather than the giving, of property for periods deemed contrary to a state's . public policy. Since the holding will occur in whatever place the trust is to be administered, it is difficult to see why a court of the place of admin-

vivos trusts does not appear always, to have been recognized by the courts. Probably this may be explained in part by the comparative paucity of old judicial decisions upon conveyances in trust inter vivos, and the overlooldng - of the possible importance of a distinction when, at a later date, the early testamentary cases were cited as authority for a general rule applicable to all trusts of personalty. See Hutchison v. Ross (1933), 262 N.Y . 381, at p. 391. 7 Restatement, Conflict of Laws (1934), 8.295 . See also In re Aganoor's Trusts (1895), 64 L.J. Ch. 521 . 8 Goodrich, Conflict of Laws (1938), s. 155. 9 (1892), 131 N.Y. 330. 19 For the converse situation see Hope v. Brewer (1892), 136 N.Y. 126 . And see the earlier decisions in Despard v. Churchill (1873), 53.N .Y .192, and Chamberlain v. Chamberlain (1871), 43 N.Y. 424. Cf. Fordyc e v. Bridges (1948), 2 Ph. 497 ; 41 E. R. 1035 . 11 Note (1941), 89 U. of Pa. L. Rev. 360, at p. 368 (emphasis mine).

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istration should not strike down a trust offending its public policy in such a manner. Indeed, on this basis it may be that the court of the testator's domicile also should refuse to sustain the trust, even though "valid" by its own law. The same should be true for any prohibition which from its very nature has its legitimate connection with the place of administration, and which is not repugnant to the policy underlying the domiciliary law. It is urged then that in examination of the nature and purpose of the prohibition in question, rather than in the formulation of and adherence to some "logical distinction", 12 lies the course the courts should follow. Unfortunately, however, they have, to the present time, been content to rest their decisions upon statutory construction and the general tendency to sustain testamentary dispositions of property.12

II. Validity of Trusts Inter Vivos The process of settling the law governing the validity of inter vivos trusts of movables has not reached the state of un- animity now present in respect of testamentary trusts. Where chattels were concerned, there was a reluctance for a long time to abandon the maxim mobilia sequuntur personam, which as Mr. Falconbridge has said is more dangerous than some maxims "because the absurdity resulting from a literal translation of the words is not quite so obvious".14 Adherence to this maxim meant that the tests of the validity of living and testamentary trusts were identical. At the same time, there was a tendency, as has been pointed out already," to regard as general authority the

12 Croucher, supra footnote 3, at p. 112 suggests the following "logical distinction" : "that all questions as to formal or essential validity of the beneficial interests intended to be created thereunder and the validity ofthe detailed provisions contained in the trust instrument are questions affecting the creation of the trust. Any other questions are administrative questions . If this is correct, then, for example, rules relating to perpetuities in the English sense are rules relating to the creation of trusts in that such rules determine the validity of the beneficial interests ." "See Hope v. Brewer, supra footnote 10, at p. 143, and Hutchison v. Ross, supra footnote 6, at p. 394. In the former the court went so far as to explain the ground of the decision in Cross v. United States Trust Co . (1892), 131 N.Y. 330, as a straight application of the doctrine of comity, thus ignoring once again, it is suggested, the very nature of the prohibition in both cases. See also the English case of Canterbury v. Wyburn, [18951 A.C. 89. In New York the question of what law will govern the validity of a testamentary trust of personal property has been the subject of two provisions in the Decedent Estate Law, namely sections 47 and 24 . Appar- ently, however, no great use has been made of these enactments thus far . ", Falconbridge, Administration and Succession in the Conflict of Laws (1934), 12 Can. Bar Rev. 67, at p. 68 . 11 Supra footnote 6.

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earlier decisions on testamentary trusts, and thus to emphasize the factor of the settlor's domicile. This tendency may be ob- served in two early New York decisions." In the later New York cases, however, the settlor's domicile does not appear to have been considered to be so significant.17 The whole problem of the validity of trusts inter vivos was reviewed in 1933 in the case of Hutchison v. Ross,l$ which has been viewed as having changed the course of the decisions in New York on the question of the importance of the settlor's domicile.19 This was an action to set aside a deed of trust created by a settlor domiciled in the Province of Quebec, Canada. The settlor, in a series of transactions - some of which took place in New York, transferred to a New .York trust company as trustee certain securities situated in that State. The trust, though valid by New York law, was invalid under his domiciliary law. The New York court sustained the trust,. apparently on the ground that New York was the situs of the trust property,and that, while there was no such express declaration of intention as is comprehended in the New York Personal Property Law,2° the intention to have New York law govern was "implied in every act and word of the parties". "It follows", the court said, "'that the validity of a trust of personal property must be determined by the law of this State, when the property is situated here and the parties intended that it should be administered in accord- ance with .the laws of this State."" . The later decisions 22 do seem to show that in the case of 'inter vivos trusts no single element is determinative of the choice of law that will govern. Further, there seems no doubt that the validity, of a trust of tangible movables depends upon the law of is Sullivan v. Babcock (1882), 63 How: Pr. 120 (N.Y.), and Townsend v. Allen (1891), 59 Hun. -622 ; 13 N.Y. Supp. 73. t"1 Robb v. Washington & Jefferson College (1906), 185 N.Y . 485 'and Equitable Trust Co. v. Pratt (1922),117 Misc. 708 (Sup . Ct .) ; aff'd on opinion below (1923), 206 App . Div. 689 (1st Dept.) . In the latter the court seemed .toto attach importance to the settlor's intention as shown by his, appointment a New York trustee, and to the situs of the trust res . 18 (1933), 262 N.Y. 381. 11 Land, Trusts in the Conflict of Laws (1940), p. 92. 20 Pers. Prop . Law, s. 12-a, enacted in 1930. As amended in 1933, it reads: "Whenever a person being a citizen 'of the United States, or a- citizen or.a subject of a foreign country, wherever resident, creates a trust of personal property situated within this State at the time of the creation thereof, or of which the trustee is a resident of this State, or a domestic corporation or national bank located within this State, duly authorized by law to act as trustee, and declares in the instrument creating such trust that-it shall be construed and regulated by the laws of this state, the validity and effect of such trust shall be determined by such laws ." 21 (1933), 262 N.Y. 381, at p. 395. 22 See also Shannon v. Irving Trust Co. (1936), 246 App . Div. 280 (1st Dept.) ; aff'd 275 N.Y. 95.

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their situs at the time of the settlement. Section 294 of the Re- statement distinguishes between trusts of chattels and trusts of intangibles in this matter. Whether the courts actually do so is difficult to ascertain; there are few decisions on trusts of tangibles and such as there are do not raise the matter plainly.23 It may be said, however, that careful consideration will be given to the settlor's intention, whether indicated by express declaration or by reasonably strong implication, and, in general, he will be per- mitted to prescribe the governing law for the trust, provided that the state he selects has some real contact with the transaction. The English courts, it would appear, have been confronted with the problem of inter vivos trusts in the conflict of laws only when such trusts have arisen under marriage settlements. It is difficult to say to what extent these decisions may be considered applicable to ordinary trusts.24 In any event, the general rule is that the marriage settlement is governed by the law of the matrimonial domicile 25 (usually agreed to be the domicile of the husband at the date of the marriage), but there is apparently only a presumption in favour of that law. In In re Hewitt's Settlement the trustees of a marriage settlement, which had been executed originally in Scotch form, re- quested the English court to appoint the Public Trustee as sole trustee of the settlement. It was urged that it was proper to do so inasmuch as the matrimonial domicile, the present trustees, the beneficiaries and the trust investments all were English. Refusing to grant the application, the court stated in part: 26 In the absence of any indication of a contrary intention, a marriage settlement is to be construed according to the law of the matrimonial domicile, but . . . the rule yields to the intention of the parties, and if from the settlement or the circumstances in which it was executed an intention that it shall be construed by some other law can be gathered, then it must be construed by that other law and not by the law of the matrimonial domicile . After pointing out that all of the original trustees were of Scotch domicile and that the deed was in Scotch form throughout, with 23 See Sullivan v. Babcock (1882), 63 How. Pr. 120 (N.Y .), and Matter of Dialogue (1936), 159 Misc. 18 (Surr. Ct.). Land suggests that where the trust contains only a small amount of tangibles, or tangibles having a temporary physical location, they may be treated the same as intangible personalty : Land, Trusts in the Conflict of Laws (1940), p. 46 . 24 It has been suggested that, where parties conclude a marriage settlement, their proprietary relationship is governed by the law of their contract, and the whole problem would seem to be transferred from the law of general assignments to that of contracts and particular assignments : Schmitthofï, English Conflict of Laws (1945), p. 246. 25 In re Fitzgerald, [190411 Ch. 573, at p. 578. 26 [191511 Ch. 228, at p. 232.

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numerous terms unknown to the English law, the court concluded that both in form and substance this was intended to be a Scotch settlement to be governed and construed by the law of Scotland, and if so, it still remains a Scotch settlement notwithstanding that the beneficiaries and the persons who now claim to be trustees are all resident in England, and that the whole of the trust fund is invested in securities in England .V- If this decision and others 23 may be taken as authoritative in situations other than those relating to trusts embodied in marriage settlements, it would appear that in England, as well as in the United States, no single factor emerges as -controlling in the choice of law governing the creation of inter vivos trusts of movables. Although as â. general rule the marriage settlement will be referred to the law of the matrimonial domicile, this rule will give way to an express or implied intention of the parties to the contrary. In the search for an indication of the parties' intention, the courts will consider such elements as the domicile of the trustees, the form of the trust instrument and place of its execution, and the situation of the trust property. All these circumstances .are examined by the court in fixing what is termed "the proper law" of . the settlement. This proper law, has been defined by the Court of Appeal in a recent case as "the law by reference to which the settlement was made and which was intended 'by the parties to govern their rights and liabilities" .29 The court there agrees - that "In determining what is the proper law of the settlement the nature 'and situation of the property settled is, no doubt, a matter to be ,taken into consideration",39 and it attaches "Particular weight to the fact of the matrimonial domicile",31 but these are merely some of the relevant factors to be considered in deciding what is the proper law of the settlement. It is interesting to note that the court feels that the question whether the .law of England or the law of the State of New York is to govern is to be answered "on the same principle, as it- seems to us, as a similar question arising in the case of any other personal contract".32 Such a resort to contract analogy and term- inology may be justifiable in some instances,33 but the courts 27 [191511 Ch. 228, at p. 233. . "For an early case, see Van Grutten v. Digby (1862), 31 Beav. 561, at pp. 571-2 ; 54 E.R. 1256, at p. 1260 . See also In re Bankes, [19021 2 Ch. 333, and In re Fitzgerald, [190411 Ch. 573. 29 Duke of Marlborough v. Attorney-General, [19451 1 Ch . 78, at p. 83; 1194511 All E.R. 165, at p. 168. ao Idem ., at p. 85; All E.R. at p. 170. 31 Idem., at p. 89; All E.R. at p. 172. 32 Idem., at p. 88; All E.R. at p. 171. 31 Professor Cavers suggests that this approach may be defensible where the settlement relates to after-acquired property : Cavers, Tfusts Inter Vivos and the Conflict of Laws (1930), 44 Harv. L. Rev. 161, at p. 185 .

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unfortunately do not tend to discriminate according to the nature of the problem. The chief aim is to ascertain and give effect to the intent of the parties. The danger of this process is that A conjectural intent, especially where this is directed to a generality such as `the law of the contract' and not to the consequences of the controversy in litigation, may result in the selection of a different law from that which a considered appraisal of all the factors would have indicated 34 There is no gainsaying, however, that the place of intent, as a guide to the selection of the appropriate law, poses an important problem. It will be treated more fully at a later stage of this article. 15 III. Administration of Trusts As to matters of administration, it may be said at once respecting trusts of land that the governing law is that of the state where the land is. This is the position taken by the Restate ment," and it would be surprising to find it questioned. The courts have not departed from the general rule whereby questions relative to interests in land are referred to the law of the situs. 37 There is more difficulty, however, in stating a precise rule for trusts of movables. The difficulty appears to lie in the problem as to what elements of the trust should be considered in choosing the law that is to govern, and as to the relative importance of each element. The factors that commonly have received attention are the creator's domicile, location of the trust res, place of execution of the trust instrument, domicile of the trustees, place in which the business of the trust is to be carried on, and the domicile of the beneficiaries. English cases throw little, if any, light on the law governing administration of trusts of movables. Attorney-General v. Camp- bell,", if it can be considered authoritative in this regard, would suggest that the law of the situs of the property is to apply. The case involved a testamentary trust, but the grounds given for the decision do not appear to distinguish between the trust 34 Cavers, The Choice-of-Law Problem (1933), 47 Harv. L. Rev . 173, at p. 185. 35 Infra pp, 1425 ii. 36 Restatement, Conflict of Laws (1934), s. 243, See also 2 Beale, Conflict of Laws (1935), s. 243.1. 37 Matter ofWuppermarzn (1937),164 Misc. at p. 900, 904 (Surr. Ct .) . Cf . Jones v. Jones (1894), 8 Misc . 660, at p. 663 (Sup . Ct .) . The court may sometimes supervise the administration of a trust of foreign land, where there is personal jurisdiction over the trustee . But this would seem clearly to be more a question of jurisdiction of the courts than of choice of law governing admininstration of the trust. 38 (1872),41 L.J.Ch . (N.S.) 611.

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in question and trusts inter vivos. What the English law is respecting administration of the latter is doubtful unless the authorities that have been cited may be taken to mean that the same law would apply to both creation and administration. Professor Peale has stated of living trusts that "All matters of administration are determined by the law of the situs or seat of the trust" and, in determining the situs, he would have "all indications . . . considered, such as the intention of the parties, .the. place of business or domicil of the trustees, the location of the trust res, and other similar matters".39 The Restatement. would appear to reach approximately the same result-40 The situs of the trust would be determined . by all the operative elements, in eluding the settlor's intent.41 In the case of testamentary trusts, the Restatement takes the position that the governing law should be that "of the state of the-testator's domicil at the time of his death unless the will shows an intention that the trust should be administered in another state". This statement is accompanied by comment to the effect that "If the testator appoints as trustee a trust company of another state, presumptively his intention is that the trust should be administered in the latter state . . ." .41 This suggests that the law of the testator's domicile will give way where there is sufficient evidence of- a contrary intent, either in. the express terms of the trust instrument or arising by implication from the various operative factors. It appears also from the above that the same result may be reached whether the trust be testamentary or inter vivos, and an examination of some pertinent New York decisions indicates that to quite a large extent this is the case.43 A good deal would seem to turn upon the supposed intention of the creator of the trust. It - may be, as has been suggested, that the word "intention" is used in section 298 of the Restatement 39 Beale, supra footnote 3, at p. 972. '0 Restatement, Conflict of Laws (1934), s.. 297 and Comment (d) . It will be noted that neither Professor Beale nor the Restatement mentions the settlor's, domicile or the place of execution of the trust instrument as relevant factors, although the courts have taken those factors . into account. See, for example, First National Bank v. National Broadway Bank (1898), 156 N.Y. 459, and In re Fitzgerald, supra footnote 28. 41 Cf. Falconbridge, Essays on the Conflict of Laws (1947), p. 561 . 42 Restatement, s. 298 and Comment (c) . No case was found in which the domicile of the trustees, standing alone, was considered of sufficient significance to make the law of that state govern . 43 See Matter of Bamberger (1937), 163 Misc . 549 (Surr. Ct .) ; Matter of McAulire (1938), 167 Misc . 783 (Surr. Ct.) ; Matter of Vanneck, 158 Misc. ,704, at p. 706 ; First National Bank v. National Broadway Bank, supra footnote 40; and Irving Trust Co. v. Natica, Lady Lister-Kaye (1935), 157 Misc . 32 (Sup . Ct.) .

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"in the sense that the law of a particular state should govern because of the number of elements of the trust which are located in that state".44 Such a construction serves to bring the Restate- ment position more nearly in accord with the decisions of the courts and at the same time wipes out much of the basis for distinction between testamentary and inter vivos trusts, in so far as matters of administration are concerned. But it does not assist greatly in pointing the way out of the central problem; it does not, that is, carry one beyond Professor Cook's suggestion that the governing law should be "that of the jurisdiction, with which, on the whole, the trust has the most substantial connection".45 In the absence of expressed intention on the part of the creator of the trust, no single element will control, and the relative weights to be attached to the various elements which properly may be taken into account are uncertain. One is left with the question whether a mere numerical preponderance of elements in one state will suffice to make the law of that state govern. No court appears to have listed in order of their importance the factors that should be considered. Undoubtedly the domicile of the testator receives first consideration in the case of a testa mentary trust. The strength of tradition is behind this element of the trust and, if it coincides with another of the accepted factors (it coincides frequently with the place of probate) or if from the factual situation the other elements are largely neutralized, it is almost certain to govern." Whether this result follows will depend upon the grouping of the other factors and upon whether such grouping appears to have come about through a conscious effort on the part of the creator of the trust to have a law other than that of his domicile apply to the administration of the trust. Thus it may well appear that, if a testator names a trustee in another state and deposits with this trustee the property that is to comprise the trust res, it was the testator's intention to have the law of the trustee's domicile govern.47 The

44 Land, Trusts in the Conflict of Laws (1940), p. 206 . 45 Cook, Trusts of Personal Property and the Conflict of Laws (1919), 19 Col. L. Rev. 486, p. 488. 46 See Matter of Bamberger, supra footnote 43. 47 Matter of McAulife and Matter of Vanneck, supra footnote 43. In Kenney v. Morse (1902), 71 App. Div. 104, not only were the trustee, trust property and place of administration in New York, but the creditors of the beneficiary had obtained a judgment against him there and were attempting to enforce it against the trustee . The New York court applied local law, even though the testator's domicile and the place of probate of the will were in Rhode Island. The decision leaves in doubt, however, the weight that the court may have attached to the factor of New York as the forum. In that regard, cf. Duke of Marlborough v. Attorney-General, [1945] 1 Ch. .78, at p. 87; [1945] 1 All E.R. 165, at pp. 170-71.

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same factors have been field to indicate the intent of" the settlor in the case of an inter -vivos trust-48 While on principle the domicile of the beneficiaries might appear entitled to be classified as an important factor in itself, it is unsatisfactory on its face since obviously there may be, a number of beneficiaries, each with - a different domicile. The place of execution does not have a sufficiently, substantial connection with the transaction to be rated. very highly among the significant factors; it may be purely fortuitous-. For these and perhaps other reasons no great weight has been attached to the fact of the beneficiaries' domicile, or,of the place of execution of the trust instrument, as an indication of the creator's intent, in particular when others of the commonly accepted factors have pointed to another law. The place of probate, while sometimes included in the enumeration of relevant factors 49 seems invariably to be combined in the factual situation with another o£ the more important elements, such as the testator's domicile or the location of the trust res, and consequently serves only to strengthen the chances that the law of such place will be chosen as the applicable law. If the above , correctly represents the trend of the law, it would appear that groupings of factors rather than any particular factors in themselves are regarded as controlling. This being so, one would not look-for the courts to attempt such an appraisal of the various factors. as would fix the relative importance of each, regardless of its association in the facts of the case. The courts have been interested in effectuating the intent of the creator of a trust, and have looked to the grouping of the elements of the trust at hand as an appropriate means .of ascertaining what that intent fairly may be said to have been. The doctrine of intent, even where the intent has been expressed clearly, would appear to be subject to some limitation. In the English case of In re Fitzgerald, Cozens-Hardy L.J. said: 50 As a general rule the law of the .matrimonial domicile is applicable to a contract in consideration of marriage. But this is not an absolute rule . It yields to an express intention that some other law shall apply.

Cheshire states his rule more cautiously when he says : 51 The rule is that this contract, like all other species of contrâcts, is governed by the proper law, i.e. the law with which it is most nearly connected . aâ Irving Trust Co. v. Natica, Lady Lister-Kaye, supra footnote 43 . 4s See. Matter of Bamberger, supra footnote 43. 10 [190411 Ch. 573, at p. 587. 51 Cheshire, Private International Law (3rd ed., 1947, p. 660. .

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Previously he had found that the expressed intention of the parties to a contract is at least not of unlimited operation.s2 Professor Beale, though he was speaking of the law governing validity rather than administration, has criticized the doctrine of intent on the ground that "in point of theory . . . it involves permission to the parties to do a legislative act"," while in practice the courts have had to define limitations to such an extent that "it is practically impossible to predict what any court in which this form of rule is laid down will say as to the intention of the parties".s4 There appears, indeed, to be a natural prejudice among those trained in the law against giving the maker of a contract or the creator of a trust unrestricted power to determine what law shall govern. American decisions giving efficacy to the expressed intent of a settlor are exceedingly raxe.65 The nature of the difficulty surrounding the doctrine of intent may be clarified perhaps if one examines what is meant by "implied intent" . Implied intent appears to have at least three connotations, namely : (1) intent, as it comes into play in the interpretation of a document; (2) intent arising through a presumption that the creator of a trust intended that the trust should be governed by the law of a state that would uphold the trust provisions ; and (3) intent arising by implication from the fact of a preponderance of operative factors within a particular jurisdiction, and through a deduction that the grouping of these factors was a conscious effort on the part of the creator. Intent in the first and second instances becomes merely one of a number of elements that the court will consider in determining the governing law. If from the language employed in, and the nature of the provisions of, the trust instrument, it is evident that the creator was acting with reference to the law o£ a particular jurisdiction and if, moreover, the trust is valid under that law, but not under the alternative, then the intent so deduc- ible will be treated as a significant element in arriving at the governing law. This was . the position taken by the English courts in lit re Bankes and In re Fitzgerald.ss es Mein., at p. 329. ss Beale, What Law Governs the Validity of the Contract (1910), 23 Harv. L. Rev. 260. sa Idem., at p. 266. sa See, however, City Farmers Trust Co. v. Meyn (1942), 263 App . Div. 671 (2d Dept.), where a New York court stated, "This is a concise, clear, unequivocal statement of the settlor's intention that the law of this State was to be applied to all the provisions of the trust agreement", and applied the New York law notwithstanding that the result was to hold invalid the exercise of a power of appointment . 56 [190212 Ch. 333, and (1904] 1 Ch. 573, respectively .

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The intent presumed from the fact of a preponderance of factors within_ a jurisdiction, however, partakes of something more than the character of an additional factor. It is, as it were, a finding on the whole issue of the governing law and as such comes very close to the idea of the situs or seat of an inter vivos trust. Indeed, it does not differ, widely from "the proper -law" as interpreted by Cheshire and defined by the English Court of Appeal in Duke of Marlborozegh .v. Attorney-General.57 Nor is it far removed from Professor Cook's advocacy of the place with which a testamentary trust has "the most substantial connection".

IV. Effect of Shifts of Elements of a Trust The question now arises as to the time the courts will consider pertinent in determining the presumed intent of the creator of a.trust. What will be the effect, for instance, of a shift of certain of the factual connections of a trust subsequent to its creation? While this problem is, not so likely to occur in the administration of an inter vivos trust, since there would be no appreciable delay ordinarily between the execution. of the trust deed and the . setting up of the trust, it is by no means extraordinary that such a problem should develop in the case of a testamentary trust, inasmuch as a considerable period may elapse frequently between the execution of a will and the testator's death. May shifts of the' elements of a trust during this period be taken to indicate a change of mind, on the part of the creator of the trust, as to the law he desires to govern it? The following comment concerning the "testator's intention" is found in connection with section 298 of the Restatement- In the case of a testamentary trust, the state in which the testator intended the trust to be administered is presumptively the state of the testator's domicile at the time of his death, since it is natural to suppose that he intended the trust to, be administered in the same place in which his estate was to be administered, and under the direction of the courts of that state. Suppose then that the testator changes his domicile following the execution of his will. Is his presumed intent's to be deemed to alter with each change of domicile? Logically it would seem that intent should be ascertained as of the time of execution of the will. Under the Restatement rule it is difficult to escape crediting the testator with an unusual amount of foresight, unless one places a very liberal construction upon the word "intention" .59

51 Supra footnote 29. sa The New York Decedent Estate Law provides for the contingency of change of residence; where the testator has declared his intent. 59 Supra pp. 1423-1424.

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Again, there may be a shift of the trust property. If the shift is, for example, from the testator's domicile to the domicile of the trustee named in the will, and the transfer of property is effected with reasonable promptness following the execution of the will, it would appear susceptible of interpretation as an effort by the testator to order the factual situation, with a view to having the law of the trustee's domicile apply. If there were subsequent shifts of the trust res at later periods, however, it might be more difficult to ascertain whether they had transpired as a result of a change in the testator's intention. One would not suppose that much significance would be attributed to such a shift of trust property as might be carried out by the executors from the place of probate to the trustee's domicile ; that, being a mere administrative detail, would scarcely be taken into account. A change in the domicile of the trustee, on the other hand, might be considered important, for normally the business of the trust would be conducted at the trustee's domicile. The change might come at any time during the administration of the trust. The Restatement does not seem even to take cognizance of this problem and, while the courts have grappled with it, they have not provided thus far anything approaching a definite and complete answer. Not infrequently they refer to the testator's or trustee's domicile or the location of the trust property su as being an important factor in the case, without making it clear as of what time they are speaking or whether a shift of factors actually has taken place. The English Court of Appeal in Duke of Marlborough v. Attorney-General stated: 11 It may well be the case that the proper law of a settlement can be changed by subsequent events, but we do not see how this can happen without the concurrence of the beneficiaries agreeing to a change in the proper law and thereby, in effect, making a neiv settlement. It cannot, we think, be effected by a change in trusteeship . . . . In determining what is the proper law of the settlement the nature and situation of the property settled is, no doubt, a matter to be taken into consideration. But the relevant date for this purpose can only be the date of the settlement itself since we do not see how a change, for example, from foreign investments to English investments can turn what was originally a foreign settlement into an English settlement. As in the case of trustees, so in the case of investments, a change may be quite fortuitous and cannot affect the question of what law governs the settlement . so See Matter of Avery (1904), 45 Misc . 529, at pp. 533-4 (Surr. Ct .), and Swetland v. Swetland (1930), 105 N. J. Eq. 608, at p. 614 (Ch .) . 61 [194511 Ch. 78, at p. 85 ; [1945] 1 All E.R. 165, at p. 170 (emphasis mine) .

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From - the above s2 it would appear that the change of no one element of a trust is controlling and that a shift, subsequent to the creation of a trust, of the creator's, beneficiaries', or trustee's domiciles, or the removal of the trust property to another state, would not of itself affect the law governing the administration ôf the trust. Nevertheless may there not in some instances be such a shift in the operative factors that the trust map be said to have become substantially connected with a new jurisdiction? May there not be such a change in the real location and place of administration that a different law will .apply, even, as to the. validity of the trust? This was the problem raised in a well- known American case involving the Wilmington Trust Company.63 Here the court, adopting "the so-called intent rule", found that the real location and place of administration of the trust in question had moved from New .York to Delaware, with the result that the law of the latter State. was controlling. The decision would be startling indeed if it determined that the whole meaning of a trust, and consequently property rights dating from its creation, were capable of being altered overnight through a change of trustees - in this case the appointment of the Wil- inington Trust Company as successor trustee. It seems . more reasonable to regard the case as having been decided on the. court's theory of a "re-creation" of the-trust, and to restrict the. )weight to be attached to it accordingly,

I V. Canadian Decisions The problems that have been discussed in this article have received little attention by Canadian courts. ®n such occasions as these problems have arisen, there has not always been agree inent that the situation involved a question . of conflict of laws, nor a clear appreciation of the nature of the conflicts question. s4 The decision in Harris Investments .Ltd. v. Smith may indicate that, in dealing with the administration of an inter vivos trust, a Canadian court will adopt a practice similar to that of the United States courts, of examining the various elements of a trust, with a view to, determining the situs or seat of the trust. 62 See also In re Hewitt's Settlement, [191511 Ch. 228, at pp. 232-33, and Mercer v. Buchanan (1904), 132 Fed. 501 (C.C .w.D. Pa.) . ss 15A (2d) 153 (Del. Ch. 1940), aff'd 24A. (2d) 309 ; 139 A.L.R . 1117 (Del. 1942). - 64 See, e.g., Harris Investments Ltd. v. Smith, [193411 D.L.R . 748, where MacDonald C.J . stated that the main question raised was one of conflict of laws and that the law of British Columbia governed, while Macdonald J.A., concurring in the result, contended that there would be no controversy as to what system of law prevailed since the contract itself rineticulously outlined the course to be followed by the trustees .

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It is difficult to say from that case., however, whether the settlor's intent is merely an additional element to be considered in deciding what is the jurisdiction with which the trust is most closely associated, or whether the intent when ascertained is actually a conclusion, reached by the court after an investigation of all of the relevant factors, that the settlor may be presumed to have intended the law of a certain jurisdiction to apply. If it is not the latter, then it appears at least to have been an over- riding consideration, of much greater importance in itself than the domicile of the trustees, for example. However much one would wish to feel that there was behind the decision some such analysis of, all the factors involved, one cannot ignore the pretty definite indications, from the language employed, that the pre-eminent position accorded the element of intention came about through the employment of analogies drawn from the law of contract. This, as pointed out heretofore, is the approach of which the English courts seem to approve and, while it may not affect the result in a particular case, it tends so to oversimplify the problem that factors, other than what amounts to a merely speculative intent, and the interests they represent, may not be given the significance they de- serve.ss In Vermont Loan and Trust Co. v-. Ennis6 the jurisdiction of the Saskatchewan courts to deal with a trust deed was questioned on the ground that it was executed in the United States between parties now domiciled there and for the benefit of cest-uis que trustent all resident there. This objection appears to have been sustained, although two of the judges did not find it necessary to deal with the question, since, even though the court did have jurisdiction, the plaintiff was not entitled to the relief sought. While the jurisdictional problem seems to have been disposed of largely on the basis of an application of the doctrine of forum non convenie-ns, the decision does show the elements of the trust to which the courts presumably will attach importance in determining the real location of an inter vivos trust. In a much earlier case, involving a testamentary trust, an Ontario court appears to have been divided in opinion as to whether a conflicts problem had arisen and, further, as to the relative importance of the factor of the beneficiaries' domicile as against that of the trustees. Re Goodhue 67 a majority of "Cf. Re Ha.mmond (1921), 51 O.L.R. 149, at p. 153, and Re Wilkinson, [1934] 1 D.L .R., 544, at p. 546. 66 [193312 W.W.R. 397. 1,7 (1872), 19 Gr. Ch. Rep. 366 (Ont.) .

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the Ontario Court of Appeal treated the problem at hand as one of statutory interpretation, but Strong V. C., agreeing with the majority in allowing the appeal, saw implications of a conflict of laws problem and found that, since the testator's will had directed that the whole estate be converted -into personalty, and the "locality of the right" to the latter was at the domicile of the party entitled to it, the rights of the grandchildren domiciled outside Ontario remained unchanged by a private Act of the Ontario Legislature which had ignored them. On the other hand, Spragge C., dissenting, concluded his opinion by saying I have, I confess, come to a less decided opinion upon the question of domicile than upon any other question in the case . I incline to think that it is "the domicile of the trustees that must govern. The view taken by a majority of the Court renders it less necessary than it otherwise would be, that I should come to a decision upon that points$ A more helpful case is Parkhurst v. Roy,s9 although the rules the Ontario court applied there are now too familiar to require further comment. If the decision may be taken as indicative of the position that Canadian courts generally would take on the validity of testamentary trusts of personalty and trusts of land, the Canadian view would appear to be in accord with the United States authorities. As to the direction . for accumulations, the Ontario court seems to have felt strongly that this was a matter of administration and one with -which the courts of the place of administration should deal, if and -when the occasion arose. The decision has the merit in this regard of recognizing the state having the greater interest in enforcing the prohibition. Finally, the court's opinion shows a tendency, already noted in the decisions of the New York courts, to sustain testamentary dispositions of property where at all possible. That the decision in Parkhurst v. Roy does represent the Canadian viewpoint finds support in Graham v. Canandaigua Lodge 7o where a testator, domiciled in Missouri at the time of the execution of his will and at the time of his death, bequeathed all his property to a Lodge of Oddfellows in the State of New York. The will had been executed in Ontario, where his property, consisting solely of personalty, was located and the executor resided. The legatees, being unincorporated at the time .of the testator's death, were incapable under the laws of New York of taking any bequests; they subsequently availed themselves of the provisions of a New York law enabling them to acquire the property as trustees. es Idem., at p. 418 . 69 (1881), 7 Ont . App. 614. 70 (1894), 24 O.R. 255.

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It was contended by the plaintiff that the law of New York. should govern and that under such law the bequest was invalid. The court held, however, that, since the testator had his domicile at the time of making of the will and at the time of his death in the State of Missouri, the law of that State must govern, notwithstanding that the will was made and the whole of the estate was in Ontario ; and further the court stated that, there being no evidence whatever as to the law of Missouri, it must be taken to be the same as that of Ontario. Dealing with the contention that the capacity of the beneficiary to take depended upon the law of his domicile, the court stated that, while it might be that "a positive prohibitory law" of his domicile would prevent the giving effect to a bequest which would contravene it, there was nothing of that character alleged in this case. The bequest to the Lodge was held therefore to be a valid gift to its members. The court examined a number of authorities, and concluded: The case of Fordyce v. Bridges, 2 Phillips, 497, referred to in Chamberlain v. Chamberlain, does not support the broad contention [that the right or capacity to take depended upon New York law]; what was there held, and followed in Chamberlain v. Chamberlain, was merely that the law of the domicil of a testator preventing a gift for a particular purpose within its jurisdiction, but having no extrater- ritorial effect, would not render invalid a gift for the same purpose where it would be valid 71 There was, thus, further affirmation of the law of the testator's domicile as the governing law, and a. concerted effort to uphold the testamentary disposition, even though at the time when the bequest became effective there was doubt as to the ability of the beneficiary (actually trustee) to accept it. It would be presumptuous to attempt on the basis of these few decisions to formulate definite rules to which Canadian courts might be expected to adhere in future. For the comments of the outstanding Canadian authority and a veteran writer in the field, the reader is referred to Mr. John D. Falconbridge's recent work, Essays on the Conflict of Laws,72 which already has received judicial approval .73

VI. Planning by Creators of Trusts In conclusion, it may be appropriate to consider briefly what steps might be taken by the creator of a trust of personal 71 (1894), 24 O.R. 255, at p. 262. 72 See Post Script : Creation and Administration of Trusts, pp. 559-563 . 73 See In re Nanton Estate, [1948] 2 W.W.R. 113, at pp . 117-18 .

1943] Some Aspects of Trusts, in the Conflict of Laws 1433

property to ensure that the validity of the trust, and problems arising in connection with its administration, will be subjected to the law of a state of his own -choosing. If the foregoing decisions of. the courts are representative and have been interpreted accurately, there would seem to be little doubt that, if the creator of a trust, whether it be inter vivos or testamentary, incorporates in the. trust - instrument a clear expression_ of his intention to have the law of a particular state govern, his wishes will be -respected by the courts, provided that he names à state having some close association with the trust 74 It is not possible to state with certainty. how substantial the connection with the state in question must be, or, to put it otherwise, precisely what elements of the' trust must be, found within a state before the courts will effectuate the creator's expressed intention to have the law of that . state . govern .75 Apparently, if there is some genuine and reasonable connection, in the sense that one or more of the factors generally agreed to be relevant are present, at least some courts will hold that the connection is sufficient. Thus in Matter of Adriance 76 the testator's direction that the law of England should govern was given effect to regardless of the fact that the only contact appeared to be that the will had been executed in England and that the testator had resided there temporarily. In Shannon v. Irving Trust Co., 77 however, while New. York was the place of execution of the trust instrument, the location of the trust res, the domicile of_ the trust instrument and the place of administration of the trust, the settlor's domicile was in New Jersey, the State whose law he desired to have govern: The court stated that its decision did not extend beyond instances where the conflict arose between the doiniciliary law and the law of the situs. To be on the safe side, then, one would wish to see the provision in the trust instrument accompanied by a concentration, in the stateindicated, of one or more elements - such as the creator's domicile, situs 74 In re Fitzgerald, [1904] 1 Ch. 573, at p. 587; Shannon v. Irving Trust Co. (1936), 246 App . Div . .280 (1st Dept.), aff'd (1937), 275 N.Y. 95 ; and Matter of Tabbagh (1938), 167 Misc . 156 (Surr. Ct.). The last-named did involve, of course, an application of a New York statutory 75 provision. The decision in City Bank Farmers Trust Co. v. Cheek, 93 N.Y . L.J. 2941 (June 7, 1935, Sup. Cit.), seems a definite ruling that a clear expression of opinion is not enough . Here the court, holding the trust entirely invalid, stated: "Judicial surgery cannot be resorted to for the purpose of saving a part of this trust. To do so would do violence to the intent and general plan of the settlor." 75 (1936), 158 Misc . 857 (Surr. Ct.). 77 (1936), 246 App. Div. 280 (1st Dept.) ; aff'd 275 N.Y. 95.

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of the trust property or the trustee's domicile - which the courts may be relied upon to treat as important. In the event that the creator of the trust neglects to make any express provision in the trust instrument for the system of law which he desires should govern its validity, or if for any reason he does not wish so to provide, it is probable that the same result could be achieved otherwise, at least in certain instances - for example, where an inter vivos trust of securities is involved. This would be accomplished through bringing about such a concentration of the elements of the trust in one state that the courts will be prepared to presume an intent on the part of the settlor to have the trust's validity referred to the law of that State. It will be assumed, that is, that the settlor, in execut- ing the trust deed, had in mind the law of that state.78 Again, inasmuch as no single element appears to be determinative of the choice of the governing law, one cannot state positively what grouping of elements will be required as a minimum to ensure the application of the law of a particular state. In the case of a trust of tangible movables it would seem doubtful that a grouping of elements in a state other than that of the situs of the property would overcome the settled rule that the validity of such a trust depends upon the law of the situs. It would appear even less likely, in respect of a testamentary trust, that the law of the testator's domicile would be displaced through a mere implication, arising from the presence of a number of factors in another state, that the law of that state should apply. It is true, of course, that the courts have on occasion determined the validity of a testamentary trust by a reference to the law of the place of administration and, on a theory of intent, the courts might be said to have acted in those cases upon a presumption that the testator intended that the trust should be governed by a system of law that would sustain the provisions of the trust. But this seems to be straining the idea of intent and, moreover, the desire to uphold testamentary dispositions is in itself an adequate explanation of the courts' attitude. Whether or not the law of the place of administration will be applied to uphold the validity of a trust should depend upon the nature of any question of public policy that may be involved. If the barrier to the trust's validity lies in the domiciliary law, and consists of a prohibition which in its very nature has its legitimate connection with the administration of a trust rather 78 See Equitable Trust Co. v. Pratt, supra footnote 17. Cf . Hutchison v. Ross, discussed supra, p. 1419, and the English view as to the proper law of a marriage settlement .

19431 Some Aspects .of Trusts in the Conflict of Laws 1435

than its creation, then it seems unreasonable that the courts_ of the domicile should strike down the trust: Moreover, if the decisions examined can.be considered fair examples, they would seem to indicate that it is in connection with matters of administration that the trust is most likely to run counter to strong public policy. But even if this be so, not all questions of administration are bound up with considerations of public policy, and a distinction should be made. No such consideration is present, for instance, in the ar- rangements for the trustee's commissions, nor perhaps as to the type of investments the trustee is authorized to make. There would seem to be no real objection to those and similar matters being regulated by the law of a state selected by the creator of the trust. There are, on the other hand, questions of administration that would more probably be the subject of some rule based on serious considerations of public policy. A state's policy on perpetuities and accumulations, or on the alienability of the beneficiary's interest, might well fall within this category, and it would seem to be defensible if the courts of. such a state were to refuse to aid in carrying out a trust which offended a rule of that nature. Against the duty of the-state to protect the welfare of its individual citizens, the çourts should balance, however, the important fact that a reasonable degree of ease in commercial transactions. is essential if business enterprise is not to be dis- couraged. ®n the whole, it would seem little more. than sensible that, before the administration of a trust is submitted, either expressly or impliedly, to the law of a particular state, some appreciation should be made of the restrictions currently found . in that law. If such a study reveals a strong policy on the part of that state, directed against the type of agreement or property holding that the terms of the trust envisage, then other arrange- ments should be made for the administration of the trust. This might be accomplished in a number of ways. Since from the fact of .â preponderance of factors within a jurisdiction a court ordinarily will presume an intent on the part of the settlor to have the law of that jurisdiction govern, it should be possible, through a carefully arranged grouping of the various elements of the trust, to ensure that it will be administered in a state under whose laws it will be almost certain to be upheld. It should be possible to name a trustee whose domicile is in such a state ,and to place in the hands of the trustee, by. the- time the trust instrument is executed, the property that is to be the subject of the trust. If the trust property consists of securities

1436 The Canadian Bar Review [Vol. XXVI

or cash, this will be comparatively simple to arrange; if the trust property, or part of it, is comprised of land, it seems probable that the restrictions of the law of the situs might be a- voided if the creator of the trust were to direct that the land be sold, by that means bringing about equitable conversion of the land into personalty. 79 How much may be achieved by a planned shift of the elements of the trust after the execution of the trust instrument is difficult to say. There are decisions, both American and English, that appear to take a strong position against any change in the applicable law which might come about through events subsequent to the creation of the trust." Whether the seemingly contrary view taken in the Wilmington case would be followed by other courts seems open to considerable doubt-s'

At the outset it was stated that the subject under discussion did not lend itself to the formulation of a positive set of rules. Nor, it is feared, has a satisfactorily firm basis been suggested for those who are faced with the task of planning under such rules as do exist; there are many qualifications and unexplored avenues. As Dean Griswold has intimated, it may be "a long time before the defihitive word has been said on trusts in the conflict of laws". ,, In the meantime, perhaps the most encour- aging aspect of the situation is the evident readiness of the courts to continue the search, rather than to settle upon mere rules of thumb and maxims which have outlived their usefulness .

"$ it should be remembered, however, that the question whether or not an equitable conversion has taken place is governed by the law of the situs of the land. See Hope v. Brewer (1892), 136 N.Y. 126 . $0 See City Bank Farmers Trust Co. v. Cheek, supra footnote 75, where a change in the settlor's domicile from New York to Florida, following execution of the trust deed, was held to be immaterial. See also cases referred to in footnotes 60 and 61, supra. 11 A less objectionable method of fixing the place of administration would be to provide in the trust instrument for the appointment of a cotrustee . Thus in Matter of Vanneck (1936), 158 Misc. 704 (Surr. Ct.), the settlor's husband, who was named as trustee in the trust instrument, was directed therein to appoint a cotrustee . His subsequent appointment of a New York trust company appears to have influenced the court greatly in deciding that New York law should govern the administration of the trust. 82 Griswold, Review of Land's "Trusts in the Conflict of Laws" (1941), 55 Harv. L. Rev. 163.