Hanson v. Denckla

Background

A woman (Dora Browning Donner) created a trust in Delaware in 1935 and later moved to Florida. In 1949 she made an appointment in Florida that directed $400,000 of the Delaware trust to her daughter’s children. After Mrs. Donner died in 1952, two residuary legatees in Florida sued in Florida probate court, arguing the Florida will controlled and the appointment had failed. The Florida courts, without personal service on the Delaware trustees, held the appointment ineffective under Florida law and ordered the $400,000 to the residuary legatees. Meanwhile Delaware courts, with trustee participation, held the trust and appointment valid and refused to give the Florida judgment full faith and credit (the Constitution’s rule that one State’s judgment should normally be respected by other States).

Reasoning

The Supreme Court focused on whether Florida had the power to bind the nonresident Delaware trustee or the trust assets. For a court to reach property in another State, that State must have proper affiliation: either the property must be located there or the nonresident party must have sufficient contacts with that State. The Court found the trust corpus and the trustee tied to Delaware, and the trustee had not purposefully availed itself of Florida (no office, solicitation, or administration there). Because Florida law treated the trustee as an indispensable party, the lack of jurisdiction over the trustee made the Florida decree invalid. The Court therefore reversed Florida’s decision and affirmed Delaware’s.

Real world impact

The ruling protects out-of-state trustees and trust assets from being decided by a State that lacks proper jurisdiction. It leaves the Delaware trustee and the appointed beneficiaries in control of the $400,000 and limits a decedent’s probate in one State from automatically determining rights in trusts administered elsewhere. The opinion was followed by dissents disagreeing about fairness and convenience for Florida residents.

Dissents or concurrances

Justices Black and Douglas dissented, arguing Florida had strong ties: the appointment was made there, the decedent and many beneficiaries lived there, and the trustee acted largely as a custodian, so Florida jurisdiction and full faith and credit should have been sustained.