21 Misc.2d 356, 191 N.Y.S.2d 994
Supreme Court, New York County, New York,
Special Term, Part I.
In re MATTHEWS' TRUST.
In the Matter of the Judicial Settlement of the Intermediate Account
of Proceedings of GUARANTY TRUST COMPANY OF NEW YORK as Trustee under
an Indenture dated
April 11, 1930 made by Herbert Rouse Matthews for the benefit of
Jennie Martha Hill et al.
Sept. 28, 1959.
Successor-trustee brought proceeding for judicial settlement of its
intermediate account as trustee under indenture dated April 11, 1930,
and successor-trustee sought instruction and direction as to whether
it was under any obligation to pay British estate duties. The Special
Term, Charles A. Loreto, J., held that where trust was a New York
trust, though created by a grantor who was a domiciliary and national
of England and solicitor in England, who represented estates of
deceased annuitants, notified trustee in New York that under British
law the trustee had an obligation to pay out of the principal of the
trust duties imposed by the English government on the estates of life
annuitants because grantor at time of creation of trust and at time of
his death was a domiciliary of England, and deceased life income
annuitants were at time of their deaths likewise domiciliaries of
England, but there was no reciprocal agreement between our government
and Great Britain pertaining to the matter, trustee was not required
to comply with the requests and demands of the solicitors in England.
Trustee held under no duty to pay British estate duties.
**995 *357 Davis, Polk, Wardwell, Sunderland & Kiendl, New York City
(Andrew Y. Rogers, Joseph A. Bambury, Laurence A. Spelman, New York
City, of Sounsel), for petitioner.
CHARLES A. LORETO, Justice.
Petitioner, as trustee, seeks instruction and direction as to whether
it has any obligation to pay, out of principal of the trust, British
estate duties payable by virtue of the deaths of life income
annuitants of the trust.
By a prior order of this court, petitioner obtained full relief on all
other requests made in its original petition (see memorandum decision
dated April 9, 1959, by Steuer, J.).
The application for this construction was therein denied with leave to
renew upon notice to the British government, which has now been given.
The latter has not appeared on this proceeding.
The grantor created the trust in 1930. He died in 1933. At the time of
the creation of the trust and at his death he was a domiciliary and
national of England.
The trust indenture named the Guaranty Trust Company of New York as
trustee. Petitioner is the successor in interest of the Guaranty Trust
Company by merger. The trust res consisting of stock certificates was
transferred by the grantor to the trustee and at all times had its
situs in this jurisdiction.
The trust is a New York trust and must be construed under the laws of
this state. Article Thirteenth of the indenture provides that =91without
regard to the laws of any other state or county wherein the parties
may happen to be at the time of the execution of [the] instrument or
may now or hereafter reside * * * and for all purposes the parties
hereby acknowledge and submit to the jurisdiction of the courts of the
State of New York * * * as if they were domiciled in * * * New York=92.
The indenture provides that six annuities be paid out of the net
income of the trust for the life of the annuitants. Several of the
annuitants have died. Five charitable institutions are *358 entitled
to receive any net income over and above the amount of the annuities
payable under the indenture. The remainder of the trust is now vested
in the estate of the daughter of the grantor.
**996 The trustee has been notified by solicitors in England
representing the estates of the deceased annuitants that under British
law the trustee has an obligation to pay out of the principal of the
trust duties (estate) imposed by the English government on the estates
of the life annuitants because the grantor was at the time of the
creation of the trust and at his death a domiciliary of England, and
the deceased life income annuitants were at the time of their
respective deaths likewise domiciliaries of England. Therefore, the
the trustee has been requested to remit the trust's appropriate share
of British estate duties.
The courts of this state will not enforce the revenue laws nor aid in
the collection of taxes of another state or nation absent reciprocal
agreements (State of Colorado v. Harbeck, 232 N.Y. 71, 133 N.E. 357;
Matter of Bliss' Estate, 121 Misc. 773, 202 N.Y.S. 185; Matter of
Martin's Estate, 136 Misc. 51, 240 N.Y.S. 393, affirmed 229 App.Div.
722, 243 N.Y.S. 845, affirmed 255 N.Y. 359, 174 N.E. 753; Matter of
McNeel's Estate, 10 Misc.2d 359, 170 N.Y.S.2d 893; In re Estate of
Lamar, 15 Misc.2d 544, 182 N.Y.S.2d 512.) No reciprocal agreement
between our government and that of Great Britain pertaining to this
matter has been shown. Hence the court instructs that the trustee is
not required to comply with requests and demands by representatives of
deceased life annuitants or others for payment of British Estate
duties imposed on such deceased annuitants out of the principal of the
trust.
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