Hutchison v. Ross

John Ross (trustor) executed an antenuptial agreement to establish by deed or will a trust fund of $125,000 to benefit his prospective wife (trust beneficiary). Both Ross and his then-prospective wife were domiciled in Canada. After inheriting millions from his father, Ross decided to set up a $1,000,000 inter vivos trust to benefit his wife and children, and he directed that some securities in New York be used for that. The trust was drawn in New York and signed by Ross and his wife in Canada. The trust was then sent back to New York, where the New York trustee signed it and where the securities comprising the corpus of the trust were delivered to it. The trust also stipulated that it was in place of the previously created $125,000 trust. Within 10 years Ross had lost almost all his fortune, and he discovered that under Canadian law, an antenuptial agreement cannot be modified in any way and, regarding his wife, the $1,000,000 trust was invalid. To secure a loan, Ross promised a creditor to start proceedings to set aside the trust and deliver the trust res as collateral. Ross then commenced the promised action and upon his involuntary bankruptcy, his trustee in bankruptcy was substituted as plaintiff. The trial court held that Canadian law—the law of Ross and his wife’s domicile—governed the validity of the attempt to modify the antenuptial agreement, which meant the $1,000,000 trust was invalid. The appellate court reversed, and Ross appealed.