262 N.Y. 381, 187 N.E. 65 (1933)
In 1902, John Kenneth Ross, a resident of Montreal, married in Toronto after entering into an ante-nuptial agreement with his prospective wife.1 The agreement provided for separate property under the law of Quebec.2 It required Ross to establish a trust fund of $125,000 for his wife and children, with his father guaranteeing the donation.3
Ross's father died in 1913, leaving an estate of about $10,000,000 to his son.4 In 1916 Ross decided to create a larger trust of one million dollars funded with securities held in New York.5 He directed his adviser to prepare instruments transferring the securities to the Equitable Trust Company in New York as trustee for the benefit of his wife for life with remainder to their children.6
Ross and his wife executed the trust indenture before the American Consul General in Montreal.7 The Equitable Trust Company then signed it.8 The Bank of Montreal delivered the securities to the trustee in New York.9 The trust operated without challenge for about ten years.10
In 1926 Ross faced financial difficulties from oil stock speculations and loans from Baltimore banks.11 He was advised that the trust was invalid under Quebec law.12 He obtained written consents to revoke from his wife and children.13 He promised the banks to bring proceedings to set aside the trust in exchange for loan extensions.14 Ross commenced two actions in New York to set aside the trust as void and to revoke it by consent.15 A petition in bankruptcy was filed against Ross.16 The trustee in bankruptcy was substituted as plaintiff.17 The actions were tried together.18 They resulted in a judgment for the plaintiff in the first action and for the defendants in the second action.19 The Appellate Division reversed the first judgment and dismissed the complaint on the merits while affirming the second judgment.20
Whether the essential validity of a conveyance in trust of personal property situated in New York by a non-resident settlor is determined by the law of New York?21
Yes. The securities were situated in New York at the time of the conveyance to the Equitable Trust Company.24 Ross directed Hogg to prepare or have prepared appropriate instruments to transfer to the Equitable Trust Company in the city of New York a fund of one million dollars, to be held in trust for his wife.25 The parties intended the trust to be administered in New York in accordance with the laws of this State.26
Therefore the validity is determined by New York law rather than Quebec law.27
The essential validity of the conveyance in trust is determined by the law of New York.28
Whether the validity of provisions in a trust agreement for revocation of an ante-nuptial marriage settlement must be determined by the law of the parties' domicile, even if the conveyance in trust is governed by New York law?29
The validity of the revocation provisions must be determined by the law of the parties' domicile.34
Whether findings that the wife did not knowingly consent to revoke the marriage settlement, and that the renunciation did not induce the transfer, preclude rescission of the trust conveyance for failure of consideration?35
A conveyance valid under the law of New York might be unenforceable and subject to rescission if the consideration fails because the laws of Quebec effectually preclude the enjoyment of the promised consideration.36 The findings establish that the conveyance and renunciation were not made in exchange for each other.37
Yes. The Appellate Division has, however, found that the defendant Mrs. Ross never "knowingly consented to revoke any of the conditions or provisions for her benefit contained in the said marriage settlement, and never knowingly renounced any benefit which might accrue to her thereunder" and that "no consent to revoke, or agreement to renounce, or renunciation, by the defendant Ethel Adine Ross * * * was intended to induce, or did induce, the plaintiff Ross to transfer the securities" included in the trust.38 Therefore there is no basis for the equitable remedy of rescission.39
The findings preclude rescission of the trust conveyance for failure of consideration.40
Related opinions on this issue
Joined by Crouch, J.
Justice Kellogg dissented from the decision on this issue.41 He maintained that the trust instrument expressed a present exchange of the renunciation for the conveyance in trust.42 The new trust conveyance is expressed to be "in lieu of the provisions in her favor contained in said contract of marriage settlement." Mrs. Ross agrees to "accept in lieu" of the marriage contract the provisions of the new agreement.43
If the new trust is upheld then in Quebec the beneficiary may continue to enjoy the benefit of the original fund of $125,000 while in New York she may enjoy an interest in a trust fund of $1,000,000.44 This would result in an aggregate fund exceeding what the settlor ever intended.45
Whether consents to revoke the trust signed by the wife and children were obtained by misrepresentation?46
Yes. The courts below have found that the consents which have been signed by the wife and children were obtained by misrepresentation.49 The evidence on this point was elicited from the parties themselves.50 It could not be directly contradicted.51 It is sufficient to sustain the findings even though perhaps not sufficient to justify a reformation of the written agreement.52
The consents to revoke the trust were obtained by misrepresentation.53