Matter of Estate of Ducey

No. 89-309

I N THE SUPREME COURT OF' TIHE S T A T E O F MONTANA

I N THE MA?'TF:R O F THE E S T A T E O F
MARY ELEANOR WINSTON DIICF:Y,
Deceased.

W
,
I i

A P P E A L FROM: D i s t r i c t C o u r t o f t h e Second J u d i c i a l ~ i s t z i ct,
c
I n a n d for t h e C o u n t y of S i l v e r B o w , C 0
T h e H o n o r a b l e A r n o l d 01 s e n , F u d g e p r e s i d i n q i ,

COUNSEL O F RECORD:

For A p p e l l a n t :

C . K a t h l e e n M c R r i d e ; J o h n s o n , S k a k l e s & Kehe, B u t t e ,
Montana
J a m e s FT. E r b e c k ; J o n e s , J o n e s , C l o s e & R r o w n , L a c V e q a s ,
Nevada

For R e s p o n d e n t :

Z o s e p h N a p p i , J r . and C a r l O r e s k o v i c h ; Hemovich, N a p p i ,
O r e s k o ~ r ci h a n d R u t 1e r , S p o k a n e , F ? a s h i n g t . o r ,

-
- -- --- - - - -- - -
S u b m i t t e d on B r i e f s : Dec. 1 4 , 1989

Decided: February 6 , 1 9 9 0
Justice R. C. McDonough delivered the Opinion of the Court.

This appeal involves a petition to transfer the assets

of a Nevada trust to an estate being probated in the Montana
Second Judicial District, County of Butte-Silver Row. First
Interstate Bank of Nevada, N.A. (FIBN), respondent below,
appeals Order of the District Court ordering FIBN to transfer
and deliver all assets of the "Trust of Mary Eleanor Winston

Ducey" to the petitioner, Michael F. Keyes, as Personal
Representative of the Estate of Mary Eleanor Winston D U G ~ Y
(the Estate), to be distributed in accordance with the will
of the decedent. We reverse the District Court's Order and
order the petition dismissed for lack of jurisdiction.
FIRN raises the following issue on appeal:

(1) Did the District Court have jurisdiction to order
the transfer of assets from a foreign trust located in Nevada
to the probate estate in Montana?
FIBN raised other issues but the above issue disposes
of this appeal.

In October of 1969 the trustors Mary E. Ducey and

Winfield S. Ducey, husband and wife, created an inter vivos
trust in Las Veqas, Nevada, where they resided. The oriqinal
trustee was the First National Bank of Nevada Reno, Nevada.
Two amendments to the trust were executed, the first a few
days after the trust was created and the second by Mary Ducey
after the death of her husband Winfield.
The Trust provided that during the lifetime of the
trustors or a surviving trustor, the income from the trust
would be paid to the trustors or the surviving trustor. Upon
the death of the surviving trustor, the Trust provided for
disposition of the assets of the trust estate.
Mary Ducey executed her last will and testament April
13, 1987. The will provided for the distribution of the
estate, and included devises to various parties different
from the distributions to other parties listed in the trust
agreement. The will also included a revocation of any and
all prior wills made by the testatrix, but nowhere in the
will is there any mention of the Nevada trust.
Shortly after her husband's death in 1970, Mary Ducey
moved to Butte, Montana where she resided until her death on
August 2, 1987. In March of 1988, FIBN filed a Petition for
Confirmation of Appointment of Trustee and Request for
Instructions before the Nevada Probate Court to effect
disposition of the trust, consisting of approximately
$100,000.00 in liquid assets, pursuant to the terms of the
trust. The Estate of Mary Ducey through its personal
representative Michael Keyes, opposed the petition. On
February 24, 1989 the Nevada Probate Commissioner dismissed
the petition allegedly on the grounds that the Petition
attempted to determine title to the trust assets and ordered
FIRN to file a complaint in Nevada District Court. On March
29, 1989, the Estate of Mary Ducey filed a Petition for
Transfer of Trust Assets of Estate in the Montana Second
Judicial District Court, County of Butte-Silver Bow. FIRN
alleges that on April 6, 1989, it filed its complaint for
declaratory relief in the Eighth Judicial District Court,
Clark County, Nevada to determine the validity of the trust.
FIBN alleges that said complaint is still pending in Nevada
District Court.
On April 24, 1989 FIBN filed its "Request for Special
Appearance and Motion to Quash Petition to Transfer Assets of
Foreign Trust." The matter was heard before the Montana
Second Judicial District Court on April 26, 1989. FIBN made
a "special appearance" solely to oppose the Estate's petition
on jurisdictional grounds. After a hearing on the matter,
where FIRN participated only with respect to the jurisdiction
issue, the Court declared that its jurisdiction of the
probate of the decedent's will included jurisdiction over the
trust assets and subsequently ordered FIBN to deliver the
trust assets over to the estate. FIBN now appeals this order
and raises the issue listed above.
I

"Jurisdiction as applied to courts is the power or
capacity given - --
by law to a court to entertain, hear and
determine the particular case or matter." State ex re1
Johnson v. District Court (1966), 147 Mont. 263, 267, 410

P.2d 933, 935. Jurisdiction can affect either persons
(jurisdiction - personam),
in or interests in property

(jurisdiction - - or quasi - -
in rem in rem).
I. - -Rem Jurisdiction
In
The basis of in rem jurisdiction is the presence of the
subject property within the territorial jurisdiction of the
forum state. Overby v. Gordon (1900), 177 U.S. 214, 222, 20
S.Ct. 603, 606, 44 L.Ed. 741, 745. This principle is also
codified in the Uniform Probate Code, § 72-1-201, MCA, which

provides that the Code applies to "the property of
nonresidents located - --
in this state or property coming into
the control of a fiduciary who is subject to the laws of this
state . . . " Section 72-1-201 ( 2 ) , MCA.
Here, the property in question is not located within the
forum state. In this regard, the case at bar is nearly
identical to Hanson v. Denck1.a (1958), 357 U.S. 235, 78 S.Ct.
1228, 2 L.Ed.2d 1283, where the United States Supreme Court
reversed a Florida Supreme Court decision which held that
authority over the probate and construction of its
domiciliary's will, under which the assets in question might
pass, was sufficient to confer the requisite jurisdiction
over assets in a foreign trust. The Court stated:
 . . . jurisdiction cannot be predicated upon the
contingent role of this Florida will. Whatever the
efficacy of a so-called "in rem" jurisdiction over
-

assets admittedly -
- passing under a local will, a
State acquires no - - jurisdiction to adjudicate
in rem
the validity of inter vivos dispositions simply
because its decision might augment an estate
passing under a will probated in its courts ...
The fact that the owner is or was domiciled within
the forum State is not a sufficient affiliation
with the property upon which to base jurisdiction
in rem.
-- -
. . . so far as it purports to rest upon
jurisdiction over the trust assets, the judgment of
the Florida Court cannot he sustained.

Hanson, 357 U.S. at 248-250, 78 S.Ct. at 1237-1238, 2 L.Ed.2d

At the conclusion of the hearing on the petition to
transfer the trust assets, the District Court judge ruled:
Well, this court has the jurisdiction of the
probate of her will and the distribution of her
property.
And counsel is instructed to prepare an Order
directing the Bank in Nevada to deliver up the
assets to the estate.
We will execute the will here.
Under the rule of Hanson, the District Court would not have
in rem jurisdiction over the trust assets in Nevada by virtue
of the will being. probated in Montana, thus the District
Court's above ruling is in error.
11. - Personam Jurisdiction
In
The determination of in personam jurisdiction is a two
step process. Nelson v. San Joaquin Helicopters (1987), 228
Mont. 267, 270, 742 P.2d 447, 449. First, it must be
determined whether the party comes within the general
jurisdiction or long arm jurisdiction of the court. Nelson,
742 P.2d at 449. The second step, should the court have
jurisdiction, is to ask whether the exercise of jurisdiction
would be commensurate with the party's due process rights.

- Simmons v. State of Oregon (1983), 206 Mont. 264, 670
See
P.2d 1372; Jackson v. Kroll (1986), 223 Mont. 161, 724 P.2d

The applicable statute governing in personam
jurisdiction is Rule 4B(1), M.R.Civ.P., which provides in
part:
Rule 4B. Jurisdiction of persons. (1) Subject to
jurisdiction. All persons found within the state
of Montana are subject to the jurisdiction of the
courts of this state. In addition, any person is
subject to the jurisdiction of the courts of this
state as to any claim for relief arising from the
doing personally, through an employee, or through
an agent, of any of the following acts:
(a) the transaction of any business within this
state;
General jurisdiction applies to cases where the cause of

action is "distinct from" the defendant's activity in the
forum, see e.q. State of North Dakota v. Newberqer (1980),
188 Mont. 323, 613 P.2d 1002. When general jurisdiction is
asserted it is evaluated by the "minimum contacts" due
process standard required by International Shoe Co. v.
Washington (1945), 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95.
 Here, the cause of action is not distinct from FIBN's
activity in the forum, rather it arises directly from the
alleged activity within the forum of FIBN regarding the Mary
Ducey trust. The record does not contain substantial
evidence indicating that FIBN's activities are so
"substantial" or "systematic and continuous" to find that
FIBN is "found within" the State of Montana for purposes of
general jurisdiction. Rule 4B (1), M.R.Civ.P. , -
International
Shoe, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95.
We turn to the issue of whether FIBN as trustee falls
under the longarm jurisdiction of the court. The applicable
portion of the longarm statute is subsection (a), which
subjects any person who transacts any business within this
state to the jurisdiction of Montana courts. Rule 4B (1),
M.R.Civ.P. The estate argues that FIRN transacted business
in Montana based on the following: (1) Mary Ducey w a s a
resident of Montana, (2) periodic trust payments were made to
her throughout her Montana residency, (3) FIBN amended the
trust document and presumably would do so again at her
request while Mary Ducey was a Montana resident, (4) at her
request, the Bank allegedly negotiated changes in the trust
telephonically with Mary in Montana to allow the assets to go
to certain beneficiaries she desired in Montana, (5) FIBN
allegedly instructed her to draft a will and send a copy to
FIRN to allow the trust assets to pass under the will, and
( 6 ) FIBN "apparently" received permission from Mary Ducey, a

Montana resident, to act as a successor trustee for First
National Bank of Nevada or its successor.
Hanson v. Denckla, supra, also controls the disposition
of the in personam jurisdiction issue in this case. The
estate attempts to distinguish Hanson as non-controlling on
the basis of the Supreme Court's decision in McGee v.
International Life Ins. Co. (1957), 355 U.S. 220, 78 Sect.
199, 2 L.Ed.2d 223. In McGee, the defendant Texas insurance
company agreed to assume the insurance obligations of the
plaintiff's original Arizona insurer. The nonresident
defendant insurance company then solicited a re-insurance
agreement with the plaintiff, a resident of California. The
Supreme Court held that the California court had jurisdiction
based on the solicitation of the re-insurance agreement. In
Hanson the Court distinguished McGee from cases involving the
validity of a trust, stating:
The cause of action in this case is not one
that arises out of an act done or transaction
consummated in the forum state. In that respect,
it differs from McGee ..
. [Tlhis action involves
the validity of an agreement that was entered
without any connection with the forum State. The
agreement w a s executed in Delaware by a trust
company incorporated in that State and a settlor
domiciled in Pennsylvania. The first relationship
Florida had to the agreement was years later when
the settlor became domiciled there, and the trustee
remitted the trust income to her in that State.
From Florida Mrs. Donner carried on several bits of
trust administration that may be compared to the
mailing of premiums in McGee. But the record
 discloses no instance in which the trustee
performed any acts in Florida that bear the same
relationship to the agreement as the solicitation
in McGee . ..
Hanson, 357 U . S . at 251-252, 78 S.Ct. at 1238-1239, 2 L.Ed.2d
at 1296-1297. Like the trustee in Hanson, FIBN did not
conduct any business in the forum state availing itself of
the benefits and protections of Montana's laws. FIBN made
some payments of trust income to Mrs. Ducey in Montana. FIBN
allegedly responded to requests made by Mrs. Ducey and
allegedly participated in negotiations initiated by and at
the request of Mrs. Ducey. From Montana, Mrs. Ducey carried
on several bits of trust administration that may be compared
to the mailing of premiums in McGee. However, the record
does not indicate that FIBN as trustee performed any acts in

Montana that bear the same relationship to the trust
agreement as the solicitation of re-insurance in McGee. -
See
Hanson, 357 U . S . at 252, 78 S.Ct. at 1239, 2 L.Ed.2d at 1297.
The estate argues that -- is applicable because FIBN
McGee
"apparently" received permission from Mary Ducey, a Montana
resident, to act as successor trustee to First National Bank
of Nevada, in Reno, Nevada. Hence, the estate argues that

FIBN could only have assumed the role of trustee by seeking
Mary Ducey's permission or appointment while she was
domiciled in Montana. The estate then maintains that the
"sparsity" of the record with regard to how FIBN became
successor trustee is due to the late hour at which FIBN
objected to the petition to transfer the assets.
What the estate refers to as a "sparsity" in the record
would be better described as a complete lack of any evidence
or testimony in the record as to how FIBN became successor
trustee. Likewise, this argument analogizing the
solicitation in McGee to the "apparent" solicitation for
appointment as successor trustee is also absent from the
record below. There is simply no evidence to support this
argument. The record contains no evidence that FIRN

performed any acts equivalent to the transaction of business
in Montana that bear the same relationship to the trust
agreement as the solicitation in McGee. Hanson, 357 U.S. at
252, 78 S.Ct. at 1239, 2 L.Ed.2d at 1297. Thus the District
Court lacked both - - jurisdiction over the assets of the
in rem
foreign trust and - personam
in jurisdiction over FIRN as
trustee.

Because the court lacked jurisdiction over FIBN and the
trust, we need not dispose of the other issues raised on
FIBN's appeal. We do note that there is no longer any
distinction between a general or special appearance in
Montana. Foster Apiaries, Inc. v. Hubbard ~piaries, Inc.
(Mont. 1981), 630 P.2d 1213, 1215, 38 St.Rep. 1025,
1027-1028. Rule 12 M.R.Civ.P. eliminates the need for the
traditional classifications of general and special

appearances.

The District Court having no jurisdiction to entertain,

hear, and determine this matter, the Order of the District

Court to transfer the assets of the Nevada trust is vacated.

REVERSED and the Petition is DISMISSED.

&@
? .%,&7%d
Justice
We Concur: /
1
,
,
Justice William E. Hunt, Sr., dissenting:

I dissent. The dispute in this case concerns the
validity of a trust administered by First Interstate Bank of
Nevada, N.A. (FIBN), as trustee. FIBN, by accepting the
appointment as trustee of a trust established by a Montana
resident, transacted business in this state, thereby
subjecting it to jurisdiction under the longarm statute, Rule
4B(1) (a), M.R.Civ.P.
The present case is not on all fours with Hanson v.
Denckla (1958), 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283,
as the majority would have us believe. In Hanson, a
Pennsylvania resident executed a trust instrument in Delaware
naming a Delaware trust company as trustee. The trustor then
moved to Florida, where she died. The Supreme Court held
that the Delaware trustee could not be subject to the
jursidiction of the Florida courts when jurisdiction would be
based solely upon the unilateral actions of the trustor.
In the present case, Nevada residents executed a trust
instrument in Nevada naming First National Bank of Reno,
Nevada, as trustee. In 1970, one of the trustors died and
the surviving trustor moved to Montana. In 1979, after the
trustor had resided in Montana for nine years, FIBN accepted
the appointment as successor trustee to the trust.
Unlike Hanson, jurisdiction in the present case is not
based solely upon the unilateral actions of the trustor.
Rather, the actions of the trustee in this case are akin to
the actions of the insurance company in McGee v.
International Life Ins. Co. (1957), 355 U.S. 220, 78 S.Ct.
199, 2 L.Ed.2d 223. Both the trustee in this case and the
insurance company in McGee purposefully interjected
themselves into the forum state, availing themselves of the
benefits and protections of the forum's laws. FIBN
purposefully interjected itself into this state in 1 9 7 9 when
it accepted the appointment as trustee to the Ducey trust.
Apparently, FIBN became the successor trustee through a
merger with First National in 1 9 7 9 . Although the trust
agreement contained a provision regarding the right of the
trustee to resign, it made no provision regarding the
automatic transfer of trusteeship upon the merger of the
trustee bank with another. The resignation clause merely
provided as follows:
The right is reserved by and granted to the
Trustee, upon notice in writing to the Trustors
during their lifetime or to the surviving Trustor
during his or her lifetime, to surrender this
trust, and upon such election by the Trustee, the
Trustors shall accept the resignation of the
Trustee and shall appoint a new Trustee, and in the
event of the failure, refusal or inability of the
Trustors so to do, the Trustee, at the cost and
expense of the trust estate, may secure the
appointment of a new Trustee in the manner provided
by law.
From this clause, we can surmise one of two facts, both
pointing toward jurisdiction. Either FIBN solicited the
trustee appointment from the trueor in Montana or First
National appointed FIBN to act as trustee in its stead. In
either case, FIBN accepted the appointment knowing that the
trustor was a Montana resident.
FIBN should have reasonably anticipated being haled into
court in Montana. It accepted the appointment as trustee for
a Montana resident's trust, which named Montana residents as
beneficiaries. It forwarded periodic trust payments to the
trustor in Montana. It negotiated over the phone with the
trustor in Montana, allegedly instructing her to draft a will
and send. it a copy to allow the trust assets to pass under
the will--the very subject of these discussions form the
basis of the present controversy.
Montana has an interest in assuring that the wishes of
individuals who die while residents of this state are carried
out. Furthermore, as the state where the will is probated,
this state is the most efficient forum for the resolution of
the present controversy.
I would affirm the District Court on this issue.

I agree with the dissent of Justice ~ i l l i a mE. Hunt, Sr.