State lacks jurisdiction over foreign trust

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Wisconsin lacks personal jurisdiction over a trust, even though the trust owned real property here and the trustee had sufficient contacts with the state.

The Wisconsin Court of Appeals found April 29 that even though the requirements of Wisconsin’s long-arm statute, sec. 801.05, were met, it would offend due process to assert jurisdiction.

The trust was established by Mary Godlewski, who was a resident of Illinois when she created the trust and when she died. Her daughter Marylou Butler, also an Illinois resident, became trustee when she died.

Among the assets was a farm in Wisconsin’s Monroe County, where Godlewski’s son Walter Godlewski lived. Walter died before the trust assets could be distributed. Three of his four children then filed suit in Monroe County, seeking a declaration that the intent of the trust was that Walter’s share be distributed to his living descendants.

After suit was filed, the farm was sold and the proceeds deposited in the trust’s bank account in Illinois. The trust, with Butler as trustee, then moved to dismiss for lack of personal jurisdiction.

Monroe County Circuit Court Judge Todd L. Ziegler granted the motion, and in an opinion by Judge Margaret J. Vergeront, not recommended for publication, the Court of Appeals affirmed.

The parties did not dispute that Butler and the trust had sufficient minimal contacts with Wisconsin, so there was personal jurisdiction over the trust under subsec. (1)(d) of the long-arm statute.

But looking to the five factors enumerated in Kopke v. A. Hartrodt S.R.L., 2001 WI 99, 245 Wis.2d 396, 629 N.W.2d 662, it found that asserting jurisdiction would not comport with fair play and substantial justice.

The five factors are: (1) the forum state’s interest in adjudicating the dispute; (2) the plaintiff’s interest in obtaining convenient and effective relief; (3) the burden on the defendant; (4) the interstate judicial system’s interest in obtaining the most efficient resolution of controversies; and, (5) the shared interest of the several States in furthering fundamental substantive social policies.

Addressing the first factor, the court concluded that Wisconsin had an interest in adjudicating the dispute, but that the interest is “minimal” — of the nine beneficiaries affected, four are Wisconsin residents and five are Illinois residents.

Addressing the second factor, the court found the interest “tenuous” because the real estate in Wisconsin has been sold since the case was filed. The court acknowledged that the relevant time period for determining jurisdiction is when the suit was filed, but found that the sale “demonstrates just how peripheral the farm is to this action.”

The court wrote, “[The plaintiffs] do not explain what interest Wisconsin has in adjudicating the construction of a trust agreement created in Illinois, governed by the laws of Illinois, with an Illinois trustee, and with Illinois as well as Wisconsin beneficiaries, where the trust’s contact with Wisconsin — the farm — is not relevant to the issue the plaintiffs seek to resolve.”

The court also noted that the trust will be interpreted under Illinois law, whether the case is litigated in Wisconsin or Illinois, and that the majority of witnesses reside in Illinois.

Addressing the third factor, the court found that it would impose a significant burden on the trust to litigate in Wisconsin. Butler would have to travel 250 miles to attend court, and the court found that she has health problems that would make travel more burdensome than for the ordinary party.

The court added, “the laws of Illinois will apply, most of the witnesses are in Illinois, and the procedure in Wisconsin will be less efficient than in Illinois because of the greater number of witnesses and beneficiaries residing in Illinois and the location of the trust assets in Illinois.”

The court found the fifth factor insufficiently developed by the parties to warrant discussion.

The court thus concluded, “Based on our analysis of the first four factors, we conclude the trust has met its burden of establishing that, notwithstanding the minimum contact of owning the Wisconsin farm property and Godlewski’s and Butler’s visits after the trust was created, Wisconsin’s exercise of jurisdiction over the trust in this action does not comport with fair play and substantial justice.”

Case analysis

Assuming that the case is not published, it will not create any binding precedents.

However, because of the absence of precedents in Wisconsin concerning personal jurisdiction over trusts, attorneys will invariably discover it in their research when the issue arises and argue that it should be considered persuasive authority.

Fortunately for attorneys on the other side of the argument, they need do little more than cite a case read by every first-year law student in Civil Procedure but not cited in the opinion or the briefs — Hanson v. Denckla, 357 U.S. 235 (1958).

In Hanson, a case involving whether a state had jurisdiction over a trust, the court explicitly found irrelevant many of the factors relied on by the Court of Appeals in the case at bar.

The trust in Hanson was created by a woman who died in Florida, but the trustee was a Delaware corporation. The Supreme Court held that Florida lacked personal jurisdiction, and that Delaware was the proper state to hear the case.

One of the reasons was that no trust assets were ever held in Florida; instead, they were held in Delaware. Hanson, 357 U.S. at 251. In contrast, in the case at bar, a valuable asset, the farm, was in Wisconsin.

The Supreme Court also held it irrelevant that Florida law applied to the dispute. The court wrote, “For choice-of-law purposes such a ruling may be justified, but we think it an insubstantial connection with the trust agreement for purposes of determining the question of personal jurisdiction over a nonresident defendant.” Id., at 253.

The court also found it irrelevant that the settlor of the trust and most of the beneficiaries were domiciled in Florida. The court wrote, “[A state] does not acquire that jurisdiction by being the ‘center of gravity’ of the controversy, or the most convenient location for litigation. The issue is personal jurisdiction, not choice of law.” Id., at 254.

So, too, with the case at bar. Admittedly, Illinois is the better venue to hear this dispute. But the reasons the court gives for holding that Wisconsin lacks jurisdiction over it are not consistent with U.S. Supreme Court precedent. Ownership of the farm in Wisconsin should be sufficient to permit jurisdiction.