Restat 2d of Conflict of Laws, § 278

• Restatement of the Law, Second, Conflict of Laws
• Chapter 10- Trusts
• Topic 2- Land
• § 278 Validity of Trust of Land

The validity of a trust of an interest in land is determined by the law that would be applied by the courts of the situs.

Comment:

a.  The applicable law.  The rule of this Section is applicable to trusts of interests in land, whether created by will or inter vivos.

The law applicable in determining the validity of the trust is the law that would be applied by the courts of the situs. In most situations the courts of the state of the situs will apply its local law. There are, however, situations in which they will apply the local law of another state, as, for example, where the land is to be sold and the proceeds remitted to another state to be there administered (see Comment d).  As to the situation where the interest disposed of is personalty, see Comment e.

b.  Testamentary trusts.  The first question which arises is as to the validity of the will itself insofar as it disposes of interests in land. Although, as has been stated (see § 269), the validity of a will insofar as it disposes of interests in movables is determined by the law that would be applied by the courts of the state of the testator's domicil, the validity of a will insofar as it disposes of interests in land is determined by the law that would be applied by the courts of the situs. The courts of the situs will ordinarily apply the local law of the situs as to the validity of the will, rather than the local law of the testator's domicil. This is true as to the capacity of a testator to make a will. It is true also as to formalities required for the execution of a will. Statutes in most states provide that a will shall be valid with respect to formalities if it satisfies the requirements of the situs, or of the place of its execution or of the place of the testator's domicil at the time of its execution. These statutes are generally applicable to wills disposing of interests in land as well as of movables. Ordinarily the courts of the situs would apply its local law in determining the substantial validity of the will (see § 239).

The courts of the situs have usually applied its local law as to restrictions imposed upon dispositions by will, even though the purpose of the restrictions is to protect the surviving spouse or other members of the testator's family. The question arises not only as to the forced share of a surviving spouse or of pretermitted children, but also where there is a statutory restriction on the proportion of the testator's estate which he can give to charity by his will or on his power to dispose of his estate to charity by a will executed within a certain period preceding his death. In such cases, however, it is arguable that the courts of the situs should apply the law that would be applied by the courts of the testator's domicil at death in the case of devises of land as in the case of bequests of movables, since it is the domicil which is chiefly concerned with the protection of the testator's family, and is therefore the state of most significant relationship as to this issue. The argument for applying the law that would be applied by the courts of the testator's domicil is even stronger where the interest in the land is under the local law of the situs held to be personal property (see Comment e).

If the will is otherwise valid, a further question may arise as to the validity of a trust of an interest in land created by the will. Where the land is to be retained in the trust, the courts of the situs have applied its local law. That law has been applied to determine whether there is a violation of the rule against perpetuities, or a rule against accumulations, or a rule as to illegal conditions or purposes, or a rule precluding the creation of a trust, or a rule invalidating charitable trusts (see § 239). As to the situation which arises where the trustee is directed to sell the land and remit the proceeds to another state for administration there, see Comment d.  As to the situation where the interest disposed of is personalty, see Comment e.

c.  Inter vivos trusts.  The owner of land may create a trust of the land by a conveyance to another as trustee or by a declaration that he holds the land in trust.

Where the owner makes a conveyance of land in trust the validity of the conveyance is determined by the law that would be applied by the courts of the situs. Usually these courts would apply their local law. Thus the owner's capacity, the formal requirements for a conveyance, and the substantial validity of the conveyance would usually be determined by the local law of the situs (see § 223).

The statutes of the various states differ as to the requirement of a writing for the creation or enforcement of a trust of land. See Restatement of Trusts (Second), §§ 39-52. The local law of the situs would be applied by its courts to determine whether the trust fails because it is not evidenced by a writing required by the Statute of Frauds. This is true whether the owner of the land makes a conveyance upon an oral trust or orally declares himself trustee. Where land is conveyed upon an oral trust for the transferor or for a third person, and the trust fails, there is a conflict of authority on the question whether the transferee can keep the land or whether he holds it upon a constructive trust for the transferor. See id. §§ 44-45. As to this, the local law of the situs would be applied. So also, there is a conflict of authority on the question whether a resulting trust arises where one person purchases land and takes title in the name of another. See id. §§ 440-460. As to this, the local law of the situs would be applied.

The question may arise whether a conveyance in trust or a declaration of trust is invalid as a testamentary disposition not complying with the Statute of Wills. There is a conflict of authority as to the validity of an inter vivos trust in which the settlor has reserved a power to revoke or modify the trust and a power to control the trustee as to the administration of the trust. See Restatement of Trusts (Second), § 57. In the case of a trust of an interest in land, the local law of the situs would be applied to determine the validity of the trust.

If the trustee is to retain the land in the trust, the substantial validity of the trust is determined by the law that would be applied by the courts of the situs, and usually those courts would apply their local law. Thus, as in the case of a testamentary trust, the local law of the situs is applicable on the question whether the disposition of the land violates the rule against perpetuities, or a rule against accumulations, or a rule as to illegal conditions or purposes, or a rule precluding the creation of a trust, or a rule invalidating charitable trusts. As to the situation which arises where the trustee is directed to sell the land and remit the proceeds to another state for administration there, see Comment d.  As to the situation where the interest disposed of is personalty, see Comment e.

d.  Direction to sell the land and remit the proceeds to another state.  When a trust of land is created, either by will or inter vivos, and the trustee is directed to sell the land and remit the proceeds to another state to be there held in trust, the trust is valid if valid at the place of administration even though it would be invalid under the local law of the situs, provided that it does not violate a strong policy of the state of the situs. No such strong policy is involved in the case of the rule against perpetuities or a rule against accumulations. The principle is the same as that which is applicable to a trust of movables to be administered in a state other than that of the testator's domicil (see § 269, Comment i).

The direction to remit the proceeds to another state may be implied from the terms of the trust. Thus, if a testator devises land situated in a state other than that of his domicil, with a direction that the land be sold, it may be found that the testator intended that the proceeds should be remitted to the state of his domicil and administered there as a part of the trust of his movables.

e.  Where the interest is personalty.  Certain interests in or connected with land may for the purposes of the local law of the situs be held to be personal property rather than real property. This is the situation where, owing to a direction or contract to sell the land, there is an equitable conversion, or where the interest is a leasehold or a mortgage.

Equitable conversion.  Where a testator devises or a settlor conveys land in trust and directs the trustee to sell it and hold the proceeds in trust or distribute them, the interest of the beneficiaries is generally held to be personal property, although the trustee has not yet sold the land. They are entitled to receive money, although the money is to come from the sale of the land. See Restatement of Trusts (Second), § 131. So also, if the owner of land has made a contract to sell it, his right to the purchase price is treated as personal property, and the right of the purchaser to demand a conveyance of the land on the payment of the purchase price is an equitable interest in the land and is treated as real property.

Where a trust of land is created with a direction to sell the land, or where the owner of land contracts to sell it, there is said to be an equitable conversion of real estate into personalty. It is sometimes said that in such a case a court of equity regards the land as personalty. This, however, is a fictitious form of expression. It is also sometimes said that equity regards that as done which ought to be done. This again is a fictitious form of expression. It is more accurate to say that where a person has the right to receive the proceeds of land rather than the land itself, his interest is treated as personal property.

The question then arises how far this equitable conversion is material as to the applicable law where more than one state is involved.

Whether there is or is not an equitable conversion, and, if there is, what effect should be given to it will be decided in the same way as the matter would be decided by the courts of the situs (see § 225). If the question of the disposition of the land or of its proceeds arises in some other state, the courts of that state will apply the law which would be applied by the courts of the situs.

Although under the local law of the state of the situs an interest is treated as personalty because of the equitable conversion, the question remains whether it will apply its local law or the local law of another state. It may take the position that since the money is to come from the land, which is an immovable, it should apply its local law. This is the position taken in England. On the other hand, it may take the position that since the interest is personal property it should apply the law which it would apply to other personal property, that is the law which it would apply to interests in movables. Thus there is authority to the effect that where the interest of a decedent is personal property under the doctrine of equitable conversion, its devolution on intestacy is determined by the law that would be applied by the courts of the state of the decedent's domicil; and there is authority to the effect that the same law will be applied in case of a lapse.

A question arises as to the applicable law where one of the states involved by statute restricts the disposition by will for charitable purposes, either providing that a testator who leaves certain near relatives cannot leave to charity more than a certain proportion of his estate, or providing that he cannot leave property for charity by a will executed within a short period preceding his death. In the case of movables, as has been stated (see § 269, Comment c), the applicable law is the law that would be applied by the courts of the testator's domicil at death. In the case of interests in land which is to be retained in the trust, as has been stated (see Comment b), the applicable law is generally held to be the local law of the situs. The testator cannot avoid the restriction by a direction in the will that the land be sold. If, however, the interest which the testator had at his death was personal property under the doctrine of equitable conversion, it is arguable that the courts of the situs should apply the law that would be applied by the courts of the state of the domicil of the testator, since that state has the greatest interest in the protection of his family.

Questions may arise as to the validity not of the will but of a particular trust created by the will. Where the trustee is directed not merely to sell the land but to remit the proceeds to another state to be there administered, the courts of the situs would hold that the trust is valid if valid at the place of administration even though it would be invalid at the situs, provided that it does not violate a strong policy at the state of the situs (see Comment d).

Suppose, however, that the trust of the proceeds is to be administered in the state of the situs. A distinction may be made between the situation where the testator is the owner of the land and directs in the will that the land be sold, and the situation where, as a result of a previous trust or contract, his interest is personal property under the doctrine of equitable conversion. Where the owner of land devises it in trust with a direction that the land be sold and the trust of the proceeds administered in the state of the situs, it is held that the validity of the trust is governed by the local law of the situs even though the testator died domiciled in another state. This is true, for example, where the disposition violates the rule against perpetuities of the state of the situs, since the rule is applicable not only to the land but to the proceeds. The situation is somewhat different where the testator was disposing of an interest owned by him which under the doctrine of equitable conversion was personal property. This is the case where he is the beneficiary of a preexisting trust of land which was to be sold and the proceeds held in trust for him, or where he has made a contract to sell the land. Here it is arguable that the courts of the situs should uphold the validity of the trust of the proceeds if it is valid under the local law of the state of the testator's domicil. As has been stated, where a testator bequeaths movables in a trust to be administered in another state, the trust is not invalid under the rule against perpetuities, if it is valid either under the local law of the testator's domicil or under the local law of the state of administration (see § 269).

Leasehold interests.  Under the common law a term for years is treated as personal property, even though it is an interest in land. On the death intestate of the owner, for example, a leasehold interest passes, not to his heir, but to his personal representatives and they are under a duty, after paying his debts, to distribute it like other personal property among his next of kin. If the land is situated in a state other than that of the decedent's domicil, a question of choice of law may arise as to the disposition of the leasehold. The local law of the state of the situs of the land determines whether the interest is to be treated as real property or personal property. If it is treated as personalty, the question then arises whether the situs courts will apply their local law as to the disposition of personalty or whether they will apply the law that would be applied by the courts of the domicil of the decedent. In some jurisdictions, as in England and Ireland, the courts have said that land is an immovable and that it follows that any interest in the land, even though it is personal property, must be governed by the local law of the situs. In some States of the United States, on the other hand, the courts have said that, although the interest arises out of or is connected with land, the interest is personal property and that it follows that the law applicable to interests in other personal property must be applied. The matter, however, is not one of logical deduction but one of public policy. It would seem that even though the courts of the state of the situs apply its local law to the descent of a freehold interest on the death of the owner intestate, or to the validity of a will disposing of such interest, they might properly apply to a leasehold interest the law which governs the distribution of other personal property.

On the other hand, where a leasehold is bequeathed or conveyed in trust, and is to be retained in the trust, the rule against perpetuities of the situs should be applied, since it is against the policy of the situs to allow interests in the land which violate its rules against perpetuities. But if the testator expressly or impliedly directs that the leasehold be sold and the proceeds administered in another state, the trust is valid if valid in the other state (see Comment d).

Mortgages.  A mortgagee has a personal claim against the mortgagor for the amount of the indebtedness usually embodied in a note or bond, and the claim is secured by the mortgage of the land. If no foreign contacts are involved, his interest is treated as personal property and on his death intestate it devolves as personal property under the statute of distributions. The security follows the debt, and the person who is entitled to enforce the debt is also entitled to enforce the mortgage. So too, a bequest of the debt gives the legatee a right to enforce the debt and the mortgage.

A question of choice of law arises where the mortgagee dies domiciled in one state and the land is situated in another state. Undoubtedly the state of the situs has control over the land. Its courts have jurisdiction in a proceeding brought by the mortgagee to foreclose the mortgage, or in a proceeding brought by the mortgagor for the redemption of the mortgage (see §§ 228-230).

The question remains, however, whether the courts of the situs will apply its local law or the law which would be applicable to the debt. The question may arise on the intestacy of the mortgagee or where he disposes of his interest by will. It may also arise where the mortgage is included in a trust created by the mortgagee. Whether the mortgagee's interest is to be treated as real property or personal property will be determined in the same way that this question would be determined by the courts of the situs (see § 225). If it is treated as personalty, the question then arises whether the situs courts would apply its local law as to the disposition of personalty or whether they would apply the law that would be applied by the courts of the state where the decedent was domiciled at the time of his death. In some jurisdictions, as in England and Ireland, the courts have said that land is an immovable and that it follows that any interest in the land, even though it is personal property, must be governed by the local law of the situs. It would seem, however, that the courts of the situs might properly hold that the security follows the debt and apply the law which governs the distribution of other personal property.

f.  Capacity of the devisee or grantee.  In some states restrictions are imposed upon the taking or holding of land. Thus, it may be provided by statute that an alien cannot take or hold land. There is some conflict of authority on the question whether and to what extent the statute precludes an alien from taking and holding an equitable interest under a trust of the land. See Restatement of Trusts (Second), § 117, Comment b.  Thus, it may be held that the statute is inapplicable on the ground that a beneficiary has only a claim against the trustee and not an interest in the land, or that if there is a direction to sell the land and pay the proceeds to the beneficiary his interest is personalty under the doctrine of equitable conversion. The policy involved is that of the state of the situs, and its local law will be applied in determining the validity of the trust.

So also, it may be provided by statute that a corporation cannot take and hold land, or land of more than a certain value, or except for certain purposes. It may be held that the restriction is applicable not only to legal ownership by the corporation but to a trust of which the corporation is beneficiary. See Restatement of Trusts (Second), § 117, Comment a.  It is for the courts of the situs to determine whether the statute is applicable to foreign as well as to domestic corporations. Where, however, by the terms of the trust the land is to be sold and the proceeds paid to a corporation of another state, the policy of the situs against the holding of land by corporations is not applicable. Whether the corporation is precluded from taking and holding the proceeds depends upon the local law of the state of incorporation (see § 269, Comment h).

Testamentary trusts.  Validity of the will.  In several states it is provided by statute that "Except as otherwise provided, the validity and interpretation of wills are governed, when relating to real property within this state, by the law of this state; when relating to personal property, by the law of the testator's domicil." Idaho Code Ann., § 14-327 (1948); Montana Rev.CodesAnn., § 91-319 (1964); North Carolina Gen.Stat., § 31-27 (1966); North Dakota Cent.Code, § 56-02-14 (1960), as amended S.L.1963, ch. 373; Oklahoma Stat., tit. 84, § 20 (1952); South Dakota Code, § C.L. § 29-2-2 (1967); Utah Code Ann., § 74-3-21 (1953).

By New York Estates, Powers and Trusts Law, § 3-5.1(b) (1), superseding Decedent Estate Law, § 47, it is provided that "The formal validity, intrinsic validity, effect, interpretation, revocation or alteration of a testamentary disposition of real property and the manner in which such property descends when not disposed of by will, are determined by the law of the jurisdiction in which the land is situated."

In the absence of a statute otherwise providing, it is held that the formal requirements for the execution of a will are determined as to immovables by the local law of the situs. By statute, however, in many states it is provided that a will shall be valid with respect to formalities if it satisfies the requirement of the situs, or of the place of its execution or of the testator's domicil at the time of execution. These statutes are applicable to land as well as to movables. Dickey v. Vann, 81 Ala. 425, 8 So. 195 (1887) (semble); Shimshak v. Cox, 166 La. 102, 116 So. 714 (1928); Hunter v. Baker, 154 Md. 307, 141 A. 398 (1928); Matter of Fowler, 161 Misc. 204, 291 N.Y.S. 639 (1936); DeFogassieras v. Duport (1881) 11 L.R. Ir. 123 (leaseholds and freeholds).

The capacity of a testator to devise interests in land is determined by the local law of the situs. Dickey v. Vann, 81 Ala. 425, 8 So. 195 (1887) (semble); Matter of Stewart, 11 Paige 398 (N.Y.1845); compare Matter of Schober, 90 Misc. 230, 154 N.Y.S. 309 (1915) (undue influence); Carpenter v. Bell, 96 Tenn. 294, 34 S.W. 209 (1896).

Whether a testator can by a will executed shortly before his death leave property for charitable purposes, and whether he can by will leave more than a certain proportion of his property to charity, has been held to be determined as to land by the local law of the situs:

If there is such a restriction at the situs, it has been held to be applicable. In re Koehler's Estate, 360 Pa. 460, 61 A.2d 870 (1948); Lowe v. Plainfield Trust Co., 216 App.Div. 72, 215 N.Y.S. 50 (1956).

Conversely, if there is no such restriction at the situs, it has been held that the disposition is valid. Toledo Society for Crippled Children v. Hickok, 152 Tex. 578, 261 S.W.2d 692 (1953), cert. den. 374 U.S. 936 (1954).

Validity of the trust.  If the will is otherwise valid, a further question may arise as to the validity of a trust created by the will:

If the trustees are to retain the land in the trust, the trust is invalid if it violates the rule against perpetuities of the situs. Campbell-Kawannanakoa v. Campbell, 152 Cal. 201, 92 P. 184 (1907); Pond v. Porter, 141 Conn. 56, 104 A.2d 228 (1954); Amerige v. Attorney General, 324 Mass. 648, 88 N.E.2d 126 (1949); Hobson v. Hale, 95 N.Y. 588 (1884); Matter of Wuppermann, 164 Misc. 900, 300 N.Y.S. 344 (1937); New England Trust Co. v. Wilcox (In re Ward's Will), 41 N.Y.S.2d 527 (1943), aff'd mem. 267 App.Div. 976, 48 N.Y.S.2d 557 (1st Dep't 1944) (by marshalling assets, trust upheld); Penfield v. Tower, 1 N.D. 216, 46 N.W. 413 (1890).

Inter vivos trusts.  The owner of land may create a trust of the land by a conveyance to another as trustee or by a declaration that he holds the land in trust.

When he conveys land in trust, the validity of the conveyance is ordinarily determined by the local law of the situs (see § 223).

When the owner declares himself trustee of land, the validity of the trust is determined by the local law of the situs:

Thus, the local law of the situs determines whether a conveyance upon an oral trust or an oral declaration of trust is valid. Herman v. Edington, 331 Mass. 310, 118 N.E.2d 865 (1954); Laughlin v. March, 19 Wash.2d 874, 145 P.2d 549 (1944).

Where land is conveyed upon an oral trust for the transferor or for a third person, and the trust fails, the question whether the transferee holds the land upon a constructive trust for the transferor is determined by the local law of the situs. Lawrence v. Andrews, 84 R.I. 133, 122 A.2d 132 (1956).

Whether a resulting trust arises where one purchases land in the name of another is determined by the local law of the situs. Acker v. Priest, 92 Iowa 610, 61 N.W. 235 (1894); Arbury v. De Niord, 152 N.Y.S. 763 (1915).

Whether a conveyance of land in trust or a declaration of trust of land is invalid as a testamentary disposition not complying with the Statute of Wills is determined by the local law of the situs. Boyle v. Kempkin, 243 Wis. 86, 9 N.W.2d 589 (1943).

If the trustees are to retain the land in the trust, its substantial validity is determined by the local law of the situs.

This is true, for example, as to the rule against perpetuities. Peabody v. Kent, 153 App.Div. 286, 138 N.Y.S. 32 (2d Dep't 1912), aff'd 213 N.Y. 154, 107 N.E. 51 (1914).

Duty to sell and remit the proceeds.  If by the terms of the trust the trustee is under a duty to sell the land and remit the proceeds to another state where the trust of the proceeds is to be administered, the trust will be upheld if valid in the place of administration. Chamberlain v. Chamberlain, 43 N.Y. 424 (1871); Hope v. Brewer, 136 N.Y. 126, 32 N.E. 558 (1892); Mount v. Tuttle, 183 N.Y. 358, 76 N.E. 873 (1906) (semble); Matter of Merritt, 273 App.Div. 79, 75 N.Y.S.2d 828 (1947); In re Milks' Will, 102 N.Y.S.2d 52 (1951). But see Stafford v. Stafford, 28 N.Y.S.2d 523 (1941).

If a testator devises land situated in a state other than that of his domicil with a direction that the land be sold and the proceeds invested, and he directs, expressly or impliedly, that the trust be administered at his domicil, a provision for accumulation of the income is valid if valid at his domicil. Equitable Trust Co. v. Ward, 29 Del.Ch. 206, 48 A.2d 519 (1946).

Equitable conversion.  Whether there is an equitable conversion and the effect thereof is determined by the local law of the situs. Clarke v. Clarke, 178 U.S. 186 (1900); Trotter v. Van Pelt, 144 Fla. 517, 198 So. 215 (1940); Norris v. Loyd, 183 Iowa 1956, 168 N.W. 557 (1918); In re Estate of Hencke, 220 Minn. 414, 19 N.W.2d 718 (1945); Page's Estate, 75 Pa. 87 (1874); Toledo Society for Crippled Children v. Hickok, 152 Tex. 578, 261 S.W.2d 692, 43 A.L.R.2d 553 (1953), cert. denied 347 U.S. 936 (1954).

On the question whether a court of the situs will apply its local law or the law which it would apply to movables, there is a conflict of authority:

If the owner of an interest in land dies intestate, it has been held in England that the property will be distributed under the statute of distributions of the situs. In re Berchtold, [1923] 1 Ch. 192; In re Burke, [1928] 1 D.L.R. 318 (Sask.). Compare Duncan v. Lawson, (1889) 41 Ch.D. 394 (leasehold).

But there is authority to the effect that the situs will apply the statute of distributions of the testator's domicil. McGuire v. Andre, 259 Ala. 109, 65 So.2d 185 (1953) (contract to sell); Planson v. Scott, 26 Ohio App. 122, 158 N.E. 588 (1927). Compare Duckwall v. Lease, 106 Ind.App. 664, 20 N.E.2d 204 (1939) (lapse); Craig v. Craig, 140 Md. 322, 117 A. 756 (1922) (leasehold).

Where the land is to be sold and the proceeds administered in the state of the situs, the rule against perpetuities of the situs is held to be applicable, even though the trust was created by a person domiciled in another state. Trowbridge v. Metcalf, 5 App.Div. 318, 39 N.Y.S. 241 (1896), aff'd mem. 158 N.Y. 682, 52 N.E. 1126 (1899); Peabody v. Kent, 153 App.Div. 286, 138 N.Y.S. 32 (1912), aff'd 213 N.Y. 154, 107 N.E. 51 (1914); In re Gault's Estate, 48 N.Y.S.2d 928 (1944); Penfield v. Tower, 1 N.D. 216, 46 N.W. 413 (1890).

Where testamentary dispositions to charity are forbidden or limited by statute, it has been held that the validity of the disposition is determined by the local law of the situs, even though under the doctrine of equitable conversion the interest disposed of is personal property. Lowe v. Plainfield Trust Company, 216 App.Div. 72, 215 N.Y.S. 50 (1st Dep't 1926) (disposition failed because of restriction at the situs); In re Koehler's Estate, 360 Pa. 460, 61 A.2d 870 (1948) (disposition failed because of restriction at the situs); Toledo Society for Crippled Children v. Hickok, 152 Tex. 578, 261 S.W.2d 692 (1953), cert. denied 347 U.S. 936 (1954) (disposition upheld because no restriction at the situs).

Leasehold interests.  If the owner of a leasehold interest dies intestate, it is held in England and in Ireland that the statute of distributions as to personal property of the situs, and not of the domicil of the decedent, is applicable. Duncan v. Lawson, 41 Ch.D. 394 (1889); In the Goods of Gentili (1875) 9 Ir.R.Eq. 541.

But in Craig v. Craig, 140 Md. 322, 117 A. 756 (1922), the court of the situs applied the statute of distributions of the domicil of the decedent.

In England and Ireland it is held that the validity of a will disposing of a leasehold interest is governed by the local law of the situs and not by that of the testator's domicil. Pepin v. Bruyere, [1902] 1 Ch. 24; De Fogassieras v. Duport, 11 L.R.Ir. 123 (1881).

In Freke v. Carbery (1873) L.R. 16 Eq. 461, a testator died domiciled in Ireland bequeathing a leasehold of English land in trust to sell it and invest the proceeds and hold them upon the trusts declared concerning his personal estate. In the trust of his personal estate there was a provision for accumulation of income which would be valid in Ireland but invalid in England. The court held that although the direction for accumulation was valid as to the purely personal estate, it was invalid as to the leasehold interest. It was clear that the interest of the beneficiary was personalty, not realty, because of the direction to convert it and because it was a term for years. The court said, however, that it was an immovable, and that immovables, whether realty or personalty, are governed by the local law of the situs. The court did not consider the fact that the testator probably intended that the proceeds of sale should be remitted to Ireland and administered there.

If a testator devises in trust a leasehold interest in land in a state other than that of his domicil, and expressly or impliedly directs that the leasehold be sold and the proceeds administered in the state of his domicil, the trust is valid if valid at the domicil. See Despard v. Churchill, 53 N.Y. 192 (1873).

Mortgages.  In England it is held that since a mortgagee has an interest in land, an immovable, the validity and effect of a disposition of the mortgage is governed by the local law of the situs of the land and not by that of the decedent's domicil. In re Hoyles, [1911] 1 Ch. 179; In re Anziani, [1930] 1 Ch. 407; Macdonald v. Macdonald's Executrix, [1932] S.C. (H.L.) 79. See In re Landry and Steinhoff, [1941] 1 D.L.R. 699 (Ont.).

New York legislation.  By New York Estates, Powers and Trusts Law, § 3-5.1(i), it is provided that whether an estate in, leasehold of, fixture, mortgage or other lien on land is real property or personal property is determined by "the local law" of the jurisdiction in which the land is situated.

As to the law applicable to the validity of trusts of land, see 5 Scott, Trusts § 649-658 (3d ed. 1967).

ALR Annotations:

What law governs as to validity of trust for maintenance or care of private cemetery, burial lot, tomb, or monument, or erection of tomb or monument. 47 A.L.R.2d 641.

Digest System Key Numbers:

Trusts 2