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Stern v. Stern

Decided: October 15, 1984.


On appeal from the Superior Court, Chancery Division, Passaic County.

McElroy, Dreier and Shebell. The opinion of the court was delivered by Shebell, J.A.D.


Plaintiff, Sandra Stern, now known as Sandra Gast, and defendant, Herbert Stern, were divorced on December 5, 1977 and she was granted custody of their children, Jason and Jordan.

As a result of a motion brought by defendant for change of custody, a consent order was entered January 8, 1980 directing the Passaic County Probation Department to conduct a custody investigation. While this was pending, Sandra created an irrevocable trust in New York on March 24, 1980 naming the boys as beneficiaries and appointing appellant Henry P. Renard as trustee. The trust corpus consisted of cash provided by plaintiff which was used to purchase the former marital home of the parties located in New Jersey. Sandra had received title to this property as part of the divorce settlement. She originally intended to fund the trust by transfer of title to the trustee but in order to obtain tax advantages she funded the trust with cash, had the property independently appraised and arranged for the trust to buy the property from her at the appraised value.

The deed to the trustee was recorded April 2, 1980. The next day Sandra, without notice to the defendant or the court before whom the custody issue was pending, removed the boys to Oklahoma. On April 8, 1980 Sandra filed a complaint for custody in Oklahoma without advising the Oklahoma court of

the custody proceeding which was underway in New Jersey. On June 23, 1980 that court found plaintiff had "lawfully moved" to Oklahoma and entered a default judgment granting her custody of the children.

In the interim, on defendant's application, a New Jersey judge entered a temporary restraining order and order to show cause on April 7, 1980 giving temporary custody to defendant and directing plaintiff to return the boys to this state. Because he was unaware of the creation of the trust the judge also enjoined plaintiff from selling or otherwise disposing of the former marital home. Plaintiff ignored this order. On April 18, 1980 the New Jersey judge who had signed the consent order requiring the custody investigation entered another order to show cause enjoining disposition of the marital home. Both orders had return dates of April 25, 1980. The matter was heard on that date and the judge, still unaware of the creation of the trust and sale of the home, denied defendant's motion to enjoin its sale stating it was

On July 21, 1980 the New Jersey court found the Oklahoma custody judgment entitled to no deference and awarded custody to defendant. It also appointed a sequestrator of the property within this State and terminated defendant's obligation for child support.

On July 24, 1980 the trial court issued an order requiring that appellant-trustee Renard show cause on August 1, 1980 why an order should not be entered sequestering the corpus of the trust and enjoining him from conveying the marital residence or other trust corpus. The order temporarily restrained conveyance of the trust corpus. The trustee was personally served in New York and by certified mail but did not respond. On August 1 an injunction was entered enjoining the trustee from selling the marital residence without court approval and directing him to deliver the trust corpus to the sequestrator. On

August 22, 1980 the trustee filed a motion to dismiss the July 24th order or alternatively to quash the process for lack of jurisdiction. He noted that the site of the creation and funding of the trust was New York and that he was a resident and employee in that state. He continued to preserve his jurisdictional defense and noted that he had never been advised of any restraint on the conveyance of the property.

In 1982 the trustee and defendant consented to an order permitting sale of the trust's real property and investment of the proceeds from the sale in an escrow account while preserving the trustee's jurisdictional defense. The order restrained disbursement of the trust assets. The trustee submitted to two depositions without prejudice to the jurisdictional issue. On November 18, 1983 he moved to dismiss for lack of personal jurisdiction, to vacate the restraints, to permit disbursement of trust income and capital, and for counsel fees, costs and other relief. The trustee's motion was denied by the court without oral argument on December 21, 1983. The trustee's attorney alleges that he did not learn of this order until more than a month after its entry when he received a copy from defendant's counsel. By letter dated January 30, 1984 the trustee requested that the court vacate its December 1983 order and reenter it on a current basis, schedule the matter for trial, and render findings of fact and conclusions of law; but, because Renard had filed a timely notice of appeal, the trial ...

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