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In re Settlement of Accounts of Joseph Unanue and Frank Unanue

Decided: December 4, 1991.

IN THE MATTER OF THE SETTLEMENT OF THE ACCOUNTS OF JOSEPH UNANUE AND FRANK UNANUE, TRUSTEES UNDER THE TRUST AGREEMENT DATED NOVEMBER 16, 1970, AS AMENDED, BY AND AMONG PRUDENCIO UNANUE, AS GRANTOR, AND PRUDENCIO UNANUE, JOSEPH UNANUE AND ANTHONY UNANUE, AS TRUSTEES OF SIXTEEN TRUSTS THEREUNDER


Martin J. Kole, J.A.D. (retired and temporarily assigned on recall).

Kole

This is a truncated version of a 147 page opinion dealing with the matter of domicile.

Part I contains a summary of the factual findings of the court.

Part II contains selected excerpts from the court's opinion.

PART I

SUMMARY OF FINDINGS

The issues in this case relate to the domicile of decedent, Prudencio Unanue on two dates: (1) November 16, 1970, the date he executed, in Brooklyn, New York, an inter vivos

revocable trust agreement, under which the ultimate beneficiaries were his grandchildren and the corpus was his majority ownership interest in the then issued and outstanding shares of stock of Goya Foods, Inc.; and (2) March 17, 1976, the date of his death in Puerto Rico. Prudencio also executed a will on November 16, 1970, in Brooklyn, New York, which was probated on August 11, 1976 in Bergen County, New Jersey.

Prudencio's wife was Carolina. Residing with Prudencio and Carolina for much of the time involved in this action was Carolina's sister, Ana Maria. Prudencio and Carolina had 4 sons: Charles, Joseph, Frank and Anthony, all of whom were active in the Goya businesses and were the sole shareholders of corporations that the court found were Goya-related businesses in Puerto Rico, including Puerto Rico Foods Corp. and Caribbean Canneries Inc. Anthony died on March 23, 1976, six days after Prudencio's death. In view of Anthony's death the executors under Prudencio's will and the trustees under the trust essentially were Joseph and Frank.

After a dispute with his father and brothers, in June 1969, Charles was ousted as an officer, director and employee of all of the companies, including Goya. Charles remained a shareholder. Thereafter, extensive litigation ensued, with Charles on one side and his father and brothers on the other. The litigation was settled twice, as a result of which in 1972 and 1974, Charles' interests in the family-related companies were purchased by the other parties for in excess of $4,300,000 and he agreed never to contest the Will or the Trust. This amount was paid in full in 1975.

In this action, Charles contends that his father Prudencio's domicile at all times was in Puerto Rico and not Bergen County, New Jersey; and that, in any event, his domicile became Puerto Rico when he and Carolina left for Puerto Rico in November 1970 and remained there without leaving for New Jersey from that date until his death in March 1976. If Puerto Rico was Prudencio's domicile, Charles claims that under its laws, he is

entitled to part of the Goya shares of stock as a forced heir of Prudencio and a beneficiary under his mother Carolina's will of her community property interest therein.

The court, after detailed factual and legal findings, concluded that Prudencio was domiciled in Tenafly, New Jersey on both dates -- November 16, 1970 and March 17, 1976, when he died.

In those findings, the court determined that:

Prudencio came to Puerto Rico from Spain in 1904. He started a business venture in San Lorenzo in 1908 and became friendly with Ramona Falero there, who later claimed he was the father of her child Augusto, born in 1911. He believed, whether correctly or not, that Augusto was his son. In 1911 he became engaged to Carolina, who was residing in San Lorenzo. In 1916, he left for the continental United States, learned English and graduated from a business school in Albany, New York. He then worked and resided in New York City. He returned to San Lorenzo to marry Carolina in 1921. He left Puerto Rico alone soon after his marriage in order to earn a livelihood in the New York City area.

In 1923 and 1924 first Carolina and then Charles, their son (who had been born in Puerto Rico while Prudencio was in New York), joined Prudencio in Brooklyn. Prudencio continued to work in New York City and resided in Brooklyn with his wife and child from 1924 to 1929. Joseph and Anthony were born in Brooklyn. In August 1929, Prudencio and his family moved to New Jersey, residing in a rented house in Ridgefield Park, in which Frank was born; soon thereafter Carolina's sister, Ana Maria, and her brother, Pepe, left Puerto Rico to reside with the family.

In 1934, all of them moved to a rented house in Bogota, which was purchased in Carolina's name in January, 1937. They lived in this house for 28 years, from 1934 to 1962. All of the sons were raised there, went to school in Bergen County, and throughout their attendance at college and military service and until their marriages, resided with their parents in Bogota.

While in Bogota in 1946 and 1956, Prudencio and Carolina, respectively, became naturalized United States citizens. Neither Prudencio nor Carolina visited Puerto Rico from 1923, when Carolina came to live with Prudencio in Brooklyn, until some 26 or 27 years later -- in 1949 or 1950.

The Goya company and business was founded by Prudencio in or about 1936, although he was in business for himself in New York City since 1929. Goya's headquarters were moved from Manhattan to Brooklyn in 1958. It again moved, while Prudencio was ill in Puerto Rico, in December 1974, to Secaucus, New Jersey.

With Prudencio's impetus and money, in 1949, his son Charles purchased a cannery in Puerto Rico. Prudencio was then 64 years of age. This served as the nucleus for the formation and operation of the two Puerto Rican businesses. Prudencio had no ownership interest in these businesses. They were owned by his 4 sons. But he was the "boss" of Goya and the Puerto Rican enterprises. By 1969, Charles had become Chief Operating Officer and Chief Executive Officer of all of the companies, including Goya. But, as indicated, Charles was dismissed from these positions in the companies in June 1969.

Commencing in the late 1950's, Prudencio and Carolina, who then resided in Bogota, New Jersey, began routinely to spend the winter months of each year in Puerto Rico -- usually from some time in November of each year (generally after Thanks-giving in Bogota) until March or April (generally around Easter) of the following year.

Prudencio's winter visits to Puerto Rico were primarily taken because of pain and discomfort caused by an arthritic condition which began in the 1940's and forced him to walk with a cane by the mid-1950's. During the 1960's, Prudencio's arthritic condition worsened further, and he obtained motorized wheel-chairs which he used to travel around the company offices both in New York and in Puerto Rico. The cold New Jersey winters exacerbated the pain resulting from his arthritis. Additionally,

he was afraid he might fall on the ice or snow during the New Jersey cold weather. Prudencio, who was 70 years old in 1956 and 80 years old in 1966, used his trips to Puerto Rico to escape these winters.

While in Puerto Rico, during the 20 years of annual visits there, Prudencio and Carolina would usually stay in various residences (generally apartments) owned or leased by a Puerto Rico company owned by their sons. None of them was owned or leased by Prudencio or Carolina. The apartments varied. Among others, there was a one-room efficiency apartment and an apartment over a retail store.

The last of these company apartments in Puerto Rico was located at 54 Kings Court, Santurce in a building known as Condominium Ashford Park (sometimes "Kings Court apartment"). This apartment was purchased on November 11, 1966 and owned by Charles, who ultimately, in November, 1968, sold it to the Puerto Rico company.

The New Jersey houses of Prudencio and Carolina were larger and far more comfortable than the apartments in Puerto Rico in which they stayed during their winter visits.

In July 1962, Prudencio and Carolina moved from the Bogota residence to a ranch style one-level house at 13 North Summit Street in Tenafly, New Jersey. Prudencio's move from Bogota to Tenafly was prompted by his desire not to climb stairs any longer as a result of his severe arthritic condition.

Prudencio and Carolina enjoyed their New Jersey houses and considered them as home. Prudencio showed the houses with pride to his friends and visitors. He and Carolina were deeply interested in their family -- their sons and spouses and their grandchildren. The naturalization papers of Prudencio and Carolina stated that they resided in Bogota, New Jersey. The grandchildren, from time to time, visited at the Bogota and Tenafly houses with and without their parents. Most of them were located in the New Jersey area or in places readily accessible thereto. Some of them stayed over on weekends or

longer. They played with children of neighbors, both in Bogota and Tenafly. Prudencio enjoyed talking to them and watching them play.

Prudencio and Carolina's valuables and sentimentally significant possessions (such as silver, jewelry and prayer books) were always kept in the New Jersey houses in Bogota and Tenafly. When Prudencio and Carolina went to Puerto Rico in November 1970 and in prior years, they took with them only clothing and personal effects in 2 or 3 suitcases. They left the Tenafly house with all of the furniture, most of their clothing and other personalty therein intact. In November 1970, they intended to return to Tenafly, despite Prudencio's advanced age -- 84.

Prudencio voted in Bogota for Dewey in the election of 1948. He also voted in Bogota in other elections, including 1952 when he voted for Eisenhower. He never voted in any Puerto Rican election. He gave money to the Community Chests of Bogota and, at least in 1962, Tenafly. He had a New Jersey driver's license until the early 1960's, when he stopped driving, and never had one from Puerto Rico. He never paid any income tax in Puerto Rico. He had a bank account in the Bank of Bogota for some period, including the years 1960 and 1962, issuing checks therefrom in July 1960 and September and October 1962. He also had a checking account at the Hackensack Trust Company at some period, including the year 1963. His bank accounts listed his New Jersey address. Although Carolina had a savings account in Puerto Rico, Prudencio had no bank accounts there. He received his Social Security number in New York and Carolina received 0 hers in New Jersey. His 1957 and 1961 passports and 1957 passport application show his address as his house in Bogota; and his 1966 passport application shows his address at his Tenafly house. The naturalization papers of Prudencio and Carolina stated that they resided in Bogota, New Jersey.

During their absences in Puerto Rico before and after November 1970, the Federal and the New York State and City non-resident

income tax returns filed for Prudencio and Carolina contained their New Jersey address as their "home" address. Prudencio's wills, including the November 1970 will, and the November 1970 Trust, recited his New Jersey residence. Prudencio's November 1970 Will incorporated the provisions of the trust, executed on the same day, to the effect that it shall be construed under, and the shares thereunder shall be governed in all respects by, New Jersey law. Carolina executed a will dated October 24, 1964 in which she describes herself as a resident of New Jersey.

Prudencio executed contracts in New York City with his four sons, including Charles, as parties, in which he was described as "a resident of the State of New Jersey". These documents were signed by Prudencio on July 17, 1 1964, April 22, 1966, and June 20, 1967. There are a great number of other documents throughout the years, including 1969 affidavits, signed by Prudencio in which he referred to his residence as New Jersey.

While Prudencio and Carolina were in Puerto Rico, both before and after November 1970, the Tenafly house was looked after, from time to time, by Joseph and his wife Carmen Ana, as well as their son, Joseph F. Unanue. In 1971 or 1972, the pipes burst. Carmen Ana had the necessary repairs made so that Prudencio and Carolina could return to a fully intact livable house.

The Puerto Rican companies, Caribbean Canneries and Puerto Rico Food Products, had substantial earnings and profits. Prudencio was obviously interested in their operations, sales and profitability, as well as their being an excellent source of income to the members of the Unanue family. Nevertheless, his primary interest always remained with the financial success of Goya itself; and his true emotional attachment always was to Goya. He considered the Puerto Rican enterprises essentially as contributors to the over-all success of the Goya business, good-will and tradename he had founded and nourished. To him, Goya itself 2 was the significant entity or enterprise.

In sum, it was Goya, the largest and most substantial sales operation, which was the center of his business and personal life, rather than the canning and related enterprises in Puerto Rico. His basic interest was sales. Just about every witness who knew him in business characterized him as the "super salesman" and considered salesmanship his abiding concern.

Up to the second half of November 1970, when he left to spend the winter months in Puerto Rico, Prudencio was clearly domiciled in New Jersey. His permanent home was here. His primary business enterprise, Goya, was in New York, to which he commuted from New Jersey to work five and six days per week. When he ceased driving a car, one of his sons who lived near him, took him to Goya. All of the indicia of New Jersey domicile were present. There existed a firmly rooted residence and intent to reside in New Jersey on a permanent basis. His annual trips to Puerto Rico for the winter seasons were essentially for health reasons, and, secondarily, for business purposes and a winter vacation. Thus, as of November 16, 1970, the date of the trust, he was a domiciliary of this State.

In November 3 1970 Prudencio and his wife left for their usual winter sojourn in Puerto Rico, intending to return to Tenafly.

Despite his intention to return to Tenafly after the November 1970 trip to Puerto Rico, Prudencio did not come back before he died in March 1976. It was during his last winter visit to Puerto Rico, starting November 1970, that he was beset with serious illnesses that continued until his death in March 1976. As a result, he ...


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