right of election

Ferdinand Straus died on July 1, 1934, leaving a last will and testament dated May 5, 1934, which contained a provision for a trust for his wife for her life of one-third of the decedent’s property both real and personal. On June 28, 1934, three days before his death, he executed trust agreements by which, in form at least, he transferred to trustees all his real and personal property. The beneficiary named in the trust agreement brought this action to compel the trustees to carry out its terms. The widow challenged the validity of the transfer to the trustees. The trial court found that the trust agreements were made, executed and delivered by said Ferdinand Straus for the purpose of evading and circumventing the laws of the State of New York, and particularly sections 18 and 83 of the Decedent Estate Law. The trial court also found that the settlor reserved the enjoyment of the entire income as long as he should live, and a right to revoke the trust at his will, and in general the powers granted to the trustees were in terms made subject to the settlor’s control during his life.

In 1932 Jennie M. Clapper, a New Hampshire citizen serving as administratrix, filed suit in a New Hampshire court against Bradford Electric Light Co., Inc., a Vermont corporation. She sought damages for the death of Leon J. Clapper under the employers’ liability provisions of the New Hampshire Employers’ Liability and Workmen’s Compensation Act. The Company maintained its principal place of business in Vermont and operated lines extending into New Hampshire. Leon Clapper, a Vermont resident, was hired by the Company in Vermont as a lineman for emergency service in either state. While performing his duties in New Hampshire by restoring burned-out fuses at a substation, he was killed. The case was removed to federal district court on diversity of citizenship. The Company raised a special defense that the Vermont Workmen’s Compensation Act barred the action because the employment contract had been made in Vermont, both parties resided there, and both had accepted the Vermont Act as a term of the contract. The district court rejected the special defense and denied a motion to dismiss. After three jury trials the third resulted in a $4,000 verdict for the plaintiff. The Circuit Court of Appeals first reversed the judgment but on rehearing affirmed it, one judge dissenting. The Company sought review in the Supreme Court by appeal and petition for certiorari. The appeal was denied and certiorari was granted. The Vermont Act provided that every contract of employment made in the state was presumed subject to its provisions unless expressly declined in writing. Acceptance made its remedies exclusive for injuries inside or outside the state. The New Hampshire Act required an employer to file a declaration to become subject to its compensation provisions yet still permitted an employee to elect after injury to sue at common law. The Company had filed the required declaration in New Hampshire.