[*226] COUNSEL: Aranow, Brodsky, Bohlinger, Einhorn & Dann, New York City (Herbert A. Einhorn and Louis W. Bookheim, Jr., New York City, of counsel), for Oei Ing Tjhing, ancillary executor. Braun & Braun, New York City (Leon Braun and Arthur Braun, New York City, of counsel), for Abby Oei, Kien Stiftung and Yan Stiftung.

JUDGE: Frankenthaler, S.

DATE: April 6, 1956.

Discovery proceeding. The Surrogate’s Court, Frankenthaler, S., held that funds attempted to be transferred to one of the respondent family foundations were recoverable, since the foundation had never constituted a legal entity, and held that since it had not been decedent’s intention to make gift of the other family foundation by direction to bank to transfer funds and securities to that foundation, and since his purpose in making transfers and been merely to render funds available for his personal use rather than to increase holdings of foundation, that foundation too was accountable for assets so received.

Decree accordingly.

FRANKENTHALER, Surrogate.

The respondents in this discovery proceeding are two family foundations identified by the names Yan Stiftung in Vaduz and Kien Stiftung in Chur. In March 1939 decedent, purportedly acting in conformity with Swiss law, organized a foundation then known as Yan Stiftung in Zug. In December 1939 decedent organized another foundation known as Kien Stiftung in Chur. This foundation also was formed in Switzerland and its organization was intended to be in compliance with the law of that country. The site of this foundation has remained in Switzerland since its formation. In late December 1939 the site of Yan Stiftung was transferred to the Principality of Liechtenstein and the foundation then became known as Yan Stiftung in Vaduz from which locality the foundation has since operated.

One contention of the petitioner is that Kien Stiftung never had any valid existence for the reasons that its stated purposes were not within the contemplation of Swiss law and that the powers reserved to the decedent as founder of the foundation were such as to render the foundation a nullity ab initio. The testimony of the expert upon Swiss law to the foregoing effect was not contradicted by the respondent and it is found that such law is controlling as to the validity and legal existence of the foundation. Matter of von Shertel, N.Y.Law Journal, November 25, 1949; Matter of Tonkonogoff’s Estate, 177 Misc. 1015, 32 N.Y.S.2d 661; Restatement of the Law of Conflict of Laws, ¤ 155. Inasmuch as this foundation never constituted a legal entity, the funds attempted to be transferred to it by the decedent are recoverable in this proceeding.

The petitioner does not attack the legal existence of Yan Stiftung but concedes, in accord with the testimony of the foreign law expert, that this foundation is legally constituted under the laws of Liechtenstein. The petitioner does contend that transfers of decedent’s assets to this foundation in 1941 were not intended by the decedent to be beneficial [*227] to the foundation but that instead he merely used the foundation as a temporary repository of his assets. The transfer in question was made on the written direction of the decedent to his New York bank at a time following his release from a French prison at the instance of the Chinese Ambassador to France and while the decedent was a guest of the Chinese Embassy in Vichy, France. At that date the decedent could not obtain access to any of his funds in Europe and wartime restrictions prevented him, as a Dutch national, from availing himself of his assets on deposit in this city. His correspondence with the New York banks concerning the transfer of his assets to the two foundations and regarding his later efforts to obtain funds from the foundations clearly evidences that his purpose in making the transfers was to render funds available for his personal use rather than to increase the holdings of the foundations. That such was the decedent’s purpose was substantiated by the oral testimony. It is held that it was not the decedent’s intention to make a gift to Yan Stiftung by his direction of August 28, 1940 to his New York bank to transfer funds and securities to that foundation and, consequently, the respondent Yan Stiftung is accountable to the petitioner for the assets so received.

Submit decree on notice providing for the recovery by petitioner of the assets in this jurisdiction held by Kien Stiftung and referred to in the petition herein and the recovery of the aforementioned assets transferred in 1941 to Yan Stiftung and referred to in the petition herein.