## Facts

- A 1906 agreement created a trust to receive payments from Gerald P. Fitzgerald for the benefit of his former wife (Princess Lida) and their children, ultimately aiming to accumulate a $300,000 fund administered by trustees.
- After Fitzgerald repudiated the agreement, beneficiaries and a trustee sued in a Pennsylvania court for specific performance; the court enforced the agreement, required accounting and payments, removed Fitzgerald as trustee, and protected the trust assets.
- The specific-performance decree was later treated as satisfied, ending that proceeding’s continuing jurisdiction over the trust.
- Years later, surviving trustees filed a formal trust account in the Pennsylvania Court of Common Pleas under state accounting procedures, commencing an ongoing state trust-administration/accounting matter.
- After the state accounting began, two beneficiaries (including Princess Lida) filed a federal diversity suit against trustees and a deceased trustee’s administrator alleging mismanagement and seeking a full accounting, restitution, removal of trustees, bonding requirements, and related administrative relief.
- The federal district court enjoined further proceedings in the state accounting matter; the state court responded by enjoining prosecution of the federal suit.
- The Pennsylvania Supreme Court upheld the state court’s injunction, and the dispute reached the U.S. Supreme Court.

## Issues

1. Whether a federal court may exercise jurisdiction over a beneficiary suit seeking accounting, restitution, trustee removal, and other trust-administration relief when a state court has already assumed jurisdiction over the same trust through a pending accounting proceeding.
2. Whether the state court’s trust accounting jurisdiction is in rem or quasi in rem and, if so, exclusive as to the trust property.
3. Whether either court had power to enjoin proceedings in the other forum under these circumstances.

## Decision

- The U.S. Supreme Court affirmed the Pennsylvania Supreme Court.
- Upon the trustees’ filing of an account, the Pennsylvania court first assumed quasi in rem jurisdiction over the trust res.
- The federal suit sought relief requiring control of the trust property and administration; therefore, the federal court lacked jurisdiction to proceed.
- Because the federal court lacked jurisdiction, it lacked power to enjoin the state accounting proceeding.
- The state court, as the first court with quasi in rem control of the trust res, could enjoin the parties from prosecuting the later federal action to protect its jurisdiction.

## Legal Principles

- When the relief sought is strictly in personam, state and federal courts with concurrent jurisdiction may proceed concurrently until one judgment may be asserted as res judicata in the other.
- If suits are in rem or quasi in rem such that the court must control the property to grant relief, the court first assuming jurisdiction over the property has exclusive jurisdiction, and the other court must yield.
- The prior-exclusive-jurisdiction rule applies not only to property physically seized, but also to proceedings to marshal assets, administer trusts, liquidate estates, and similar matters requiring court control over the res.
- A federal action merely establishing the validity or amount of a claim concerning a trust does not necessarily interfere with a state court’s control of the trust res; actions seeking supervision or alteration of trust administration do.

## Conclusion

Because the Pennsylvania court first obtained quasi in rem jurisdiction over the trust through a pending accounting proceeding, a later federal diversity suit seeking accounting and administrative control (including trustee removal and bonding) could not proceed, and the state court could restrain the federal action to preserve its exclusive control of the trust res.


Princess Lida of Thurn & Taxis v. Thompson, 305 U.S. 456 (1939)