Cummings, Pell and Sprecher, Circuit Judges.
In 1922, Mr. and Mrs. John D. Hertz, Illinois domiciliaries, established two trusts for the benefit of their son, John D. Hertz, Jr. ("Hertz"). Each trust gave Hertz general testamentary powers of appointment over the corpus of the trusts. He died testate and domiciled in Florida on May 9, 1968. His last will, executed in 1965, contained a residuary clause providing in part:
"All the rest, residue and remainder of my property of whatever kind and wherever situated (herein referred to as my 'residuary estate'), after the payment therefrom of the obligations directed to be paid by article 'THIRD' hereof, I direct my executor to [distribute in varying shares to ten named residuary legatees.]"
The last article of the 1965 will provided as follows:
"Nearly all of my property is located in New York and my important financial matters and related affairs have been handled in said State for many years. Accordingly, it is my desire and I hereby direct that this my will be originally probated in the State of New York; that my executor shall qualify in the State of New York, and, in accordance with its laws, shall administer and distribute my estate in the State of New York; that my executor shall be accountable in the Courts of that State in so far as may lawfully be done that the disposition herein contained shall be construed and regulated by the laws of said State."
In 1968, the First National Bank of Chicago, which was the trustee of the 1922 trusts, filed suit in the Circuit Court of Cook County, Illinois, to determine whether Hertz had exercised his powers of appointment thereunder. The Florida executor of Hertz's will, which had been admitted to probate in Florida, filed a petition removing the action to the district court.
The executor claimed that the powers of appointment were exercised. In default of appointment, the trust assets were to be distributed to Hertz's sister, Helen Hexter, and his nephew, John Ettlinger. Since he was not a residuary legatee, Ettlinger's answer and cross-complaint asserted that the powers had not been exercised. Mrs. Hexter, both a residuary legatee and a taker in default of appointment, first filed an answer stating that she "takes no position with regard to the issues in this suit." However, on October 31, 1969, pursuant to leave of court, she filed an amended answer asserting that Hertz did not intend to exercise the powers of appointment in his last will, and asserting in the alternative that he did intend to exercise his power of appointment in favor of the ten residuary legatees.
The district court twice refused to remand the cause to the state court. After trial, the court concluded that Hertz intended his will to dispose of all property within his control, including the assets of the two trusts in question. After ruling that Hertz exercised the powers of appointment under those trusts, the court ordered that Hertz's executor was entitled to receive the trust assets. Consequently, the trustee was ordered to deliver the assets to the executor. As to Ettlinger's cross-complaint, judgment was also entered in favor of the executor. Ettlinger alone has appealed. We affirm.*fn1
Appellant first argues that the district court erred in denying his motions to remand. As to the first motion to remand, the district court rendered a thorough opinion reported as First National Bank of Chicago v. Mottola, 302 F. Supp. 785 (N.D.Ill.1969). We adopt that opinion. After Mrs. Hexter filed her amended answer, Ettlinger filed another motion to remand on the ground that Mrs. Hexter had now taken a position opposed to the executor and therefore had to be aligned on the opposite side of the case from him for diversity purposes. Since Mrs. Hexter and the executor were both citizens of Florida, Ettlinger argued that there was no diversity jurisdiction and therefore remandment was necessary. However, Mrs. Hexter's amended answer was in the alternative and therefore, like her first answer, was neutral in effect, so that the district court also properly denied the second motion to remand. Although Mrs. Hexter sided with Ettlinger at the ensuing trial, the jurisdictional issues had already been decided and her change of position came too late to defeat removal. See Murphy v. Kodz, 351 F.2d 163, 167 (9th Cir. 1965); Direct Transit Lines, Inc. v. Local Union No. 406, I.B.T., 199 F.2d 89, 90 (6th Cir. 1952); IA Moore, Federal Practice, paras. 0.157, at 382 and 0.161, at 529 (1965 ed.).
Appellant next argues that the district court improperly applied New York law to determine whether the residuary clauses of Hertz's will exercised his powers of appointment under the trusts. Under the rule of Klaxon v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S. Ct. 1020, 85 L. Ed. 1477, a federal court must follow the conflict of laws principles prevailing in the state in which it sits. Therefore, Illinois conflicts rules are governing here. Both sides are in agreement that Illinois adheres to the general rule that it is normally the law of the domicile of the power's donor and not that of the donee's domicile which controls the question whether the donee effectively exercised a testamentary power of appointment.*fn2 In re Estate of Erdman, 264 C.A.2d 335, 70 Cal.Rptr. 774 (1968); In re O'Reilly's Estate, 371 Pa. 349, 89 A.2d 513 (1952); Anno. 150 A.L.R. 519, 531 et seq. (1944); see In re Estate of Breault, 29 Ill.2d 165, 174, 193 N.E.2d 824 (1963); Restatement, Second, Conflict of Laws § 275 and Comment c.
Here the domicile of Hertz's donors, and the state whose law governs the construction, validity and effect of their trust instruments, is Illinois. However, as recited above, in his will Hertz directed that the disposition of his property be construed and regulated according to the laws of New York. The question, therefore, is whether under Illinois conflict principles the exercise vel non of Hertz's general testamentary powers of appointment is governed by Illinois or New York law.*fn3
Under the law New York would apply to a wholly domestic situation, it is clear that where, as here, no express or necessarily implied contrary intention appears, the residuary clause in a will undertaking to dispose of all the testator's property not specifically devised does exercise a general power of appointment.*fn4 Under local Illinois law a general residuary clause does not per se exercise a testamentary power of appointment over trust property. Emery v. Emery, 325 Ill. 212, 222, 156 N.E. 364 (1927); Northern Trust Co. v. House, 3 Ill.App.2d 10, 18, 120 N.E.2d 234 (1954). Rather, the intention of the testator is the ultimate test for determining whether the power is exercised by a general residuary clause. Rettig v. Zander, 364 Ill. 112, 4 N.E.2d 30 (1936); Northern Trust Co. v. Moscatelli, 54 Ill.App.2d 316, 203 N.E.2d 447 (1964); Northern Trust Co. v. Cudahy, 339 Ill.App. 603, 91 N.E.2d 607 (1950). The district court held that Illinois courts would defer to Hertz's selection of New York law, but that even under Illinois law Hertz would have exercised his powers. We agree that Illinois courts would recognize Hertz's choice of law stipulation, but nonetheless find it necessary to look to Illinois law to determine whether Hertz sufficiently manifested an intent to exercise. We will not upset the lower court's finding that he did.
"The lodestar of will construction is to ascertain and effectuate the intention of the testator, provided such is not contrary to law * * *." Carr v. Hermann, 16 Ill.2d 624, 628, 158 N.E.2d 770, 772 (1959); see Whittington v. Hunt, 296 Ill. 133, 138, 129 N.E. 543 (1920). Since Hertz designated that his will should be construed in accordance with the laws of New York, the courts of Illinois (or Florida) could only be sure to effectuate the will provisions as they were intended to operate by interpreting them according to the law of New York. In deciding whether or not to give recognition to a stipulation of what law is to govern a particular transaction, the crucial question is whether an important policy of the most interested state would be evaded thereby. A. Von Mehren and D. Troutman, The Law of Multistate Problems, 250 (1965). At least insofar as the precise question of the exercise vel non of the powers of appointment is concerned, no public policy of Illinois (or Florida) is thwarted by construing Hertz's will in accord with the law of his choice.*fn5 If that law would presume that the clause exercised the powers in the absence of ...