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Nature of Suit Code: 140
Nature of Suit: Negotiable Instruments
Cause of Action: 

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PUBLISH 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

FEDERAL DEPOSIT INSURANCE 

CORPORATION, Receiver for 

Penn Square Bank, N.A., 

Plaintiff-Appellee, 

FILED 

United States Court of Appeals ·renth Circuit 

JUN 131989 

ROBERT L. HOECKER 

Clerk 

v. 

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) 

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) 

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No. 87-1530 

FRED M. FARHA, 

Defendant-Appellant. 

Appeal from the United States District Court 

for the Western District of Oklahoma 

(D,C. No. CIV-85-3062-A) 

Fredrich H. Wright (Dan Nelson was on the brief), of 

Hughes & Nelson, Okla.homa City, Oklahomji, for Defendant-Appellant. 

Gregory E. Gore, of Oklahoma City, Oklahoma, for PlaintiffAppellee. 

Before SEYMOUR, SETH, and MOORE, Circuit Judges. 

SEYMOUR, Circuit Judge. 

Appellate Case: 87-1530 Document: 01019784750 Date Filed: 06/13/1989 Page: 1 
This appeal arises out of an attempt by the plaintiff Federal 

Deposit Insurance Corporation (FDIC} to garnish a pension plan in 

order to satisfy a judgment obtained against the sole participant 

in the plan, defendant Fred Farha. The court below held that the 

trust created by the pension plan is illusory, and that the funds 

contained therein are consequently subject to garnishment. 

Because the Employment Retirement Income Security Act (ERISA) 

preempts state law on the issue of creditors' access to such 

funds, 29 u.s.c. § 1144(a}(l982}, we reverse. 

I • 

Fred Farha defaulted on a promissory note executed in favor 

of Penn Square Bank. The FDIC, in its capacity as receiver of 

Penn Square, sought and obtained a judgment against Farha for the 

balance due on the note. In an effort to collect on the judgment, 

the FDIC sought to garnish a number of bank accounts held by· Farha 

or by business entities controlled by him. Only one of those 

accounts contained any funds: the Metro Bank, N.A., of Oklahoma 

City held approximately seventy-six thousand dollars in the name 

of the Farha Sales Defined Benefit Pension Plan (Plan). 

The FDIC sought to garnish the funds. Farha responded by 

claiming an exemption from garnishment because the Plan is a 

tax-exempt pension benefit plan that contains a spendthrift 

provision as required by ERISA. See 29 u.s.c. § 1056(d)(l). The 

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Appellate Case: 87-1530 Document: 01019784750 Date Filed: 06/13/1989 Page: 2 
Plan was drafted in 1979, and an expert testified for Farha that 

it complies with the provisions of ERISA, and that it was 

qualified for tax exempt status by the IRS as a valid pension plan 

pursuant to 26 U.S.C. § 401. 1 The controversy here centers on the 

particular structure of the Plan, specifically the fact that Farha 

and the Plan are essentially one and the same. The Plan was 

created by Farha Sales, Inc. and Libra Trading, Inc., corporations 

owned by Fred Farha. The only employers listed in the Plan are 

Farha Sales, Inc. and Libra Trading. Their only employee is in 

turn Fred Farha, who is the sole participant in the Plan. Farha 

Sales, Inc. is the administrator of the Plan, and Fred Farha is 

the trustee of the trust created by the Plan. Farha's expert, who 

sets up IRS-qualified retirement plans for businesses, testified 

that .the rules and regulations governing qualification of plans 

are no different when a sole shareholder owns the corporation and 

also administers the plan. 

Farha claims the Plan is exempt from garnishment because of 

its spendthrift clause, which reads: 

"The assets of the Trust shall not be subject to 

alienation, assignment, trustee process, garnishment, 

attachment, execution or levy of any kind except as may 

be necessary to repay advances or by the Trustee or by 

the Administrator for its fees and expenses of the 

Trust, and no attempt to cause such assets to be 

1 The Internal Revenue Code contains criteria identical to 

ERISA for the establishment of such plans. The IRS has the 

authority and responsibility for qualifying plans for tax exempt 

status under these statutory criteria and supplemental Treasury 

Department regulations. See generally 29 u.s.c. § 1201. 

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Appellate Case: 87-1530 Document: 01019784750 Date Filed: 06/13/1989 Page: 3 
alienated, assigned, etc., shall be recognized by the 

Trustee. If any Participant shall attempt to alienate, 

assign, etc., his interest provided by the Trust 

Agreement, the Trustee shall take such reasonable steps 

as is deemed necessary to preserve such interest for the 

benefit of the Participant or his Beneficiary." 

Brief of Appellee, Attachment A, p. 21. This clause was included 

so that the Plan would comply with ERISA section 206(d)(l) and 

Internal Revenue Code section 40l(a)(l3), both of which require 

qualified pension plans to contain provisions that forbid plan 

benefits from being "assigned or alienated.'' See 29 u.s.c. § 

1056(d)(l); 26 u.s.c. § 40l(a)(l3). Despite this clause and its 

underlying statutory justification, the concentration of roles in 

the personage of Mr. Farha led the district court to conclude that 

the trust is illusory, and that the funds are therefore subject to 

garnishment. 

II. 

This case presents us with the question whether ERISA 

protects qualified pension plan assets from garnishment by the 

creditors of participants in such plans, and the subsidiary issue 

whether ERISA preempts state law governing spendthrift trusts. 

The FDIC argues that the Plan is a self-settled spendthrift trust, 

and therefore may not be used to shield funds from creditors. 

Farha replies that ERISA section 206(d)(l) preempts state law 

regarding both garnishment in general and spendthrift trusts in 

particular. 

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Appellate Case: 87-1530 Document: 01019784750 Date Filed: 06/13/1989 Page: 4 
A. 

Section 206(d)(l) requires that "[e]ach pension plan shall 

provide that benefits provided under the plan may not be assigned 

or alienated." 29 u.s.c. § 1056(d)(l). Section 514(a) states 

that ERISA preempts ''any and all State laws insofar as they may 

now or hereafter relate to any employee benefit plan" covered by 

the statute. 29 U.S.C. § 1144(a). 

The first issue we address is whether these two provisions 

combine to protect an employee's interest in a pension plan from 

garnishment by his commercial creditors. Federal courts have 

unanimously answered this question in the affirmatiye, even though 

section 206(d)(l) does not explicitly mention garnishment. See 

Tenneco, Inc. v. First Virginia Bank of Tidewater, 698 F.2d 688, 

689-90 (4th Cir. 1983); General Motors Corp. v. Buha, 623 F.2d 

455, 460-63 (6th Cir. 1980); Commercial Mortgage Ins., Inc v. 

Citizens Nat'l. Bank of Dallas, 526 F.Supp. 510 (N.D. Tex. 1981). 

We are convinced by these courts' reasoning, and we join in their 

conclusion that a qualified ERISA plan is generally protected from 

garnishment under state law. 

This conclusion is supported by the purpose of the antialienation provision, which is to "ensure that the employee's 

accrued benefits are actually available for retirement purposes." 

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Appellate Case: 87-1530 Document: 01019784750 Date Filed: 06/13/1989 Page: 5 
H.R. Rep. No. 807, 93rd Cong., 2d Sess., reprinted in 1974 U.S. 

Code Cong. & Admin. News 4670, 4734. The provision furthers the 

primary purpose of the statute as a whole, which is to implement a 

national policy of protecting "the interests of participants in 

employee benefit plans and their beneficiaries." 29 U.S.C. § 

lOOl(b) (1982). 

In addition, Treasury Department regulations that interpret 

26 U.S.C. § 40l(a)(l3), the Internal Revenue Code counterpart of 

section 206(d)(l), specifically prohibit garnishment of retirement 

plan benefits. See Tenneco, 698 F.2d at 689-90; Buha, 623 F.2d at 

462; Commercial Mortgage Ins., 526 F.Supp. at 516. Specifically, 

the relevant regulation states: 

"Under section 40l(a)(l3), a trust will not be 

qualified unless the plan of which the trust is a part 

provides that benefits provided under the plan may not 

be anticipated, assigned (either at law or in equity), 

alienated or subject to attachment, garnishment, levy, 

execution or other legal or equitable process." 

Treas. Reg. § l.40l(a)-13(b) (1) (1978) (emphasis added). In the 

implementation of ERISA, Congress gave the Treasury Department 

considerable authority to issue regulations pursuant to section 

410(a) of Title 26 and other sections governing participation and 

vesting requirements for benefit plans generally. See 29 u.s.c. § 

1202; see generally Buha, 623 F.2d at 461-63 (discussing relevant 

statutory sections and legislative history). Because the 

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Appellate Case: 87-1530 Document: 01019784750 Date Filed: 06/13/1989 Page: 6 
regulation was promulgated under a broad grant of authority from 

Congress, we must give it considerable deference. Id. at 462-63. 

The Supreme Court's recent opinion in Mackey v. Lanier 

Collection Agency & Service, Inc., 108 s. Ct. 2182 (1988), also 

persuades us that ERISA section 206(d)(l) protects a participant's 

interest in a qualified pension benefit plan from commerical 

garnishment. The Court there considered whether ERISA welfare 

benefit plan benefits are protected from garnishment. It noted 

that ERISA contains no provision preventing the garnishment of 

such benefits. This is significant, the Court reasoned, because 

Congress did employ such a provision with respect to pension 

benefit plans: 

"Ultimately, in examining§§ 206(d)(l) and 514(a) 

there is no ignoring the fact that, when Congress was 

adopting ERISA, it had befor~ it a provision to bar the 

alienation or garnishment of ERISA plan benefits, and 

chose to impose that limitation only with respect to 

ERISA pension benefit plans, and not ERISA welfare 

benefit plans." 

Id. at 2189 (emphasis in original). Although this statement is 

dicta, it nevertheless played a significant role in the Court's 

reasoning, and we believe it bolsters our holding that 206(d)(l) 

protects participants' interests in qualified pension plans from 

commercial creditors. 2 

2 This does not mean that plan assets are always free from 

judicial process. Pension plans themselves conduct a wide variety 

of activities, and may be sued in a number of roles. See 

generally Mackey v. Lanier Collections Agency & Servic~Inc., 108 

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Appellate Case: 87-1530 Document: 01019784750 Date Filed: 06/13/1989 Page: 7 
B. 

The FDIC argues that this case presents a peculiar issue 

which makes the foregoing reasoning inapplicable. Specifically, 

it contends that the position enjoyed by Farha as trustee, 

administrator, employee, and employer makes the plan a selfsettled trust, the spendthrift clause of which is ineffective 

against commercial creditors. 3 In support of this claim, the FDIC 

S. Ct. 2182, 2186-87 (1988). In addition, an individual's 

benefits are subject to garnishment under certain limited 

circumstances. For example, this Circuit has held that a 

participant-trustee's plan benefits may be garnished to satisfy a 

judgment remedying his embezzlement of plan funds while a trustee. 

See Guidry v. Sheet Metal Workers Nat. Pension Fund, 856 F.2d 

1457, 1459-60 (10th Cir. 1988). Plan benefits may also be. 

garnished pursuant to "qualified domestic relations orders," 29 

u.s.c. § 1056(d)(3) (Supp. 1984). We do not hold here thit 

benefits are not subject to levy by creditors authorized by other 

federal statutes to garnish ERISA plan benefits. See infra. n.4. 

We hold only that commercial judgment creditors of a pension plan 

participant may not garnish that participant's interest in the 

plan pursuant to state law. 

3 The FDIC also correctly points out that ERISA is generally 

preempted by contrary federal law. See 29 u.s.c. § 1144(d) 

("Nothing in [ERISA] shall be construed to alter, amend, modify, 

invalidate, impair, or supersede any law of the United States 

[except pre-existing federal pension law] or any rule or 

regulation issued under any such law."). The FDIC argues that its 

responsibilities as a federal receiver preempt ERISA section 

206(d)(l). In support of this argument, the FDIC cites only to 

its statutory duty to collect on the debts of failed banks as 

conflicting federal law. See 12 u.s.c. § 192. It admits, 

however, that in such capacity it possesses only the powers of any 

other receiver of a national bank, see 12 U.S.C. § 182l(d), and 

cites to no statute, rule, or regulation giving it power to 

garnish otherwise protected funds. The general duty of the FDIC 

to collect on debts in its capacity as receiver contrasts with the 

specific nature of federal statutes that have been held to expose 

ERISA plan benefits to creditors. See,~' infra n.5 

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Appellate Case: 87-1530 Document: 01019784750 Date Filed: 06/13/1989 Page: 8 
( cites the laws of several states that make self-settled 

spendthrift trusts available to creditors. See,~' Lichstrahl 

v. Bankers Trust (In re Lichstrahl), 750 F.2d 1488, 1490 (11th 

Cir. 1985) (construing Florida law); Bank of Dallas v. Republic 

Nat'l. Bank of Dallas, 540 S.W.2d 499, 501 (Tex. Cir. App. 1976); 

Okla. Stat. tit. 60, § 175.25 G.(1981); Tenn. Code Ann. § 

26-4-10l(a)(l988). 4 

We see no compelling argument making the general rule against 

commercial garnishment of ERISA pension plan benefits inapplicable 

to plans that are considered self-settled spendthrift trusts under 

state laws. 5 Accord Commericial Mortgage Ins., 526 F.Supp. at 5181 

(discussing preemption of ERISA by federal bankruptcy law); 26 

u.s.c. § 6334(c) (making all classes of property except those 

explicitly exempted in section 6334(a) subject to tax levy, 

"[n]otwithstanding any other law of the United States."). We are 

not persuaded that ·congress intended the FDIC as receiver of a 

failed bank to have power to override the required spendthrift 

provisions of an ERISA plan where other commercial creditors are 

prohibited from doing so. 

4 The FDIC references the laws of four states, Oklahoma, Texas, 

Florida, and Tennessee, because each had some connection to Mr. 

Farha, his businesses, or the Plan. 

5 The FDIC cites a number of federal bankruptcy cases for the 

proposition that state laws on self-settled spendthrift trusts 

expose plans such as Farha's to garnishment. See Brooks v. 

Interfirst Bank (In re Brooks), 844 F.2d 258 (5th Cir. 1988); Goff 

v. Taylor (In re Goff), 706 F.2d 576 (5th Cir. 1983). As we have 

noted, the general preemption provision of ERISA specifically 

states that ERISA should not be interpreted as preempting other 

federal laws. 29 U.S.C. § 1144(d). The bankruptcy code provides 

that any property in which a debtor has "legal or equitable 

interests" at the time of bankruptcy is to become part of the 

bankruptcy estate. 11 u.s.c. § 54l(a)(l). This is so 

notwithstanding "any provision in an agreement ... that 

restricts or conditions transfer of such interest by the debtor." 

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Appellate Case: 87-1530 Document: 01019784750 Date Filed: 06/13/1989 Page: 9 
(plan established by professional association for the benefit of 

its sole director and shareholder not subject to garnishment), We 

note as an initial matter that "[t]he scope of ERISA preemption 

is very broad." Straub v. Western Union Tel, Co., 851 F.2d 

1262, 1263 (10th Cir, 1988). The phrase in section 514(a) 

preempting state laws that "relate to" plans covered by ERISA is 

not limited to "state laws specifically designed to affect 

employee benefit plans." Shaw v. Delta Air Lines, 463 U.S. 85, 

98 (1983), It also preempts laws of general application that have 

an impact on employee benefit plans. See Straub, 851 F.2d at 

1263-64 (ERISA preempts common law cause of action for breach of 

contract and negligent misrepresentation brought by employee for 

failure to include him in increase of ERISA plan benefits); Shaw, 

463 U.S. at 92-106 (ERISA preempts state anti-discrimination law 

insofar as it prohibits practices lawful under federal law). Any 

law that makes trusts established as part of ERISA pension plans 

garnishable by commercial creditors "relates to" qualified plans. 

In addition to the explicit phrasing of section 206(d)(l), 

three important statutory purposes behind ERISA convince us that 

self-settled spendthrift trusts are protected by ERISA from 

garnishment under state law. First, as discussed above, ERISA was 

Id. § 54l(c)(l)(A). Reading the bankruptcy provisions together 

with section 1044(d), the court in Goff reasoned that the general 

rule sweeping all property into the bankruptcy estate preempts 

ERISA's anti-alienation clause. Goff, 706 F.2d at 586-87. 

However, these cases shed little light on the effect of the ERISA 

anti-alienation provision outside the bankruptcy context. 

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Appellate Case: 87-1530 Document: 01019784750 Date Filed: 06/13/1989 Page: 10 
meant to ensure that retirement benefits are actually available to 

plan participants and their beneficiaries upon retirment. See 

H.R. Rep. No. 807, 1974 U.S. Code Cong. & Admin. News at 4734. 

Permitting Farha to create a trust where he or an alter-ego 

corporation may deposit funds that are immune from creditors 

allows him to prepare for his retirement. Moreover, the 

spendthrift provision does not give Farha a very powerful tool for 

avoiding creditors. The Plan contains certain mandated 

limitations on the amount of contributions, Brief of Appellee, 

Attachment "A", pp. 19-20, thereby limiting the amount of money 

Farha can protect from creditors. And if Farha receives money 

from the Plan either in the form of benefits or because the Plan 

terminates, that money will immediately become available to 

creditors. See Tenneco v. First Virginia Bank, 698 F.2d at 690-

91. 

The second statutory goal that would be impaired by 

permitting garnishment is that of ending the disadvantaged 

position of self-employed persons in establishing retirement 

plans. See S. Rep. No. 383, 93d Cong. 2d Sess., reprinted in 1974 

U.S. Code Cong. & Admin. News 4890, 4890, 4900. In addition to 

limiting the pension plan options of owner-managers of small 

corporations such as Farha, affirming the district court would 

jeopardize Keogh plans, which are self-settled trusts of 

self-employed individuals. 

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Appellate Case: 87-1530 Document: 01019784750 Date Filed: 06/13/1989 Page: 11 
The final statutory purpose at stake in this case is that of 

uniformity. In passing ERISA, Congress intended to implement ."a 

uniform and systematic framework for regulation of employee 

benefit plans •••• It is central to the statutory scheme that 

ERISA not be subject to state and local laws which might frustrate 

its goals." Buha, 623 F.2d at 459. This case presents an 

excellent example of how deciding a particular issue based on 

state law would jeopardize this goal. Whether the plan could be 

garnished under Oklahoma law would depend upon the resolution of 

the conflict between Okla. Stat. tit. 60, § 175.25 G., and Okla. 

Stat. tit. 60, §§ 326-328. The former opens self-settled 

spendthrift trusts to garnishment, and the latter protects all 

federally tax exempt retirement plans and accounts from 

garnishment. It would run contrary to the· basic structure of 

ERISA to decide the availability of plan benefits to commercial 

creditors on such a specific question of state law. Indeed, the 

rationale of the Supreme Court in Mackey precludes such an 

outcome. The Court held there that ERISA preempts a state law 

affording more extensive protection to welfare benefit plans than 

does ERISA, noting that "[l)egislative 'good intentions' do not 

save a state law within the broad pre-emptive scope of§ 514(a) ." 

Mackey, 108 s.ct. at 2185. This holding indicates that the 

availability of ERISA plan benefits to creditors is a question of 

federal law. The FDIC points to no authority supporting the 

conclusion that the Plan is illusory as a matter of federal law. 

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Appellate Case: 87-1530 Document: 01019784750 Date Filed: 06/13/1989 Page: 12 
III 

ERISA section 206(d)(l), as well as the structure and purpose 

of the statute as a whole, compel the conclusion that ERISA 

pension plan benefits are to be free from commercial garnishment, 

even if the plan constitutes a self-settled trust subject to 

garnishment under state law. We therefore reverse the judgment of 

the district court and hold that Farha is entitled to an exemption 

from garnishment with respect to funds held in the name of the 

Farha Sales Defined Benefit Pension Plan. 

REVERSED. 

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Appellate Case: 87-1530 Document: 01019784750 Date Filed: 06/13/1989 Page: 13 
87-1530 - FEDERAL DEPOSIT INSURANCE CORPORATION v. FRED M. FARHA 

SETH, Circuit Judge, dissenting: 

I must respectfully dissent from the majority opinion herein 

on what appears to be a basic question--which is whether a trust 

existed at all. "A trust'' is required under the pertinent 

statutes, and the majority concluded that one had been created. 

In my view, there was no trust although the standard provisions 

had been included in the documents seeking to create an ERISA 

trust. It is apparent that some variations from traditional trust 

doctrine are contemplated by ERISA but these are not fundamental 

ones. Also, in my view, the acceptance of the documents by the 

federal authorities for their purposes did not, and could not, 

serve to cure the basic defects. 

As indicated by the majority, and demonstrated by the record, 

the Benefit Plan and the Adoption Agreement provide that there be 

a Trustee with specified powers and broad discretion; that there 

be Participants--beneficiaries-employees; that there be an 

Administrator with described duties and, of course, an Employer. 

The whole structure and the interrelations are well described. 

The problem is that all these functionaries, all the decision 

makers and the single employee-beneficiary are in reality but one 

and the same person--Mr. Fred M. Farha. He makes all the 

decisions and exercises all the powers for himself as the sole 

beneficiary. 

Appellate Case: 87-1530 Document: 01019784750 Date Filed: 06/13/1989 Page: 14 
It is obvious that the authority of Mr. Farha under the 

agreement in the several capacities is governed to some extent 

also by the statutes and regulations. However, this limitation 

does not alter the consequences of having one person, Mr. Farha, 

as the sole beneficiary, the sole trustee, and the sole settler. 

He was, of course, the only one who signed the documents. 

The trial court, of this, stated in part: 

"Further, with respect to the essential antialienation feature of the plan, that is 

largely illusory, as is the operation of the 

plan, so as to place the assets beyond the 

control of Mr. Farha. Under Article XI of the 

Plan, Sections 11.01 and 11.02, the Plan could 

be amended at any time by the employer with 

the consent of the Trustee and the 

Administrator. The Employer, the Trustee and 

the Administrator, are all entities in which 

he owns one hundred percent of the stock. 

Termination of the plan governed by Section 

11.02 permits the Employer, that is Mr. Farha, 

to terminate the plan at any time by an 

instrument in writing executed by the 

Employer, that is Mr. Farha, and deliver to 

the Trustee, that is Mr. Farha, in which event 

the aliquot share the benefits in the plan is 

immediately vested in the participant of the 

plan, and that also is Mr. Farha; and that 

under the circumstances the plan simply does 

not have such genuine quality as to regard it 

as a plan permitted for exemption because of 

the provisions of the ERISA, and that is the 

factual basis for my ruling there's no need 

for me to proceed to any analysis of whether 

ERISA does or does not affect the rights of 

FDIC in general to collect upon debts owed to 

the banks for which the FDIC is acting." 

Another example concerns borrowing from the trust. This under the 

documents may be done if a Participant (Mr. Farha) requests a loan 

and if directed by the Administrator (Mr. Farha), and an 

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Appellate Case: 87-1530 Document: 01019784750 Date Filed: 06/13/1989 Page: 15 
( 

application made to the Trustee (again Mr. Farha). Other examples 

are apparent as might be expected. 

The trial court in the Order ofl Garnishment found "that Farha 

has complete control and dominion over the Plan." It also 

concluded, "As a result of Farha's complete control and dominion 

over the Plan, the Court finds that the Plan is illusory and not 

exempt from garnishment.'' With this I agree. 

It would seem that to have a valid trust the powers of the 

sole trustee must be separated from the rights and functions of 

the sole beneficiary. Under the statute some combinations on the 

trustee-administrator side may be combined (29 U.S.C.A. § 1102), 

but there is nothing to indicate that the sole beneficiary may 

serve in all the trust positions and beneficiary at the same time. 

In the· agreement, as mentioned, all the elements of a trust 

are well set forth, the functions of the participants and the 

relationship and the interrelations of the functionaries and the 

beneficiary are described and authorized. However, the many 

required combinations of those holding the positions to permit 

actions and decisions are destroyed by vesting in one person all 

positions within the trust including one employee-beneficiary. It 

all becomes illusory. 

The documents as drafted did not indicate that there is but a 

sole participant on all sides. The signing by Mr. Farha in all 

capacities did however disclose this and, in my view, with the 

fact he is the sole beneficiary prevents the creation of the 

trust. 

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There are special provisions in the statutes to permit under 

particular circumstances plans to benefit an owner-employee but 

this again presupposes that there is first created the required 

trust. If there is no trust in these circumstances there is no 

ERISA plan. We held in Williams v. Nylund, 268 F.2d 91, citing 

Malone v. Herndon, 168 P.2d 272 (Okla.), that under Oklahoma law 

the same person cannot be the sole trustee and the sole 

beneficiary. This is the typical trust doctrine. A trust is 

illusory when the settlor has complete control over the trust and 

the res. Bogert, The Law of Trusts and Trustees, § 211. The ALI 

Restatement (Second) Trusts, Vol. 1 § 99: "The sole beneficiary 

of a trust cannot be the sole trustee of the trust," and§ 115: 

"The sole trustee of a trust cannot be the sole beneficiary of the 

trust." 

The Eleventh Circuit in In re Lichstrahl, 750 F.2d 1488, 

considered similar questions under the bankruptcy law and in 

note 5 stated that it did not apply the merger doctrine because 

there was an "open class" of beneficiaries. However, in the case 

before us the settler had but one employee and there was in fact 

I 

no "open class." The merger doctrine should apply. 

The majority expresses concern for the "pension-plan options 

of owner-managers of small corporations such as Farha," and that 

Keogh plans might be jeopardized by an affirmance of the trial 

court's judgment. However, those questions of policy are not 

before us. 

I would affirm. 

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